In Yakubow v Edmonton Granite Memorials Ltd., 2026 ABKB 360 (Oviatt), the Court of King’s Bench found that an employer’s pressure on an employee to sign a written employment agreement amounted to constructive dismissal.
This case is important because it affirms that constructive dismissal can exist even before a change is imposed on an employee if it amounts to “anticipatory breach” of the employment terms. It is also important because of how it treats income earned from another source in the notice period.
Facts
The following were the pertinent facts summarized by the ABKB:
- The plaintiff employee, Dwayne Yakubow, worked for the employer Edmonton Granite Memorials Ltd. for over 20 years
- The employee held the position of Sales Manager at the end of his employment. The court found this was a “middle management” position
- The employee did not have a written employment agreement for most of his employment, so it was an unwritten contract with terms implied by common law
- In 2023, the employee was presented with a written employment agreement which would alter several terms of his unwritten employment:
- It changed his job title and duties
- It formalized his bonus structure, replacing discretionary bonuses
- It limited his termination pay to Employment Standards Code minimums
- It imposed non-competition and non-solicitation obligations
- The contract was provided to the employee on a Friday and the employer indicated it expected it to be accepted by the Monday (3 days later)
- The employer and employee discussed the contract that weekend and at the start of the week. The employee resigned less than a week after receiving the contract. The employer never actually imposed the contract on the employee prior to resignation
- The employee alleged constructive dismissal
- The employer defended, arguing that the terms were never actually imposed and were negotiable
- The employee was 45 years old at the date of alleged constructive dismissal
- This matter proceeded by Streamlined Trial
Analysis / Conclusion
The Court considered whether the employer’s actions in presenting the written employment agreement and pressuring the employee to sign it amounted to constructive dismissal under the second branch of Potter, which asks whether the employer’s conduct communicated an intention to no longer be bound by the existing employment contract.
The Court found that even though the employer had not implemented the new contract, it was constructive dismissal arising from an “anticipatory breach” because the employer’s actions clearly communicated an intention to no longer be bound by its essential future obligations.
[21] The events unfolded over less than a week. The contract was presented on Friday, January 20, 2023. Yakubow resigned on Thursday, January 26, 2023, claiming constructive dismissal. During that period, Crosty repeatedly emphasized that the form of the contract, including the restrictive covenants and termination provision, was required. He applied ongoing pressure on Yakubow to sign.
[…]
[26] Here, there was no evidence that the Employer changed course when it learned that Yakubow had concerns with the non-competition clause in the new contract or after Yakubow claimed constructive dismissal. On the contrary, 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 repeatedly communicated that these terms were required and final, or a fait accompli.
Regarding reasonable notice (severance), the Court found this middle manager with over 20 years’ service was in a general sales management role with skills that could be used in many industries. He was awarded 15 months’ reasonable notice / severance.
Regarding calculation of reasonable notice damages:
- The Court found that the 3-year average of the employee’s discretionary bonuses was $6,000 per year. The Court found this resulted in $500 per month towards damages to loss of bonus over the reasonable notice period of 15 months
- The Court had limited evidence of benefit value actually lost. The Court assigned a value of 10% of the employee’s salary for loss of health benefits, which worked out to $10,350 per year or $862.50 per month
The Court also considered whether income received in the notice period should be deducted from the severance as “mitigation income”. The employee had been doing work as a hockey referee while he was employed. In the notice period, he continued to do this, but was able to referee more games. The Court declined to deduct any of this from the severance award, noting as follows:
[57] Other income, which fell within the notice period, included hockey referee work. However, to be deducted, the income earned must be a direct substitute for the employee’s previous income: Brake at para 140 citing Karas v Rowlett, 1943 CanLII 53 (SCC), [1944] SCR 1. [underline added]
My Take
I found this case to be interesting.
The employer tried to pressure the employee into signing an agreement which would potentially have altered that employee’s rights to severance. The pressure was strong enough that the employee reasonably concluded the new terms were not optional. Resignation in these circumstances amounted to constructive dismissal based on anticipatory breach. This route to constructive dismissal is relatively rare.
The reasonable notice period was a bit on the low side for a 20+ year employee in middle management I’d say. However, reasonable notice determinations are always a gamble and this was surely within the discretionary range of the Court.
The Court’s choice to calculate health benefits as 10% of salary, without more specific evidence, is favorable to employees generally. No one seriously doubts that health benefits have some value, but the precise value can be difficult to prove efficiently. That said, I think there will continue to be disputes on this point, with employers arguing that actual damages must be proven.
The Court’s analysis of whether to deduct the hockey refereeing income earned in the notice period is a win for employees as well:
- Its well settled that when someone has a side-gig during employment, the income from that will not be deducted in the notice period – as long as the income remains steady
- A number of authorities have found that if the income from a side-gig goes up during the notice period, it should be deducted
- A number of authorities have found that if someone obtains a new income source in the notice period, that income will be deducted from the severance award
- A growing number of recent authorities across Canada have found that where the income is de minimis or not a real substitute for the income lost, it will not be deducted from the severance
Most of the authorities that have declined to deduct income in the notice period are from outside of Alberta. There are not many inside Alberta. This makes Yakubow an Alberta precedent for deduction of income in the notice period.
