When “Return-to-Office” Amounts to Constructive Dismissal
The shift to working from home after the pandemic has significantly altered traditional workplace dynamics, offering employees and employers alike greater flexibility and autonomy. However, as organizations adapt to new hybrid or remote work models, employers must tread carefully when making changes to established work-from-home arrangements. Recent decisions from courts in Ontario and Alberta suggest that unilateral decisions to revoke remote work arrangements could expose employers to the risk of a constructive dismissal claim.
I. Overview of the Law of Constructive Dismissal
The Supreme Court of Canada has defined the concept of constructive dismissal in Farber v. Royal Trust Co., [1997] 1 S.C.R. 846 at para 34:
A constructive dismissal occurs when an employer makes a unilateral and fundamental change to a term or condition of an employment contract without providing reasonable notice of that change to the employee. Such action amounts to a repudiation of the contract of employment by the employer whether or not he intended to continue the employment relationship. Therefore, the employee can treat the contract as wrongfully terminated and resigned which, in turn, gives rise to an obligation on the employer’s part to provide damages in lieu of reasonable notice.
In Potter v. New Brunswick Legal Service Commission, 2015 SCC 10, the Supreme Court of Canada further articulated a two-prong test to determine if constructive dismissal has occurred. Satisfaction of either branch of the test is sufficient, and the Court is called to apply an objective analysis in determining whether there was a breach of the employment contract. The first branch of the test requires the Court to review the specific terms of the employment contract and determine whether there has been a substantial alternation to an essential term of the contract. The second branch allows for constructive dismissal to be established when, viewed in light of all the circumstances, a reasonable person would believe that the employer no longer intended to be bound by the contract. The focus on the second branch is on a cumulative effect of past acts by the employer, rather than a single act. The employee bears the burden of proof to establish that they have been constructively dismissed.
II. When “Return-to-Office” Amounts to Constructive Dismissal
a. Byrd v. Welcome Home Children’s Residence Inc., 2024 CarswellOnt 21744
In Byrd v. Welcome Home Children’s Residence Inc., the Ontario Superior Court of Justice – Small Claims Court (the “Court”) found that an employee had been constructively dismissed after her employer required her to return to in-person work in Canada, following over a year of working remotely from Europe. The Court concluded that remote work from Europe had become an established and accepted condition of her employment, and that the employer had never reserved or communicated a right to require her return. As a result, the demand to resume in-person work constituted a repudiation of the employment contract.
The Court agreed with the employee’s position that, under the circumstances, she had been constructively dismissed. It held that the employer’s ultimatum—return to in-person work or resign—constituted a repudiation of the employment contract and a constructive dismissal.
This conclusion was grounded in two key findings: (1) the employee’s ability to work remotely from Europe had become an accepted term of her employment; and (2) the employer had neither established nor communicated any right to require her return to in-person work. In determining that remote work had become a recognized part of the employee’s role, the Court placed little weight on disputed oral conversations and instead relied on the undisputed fact that she had worked remotely for over a year without interruption or objection from the employer.
The Court emphasized that a fundamental change—such as requiring an employee to relocate from Europe to Ottawa for in-person work—demands clear and timely communication, which was lacking in this case.
b. Nickles v. 628810 Alberta Ltd., 2025 ABKB 212
In Nickles v 628810 Alberta Ltd., the Alberta Court of King’s Bench ruled that an employer’s rollout of a “return-to-office” amounted to constructive dismissal for an employee who had worked remotely for nearly four decades.
The plaintiff in Nickles served as an office manager from 1986 to 2023, during which time she consistently worked from home. Although she occasionally went into the office, it was largely at her own discretion, and there was no disagreement that the position was effectively remote.
Following a change in ownership, the employer introduced a formal return-to-office policy, requiring the plaintiff to begin working in the office full-time. The employee was given less than three months to comply. She objected, arguing that this was not a return to an original arrangement, but a substantial shift in the terms of her role.
After consulting legal counsel, the employee claimed constructive dismissal. In response, the employer proposed a hybrid work model—2.5 days per week in the office—with the possibility of increasing to full-time in-person work based on how things progressed. The employee rejected the offer and brought a wrongful dismissal claim.
The Court held that the employee’s 37-year work-from-home arrangement had become a central and essential element of her employment. The employer’s attempt to impose a significant change to that arrangement on short notice, without the employee’s consent, constituted constructive dismissal.
Significantly, the judge emphasized that this case was distinguishable from situations arising out of pandemic-era work transitions. As the Court put it:
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’s conclusion, therefore, turned on the unique and long-standing nature of the plaintiff’s specific remote work history.
On the issue of mitigation, the Court concluded that the plaintiff was not required to accept the employer’s proposed hybrid role. Since the offer involved the same fundamental change that had triggered the constructive dismissal claim, accepting it would have undermined her position.
The Court noted that an employer cannot sidestep the legal consequences of altering a fundamental term simply by presenting the same change as a mitigation opportunity.
III. Takeaways
As remote and hybrid work arrangements become a lasting feature of the post-pandemic workplace, both employers and employees must take care to clearly define the terms of such arrangements. Recent court decisions—including Byrd v. Welcome Home Children’s Residence Inc. and Nickles v. 628810 Alberta Ltd.—demonstrate that long-standing or undefined remote work setups can create legal obligations. In particular, attempts to unilaterally revoke or alter these arrangements may expose employers to claims of constructive dismissal.
To avoid disputes and reduce legal risk, the following checklist outlines key considerations when entering into, or modifying, remote work arrangements:
1. Document the Arrangement in Writing
2. Include a Right to Recall (If Desired)
3. Review and Update Employment Contracts
4. Avoid Sudden or Unilateral Changes
5. Treat Longstanding Arrangements as Potentially Binding
6. Communicate Clearly and Consistently
7. Consider Individual Circumstances