In Ross v Newly Institute Inc, 2026 ABKB 538, the Alberta Court of King’s Bench held that a senior employee had been terminated without cause, had neither resigned nor abandoned his employment, and was entitled to $300,000 in contractual severance. The decision is particularly useful for its treatment of the objective test for termination and the requirement for fresh consideration when materially amending an existing employment agreement.
Test for Termination
The Court confirmed that whether an employee has been dismissed is determined using an objective test. The question is whether, considering all of the surrounding circumstances, a reasonable person would have understood the employer’s statements and actions to mean that the employee was dismissed. The employee bears the burden of proving dismissal on a balance of probabilities.
Importantly, the employer’s subjective intention is irrelevant. An employer therefore does not necessarily avoid a termination simply because it did not intend to dismiss the employee or did not expressly communicate a termination. Instead, the Court considers the objective effect of the employer’s actions viewed in their totality.
Following a contentious July 14, 2022 meeting, Newly Institute blocked Ross’ computer and email access, told him “We wish the three of you all the best in your future endeavours,” failed to restore his access despite his express request to continue performing his duties, excluded him from a company town hall, and otherwise effectively excluded him from the organization.
The employer argued that no termination had occurred because Ross had never formally been told that he was fired, no termination notice had been provided, an ROE reflecting dismissal had not been issued, and payroll had not immediately ceased. The Court rejected this argument, emphasizing that “it is the substance that matters.” Despite the absence of those formal steps, the substance and cumulative effect of Newly Institute’s conduct objectively established a dismissal.
The Court concluded that even if the CEO did not subjectively intend to terminate Ross, objectively that was the effect of the employer’s conduct. A reasonable person in Ross’ position would have understood that they had been dismissed.
Key principle: termination in Alberta does not depend upon formal words or paperwork. Courts look to the substance, totality and objective effect of the employer’s conduct.
Resignation and Abandonment
The Court separately rejected the employer’s arguments that Ross had resigned or subsequently abandoned his employment.
Unlike dismissal, resignation involves both a subjective and objective test: the employee must actually intend to resign, and their words or conduct, objectively viewed, must communicate that intention to a reasonable employer. Ordinarily, resignation requires a clear and unequivocal act demonstrating an intention to end the employment relationship.
There was no such evidence. To the contrary, after his access was removed, Ross expressly requested that it be restored so he could continue working as Chief Scientific Officer. The Court found this objectively demonstrated his intention to remain employed.
Similarly, abandonment requires the employee to unequivocally abandon the employment contract through their words or actions, viewed objectively. The employer bears the burden of establishing abandonment.
Ross could not have abandoned employment that Newly Institute had already terminated. More importantly, his conduct demonstrated that he wanted to work despite having been locked out. The Court characterized the employer’s later attempts to establish abandonment—after receiving Ross’ lawyer’s demand for contractual termination pay—as having an “air of artificiality.”
Just Cause
Newly Institute argued in the alternative that if Ross had been terminated, it had just cause based on insolence arising from his conduct toward the CEO during the July 14, 2022 meeting.
The Court reaffirmed that the employer bears the burden of proving just cause and that misconduct alone is insufficient. The misconduct must be sufficiently serious that it causes a breakdown in the employment relationship such that the relationship can no longer viably continue—conduct that is incompatible with the fundamental terms of employment or strikes at the heart of the employment relationship.
The Court rejected the employer’s characterization of Ross’ conduct as insolent. Ross had been asked to determine what would be required to persuade two departed employees to return, and he was reporting their concerns and proposed conditions back to the CEO. Although those views were difficult for the CEO to hear—including a proposal that he step down as CEO—the Court accepted that Ross presented the information politely and respectfully.
The Court emphasized that context is extremely important in assessing alleged insolence. Ross’ comments were neither insulting, abusive, threatening, contemptuous nor otherwise sufficiently serious to constitute insolence. The Court therefore concluded that Newly Institute had no just cause to terminate him.
Fresh Consideration
The other significant aspect of Ross concerns Newly Institute’s attempt to materially reduce Ross’ contractual termination entitlement.
Under his December 2021 employment agreement, Ross was entitled to 18 months of base salary upon termination, amounting to $300,000 based on his $200,000 salary.
