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Constructive Dismissal

. Morningstar v. WSIAT

In Morningstar v. WSIAT (Div Ct, 2021) the Divisional Court briefly summarizes the doctrine of constructive dismissal:
[79] An employee can claim constructive dismissal when an employer’s conduct demonstrates the employer’s intention no longer to be bound by the employment contract. This can come about when an employer engages in conduct that objectively demonstrates the employer’s intention no longer to be bound by the contract. There is no requirement that a worker be injured at all: Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10 (CanLII), [2015] S.C.J. No. 10, at paras. 30, 39; Farber v. Royal Trust Co., 1997 CanLII 387 (SCC), [1996] S.C.J. No. 118, at paras. 26, 33. Constructive dismissal may arise where the employer’s treatment of an employee makes the employee’s continued employment objectively intolerable: Potter, at para. 33. Courts have found constructive dismissal based on the breach of an implied term or duty that the employer will treat the employee with civility, decency, respect and dignity or that the work atmosphere will be conducive to the well-being of its employees: Colistro v. Tbaytel, 2019 ONCA 197, at para. 50. Workplace harassment and the creation of a hostile work environment can ground claims for constructive dismissal: Colistro, at paras. 42-48.

[80] Damages in lieu of notice are the principal measure of damages in cases of wrongful or constructive dismissal: Honda Canada Inc v Keays, 2008 SCC 39, at para. 50. Additionally, in appropriate circumstances, a court can also award aggravated or moral damages attributable to the employer’s bad conduct in the manner of dismissal, and punitive damages for independent actionable wrongs, such as a breach of a distinct and separate contractual provision or other duty such as a fiduciary obligation: Honda Canada Inc v Keays, at paras. 59, 62.
. Pearce v. Canada (Staff of the Non-Public Funds, Canadian Forces)

In Pearce v. Canada (Staff of the Non-Public Funds, Canadian Forces) (Ont CA, 2021) the Court of Appeal considers constructive dismissal in the context of a federal statutory employment regime:
[48] Constructive dismissal occurs where the employer’s conduct evinces an intention to no longer be bound by the employment contract. When that occurs, the employee has a choice of accepting the conduct, or treating it as a repudiation of the contract and suing for wrongful dismissal: Farber v. Royal Trust Co., 1997 CanLII 387 (SCC), [1997] 1 S.C.R. 846, at para. 33; Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, [2015] 1 S.C.R. 500, at para. 30. The word, “constructive,” indicates that the dismissal is a legal construct: the employer’s act is treated as a dismissal because of the way it is characterized by law: Potter, at para. 30.

[49] In Evans v. Teamsters Local Union No. 31, 2008 SCC 20, [2008] 1 S.C.R. 661, at para. 26, the Supreme Court of Canada confirmed that constructive dismissal is a termination:
[T]he very purpose behind recognizing constructive dismissal is to acknowledge that where an employer unilaterally imposes substantive changes to an employment contract, the employee has the right to treat the imposition of those changes as termination. This termination is every bit as “real” as if the employee were actually told of the dismissal…. [Emphasis added.]
[50] As Wagner J., as he then was, observed in Potter, constructive dismissal can occur in one of two ways. In the first way, the court determines whether the employer has breached an express or implied term of the contract, and then determines whether the breach was sufficiently serious to amount to constructive dismissal: Potter, at para. 32. In the second way, the court determines whether the employer’s conduct more generally demonstrates an intention to no longer be bound by the contract. For example, “if the employer’s treatment of the employee made continued employment intolerable”: Potter, at para. 33.

[51] The second approach is retrospective. As Wagner J. observed in Potter, at para. 33, “it requires consideration of the cumulative effect of past acts by the employer and the determination of whether those acts evinced an intention no longer to be bound by the contract.”

[52] The approach is also objective. Under the second branch of the test for constructive dismissal, the question is whether the employer’s conduct, “when viewed in the light of all the circumstances, would lead a reasonable person to conclude that the employer no longer intended to be bound by the contract”: Potter, at para. 42.


[57] I do not accept the appellant’s submission that constructive dismissal is a common law concept that has no place in the federal labour and employment regime. The appellant cites no judicial authority for this proposition, although he does cite to two decisions of the PSLRB and the PSLREB: Gaskin v. Canada Revenue Agency, 2008 PSLRB 96, at para. 69; Wercberger v. Canada Revenue Agency, 2016 PSLREB 41, at para. 57. In the former, the Board observed that it was “clearly debatable whether the common-law doctrine of constructive dismissal can be applied in this jurisdiction, where the employer’s authority to terminate the employment relationship is precisely defined and circumscribed by statute”: Gaskin, at para. 69. In the latter case, at para. 35, it was suggested that “[t]he doctrine of constructive dismissal has no application to the federal public service as employees in the public sector must be terminated for cause.”


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