Constructive dismissal: Cutting through the confusion

Editor's Note

This article is sponsored by Samfiru Tumarkin

In our practice, our constructive dismissal lawyers speak to both employees and employers daily about changes to their jobs. “Constructive dismissal” is a term that many people have heard or read about in passing, but it remains an employment law concept that is shrouded with mystery.

There are many misconceptions about what constitutes a constructive dismissal and the legal recourse that is available to employees who have been constructively dismissed.

What is a constructive dismissal?

A constructive dismissal occurs when an employer imposes a fundamental change to the terms and conditions of employment without the employee’s consent.

When faced with the imposition of a fundamental change by an employer, employees have two choices:

  1. Accept the change, which results in that change becoming part of the terms of employment moving forward; or
  2. Refuse the change, resign due to the employer’s breach of the employment agreement, and claim constructive dismissal.

It is important to note that a constructive dismissal does not result from any change to the terms of employment, but from a major and substantial change to the essential terms. The essential terms of employment include, but are not limited to, an employee’s compensation, position and hours of work.

Fundamental changes to employment

Specific examples of fundamental changes that would lead to a claim for constructive dismissal include:

  • A salary reduction or reduction to hourly wage
  • A demotion
  • A removal of duties
  • A reduction in hours
  • Shift changes
  • A change of work location that substantially increases an employee’s commute

In the more recent Ontario case of Robinson v. HJ Heinz Co. (2018 ONSC 3424), the employer removed all of the employee’s core duties, demoted her position and changed her title. The Ontario Superior Court of Justice found that the employer had breached the employment agreement by making these unilateral, fundamental changes and the employee had been constructively dismissed.

Another fundamental change that could result in a constructive dismissal occurs when an employee is forced to work in a toxic or hostile work environment. This can include an act or repeated acts of discrimination, bullying, or sexual harassment. Constructive dismissals of this nature have garnered more attention in recent years, due in large part to the #MeToo movement. It takes place when an employer either creates, or does not prevent, an unsafe and toxic work environment and, as a result, the employee can no longer continue to work there and is forced to resign.

In the very recent and widely publicized case of Colistro v. Tbaytel (2019 ONCA 197), the Ontario Court of Appeal confirmed that a toxic workplace can result in a constructive dismissal. In this case, the employee had worked for the employer for over 20 years. In 1995, she filed a sexual harassment complaint against her supervisor, which resulted in the supervisor’s termination. Approximately 10 years later, the company rehired that same supervisor and the employee would have been forced to work with him. The employee resigned upon learning of the rehiring and commenced a claim for constructive dismissal. The Ontario Court of Appeal upheld the lower court’s decision and found that the company’s conduct in rehiring the supervisor had created an unsafe work environment, making it impossible for the employee to continue her employment, which resulted in a constructive dismissal.

What happens after a constructive dismissal?

When any of the above scenarios occur, the employee may resign from their employment and subsequently seek their full termination entitlements. In other words, the employee who refuses the imposition of a fundamental change and resigns can pursue severance pay by commencing a claim for wrongful dismissal. The amount of severance pay will depend on several factors, including the employee’s age, length of service, position and compensation.

Temporary layoffs

In connection with constructive dismissals, a common misconception that we frequently come across is related to temporary layoffs. Both employees and employers often think that temporary layoffs can be imposed as long as an employer follows the time constraints prescribed by the Ontario Employment Standards Act. This, however, is only true if the employee has previously agreed to the possibility of a future temporary layoff. Absent an employee’s prior agreement, the imposition of a temporary layoff is unlawful.

In addition to the examples of fundamental changes discussed above, the imposition of an unlawful temporary layoff also amounts to a fundamental change of an essential term of the employment contract, which would result in a constructive dismissal and the employee’s right to claim severance pay.

What to do if you think you’ve been constructively dismissed

If your employer is attempting to make changes to the terms and conditions of your employment, we recommend that you immediately contact an employment lawyer at Samfiru Tumarkin LLP by calling 1-855-821-5900. Our experienced legal team has successfully handled thousands of constructive dismissal cases across Ontario. We can identify whether you have legitimately experienced a constructive dismissal, what your options are and how to respond to your employer when certain types of changes are made to your job without your consent. Our employment lawyers also help employers manage the difficulties that arise when a business makes necessary changes to the workplace.

To find out if you have been constructively dismissed from your job, use our interactive resource at PocketEmploymentLawyer.ca to get fast results.

Samara Belitzky is an Ottawa employment lawyer and an associate with Samfiru Tumarkin LLP’s Labour and Employment Law practice group. She recognizes the value in resolving disputes for employees and employers in the most timely and cost-effective manner possible. Samara is a fierce advocate for her clients, and is widely respected for her level of compassion and dedication.