Constructive dismissal is one of the most misunderstood concepts in Ontario employment law. It occurs when an employer makes significant unilateral changes to your employment conditions — without your agreement — that are so fundamental you are effectively forced to resign. In law, this resignation is treated as a termination, entitling you to the same severance and damages as if you had been fired.
What Changes Can Constitute Constructive Dismissal?
- A significant reduction in salary (typically more than 10-15%)
- A major demotion or removal of responsibilities
- Forced relocation to a distant location
- Toxic workplace conditions created or allowed by the employer
- Removal of a company car, office, or other significant benefits
- A drastic change in hours or work schedule
What Should You Do?
The most important thing is to act promptly. If you accept the changed conditions and continue working without objecting, you may be deemed to have accepted the new terms. You generally have a limited time to either object in writing or resign and make a claim.
Before resigning, consult an employment lawyer. Resigning without legal advice can jeopardize your EI entitlement and your ability to claim constructive dismissal damages.
What Are You Entitled To?
If successfully established, constructive dismissal entitles you to the same remedies as wrongful dismissal: reasonable notice pay, lost benefits, and potentially damages for bad faith conduct by the employer. This can range from a few months to over a year of total compensation depending on your circumstances.