Case: Yakubow v. Edmonton Granite Memorials Ltd., 2026 ABKB 360
Court: Alberta Court of King’s Bench
Key Topic: Constructive Dismissal in Alberta
Damages Awarded: $149,812.50
$149,812.50 In Damages Awarded for Constructive Dismissal
Overview: In a significant Alberta employment law decision, the Alberta Court of King’s Bench ruled that an employer committed constructive dismissal when pressure to accept a new employment contract containing fundamental changes to the employment relationship was imposed by the employer.
In Yakubow v. Edmonton Granite Memorials Ltd., the Court held that an employee with more than 20 years of service was constructively dismissed after his employer attempted to impose a new employment agreement that significantly changed the fundamental terms of his employment. Consequently, he was awarded $149,812.50 in damages.
Importantly, the Court ruled that constructive dismissal can occur even when the employee never signs the contract and the changes are not yet been formally implemented, if the employer’s conduct objectively demonstrates an intention to no longer be bound by the exiting employment relationship.
This decision provides important guidance for employers introducing new employment contracts, restrictive covenants, compensation changes, or revised termination provisions.
What Is Constructive Dismissal?
Constructive dismissal occurs when an employer unilaterally makes substantial changes to a fundamental term of employment or otherwise demonstrates an intention not to be bound by the existing employment relationship.
The governing legal framework comes from Potter v New Brunswick Legal Aid Services Commission, 2015 SCC 10.
Specifically, the Court considered:
- Whether the employer unilaterally breached an essential term of the employment relationship by presenting a new contract containing significant changes to compensation, termination entitlements, and restrictive covenants; and
- Whether the employer’s conduct, viewed objectively, demonstrated an intention to no longer be bound by the existing employment agreement, such that a reasonable employee would conclude the original terms no longer applied.
If both elements were established, the employee would be entitled to treat the employment relationship as terminated and claim damages for constructive dismissal.
Background Facts
The employee worked for approximately 21 years without a written employment contract.
The employer later introduced a new contract. This new employment contract substantially altered at least five terms of the unwritten employment agreement, including:
- a change to job title and duties;
- the formalization of a bonus structure replacing discretionary bonuses;
- limitation of termination pay to Employment Standards Code minimums;
- the imposition of a non‑solicitation clause; and
- the imposition of a non‑competition clause
The employee was given only a short period to review the agreement and alleged he was repeatedly pressured to sign it.
He resigned less than a week later and commenced a constructive dismissal claim.
Why the Court Found Constructive Dismissal?
The Court found that the employer’s conduct amounted to constructive dismissal for three key reasons:
- The Employer Attempted to Alter Fundamental Employment Terms
The Court found that several of the proposed changes affected essential aspects of the employment relationship.
Particular concern was placed on:
- Restricting termination entitlements
- Adding new restrictive covenants
- Changing compensation structure
These changes represented significant departures from the employee’s common law rights.
The addition of non-competition and non-solicitation clauses further altered the employee’s legal rights in a material way.
The Court held that any one of these changes may have been enough to satisfy the first stage of constructive dismissal; here, there were multiple changes at once.
- The Employer’s Conduct Suggested the New Contract was Mandatory
Although the employer argued the contract was merely a draft open to negotiation, the evidence suggested otherwise.
The Court emphasized that:
- The contract contained effective dates and did not identify itself as a draft;
- The employee was pressured to respond quickly;
- The employer repeatedly stated other employees had already signed similar agreements;
- The employer communicated that the new ownership could impose whatever agreement it chose; and
- The employer never indicated that key terms, such as termination provisions and restrictive covenants, were negotiable.
Viewed objectively, these actions conveyed that acceptance of the new terms was expected and that the employer intended to proceed regardless of the employee’s objections.
The Court described the employer’s approach as presenting the employee with a fait accompli, rather than rather than an invitation to negotiate.
- Constructive Dismissal Can Occur Before New Terms are Formally Implemented
One of the most important aspects of the decision is the Court’s confirmation that constructive dismissal can arise through an anticipatory breach, where an employer clearly communicates an intention not to honour essential future obligations.
The employer argued there could be no constructive dismissal because:
- The employee never signed the contract; and
- The new terms were never implemented
The Court rejected the employer’s argument.
Instead, the Court held that constructive dismissal may occur where an employer clearly communicates an intention not to honour future obligations under the existing employment agreement.
Because the employer continued insisting the new terms were required despite the employee’s concerns, the Court found that the employer had objectively demonstrated an intention to no longer be bound by the original terms of employment.
Results: Damaged Awarded
The employee received $149,812.50 in damages.
The Court determined that the employee had been constructively dismissed and awarded:
- 15 months’ reasonable notice damages
- Compensation for bonuses calculated at a 3-year average
- Compensation for benefits throughout the entirety of the termination period, calculated at 10% of base salary
- Pre- and post-judgment interest
Why This Decision Matters?
This decision is a reminder that employers cannot unilaterally introduce significant changes to employment terms without risk.
Even when:
- A new contract has not been signed
- A new contract has not been formally implemented
- The employer claims negotiations are ongoing
Pressure to accept substantial changes to termination rights, restrictive covenants, or compensation structures may support a finding of constructive dismissal if the employer’s conduct suggests the changes are mandatory.
For employers, this case highlights that when implementing new contracts or workplace changes, the importance of:
- Transparency
- Providing employees with meaningful time for legal review
- Encouraging independent legal advice
- Clearly communicating whether terms are negotiable
- Avoiding pressure tactics
For employees, this decision confirms that constructive dismissal claim may be justified if there is pressure to accept major changes to:
- Severance rights
- Compensation structure
- Restrictive covenants
Key Takeaways for Employers
Employers Should Avoid:
- Imposing new employment contracts without consideration;
- Limiting termination entitlements without legal advice;
- Using pressure tactics or artificial deadlines;
- Presenting revised contracts as non-negotiable; and
Employers Should Consider:
- Providing adequate review periods;
- Clearly identifying draft agreements;
- Inviting meaningful negotiation;
- Offering fresh consideration for new terms; and
- Seeking legal advice before implementing substantial contractual changes.
Frequently Asked Questions About Constructive Dismissal
Can an employee claim constructive dismissal without signing a new contract?
Yes. As confirmed in Yakubow v. Edmonton Granite Memorials Ltd., constructive dismissal may occur even if the employee never signs the proposed agreement, where the employer’s conduct objectively demonstrates that the original employment terms will no longer be honoured.
What types of employment changes may trigger constructive dismissal?
Common examples include:
- Reduced severance entitlements;
- Significant compensation changes;
- Demotions or duty changes;
- New restrictive covenants;
- Major schedule or location changes; and
- Reductions in authority or status
Can employers introduce new employment agreements?
Yes, but employers must do so carefully. Significant contractual changes generally require:
- proper legal consideration,
- meaningful employee review,
- and a genuine opportunity for negotiation.
Failure to do so may expose the employer to constructive dismissal liability.
Final Thoughts
The decision in Yakubow v. Edmonton Granite Memorials Ltd. reinforces a growing trend in Canadian employment law: courts will closely scrutinize attempts by employers to impose new contractual terms that reduce employee rights.
For employers, the case serves as a warning that pressure-driven contract rollouts involving termination clauses, non-competition agreements, and other restrictive provisions can create substantial liability exposure.
For long-service employees, the decision confirms that courts remain willing to protect employees from unilateral and coercive changes to fundamental employment terms.
