Constructive Dismissal

Repudiation or Termination – Introduction

There is a difference between an assertion of repudiation and termination. Repudiation is an assertion that the employment “contract” has been violated by the conduct of the employer. An allegation of termination is that the conduct has brought about the end of the working relationship. There is no distinction where the relationship is a common law one. Many cases speak to the conduct to support a constructive termination as “repudiation”. There is often used where the distinction is of no consequence.

If there is an existing written contract, which for example, sets out a defined severance obligation, the difference is meaningful. An assertion of repudiation, if successful, will release the employee from the terms of the contract and their claim will be based on common law.

An allegation of termination will allow the employee to claim that the agreement is just that, ended by the questioned conduct, in which case, the damages will follow the contracted term.

It goes without saying that the issue of repudiation must be pleaded to allow for the submission to be made, and, further, that the onus rests upon the advocate of this submission. 1 It is a significant defence as it allows the successful objector to avoid the consequences of the termination clause, or any other term of the contract. If so, the claim will be adjudicated by common law principles.

There will be two building blocks to the success of such an argument. The first is to prove that the conduct of the employer has ended the relationship and further that the innocent party has clearly and unequivocally communicated this position of repudiation, as opposed to just termination, to its counterpart. The law in Ontario notes that the conduct may have been such to reach termination grade, but not the higher level required for repudiation. The most recent case in B.C., decided in early 2024, after this most current Ontario review in 2023, a case which is not referenced in the reasons, does not make this graded distinction.

Prudent judgment should be taken in electing to argue repudiation as its success will allow the claim to be assessed on common law ground. In certain situations, the contract remedy may provide better compensation. It will be possible to argue termination, but not repudiation, governed by the employee’s response at the time of the event. It is an election which is not reversible.

The wording of the objection made by the innocent party will be critical. Should for example, the employee be demoted, the response may be “I treat the agreement as terminated”, in which event, the damage claim will follow the contracted term. If the response is “I assert the contract is repudiated”, then the successful claim will be judged on common law principles and not the contract. This will be the election to be made by the innocent party. It must be made within a "reasonable time" from the date of the violation.