Constructive Dismissal Due To Management or Bullying

Constructive dismissal is a form of wrongful dismissal without an employer formally terminating an employee. Generally, Ontario constructive dismissal claims arise from one of two situations. First, constructive dismissal may occur when an employer makes a unilateral change that is significant enough that the change fundamentally alters the terms of the employee’s employment agreement. Second, an employee who is forced to resign due to workplace bullying or harassment may be able to claim constructive dismissal successfully.

Definition: Constructive Dismissal

Constructive dismissal in Ontario refers to a situation in which an employer makes significant changes to the terms and conditions of an employee’s employment, creating a work environment that is substantially different from what was originally agreed upon in the employment contract. These changes can be related to job duties, compensation, work hours, or other fundamental aspects of employment.

Key elements of constructive dismissal in Ontario include:

Material Change: The changes made by the employer must be significant and material, going beyond routine workplace adjustments.

Unilateral Action: Constructive dismissal typically occurs when the employer imposes these changes unilaterally, without the employee’s agreement.

Substantial Impact: The changes should have a substantial adverse effect on the employee’s role, making it difficult for them to continue working under these conditions.

Harassment or Discrimination: Constructive dismissal may occur in situations where an employee resigns from their job due to fundamental changes in their employment conditions, treatment, or workplace environment that make continued employment intolerable. This type of constructive dismissal can result from workplace harassment or bullying.

Constructive Dismissal Claims Due To Management Decisions

While an employer can change some minor aspects of an employee’s job responsibilities, any significant change requires an employee’s agreement. The most common considerable change an employer can make is a unilateral demotion. A unilateral demotion happens when an employee moves to a more junior position or when an employer removes any of an employee’s key job responsibilities.

While a corresponding reduction in the employee’s salary would strongly support an Ontario constructive dismissal claim, it is not necessary if there are aggravating factors. 

An employee who experiences a humiliating and public demotion but did not receive a reduction in pay may still be successful in filing an Ontario constructive dismissal claim. An employee can also claim constructive dismissal if their job responsibilities have been gradually reduced, effectively resulting in a demotion.

Alternatively, an employee may have a successful constructive dismissal claim if they experience a significant reduction in their compensation without corresponding job responsibilities. Reductions in compensation over 10% significantly raise the risk of finding an employee has been constructively dismissed. While there is no specific threshold of reduction in compensation that will automatically trigger a constructive dismissal, reductions in compensation of over 10% raise the risk of a finding that an employee has been constructively dismissed. 

If an employee experiences any of the events outlined above, the employee should not wait to take action. If they wait too long to address the issue, they risk being found to have condoned the employer’s actions and will have a tough time filing a successful constructive dismissal claim. It is best to take action as soon as possible.

Related Reading

Constructive Dismissal: Reducing the Employer’s Risk

Constructive Dismissal: Non-Discretionary Bonus and Performance Reviews

Constructive Dismissal Explained

Constructive Dismissal And Bullying

An employee may also have a successful constructive dismissal claim if they resign due to workplace bullying and harassment. A poisoned work environment may occur if a superior consistently harasses a subordinate, or an employee is experiencing bullying and harassment from coworkers, and management fails to take appropriate steps to address the situation. 

Harassment is generally considered any unwelcome behaviour or behaviour that ought to be reasonably known to be unwelcome. It is important to remember that an employer is entitled to manage the workplace, including instances where an employer is critical of an employee’s work performance or if an employer disciplines an employee for work-related shortcomings. These circumstances would not meet the definition of harassment, even if they were unwelcome by the employee. Employees who believe they may have a successful Ontario constructive dismissal claim based on workplace harassment should retain as much written documentation of the harassment as possible, as these claims can be hard to prove. When in doubt, try and utilize written forms of communication as much as possible to ensure there is a paper trail of workplace bullying. 

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