A constructive dismissal is where an employer makes a substantial change to the terms of an employee’s employment without the employee’s consent or demonstrates an intention to no longer be bound by the terms of the employment contract so that the employee has the option of treating his or her employment as having been terminated.

What Constitutes a Constructive Dismissal

To be considered as a constructive dismissal, the change to the terms of employment must be very fundamental to the employment contract. A typical example can be that when the employer cuts the hours of work or lowers the pay of the employee. It may also occur when the employer modifies the employee’s duty or asks the employee to relocate. However, the line between a fundamental change and a reasonable modification to one’s duties can be difficult to draw. It is therefore advisable that an employee consult a lawyer when these scenarios arise.

Claims and Remedies

In Ontario, there are 2 ways that one can make a constructive dismissal claim. The first route is to make a complaint to the Ministry of Labour, which enforces the Employment Standards Act (ESA). The employee can also directly bring their claim to the court.

Generally, when an employee is constructively dismissed, you can claim pay in lieu of notice. It shall be noted that an employee may also be able to claim severance pay if they have worked for the employer for five or more years, and the employer either has a payroll in Ontario of at least $2.5 million, or severed the employment of 50 or more employees in a six-month period because all or part of the business is permanently closed.

It shall be noted that the ESA only provides minimum standards. Some employees may have greater rights under the common law, and a complaint to the Ministry of Labour can only help an employee obtain their entitlements under the ESA.

Changes During COVID-19

As of March 21, 2020, employees cannot claim constructive dismissal based on the ESA for temporary cuts to their pay or hours of work because of COVID-19, according to Regulation 228/20 issued by the Ontario government on March 29, 2020. These employees are deemed to be on “emergency leave”.

Specifically, an employee encountering either of the following situations are barred from making a constructive dismissal claim under the ESA:

  • a temporary reduction or elimination of the hours of work by the employer for reasons related to COVID-19; or
  • a temporary reduction in the wages by the employer for reasons related to COVID-19.

This does not apply to an employee who resigned within a reasonable period in response to a constructive dismissal before the Regulation came into force on May 29, 2020. In addition, since the Regulation only deals with constrictive dismissal claims under the Employment Standards Act but not the common law, it may not necessarily bar employees from bringing common law constructive dismissal claims to the court.

On December 17, 2020, the Ontario Government amended Regulation 228/20 by extending the “COVID-19 Period” to July 3, 2021. In other words, employees who experience cuts to their pay or hours of work due to COVID-19 will be on a deemed emergency leave until July 3, 2021.

If you are experiencing constructive dismissal issues, Toronto employment lawyer, Stacey ball can help you determine your legal options. Please call us at 416-921-7997, extension 227.