Employee of more than 20 years resigns six days after receiving new terms
The Court of King’s Bench of Alberta has ruled that an Alberta employer constructively dismissed an employee of more than 20 years over a never-implemented contract — awarding nearly $150,000 in damages.
Dwayne Yakubow was hired by Edmonton Granite Memorials in 2002 and promoted to sales manager in 2015. He worked for the company for more than 20 years without a written employment contract. On Jan. 20, 2023, company owner Paul Crosty presented a new written agreement that substantially altered at least five terms of the existing arrangement.
The court found each of these affected essential terms of the unwritten employment contract.
The changes included:
- a change to job title and duties
- a formalized bonus structure replacing discretionary bonuses
- a limitation of termination pay to Employment Standards Code minimums
- A non-solicitation clause
- a non-competition clause.
The employer argued the contract was merely a draft, open for negotiation, and never imposed. The court rejected that defence, holding that constructive dismissal may arise from an anticipatory breach "where an employer clearly communicates an intention not to be bound by essential future obligations."
Pressured to sign new contract
The contract was presented late on a Friday afternoon with a response expected by Monday. It was dated as accepted on Jan. 20, 2023, and stated to be effective Jan. 23, 2023. There was no indication in the document that it was a draft or subject to negotiation, and Crosty did not advise Yakubow of his right to seek legal advice.
In the days that followed, Crosty repeatedly told Yakubow that other employees had signed similar agreements and asserted that new ownership could impose whatever agreement it chose. On Jan. 25, 2023, Crosty brought in two respected colleagues to speak about the new contract directly to Yakubow. At no time did Crosty communicate or suggest that the terms around termination pay, restrictive covenants, or other essential terms were open for negotiation.
The court found that "every communication from the employer confirmed that the form of the contract, with limits on termination pay and restrictive covenants, was required going forward." The employer, the court concluded, "repeatedly communicated that these terms were required and final, or a fait accompli."
The court noted that "at no time did Yakubow condone or agree with the proposed changes to his employment agreement."
Yakubow resigned on Jan. 26, 2023.
Pay in lieu of notice
The court awarded Yakubow 15 months' pay in lieu of notice, totalling $149,812. His base salary was $103,500 per year. The court added $500 per month based on a three-year average of discretionary bonuses.
It also applied 10 percent of base salary for the value of lost health benefits, an approach that Justice Kathryn Oviatt acknowledged "has not been clearly endorsed in Alberta." The benefits package included an annual health spending account, disability benefits, life insurance, and accidental death and dismemberment.
The employer failed to prove Yakubow did not adequately mitigate his damages. While the court found his job search was "imperfect, including significant deficiencies on his resume," it held these efforts "did not fall below the standard of reasonableness in the circumstances." The employer also did not meet its burden to show that comparable work was available.
It took Yakubow three years to find permanent employment at roughly half his former pay.
Aggravated damages were not awarded, as the court found the employer's conduct was "not dishonest, in bad faith, or with malicious intent."
