WRONGFUL DISMISSAL - Constructive dismissal - Change to remuneration - Economic conditions

Law360 Canada (May 12, 2021, 6:09 AM EDT) -- Action by Kosteckyj for damages for wrongful dismissal. Kosteckyj commenced employment with Apache Canada as a Senior Integrity Engineer in October 2013. In August 2017, the defendant Paramount Resources took over the business of Apache in Canada and continued Kosteckyj’s employment. On March 27, 2020, Paramount announced that, effective April 1, 2020, it would institute a companywide cost reduction program. Because of the cost reduction program, Kosteckyj’s base salary was reduced from $154,800 to $139,320. In a further cost-cutting measure, Kosteckyj, along with several other Paramount employees, was terminated without cause on April 22, 2020. Kosteckyj took the position that she was entitled to 12 months’ notice. Paramount took the position that Kosteckyj was entitled to only six months’ notice.

HELD: Action allowed in part. Kosteckyj was permitted to amend her statement of claim to include an alternative allegation of constructive dismissal. The compensation reduction imposed by the cost reduction program was detrimental to Kosteckyj and a breach of her employment contract occurred. The implementation of the cost reduction program resulted in Kosteckyj’s constructive dismissal. Kosteckyj was a professional engineer with considerable work experience. She was not in a supervisory or management position with Paramount. She was 47 years old when she was terminated by Paramount, and the court considered that a neutral factor. Kosteckyj was constructively dismissed on April 1, 2020, during an economic downturn in the Alberta oil and gas industry and during the COVID-19 pandemic. She was entitled to nine months’ notice. She was entitled to damages for the notice period based on her compensation immediately before April 1, 2020, which was $154,800 per annum. Kosteckyj’s attempts to mitigate were adequate, especially considering the COVID-19 pandemic conditions. She acknowledged that she was paid statutory severance in the amount of $14,884. Kosteckyj was entitled to interest on $107,247.

Kosteckyj v. Paramount Resources Ltd., [2021] A.J. No. 447, Alberta Court of Queen's Bench, E.J. Sidnell J., March 24, 2021. Digest No. TLD-May102021005