Constructive Dismissal in Ontario

by Anteneh Fekade Kassa on May. 25, 2019

Employment Employment  Employment Contracts Employment  Employee Rights 

Summary: A step by step explanation of constructive dismissal law

                                                            Constructive Dismissal in Ontario

What is constructive dismissal?

Constructive dismissal occurs when an employer shows an intention to no longer be bound by the employment contract and the employee reasonably considers the employment contract to be at an end. There are two general situations where constructive dismissal operates: a unilateral change to the terms of employment and poisoned work place environments. Examples of the former type include: reduced pay, relocation to another city, change of employee's responsibility, promotion, or demotion. With respect to the latter type, the Court has stated that an employer owes a duty to see that the work atmosphere is conducive to the well-being of its employees. An employer's failure to prevent harassment, discriminatory conduct, bullying or improper employer discipline is a breach of this duty capable of amounting to constructive dismissal.

How much money can I get for a constructive dismissal claim?

If you are successful in a constructive dismissal claim, then you may be awarded pay in lieu of reasonable notice. That is, you will receive your regular pay with the employee for a set amount of time. 

Determining how long that time will be depends on the following:

  1. Character of employment;
  2. Length of service;
  3. Age;
  4. Availability of similar employment;
  5. The time of year when the employee was dismissed; and
  6. Whether the employee suffers from any disability or lack of formal education .

An application of the above factors is more of an art than a science.  The objective is to gauge how long it will take a dismissed employee to secure similar employment.

A dismissed employee may also be entitled to punitive damages and or aggravated damages where the manner of dismissal is egregious or conducted in bad faith.

Punitive damages are not used to compensate an employee for loss or damages suffered. Rather, punitive damages are intended to punish an employer. They are awarded in rare circumstances where the employer's conduct has been so malicious and high handed that it forms an independent actionable wrong. That is, the conduct must attract the court's sanction without considering the employee's dismissal and the normal feelings of hurt which accompany a firing.

Punitive damages can be quite large but are very difficult to obtain in employment law. As stated by the Supreme Court of Canada, "the conduct must be extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment."

To give you an idea of the difficulty with obtaining an award of punitive damages consider the facts from a leading case. In that case, Mr. Reid was the employer. The facts were read by the court in Vorvis v. Insurance Corp. of British Columbia at the trial level, at paragraph 26.

Mr. Reid must have known that the plaintiff was a sincere, sensitive and dedicated employee. He was indifferent to the plaintiff’s feelings, constantly criticized his shortcomings while giving him no credit for his accomplishments. He set up a meeting each Monday, which he called a "productivity meeting" at which he reviewed the work done by the plaintiff during the previous week. He criticized the plaintiff for the number of hours he spent on each project. He criticized him because he did not employ the same work habits as he did. It became an inquisition, and as the pressure increased the plaintiff became tense, agitated and distressed. Finally resorting to medical attention and a tranquillizer. That stage was reached almost two months before his dismissal. The plaintiff is a man who would do his utmost to satisfy his employer. I am convinced that he was not treated fairly by the defendant. When he did not bend to the will of his inquisitor he was abruptly terminated, being given an opportunity of reasonable notice only if he agreed to admit that he was incompetent. A colourable attempt was made to find him other employment within the company, but all it did was to emphasize his shortcomings, and damage his reputation.

As bad as the employer acted, the plaintiff’s claim for punitive damages was denied. The denial of his claim for punitive damages was upheld by the Supreme Court of Canada.  Thus, it is very difficult to obtain punitive damages in employment law.

On the other hand, aggravated damages are designed to compensate an employee for intangible damages such as mental distress. Aggravated damages do not require an independent actionable wrong, and on that basis, are easier to obtain than are punitive damages. However, the aggravated damages must result from the manner of dismissal. For instance, in the above case the plaintiff was not awarded aggravated damages because the employer's conduct occurred prior to the wrongful dismissal.

To be clear, any stress or hurt feelings that result from the fact of dismissal do not attract aggravated damages. It is the employers conduct during the course of dismissal which is assessed in a claim for aggravated damages. Further, aggravated damages are relatively modest and depend on the extent of your injury and whether it has affected your ability to work.

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