What is constructive dismissal in Canada?
Constructive dismissal occurs when an employer makes a substantial, unilateral change to a fundamental term of your employment — such as a significant pay cut, a demotion, a forced relocation, or a poisoned work environment — without your agreement. The law treats this as if the employer terminated you, entitling you to reasonable notice damages even though you were not formally fired.
How big does a pay cut have to be to be constructive dismissal?
There is no fixed threshold, but courts have found that reductions of roughly 10% or more to base compensation can constitute constructive dismissal, especially when combined with other changes. Smaller reductions may qualify if they signal a fundamental breach. The Supreme Court in Potter v. New Brunswick (2015) confirmed the two-branch test for constructive dismissal.
Should I quit if I think I have been constructively dismissed?
Be very careful. Resigning is risky because if a court later decides the change was not fundamental, you may be treated as having voluntarily quit with no entitlement. You should object in writing to the change, avoid signalling acceptance, and get legal advice before resigning. An employment lawyer can help you preserve your claim.
Do I have to keep working during a constructive dismissal claim?
Sometimes. Courts may require you to mitigate by continuing to work in the changed role if a reasonable person would do so and the environment is not hostile. Whether you must stay depends on the severity of the change and the relationship. This is a fact-specific question best assessed with a lawyer.