What You Need to Know about Constructive Dismissal

Written By:  Rodney Jackson

Posted: June 3, 2024   2 minute read

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In Ontario, common law—the body of law developed through judicial decisions—plays a crucial role in shaping employment practices and principles. Employment common law changes on a very regular basis and it is critical to keep up to speed as an employer or an employee. Here is a look at some of the key recent common law changes to constructive dismissal in Ontario employment law.

Constructive Dismissal

Constructive dismissal occurs when an employer makes unilateral changes to fundamental terms of employment, leading the employee to resign. Recent cases have clarified what constitutes constructive dismissal, what is considered a fundamental change and the circumstances under which employees can claim it.

• Case Example: Hagholm v. Coreio Inc., 2018 ONCA 633 (CanLII)

The Ontario Court of Appeal ruled that significant changes to an employee’s duties and compensation can constitute constructive dismissal. In this case, the court found that a substantial reduction in pay and responsibilities amounted to a breach of the employment contract and therefore constituted constructive dismissal. Constructive dismissals are more commonly awarded to more senior and tenured employees.

• Employer Implications: Employers should tread carefully when modifying job roles, compensation, or working conditions or even creating workplace accommodations. Employees must remain at the same level of responsibility and same level of pay, any decrease in either would be considered constructive dismissal.

• Employee Implications: Employees should be aware that substantial negative changes to their employment terms might allow them to claim constructive dismissal.

If you have questions regarding termination clauses and how they may affect you as an employer or employee be sure to Reach out to us today!

Disclaimer: The content of this article/blog are provided as a general introduction and overview of a legal topic only. This article/blog does not provide legal or other professional advice, nor does it express any opinion. It is recommended to consult a legal professional before making decisions based on your specific circumstances.

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