Q&A: Constructive Dismissal from Employment

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Q&A is a recurring series on the Vey Willetts LLP blog. The aim is to provide quick answers to questions we commonly encounter in our day-to-day practice of employment law. In this edition, we focus on constructive dismissal from employment.

Q. What is constructive dismissal?

A. Constructive dismissal is a legal concept that refers to any situation where your employer has made a unilateral and fundamental change to a term of your employment, such that your job has substantially changed as a result. By making this change absent agreement, your employer is deemed to have terminated your employment contract. 

Q. What types of changes may be considered a constructive dismissal?

A. There is no exhaustive list of the changes that will lead to a constructive dismissal. That said, some of the common forms that a constructive dismissal may take are:

  • a demotion;
  • a reduction in your total compensation (whether salary, commissions or bonus);
  • a change in your job location (i.e from Ottawa to Thunder Bay),
  • a significant increase (or decrease) in your hours of work; 
  • a substantial change in your organization's internal reporting structure; or
  • the creation of a toxic work environment (i.e. through persistent harassment). 

Q. My boss is reducing my pay, is this a constructive dismissal?

A. Possibly. The answer to this question will likely depend on the amount of the reduction. For example, a minor reduction (i.e. 2%) is unlikely to be considered "fundamental" and thus may not be viewed by a court as a constructive dismissal. On the other hand, a reduction in pay of 20% or more would likely constitute constrictive dismissal. As such, if your compensation is reduced, it is best to seek legal advice from an employment lawyer before taking any further steps. 

Q. I think I am being constructively dismissed, can I quit my job?

A. While in certain circumstances it may be appropriate, or necessary, to resign in response to an alleged constructive dismissal, these situations are relatively limited (i.e. where staying in the workplace the person will objectively experience hostility, embarrassment and/or humiliation). It is important to remember that effected employees bear the onus of proving that they were constructively dismissed. As such, in the event that a constructive dismissal is not found, and the person has already resigned, all that the individual will have done is quit a job and likely forfeited any severance entitlement they may have otherwise had.  

As such, this step should never be taken without first speaking with an employment lawyer.

Q. What compensation (damages) may I seek if I have been constructively dismissed?

A. If you have been constructively dismissed, you can likely seek severance from your employer. Also, in particularly egregious cases, you may also have a claim for compensation in the form of aggravated damages, punitive damages and/or due to breaches of statute such as the Human Rights Code

The amount of severance you may be entitled to receive will be based on a number of factors, including: the contents of any employment contract that you signed; your age; your length of service; your position at the time of the constructive dismissal; and the availability of similar jobs in the local market.

Additional Resources

*This Q&A article is provided solely for informational purposes. It is not specific legal advice. Should you wish to receive specific legal advice regarding your particular circumstances, please contact us directly.

Vey Willetts LLP is an Ottawa-based employment and labour law boutique that provides timely and cost-effective legal advice to help employees and employers resolve workplace issues in the National Capital Region and across Ontario. To speak with an employment lawyer, contact us at: 613-238-4430 or info@vwlawyers.ca