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Constructive Dismissal in Canada: Understanding the Concept and Recent Ontario Court Cases from an Employment Lawyer

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Constructive dismissal is not a termination by the employer, but rather a resignation by the employee due to intolerable working conditions created by the employer. While there is no single definition of constructive dismissal, some common examples include significant salary cuts, demotion, substantial changes in job responsibilities, hostile work environment, or breach of fundamental terms of the employment contract.


Elements of Constructive Dismissal:


While not exhaustive, to establish a claim for constructive dismissal, certain elements need to be present:


  1. Breach of Contract: The employer must have made substantial changes to the employment contract without the employee's consent.

  2. Intentional or Unilateral Changes: The changes must be initiated by the employer and must not have been agreed upon by the employee.

  3. Fundamental Breach: The changes made by the employer must be significant enough to breach the fundamental terms of the employment contract.

  4. Employee's Resignation: The employee must demonstrate that they resigned due to the changes imposed by the employer.


Recent Ontario Court Cases:


Let's explore some recent court cases from Ontario that shed light on constructive dismissal:


Stomp v. 3M Canada (2023)

The Ontario Superior Court allowed (at the preliminary motion stage) a claim of constructive dismissal and Human Rights Code violation.. The lawsuit sought a remedy for the constructive violation of an implied term or duty that "the employer will treat the employee with civility, decency, respect and dignity." This is a claim for constructive dismissal based on mistreatment and discrimination. Not simply financial modification/demotion.


Farwell v. Citair Inc. (2014):

The Ontario Court of Appeal ruled in favor of an employee who had been constructively dismissed after the employer unilaterally reduced his salary and commission structure. The court reaffirmed that a single significant change to the employment contract, such as a substantial reduction in compensation, could amount to constructive dismissal.


Evans v. Paradigm Capital Inc. (2018):

In this case, the Ontario Court of Appeal held that a series of actions by the employer, including a demotion and hostile work environment, constituted constructive dismissal. The court emphasized that a cumulative effect of changes can lead to a finding of constructive dismissal.


Cormier v. 1772887 Ontario Ltd. (2019):

This case involved an employee who resigned due to a poisoned work environment created by the employer's conduct. The Ontario Superior Court of Justice found in favor of the employee, stating that constructive dismissal can occur when the employer's actions fundamentally undermine the employment relationship.


Constructive dismissal is a significant aspect of Canadian employment law that protects employees from intolerable working conditions. Ontario courts have consistently recognized the rights of employees in constructive dismissal cases, emphasizing that toxic work environment and substantial changes to the employment contract without consent can lead to a finding of constructive dismissal.


Employees who believe they have been constructively dismissed should consult with a leading employment lawyer at Stitz Litigation to understand their rights and seek legal remedies if necessary. Give us a call at 647-243-4350.

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These materials do not constitute legal advice and do not create a solicitor-client relationship between you and Michael Stitz, Stitz Litigation PC and/or Stitz Law. The author makes no claims, promises or guarantees about the accuracy, completeness, or adequacy of any information linked or referred to or contained on Stitzlaw.ca and its related web pages. No person should act or refrain from acting in reliance on any information found on this website without first obtaining appropriate professional advice from a lawyer duly licensed to practice law in the relevant province, state, territory or country. The use of live chat or related correspondence does not create any relationship (solicitor/client or otherwise) unless you have signed and entered into a retainer agreement with Michael Stitz, Stitz Litigation PC, Stitz Law or any other related entity.

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