Category: Constructive Dismissal

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Constructive Dismissal Termination

Layoff Terms To Be Explicit in Employment Contract Or Clearly Implied

Ever since the pandemic, the topic of layoffs has gained considerable attention. In 2023, 2024, and beyond, layoffs are ongoing matters that affect many employees. It is important to consider the legal consequences that can flow from a layoff. The terms of the employment agreement and the conduct of the employee and employer at the time of the layoff may also impact these consequences. In particular, it may be possible to find that there has been a constructive dismissal if an employee has been laid off, which would mean that they are entitled to certain damages. 

In this post, we will discuss the connection between layoffs and constructive dismissals and what can happen when the employment contract does not contain terms on layoffs. We will discuss whether there can be implied agreement terms to a layoff if the contract does not specify layoff terms. We will discuss a case example, Pham v. Qualified Metal Fabricators Ltd., 2023 ONCA 255, in which there was no implied term that the employee agreed to the layoff. This post will provide important insights for employees seeking to understand their rights when laid off and for employers to understand their obligations if they are laying off employees, including considerations for what should be included in the employment contract at the outset. 

What is the connection between a layoff and a constructive dismissal?

A constructive dismissal can occur where:

  1. The employer breached an essential term of the employment contract or
  2. The employer’s conduct establishes that it no longer intends to be bound by the employment contract. 

When an employer decides to lay off an employee unilaterally, it will be considered a substantial change in the employment contract if there is no express or implied term in the employment agreement that authorizes this course of action. As a result, an employee can pursue a constructive dismissal claim, which applies even for temporary layoffs. 

What happens when there is no term in the employment contract regarding a layoff?

If the employment contract does not contain explicit terms regarding a layoff, the employer may have an implied right to lay off the employee. However, this will only be the case for situations where it is very clear that there was an implied agreement. In particular, if the employee’s co-worker had previously been laid off, this alone is not enough to establish that the employer had a right to lay off the employee. If a right to lay off the employee is implied, it must be very obvious based on the case facts. 

Under sections 56(1)(c) and 56(2) of the Employment Standards Act (ESA), the laid-off employee has 35 weeks to wait and see if they will be recalled to work before ending the employment relationship by beginning their constructive dismissal claim. If the layoff is longer than 35 weeks, it is deemed a termination. 

When is there an implied agreement to a layoff?

While there was previous case law that suggested an employer’s past practices in laying off employees could produce a right to lay off an employee, the Court of Appeal in the Pham case clarified that the case involved a small family-owned business, so the circumstances were not applicable in all cases and this did not represent a general rule. The Court of Appeal also confirmed that at common law (i.e. outside of the employment agreement), the employer does not have a right to lay off an employee. 

If employee condones layoff, there may be no constructive dismissal 

In the Pham case, the employer laid off several employees during the pandemic. The employee was laid off and received several extensions before bringing the matter to court. 

The employee claimed constructive dismissal. 

In their defence, the employer claimed that the employee had condoned the layoff, so he could not claim that he was constructively dismissed. To find this, the employer was required to show that the employee consented freely to the layoff as a change in the employment contract.

At trial, the court found an implied term of agreement towards the layoff, which was justified. 

The employee appealed.

The Court of Appeal found that the lower court judge erred in dismissing the matter, as it was not established that the employee condoned the layoff. 

In particular, the employee had signed a layoff letter, but this was not considered condoning it as it was simply an acknowledgment of receiving the terms the employer had set out regarding the layoff. By signing the letter, the employee was not acknowledging agreement with the terms, just receipt of the terms. 

Also, the fact that the employee did not object to the layoff did not mean he condoned it. This was because the employee is entitled to a reasonable time to assess contractual changes before they are required to take a stance on their legal position. The court recognizes that employees are vulnerable, so allowing them time to consider their next step is important, as it could drastically change the employment relationship. In the Pham case, the court also found that each layoff notice he received would renew the 35-week ESA period, allowing him to wait and see how the employer would proceed. The employee’s silence was insufficient to find that he condoned the layoff. 

Condoning a layoff requires action on the part of the employee, including expressed consent to the layoff or expressing a willingness to work before claiming wrongful dismissal. These situations would justify an employer’s reasonable belief that the employee consented to the change in employment terms. These circumstances were not established in the Pham case.

The Court of Appeal, therefore, concluded that the employee’s case for constructive dismissal should not have been dismissed, and the parties were to return to trial to determine the issue. 

