What happens if an employers tells an employee that he will be receiving a raise on a certain date but then, because of changed economic circumstances changes its mind and not give him a raise
papers to Coosportation High God CHAPTER 17 Navigating the funployment fetaboronlip 459 ime part of hes loops. furthermore, the acknowledgment included an explicit statement that d the employes to abide by the handbooks policies "may result in disciplinary action andful I and contrary The thorough way in which Depco implemented its progressive discipline as played a crucial part in the court's ultimately finding in its favour would be noted that for a breach of a company rule (or policy) to constitute just Meniscal, several factors must exist. In addition to being well-communical Iconsistently enforced, the rule itself must be "reasonable," the implications of ling the rule must be sufficiently serious to justify termination, and employers be advised that they can be terminated for breaking it. Finally, the employee he employes but not have bind a reasonable excuse for breaking the rule (Saint-Cyr, 2012), employment should Changing Employment Terms and Conditions incorpor Amending the Employment Contract ork djupter 4 discusses the benefits of having a written employment contract that sets out the rights and responsibilities of both parties during the employment relation hip However, what happens when, because of either changed circumstances of an wersight in negotiating the agreement, the employer wants to make changes to the olicy contract after employment begins? pically Introducing changes to an employment contract, whether oral or written, during the the course of employment raises a number of issues. As noted above, if an employer 's are wishes to make a minor change, such as slightly modifying a procedure for applying for anything imbursements, the employer can simply notify employees of the change and distrib ute amendments to the policy manual. However, an employer that wishes to introduce dhere to a change that is more significant faces two potential legal problems. First, if the change afters the employment agreement in a fundamental way, it may constitute constructive e sole tomissal, thus allowing the employee to bring an action against it for damages for utdelines wrongful dismissal. Second. if the employer negotiates the change with the employee, the employer must provide consideration for the new term or the employee may subse- gis- quently argue that she is not bound by it. These two issues are discussed below. aded to Constructive Dismissal and Reasonable Notice The first question that must be addressed is whether the change is so fundamental that it ing the constitutes constructive dismissal. For example, an immediate 25 percent reduction in ad indi pay or a significant downgrade in job duties clearly goes to the heart of the employment nts, the greement. It is a repudiation of the existing terms and conditions of employment. In cases such as these, an employee can either accept the change (or possibly negotiate renting changes of her own) and continue working under the new arrangement or inform the employer that the change constitutes constructive dismissal. In the latter case, the urther employee may quit and sue the employer for pay in lieu of proper notice or stay in the t of its position and sue the employer for the difference between the old and the new salary, er, the On the other hand, where an employer wants to introduce a more modest dbook change, such as slightly modifying an employee's commission package of proposing eceipt a relatively small across-the-board salary decrease in response to difficult market , and conditions, the situation is less clear. Every case must be evaluated on its own facts to. Canadian Chante apples to gov . Human and coosportation . Hyman tight code well as private collective agree RT III DURING THE COURSE OF EMPLOYMENT Even where proposed changes to the terms of employment involve the promotion of band geographic an employee, the employer must keep the common law notion of constructive dismiss- a the entire em al in mind. An employee who is unhappy in a new position may successfully argue because the emp for signing it. The that his promotion constitutes constructive dismissal by affecting the foundation of his not consideration contract. In this case, an employer may be liable for damages for wrongful dismissal In an employee Consequently, employers should never force employees to accept promotions. The employer tells ar decision must be mutual. Employers must be prepared to assist employees in per- won the new agr forming new jobs. If an employee accepts a promotion but is unable to perform the new job satisfactorily, in the absence of just cause an employer should be prepared to re-employ him in his previous job or provide proper notice of dismissal or pay in lieu. In Kohler, th Providing Consideration ment as the en of salary durin Another way to amend an employment contract is through negotiation. This the employer h approach is especially useful where the employer wants the new term, such as a obligation. Bec non-competition clause, to be added immediately. notice, its prom However, there is one legal requirement that an employer must keep in mind it was merely when negotiating a fundamental change to an employment contract. As discussed in On the othe Chapter 4, to create a binding contract under