Constructive dismissal settlements in Ontario are usually based on the severance and other compensation an employee should have received if the employer had properly terminated them without cause.

There is no fixed settlement amount or reliable “average.” Depending on your age, length of service, position, employment contract and ability to find comparable work, a constructive dismissal claim can be worth many months of compensation. In appropriate cases, common-law severance can reach as much as 24 months’ pay.

But don’t resign simply because you think your job has changed enough to qualify. You first need to establish a constructive dismissal in Ontario. Resigning too quickly—or accepting the change for too long—can put the settlement itself at risk.

⚠️ Don’t resign just to start a constructive dismissal claim. Have the workplace change and your potential compensation reviewed before ending your employment.

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How Much Can a Constructive Dismissal Settlement Be in Ontario?

A constructive dismissal settlement can range from weeks to many months of compensation, with common-law severance reaching as much as 24 months’ pay in appropriate cases.

There is no standard amount because constructive dismissal compensation is usually based on the notice or severance you would have received if your employer had terminated you without cause.

Your particular entitlement depends on your circumstances—not a chart or simple years-of-service formula.

Is there an average constructive dismissal settlement?

No meaningful average can tell you what your constructive dismissal claim is worth.

Many employment settlements are negotiated privately, and the value of one employee’s claim can be very different from another’s. A 45-year-old manager with 15 years of service does not necessarily have the same entitlement as a 30-year-old employee who worked for the company for two years.

Even employees with the same length of service can receive very different amounts because age, position, contract language and available job opportunities also matter.

💡 There is no “one month per year” or “one week per year” formula for constructive dismissal settlements. The value of the claim depends on the employee’s complete circumstances.

How Are Constructive Dismissal Settlements Calculated?

The starting point is usually the amount of reasonable notice or severance the employee should have received when the employment relationship ended.

For many non-unionized employees, the most important factors include:

  • Age: Finding comparable employment can become more difficult as an employee gets older.
  • Length of service: Longer service can increase the reasonable-notice period.
  • Position: Senior, specialized or difficult-to-replace roles can affect the amount of notice required.
  • Availability of similar work: A limited market for comparable employment can increase the appropriate notice period.
  • Employment contract: An enforceable termination clause can affect common-law rights.

These are the same core considerations used in many without-cause termination cases. Learn more about how severance pay in Ontario is calculated.

Are ESA minimums the settlement amount?

No. Ontario’s Employment Standards Act provides minimum termination and severance rights, not necessarily your full constructive dismissal entitlement.

Ontario expressly recognizes constructive dismissal as a termination for employment-standards purposes when the employee resigns in response within a reasonable period. Many non-unionized employees also have greater rights at common law.

Do not assume an employer’s ESA calculation represents everything your claim is worth.

What Can a Constructive Dismissal Settlement Include?

A constructive dismissal settlement can include more than base salary.

Depending on your employment terms and the circumstances of the claim, compensation can include:

  • Salary or regular wages during the notice period
  • Bonuses
  • Commissions
  • Health and dental benefits
  • Pension or RRSP contributions
  • Equity or other incentive compensation where applicable
  • Other regular compensation that would have been received during continued employment

The Supreme Court of Canada has confirmed that reasonable-notice damages can include bonuses and other compensation the employee would have received during the notice period unless enforceable contractual language properly removes that right.

Can you receive damages beyond severance?

Yes, but additional damages are not automatic in every constructive dismissal case.

Extra compensation can become relevant where the employer’s conduct also violated another legal right—for example, where a dismissal involved discrimination or where the employer acted improperly in the manner of dismissal.

The facts need to support those additional claims. A constructive dismissal does not automatically produce punitive, aggravated or human rights damages simply because the employer made an unlawful workplace change.

What Situations Can Lead to a Constructive Dismissal Settlement?

Settlements commonly arise after substantial pay cuts, demotions, major changes to duties or hours, forced relocations and other fundamental changes to employment.

Significant pay cut

If your employer substantially reduces your salary, commissions or other important compensation without your agreement, the change can support a constructive dismissal claim.

Demotion

A major reduction in title, authority, prestige or responsibilities can amount to constructive dismissal even if your salary does not immediately change.

Reduced hours

A substantial unilateral reduction in working hours that significantly reduces your income can amount to constructive dismissal.

Toxic or abusive workplace

Serious harassment, abuse or a poisoned work environment can amount to constructive dismissal when the conduct fundamentally damages the employment relationship.

Not every unpleasant workplace or unwanted change meets the test. The strength of the constructive dismissal claim itself directly affects the employee’s ability to negotiate a settlement.

Does the type of constructive dismissal change your severance?

The way you were constructively dismissed does not create a separate severance formula.

