Many employees often face managers who will suddenly change their job descriptions, responsibilities and compensation months or years after the employee was originally onboarded by the company. That can happen due to various reasons. For example:
- The company may have a change in management who now wants the employee to have a broader scope of work or a different role;
- The employee may not have a written employment contract but now the employer wants to have a formal written contract that includes new or different terms;
- The old manager left the job and the new manager wants the employee to perform a different role.
- General internal restructuring of the company leading to the employee being transferred to another role or department with a different job.
Many of the above can happen to any business operating reasonably. However, from the perspective of employment law, this can have severe legal consequences on the legal relationship between the employer and employee. Our Calgary employment lawyers at OP Lawyers LLP are experienced in dealing with such complex circumstances and regularly advise both employees and employers to navigate such circumstances to achieve a result mutually beneficial and acceptable to employers and employees.
The law
In general, an employer cannot unilaterally change the terms and conditions of an existing employment agreement, whether it’s a written contract or not. In many cases, our Calgary employment lawyers at OP Lawyers LLP encounter circumstances where the employee has been employed by the employer for many years without a formal employment contract. That has been the norm and practice for many businesses in Alberta for many decades now.
However, as employers are becoming more legally conscious, many of them are now forcing employees to sign new employment contracts. Such contracts will often include terms or conditions which are different from the original conditions of employment that existed before the employer decided to have a written contract. The net effect of forcing this new written contract is that:
- The employer has decided to breach the original unwritten employment agreement; and
- The employer no longer wishes to be bound by the original unwritten employment agreement.
Legally, this is known as constructive dismissal. Constructive dismissal occurs when an employer's conduct demonstrates an intention to no longer be bound by the employment contract, allowing the employee to treat the conduct as a repudiation and sue for wrongful dismissal. The law recognizes two forms of constructive dismissal: (1) a single unilateral act that breaches an essential term of the contract, or (2) a series of acts that, taken together, show the employer no longer intends to be bound by the employment agreement.
The fundamental principle is that certain contractual terms are so important that they are fundamental to the specific employment relationship. A breach of such a fundamental term unilaterally by the employer, absent employee agreement, gives rise to the employee's right to treat the change as a repudiation entitling them to sue for damages.
When an employer attempts to force an employee to accept new contract terms, whether through a formal new written agreement or through unilateral changes to existing terms, this conduct may constitute constructive dismissal if the changes affect fundamental terms. The key question is whether the employer has breached an express or implied term of the employment contract that goes to its very root.
If the proposed changes affect essential terms, such as compensation, benefits, responsibilities, reporting structure, or job security provisions, and the employee does not genuinely consent to these changes, the employer's insistence on the new terms constitutes a repudiation of the original contract.
When faced with a unilateral change to fundamental contract terms, the employee faces a critical decision that must be made within a reasonable timeframe. The employee may:
- accept the changes,
- reject the changes, resign, and sue for constructive dismissal, or
- remain working while protesting and demanding restoration of the original terms, before ultimately resigning and suing if the situation is not remedied.
When constructive dismissal is established, the remedies mirror those available for wrongful dismissal. The employee is entitled to damages representing pay in lieu of reasonable notice of termination. The determination of reasonable notice is governed by the employment contract (if it contains an enforceable termination clause), the Employment Standards Code (which sets minimum standards), and common law principles (which typically provide longer notice periods based on factors such as age, length of service, position, and availability of comparable employment).
In appropriate circumstances, employees may also seek aggravated or punitive damages, particularly where the employer's conduct in attempting to force new terms was undertaken in bad faith or involved harassment or other egregious conduct.
The coercive nature of "forcing" new terms is a problematic issue. Many companies may legitimately require changes in the employment contract for proper functioning of the business, and such changes may often be beneficial to the employee. True contractual modification requires discussion with the employee, consultation and mutual agreement. When an employer presents new terms on a "take it or leave it" basis, or threatens adverse consequences for non-acceptance, this underscores the unilateral nature of the change and strengthens the constructive dismissal analysis.
