Constructive Dismissal

Condonation & Lay-Off


An employee who has been laid off, absent a prior agreement allowing for such action, has options available to them. The first is to do nothing and wait to see if they will be re-hired. The alternative is to treat such action as termination immediately. 2 The plaintiff had been advised of his temporary lay-off on November 25, 2014, due to financial issues. The notice stated that his benefits would continue and that the company may be able to recall him within the next 35 weeks. He was called back to work on December 16, 2014. He declined to return to work by letter of the same date and claimed then he was constructively dismissed.

The critical issue was that the plaintiff continued to make claims for benefits coverages after the date of his lawyer’s letter asserting constructive dismissal, even as late as May 2015, after he had found other employment. The motion’s judge found that he had accepted the right of the employer to lay-off:

It is clear on the evidence that the plaintiff did not decide what he wanted to do until after he was aware the defendant wanted him to return to work. By that time, it was too late for him to declare that he had been constructively dismissed. In addition, his continued application for a receipt of benefits from the defendant’s employment is troubling and is inconsistent with his declaration of constructive dismissal.

The fact that the employee had done nothing following receipt of the notice of lay-off should not interfere with his right to assert he was dismissed as he did on December 16. With respect, it could not be too late to make this assertion.

All this said, the judge found acceptance of the lay-off term by the employee’s conduct. The decision nonetheless continued to state that the parties had each abandoned the terms of the written agreement. Somehow it was determined that he had been terminated on November 25, the date of the lay-off letter and awarded three months damages. The decision, respectfully, is odd.

[15]        I find that at the time the defendant offered to bring the plaintiff back to work, the plaintiff had acquiesced with the lay-off notice, and the defendant had, by virtue of the lay-off notice, abandoned its right to require 3 months’ notice from the plaintiff. In the unique circumstances of this case, I find that both parties had implicitly or explicitly accepted terms other than those contained in the written employment agreement, and the plaintiff is entitled to damages for wrongful dismissal on a common law basis.


[13]        I find that at no time did the lay-off become a constructive dismissal. The plaintiff argues that as of his lawyer’s letter of December 16, 2014, he was constructively dismissed, and entitled to damages equal to the 6 month notice period in the written contract on the authority of Bowes v. Goss Power Products Ltd.[2], which held that a notice period in a written employment contract constitutes the measure of the damages for wrongful dismissal.

The Pham case in the OCA in 2023 is significant as it set aside the decision of the motion judge on this issue. There were a variety of reasons for doing so, which were as follows:

  1. The signature on the lay-off letter proved only its receipt and not acceptance of the term proposed;
  2. The employee had contacted legal counsel in December 2020 which was long after the lay-off had commenced and after the lay-off had been extended several times. This was shortly prior to his claim for constructive dismissal. This could not be seem as evidence of knowledge of the ramifications of the lay-off. Further, there was no evidence that the employer relied upon the employee having received legal advice.
  3. The evidence did not lead to the conclusion that the employee’s failure to object was condonation;
  4. In considering the impact of the employee’s silence on this issue, the initial decision led to three extricable errors;
  5. Firstly, there was no consideration to the allowance to the employee for a reasonable time period to assess the situation; the evidence was consistent with the employee’s “wait and see” approach; The trial decision failed to reflect upon this issue or whether the employee took a reasonable time to assess the context; the initial decision also equated silence with acquiescence and condonation;
  6. Secondly, condonation in a lay-off requires affirmative action. This would include “expressed consent” or “expressing a willingness to work”;
  7. Thirdly, the initial decision wrongly distinguished McGuinty. In that case the employee was on medical stress leave for over a year and was unable to condone changes to his working relationship. The OCA here concluded that the employee was in a comparable circumstance, namely, that he was unable to condone changes as he also was not actively working.
  8. Further, there is no obligation upon the employee to ask when they might be called back to work before suing.

An Ontario decision in October of 2023 considered conduct of the employee soon after notice of a lay-off due to the pandemic was given on March 27, 2000. The plaintiff continued to work on certain matters through the early months of the pandemic without pay. This was considered to be sufficient evidence to demonstrate his then acceptance of this term. This position was, however, later revised, as the company subsequently instructed the plaintiff that he was no longer to perform any further services. 3 Chalmers v Airways Transit [/efn   _note]