Key Takeaways 

It is important for employers to clearly define the terms of a layoff in an employment contract. Otherwise, it can be difficult to establish that there were implied terms of agreement towards the layoff, and the employee may have grounds to claim constructive dismissal for a unilateral change in the employment agreement. While this may depend on the circumstances of the case as a whole, an employee’s lack of objection to the layoff alone is not enough to establish that they condoned the layoff and could no longer make their claim for constructive dismissal. 

Contact Haynes Law Firm in Toronto for Advice on Layoffs and Constructive Dismissal Claims

Employers and employees should carefully consider the legal consequences of a layoff. If the employment contract does not contain express terms regarding a layoff, an implied agreement towards the layoff must be clear from the circumstances. Otherwise, there may be a wrongful dismissal, and employers may need to provide pay in lieu of reasonable notice. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. For employees, our goal is to ensure that they understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from terminations that are not permitted by the legislation. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.

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Constructive Dismissal Employee Benefits

What Happens When Benefits Are Reduced In An Employment Contract?

An employee’s benefits are an important component of the employment contract. They cannot be reduced during the employee’s tenure without their consent. If an employee’s benefits are reduced, this may amount to a constructive dismissal, in which an employer would be liable for certain damages for unilaterally changing the employment contract. Therefore, it is important to consider the legal implications of requiring a change in an employment contract, including reducing benefits in some way. 

The purpose of this post is to explain what can happen if employee benefits are reduced in an employment contract and what constitutes a constructive dismissal regarding reducing employee benefits and its legal implications. Also, this post will examine a case example, Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402, in which the court found that the employee was constructively dismissed due to a reduction in her benefits despite her salary remaining the same. Employers and employees can take away key takeaways from this post as they seek to understand their rights under an employment contract and prevent liability arising from changes to employment contracts.

What is a constructive dismissal?

First, it is important to understand a constructive dismissal and how it can arise with respect to changes to an employment contract. 

If there has been a change to a fundamental part of the employment contract, the employee may be considered constructively dismissed, although they are not explicitly terminated. Changes to an employment contract can include changes in the employee’s remuneration, job duties, job status, job content, or a demotion. Oftentimes, a combination of changes may amount to a constructive dismissal rather than just one change. Also, the extent of the change will be considered in determining whether there was a fundamental change in the employment contract to result in a constructive dismissal.

To find that there has been a constructive dismissal, the court must find that one or both of the two branches are satisfied. For the first branch, the court will determine whether a breach in the employment contract has occurred. The court must determine if the employer unilaterally changed the contract (i.e. without the employee’s consent). The court must also look to the terms of the employment contract at issue, as it may contain terms that allow the employer the ability to validly make the change if the employee consents or acquiesces to the change (i.e. the employee did not do anything to suggest they were opposed to the change, and did not challenge it when it occurred). The breach in the employment contract must also be detrimental to the employee. After a breach is established, the court must consider if a reasonable person in the same situation as the employee would have thought that the essential terms of the employment contract were being substantially altered. In other words, the test is not whether the actual employee thought the change was substantially altered but whether a reasonable person would come to this conclusion. 

In the second approach, the court would find a constructive dismissal where there has been conduct that would lead a reasonable person to believe that the employer no longer intended to be bound by the employment contract terms. This approach considers the specific circumstances of the events related to the dismissal. 

How does reducing employment benefits relate to constructive dismissal?

If an employer reduces an employee’s benefits, this may be a constructive dismissal if it is considered a fundamental change to the employment contract. The change would need to be significant enough to be considered a fundamental change. Also, it will be considered based on the circumstances, including any other changes that occurred, such as a change in salary, role, etc. To illustrate this, we will discuss the Brake case below, in which the court found that the employee was constructively dismissed as her benefits were significantly lower than her existing role with the company, while her salary remained the same. 

Court finds constructive dismissal where employee benefits reduced, despite same salary for the role

In the Brake case, the employee was a restaurant manager who worked for the company for over 25 years. Management approached her to change her role to First Assistant, which was considered a demotion. She was given the option to accept the new role or be terminated. She refused to accept the new role, so she was terminated. The employee was 62 at the time of termination. 

