Best practice is to tell employee at time of hiring that duties could change
Question: What would be an employer’s best course of action and potential liability if it wanted to completely change an employee’s job duties if the employee is reluctant to take on the new duties?
Answer: In the absence of a contractual right of the employer to substantially alter the duties an employee was hired to perform, a unilateral change initiated by the employer without the employee’s consent will generally amount to a constructive dismissal. The dismissal is “constructive” because the employer wishes to retain the employee’s services; it is a dismissal because the employer has altered the employee’s duties so substantially that it is an effective repudiation of the employer’s part of the bargain. The employee may accept the repudiation brought about by the unilateral change or leave her employment and sue for wrongful dismissal.
In the past, it was generally assumed that a unilateral change could be made without risking constructive dismissal if the employer provided the employee with reasonable notice of the impending change and did not implement the change until after the expiry of that reasonable notice period. Courts had relied on the comments of the Supreme Court of Canada in the 1997 decision Farber v. Royal Trust Co., as authority for this proposition: “A constructive dismissal occurs when an employer makes a unilateral and fundamental change to a term or condition of an employment contract without providing reasonable notice of that change to the employee.”
However, in 2008, the Ontario Court of Appeal in Wronko v Western Inventory Service Ltd., introduced a subtle but important limitation on the employer’s ability to make changes on notice.
In Wronko, the employer gave the employee 24 months’ notice of its intention to implement a change unilaterally. The employee refused to agree to the change but continued to work for the employer. Four days after expiry of the 24 months’ notice, the employer sent the employee a new contract of employment containing the revised provision. He was advised in an email that the employer would no longer have a job for him if he did not sign the agreement. The employee took this as a termination and sued for wrongful dismissal.
The trial court dismissed the claim, holding that the employer was entitled to amend the employment contract after giving reasonable notice of its intent to do so. However, the Court of Appeal disagreed, finding that the employer, having failed to terminate the employee and offer re-employment on the new terms when its proposed change was rejected, must be taken to have accepted that the terms of the original contract remained in effect.
The Court of Appeal found the employer’s email indicating there was “no job” for the employee unless he accepted the change was a termination of employment. Because the employer had not previously advised the employee that his employment would terminate if he failed to accept the change at the end of the notice period, the employer was required to pay damages in accordance with the terms of the original contract.
In Russo v. Kerr Bros. Ltd., the employer was held liable for damages when it failed to terminate an employee who objected to a substantial pay cut. The court rejected the employer’s argument that the employee was required to make an election whether to accept the changed term and had done so by continuing in the employment. The employer could not assume the employee’s continuation in employment was an acceptance of the changed term, said the Ontario Superior Court of Justice. He was entitled to continue to work as a means of mitigating his damages, even though that option was not offered by the employer, as long as he did not stay past the period of reasonable notice.
Given these findings, an employer seeking to significantly alter duties of an employee must be absolutely clear in conveying its intentions to the employee. If the employee is given reasonable notice, she should be told the change will take place after expiry of the notice period and the notice will be a termination notice if the employee does not accept the change. If the employer wishes to implement the change immediately and the employee objects, the employer would be well-advised to terminate the employee with appropriate pay in lieu of notice.
Tim Mitchell is a partner with Armstrong Management Lawyers in Calgary who practices employment and labour law. He can be reached at [email protected].
