The Court of Appeal of Alberta recently upheld a finding of
constructive dismissal of an employee, who although paid to the end
of his one year fixed-term contract, was not allowed to work during
the final month of the contract.
In Thompson v Cardel Homes Limited Partnership, 2014
ABCA 242, the fixed-term contract entered into by the employer and
the employee conferred upon the employer absolute discretion to
terminate the contract at any time by giving four weeks'
written notice and a lump sum payment of 12 months' salary.
However, the contract provided no payment upon the end of the one
One month before the fixed-term contract was to end the employer
advised the employee by letter that it would not be entering
another employment contract with him. The employer also advised the
employee in this letter that he would not be
required to attend work for the remainder of the term of the
contract, although he would be paid to the end of the term.
Furthermore, the employee was instructed to immediately return his
keys, his card key and his computer password.
The Court of Appeal was asked to determine if the employment was
terminated without cause or whether the fixed-term employment
contract was simply not renewed. If the employee was terminated
without cause, then he would be entitled to the lump sum payment of
12 months salary.
It was found that viewed objectively, the employer's letter
and its actions constituted a termination. The Court noted that the
employee was not permitted to carry out his duties or exercise his
powers as an executive of the company and he was not even permitted
to come into the office. These facts supported the employee's
position that he had been constructively dismissed. In other words,
the employer's actions were determined to be unilateral changes
that substantially altered the essential terms of this
Stressing the mutual nature of employment contracts, the Court
of Appeal explained that "[i]f [employment contracts] are to
be terminated early or there is to be a unilateral change in their
terms, both parties must agree, regardless of the duration of the
In this case, it was determined that the employer failed to
obtain the employee's agreement to ending the employment
relationship prior to the end of the fixed-term contract. The
employer unilaterally denied the employee the opportunity to
complete his "tour of duty".2
The Court of Appeal warns employers of two significant risks
arising from the modification of employment contracts:
When no attempt is made by an employer to obtain an
employee's consent to early termination of a fixed-term
contract, the employer risks a finding of termination.
When there is evidence of a unilateral change in the terms of
employment, the employer runs the risk of being found by a court to
have terminated the employee without cause.3
These risks should be considered by employers when drafting,
modifying or termination employment contracts. Field Law's
Labour and Employment Group can help employers with all aspects of
employment contracts and offer advice to minimize legal risks when
hiring or dismissing employees.
1 Para 19.
2 Para 21.
3 Para 21.
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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