Employers are avoiding terminations by not-so-subtly phasing employees out. Cue the lawsuits

In Canadian workplaces, termination no longer begins with a meeting, but with silence.

An employee is not fired — at least not formally. There is no without-cause termination, no severance package, no final date.

Something more subtle occurs. Responsibilities are reduced. Direct reports disappear. Decisions are made elsewhere. Meetings proceed without them. Titles remain. Authority does not.

The employee is still "employed" but only in the most technical sense.

Employers increasingly treat this as a form of "working notice" — a less confrontational way of managing exits. Why terminate and pay severance, the thinking goes, when you can simply ease someone out?

But that is not working notice at all. It is constructive dismissal.

Working notice, properly understood, requires that the employee continue in substantially the same role during the notice period. The bargain is straightforward: the employer provides advance notice of termination and the employee continues working on the same terms and conditions of employment.

What is occurring today in many Canadian workplaces bears little resemblance to that.

When a senior employee loses their team, budget or decision-making authority, the change is not cosmetic. It strikes at the heart of the employment relationship. Courts have long held that a substantial reduction in duties or prestige can constitute constructive dismissal. Calling it "transition," "realignment," or "organizational change" does not alter that analysis.

Nor does the absence of a termination letter.

Employers often believe they are reducing legal risk by avoiding the formal step of dismissal. In reality, they may be triggering liability earlier — on dramatically less favourable terms.

An employee who has been effectively sidelined may be entitled to treat the relationship as having been terminated immediately and claim damages.

Worse still for employers, the period during which the employee was "benched" may not count as valid working notice at all. If the role no longer resembles what the employee was hired to do, there is no legal notice being provided since the employee was never given a final date, which is a prerequisite for working notice.

The risk is particularly acute for senior employees. Titles can be preserved with substance stripped away. But courts are not misled by titles. They examine what the employee actually does, not what appears on an organizational chart.

There is a further, often overlooked, consequence. By failing to clearly communicate termination, employers may also undermine their ability to enforce mitigation — the obligation on an employee to find other work so as to reduce the employer's financial obligations.

An employee who has not been told they are dismissed is placed in an ambiguous position: expected to remain loyal, yet given every signal that their future lies elsewhere. Courts are unlikely to view that ambiguity favourably.

None of this suggests that employers cannot restructure, reassign roles or reduce responsibilities. They can. But when those changes fundamentally alter the nature of the position, the law may deem the employment relationship to have been terminated — regardless of the employer's intentions or terminology.

The instinct to avoid difficult termination conversations is understandable. It is also misguided.

Employers believe that they are managing exits more gently, more humanely and with less legal exposure. They are doing the precise opposite: creating uncertainty, inviting claims and losing control over the timing and costs of termination.

If the decision has been made that an employee's role no longer exists, the law does not reward euphemism. It rewards clarity.

And it will treat this particular fiction of "working notice" for what it often is: termination without the courage to say so.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada.