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Oct 6, 2015

Changing the agreement at the employee's request

Atypical Ontario case looks at employer considerations

 By Stuart Rudner

The issue of whether an employment contract that is introduced after an employee has already started working can be enforced is one that has been addressed on many occasions. Usually, it is the employer that seeks to impose a new contract of employment after their relationship has already started. Sometimes, it occurs on the very first day of employment.

In other cases, it occurs years later when the employer seeks to improve its legal position. In such cases, fresh consideration must be provided. What happens, however, when it is the employee who seeks to change the employment relationship? 

In Riskie v. Sony of Canada Ltd., the Ontario Superior Court of Justice had to consider such a situation. Riskie worked for Sony for about 25 years. He was in a managerial position, based in Toronto. However, he had to move to Ottawa for family reasons and asked to be allowed to stay in the same position but telecommute from home and travel to Toronto on an as-needed basis. 

Sony was quite skeptical about the viability of this arrangement, but ultimately agreed on the condition that Riskie enter into a new fixed-term contract of employment. He did so, hoping he could prove to Sony that the arrangement would be viable and his employment would continue beyond the fixed term of his new contract.

However, Sony subsequently advised him it was not going to renew his contract, and his employment would come to an end at its conclusion. He then commenced a legal action arguing the new employment agreement was void and seeking reasonable notice of termination. 

The court considered the circumstances, including the fact that the new contract was triggered by Riskie’s request to telecommute from Ottawa. It went on to consider the issue of consideration. The court agreed with Sony that its acceptance of the telecommuting arrangement was valid consideration for Riskie’s agreement to be bound by the new terms and conditions of employment. 

Furthermore, the court accepted the fact that despite Riskie’s lengthy period of service, the new contract allowed Sony to terminate the employment relationship by effectively allowing the fixed-term contract to come to an end. 

While the fixed-term contract also contained an early termination clause which allowed for termination on 30 days’ notice, which would have been a breach of the Employment Standards Act, 2000, this clause was not relied upon by Sony and was therefore irrelevant.

The bottom line is that the court agreed with Sony that it had provided proper consideration for Riskie’s acceptance of the fixed term nature of his employment contract, despite his previous years of service, and Sony was entitled to rely upon the fact that his new contract was for a fixed term. As a result, Riskie was not entitled to any compensation for the termination of the relationship at the expiry of the contract. 

This is an atypical situation but is instructive for parties and employment counsel when dealing with situations where the employee asks the employer to change the employment relationship, and the employer agrees on condition that a new agreement be entered into.

This can occur when an employee seeks to relocate, adjust her working hours or otherwise change the terms of her employment.

Employers do not have to accept such changes, just as they cannot unilaterally impose them in most circumstances. If an agreement is reached between the parties that gives the employee what they are seeking but imposes conditions, the employee cannot accept the benefit of the deal but then seek to avoid the consequences that they agreed upon.

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