An Ontario company does not owe severance pay to a former vice-president who claimed constructive dismissal when asked to sign an amended employment contract, the Ontario Superior Court of Justice has ruled.
Darrell Wronko, 42, worked for Western Inventory Service Ltd., a provider of physical inventory calculations, for 18 years. With each promotion he signed a new employment agreement outlining several items including termination rights. By 2000, he had achieved the position of vice-president of national accounts. On Dec. 20, 2000 he signed an agreement stipulating if he was fired without cause, he would be entitled to his previous two years’ salary plus a termination bonus. This was a change from his previous agreements, which provided for two weeks’ notice for each year of service to a maximum of 20 weeks.
When a new company president was appointed in 2002, Wronko’s employment contract was reviewed. However, his 2000 agreement had been misfiled and the contract on record was a 1991 agreement with the old termination clause. The new president asked Wronko to sign a new agreement entitling him to a maximum of thirty weeks’ notice. While an improvement on the 1991 contract, it was significantly less than the 2000 agreement. When Wronko refused and informed the president of the terms of the 2000 agreement, the president felt it was preferential treatment and did not accept it. Wronko was given a letter dated Sept. 9, 2002 giving him 104 weeks’ notice that the termination clause would be changed to three weeks’ notice for each year of employment to a maximum of 30 weeks.
On Sept. 13, 2004, Wronko received notification of his new agreement which stated if he did not accept these terms, the company did “not have a job for you.” Wronko took this to mean he would be terminated if he refused. The president informed him he would not be terminated but the new clause would be in effect. Wronko refused to sign and accepted what he took to be his termination, demanding a severance package of 104 weeks’ pay.
The court noted while constructive dismissal can involve a change to an employment contract without reasonable notice, in this case Wronko had been given two years’ notice of the changes to the termination clause in his contract. Though Wronko may have believed his termination clause could not be changed at all without his consent, this was not true. The company gave him enough notice that the change was within its rights to make and it showed not desire to terminate him. “In declining to continue to work for (the company) under the terms of the revised contract, (Wronko) effectively ended the employment relationship,” the court said.
The court ruled there was no wrongful or constructive dismissal and Wronko was entitled only to his outstanding vacation pay as per a normal ending of employment. See
Wronko v. Western Inventory Service Ltd.
(Oct. 11, 2006), Docket 04-CV-276690CM1 (Ont. S.C.J.).
Look for Daniel A. Lublin’s take on this case and what it means for employers’ ability to change employment contracts in an upcoming issue of Canadian Employment Law Today.
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