During her tenure at the company, she received excellent performance reviews until she was transferred to a new location, which suffered from high staff turnover. As a result, she was placed in the company’s progressive discipline program. The court found that the program was unfair to the employee due to the issues associated with that particular location and the fact that the program required higher standards than were expected during her tenure at the company. The employer concluded that the employee had failed the program and was being demoted to First Assistant, which would include the same salary but involve a “meaningfully inferior” reduction to her benefits. The demotion would mean that she would report to other employees she had trained and supervised and who had less experience than her, which would have been a humiliating experience, according to the employee. 

The court found that the employee exhibited a history of being a competent manager. At trial, she was awarded 20 months of pay in lieu of notice and a $6,000 car allowance, $1,307.76 for cell phone costs, and $2,391.84 for health benefits.

The employer appealed, arguing that the employee was not constructively dismissed based on a demotion and reduced benefits. 

However, the Court of Appeal upheld the trial court’s decision that the employee was constructively dismissed, as she was being offered a non-supervisory position with significantly reduced benefits, which amounted to a substantial change to her employment contract without her consent. 

Key Takeaways 

To find if there has been a fundamental change in an employment contract, the court will consider all of the circumstances of the case. A significant reduction in benefits can be considered part of a fundamental change to the employment contract. Still, the court will likely consider other factors, such as whether there was a corresponding demotion. 

Contact Toronto Employment Lawyer Paulette Haynes Law for Advice on Constructive Dismissal Claims

Employment Lawyer Paulette Haynes can assist you with constructive dismissal claims. If an employer unilaterally changes a fundamental term of the employment contract, this can result in a constructive dismissal, which may lead to damages for the employee. For employees, our goal is to ensure that they understand their rights and receive maximum compensation in constructive dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from constructive dismissal claims. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.

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Constructive Dismissal

When Is A Toxic Work Environment Considered Constructive Dismissal?

Many have experienced a toxic work environment at some point in their careers, which can significantly impact other areas of a person’s life. A toxic work environment may involve employees experiencing discrimination, harassment, or unfair disciplinary procedures. These factors may cause an employee to leave their job if it becomes unbearable to remain in this situation. In some cases, a toxic work environment may amount to a constructive dismissal, which may require compensation from the employer. 

In this article, we will discuss the concept of constructive dismissal, including when it may occur in toxic work environments. We will examine a recent case, Laurie Pal v Dr. W. Khan and Dr. S. Vaid Dentistry Professional Corporation o/a Cataraqui Woods Dentistry, 2023 CanLII 56732 (ON LRB), in which the court found that an employee was constructively dismissed due to the toxic work environment created by the employer. We will also provide key insights for employees subject to constructive dismissal due to a toxic work environment and for employers seeking to avoid constructive dismissals or other claims that may arise, such as discrimination, harassment, etc. 

What is constructive dismissal?

Constructive dismissal typically occurs when an employer has changed the terms of the employment agreement that was initially agreed upon. The change is to be significant, meaning that something fundamental in the employee’s role has been altered. Also, the change must have been adopted without the employee’s permission. 

Another form of constructive dismissal is when a work environment has become toxic to a point at which an employee can objectively no longer continue working there. It can involve harassment, discrimination, violence, or subjecting the employee to unwarranted disciplinary procedures. 

The employee has the onus to prove that there was a toxic work environment to result in a constructive dismissal. The employee must prove facts that demonstrate that the employer acted in such a way that was fundamentally incompatible with continuing an employment relationship. This can include situations where an employer acted in such a way that breaches an implied term of every employment contract that an employee should be treated with respect and civility. 

In other words, a constructive dismissal due to a toxic work environment can occur where an employer’s behaviour is done to cause an employee to resign from their position effectively. This is an objective test. The employee must show that a reasonable person should not be expected to continue employment. 

This is not to say that employers cannot criticize their employees if their work is unsatisfactory. Generally, unpleasantness, rudeness, or misunderstanding of the facts would not be enough to establish a constructive dismissal due to a toxic work environment. 

However, at a certain point, an employer’s conduct may cross the line, and a reasonable person would not be expected to continue their employment, as it is intolerable. This would include situations where there is serious wrongful behaviour by the employer, including egregious stand-alone incidents or persistent wrongful behaviour. Constructive dismissal can also be determined even if the employee does not ultimately resign. 

Employee subject to bullying, disrespectful and verbally abusive behaviour from employer 

In a recent Ontario case, Laurie Pal v Dr. W. Khan and Dr. S. Vaid Dentistry Professional Corporation o/a Cataraqui Woods Dentistry, 2023 CanLII 56732 (ON LRB), the court found that there was constructive dismissal due to a toxic work environment created by the employer. 

