Alberta Court of Queen’s Bench, 2009

The plaintiff had worked for the defendant Top- Co’s predecessor for more than 34 years. He began as a labourer but eventually obtained a senior management position, and even acted in the president’s place for six months. When the predecessor company’s assets were sold to Top-Co, Johnson had met several times with Top-Co’s president and negotiated a new employment contract. The new contract included an increased base salary, payment for “after-hours service calls”, a performance bonus, and other benefits. After three months with Top-Co, Johnson began to have concerns regarding the company’s interpretation of “after-hours service calls”, and he did not receive his quarterly bonus as scheduled. Johnson’s meeting with the president failed to resolve the issue, so he resigned, claiming he was constructively dismissed when Top-Co changed the fundamental terms of the employment contract without notice. Top-Co counterclaimed, alleging it suffered damages when Johnson quit without notice.

The Court found that Johnson was constructively dismissed. Although Top-Co’s interpretation of “afterhours service calls” was correct, the Court held that the company had committed fundamental breaches in the calculation of Johnson’s bonus, which fundamentally changed the entire pay structure of Johnson’s employment contract. This breach, and other actions of Top-Co’s president, undermined the fundamental trust relationship between Johnson and the company.

Given that Johnson was 53 years old, had only ever worked for one employer, and had risen through the company ranks from general labourer to senior management, he was awarded 20 months’ pay in lieu of notice. This was reduced by six months because Johnson failed to mitigate his damages by refusing two job offers that were comparable to his previous employment, choosing instead to be self-employed as a farmer. As the Court found that Johnson was constructively dismissed, Top-Co’s counterclaim was dismissed.