Constructive Dismissal In Ontario: What You Need To Know

Constructive Dismissal In Ontario: What You Need To Know

[The information on this page applies only to non-unionized employees in Ontario, working in provincially regulated industries. It is for informational purposes only and is not legal advice, which cannot be given without consideration of your individual circumstances.]

What is constructive dismissal?

Constructive dismissal is when your employer has not formally terminated your employment, but has seriously changed or breached the terms of your employment contract, to the point that you can reasonably conclude you have been dismissed. 

To qualify as a constructive dismissal, the employer’s breach of the employment contract must be sufficiently serious. Examples of conduct that constitutes constructive dismissal include:

  1. The employer unilaterally reduces an employee’s salary, benefits package, or bonus entitlement.
  2. The employer unilaterally changes an employee’s hours of work. 
  3. The employer unilaterally modifies an employee’s employment status (e.g., from full-time to part-time; from employee to independent contractor).
  4. The employer unilaterally relocates an employee’s place of employment, if relocation was not part of the job. 
  5. The employer makes significant changes to an employee’s duties, job description, title, rank, or responsibilities. 
  6. The employer creates a toxic environment in the workplace.

What do I do if my employer has breached my employment contract?

If you believe your employer has breached your employment contract, you should consult with an employment lawyer to assess whether you have been constructively dismissed. It is very important to consult a lawyer before resigning your employment, to fully understand your rights and the consequences of that action. 

Importantly, if you fail to challenge the employer’s breach or change to your employment in a reasonably timely manner, you may be found to have accepted the employer’s changes to your employment contract, which may jeopardize your claim of constructive dismissal. 

If you do resign, it is important that you make it clear to the employer that you are resigning as a result of the employer’s breach of your employment contract and that you consider yourself to have been constructively dismissed. 

How Much Compensation Can I Receive for a Constructive Dismissal?

The amount of notice an employee is owed on termination, and thus an amount they may claim in an action for constructive dismissal, is based on the two primary sources of law that govern an employment relationship: 

  • The Employment Standards Act (ESA)
  • The employment contract and the common law

The ESA is the law that sets employments standards in Ontario. Under that law, employees who have been continuously employed for at least three months are entitled to notice in the amount of one week per year or partial year of service, up to a maximum of 8 weeks’ pay. If you have worked for your employer for at least five years, and your employer meets other requirements, you may also be entitled to severance pay under the ESA in the amount of one week per year of service up to 26 weeks of severance pay.

This is the minimum termination pay to which an employee is entitled. However, many employees may be entitled to greater amounts either under their employment contract or the common law. 

The employee’s contract might spell out how much notice is owed. Where it does not, courts will consider several factors, such as: 

  • Age;
  • Length of service;
  • Character of employment; and
  • Availability of similar employment

Applying these factors, courts determine an employee’s entitlement to “reasonable notice” that approximates the amount of time an employee would need to find new employment. This amount is generally capped at 24 months, though in exceptional circumstances, courts will go higher. An employment lawyer can help determine what your reasonable notice period may be. 

Depending on the circumstances of your termination, you may be entitled to other compensation for a constructive dismissal, including damages for bad faith in the manner of dismissal or punitive damages.

Do I need to look for work after a constructive dismissal?

Yes. While your entitlements under the ESA are not dependent on you looking for work, any entitlements under your contract or the common law are subject to your duty to mitigate, which means you have to look for work and, if you find work, your damages will be reduced. However, if you negotiate a lump sum severance package, you may not have to worry about mitigation. 

How can I sue for constructive dismissal?

For assistance with the filing of your constructive dismissal claim, you may contact our experienced employment lawyers at RavenLaw LLP. Our lawyers can help you prepare an action in court, and assess whether to proceed by way of a trial or a motion for summary judgment, depending on the circumstances of your case.

Our Experience with Constructive Dismissal

The employment lawyers at RavenLaw LLP have advised and represented countless workers in claims for constructive dismissal throughout Ontario. If you believe that you have been constructively dismissed or believe that your employer has demonstrated the intention to do so, feel free to contact our employment lawyers at RavenLaw LLP to assess the viability of your constructive dismissal claim, and to navigate the options towards the resolution you are seeking. 

We are here to help. Please call 613–567–2901 or email [email protected] to consult one of our experienced employment lawyers. 

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