The employee was a dental hygienist, and the employer was one of the dentists. 

The court found that the employer had managed his employees in a controlling and domineering way, including embarrassing them at staff meetings or harshly criticizing their work. However, there was no evidence that the employee was publicly embarrassed, and her work was monitored by another party who did not bully the employee. 

The employer also made rude comments about former employees and patients. However, the court found that these comments were not directed at the employee, and she did not raise them as an issue. After the comments were made, the employee also continued to work there for several years. 

The employer also discussed his support for Mr. Ghomeshi during his trial regarding sexual abuse. The employee did not raise this issue with the employer. The employer also made comments about Catholic schools and teachers, expressing that he thought there were many pedophiles in the Catholic Church and referred to the teachers are perverts. Despite knowing that her children attended a Catholic school, the employer commented to the employee. 

During the COVID-19 pandemic, the employer urged the employee to attend work as soon as possible. He had requested for her and other employees to avoid testing for COVID-19 and said that he considered this a form of disloyalty to him. When the employee took a test in June 2020, she was reprimanded during a meeting. Her work was also reassigned to other hygienists. When she resigned a few months later, the employer commented that if her mental health did not permit her to continue her employment here, she would not be able to work anywhere else as a hygienist. This meeting was upsetting to the employee. 

The court found that the employer’s comments about Catholic schools and teachers supported a finding of constructive dismissal for creating a toxic and unbearable work environment. The court considered that the employer knew that the employee’s children attended a Catholic school and that these comments were insulting and demeaning as they suggested that, as a parent, the employee was putting her children at risk of sexual abuse. 

The court found that the employer asking that the employees return as soon as possible was consistent with the policies of health authorities at the time, and this did not contribute to a toxic workplace. On the other hand, his insistence that employees not test for infectious diseases like COVID-19 when they may have been exposed was seriously inappropriate. In particular, dental hygienists are at a higher risk of infection as they work closely with the public. The employer’s pressure on the employee not to test would put her at risk and not allow her to protect herself, her family, and her patients. It is reasonable for her to take a test after potential exposure, as was the case here. Therefore, the work environment was considered toxic and unbearable as she was pressured to choose between her health and safety and her employer’s directions. 

Contact Haynes Law Firm in Toronto for Advice on Constructive Dismissal and Workplace Harassment Claims

Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with constructive dismissal or workplace harassment. In some situations, a toxic work environment may be considered a constructive dismissal if it becomes unbearable and intolerable for a reasonable person to continue working there. For employees, our goal is to ensure that they understand their rights and receive maximum compensation in constructive dismissal or workplace harassment cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from constructive dismissals and harassment claims. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.

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Constructive Dismissal

How Long Is Too Long? Waiting And Constructive Dismissal Claims

If an employer makes a fundamental change to an employment contract, it may be possible for the employee to bring a claim for constructive dismissal. However, if the employee waits too long to resign, they may be deemed to have condoned the change and be unable to bring a claim.

This article looks at constructive dismissal in the context of layoffs and how long the employee has to object before they will have condoned the change. We also look at a recent decision of the Court of Appeal for Ontario in which an employee argued that he had been constructively dismissed after he was laid off during the COVID-19 pandemic.

A layoff might constitute a constructive dismissal

There are two ways that an employee can establish that they have been constructively dismissed:

  • the employer has breached an essential term of the employment contract; or
  • the employer has engaged in a course of conduct that shows that it no longer intends to be bound by the contract. 

For the first route, the change to the employment relationship needs to be significant and instituted by the employer on a unilateral basis. Putting an employee on a temporary layoff may meet these requirements unless the employment contract permits the employer to lay off the employee, either expressly or impliedly. Therefore, an employee may be able to pursue a constructive dismissal claim if they have been laid off. 

The ESA deems certain layoffs to constitute termination

Section 56 of the Ontario Employment Standards Act (ESA) states that an employer terminates an employee if they lay them off for longer than “a temporary lay-off,” which is defined to include a layoff of fewer than 35 weeks in any period of 52 consecutive weeks. This means a layoff of 35 weeks may be deemed a termination of employment. Prior to this, the employee can wait and see if their employer recalls them. 

Despite these rules, courts have decided that a layoff being conducted in accordance with the ESA does not impact an employee’s common law rights, including the ability to claim constructive dismissal. 

