Constructive Dismissal and Covid-19

by | Jul 13, 2020 | For Employees

Constructive Dismissal and Covid-19

Over the past few months, we have received many questions from concerned employees about changes to their jobs and constructive dismissal.  Some have experienced reductions in hours, others have had their pay cut, others are being asked to complete new or different tasks.

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, this 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.  It may also include situations where an employer’s treatment of an employee or its actions creates 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 in section 56 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 make this claim. However, there is an argument that this only removes the employee’s right to make this claim 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 claim that they have been terminated due to a reduction in hours, wages or layoff. 

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

Lessons Learned

  1. The law is complex and that is even more true with the introduction of the new ESA regulation. Some employers will not be aware of their employees’ common law rights and will assume that the ESA tells them everything concerning employer obligations and duties.
  2. It is not always legally or financially sensible to make this type of 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.  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 changes at work, employment contracts or termination, you can contact Barrie and Toronto Employment Lawyers MacLeod Law Firm at 647-204-8107 or at [email protected]


The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.



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