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I’ve been constructively dismissed – or have I?

Gord McGuire is a partner with Adair Barristers LLP, Toronto.

When you've been actually dismissed by your employer, it's pretty hard to miss. Whether you've been politely informed by human resources that the company is downsizing, or your boss has bellowed in true Trumpian fashion "YOU'RE FIRED!" you get the drift: you're out of a job.

But determining whether your employer has through its actions constructively dismissed you is another matter. That situation can arise if your employer has imposed changes to the working relationship to the extent that, in the eyes of the law, you've been effectively dismissed, even if no one has come out and said so.

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As with actual dismissal, you are generally entitled upon being constructively dismissed to compensation by way of a severance package. The problem is that the pink slip you've received in this case is invisible. You may be legally entitled to stop working and demand severance. But chances are your employer isn't going to readily acknowledge this and cut you a cheque – unless you play your cards right.

What exactly is constructive dismissal, anyway?

Constructive dismissal is based on the notion that an agreement (i.e. a contract) governs the relationship between you and your employer. The terms of this agreement are typically partly written and partly unwritten, and include when and where you will work; what your responsibilities will be; and how you will be paid.

In light of this contract, there are legal consequences when your employer attempts to change the circumstances of your job without your consent. If your employer imposes a change that substantially alters a fundamental term of your employment, and you do not accept this alteration, the employer is considered to have 'repudiated' your contract – that is, to have treated that contract as at an end.

If this happens, you're entitled to 'accept' the repudiation, stop working, and seek a severance package.

Have I been constructively dismissed?

Start by asking yourself two questions.

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Is the employer imposing a change to a fundamental aspect of your employment? Your employer has the right to make relatively small changes (even unilaterally). But the question is: would a reasonable person conclude that that a fundamental aspect of the employment contract has been, or is being, substantially changed? This could include:

  • A significant decrease in your compensation, or your opportunity to earn commissions;
  • A demotion in title, responsibilities or reporting relationships; or
  • A hostile or poisoned working environment.


Were these significant changes to your employment imposed unilaterally? If you've agreed to the changes in advance, or are taken to have accepted them after the fact, there is no constructive dismissal. Similarly, there's no constructive dismissal if the employment contract allows your employer to impose the changes in question without consulting you first.

So what should I do?

How you respond to a potential constructive dismissal situation depends on what you want to achieve. Usually, the employee wants their employer to acknowledge that he/she has effectively been fired, and to provide a severance package accordingly.

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The difficulty lies in how and when you broach the issue with your employer. What makes this difficult is the uncertainty of whether what happened would be seen as constructive dismissal, in the eyes of a court. Since being constructively dismissed is a legal construct, you can never know for sure it's happened – until a court says it has. And getting that determination from a court can be expensive and risky, even with a strong case.

If you have any inkling that the changes being thrust upon you might constitute constructive dismissal, you should consult with an employment lawyer without delay. Your lawyer can then gauge the strength of your case and help devise a strategy to obtain the result you want.

No single strategy works in all cases, so what will work will depend on the strength of your claim; your re-employment prospects; and the politics and personalities in your workplace. You should also consider your risk tolerance and appetite for confrontation.

Sound stressful? It certainly can be. But it's important to remember that the situation can be every bit as stressful for your employer. After all, the one thing your employer wants less than a lawsuit is being stuck with an employee with whom their relationship has completely broken down. If the employee handles the situation properly, the employer is likely to realize that it's better to acknowledge the dismissal and compensate the employee fairly than to risk litigation and the continuation of an unhealthy relationship indefinitely.

Disclaimer: This is a high-level overview of certain general principles of employment law for non-unionized employees in Canada's common law provinces, and should not be construed as legal advice.

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