The COVID-19 pandemic brought certain changes to the ESA in respect of layoffs. The Government made a new regulation that deemed, for a specified temporary period, certain employees to be on unpaid infectious disease emergency leave (IDEL). This applied when hours of work were temporarily reduced or eliminated for reasons related to COVID-19. The regulation meant that such employees were not considered to be laid off or constructively dismissed. 

Condoning a layoff prevents an employee from bringing a constructive dismissal claim

In order for an employee to treat a layoff as a constructive dismissal, they must not have condoned the change. For the employee to have condoned the change, the employer needs to believe, viewed from an objective perspective, that the employee consented freely to the change. The employer needs to prove that the employee condoned the change to the employment relationship if it wishes to rely on this as a defence to a constructive dismissal claim. 

If the employee objects to the significant and unilateral change in their employment terms within a reasonable time, they will not have condoned the situation. 

Plaintiff started court proceedings after his layoff was extended three times

In Pham v Qualified Metal Fabricators Ltd., the plaintiff was a welder that had worked for his employer for about 20 years. As a result of the COVID-19 pandemic, the defendant employer laid off 30 employees in March 2020, including most of its welders, including the plaintiff. 

The plaintiff’s manager said that the layoff was temporary, and the plaintiff was given a letter stating that it was for 13 weeks. In June 2020, the defendant extended the layoff for up to 35 weeks. The layoff was extended again in September and December, with the employer stating that it was subject to the IDEL regulation.

In December, the plaintiff spoke to a lawyer, and he commenced proceedings against the defendant the next month. In February 2021, shortly after the plaintiff got a new job, the defendant sent a letter recalling him. 

Defendant argued the plaintiff had condoned the layoffs

The defendant applied to the court to have the claim dismissed, arguing that the plaintiff had condoned his layoff. 

The employer argued that the plaintiff’s employment contract had an implied term permitting layoffs. It also claimed that the plaintiff condoned the layoffs by signing a letter, seeking legal advice and not protesting against the layoff. 

The motion judge agreed with the defendant and dismissed the plaintiff’s action. The plaintiff appealed. 

There is a live issue as to whether there was condonation; constructive dismissal claim to proceed to trial

The Court of Appeal decided that the fact that the defendant had laid off other workers did not imply a term permitting layoff into the plaintiff’s contract. 

The Court also decided that the record did not establish that the plaintiff had condoned the layoff. Signing a layoff letter proved no more than an acknowledgment of receipt. It also said:

“an employee is permitted reasonable time to assess contractual changes before they are forced to take an irrevocable legal position.”

The Court decided there was a genuine issue as to whether the plaintiff had taken a reasonable time to assess his situation before advancing a constructive dismissal claim. There was no evidence that the plaintiff had taken positive action to consent to the layoff. There was also no requirement for the plaintiff to ask his employer when he might be called back to work before commencing an action for constructive dismissal.

The Court ordered the plaintiff’s claim to continue to trial, finding that there was a genuine issue as to whether the plaintiff had condoned the layoff or whether he had been constructively dismissed. 

Contact Haynes Law Firm in Toronto for Guidance on Constructive Dismissal

If you are either an employee that is considering resigning and claiming constructive dismissal, or an employer seeking to avoid allegations of constructive dismissal, you need timely advice from an experienced employment lawyer. The Haynes Law Firm is here to assist you. Please contact us online or call us at 416.593.2731.

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Constructive Dismissal Employee Terminations

Laid Off Because Of Covid-19 – Can You Claim Constructive Dismissal?

Constructive dismissal is where an employer makes a unilateral change to the employer-employee relationship outside the scope of the original employment contract. Changing a fundamental aspect of the agreement, such as placing an employee on a temporary layoff unless this possibility is indicated in the contract, without consent, may be considered termination. 

This article looks at whether a layoff caused by COVID-19 could constitute constructive dismissal. We also look at a recent decision of the Court of Appeal for Ontario in which a Tim Hortons employee made such a claim.

What is constructive dismissal?

There are different forms of constructive dismissal. Relevant to this discussion is where an employee demonstrates that the employer has, by a single unilateral act, breached an essential term of the employment contract by a single unilateral act. This form of constructive dismissal might be found where there has been a significant change to the employee’s role, working environment or salary, such as when an employee has been placed on a temporary layoff. 

If an employee is constructively dismissed, they are entitled to pay in place of reasonable notice and potentially severance pay, even if they have resigned voluntarily.

