When a Job Change Becomes a Dismissal: Understanding Constructive Dismissal in Canada

Under Canadian employment law, an employee can be dismissed even if the employer has not issued a termination of employment. This is known as constructive dismissal.

What is Constructive Dismissal?

Constructive dismissal happens when an employer makes a major change to an employee’s job — like a pay cut, a demotion, or a drastic change in duties — without the employee’s agreement. These changes can violate the terms of the original employment contract, effectively ending the employment relationship. If this happens, the law may treat it as if the employee has been wrongfully dismissed, which may entitle the employee to damages.

Key Court Decisions

Several Canadian cases have helped define when a job change crosses the line into constructive dismissal:

• Farber v. Royal Trust Co. (Supreme Court of Canada): This landmark case established that a substantial alteration to the essential terms of a job — such as a demotion or a large pay cut — may be considered constructive dismissal. Each case, however, depends on its specific facts.

• Hart v. Bogardus Wilson (1984) Ltd.: Changing an employee's pay structure from a fixed salary to one based on commission was found to be a significant enough change to qualify as constructive dismissal.

• Haddock v. Thrifty Foods: A reduced salary and change in managerial responsibilities were considered a fundamental breach of the employment contract.

• Sifton v. Wheaton Pontiac Buick GMC: Reassigning a manager to a technician role with lower pay and diminished duties was seen as a demotion and a constructive dismissal.

• Parks v. Vancouver International Airport Authority and Danielisz v. Hercules Forwarding Inc.: Both cases highlighted that changes to job duties, hours, and pay must be assessed in context. What matters is the significance of the changes and whether they reflect the employer's intention to alter the core terms of the employment contract.

Not every job change qualifies. In Robbins v. City of Vancouver, the court found that although the employee’s responsibilities shifted, the essence of her role remained the same, so there was no constructive dismissal.

What Does This Mean for Employers?

If an employer wishes to make a major, possibly unwanted change to an employee’s job — especially without warning or agreement — that employee may be able to claim constructive dismissal. However, this is not automatic. The employee must demonstrate that the change was substantial enough to constitute a breach of contract, and courts will scrutinize the details closely.

Examples of constructive dismissal include:

• Major changes in job duties

• Relocation without consent

• Significant wage reductions

  
  

Final Thoughts

Constructive dismissal is not always easy to spot, and claiming it can be legally complex. If you are considering a change to an employee’s job, it would be prudent to seek legal advice before taking action.

If you have any questions, please contact us at (778) 871 9791 or email Dominique Legendre  dl@dwslaw.ca.

Disclaimer: This article is not intended to serve as, or should be construed as legal advice, and is only to provide general information. Should you require legal advice for your particular situation, please get in touch with us. The information for this article was compiled on September 9, 2025.