Have you ever felt like your boss was pushing you to quit—without actually firing you? Maybe your hours were suddenly cut, your job title changed, or you were moved to a different role without warning. 

If this sounds familiar, you might have experienced what's known as a constructive dismissal.

A constructive dismissal happens when an employer makes major changes to your job—such as pay cuts, new duties, or a toxic work environment—without your agreement. These changes can make it hard or even impossible to stay, essentially forcing you to leave.

In the eyes of the law, it can be treated as a wrongful dismissal, even if you weren’t officially let go.

According to a recent survey by the Angus Reid Institute, one in three Canadian workers said they’ve experienced unfair treatment at work—and many may not even realize that what they went through could be considered constructive dismissal.

In this blog, we’ll explain what constructive dismissal really means in Canada. You’ll learn the legal definition, see practical examples, and find out how to spot warning signs. 

Whether you're an employee looking to protect your rights or an employer wanting to avoid legal trouble, we’ll also share clear, simple steps to help prevent these situations before they turn into legal claims.

What Is Constructive Dismissal?

Constructive dismissal happens when your employer doesn’t technically fire you, but changes your job so drastically that it feels like you’ve been pushed out.

Like slashing your pay, demoting you without reason, or creating such a toxic environment that staying isn’t really an option. 

In legal terms, it’s considered a unilateral change that breaches fundamental parts of the employment contract, effectively ending the working relationship even if the employee hasn’t been formally fired.

For a situation to qualify as constructive dismissal, several key elements must be present:

• Serious change: The change must affect a core part of the job, such as salary, work location, job duties, or work hours.
• Employer action: The change must be initiated by the employer, not requested or agreed to by the employee.
• Lack of consent: The employee did not agree to the change and felt they had no choice but to resign as a result.

In such cases, the resignation is treated as a termination, which may entitle the employee to severance pay or legal compensation.

In Canada, constructive dismissal is recognized under both provincial employment laws like the Employment Standards Act and federal rules under the Canada Labour Code. 

While the core definition remains similar across provinces, the legal remedies and timelines for claims may vary slightly depending on jurisdiction.

Signs of Constructive Dismissal

Recognizing the signs of constructive dismissal can help employees act early and help employers avoid legal trouble.

Below are some common reasons for constructive dismissal under Canadian law — especially when changes are made without the employee’s consent.

1. Significant Salary Cuts Without Notice

If an employer reduces your pay—especially by a large percentage—without your agreement, it may be seen as a breach of your employment contract. 

A pay cut impacts a core term of employment and can make it financially unreasonable for you to stay.

2. Forced Relocation or Remote Work Without Agreement

Being suddenly told to move to another city or switch from office to remote work (or vice versa) without prior agreement can be considered a major change. 

If your job originally required a fixed location, changing that condition could amount to constructive dismissal.

3. Demotion or Removal of Duties and Responsibilities

If you're stripped of your key responsibilities or demoted to a lower-ranking position without a valid reason or your approval, it may show that your employer no longer intends to honour your role. This shift in job status can be interpreted as termination in disguise.

4. Unsafe or Toxic Work Conditions

If an employer knowingly allows a hostile, discriminatory, or dangerous work environment to continue—without addressing complaints—it could be grounds for constructive dismissal. You’re entitled to a safe and respectful workplace under Canadian law.

Legal Consequences and Risks

When a constructive dismissal claim is made, the law often treats it as if the employer has wrongfully terminated the employee. 

This can trigger serious consequences for both parties—especially if the issue goes to court or a labour tribunal.

For Employees: Rights and Remedies

If you successfully prove constructive dismissal, you may be entitled to:

• Severance pay or termination pay, depending on your length of service
• Compensation for lost wages or benefits
• Damages for bad faith conduct, if the employer acted in a harsh or misleading manner

Employees must act promptly after resigning due to constructive dismissal—ideally seeking legal advice before quitting to preserve their rights.

For Employers: Risks and Liabilities

Constructive dismissal claims carry real risks for employers, including:

• Legal costs and settlements: Employers may be ordered to pay significant damages if found liable.
• Reputational damage: Public claims can harm company image, especially in small or local markets.
• Higher turnover and reduced trust: Mismanaging roles or workplace culture can affect overall morale and retention.

Real-World Example

In Farber v. Royal Trust Co. (1997), the Supreme Court of Canada ruled in favour of an employee who was demoted without consent, confirming that a serious unilateral change could amount to constructive dismissal under Canadian common law. 

Cases like this set a clear legal precedent for what courts will consider a breach.

How Employees Can Protect Themselves

If you suspect you’re facing a constructive dismissal, taking the right steps early can protect your rights and strengthen your case if legal action becomes necessary. Here are some practical ways to stay protected:

1. Document All Workplace Changes in Writing

Keep a record of any major changes to your job—such as pay, duties, schedule, or reporting structure. 

Save emails, memos, or notes from meetings that show when and how the changes were introduced. These documents may become crucial evidence if you need to file a claim later.

2. Ask for Clarification or a Formal Meeting

If a change is unclear or feels unfair, don’t stay silent. Politely ask for a meeting or submit a written request for clarification. This shows you acted in good faith and gave your employer a chance to address your concerns.

3. Speak With HR or Legal Counsel Early

Don’t wait until things escalate. Reach out to your HR department to discuss the issue, and consider speaking with an employment lawyer. Many offer free consultations and can explain your options under Canadian law.