COVID-19 related amendments to the Employment Standards Act 

In March 2020, the Employment Standards Act 2000 (ESA) was amended to create a new category of leave – the infectious disease emergency leave (IDEL). The ESA prescribes the circumstances in which an employee is entitled to IDEL without pay if the employee will not perform their position duties because of a declared emergency. 

Under the Infectious Disease Emergency Leave Regulation 2020 (IDEL Regulation), made in May 2020, COVID-19 was designed as an infectious disease for the purpose of entitlement to IDEL for a period ending on July 30, 2022.

Relevantly, the IDEL Regulation provides that:

  • An employee whose hours of work are temporarily reduced or eliminated by the employer, or whose wages are temporarily reduced by the employer, for reasons related to the designated infectious disease during the COVID-19 period is not considered to be laid off under the ESA unless there is a permanent discontinuance of the employer’s business at an establishment.
  • A temporary reduction or elimination of an employee’s hours of work, or an employee’s wages, by the employer for reasons related to the designated infectious disease does not constitute constructive dismissal if it occurred during the COVID-19 period.

However, section 8(1) of the ESA says that no civil remedy of an employee against his or her employer is affected by the Act.

An employee claims constructive dismissal following temporary layoff in March 2020

In Taylor v Hanley Hospitality Inc., the plaintiff employee argued that she was placed on a temporary layoff without pay in March 2020. She claimed that the defendant’s employer, which operated as Tim Hortons, continued its operations with a reduced staff and that her temporary lay-off was, therefore a business decision made in response to unfavourable economic conditions and not related to COVID-19.

The employee commenced an action for damages for constructive dismissal in July 2020. She was later recalled to her employment in September 2020. 

The employer argued that it had no choice but to temporarily lay off over 50 employees following the Ontario Government’s declaration of a state of emergency and imposition of emergency measures to curb the spread of COVID-19. It claimed that the employee was on IDEL and was never terminated.

Contrary to prior Superior Court decision, judge decides that layoff because of COVID-19 precludes constructive dismissal claim

The motion judge dismissed the employee’s claim, finding that the employee was on IDEL and therefore was deemed not to be laid off or constructively dismissed for all purposes. Her Honour said that section 8(1) of the ESA simply meant that the ESA does not set out an exclusive forum for addressing matters set out in the Act. In other words, the employee can make a complaint under the Act or seek redress in the courts.

Her Honour concluded:

I agree with Tim Hortons that exceptional situations call for exceptional measures. The Ontario Government recognized the inherent unfairness in subjecting employers to wrongful dismissal claims as a result of the government imposing a state of emergency. If they did not take action, these claims would only serve to make the economic crisis from the pandemic even worse. It is just common sense.

This decision disagreed with a prior decision in which the Superior Court decided that the IDEL Regulation did not affect an employee’s right to pursue a constructive dismissal claim at common law.

Court of Appeal overturns decision and declines to decide whether COVID-19 layoff can constitute constructive dismissal

The Tim Hortons employee succeeded on appeal. The Court of Appeal decided that the motion judge erroneously dismissed the employee’s action by agreeing with Tim Hortons’ version of the facts, even though they were disputed by the employee and not subject to adjudication at a trial. For example, the parties disagreed as to the reasons for the employee’s layoff. 

As a result, the Court of Appeal sent the case back for determination before another judge of the Superior Court.

The Court of Appeal refused to interpret the ESA and IDEL Regulation, deciding that the statutory interpretation issue should not be resolved separately from the factual issues in the case. As a result, whether an IDEL precludes a constructive dismissal claim has not yet been determined at the Court of Appeal level.

Contact Haynes Law Firm in Toronto for Guidance on Constructive Dismissal 

Haynes Law Firm helps employers and employees throughout Ontario achieve effective solutions to legal issues and conflict management in employment law and civil litigation. We help employees seek appropriate remedies for constructive dismissal. Paulette Haynes has in-depth experience litigating constructive dismissal claims, making her an extremely effective advocate for her employee clients. Paulette also works with employers to proactively address potential areas of concern before they become a problem. Avoid unintentionally triggering costly constructive dismissal claims with our trusted guidance. Please contact us online or call us at 416.593.2731.

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Constructive Dismissal

What Is Constructive Dismissal?

Constructive dismissal is where an employer makes a unilateral change to the employer-employee relationship outside the scope of the original employment contract. Changing a fundamental aspect of the agreement without consent may be considered termination. If an employee is constructively dismissed, they are entitled to pay in place of reasonable notice and potentially also severance pay, even if the employee has resigned voluntarily.

