Many legal concepts in employment law appear distinct and separate, such as constructive dismissal, termination for cause and resignation of employment by an employee. Each of these categories are accompanied by its own criteria and implications. However, an employer or an employee can allege all of them in response to a particular situation. The parties to a dispute may perceive events differently, but they may also make arguments in the alternative. 

After briefly explaining constructive dismissal, termination for cause and resignation, this article looks at a recent decision of the Ontario Superior Court of Justice, which demonstrates how all these concepts may be raised at the same time. 

Constructive dismissal may arise if the employer changes the terms of the employment relationship

An employee may have been constructively dismissed if their employer unilaterally altered an essential term of their employment contract, or if the employer’s conduct has demonstrated an intention to no longer be bound by the employment contract. We have previously written in more detail about the different forms of constructive dismissal.

A constructive dismissal is different from termination without cause because the employee is not expressly told that they are terminated. However, the outcome may be the same – if proven by the employee, they are entitled to damages, including for payment of the reasonable notice period. 

An employer may terminate an employee for cause in sufficiently severe cases of misconduct

If an employee engages in misconduct incompatible with the employment relationship’s fundamental terms, the employer may be entitled to terminate them for cause. Termination for cause may be justified after considering the nature and extent of the misconduct in the circumstances. The misconduct must be sufficiently serious to have caused a breakdown in the employment relationship.

Termination for cause does not entitle an employee to a common law period of reasonable notice. However, the employee is entitled to the minimum statutory notice under the Employment Standards Act provided they have not engaged in conduct amounting to wilful misconduct or the like. An employee may sue an employer, arguing that their conduct did not justify termination for cause.

An employee may have simply resigned or abandoned their position

An employee may have voluntarily left their position by resigning or abandoning their employment. This may occur if the employee clearly indicates an intention to no longer be bound by the employment contract. 

Employees who voluntarily leave their position are not entitled to reasonable notice or payment in lieu.

Employee took leave after punching a solid oak cabinet and sued employer for wrongful or constructive dismissal

In Tuinhof v Modern Heating Brandford Ltd., an employee sued his former employer arguing that he had been constructively dismissed. The employee worked for a small company where he installed heating, ventilation and air conditioning equipment around Brantford, Ontario. 

In March 2019, the employee injured his wrist after punching a cabinet. About a week later, he went off work sick and never returned. The employer’s directors met with the employee in July 2019 to discuss a return-to-work plan. They told him that he was not fired but asked him to return his company cell phone and the keys to the work van.

Shortly after, the employee issued correspondence to the employer through his lawyer.

Employer claimed employee voluntarily left and that it had grounds for a just cause termination

The employer argued that it never actually terminated the employee. It claimed that the employee had stopped working for medical reasons and never provided any evidence that he was able to return to work. As such, the employee simply abandoned his employment. In the alternative, the employer claimed that if the court determined the employee had been terminated, it had grounds to terminate for cause because the employee breached his duty of loyalty by completing side jobs and soliciting its clients.

The employee claimed that these allegations had been fabricated so the employer could avoid paying termination benefits when it terminated him. In the alternative, he argued that he had been constructively dismissed because his work equipment had been taken off him.

Employee was not constructively dismissed

Justice Gibson first looked at the constructive dismissal claim. His Honour explained that the company’s employees did not have the right to a truck or phone for private purposes as a condition of employment. These were for work purposes, not part of the employee’s compensation. His Honour found that the employer asked for the equipment back because it was a busy season. 

As a result, there was no breach of an essential employment contract term and no constructive dismissal. His Honour concluded that the employee voluntarily left his employment, and was therefore not entitled to compensation.

Employer would have had just cause for dismissal

In any event, Justice Gibson was satisfied that the employer had grounds to dismiss the employee for cause. His Honour determined that the employee breached his duty of loyalty by soliciting business from his employer’s customers for his own benefit. There was evidence that the employee did jobs for cash with no benefit to the employer which exposed the employer to liability in the event of faulty installation. 

His Honour decided that the employee’s misconduct was not condoned by the employer and was serious enough to cause a breakdown in the employment relationship, warranting termination for cause. 

Contact Grosman Gale Fletcher Hopkins LLP in Toronto for Advice on Employee Termination

Whether you are an employer or employee, the employment lawyers at Grosman Gale Fletcher Hopkins LLP will help you with your termination-related matter. We have the experience to assist you with whatever the issue, from allegations of employee misconduct to potential claims of constructive dismissal. 
If you need guidance with an employment law issue, contact Grosman Gale Fletcher Hopkins LLPonline or call us at 416.364.9599 to schedule a confidential consultation.