Employer should have given choice of accepting new contract provisions or resigning under old ones: Court
The Ontario Court of Appeal has provided insight into how an employer should handle an employee who refuses to accept a unilateral change to a term of her employment even with reasonable notice. The court overturned a lower court’s decision that an employee was wrongfully dismissed when the change was implemented, which seems to require an employer notify an employee who clearly refuses the change that further refusal will result in termination. If the employer fails to notify the employee of this, then the termination for refusing the change will be considered a wrongful dismissal.
Employer introduced new termination provision
Darrell Wronko, 43, had an employment contract with Western Inventory Service in Toronto, which allowed for two years’ pay if terminated. Western attempted to shorten the provision to 30 weeks, but Wronko refused to agree to the change. Western notified Wronko the new termination provision would come into effect in two years. Again, Wronko indicated his disapproval.
Once the notice period elapsed, Western sent an e-mail to Wronko indicating the new termination provision was in effect and “if you do not wish to accept the new terms and conditions of employment as outlined, then we do not have a job for you.” Wronko acknowledged he understood his employment to be terminated and requested his severance package of two years. Western told Wronko he had not been terminated, but rather his employment contract had been amended with the new termination provision. Wronko did not return to work and was not given his two year severance package.
The Ontario Court of Justice, believing this case to be one involving a constructive dismissal, held that Western had the right to unilaterally alter the termination provision of the contract because reasonable notice was given to the employee of this change. With this concept in mind, the court dismissed Wronko's claim and found he ended the employment relationship.
No constructive dismissal, says Court of Appeal
The Ontario Court of Appeal disagreed with the trial decision in two ways. First, it found Wronko did not end the employment relationship, but rather Western had done so by giving him an ultimatum that he accept a term it knew he did not agree with. Secondly, the Court of Appeal disagreed with the lower court’s position that this case was one concerning a constructive dismissal.
No immediate impact on employee ruled out constructive dismissal
”In many cases, where an employer imposes a unilateral change of a fundamental term of an employment contract, the employee's response will be to sue for constructive dismissal because the change will have an immediate and undesired impact on the employee, the Court of Appeal said. “In the present case, the unilateral change did not have an immediate impact on the employee. Wronko's response to the attempted change and Western's reaction to his response bring this case outside the constructive dismissal context.”
The distinction appears to be that the Court of Appeal viewed the change as not having an immediate impact on the employee and the employer effectively terminated the employee, therefore not bringing Wronko within the constructive dismissal context. In drawing this distinction, the Court of Appeal stated that Western should have either informed Wronko that refusing the new provision would result in his termination and re-employment under the new term would be offered, or permitted him to continue working pursuant to the original provision. Since it did not choose the former, it acquiesced to allow Wronko to continue employment pursuant to his original termination provision and, since he was found to have been terminated, he was entitled to the two year severance package.
Reasonable notice of change not enough if employee objects
This decision seems to indicate reasonable notice of a unilateral change to a term of an employment contract, by itself, is not enough when the employee objects to it. In addition to the notification, the employer must inform the employee that refusal to accept the new term will result in termination. If this warning is not provided, an employer will likely be found to have wrongfully dismissed the employee.
For more information see:
•Wronko v. Western Inventory Service Ltd., 2008 CarswellOnt 2350 (Ont. C.A.).
Ronald S. Minken is a senior lawyer at Minken & Associates P.C., an employment law boutique located in Markham, Ont. He can be reached at (905) 477-7011 or www.EmploymentLawIssues.ca. Minken gratefully acknowledges Kyle Burgis and Sara Kauder for their assistance.
Employer introduced new termination provision
Darrell Wronko, 43, had an employment contract with Western Inventory Service in Toronto, which allowed for two years’ pay if terminated. Western attempted to shorten the provision to 30 weeks, but Wronko refused to agree to the change. Western notified Wronko the new termination provision would come into effect in two years. Again, Wronko indicated his disapproval.
Once the notice period elapsed, Western sent an e-mail to Wronko indicating the new termination provision was in effect and “if you do not wish to accept the new terms and conditions of employment as outlined, then we do not have a job for you.” Wronko acknowledged he understood his employment to be terminated and requested his severance package of two years. Western told Wronko he had not been terminated, but rather his employment contract had been amended with the new termination provision. Wronko did not return to work and was not given his two year severance package.
The Ontario Court of Justice, believing this case to be one involving a constructive dismissal, held that Western had the right to unilaterally alter the termination provision of the contract because reasonable notice was given to the employee of this change. With this concept in mind, the court dismissed Wronko's claim and found he ended the employment relationship.
No constructive dismissal, says Court of Appeal
The Ontario Court of Appeal disagreed with the trial decision in two ways. First, it found Wronko did not end the employment relationship, but rather Western had done so by giving him an ultimatum that he accept a term it knew he did not agree with. Secondly, the Court of Appeal disagreed with the lower court’s position that this case was one concerning a constructive dismissal.
No immediate impact on employee ruled out constructive dismissal
”In many cases, where an employer imposes a unilateral change of a fundamental term of an employment contract, the employee's response will be to sue for constructive dismissal because the change will have an immediate and undesired impact on the employee, the Court of Appeal said. “In the present case, the unilateral change did not have an immediate impact on the employee. Wronko's response to the attempted change and Western's reaction to his response bring this case outside the constructive dismissal context.”
The distinction appears to be that the Court of Appeal viewed the change as not having an immediate impact on the employee and the employer effectively terminated the employee, therefore not bringing Wronko within the constructive dismissal context. In drawing this distinction, the Court of Appeal stated that Western should have either informed Wronko that refusing the new provision would result in his termination and re-employment under the new term would be offered, or permitted him to continue working pursuant to the original provision. Since it did not choose the former, it acquiesced to allow Wronko to continue employment pursuant to his original termination provision and, since he was found to have been terminated, he was entitled to the two year severance package.
Reasonable notice of change not enough if employee objects
This decision seems to indicate reasonable notice of a unilateral change to a term of an employment contract, by itself, is not enough when the employee objects to it. In addition to the notification, the employer must inform the employee that refusal to accept the new term will result in termination. If this warning is not provided, an employer will likely be found to have wrongfully dismissed the employee.
For more information see:
•Wronko v. Western Inventory Service Ltd., 2008 CarswellOnt 2350 (Ont. C.A.).
Ronald S. Minken is a senior lawyer at Minken & Associates P.C., an employment law boutique located in Markham, Ont. He can be reached at (905) 477-7011 or www.EmploymentLawIssues.ca. Minken gratefully acknowledges Kyle Burgis and Sara Kauder for their assistance.
