Constructive Dismissal
What is constructive dismissal?
Constructive dismissal happens when an employer makes a fundamental, unilateral change to the terms of employment, or when the workplace becomes intolerable due to a poisoned environment. The law treats that as a termination even if you were not formally fired.
Typical triggers include significant cuts to pay, demotions, major changes to duties, hours, or location, prolonged unpaid layoffs, or harassment that creates a toxic environment.
Do not resign before you understand your rights. A decision to resign can affect what you may be owed.
Common signs you should get advice
• A significant reduction in base pay or total compensation
• A demotion in title or responsibility
• Major changes to core duties or reporting structure
• A relocation that meaningfully impacts commute or living arrangements
• Substantial changes to hours or shift patterns
• A prolonged unpaid layoff or “suspension” from work
• Harassment, bullying, or a poisoned work environment
• Health and safety concerns not addressed by the employer
• Unilateral changes to bonus, commission, or incentive plans
• Pressure to accept new terms or sign quickly without time to review
Should I resign?
Don’t rush. Resignation can have legal and financial consequences, including for severance and employment insurance.
In some cases, employees consider working “under protest” while seeking advice. Acting without protest for too long may be seen as accepting (or “condoning”) the change. Your duties to mitigate losses may also be considered.
Timelines matter. Get advice early to avoid steps that could limit your options.
Temporary layoffs and major changes
Temporary layoffs and other major changes may be restricted unless your contract clearly allows them. Even where a policy exists, how it was implemented can matter.
Contract wording, handbooks, and past practices can change outcomes. A careful review is essential.
Why get a legal review early?
Most packages and change notices come with a release or require quick decisions. Once you sign, you may be giving up legal rights. Strategy matters before you file any ESA complaint or start a lawsuit.
Value is more than base pay. A review looks at benefits continuation, bonus or commission eligibility, equity or stock awards, and practical items like reference letters and Record of Employment details.
Choosing the right path - ESA complaint, negotiation, or court - affects timing, procedure, and potential recovery. Deadlines must be preserved.
What we assess in your case (Ontario)
• Your employment contract and any updates or policy manuals
• Termination, layoff, relocation, and change clauses and their enforceability
• ESA minimums vs. potential common-law notice and severance
• Benefits continuation (health, dental, disability) and vacation pay
• Bonus, commission, and incentive plans during any notice period
• Equity and stock plans (options, RSUs, ESPPs) and vesting rules
• Non-competition and non-solicitation clauses and practical impact
• Payment structure (lump sum vs. salary continuance) and timing
• Mitigation or “stop” clauses that reduce payments if you find new work
• The strength of your documentation and evidence
Our Ontario-focused process
Document intake and quick review: we confirm jurisdiction, timelines, and your goals.
Entitlements analysis: we assess ESA and potential common-law entitlements side by side.
Strategy and negotiation: we advise on counterproposals, clarifications, and risk.
Finalizing terms: we ensure the written agreement reflects what was negotiated and discuss next steps.
What to document right now
• Employment agreement and any amendments or new contracts
• Recent pay stubs and compensation summaries
• Bonus, commission, and equity plan documents
• Emails and memos about changes to role, pay, hours, or location
• Calendar entries or screenshots showing schedules and shifts
• Notes of incidents, meetings, or complaints (dates, what was said, who was present)
• Any termination, layoff, or change letters and any release
Who we help across Ontario
We assist non-unionized employees and employers across Ontario, including Toronto, Ottawa, Mississauga, Brampton, Hamilton, London, Kitchener-Waterloo, Markham, Vaughan, and Windsor. Virtual consultations are available province-wide.
FAQs
Do I have to quit immediately?
Usually, no. Get advice first. Your response strategy can affect entitlements and next steps.
Is a pay cut constructive dismissal?
A significant reduction can be, depending on all the circumstances and your contract. It’s fact-specific.
Does harassment or a toxic environment count?
A poisoned work environment can amount to constructive dismissal. Document incidents and seek help promptly.
What about temporary layoffs?
Layoffs may be restricted unless clearly permitted by contract. Duration and context matter - get advice on your options.
How long do I have to act?
Strict timelines apply. Many civil employment claims have a two-year limitation period from when the claim is discovered.
I’m in banking/telecom/airlines - do rules differ?
Federally regulated employees may fall under the Canada Labour Code, which has different procedures and remedies.
Speak with an Ontario employment lawyer
Book a confidential consultation to understand your options in clear terms so you can decide how to proceed. You’ll get practical guidance on risks, timelines, and next steps.