Constructive Dismissal Explained
Constructive dismissal, also called constructive termination, happens when an employer does not fire an employee outright, but instead makes changes to the job that are so significant they effectively force the employee out.
In Ontario, constructive dismissal claims are complex. They can lead to significant damages for wrongful dismissal if an employer oversteps. For employees, knowing when workplace changes cross the line can protect their rights.
This article explains what constructive dismissal means in Ontario, what types of changes may qualify, and what steps both employers and employees should take.
What Is Constructive Dismissal in Ontario?
Under Ontario law, constructive dismissal occurs when:
- An employer makes a fundamental change to a key term of employment without the employee’s consent; or
- The employer creates a toxic or intolerable work environment that leaves the employee no reasonable choice but to resign.
If this happens, the law may treat the resignation as a termination without cause, entitling the employee to notice or severance pay.
Common Examples of Constructive Dismissal
Constructive dismissal is highly fact-specific, but common triggers include:
- Significant pay cut or loss of benefits
- Demotion or major change in duties/responsibilities
- Unreasonable relocation or drastic schedule change
- Toxic work environment due to harassment or bullying that management fails to address
- Suspension without pay in circumstances not justified by contract or law
Minor or temporary changes usually do not amount to constructive dismissal. The change must be substantial and unilateral.
Employee Rights in Ontario
If constructive dismissal is proven, the law treats the employee as if they were terminated without cause.
That means they may be entitled to:
- ESA minimum entitlements: notice or termination pay, severance (if applicable), and benefits continuation
- Common law reasonable notice: often much greater than ESA minimums, depending on age, position, service, and availability of comparable work
Employees may also have claims for human rights damages if discrimination was involved, or moral/punitive damages if the employer acted in bad faith.
Employer Risks and Responsibilities
For employers, constructive dismissal claims are risky because:
- Courts often award months of common law notice well beyond ESA minimums
- Legal costs and reputational harm can be significant
- Defending constructive dismissal claims requires strong documentation and evidence of business necessity
Best practice: Employers should obtain employee agreement before making substantial changes to pay, duties, or workplace conditions, and should seek legal advice before implementing changes.
Constructive Dismissal in Ontario FAQs
Not exactly. In constructive dismissal, the employee technically resigns, but the law treats it as if they were wrongfully terminated.
Yes. Employees can bring a claim in civil court or the Human Rights Tribunal (if discrimination is involved).
Employees must show that the employer made a fundamental change without consent, or created an intolerable work environment. Evidence such as emails, policies, or witness statements may be critical.
Tip: If you’re experiencing workplace bullying, harassment, or discrimination, keeping good records is critical. Download our free checklist to help you keep track of incidents clearly and effectively.
Yes. Employers may argue the change was minor, temporary, agreed to, or permitted by contract. Legal advice is key before implementing workplace changes.
Depending on the case, employees may receive ESA minimums, common law notice (which can be months or more), and in some cases additional damages.
Key Takeaway
Constructive dismissal in Ontario is not always easy to spot.
- For employees, it may mean access to significant compensation.
- For employers, mishandling workplace changes can lead to costly claims.
As Christopher Achkar, employment lawyer and founder of Achkar Law, explains:
“If your job has changed in a way that feels unfair or forced, you may have been constructively dismissed without ever being fired. Speak to a lawyer to understand your rights and whether you’re entitled to compensation.”
Need Help With Constructive Dismissal in Ontario?
At Achkar Law, we help both employees and employers across Ontario understand constructive dismissal, assess risks, and manage claims.
Whether you are considering a workplace change or feel you have been forced out, our team can help.
Contact us today to speak with a workplace lawyer about constructive dismissal in Ontario.
Phone Toll-free: 1-800-771-7882 | Email: [email protected]
Video: What is Constructive Dismissal?
In this short video, employment lawyer Christopher Achkar explains what constructive dismissal means, how it affects employees in Ontario, and what steps you can take if you believe you’ve been constructively dismissed.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation.©
Workplace Law Topics: Constructive Dismissal, Wrongful Dismissal, Employment Contract, Human Rights, Workplace Harassment, Workplace Discrimination