Williams HR Law LLP

“Quiet Firing”: Risks and Best Practices for Employers

September 21, 2022

By now, many have become familiar with “quiet quitting”, the viral concept that describes employees prioritizing work/life balance to avoid burnout. An equally buzzy spin-off phrase, “quiet firing”, is now making waves. While definitions vary, the phrase describes employer conduct that is intended to demoralize an employee and set them up to fail, such that the employee will be driven to resign from their position.

Despite the term’s recent entry into popular vocabulary, the concept it describes is far from novel. Forms of quiet firing often constitute “constructive dismissal”—a form of wrongful dismissal that can lead to significant risks for employers.

What is constructive dismissal?

Constructive dismissal describes situations in which an employer, without having explicitly dismissed an employee, unilaterally implements changes that fundamentally alter the employee’s terms of employment. This can include behaving in a manner that makes the workplace intolerable to the employee. Employers may engage in constructive dismissal tactics for various reasons, including a reluctance to engage in tough conversations or as part of an attempt to avoid the financial obligations associated with a without-cause dismissal.

Determining what amounts to constructive dismissal is a highly fact-specific exercise that considers the terms and conditions of employment, the employer’s conduct, and the employee’s response. While each case should be reviewed with regard to its particular circumstances, courts have previously considered major, unilateral changes to an employee’s responsibilities, wages, hours of work, location of employment, and/or title to constitute a fundamental change to the terms of employment resulting in a finding of constructive dismissal.

As noted above, constructive dismissal may also describe employer conduct that fosters a work environment so hostile or toxic to the employee that it is intolerable for them to continue working. This includes the condonation, or even encouragement, of workplace harassment and discrimination. For example, in the 2019 decision Colistro v Tbaytel, the Ontario Court of Appeal upheld a decision in which a female employee was found to have been constructively dismissed from her role after the employer rehired a male employee who had sexually harassed her in the workplace, and had previously been dismissed on a without cause basis for having done so (for more information, see our blog). Notably, the Court found that while the employer’s decision to rehire the male employee was a single incident of mistreatment as opposed to a pattern of repeated behaviour, it was sufficiently egregious to ground the finding that the female employee had been constructively dismissed.

What are the risks that flow from constructive dismissal?

A claim of constructive dismissal can leave an employer vulnerable to potentially costly consequences. An employee who has been constructively dismissed will be entitled to treat their employment as having been terminated by the employer and to receive damages equal to their termination entitlements. Moreover, the employer may be found liable for additional damages for mental distress experienced by the employee as a result of the employer’s bad faith conduct in dismissing the employee (for more information on bad faith damages and the employer’s concomitant duty to act in good faith, see our blog).

Employers should also take care to avoid underestimating the non-pecuniary effects of engaging in conduct giving rise to a valid constructive dismissal claim, including damage to the employer’s reputation and diminished workplace morale.

Best practices for employers

Employers attempting to “quietly fire” their employees should re-evaluate their approach, given the significant risks that flow from constructive dismissal.

Where an employer seeks to make changes to an employee’s terms of employment, it is important to obtain the employee’s agreement or otherwise ensure that the changes do not fundamentally alter the nature of the work relationship. However, where the end of an employment relationship is what is truly desired, it will typically be less costly—financially and to workplace culture and employee morale—for employers to be forthright about their intentions rather than seek to disguise the dismissal as unwanted changes to an employee’s work conditions in the hopes that the employee will resign.

Additionally, to mitigate constructive dismissal risks arising from a toxic work environment, employers should take care to conduct thorough intakes of employee complaints. Employers would be well advised to remember that most occupational health and safety laws in Canada require that an investigation be conducted into incidents or complaints of workplace harassment, including discriminatory harassment.

If your organization’s managers are in the midst of taking steps to “quietly fire” employees, we encourage you to consult an employment lawyer to assist you in assessing your circumstances and options, and advise you of any constructive dismissal risks.