4. Know the Timelines for Making a Claim

Time limits vary by province, but most constructive dismissal claims must be made within two years from the date of resignation.

Acting quickly ensures your complaint remains valid and increases the chance of a fair resolution.

How to Avoid Constructive Dismissal – Don’ts for Employers

Avoiding constructive dismissal begins with thoughtful planning and open, respectful communication.

When employers make sudden or one-sided changes, they don’t just face potential legal consequences — they also risk losing employee trust and morale. Here’s how you can lower those risks:

1. Don’t Cut Pay Without Agreement

Before changing an employee’s role, pay, location, or schedule, discuss the reasons openly.

Explain the business need, involve the employee in the conversation, and give them time to respond. Surprises are one of the fastest ways to trigger resentment and legal claims.

2. Don’t Make Sudden Role Changes

Shifting an employee to a completely different job or stripping key responsibilities without consultation can appear retaliatory or unfair. If changes are needed, involve the employee in the process and explain the reasons clearly. 

3. Don’t Ignore Contract Terms

When making permanent changes to an employee’s job, always update their employment contract and ask for written agreement. 

This protects both parties and shows mutual understanding of the new terms.

4. Don’t Create a Hostile Environment

Toxic workplaces are those where employees feel bullied, harassed, or singled out — often lead to constructive dismissal claims. Employers must maintain a respectful, safe environment and address issues quickly. 

Avoid forcing ultimatums—collaborative solutions reduce the risk of constructive dismissal claims and help maintain a positive workplace culture.

5. Don’t Reduce Hours Without Cause

Cutting back an employee’s schedule without discussion can significantly impact their income and stability. If business needs change, handle it carefully and fairly.

6. Don’t Relocate Without Notice

Forcing an employee to move to a new work location without proper notice or agreement can be disruptive and is often considered unreasonable. Discuss relocation options in advance.

7. Don’t Act Without Communication

Above all, constructive dismissal often happens because employees feel blindsided. Sudden, unexplained decisions damage trust. Clear, respectful communication is the simplest way to prevent problems before they escalate.

Best Practices for Changing Work Terms

Making changes to an employee’s role or work conditions is sometimes necessary, especially in evolving businesses. 

But how those changes are introduced can mean the difference between a smooth transition and a constructive dismissal claim. 

Below are some best practices to help employers manage job changes fairly and respectfully.

1. Implement Consultative Change Policies

Build policies that prioritize two-way communication. Before any major change, consult with affected employees. 

Share the business reasons, ask for their input, and involve them in the decision-making process. When employees feel heard, they’re more likely to cooperate—and less likely to file complaints.

2. Introduce Structured Feedback and Review Periods

Whenever new duties or schedules are introduced, include a defined review period. 

This gives both the employer and employee a chance to evaluate how the change is working and make adjustments if needed. It also reinforces transparency and mutual accountability.

3. Propose Trial Periods with the Right to Revert

When suggesting significant changes—like a new position or shift—offer a trial period with a clear option to return to the previous role if the new arrangement doesn’t work out. This builds trust and minimizes legal risks.

4. Respectfully Manage Exits When Needed

If an employee does not agree to the proposed change, handle the situation with care. Offer fair severance and a respectful offboarding process. This helps protect the organization’s reputation and may prevent legal disputes.

How to Handle a Suspected Constructive Dismissal

If you believe you’re being pushed out of your job through unfair changes, it’s important to act early and carefully. 

Handling a suspected constructive dismissal the right way can protect your legal rights and improve your chances of a fair outcome. Here are key steps to follow:

1. Document All Events and Changes

Keep a detailed record of what’s happening—dates of changes, emails from your employer, meeting notes, and any shift in duties, pay, or workplace treatment. These notes will help show a pattern of behaviour if you decide to file a formal complaint.

2. Request Written Clarification or Notice

Ask your employer for a written explanation of the changes being made to your role. This not only clarifies their position but also creates a paper trail that may support your claim.

3. Seek Mediation or Internal Resolution

Before resigning, try to resolve the issue internally. Ask for a meeting with HR or a supervisor to explain your concerns. Mediation may help both sides find a workable solution and avoid further conflict.

4. Contact Your Provincial Labour Board or Employment Standards Office

If internal steps don’t resolve the issue, reach out to your province’s employment standards office or labour board. They can advise on your rights and guide you through the next steps.

5. Prepare Evidence for a Tribunal or Legal Claim

If you pursue a legal complaint, be ready to present your evidence. This includes your employment contract, records of changes, emails, witness statements, and a clear timeline of events. Proper documentation can make or break your case.

Conclusion

Avoiding constructive dismissal isn’t just about staying on the right side of the law—it’s about building fair, respectful workplaces where both employers and employees feel secure. 

When job changes are handled with open communication and mutual consent, everyone benefits.

For employers, the key to prevention lies in proactive planning. That means consulting staff before making major changes, updating contracts when needed, and offering choices rather than ultimatums. 

Simple steps like trial periods, feedback reviews, and written agreements can go a long way in reducing risk and building trust.

For employees, it’s important to stay informed and alert. If changes to your role feel unexpected or forced, start documenting right away. 

Don’t hesitate to ask questions, raise concerns, or seek legal advice. Acting early gives you more options and can help prevent long-term stress or financial loss.

Additionally, we would recommend utilising resources like the Canada Safety Training and Workplace Harassment Awareness Program to educate employees and management about creating a fair and respectful work culture.

By taking the right steps, employers and employees can move forward with clarity and confidence.