Recent court decisions shed some light on the constructive dismissal threshold
A lot can change in five years.
This time five years ago, employers and employees were frantically adjusting to the “new normal” brought on by the COVID pandemic, including novel work-from-home arrangements. But by the time that public health restrictions were winding down towards the end of 2022, many workplaces had learned to embrace these arrangements, citing such factors as improved work-life balance and employee morale.
However, as most employment lawyers and HR professionals will confirm, the story today is much different. In recent months, there has been a noticeable push by employers to bring employees back to the office in the name of productivity, collaboration, networking, mentorship, skill development and a variety of other justifications. Predictably, this push has resulted in pushback from some employees.
The legal question is whether return-to-office mandates give rise to constructive dismissal risks. Constructive dismissal occurs where an employer has not expressly terminated an employee’s employment, but a termination can be interpreted – or “constructed” – because the employer has unilaterally made a substantial change to the essential terms of an employee’s (written or unwritten) contract (a test established by the Supreme Court of Canada in Potter v. New Brunswick Legal Adi Services Commission, 2015 SCC 10).
Until very recently, the answer to this question was entirely unclear, thanks to a lack of judicial precedent. However, a trio of recent decisions are finally shedding some light on the answer.
Nickles v. 628810 Alberta Ltd., 2025 ABKB 212 (Alberta)
The employee, Ms. Nickles, had worked from her home as an office manager for 37 years (from 1986 to 2023). During this period, she attended the office when needed – but mostly at her own discretion.
Following a change in ownership, the employer introduced a so-called return-to-office mandate requiring Nickles to work in the office on a full-time basis. The employer gave Nickles less than three months’ notice to comply. In response, Nickles argued that this was not a “return” to the office, but rather a significant change to her longstanding work from home arrangement.
After Nickles asserted constructive dismissal, the employer offered her a hybrid work arrangement of 2.5 days per week in the office, which could later revert to full-time in-office attendance – depending on “how it went.” Nickles declined and commenced an action for wrongful dismissal.
On summary judgment, the Court of King’s Bench of Alberta found that Nickles’ work-from-home arrangement was an essential term of her (unwritten) contract. Therefore, the employer’s alteration of this term, on less than three months’ notice, amounted to constructive dismissal.
However, the court also opined that Nickles’ longstanding work-from-home arrangement was distinguishable from the remote and hybrid work arrangements that grew out of the COVID pandemic:
“This was not a return-to-work arrangement of the type that was common after the COVID pandemic. The COVID return to work template does not fit this paradigm. This was an arrangement where the work was always from home.”
The court also held that Nickles was not required to accept the employer’s hybrid work proposal in order to mitigate her damages. In the court’s view, it would be unreasonable for the employer to indirectly get what it wanted under the guise of mitigating damages.
Parolin v. Cressey Construction Corporation, 2025 BCSC 741 (British Columbia)
The employee, Ms. Parolin, began working for the employer, a major real estate developer and construction company, in 2005. After Parolin returned from maternity leave in 2013, the employer’s Executive Vice-President approved a flexible work schedule that would allow Parolin to accommodate her childcare commitments.
Then, in March 2020, Parolin commenced working from home due to the COVID pandemic. While almost all other employees returned to the office within a matter of weeks, Parolin continued working from home with the employer’s approval – “as long as the job was getting done.”
However, in 2023, the employer’s Vice President of Development called Parolin into a meeting and directed her to return to the office from 9 a.m. to 5 p.m., Monday to Friday. As a result of this meeting, Parolin commenced an action for constructive dismissal.
The Supreme Court of British Columbia agreed with Parolin. According to the court, Parolin’s flexible work schedule and work from home arrangement were fundamental terms of her (unwritten) contract:
“[A] term of Ms. Parolin’s employment contract was her ability to work flexible hours at home, due to childcare commitments. This term was not indefinite, as it was tied to childcare commitments. While I accept that employers have the ability to manage their workforce, including the location of work, that is tempered where a binding term in an employment contract exists. In this case, while the term of flexible hours and location in employment contract is oral, I have concluded it exists, and thus can only be changed with reasonable discussion and/or notice.”
