A Constructive Dismissal in Ontario is where an employer decides unilaterally to make substantial changes to the essential terms of a non-union employee’s contract of employment and the employee does not agree to the changes and leaves his or her job, the employee has not resigned, but has been dismissed. The departure of the employee will not be considered to be a resignation but, instead, will be a Constructive Dismissal.

 

In 2015, the Supreme Court of Canada further expanded the the scope of a Constructive dismissal in the case of Potter v New Brunswick Legal Aid Services Commission. A Constructive Dismissal can also arise when it can be shown, based on the employer’s actions, that the employer did not intend to be bound by the employment agreement.

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What are examples of Constructive Dismissals?

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• reducing the employee’s compensation or failing to pay an employee;

• demotion of the employee; 

• reducing the employee’s job responsibilities;

• requiring the employee to move to a different geographic location;

• requiring the employee to work in an environment whereby they are being harassed or discriminated against;

• laying off the employee.  At common law, an employer does not have an automatic right to lay off a non-unionized employee unless they satisfy an exception.