An employer does not have to physically remove an employee from the workplace to end the existing employment relationship. Insisting on material changes to core terms can be enough.
In Yakubow v. Edmonton Granite Memorials Ltd., 2026 ABKB 613, a sales manager with more than 20 years of service was presented with a new written employment agreement. The proposed contract changed important terms, including termination rights and restrictive covenants. The employer treated the core changes as non negotiable.
The Court of King's Bench found constructive dismissal. Applying the framework from Potter, the court concluded that the employer had repudiated the existing employment relationship by insisting on material changes to essential terms.
The employee received 15 months of reasonable notice. The employer's mitigation defence failed because there was not enough evidence to establish that the employee had failed to take reasonable steps to reduce his loss. The claim for aggravated damages was denied because the employer's conduct did not meet the separate bad faith threshold.
The case is a useful warning about contract updates. Employers often have legitimate reasons to modernize agreements. A new contract may address termination language, confidentiality, competition or other business risks. The legal problem arises when the process assumes the employer can simply replace the existing bargain without considering whether the changes are fundamental and what consideration or agreement is required.
Calling a document an updated contract does not make the old rights disappear. The more significant the changes, the greater the risk that presenting them as mandatory will be treated as a repudiation of the existing agreement.
For employees, the decision also shows why constructive dismissal is not limited to a pay cut or demotion. Changes to termination protection and restrictive obligations can affect the substance of the bargain even if salary and day to day duties remain similar.
The damages analysis remains separate. Establishing constructive dismissal does not automatically establish aggravated damages, and an employer relying on mitigation still needs evidence capable of supporting that defence.