Constructive Dismissal vs. Wrongful Dismissal

Constructive dismissal and wrongful dismissal are often confused — but they are not the same.

Understanding the difference is critical, because both can lead to severance pay, but they happen in very different ways.

In simple terms:

• Wrongful dismissal = you were fired improperly
• Constructive dismissal = you were forced out due to major changes

This guide breaks down the key differences and what they mean for your rights.

What Is Wrongful Dismissal?

Wrongful dismissal happens when an employer terminates your employment without providing proper notice or severance.

This includes:

• Firing you without cause and offering too little severance
• Terminating you without following your employment contract
• Not providing reasonable notice

What Is Constructive Dismissal?

Constructive dismissal happens when your employer doesn’t fire you — but makes major changes to your job.

These changes can include:

• A pay cut
• A demotion
• Reduced hours
• A toxic work environment

Key Differences at a Glance

In both cases, you may be entitled to compensation.

Do Both Lead to Severance Pay?

Yes.

Whether it’s constructive dismissal or wrongful dismissal, the outcome is often the same:

• You may be owed severance pay in Canada.

This can include:

• Pay in lieu of notice
• Continued benefits
• Bonuses and commissions

Why the Difference Matters

The difference affects:

1. How Your Case Is Proven

• Wrongful dismissal → focus on severance
• Constructive dismissal → must prove a fundamental change

2. What Evidence Is Needed

Constructive dismissal requires more documentation.

3. How quickly you must act

In constructive dismissal cases, timing is critical.

Common Confusion (Very Important)

Many employees think:

• “I wasn’t fired, so I don’t have a case.”

That’s not true.

If your employer made major changes to your job, you may still have a constructive dismissal claim.

Ontario Example

In Ontario, both wrongful dismissal and constructive dismissal are governed by:

• Common law
• The Employment Standards Act (ESA)

Real-World Scenario

Scenario:

An employee’s salary is reduced by 25%.

• If they are fired → wrongful dismissal
• If they stay but are forced out → constructive dismissal

What Should You Do If You’re Not Sure?

If you’re unsure whether your situation is constructive or wrongful dismissal:

1. Don’t Guess

Mislabeling your situation can cost you money.

2. Don’t Resign Too Quickly

This can hurt your claim.

3. Get Legal Advice

An employment lawyer can determine your best path.

Speak to an Employment Lawyer

If your employer has terminated your job — or made major changes to it — you may be entitled to compensation.

At Samfiru Tumarkin LLP, our employment lawyers have helped thousands of employees:

• Understand their situation
• Determine what they’re owed
• Resolve disputes efficiently

FAQ: Constructive vs Wrongful Dismissal

Which is better: constructive dismissal or wrongful dismissal?

Neither is “better,” but both can result in severance pay.

Is constructive dismissal harder to prove?

Yes. It requires showing a fundamental change and lack of acceptance.

Can I have both?

Not exactly—but constructive dismissal is treated similarly to wrongful dismissal in terms of compensation.

Do both require legal action?

Not always. Many cases are resolved through negotiation.

What’s the biggest difference?

Whether the employer ended the job (wrongful) or changed it so much you were forced out (constructive).