If your workplace has become toxic, or if your employer has drastically changed your job duties, you may be tempted to throw your hands up, hand in your resignation, and walk away.
Before you draft that resignation letter, you need to ask one critical question: “If I quit my job, do I still get severance pay?”
The General Rule: If you voluntarily resign from your job in Ontario, you forfeit your right to a severance package.
The Massive Exception: If your employer effectively forced you to quit by making fundamental, unwanted changes to your job, or by creating an intolerable work environment, the law treats your resignation as a termination. This is known as Constructive Dismissal, and if proven, you are legally entitled to your full common law severance pay.
Quitting your job is the exact outcome your employer is hoping for, because it saves them from paying you a severance package. Before you formally resign, you must speak with an Ontario employment lawyer at Samfiru Tumarkin LLP. We can help you strategize your exit so you do not accidentally forfeit your legal rights.
On This Page:
- 1. Voluntary Resignation
- 2. Forced Resignation
- 3. Protect Your Severance Rights
- 4. How Much Are You Owed?
- 5. Secure Your Exit Strategy
The General Rule: Voluntary Resignation
Under the Ontario Employment Standards Act (ESA) and common law, a severance package is designed to act as a financial bridge for an employee who has lost their job through no fault of their own.
When you voluntarily decide to end the employment relationship because you found a better job, want to go back to school, or simply want a change of pace, the situation is out of your employer’s control. Therefore, they owe you no financial compensation beyond your final wages and any accrued vacation pay. Furthermore, resigning voluntarily will generally disqualify you from receiving Employment Insurance (EI) benefits.
The Exception: Constructive Dismissal (Forced Resignation)
You do not need to be formally fired to be owed severance pay. Constructive dismissal Ontario occurs when an employer makes a unilateral, fundamental change to the terms of your employment without your consent, or makes the workplace so toxic that you have no reasonable choice but to resign.
In the eyes of Ontario courts, the employer has “constructed” a dismissal. Because the employer broke the terms of the employment contract first, the law treats you as if you were wrongfully dismissed.
Common Triggers for Constructive Dismissal
You may have a claim for constructive dismissal (and full severance pay) if your employer imposes any of the following changes without your agreement:
- Significant Pay Cuts: A sudden reduction in your base salary, bonus structure, or commission rate.
- Demotion or Loss of Authority: Stripping you of your managerial duties, reporting lines, or prestige, even if your pay remains the same.
- Drastic Changes to Hours or Shifts: Moving you from day shifts to night shifts, or severely reducing your guaranteed hourly work.
- Forced Relocation: Demanding you transfer to an office in a different city, significantly increasing your commute.
- Toxic Work Environment: Permitting ongoing harassment, discrimination, bullying, or workplace violence.
- Temporary Layoffs: In Ontario, placing a non-unionized employee on a temporary layoff is almost always illegal unless you explicitly agreed to it in your employment contract. It is an immediate constructive dismissal.
Why Employers Use These Tactics
Many employers know that firing a long-term employee will trigger a massive common law severance payout. To avoid this financial hit, they resort to “quiet firing.” They will deliberately make your working conditions miserable, hoping you will get frustrated and quit voluntarily. If you resign without legal guidance, their strategy works, and they save tens of thousands of dollars.
How to Protect Your Right to Severance
If your employer has just announced a fundamental change to your job, how you react in the days immediately following the announcement will dictate whether you can claim severance.
1. Do Not Accept the Change
If your employer cuts your pay and you continue to work for several months without complaining, the courts will assume you have legally “condoned” (accepted) the new terms. Once you condone the change, you can no longer claim constructive dismissal. You must object to the change immediately.
2. Put Your Objection in Writing
If your employer changes your shift or demotes you, send a polite but firm email stating that you do not agree to the change and are working under protest. Keep a copy of this email for your personal records.
3. Do Not Quit Until You Have Legal Advice
Constructive dismissal is one of the most complex areas of Ontario employment law. If you resign and claim constructive dismissal, but a judge later decides the employer’s change wasn’t “fundamental” enough, you will be deemed to have legally resigned and will get nothing. You need an employment lawyer to assess the strength of your case before you pull the trigger.
How Much Severance Are You Owed for Constructive Dismissal?
If you successfully prove you were constructively dismissed, your employer owes you the exact same amount of severance pay as if they had looked you in the eye and fired you without cause.
This means you are entitled to Common Law Severance. Unlike the bare minimums guaranteed by the ESA, common law severance is calculated using the Bardal factors, which evaluate your age, length of service, and the seniority of your position. Payouts under common law can provide up to 24 months of full pay, including the value of your bonuses, pensions, and health benefits.
Secure Your Exit Strategy Today
If you are trapped in a toxic work environment or facing unacceptable changes to your job, do not navigate the minefield of constructive dismissal alone.
The employment lawyers at Samfiru Tumarkin LLP can review your situation, advise you on exactly what to say to HR, and execute a strategic exit that protects your mental health and secures the maximum severance compensation you deserve.
As Canada’s largest and most positively reviewed employee-side employment law firm, we have successfully represented tens of thousands of professionals across Ontario. We have the leverage to force employers to take responsibility for the dismissals they construct.
Contact Samfiru Tumarkin LLP Today
Do not resign before speaking with us. Let us secure the compensation you deserve.