Constructive Dismissal

Toxic Workplace

Abusive Work Environment

The test to be applied is typically not a single act but rather it is based on the “cumulative effect of past acts by the employer” that establish that the employer no longer intends to be bound by the contract. 1

To succeed on this claim, the conflict must be one which goes “well beyond interpersonal conflicts, workplace disagreements, or criticism. The context must show that the issue prevents the employee from doing their work. 2

The Ontario Court of Appeal reviewed this issue in a 2020 decision. The plaintiff had sold his family funeral business in North Bay and was hired back on an employment contract. The case involved a significant damage claim as the agreement ran for some 10 years without a termination clause. The trial judge had found that a series of events had transpired which allowed for a successful termination finding. These were as follows:

  1. The company terminated the right of the employee to use the company vehicle for personal use;
  2. It had requested an employee who reported to the plaintiff to track his time at work, without so advising the plaintiff;
  3. It had failed to pay commissions;
  4. It removed the plaintiff’s photograph from the funeral premises;
  5. It changed the locks to the business premises without notice or any explanation to the plaintiff.

These factors caused the plaintiff to no longer report to work. The defendant at trial had argued that his motivation was not based on the above assertions, but rather because he had sold the business. This conduct, as found at trial, satisfied the test of Potter that a reasonable person would have concluded that the employer no longer intended to be bound by the agreement.

The Ontario Court of Appeal affirmed a trial decision made in 1998, which found in favour of the plaintiff’s claim based on an abusive work environment, noting that the test was an objective one, factually based, requiring conduct which goes “so far beyond the bounds of reasonableness”: 3

Where the conduct of management personnel is calculated to cause an employee to withdraw from the employment, it may, in my judgment, amount to constructive dismissal. The test, I believe, is objective: it is whether the conduct of the manager was such that a reasonable person in the circumstances should not be expected to persevere in the employment. As the particular circumstances are crucial, each case must be decided on its own facts. The test should not be lightly applied. An employer is entitled to be critical of the unsatisfactory work of its employees and, in general, to take such measures—disciplinary or otherwise—as it believes to be appropriate to remedy the situation. There is, however, a limit. If the employer’s conduct in the particular circumstances passes so far beyond the bounds of reasonableness that the employee reasonably finds continued employment to be intolerable, there will, in my view, be constructive dismissal whether or not the employee purports to resign.

The conclusion should be emphasized that this test will succeed whether or not the employee “purports to resign”.

This same issue was reviewed in an Ontario case decided in 2010. Douglas Disotell was an hourly paid factory worker at the defendant’s factory in Ingleside, Ontario as a whey driver operator. He was employed for 16 years.

The failure of the employer to apply its harassment policy and respond fairly to the complaints made by the employee was seen as sufficient grounds for the plaintiff to assert that the employment relationship was unilaterally terminated in the Ontario Superior Court decision of Disotell v Kraft, written by Kane J. The timing of the case was after Farber and before Potter.

The court agreed with the plaintiff’s plea that the ongoing harassment and the failure of the company to act upon its harassment policy caused a legal termination. An award of 12 months compensation was made. The court summarized the reasons for finding a constructive termination as follows:

Within the context of Farber v. Royal Trust Co., [1997] 1 S.R.C. 846 held a reasonable person in the same position as Mr. Disotell faced with the length of time during which harassment comments were being made and the severity thereof, would conclude that the term of his employment by which the employer was required to provide an environment free of harassment had been changed by the employer allowing the harassment to continue.

[106]      The failure of Mr. Bougie to effectively intervene and engage the harassment policy of the employer by non‑reporting of the complaints, caused this employee to withdraw from his employment within the context of Shah v. Xerox Canada Ltd., [1998] O.J. No. 4349.  The circumstances of this case as viewed objectively would result in a reasonable person in the position of the Plaintiff, not being expected to persevere in these employment conditions.

Single Event

In a further decision, the Ontario Court of Appeal considered the submission that one single event could not amount to a finding of a toxic work environment. The employer in this case had hired a past employee who had sexually harassed the plaintiff in his prior period of employment. This argument was rejected. The trial decision was upheld. 4

The same conclusion was reached in a 2013 Ontario Court of Appeal decision, although it qualified this view that to state that a finding must be “particularly egregious” for a stand-alone incident. This decision set aside factual findings made by the trial judge which had underpinned the trial finding of constructive dismissal based on racist conduct. The words cited are obiter. 5

Generally the conduct giving rise to such a claim is persistent and repeated. 6