What is constructive dismissal? The law in Ontario has been changing over the past year or so.

Generally, it may occur when an employer unilaterally makes a fundamental change to an employees terms of employment. This may be, for example, a pay reduction, a significant change to the employees duties or position, or even a job relocation. It can also potentially occur in the case of harassment in the workplace, for example. Unpaid suspensions can also trigger a constructive dismissal. Even a paid suspension from work can potentially cause a constructive dismissal, if it is found to be an unreasonable suspension (even with pay).  In Ontario, even a temporary lay-off (which is authorized by the Employment Standards Act of Ontario), can be a constructive dismissal if the employee did not expressly agree to this in his or her employment agreement.

Essentially, it is an action by the employer (or that occurs in the workplace) that makes it untenable and unreasonable for the employee to continue to be employed. Often employees will resign and bring a claim for constructive dismissal. However, that strategy should be carefully considered by employees in Ontario. 

Employers have to be careful before making these types of unilateral and fundamental changes in the workplace.

Similarly, employees have to be cautious in their decision-making. Now in Ontario, employers have the ability, if an employee makes a complaint about constructive dismissal, to invite the employee to continue to be employed during the notice period that the employee would otherwise be entitled to receive arising from the dismissal (i.e., the common law reasonable notice period).

However, there are pitfalls for both sides in a constructive dismissal matter. For example:

– Employers, if they offer continuing employment to the employee, must make this offer only after the employee has made a complaint of constructive dismissal, or the employer may not be protected from paying damages to the employee for the dismissal

– Employees must carefully consider any offer to remain employed by the employer, as employees have a duty to mitigate their damages arising from a dismissal and, if they refuse to agree to continue to be employed and it is found by the Court that it was reasonable for in the circumstances to have done so, the employee may not be entitled to any damages

– Employees must also make their complaint for constructive dismissal promptly when they believe it takes place, or the Court may find the change was accepted by the employee (meaning there was no dismissal and, therefore, no damages payable by the employer)

Employees should give careful consideration to their position before resigning and seeking damages on the basis of constructive dismissal. This is a tricky area and often heavily weighted by the facts in the specific case.

Similarly, employers need to tread carefully in making significant changes in the workplace and, if a constructive dismissal complaint is received, in reacting to it, legally.

Good advice from a qualified employment lawyer is essential to both the employer and employee if a constructive dismissal matter arises in the workplace.

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We’re here to help – [email protected]  www.wardlegal.ca


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