In Ontario, being demoted can amount to constructive dismissal if it significantly changes your role, status, or pay without your consent or a clear contractual basis. Courts will look at whether the demotion undermines the core terms of your job or affects your dignity, status, or future prospects.
When It’s Likely Constructive Dismissal:
- Your responsibilities are significantly reduced
- Your title or authority is downgraded
- Your compensation is cut without agreement
- The new role is humiliating or career-limiting
Case Highlights:
- Blight v. Nokia Products (ONSC 2012): Status and prestige matter — even with the same salary, the employee was constructively dismissed. Blight was moved from a high-profile leadership role to a back-office technical position, even though his title and pay stayed the same. The court found that the loss of status, visibility, and influence amounted to a substantial unilateral change in the employment relationship. Despite no cut in pay, the court ruled it was a constructive dismissal.
- Brake v. PJ-M2R (ONCA 2017): A forced demotion without contractual authority was humiliating and illegal. Brake was told to either accept a demotion to a junior role or be fired. The demotion involved a significant reduction in status and was presented in a coercive way after a one-sided “performance improvement” plan. The Court of Appeal agreed it was constructive dismissal and emphasized that an employee shouldn’t have to choose between humiliation and unemployment.
- Evans v. Teamsters (SCC 2008): Employees don’t need to work in an atmosphere of humiliation just to mitigate damages. Evans was offered continued work after being constructively dismissed but declined because the environment had become hostile and humiliating. The Supreme Court ruled that employees aren’t required to work in degrading or uncomfortable conditions just to mitigate damages. This case clarified that workplace atmosphere matters, not just the job title or duties.
- O’Dwyer v. Dominion Soil Investigation Inc. (1999 ONSC): Employees can be demoted if their conduct would justify termination. O’Dwyer was demoted after misconduct that would have justified termination. The employer chose to demote him instead, and the court upheld it as a reasonable disciplinary alternative. When there’s just cause, a demotion may be allowed and does not amount to constructive dismissal.
When Demotion May Be Legal:
- Your contract allows it
- It’s part of a good-faith accommodation (e.g., due to medical issues)
- You were demoted instead of being fired for just cause (e.g., in lieu of dismissal)
Bottom Line: Demotions aren’t always legal. If yours wasn’t agreed to or justified, and it significantly changes your job, you may have a claim for constructive dismissal.
Need Help?
Give our office a call. The lawyers at De Bousquet PC are here to support Ontario workers. Whether you’re reviewing a contract or dealing with a workplace issue, we can help you understand your rights and your options.