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Employment - Constructive Dismissal. Flohr v. Susur Lee Group Inc.
In Flohr v. Susur Lee Group Inc. (Div Ct, 2026) the Divisional Court considered the often difficult issue of the "employer’s unilateral alteration of an employment contract":(e) Continuing to Work for the Respondent as Mitigation
[29] Finally, the trial judge’s rejection of the appellant’s position that he continued to work for the respondent in order to mitigate his damages was based on a misapprehension of the applicable law. The law on this issue was explained in Wronko v. Western Inventory Services Ltd., 2008 ONCA 327, 90 O.R. (3d) 547, where the court adopted the reasoning of Mackay J.A. in Hill v. Peter Gorman Ltd. (1957), 1957 CanLII 393 (ON CA), 9 D.L.R. (2d) 124 (Ont. C.A.). An employee faced with an employer’s unilateral alteration of an employment contract has three options (at paras. 34-36):First, the employee may accept the change in the terms of employment, either expressly or implicitly through apparent acquiescence, in which case the employment will continue under the altered terms.
Second, the employee may reject the change and sue for damages if the employer persists in treating the relationship as subject to the varied term. This course of action would now be termed a “constructive dismissal”, as discussed in Farber, although this term was not in use when Hill was decided.
Third, the employee may make it clear to the employer that he or she is rejecting the new term. The employer may respond to this rejection by terminating the employee with proper notice and offering re-employment on the new terms. If the employer does not take this course and permits the employee to continue to fulfill his or her job requirements, then the employee is entitled to insist on adherence to the terms of the original contract. In other words, if the employer permits the employee to discharge his obligations under the original employment contract, then -- unless proper notice of termination is given -- the employer is regarded as acquiescing to the employee’s position. As Mackay J.A. so aptly put it: “I cannot agree that an employer has any unilateral right to change a contract or that by attempting to make such a change he can force an employee to either accept it or quit.” ....
[31] The situation in this case is similar to that in Russo v. Kerr Bros. Ltd., 2010 ONSC 6053, 326 D.L.R. (4th) 341, at paras. 39-45:The plaintiff does not merely sue on the original terms of employment. He accepts the alteration of his terms and conditions of employment as a repudiation or constructive dismissal, but he says he is remaining in his employment under the new terms as a means of mitigating his damages.…
In my view, there is no reason in principle why the plaintiff cannot adopt the course of action that he has.
Through counsel’s letter dated July 27, 2009, the plaintiff made two things clear: first, that the unilateral change in the plaintiff's terms and conditions constitutes constructive dismissal; second, that the plaintiff did not consent to the alteration.…
Nothing in counsel’s letter, or in any other communication between the parties, changed that state of affairs. The defendant could not have been under any illusions. The defendant was clearly on notice that the plaintiff took the position that he had been constructively dismissed, and that he did not consent to the changes in his terms and conditions of employment. Thus, when the plaintiff remained in the workplace under the reduced terms, the defendant had no right to assume that the plaintiff had elected to do so under a new contract of employment. The only basis on which the plaintiff could be in the workplace under the reduced terms was by his acceptance of the reduced terms as a means of mitigating his loss during what would be a period of reasonable notice.
While I accept Mr. Newcombe’s submission that upon a constructive dismissal the plaintiff is required to make an election, the defendant is also required to make an election. This is clear, in my view, from paras. 32-36 of Winkler C.J.O.’s judgment in Wronko, reproduced above.
Once the defendant had been told that the plaintiff accepted that a constructive dismissal had occurred, and that he did not accept the new terms and conditions, the defendant could have told the plaintiff to leave the workplace. Alternatively, the defendant could have kept the old terms and conditions in place for the period of reasonable notice. However, the defendant did neither. It simply allowed the plaintiff to remain in the workplace knowing that the plaintiff took the position that he had been constructively dismissed, and that he did not accept the new terms.