the common law, both parties must re- minate an agre ceive consideration-something of value-in exchange for the promise given. Without of the agreeme consideration, the agreement is unenforceable. The same requirement applies to the amendment of a contract. If an employer places a contract containing a disadvanta ba new term geous new contractual term in front of an employee and simply asks her to sign it. employer succ a court may refuse to enforce the new term because it lacked consideration. This is that it intended what happened in Kohler Canada Co v Porter. accept the am To ensure able, the emp respect to dr N POINT time to revie sideration Makes Non-Competition Clause Unenforceable signing the might intro Cov Porter, 2002 CanLil 49614 (Ont SC) well, such as might give t contract, Porter was offered a position as regional sales If the amen ing for the employer in 1988 as a customer be faced wit tive; by 1999 he occupied a management manager with a company that competed with Kohler. Kohler reasonable t have a written employment agreement sought an injunction restraining Porter from working for the new employer on the basis of the non-competition clause in disadvantage the employer presented him with one and it. Believing it was a routine document, the employment agreement. therefore, without obtaining legal advice. In fact, an option ncluded a non-competition clause that Relevant Issue om working anywhere in North America the termination of his employment in a Whether the employment contract and its non-competition peted with the employer's business. It also clause were enforceable. Monit nsideration for the agreement was Porter's tus with Kohler and the payment of salary Decision Employme loyment."Shortly after signing the rewritten The Ontario Superior Court held that the non-competition employers clause was unenforceable because it co se it covered an overly performan benefit froon religion . Canadian Charle applies to gov & Human and coosportation fight code 420 PART III DURING THE COURSE OF EMPLOYMENT decide how essential the change is to that employee's Job. Ultimately. if the issue thy up in court, it will be up to a court to decide whether the change is a fundamer one and therefore constitutes constructive dismissal. It ap Where a proposed change to an employment contract is arguably a fundament Ing an one, an employer can generally meet its legal obligations by providing the employ contr with proper advance notice of the change. However, in 2008 the Ontario Count still b Appeal issued a decision, Wronko v Western Inventory Service Lid, that called in question the application of this general principle: chang agents claim CASE IN POINT daim the em Changing Employment Terms Mid-Stream to rel this ar Wronke : Western Inventory Service Lid, 2008 ONCA 327, 2006 CanLll 34211 made whet Facts no rea Wronko began working for Western, a Toronto-based proper notice to the employee. The court therefore dismissed the wrongful dismissal claim. Wronko appealed at the Inventory service provider, in 1987, and by 2004 he was The vice-president of sales. With each promotion he executed a Relevant Issue by: Ho new employment agreement. The last contract, signed in De- Whether an employer is able to unilaterally change a in the cember 2000, provided for a generous severance package of to an a lump sum payment of two years salary upon termination fundamental term of an employment agreement simply by without cause In 2002, Western's new president decided that providing advance notice of the change to the employee indic empl Wronko's contract should be amended, and he presented Decision jects Wronko with a draft agreement that provided him with only The Ontario Court of Appeal unanimously found for Wronks of em seven months severance if terminated without cause. After seeking legal advice, Wronko refused to sign this amended It held that where an employer attempts to make a unilateral rehin agreement. On September 9, 2002. Western responded with and fundamental change to the terms of an existing employ a letter stating that the new contract would take effect in two ment agreement, and the employee clearly rejects that new deter years time. Wronko made it clear that he still did not accept term, the employer must do more than provide advance prop the change, but he continued working. Two years later, West- notice of the change. It must also advise the employee of the the te em wrote Wronko a letter that stated: consequences of rejecting it. In this instance. Western could term plies Effective September 9, 2004, the terms noted in have done this by explicitly telling Wronko that if he refused on the employment agreement .. . apply and are in to accept the new terms, employment under the terms of the Whe full force and effect. If you do not wish to accept existing contract would terminate at the end of the working the new terms and conditions of employment notice period (September 2004). At the same time, it could ably as outlined, then we do not have a job for you, have offered to rehire him under the new terms, starting at iod the end of the working notice period. However, because is th Wronko again refused the new terms and, taking the Western had allowed him to continue working in these per position that the employer's letter effectively fired him, sued circumstances without notifying him of the consequences for wrongful dismissal. of this decision, Wronko