What is constructive dismissal in Ontario?
Constructive dismissal happens when an employer makes a significant change to a fundamental term or condition of employment without the employee's actual or implied consent. Ontario's guide to the Employment Standards Act, 2000 uses this description. The employee was not told the job was over, but the change is serious enough that the law may treat the employment as having ended.
When a constructive dismissal is established, the employee generally has the same rights as someone who was let go without cause: notice or pay in lieu of notice under the Act, and, depending on the contract, common-law reasonable notice. Some employees also qualify for severance pay under the Act.
What can count as a fundamental change?
Not every change is constructive dismissal. Employers can usually make minor changes to how work is organized, and the question is whether a reasonable person in the employee's position would see the change as substantial. Situations that may qualify include:
- A significant reduction in salary, commission or benefits.
- A demotion, or a major loss of duties, responsibilities or status.
- A significant change to hours, shifts or work location.
- A temporary layoff that the contract does not allow.
- Harassment or abuse that the employer causes or does not address, making continued employment intolerable.
- An ultimatum to resign or be let go, followed by a resignation.
Does the employee have to resign?
Under the Employment Standards Act, an employer's actions count as a termination only if the employee resigns in response to the change within a reasonable period. That makes the timing important in two directions.
Resigning without fully understanding the position carries risk: if the change turns out not to be fundamental, the resignation may simply end the job with nothing owed. Staying too long carries a different risk: continuing to work under new terms for an extended period without objecting may be treated as accepting them, a concept courts call condonation. In some situations, courts have also expected an employee to keep working for the same employer during the notice period, where the working relationship has not broken down.
For these reasons, many people find it helpful to understand their options before they resign or accept a change. Some employees raise an objection in writing while discussions continue, so that the record shows they did not agree.
How is constructive dismissal proved?
The employee generally has to show what the original terms were, what changed, and that the change was made without their agreement. Useful records often include:
- The employment contract, offer letter and any job description.
- Pay stubs or commission statements from before and after the change.
- Emails, letters or messages announcing or discussing the change.
- Notes made at the time about conversations and dates, and any written objection.
Temporary layoffs
A temporary layoff under the Act has limits on how long it can last. If a layoff runs longer than the Act permits, the employer is considered to have terminated the employment, and the employee will generally be entitled to termination pay. Separately, under the common law, an employer that lays off an employee without a contractual right to do so may be found to have constructively dismissed them. Whether a layoff was allowed depends on the contract and the circumstances.
What compensation may be owed?
The Employment Standards Act sets minimum notice, or pay instead of notice, of one week for each completed year of service, up to eight weeks, once an employee has three months of service. Severance pay under the Act is a separate amount for employees with five or more years of service whose employer meets the payroll or closure conditions. A contract cannot reduce these minimums.
Where the contract does not validly limit notice, courts assess common-law reasonable notice using factors such as age, length of service, the kind of position and the availability of similar work. Amounts vary widely, and no guide can say what a particular situation is worth.
Time limits
For many employment claims in Ontario, the general limitation period for a court claim is two years. A claim under the Employment Standards Act to the Ministry of Labour generally also has a two-year limit, and the same issue generally cannot be pursued both through a Ministry claim and in court. Where harassment or discrimination is linked to a protected ground under the Human Rights Code, an application to the Human Rights Tribunal of Ontario must generally be filed within one year of the last incident.
Lutfi Law reviews changes to employment for employees across Ontario, online by video or phone. Initial consultation free for employment and human rights matters.
Last reviewed: October 2026 · Lutfi Law
Sources: ontario.ca · ontario.ca · ontario.ca · ontario.ca