In the circumstances, the defendant must be taken to have understood that the plaintiff was remaining in the workplace, but not under the acceptance of any changed terms and conditions of employment. There is no reason in principle, in my view, why the plaintiff cannot be considered to be mitigating his loss by so doing.
These conclusions are apposite to the case at bar. [32] As noted in Kerr, at para. 47, the appellant continuing to work for the respondent can only constitute mitigation during whatever reasonable notice period he is entitled to if his claim of constructive dismissal succeeds. . Flohr v. Susur Lee Group Inc.
In Flohr v. Susur Lee Group Inc. (Div Ct, 2026) the Divisional Court considered principles regarding 'constructive dismissal' from employment:C. Overview of Relevant Legal Principles
[19] The principles to be applied in assessing claims of constructive dismissal are well established and may be summarized as follows:. Constructive dismissal occurs when an employer evinces an intention not to be bound by the terms of an employment contract by unilaterally breaching an express or implied term of the contract resulting in a substantial change in the employee’s working conditions: Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, [2015] 1 S.C.R. 500, at paras. 37-43; Farber v. Royal Trust Co., 1997 CanLII 387 (SCC), [1997] 1 S.C.R. 846, at para. 24.
. Unless permitted by the employment contract, a unilateral layoff of an employee will constitute a breach of the contract resulting in a substantial change and will amount to constructive dismissal: Pham v. Qualified Metal Fabricators Ltd., 2023 ONCA 255, at para. 29.
. An employee faced with an employer’s breach of a contract can choose to accept the employer’s breach or treat it as a repudiation of the contract and sue for wrongful dismissal. If the employee accepts the breach, it is not unilateral and cannot amount to constructive dismissal: Potter, at paras. 30, 37.
. The employee is permitted reasonable time to choose whether to accept the breach or treat it as a repudiation: Belton v. Liberty Insurance Co. of Canada (2004), 2004 CanLII 6668 (ON CA), 72 O.R. (3d) 81 (C.A.), at para. 26; Persaud v. Telus Corp., 2017 ONCA 479, at para. 14-15, aff’g 2016 ONSC 1577, at para. 43. What constitutes a reasonable period of time is a fact-specific determination based on a number of factors: McGuinty v. 1845035 Inc., 2020 ONCA 816, 154 O.R. (3d) 451, at para. 25.
. Acceptance or condonation of the changes to the contract must be expressed by positive action and mere silence on the part of the employee is insufficient: Pham, at para. 55; Webb v. SDT North America, 2023 ONSC 7170, 92 C.C.E.L. (4th) 235, at para. 36. An employee will have condoned the breach where his or her conduct was such that the employer would reasonably believe that the employee consented to the change. The burden of establishing condonation is on the employer: Pham, at para. 45.
. The fact that an employee returned to work or continued to work is not determinative of condonation: McGuinty, at para. 26. However, in most cases, an employee’s willingness to continue to work under the altered terms of the contract for a significant period of time will be viewed as condonation: Persaud (S.C.J.), at para. 43. ....
[27] An employee is permitted a reasonable period of time to decide whether to accept an employer’s repudiation of the employment contract because “it is understandable that such employees may wish to try to adjust to the new terms and conditions ... before taking the radical step of advancing a constructive dismissal claim”: Belton, at para. 26. This presupposes that the nature of the new terms and conditions is known. In this case, it was not as it was unclear when the restaurant would resume operations. This fact had to be taken into account in determining what was a reasonable period of time. The trial judge failed to do so.