In March 2022, the employer presented him with a replacement agreement that was essentially identical except that it dramatically reduced his termination entitlement. The evidence was that Newly Institute considered the earlier agreement too employee-friendly and sought to reduce the severance it would have to pay.
The Court reaffirmed the established Alberta principle that an employer must provide fresh consideration to make a significant amendment to an existing employment agreement binding. Continued employment alone is not sufficient. There must be some new benefit flowing to the employee in exchange for accepting the changed terms. The Court noted that this requirement is particularly important where an employer seeks to alter termination rights.
Because the new employment agreement significantly reduced Ross’ termination entitlement, it constituted a substantial contractual change requiring fresh consideration.
The March 2022 agreement stated that a $500 signing bonus constituted consideration. However, Newly Institute had paid Ross only one $500 bonus—in November 2021—and that payment had already served as consideration for the December 2021 agreement. The employer could not reuse that previous payment as consideration for the subsequent agreement.
Accordingly, the March 2022 agreement was unenforceable for lack of fresh consideration, leaving the more favourable December 2021 agreement governing Ross’ termination entitlement.
The employer also invited the Court to follow Rosas v Toca, 2018 BCCA 191, which questioned the continuing need for consideration for certain contractual amendments. The Court expressly declined to alter Alberta law, particularly in the employment context, given the significant body of authority requiring fresh consideration for changes of this nature.
Key Takeaways
Termination: The test is objective. Express words of dismissal, an ROE, cessation of payroll or formal termination documentation are not essential. The Court looks at whether the totality of the employer’s conduct would cause a reasonable person to understand that they had been dismissed.
Abandonment/resignation: Both require clear evidence that the employee intended, through words or conduct, to end or abandon the employment relationship. An employer cannot retroactively characterize an employee as having abandoned a relationship the employer has already terminated.
Just cause: Misconduct must be assessed contextually and proportionately. Difficult or unwelcome criticism of management does not itself constitute insolence or cause, particularly where the employee is performing a task the employer asked them to undertake.
Fresh consideration: A material amendment to an existing employment contract—particularly one reducing termination entitlements—requires a new benefit flowing to the employee. Continued employment is insufficient, and consideration already provided for an earlier agreement cannot be recycled to support a later one.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018 and Evolution Legal in 2026.
FAQs
How does an Alberta court determine whether an employee has been terminated?
The test is objective. The court asks whether, considering all of the surrounding circumstances, a reasonable person would understand the employer’s words and conduct to mean that the employee had been dismissed. The employer’s subjective intention is not determinative.
Does an employer have to expressly say “you are fired” for a termination to occur?
No. Formal termination language, an ROE, cessation of payroll, or written notice are not essential. In Ross, the Court emphasized that “it is the substance that matters” and found a termination based on the employer’s overall conduct, including cutting off access and excluding the employee from the workplace.
When will an employee be found to have resigned in Alberta?
Resignation requires both a subjective and objective test. The employee must actually intend to resign, and their words or conduct must objectively communicate that intention to a reasonable employer. Ordinarily, there must be a clear and unequivocal act showing an intention to end the employment relationship. In Ross, the Court found no resignation because Dr. Ross never said he was resigning and, after being locked out, expressly asked for his access to be restored so he could continue working.
When can an employee be found to have abandoned their employment?
Abandonment requires clear and unequivocal words or conduct showing, objectively, that the employee intended to abandon the employment relationship. The employer bears the burden of proving abandonment. In Ross, the employee’s request to have his access restored so he could continue working was inconsistent with abandonment.
What is required to establish just cause for insolence in Alberta?
The employer must prove misconduct serious enough to undermine the employment relationship. Context and proportionality are critical. In Ross, the Court found that candidly relaying difficult information to the CEO, in a respectful manner and as part of an assigned task, did not amount to insolence or just cause
Does an employer need fresh consideration to change an existing employment agreement in Alberta?
Yes, where the change is significant. Continued employment alone is not enough. The employer must provide some new benefit to the employee in exchange for the amendment. In Ross, a later agreement that materially reduced termination entitlements was unenforceable because no fresh consideration had been provided.