Can an employer unilaterally change the essential terms of an employee's employment contract?

Alberta, Canada


The following excerpt is from Bonsma v. Tesco Corporation, 2012 ABQB 413 (CanLII):

In Farber v. Royal Trust Co. 1997 CanLII 387 (SCC), [1997] 1 S.C.R. 846, Gonthier J. dealt with the concept of constructive dismissal. Speaking for the court, he stated at paragraphs 24 and 25 the following: 24 Where an employer decides unilaterally to make substantial changes to the essential terms of an employee's contract of employment and the employee does not agree to the changes and leaves his or her job, the employee has not resigned, but has been dismissed. Since the employer has not formally dismissed the employee, this is referred to as "constructive dismissal". By unilaterally seeking to make substantial changes to the essential terms of the employment contract, the employer is ceasing to meet its obligations and is therefore terminating the contract. The employee can then treat the contract as resiliated for breach and can leave. In such circumstances, the employee is entitled to compensation in lieu of notice and, where appropriate, damages. 25 On the other hand, an employer can make any changes to an employee's position that are allowed by the contract, inter alia as part of the employer's managerial authority. Such changes to the employee's position will not be changes to the employment contract, but rather applications thereof. The extent of the employer's discretion to make changes will depend on what the parties agreed when they entered into the contract.

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