(d) The Lawyer’s Letter
[28] Fourth, the trial judge erred in concluding that the appellant’s lawyer’s letter “did not constitute taking an irrevocable position or making a clear election” because he did not file a Statement of Claim until December. An employee is not required to formally initiate court proceedings in order to take an “irrevocable legal position.” All the employee is required to do is to clearly communicate to the employer that he has accepted its repudiation of the employment contract: Brown v. Belleville (City), 2013 ONCA 148, 114 O.R. (3d) 561, at paras. 46-47; Spirent Communications of Ottawa Ltd. v. Quake Technologies (Canada) Inc., 2008 ONCA 92, 88 O.R. (3d) 721, at para. 55. The decision to do so is sometimes described as “irrevocable” because a claim of constructive dismissal often has permanent effects on the employee’s harmonious relations with the employer: Belton, at para. 26. . MINKARIOUS v. 1788795 ONTARIO INC.
In MINKARIOUS v. 1788795 ONTARIO INC. (Ont Div Ct, 2025) the Ontario Divisional Court dismissed a Small Claims Court appeal, here brought against findings that the respondent "had been constructively dismissed from her employment ... and awarded her damages for constructive dismissal of $14,800.00. He also awarded $20,000 pursuant to s. 46.1 of the Ontario Human Rights Code, R.S.O. 1990, c. H. 19 (the “Code”)."
Here the court considered 'constructive dismissal', including 'election' and 'condonation':Did the Deputy Judge Err in Finding that Ms. Minkarious was Constructively Dismissed?:
[26] The Supreme Court of Canada, in Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 12, at paras. 32-33, described constructive dismissal as arising where the employer’s conduct evinces an intention to no longer be bound by the contract. The Court identified two separate branches of such conduct. The first is where the employer has made a unilateral change to an essential term of the employment contract. The second instance is where there are a “series of acts by the employer that evidence an intention to no longer be bound by the terms of the contract”. This can occur where the employer’s treatment of the employee makes continued employment intolerable.
[27] At para. 42 of Potter, supra, the Court frames the test as follows: would the employer’s conduct, when viewed in the light of all the circumstances, lead a reasonable person to conclude that the employer no longer intended to be bound by the terms of the contract. The focus is on whether a course of conduct pursued by the employer “evinces an intention no longer to be bound by the contract”. This can include circumstances where the workplace is toxic or “poisoned”.
[28] Both parties on this appeal, and the Appellant at trial, relied heavily on Persaud v. Telus Corporation, 2016 ONSC 1577, affirmed by 2017 ONCA 479. Glustein J., the trial judge, in that case, described, at paras. 47-48, that a poisoned work environment can lead to a claim of constructive dismissal. A plaintiff must establish serious wrongful behaviour that creates a hostile or intolerable work environment. Unless there is a particularly egregious stand-alone incident, the behaviour must be persistent or repeated. The test is an objective one and the onus is upon the employee.
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[35] The Appellant repeats the argument that it made in Small Claims Court—that an employee must make an election, by communicating to the employer, that they have been constructively dismissed within a reasonable period of time. The Appellant argues that a failure to do so condones the employer’s conduct.
[36] In Persaud, supra, the Court of Appeal noted that where an employee is faced with a unilateral change by an employer in the essential working conditions, the employee is to be given some time to notice the change and then consider how best to respond. The Court approved of the trial judge’s recitation of the following principle of law:[43] An employee is entitled to a reasonable period of time to assess his or her circumstances and make an election. However, a considerably extended period of time will preclude an action for constructive dismissal. In most circumstances, courts will view an employee’s willingness to remain in the altered position for a significant period of time as acceptance of the new terms, absent other mitigating factors. [37] I note that Glustein J. in Persaud described the duty to make a timely election and the doctrine of condonation when dealing specifically with the situation in which the employer unilaterally changes the employment conditions (see paras. 39-43 in the trial decision). Quoting from Quitting for Good Reason: The Law of Constructive Dismissal in Canada (Canada Law Book, Aurora, 2001), at pp. 48-49, Glustein J. noted:An employment contract is not terminated simply by an employer’s wrongful breach of the contract. Rather, the employee is required to ‘accept’ the employer’s repudiation in order to bring the employment relationship to an end and recover wrongful dismissal damages. …Thus, the employee faced with a unilateral variation of a fundamental nature has a positive obligation to signal his or her rejection of the new terms in a timely fashion, or else risk being viewed as condoning the changes. …In this sense, the employee is faced with a choice to ‘elect’ whether to accept or repudiate the new terms imposed by the employer. [38] It is clear that Glustein J. was making those comments in respect of the first branch of the Potter tests for constructive dismissal. He specifically deals with the poisoned work environment subsequently and does not address condonation (at paras. 47-50).