For example, a 25 per cent pay cut does not mean your settlement is automatically worth more than someone who was seriously demoted. Once constructive dismissal is established, the core notice calculation focuses primarily on your employment circumstances and compensation.

However, particularly serious employer conduct can create separate legal issues that affect the overall value of a settlement.

Do You Have to Go to Court to Get a Constructive Dismissal Settlement?

No. Many constructive dismissal claims are resolved through negotiation without going to trial.

A settlement is an agreement between the employee and employer that resolves the dispute. In exchange for compensation and other agreed terms, the employee will usually sign a release ending the legal claim.

Settlement terms can address more than money, including:

  • The amount and timing of compensation
  • Benefits
  • Bonuses or commissions
  • Reference language
  • Confidentiality
  • How the employee’s departure is described

What if the employer denies constructive dismissal?

An employer does not have to agree that constructive dismissal occurred for you to have a claim.

If the employer denies liability, the employee can still seek to negotiate a resolution or pursue a wrongful dismissal claim.

The strength of the evidence matters. Employment contracts, emails, pay records, organizational charts and communications about the workplace change can all become important.

Does finding another job affect your settlement?

Yes. Income from comparable new employment can affect common-law wrongful dismissal damages because employees have a duty to make reasonable efforts to reduce their losses.

That does not mean you should avoid looking for work to preserve a claim. Employees pursuing common-law damages are expected to make reasonable efforts to find suitable replacement employment. Learn more about an employee’s duty to mitigate after they lose their job.

How Do You Protect a Constructive Dismissal Settlement?

The most important step is to get advice before resigning or accepting a major change to your employment.

If you believe you are being constructively dismissed:

  • Document the change. Keep emails, letters, pay records and other evidence.
  • Review your employment contract. Determine whether your employer had a contractual right to make the change.
  • Object promptly where appropriate. Continuing indefinitely without objection can allow the employer to argue that you accepted the new terms.
  • Don’t stop attending work without advice. That can create avoidable risk.
  • Don’t sign new terms or a release before understanding them.
  • Get advice before resigning. Your timing and wording can significantly affect the claim.
⚠️ A voluntary resignation normally ends your right to severance. If your employer effectively forced you to leave, the result can be different—but establish your constructive dismissal position before resigning.

Read more about severance pay when you quit in Ontario.

Constructive Dismissal Settlements Ontario: Frequently Asked Questions

How much is a constructive dismissal claim worth in Ontario?

A constructive dismissal claim can be worth weeks to many months of compensation, depending on the employee’s circumstances. Common-law severance can reach 24 months’ pay in appropriate cases, but there is no automatic amount.

Is there a maximum constructive dismissal settlement?

There is no single statutory maximum that caps every common-law constructive dismissal settlement. Reasonable-notice awards commonly fall at or below 24 months, while periods above 24 months require exceptional circumstances.

Is a constructive dismissal settlement taxable?

Some settlement payments are taxable, but the tax treatment depends on what each payment represents and how the settlement is structured. Get appropriate legal and tax advice before assuming the amount written in a settlement agreement is the amount you will receive after deductions.

Can I get constructive dismissal severance if I already resigned?

Yes, if your resignation was a timely response to conduct that legally amounted to constructive dismissal. If you voluntarily resigned for an unrelated reason, ordinary severance rights generally do not apply.

How long does a constructive dismissal settlement take?

There is no standard timeline. Some claims resolve through early negotiation, while disputed cases can take longer if the employer denies constructive dismissal or the parties disagree significantly about compensation.

Can an employer offer less than my full entitlement?

Yes. An employer’s offer does not determine what you are legally owed. Before accepting a settlement, compare the offer with your actual common-law and contractual rights.

⚠️ Unionized? Constructive dismissal disputes must be pursued through your union and the grievance process. Our employment law team can’t assist with unionized workplace disputes.

Find Out What Your Constructive Dismissal Claim Is Worth

A constructive dismissal settlement is only valuable if the underlying claim is handled properly. Before you resign, accept changed employment terms or sign a settlement release, understand both whether you have been constructively dismissed and how much compensation you can pursue.

Samfiru Tumarkin LLP helps non-unionized Ontario employees assess constructive dismissal claims, calculate their severance entitlement and negotiate compensation with their employers.

Employees in the GTA can speak with our Toronto constructive dismissal lawyers. We also assist employees through our Ottawa constructive dismissal lawyers and Hamilton constructive dismissal lawyers.

If your employer refuses to recognize the dismissal or provide proper compensation, learn more about wrongful dismissal in Ontario.

How Much Is Your Constructive Dismissal Claim Worth?

Don’t resign or accept a settlement until you understand the severance and other compensation you could be owed.

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