could legally insist that the notice char At trial, the employer argued that it had met its legal was ineffective. Therefore, by the letter of September 2004 acro obligations by giving Wronko two years' notice of the Western effectively terminated Wronko and he was en prov change and that by not attending work after that, Wronko titled to wrongful dismissal damages. The Court of Appeal be had resigned. The trial judge agreed. Under the common law, awarded Wronko two years termination pay in lieu of notice unil Western had the legal right to vary even a fundamental term ($286,000) pursuant to the terms of his existing employment of the contract-In this case the termination clause-upon contract. Western's leave to appeal to the Supreme Court of ploy Canada was dismissed with costs. statto hire an individual religion canbe illegal bored Canadian chaves of figues and freedom Human appers to gov right slater appliesto individual coosportation CHAPTER 11 Navigating the Employment Relationship appears that the Wronko decision has changed the legal requirements surround- 421 nately, if the issue ends range is a fundamental an employer & ability to make a unilateral, fundamental change to an employment However, the extent of that change is guably a fundamental Market by simply providing advance notice. However roviding the employee "being considered, For example, in the 2012 case of Kafka v Allstate Insurance the Ontario Court of Cuny of Canada, Allstate had advised all of its insurance agents that significant Lid, that called Into to their compensation structure would take effect in 24 months' time. The who refused to accept the changes resigned and filed a motion to have their certified as a class action. Basing their argument on Wronko, these agents need that once they rejected the employer's proposed changes to their contract, employer had to provide them with reasonable notice of termination and offer as rehire them on the new terms. However, the Ontario Divisional Court rejected is argument. It found that, unlike in Wronko, the employer's notice of the changes made it clear that the changes would take effect within 24 months, regardless of whether or not the employees accepted the change change. The agents could therefore have irt therefore dismissed goreasonable expectation that continuing under the previous compensation system ppealed. a the end of the 24-month period remained an option. The Ontario Divisional Court's decision in Kafka interprets Wronko quite narrow- However, it is not entirely clear wheth whether this app is approach will be consistently applied ilaterally change a In the future. At the very least, an employer who wants to make a fundamental change greement simply by wan employee's terms of employment by providing advance notice should clearly to the employee indicate that the change will take place at the end of the notice period regardless of the employee's acceptance or rejection of it. Without this clarity, where an employee re- wats the change, the employer would be well advised to provide notice of termination found for Wronka employment under the existing terms, which can be accompanied by an offer to to make a unilateral rehire the employee on the new terms at the end of the notice period (Channe, 2012). an existing employ One important question that arises from this discussion is: how does an employer ly rejects that new determine the amount of advance notice required? The answer is that what constitutes provide advance proper notice depends on the particular circumstances. First, the employer looks at he employee of the he terms of the employment contract to see whether it sets out a period for notice of e. Western could termination, In the absence of an enforceable termination clause, the common law im- that if he refused pics a duty to provide reasonable notice, which, as is discussed in Chapter 15, depends er the terms of the on a number of factors, including the employee's age, position, and length of service. d of the working Where more than one employee is affected by a significant change, an employer prob- me time, it could ably should provide the same notice to all employees based on the longest notice per- terms, starting at od to which any of the employees is entitled. The main difficulty with this approach wever, because is that the notice required under the common law is often extensive, ranging from orking in these periods of several months to periods of up to two years for long-term employees. If the consequences change being proposed by the employer is urgent, such as an immediate 15 percent that the notice across-the-board salary decrease to keep itself solvent, the employer may be unable to ptember 2004 nd he was en- provide sufficient notice to meet its common law obligations. An employer may also ourt of Appeal be faced with resentment and declining morale if it chooses to institute significant n lieu of notice unilateral changes in the terms and conditions of employment. This is especially true employment after the Wronko decision because, to make a change effective in the face of an em- reme Court of ployee's rejection of it, the advance notice now must be accompanied by rather direct statements regarding the consequences of the rejection. In short, significant changes to the employment contract can be made unilaterally by the employer if the proper steps are taken, but they should not be made lightly