[39] In McGuinty v. 1845035 Ontario Inc., 2020 ONCA 816, the Court of Appeal described condonation as applying to both branches of the Potter test, at para. 24. The employee has an election to make—whether to continue to work, and so accept the single breach/course of conduct, or to treat that breach/conduct as bringing the contract to an end and sue for constructive dismissal. A claim that the employee has condoned a breach or course of conduct is a defence to a claim of constructive dismissal. The burden is on the employer to establish condonation.
[40] In McGuinty, the Court described that the employee must make his or her election within a “reasonable period of time” but also noted that “reasonableness” is only a “notoriously vague” standard. Whether an employee acts within a reasonable period of time is a fact-specific determination that must be made by the trial judge based on consideration of a number of factors and the trial judge’s finding is entitled to deference (at para. 25)(emphasis mine).
[41] Importantly, in McGuinty the employee did not formally communicate his acceptance of the employer’s repudiation of the contract before issuing the statement of claim almost two years later. Noting that this was a lengthy period of time by “any standard”, the Court nonetheless noted that it is more difficult to conclude that condonation had been established where the employee had been unable to work because they were on medical leave due to the very conduct that established the constructive dismissal.
[42] The Court of Appeal noted that the trial judge was entitled to find that the employee could not be said to have willingly remained in his position despite the employer’s conduct because “he did not and could not return to work during that period of time due to depression and anxiety”.
[43] The Court, at para. 35, described that the real question is whether in all of the circumstances, including the passage of time, it should be inferred that the employee had accepted the new situation, condoning the employer’s course of conduct and so lost his right to sue for constructive dismissal. The Court upheld the trial judge’s determination that he had not.
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[46] Similar to the case in McGuinty, it would be difficult to conclude that Ms. Minkarious condoned the employer’s conduct because she never actively returned to work before issuing the statement of claim (see also: Pham v. Qualified Metal Fabricators Ltd., 2023 ONCA 255 at para. 56). It is true that the trial judge found that “at no time” did Ms. Minkarious clearly communicate her repudiation to the employer. However, the statement of claim itself was a clear repudiation and it cannot be said that it was issued such an unreasonable time after the plaintiff went off work that Ms. Minkarious condoned her employer’s conduct. McGuinty makes clear that issuing a statement of claim within a reasonable period of time constitutes clear communication of repudiation.
[47] Respectfully, the Appellant’s position entirely ignores the critical finding in the McGuinty case. Ms. Minkarious never signalled that she condoned the conduct of which she now complains because she never did return to work.
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[55] In light of the Deputy Judge’s conclusion that Ms. Minkarious had been constructively dismissed, he could not also have found that she abandoned her employment. A person who abandons their employment cannot also be constructively dismissed. It is one or the other (see: Gebreselassie v. VCR Active Media Ltd., 2007 CarswellOnt 6969 at para. 58). Hence, the trial judge clearly rejected the abandonment argument when he accepted the constructive dismissal. . Pham v. Qualified Metal Fabricators Ltd.
In Pham v. Qualified Metal Fabricators Ltd. (Ont CA, 2023) the Court of Appeal briefly summarizes the law of constructive dismissal:[28] Constructive dismissal can be established by either (i) the employer's breach of an essential term of the employment contract, or (ii) a course of conduct by the employer that establishes that it no longer intends to be bound by the employment contract: Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, [2015] 1 S.C.R. 500, at paras. 37-43. . 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.
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[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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