This article looks at some different forms of constructive dismissal and a recent case of the Superior Court of Justice of Ontario in which an employee claimed that he was constructively dismissed. The Court found that he had not proved that he was constructively dismissed and therefore that he was not entitled to damages. 

Forms of constructive dismissal

The burden rests on the employee to establish that they have been constructively dismissed. It is the employer’s perceived intention no longer to be bound by the employment contract that gives rise to constructive dismissal. A plaintiff can follow two routes to establish constructive dismissal.

Single unilateral act breaches an essential term of the contract

The first option for the employee is to demonstrate that the employer has, by a single unilateral act, breached an essential term of the employment contract. 

There are two steps involved in this – firstly, the employer’s conduct must be found to breach the contract, and secondly, the conduct must substantially alter an essential term of the contract. Step one is an objective test (the conduct either did or did not breach the contract), whereas step two depends on the perspective of a reasonable person in the same circumstances as the employee (a reasonable person in the employee’s situation either would or would not find that the conduct substantially altered an essential term of the contract). 

This form of constructive dismissal might be found where there has been a significant change to the employee’s role, working environment or salary. This might include a demotion, relocation to a new city, changing shifts from day to night, or a significant reduction in compensation such as bonus entitlements or commission. 

Cumulative effect of a series of acts shows that the employer no longer intends to be bound by the contract

The second option is for the employee to show that a series of acts, taken together, show that the employee no longer intends to be bound by the employment contract. This is also determined from the perspective of a reasonable person in the same circumstances as the employee.

This form of constructive dismissal might be found where a workplace has become toxic or poisoned for one or more employees, such as if they are subject to harassment or discrimination. 

An employee claims constructive dismissal following an alleged demotion and title change by the employer

In Tonkin v Paris Kitchens, a 69-year-old employee resigned following an alleged “humiliating and demeaning” change in job title from Regional Sales Manager to Project Manager. He was to receive the same salary. The employer designed and manufactured custom kitchen cabinetry. It claimed that the employee was only ever a Senior Project Manager and that he was not demoted, and that the employee was upset after the employer posted a job advertisement for a Business Development Representative.

Justice Gibson accepted the employer’s evidence that the employee did not exercise any significant sales or business development function. Despite the fact that the employer sent the employee an email with a Regional Sales Manager job description, he was solely employed as a Project Manager and was never performance managed in connection with failing to meet the job description in the email. 

The employer did not evince an intention not to be bound by the contract, so the employee’s resignation was voluntary

His Honour first examined whether the employer engaged in a single unilateral act that breached an essential term of the employment contract. His Honour noted that the employee did not act in any meaningful fashion as a Sales Manager and instead was employed as a Project Manager. As such, the formal change in the title led to no significant change in responsibilities and duties. The employee was frustrated after being overlooked for a role in business development. Justice Gibson, therefore, decided that the employer did not breach an essential term of the employment contract. 

Turning to whether there were a series of acts demonstrating that the employer no longer intended to be bound by the employment contract, his Honour decided that there were no changes in reality in respect of the employee. His salary and benefits were to have been the same and he was asked to continue doing the same work that he had been doing for many years. There was no significant change in responsibility. A reasonable person in the position of the employee would not have concluded otherwise.

Justice Gibson concluded that the employee did not satisfy the onus on him to demonstrate that he was constructively dismissed. Therefore, he voluntarily left employment and was not entitled to damages. 

Contact Haynes Law Firm in Toronto for Guidance on Constructive Dismissal 

It is important to speak with a knowledgeable employment lawyer to assess a potential constructive dismissal claim before resigning, to ensure you are well-positioned to bring a successful claim. Contact us as soon as possible to preserve your claim – if you fail to resign within a reasonable time, a court may view your inaction as passive acceptance of the circumstances.

Haynes Law Firm helps employers and employees throughout Ontario achieve effective solutions to legal issues and conflict management in employment law and civil litigation. We help employees seek appropriate remedies for constructive dismissal. Paulette Haynes has in-depth experience litigating constructive dismissal claims, which makes her an extremely effective advocate on behalf of her employee clients. Paulette also works with employers to proactively address potential areas of concern before they become a problem. Avoid unintentionally triggering costly constructive dismissal claims with our trusted guidance. Please contact us online or call us at 416.593.2731.