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Introducing new agreements for existing employees

Ontario Superior Court confirms strategic way for employers to introduce agreements
Employment law
Importantly, the court found that Michelle Lancia had received consideration in the form of the $2,000 signing bonus.

By Stuart Rudner and Nadia Zaman

The Ontario Superior Court of Justice recently released a decision granting summary judgment against an employee who had alleged constructive dismissal after signing a new employment contract and argued the contract was unenforceable due to lack of consideration.

The court confirmed that adequate consideration was provided (a signing bonus) and that since appropriate notice of the change was provided, consideration was not even necessary.

In Lancia v Park Dentistry, Michelle Lancia was employed by Park Dentistry and its predecessor as a restorative dental hygienist from 1997 to 2016. In August 2014, six years after the company bought the predecessor, the company requested that Lancia sign an employment contract which included a termination clause limiting her entitlements to the minimum required under the Employment Standards Act, 2000.

Park Dentistry provided Lancia with the option of signing the employment agreement by Jan. 14, 2016, or having her employment terminated on Feb. 14, 2016. The period between August 2014 and February 2016 would constitute working notice.

Lancia signed the agreement two days after it was provided to her, and was provided a signing bonus of $2,000 for signing prior to Sept. 19, 2014.

She then resigned from her employment with the company on Feb. 9, 2016, and over a year after resigning, brought a claim alleging: 1) constructive dismissal due to a material change in the employment relationship and lack of consideration rendering the employment agreement unenforceable, and 2) sexual harassment.

Both parties sought summary judgment.

The court held in favour of the company, finding that there was no genuine issue requiring a trial and that Lancia was not constructively dismissed. Further, the court found that the allegations of sexual harassment were unsubstantiated.

Importantly, the court found that Lancia had received consideration in the form of the $2,000 signing bonus and stated that “It is trite law that courts will not inquire into the adequacy of the consideration — a ‘peppercorn’ will do.” In addition, the court found that Park Dentistry was not required to provide consideration since it had provided common law reasonable notice of the change (i.e. by way of adequate and reasonable working notice).

The court highlighted Lancia’s delay in bringing the constructive dismissal claim and stated that “(If) an employee decides to treat the breach as a constructive dismissal, he or she must communicate that decision to the employer in a reasonable time”. Here, the court found that Lancia had failed to do so.

While this decision serves as an example of a strategic way in which employers may introduce new employment agreements for existing employees, employers must be careful in making changes to employment terms and should seek legal advice before doing so.

Nadia Zaman is a lawyer at Rudner law in Toronto.

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Stuart Rudner

Stuart Rudner, Employment Lawyer and MediatorStuart Rudner is the founder of Rudner Law (RudnerLaw.ca), a firm specializing in Employment Law and Mediation. He can be reached at stuart@rudnerlaw.ca, (416) 864-8500 or (905) 209-6999, and you can follow on Twitter @RudnerLaw.
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