The Ontario Superior Court of Justice ruled that a sustained pattern of workplace hostility can amount to constructive dismissal and attract significant damages, including aggravated damages. In Kennedy v. Kingston Area Taxi Licensing Commission, released August 14, 2025, the Court found that a long-serving employee was effectively forced out through a toxic work environment and awarded 24 months’ notice along with additional damages for the employer’s bad faith conduct. The case serves as a reminder that constructive dismissal can arise not only from formal changes to compensation or duties, but also from a sustained course of conduct that undermines the dignity and working conditions of an employee.
For charities and not-for-profits, the decision highlights the legal risks that can arise where governance changes lead to deteriorating workplace relationships, unchecked managerial conduct, or attempts to impose new employment terms midstream.
The plaintiff, Mr. David Kennedy (the “Employee”) had worked for the defendant, Kingston Area Taxi Licensing Commission (the “Employer”) for approximately 19 years in a senior operational role. Throughout most of his years of service, he received positive performance feedback and worked with significant autonomy. However, following changes in board leadership in late 2019, the workplace dynamic shifted dramatically. The Employee alleged that he was subjected to micromanagement, public criticism, and a broader pattern of belittlement that created a hostile and toxic work environment, leading him to take stress leave.
The Employer maintained that the Employee had effectively quit and denied that any fundamental change to the employment relationship had occurred. The Employer also raised various allegations of misconduct, although it did not formally plead cause for dismissal.
The central issue before the Court was whether the Employee had voluntarily abandoned his employment or had been constructively dismissed due to the Employer’s conduct.
The Court accepted the Employee’s evidence, finding it credible and corroborated, and concluded that the workplace environment had become objectively hostile following the leadership change. The Court found that the Employee had been subjected to public criticism, aggressive management behaviour, and unjustified reprimands, all of which marked a sharp departure from his prior treatment.
Importantly, the Court rejected the Employer’s allegations of misconduct, characterizing them as reflective of bias and a pre-existing determination to remove the Employee rather than legitimate performance concerns.
The Court further emphasized that the Employer failed to respond appropriately to the Employee’s complaints. Although an external investigator identified concerns with management’s conduct and recommended remedial steps, including training, clearer role definition, and mediation, none of these recommendations were implemented.
In addition, the Employer’s attempt to require the Employee to sign a new employment contract limiting his termination entitlements to the statutory minimum was viewed as evidence of bad faith, particularly when presented in the context of an already deteriorating workplace relationship.
On the whole of the evidence, the Court held that the Employer had repudiated the employment relationship. The toxic work environment, combined with the Employer’s conduct and failure to remedy the situation, justified the Employee’s decision to take stress leave and constituted constructive dismissal.
Applying the Bardal factors, the Court awarded the Employee 24 months’ reasonable notice, noting his age (61), long service (19 years), and the specialized nature of his role. The Court also awarded $25,000 in aggravated damages, finding that the Employer acted in bad faith and that its conduct caused the Employee significant mental distress requiring medical treatment.