Constructive Dismissal Explained

f your job has changed in a major way — or your workplace has become intolerable — you may be able to resign and still claim severance. This is called constructive dismissal, and it is treated as a termination under Ontario law.

Even if you resigned voluntarily, the law may say your employer left you no real choice.

What Is Constructive Dismissal?

In Ontario, constructive dismissal occurs when an employer unilaterally makes a significant change to a fundamental term of employment without the employee’s agreement, or creates a work environment that no reasonable person could be expected to tolerate.

The Ontario Ministry of Labour defines it this way: “A 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.”

Ontario courts apply a two-step test:

• Was the change significant and made without your agreement?
• Would a reasonable person see it as a fundamental breach of contract?

If both are true, you may be entitled to severance, benefits, or other damages — even though you resigned.

Types of Constructive Dismissal

There are generally two forms:

1. Monetary Constructive Dismissal Occurs when your employer cuts your wages or hours significantly — often by 10% or more.
2. Non-Monetary Constructive Dismissal Happens when the job becomes intolerable due to demotion, harassment, relocation, or other non-financial factors.

Common Examples in Ontario Workplaces

Constructive dismissal may apply when an employer:

• Reduces your pay, benefits, or bonuses
• Demotes you or strips key responsibilities
• Reassigns your role in a way that lowers your status or hours
• Relocates your job without agreement
• Changes your shift, schedule, or duties significantly
• Creates a toxic or unsafe workplace
• Fails to accommodate medical needs or caregiving obligations
• Suspends you without pay or cause
• Makes your workload unreasonable

Even small changes can qualify if they add up to a breach of trust or a poisoned work environment.

How Ontario Courts Treat Constructive Dismissal

If you’ve been constructively dismissed, the law treats it as if you were terminated without cause.

This means you may be able to claim:

• Severance Pay under Ontario common law
• Compensation in lieu of notice under the ESA
• Human rights damages, if discrimination was involved
• Bad faith or punitive damages, if the employer acted unfairly or dishonestly

The amount depends on:

• Your age
• Length of service
• The nature of your job
• How easy it will be for you to find similar work

What You Should Do If You Think You’ve Been Constructively Dismissed

1. Do Not Accept the Change If your employer changes something fundamental, say you disagree — ideally in writing. If you stay silent or keep working, a court might find that you accepted the change.
2. Keep Records Document everything: emails, texts, HR notes, and details about toxic incidents. Dates, names, and specifics matter.
3. Talk to a Lawyer Before Resigning Do not quit without legal advice. If you leave too soon, you could lose the right to make a claim. An employment lawyer can help you plan your exit and preserve your legal options.

Do I Have a Case for Constructive Dismissal?

You might — if any of these apply to you:

• Your compensation was cut significantly
• You were demoted, reassigned, or suspended
• Your workplace became discriminatory or abusive
• You were pressured to resign
• You were denied accommodation for a disability or medical need

Even if you’re unsure, it’s worth getting a legal opinion. Many people don’t realize they’ve been constructively dismissed until it’s too late.

What to Do If You Believe You’ve Been Constructively Dismissed

1. Get Legal Advice Immediately: An employment lawyer can help assess your situation and advise on whether you have a case.
2. Do Not Resign Without a Plan: Resigning too quickly can limit your legal options.
3. Keep Records: Document every change, conversation, and incident that supports your claim.

Why Choose Achkar Law?

At ACHKAR LAW , we help individuals across Ontario understand their rights and fight back after being mistreated at work.

Our team has the knowledge and experience to assess your case, explain your options, and guide you through the legal process — from review to resolution.

Whether you’ve already resigned or are thinking about it, we’ll help you make the right move.