The employer’s attempt to unilaterally change these fundamental terms, without notice, were factors contributing to Parolin’s constructive dismissal. In the result, the court ordered the employer to pay Parolin damages in lieu of 19 months’ reasonable notice.
Byrd v. Welcome Home Children’s Residence Inc., unreported decision of the Ontario Superior Court of Justice (Small Claims), File No. SC-22-00162197-0000 (Ontario)
The employee, Ms. Byrd, commenced employment with a care home to orphaned and neglected children in 2018. In September 2020, Byrd relocated to Europe when her husband was posted by the Canadian Forces to Belgium. Byrd continued to work for the employer remotely from Europe for more than a year until the employer presented her with the following ultimatum in March 2022 - reattend physically at the workplace or resign.
In response, Byrd submitted a written letter of resignation to the employer and commenced an action asserting constructive dismissal.
At trial, the deputy judge found that remote work from Europe became an “accepted part of [Byrd]’s job,” and that the employer’s ultimatum was a unilateral and fundamental change to the term of her (unwritten) contract. The deputy judge also called out the employer’s failure to provide notice of the change to Byrd’s remote work arrangement:
“A fundamental term such as a right to recall an employee from Europe to work in-person in Ottawa calls out for clear and timely notice to the employee. Here there was none.”
The deputy judge held that Byrd had been constructively dismissed and ordered the employer to pay damages in lieu of 6.5 months’ reasonable notice.
Importantly, what constitutes constructive dismissal depends on the facts and circumstances of each case (and the facts underlying the three decisions summarized above are all unique). With that said, if these three decisions are any indication, the early prognosis for employers attempting to unilaterally impose return-to-office mandates is bleak.
The good news is that there are a number of measures employers can take in order to mitigate constructive dismissal risks:
Review contractual terms: The three decisions summarized above all had one thing in common - none of the employees had written contracts setting out their primary place of work. A written contract that clearly and unequivocally reserves the employer’s right to determine where the work is performed could – in the right circumstances – provide a full defence to constructive dismissal claims. As the Court of King’s Bench of Alberta astutely put it in its recent decision of Lichuk v. Alberta (Minister of Agriculture and Irrigation), 2024 ABKB 153:
“In the wake of COVID and the popularization of work from home arrangements, it perhaps bears restating that the place of work is a fundamental term of employment which the employer may dictate, subject to negotiated arrangements with the employee or bargaining agent. There is neither a default right to work from home nor a presumption that doing so is equivalent to fulfilling a contractual obligation to come to work.” [Emphasis added.]
Draft clear remote and hybrid work policies: Similar to written contracts, clearly drafted (and consistently enforced) remote and hybrid work policies may help employers mitigate constructive dismissal risks. In addition to standard provisions establishing expectations regarding productivity, working hours, technology and data security, a good policy will also set clear rules regarding permitted work locations and the employer’s right to recall employees to in-office work.
Provide reasonable notice: All three of the decisions summarized above noted the employer’s failure to provide sufficient (or, in some cases, any) advance notice of the change to work location. This is significant because the Supreme Court of Canada has suggested that a fundamental change does not amount to a constructive dismissal where the employer provides the employee with reasonable written notice of the change – see Farber v. Royal Trust Co., [1997] 1 SCR 846, although in practice, further steps may be required beyond simply providing notice (for example, see Wronko v. Western Inventory Service Ltd., 2008 ONCA 327, where the employee explicitly rejected the employer’s notice of a fundamental change). There is no “rule of thumb” and what constitutes reasonable notice will vary on an employee-by-employee basis; however, for planning purposes, employers may wish to consider a formula of one month of notice per year of service.
Paul Boshyk is the National Chair of McMillan LLP’s Employment & Labour Relations Group, and Co-Chair of the firm’s Executive Compensation Subpractice Group. He practices out of the firm’s Toronto, Ontario and Calgary, Alberta offices.
