Introduction
According to 2024 Statistics Canada, 31% of men and 47% of women reported experiencing some form of sexual harassment or assault in the workplace. Not only is this a serious violation of an employee’s dignity and safety, but it can also have significant legal consequences for employers.
Beyond the personal harm caused, harassment can fundamentally break the trust necessary in an employment relationship. When the conduct becomes so severe that an employee cannot reasonably continue working, the law may treat their resignation as constructive dismissal.
A recent Ontario court decision demonstrates how sexual misconduct in the workplace can fundamentally breach the employment relationship and lead to constructive dismissal and substantial damages.
Quick answer
Sexual harassment in the workplace can amount to constructive dismissal under Ontario employment law when the misconduct fundamentally destroys the employment relationship. If an employee is forced to leave their job because the workplace becomes unsafe, toxic, or humiliating due to harassment, particularly by a supervisor or employer, the law may treat the resignation as a termination. In these cases, employees may be entitled to damages for lost income, mental distress, counselling costs, and potentially punitive damages.
N.M. v. C.T., 2026 ONSC 365 – A case study
In N.M. vs C. T., 2026 ONSV 365, a restaurant server successfully sued her employer for constructive dismissal, following sexual assault by the restaurant owner.
The employee had trusted the owner and reportedly viewed him “like a second father.” However, the relationship deteriorated when the owner sexually assaulted her, creating an intolerable workplace environment that the employee could not return to.
The Ontario Superior Court of Justice found that the employer’s conduct destroyed the employment relationship and effectively forced the employee out of her job.
As a result, the court held that the employee had been constructively dismissed.
The court ordered the employer to pay approximately $137,000 in damages including compensation for:
- Future counselling costs
- Delayed entry into the workforce
- Punitive damages to reflect the seriousness of the misconduct
This decision highlights how courts treat sexual harassment and assault as serious breaches of the employer’s obligations.
What is constructive dismissal?
Constructive dismissal occurs when an employer does not formally terminate an employee but engages in conduct that fundamentally alters the employment relationship.
When an employer’s actions make continued employment intolerable, the law may treat the situation as if the employee was dismissed.
Examples of conduct that may lead to constructive dismissal include:
- Significant changes to compensation
- Major changes to job duties or responsibilities
- Creating or allowing a toxic or hostile work environment
- Failure to address workplace harassment
- Sexual harassment or assault by supervisors, owners or employers
In cases involving sexual harassment, the misconduct may constitute such a severe breach of trust that the employee has little choice but to leave the workplace.
Why sexual harassment can trigger constructive dismissal?
Employers have a fundamental duty to provide a safe and respectful workplace.
Sexual harassment undermines this core obligation in the employment relationship.
When harassment occurs, especially when perpetrated by someone in a position of authority, the impact can be profound. Employees may feel unsafe, humiliated, or psychologically distressed.
Ontario courts increasingly recognize that employees should not be forced to remain in abusive or degrading work environments.
Where harassment is severe or persistent, courts may conclude that the employer has fundamentally breached the employment contract. In such cases, the employee’s resignation may be legally treated as a constructive dismissal.
Legal consequences for employers
Matters involving workplace sexual harassment can expose employers to several forms of liability outside of damages.
- Human rights liability
Sexual harassment may violate human rights legislation, such as the Ontario Human Rights Code, which prohibits discrimination and harassment based on sex.
Employees may pursue remedies through the Human Rights Tribunal of Ontario, including damages for injury to dignity and self-respect.
- Damages for mental distress or trauma
Courts may award damages for: - Psychological harm
- Emotional distress
- Counselling costs
- Loss of dignity
3. Punitive damages
In particularly egregious cases, courts may impose punitive damages to punish the employer and deter similar conduct.
Employer responsibilities to prevent workplace harassment
Employers in Ontario have both legal and practical obligations to prevent harassment in the workplace and respond effectively when complaints arise.
These responsibilities include:
- Implementing clear anti-harassment policies
- Providing regular training to employees and management
- Establishing confidential reporting mechanisms
- Investigating complaints promptly and thoroughly
- Taking appropriate disciplinary action when misconduct occurs
Failure to meet these obligations can result in employers being liable for the additional damages.
Key takeaways
The above case serves as a reminder that workplace sexual harassment can have serious legal consequences for employers and devastating personal impact for employees.
When misconduct by an employer or manager destroys the trust necessary for the employment relationship, courts may find that the employee has been constructively dismissed.
For employees who experience harassment, legal remedies may be available, including:
- Claims for constructive dismissal
- Damages for mental distress
- Human rights damages
- Punitive damages in serious cases
Creating safe workplaces is essential to protecting both employees and organizations from the significant human and legal costs of harassment.
Frequently asked questions
Can sexual harassment lead to constructive dismissal in Ontario?
Yes. If sexual harassment makes the workplace intolerable and forces an employee to resign, Ontario courts may treat the resignation as constructive dismissal.
What damages can employees receive for workplace sexual harassment?
Employees may receive damages for lost income, mental distress, counselling costs, human rights violations, and in some cases punitive damages.
What should employees do if they experience workplace sexual harassment?
Employees should document the incidents, report the misconduct through workplace channels where possible, and seek legal advice to understand their rights and options.
Conclusion
Workplace sexual harassment is not only unacceptable, it can fundamentally breach the employment relationship and expose employers to significant legal liability.
If you have experienced sexual harassment at work or believe your workplace has become intolerable due to misconduct, you may have legal options available.
The employment lawyers at Whitten & Lublin regularly assist employees in understanding their rights and pursuing claims for constructive dismissal and workplace harassment.
Contact our team to discuss your situation and learn how we can help you move forward with confidence. Book your consultation online or call 416 640 2667.
Author – Jordan Cantor