If there is no consultation or agreement, this will often lead to conflict and litigation. Our Calgary employment lawyers at OP Lawyers LLP regularly conduct litigation and trials of actions on behalf of employees and often employers as well on constructive dismissal claims.
Recent court decision - Yakubow v. Edmonton Granite Memorials Ltd
A recent Albertan case has re-established the law of constructive dismissal and its application in cases where the employer forces a new contract on the employee. In Yakubow v. Edmonton Granite Memorials Ltd., [2026] A.J. No. 561, Yakubow, was employed by the defendant, Edmonton Granite Memorials Ltd., for over 20 years, most recently as a sales manager, under an unwritten employment agreement governed by common law terms. In January 2023, the employer presented Yakubow with a new written contract that introduced several significant unilateral changes to essential terms of employment, including alterations to his role, compensation structure, and the imposition of restrictive covenants and limitations on termination pay.
Yakubow was given little time to review the agreement and was subjected to ongoing pressure to accept it, with the employer conveying that key terms were mandatory rather than negotiable. Yakubow rejected the proposed changes and resigned within a week, asserted that the employer's conduct constituted constructive dismissal and sought damages for wrongful dismissal and aggravated damages. The employer denied any constructive dismissal, arguing that the contract was merely a draft open to negotiation and, alternatively, that Yakubow failed to mitigate his losses.
The Court held that the plaintiff was constructively dismissed and entitled to damages equivalent to 15 months' reasonable notice, but not to aggravated damages. The Court found that the employer's proposed written agreement introduced substantial unilateral changes to essential terms of the employment relationship, including limitations on termination pay and the imposition of restrictive covenants.
Employees facing employers forcefully changing their employment conditions should immediately seek legal advice to decide how to respond to such changes in a way to ensure that they take the right steps to preserve and protect their legal rights under employment law. Employers, on the other hand, should seek advice to ensure that proposed changes to employment contracts are legally valid.
Employees: How to protect your rights
If your manager hands you a new contract and tells you to sign it by Friday, do not sign it immediately. Instead:
- Review the Terms: Compare the new contract with your current situation. Look specifically for changes to pay, "termination without cause" clauses, and non-compete agreements.
- Request Time: Ask for at least a week to review the document with a legal professional.
- Document Everything: Keep a record of all conversations regarding the new contract, especially if you are being threatened with termination for not signing.
Most importantly, speak to an employment lawyer. Our employment lawyers at OP Lawyers LLP regularly advise clients on constructive dismissal matters.
Employers: Tips on amending employment contracts
If your business needs to modernize its employment agreements, you must avoid the "unilateral" trap. To validly change a contract, an employer should:
- Provide Consideration: You cannot simply demand a signature. For a new contract to be valid, the employee must receive something of value in return (e.g., a signing bonus, a raise, or a promotion).
- Consultation: Engage in a dialogue. Explain the business reasons for the change.
- Reasonable Notice of Change: Instead of an immediate "take it or leave it" demand, provide the employee with notice that the changes will take effect in the future (equivalent to their termination notice period).
- Seek Legal Counsel: Ensure that any new restrictive covenants or termination clauses are enforceable under current Alberta law.
How OP Lawyers LLP Can Help
Navigating the complexities of constructive dismissal requires a deep understanding of both Alberta’s Employment Standards Code and common law precedents. Whether you are an employee facing an unfair ultimatum or an employer looking to restructure your team legally, our team at OP Lawyers LLP is here to help.
We regularly represent clients in negotiations, mediations, and trials involving:
- Constructive and Wrongful Dismissal claims.
- Severance package reviews and negotiations.
- Drafting and formalizing Employment Agreements.
- Non-compete and non-solicitation disputes.
Don’t leave your career or your business to chance. If you are facing a "take it or leave it" situation, contact a Calgary employment lawyers at OP Lawyers LLP today for a consultation. Let us help you navigate the path toward a mutually beneficial and legally sound resolution.
Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. For advice specific to your circumstances, please consult a qualified lawyer at OP Lawyers LLP or another legal professional.