Constructive Dismissal and Covid-19

Everyone, however, has the same question.  Do I have a legal case because of these changes?

The answer, as is often the case in law, is it depends. 

What is Constructive Dismissal?

Generally, constructive dismissal is when your employer makes a significant unilateral change to your employment that shows it no longer wants to be bound by your contract.  This could include lowering your pay, a demotion, or suspension. It may also include significant changes to your job duties, or a reduction in hours.  

Constructive dismissal can also include situations where an employer’s treatment of an employee or its actions create a poisoned work environment which makes continued employment intolerable. Except for particularly egregious stand-alone incidents, a poisoned workplace is not created unless the serious wrongful behaviour is persistent or repeated.

Common Law vs Employment Standards 

The Employment Standards Act (ESA) provides for the minimum employment requirements in Ontario.  It states that an employee has been terminated if there has been a constructive dismissal.  

However, the Ontario government has recently amended the ESA to address reduced hours of work and layoffs caused by COVID-19. Among other important changes, the new ESA regulation states that a reduction in an employee’s hours of work or wages for reasons related to Covid-19 from March 1, 2020 until six weeks after the end of the State of Emergency will not be a constructive dismissal under the ESA. 

On its face, this new regulation takes away an employee’s right to claim constructive dismissal. 

However, there is an argument that this only removes the employee’s right to claim constructive dismissal under the ESA and not under the common law (judge-made law).  Those employees who do not have employment contracts that refer to constructive dismissal or do not have contracts with termination clauses limiting their rights to the ESA, may still be able to make a constructive dismissal claim. 

As well, even if an employee’s contract does refer to the ESA in the termination clause, they may still be able to claim constructive dismissal under the ESA if the real reason for the reduction in hours or wages was not related to Covid-19.  

Lessons Learned

1. Constructive dismissal law is complex and that is even more true with the introduction of the new ESA regulation.
2. It is not always legally or financially sensible to make a constructive dismissal claim.  Employees thinking about doing so, especially if the decision involves resigning should speak to an employment lawyer prior to making the decision.
3. As always, employment contracts play a significant role in determining an employee’s rights – like the right to bring a constructive dismissal claim.  It is always a good decision and money well spent to have a lawyer review an offer letter or contract before taking a new job.

If you have any questions about constructive dismissal, employment contracts or termination, you can contact Nicole Simes and MacLeod Law Firm at 647-204-8107 or at [email protected]