Thursday, 31 July 2014

How Employers Can Make Fundamental Changes to Terms of Employment

How can an employer make fundamental changes to an employee’s employment? Sometimes an employer will need to make a fundamental change to the terms of an employee’s employment, this may include changing the number of hours that an employee works, the times during which an employee will work, the position that the employee will hold, or the amount of money that the employee may receive.

While the easiest way to change the terms of an employee’s employment is to get the employee to agree, not all employees will be willing to do so. In those cases, employers will need to ensure that they follow the law concerning unilateral fundamental changes.

In an earlier post (Taking the Managing out of a Problematic Manager) I commented on the case of Chandran v. National Bank, 2012 ONCA 205. In that post I commented that, “the employer’s more tactical move should have been to terminate the employee’s employment as a senior manager - on appropriate notice - and then offered him the alternative positions within the bank. Had proper notice been provided, the bank may have removed the possibility of a suit and its related costs.”

In making that comment I was employing the analysis set out in the Ontario Court of Appeal’s decision in Wronko v. Western Inventory Service Ltd., 2008 ONCA 327. A more recent case from the Ontario Divisional Court, Kafka v. Allstate Insurance Company of Canada, 2012 ONSC 1035 would appear to confirm that my earlier statement was correct.

The Decision in Kafka v. Allstate Insurance Company of Canada

In Kafka several employees of Allstate Insurance sought to bring a class action proceeding against their former employer for statutory notice and severance damages for constructive dismissal. It was clear that Allstate had made some serious fundamental changes to the employee’s compensation structure, as well as other changes.

The issue, however, was whether Allstate had provided sufficient notice of these fundamental changes.

Writing for the three-member panel Justice Harvison Young held that:

[45] In short, the Wronko analysis does not change or purport to change the law established by the Supreme Court in Farber, which affirmed that a fundamental change does not amount to a constructive dismissal where the employer provides the employee with reasonable notice of the change.

Takeaways for Employers with Labour Pains

The takeaway for employers is that should you wish to make a fundamental change to an employee’s employment, you must provide sufficient notice of the change. (Readers should note that whether or not a change is “fundamental” will always depend on the individual facts of the case.) If you do provide sufficient notice then the employee may not have any recourse.

If you are an employer in Ontario and you are thinking about making such changes to the terms of your employees’ employment, it may make sense to speak to an experienced employment lawyer first. The professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

Takeaways for Employees with Labour Pains

If you are an employee and your employer has attempted to unilaterally change the terms of your employment, it would be prudent to speak to an employment lawyer. While the law is clear that your employer can make fundamental changes to your employment, the law is equally clear that the employer must provide reasonable notice of the change. Whether sufficient notice has been provided is a question for which you seek a legal opinion.

If you are unsure about your employer’s actions and wish legal advice, it may be time to speak with an employment lawyer. The professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

Contact Us

To reach the author of this blog, Sean Bawden, email or call 613.238.6321 x260. You may also use the contact box at the top of this page.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.

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