What is constructive dismissal?
In Ontario, constructive dismissal is a forced resignation because the employee is pushed out without an official termination letter. In effect, the employee is found to have been deemed in law terminated based not on a termination letter but on the actions of the employer.
Constructive dismissal may occur when an employer makes a significant change to a fundamental term or condition of an employee’s employment without the employee’s actual or implied consent. Constructive dismissal can also occur when your employer creates or allows for the creation of, a hostile or toxic work environment.
The Labour Program of the Federal Government of Canada, describes “constructive dismissal” as “situations where the employer has not directly fired the employee. Rather the employer has failed to comply with the contract of employment in a major respect, unilaterally changed the terms of employment, or expressed a settled intention to do either thus forcing the employee to quit. Constructive dismissal is sometimes called “disguised dismissal” or “quitting with cause” because it often occurs in situations where the employee is offered the alternative of leaving or of submitting to a unilateral and substantial alteration of a fundamental term or condition of his/her employment.”
There are two types of constructive dismissal, monetary and non-monetary:
- A monetary constructive dismissal occurs when there has been a significant decrease in wages, usually above 10% or a significant decrease of hours of work, above 10%.
- A non-monetary constructive dismissal occurs when the employee is paid the same as before, but because of the employer’s conduct it is now not possible to continue employment.
Signs of constructive dismissal
Constructive dismissal may occur in the following situations:
- Reduced compensation, for example, a significant decrease in salary or a removal of benefit entitlement.
- Demotion, for example, loss of all supervisory responsibility or the employee’s title is changed from Chief Financial Officer to Office Administrator, and they are required to report to a previous subordinate.
- New work location, for example, the employee has been working at the office in Toronto for 19 years, and they are suddenly relocated to Halifax.
- Change of shifts or decrease of numbers of work, for example, early morning shifts are changed to late evening.
- Toxic work environment, for example, when the employee is discriminated against or subject to bullying, harassment, sexual harassment, unjustified discipline.
- Substantial increase of workload, for example, a substantial change of work conditions that make it quasi-impossible to fulfill caregiving obligations for children, elderly parents or other dependents.
- Refusal to accommodate, for example, the employee breaks their hip and the employer refuses to provide them with the necessary workplace conditions to fulfill their duties.
- Unjustified suspensions, for example, when an employee is put on an indefinite administrative suspension with pay or when they are suspended with or without pay in the absence of proper procedures and explanations.
In this video (3:38 minutes), Employment Lawyer Andrew Monkhouse explains what is constructive dismissal, what should you do if you have been constructively dismissed, some common types of constructive dismissal and at what point you should hire a lawyer for constructive dismissal.
What should you do if your compensation has been slashed or your work conditions are unbearable?
Here are the most important things to remember if you think you have been constructively dismissed.
Do Not Accept the Change
If your employer fundamentally changes our compensation or work conditions, refuse to accept the unilateral and fundamental change to your employment. For example, if your compensation changes fundamentally, this may amount to a constructive dismissal. However, if you work for less, without informing your employer that you object to the change, you may be found to have accepted the change and it will be more challenging to prove constructive dismissal.
Keep Good Records
In any workplace dispute, it is important to keep a record of any emails, texts or letters that discuss the change in work conditions, and take clear notes either during or immediately following any meetings in which the issues are discussed. In the case of a non-monetary constructive dismissal, it is important to document all the events that contributed to making your workplace intolerable, for example, dates and persons whose conduct make the workplace unbearable.
Before You Quit – Consult a Lawyer
It is important to consult with an employment lawyer before quitting. Often employees do not realize they have been constructively dismissed and they resign. It is important to have an expert analyze the situation and assess whether your work conditions have changed fundamentally. You should only quit in circumstances where an objective third person would find that continuing to work there would subject you to hostility, embarrassment or humiliation.
Ultimately, the risk is that if you quit prematurely, and later cannot successfully establish constructive dismissal, you may not receive any payments from your former employer.
What are you entitled to if you have been constructively dismissed?
When you are constructively dismissed you may seek full severance pay through a wrongful dismissal claim. How much severance pay you are entitled to depends on various factors, including:
- the character of employment;
- the length of service;
- the age of the employee; and
- the availability of similar employment having regard to the experience, training, and qualifications of the employee.
Additionally, if a workplace harassment or discrimination issue led to constructive dismissal, you may be entitled to an award of human rights damages or punitive damages.
COVID-19 and Constructive Dismissal in Ontario
On May 2020, the Ontario government implemented the Infectious Disease Emergency Leave (IDEL). The goal was to provide relief to Ontario businesses and employers who were suffering because of the global COVID-19 pandemic. IDEL regulation allowed employers to cut or eliminate the hours and wages of their employees for reasons related to COVID-19 without these actions amounting to dismissal under Ontario law, the Ontario Employment Standards Act, 2000 (“ESA”). Section 8 of the ESA states that “no civil remedy of an employee against his or her employer is affected by this Act.” For that reason, a dismissed employee who goes to court may well be able to seek a higher level of common law severance pay for wrongful dismissal than is provided under the ESA.
This deemed IDEL was very troublesome for many Ontario employees who consequently found themselves without work and without pay for over two years. On July 30, 2022, non-unionized employees will no longer be deemed to be on infectious disease emergency leave by the Ontario regulation.
That means many employees who had been placed on deemed IDEL will be automatically owed money from their past employers.
If your compensation has been slashed, you have been laid off or if your work environment has become unbearable, it is important to contact an employment lawyer at Monkhouse Law. You will need someone in your corner to advise you on the best next steps. We will assess the conduct of your employer and determine if you have a viable claim for constructive dismissal. We know what factors are relevant in making such a claim and can undertake a holistic analysis of your situation.
Call us for a free 30 minute phone consultation at 416-907-9249 or submit a callback request.