Constructive Dismissal
When significant changes to your job force you out, you may be entitled to full severance.
What is Constructive Dismissal?
Constructive dismissal occurs when your employer makes significant changes to your employment without your consent. These changes can be so substantial that they effectively terminate your employment, even without formal termination.
When you're constructively dismissed, you have the legal right to treat the employment as terminated and claim full severance—just as if you had been fired.
Examples of Constructive Dismissal
Significant reduction in salary or benefits
Demotion or reduction in responsibilities
Forced relocation to distant location
Change from permanent to contract role
Hostile work environment or harassment
Significant change in reporting structure
Removal of key job duties
Unilateral change to commission structure
What You Can Recover
If you've been constructively dismissed, you may be entitled to:
Full severance pay based on common law entitlements
Damages for loss of benefits during notice period
Compensation for lost bonuses and commissions
In some cases, damages for manner of dismissal
Payment for accrued vacation and other entitlements
Important: Don't Resign Too Quickly
Constructive dismissal claims require careful handling. Before resigning or accepting changes:
- Document all changes and communications in writing
- Don't immediately accept or agree to the changes
- Consult with an employment lawyer before taking action
- Understand that timing and response matter legally
- Keep records of how changes affect your role
How Courts Determine Constructive Dismissal
Courts in Ontario apply a two-part test to determine if constructive dismissal has occurred:
1. Breach of Contract
Did the employer breach an express or implied term of the employment contract through unilateral changes?
2. Fundamental Change
Was the breach substantial enough that a reasonable person would view the employment as terminated?