YOUR EMPLOYER HAS CHANGED THE TERMS OF YOUR CONTRACT: What can you do?
Employers may see the need to alter or restructure their business and, in doing so, make changes to an employee’s employment contract. If an employer changes the terms of an employment contract, the first question an affected employee may ask is: Is the change envisaged or allowed in the contract? If such a change is permitted, an employer can exercise their authority to make those changes, and it will not be considered a change in the agreement. However, if the change is substantial, for instance, the employee’s pay was significantly reduced, or the way of calculating their income was substantially changed, or altered in any way that goes beyond what is envisaged in the employment contract, the employee could take action if they did not consent to it.
If the change is substantial, then the court, in the case of Wronko v. Western Inventory Services, the Ontario Court of Appeal states that the employee has the three following options:
- Accept the changes expressly or implicitly through apparent acquiescence.
An employee can expressly state that they have accepted the new terms or acquiesce to the changes by their actions. If an employee consents, a new contract will be deemed to have begun. Usually, this acceptance will only be legally enforceable if the employer also provides some consideration. The employer could pay the employee a bonus or give the employee a raise. Note that just because an employee continues in the employment when the employer has unilaterally changed the terms under threat of losing their job does not exempt an employer from providing consideration. See Hobbs v. TDI Ltd. . (2004), 246 D.L.R. (4th) 43.
However, suppose an employee accepts these new terms for a long time. In that case, the job security provided by the new job that the old one does not have could be considered a consideration. So employees must be careful that their actions do not send a message they did not intend to send to their employer.
- The Employee can reject the change and sue the employer, alleging constructive dismissal.
If the Employer persists with the change without the employee’s consent, the employee can sue for damages under constructive dismissal. An employee is best served if they reject the change in writing; this would clarify that the employer is aware of the rejection but insists on it and makes a case for constructive dismissal stronger.
- The Employee makes it clear that they are rejecting the new term but continue working under the new terms.
If the employee rejects the new changes but keeps working, the Employer could take either of the following actions:
a. Respond by terminating with proper notice, etc. The employer’s actions should be guided by the termination clause in the employment contract, if there’s one, the Employment Standards Act 2000 and Common Law reasonable notice period. Just because an Employee, after rejecting the changes, continued for some time in their employment does not prevent them from suing the employer for reasonable notice.
Regarding a suitable notice period, in the case of Hill v. Peter Gorman Ltd. (1957), 9 D.L.R. (2d) 124 (Ont. C.A.), the court dealt with the case of a commission salesman employed under an indefinite term contract. The salesman complained periodically about this arrangement but remained in the company’s employment for over a year after the practice was initiated. Following the employee’s resignation from the company, he took action to recover the withheld commissions. The trial judge found that the salesman had never agreed to the variation and ordered the commissions to be paid at the initially agreed rate. On appeal, Mackay J.A. held that mere continuance by an employee in employment does not amount in law to an acceptance by an employee of a unilateral variation of his contract by his employer. Mackay J.A. stated in para 132 states as one of the options open the employee:
“An employee who remains in the new position, changed unilaterally by the employer, to mitigate his or her damages, may be expected to do so only for a period constituting reasonable notice or until they secure alternative employment. What will include a reasonable notice period will, of course, depend upon a variety of factors.
The Court further states:
As has been stated in innumerable cases, the determination of the appropriate notice period is primarily derived from an analysis of the factors set out in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.). On p. 145, McRuer C.J.H.C. stated:
“There can be no catalogue laid down as to reasonable notice in particular cases. The reasonableness of the notice must be decided concerning each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.”
The court will decide using what is now known as the Bard factors to determine what is reasonable notice if that employee then chooses to sue the employer or the employer decides to terminate the employee’s employment.
b. Allow the employee to continue to fulfill their job in adherence to the terms of the original employment contract. In this instance, the employer has acquiesced to the employee’s insistence on the original contract. Unless proper notice of termination is given, the employer is regarded as agreeing to the employee’s position.
An employer has the right to make changes that are envisaged in the employment contract; if the changes to the employment are substantial, the employee can either accept the changes if the employer provides consideration or rejects the offer and sue for damages based on constructive dismissal. If you are an employee or an employer and need to know more about the effect of changes to an employment contract and how to avoid legal pitfalls, contact our employment lawyers at 403-283-8018 or email [email protected].
Author: Juliette Omonigho