Unilateral changes to employment OK with enough notice: Court

New contract terms implemented with worker’s signing 2 days after offer, but worker was given 18 months to decide whether to sign

An Ontario worker has had her claim of constructive dismissal dismissed since her employer gave her 18 months' notice of a new employment contract with changes to her vacation pay calculation, the Ontario Superior Court of Justice has ruled.

Michele Lancia, 50, was a restorative dental hygienist for Park Dentistry. She started working at the dental practice in November 1997 and remained employed there when the practice was purchase by a new dentist in 2008. Five years later, in 2013, the dental practice decided to transition its staff to written employment contracts.

The transition to written employment contracts required a change in the vacation practices at Park Dentistry. Employees were paid their vacation pay before it was earned on the assumption they would work 40 hours per week — a practice that had been in place since the old owner. Because it was based on the assumption, employees could receive more vacation pay than they warranted if they didn’t work a full 40 hours every week. Lancia’s vacation pay was calculated at 10.4 per cent of earnings from a 40-hour week, but she worked significantly fewer than 40 hours per week.

Park Dentistry determined that the new written employment contracts would set vacation pay at a certain percentage of wages actually earned from hours actually worked, as set out in Ontario’s Employment Standards Act, 2000 (ESA). It provided written notice of the change to all employees on Aug. 14, 2014.

Lancia was informed that her current employment was being terminated and she was being offered new employment under the terms of the written employment contract with the same pay and five weeks vacation time, but with vacation pay amounting to 10 per cent of her actual earnings. The deadline for signing her new contract was Jan. 14, 2016, and if she refused to sign her employment would end one month later on Feb. 14, 2016 — effectively providing 18 months’ notice. The contract also provided for ESA minimum notice if she was terminated without cause, and Lancia could resign with 30 days’ notice. If the contract was signed before the deadline, it would terminate the old employment immediately. Park Dentistry also offered Lancia a $2,000 bonus if she signed it by Sept. 19, 2014.

New contract in effect upon signing

Lancia didn’t object to any of the terms of the new contract and signed it two days later.

Park also required in 2015 that Lancia pay back vacation pay that was overpaid to her in 2014 from the 40-hours-per-week assumption. This resulted in only 64 hours of paid holidays for Lancia in 2015, as opposed to 200 hours in past years. When there was no Christmas bonus, Lancia decided she had to leave.

On Feb. 9, 2016, Lancia delivered a written resignation letter outlining her vacation payback and lack of a raise as the reasons. She also said that it was “clear to me that Dr. Park would like me to leave” and requested an immediate end to her employment because “it will be too emotional for me to work here for two weeks.” Lancia then filed a claim alleging she was constructively dismissed from Park Dentistry “due to a material change in the employment relationship amounting to repeated improper deductions of vacation pay as well as allegations of sexual harassment.” She argued the $2,000 bonus for signing wasn’t proper consideration since it didn’t offset the annual pay decreases from the vacation pay recalculation.

Lancia also claimed because the written employment contract was in effect as soon as she signed it, she wasn’t given sufficient notice before it was implemented.

The court found that the notification Lancia received clearly stipulated that the new terms would be imposed as soon as she signed the contract and her old employment would be terminated. Even though she signed the contract two days after it was offered, she still was given 18 months’ notice that she could have used. In addition, the $2,000 bonus was some consideration, even though no consideration was required because her old employment was being terminated with sufficient notice, the court added.

The court also noted that under the new written employment contract, her job duties and pay level remained unchanged.

“It is settled law that an employer may transition an employee to a new contract without consideration by providing reasonable notice,” the court said, pointing to case law precedents that established that “a fundamental change does not amount to a constructive dismissal where the employer provides the employee with reasonable notice of the change.”

As for the reduction in pay resulting from the vacation pay changes, the court found it was “permissible by law.” In addition, Lancia didn’t tell Park that she felt the repayment of her vacation pay overpayment was a breach of the employment contract and didn’t complaint of any issues in her work environment.

However, the court did find that the new employment contract was not retroactive and the repayment of vacation pay Park required of Lancia in 2015 was an improper withholding of compensation. Given the amount of the repayments — $3,763 — compared to Lancia’s overall compensation, though, it didn’t substantially change an essential term of employment enough to cause a constructive dismissal — nor did Lancia ever indicate she would consider resigning over the vacation pay issues, said the court.

The court found no credibility in Lancia’s claim of sexual harassment, as the evidence showed she got along well with staff and the dentist and made no reference to it in her resignation letter. Instead, it was an attempt to bolster her constructive dismissal claim, said the court.

The court dismissed Lancia’s claim of constructive dismissal and upheld her claim regarding the vacation pay repayment, ordering Park Dentistry to pay Lancia $3,763 plus interest.

“In this case, Park Dentistry had a right to make unilateral changes to terms in the employment arrangement in the manner that it did, upon providing reasonable notice of that change to Lancia,” the court said. “With the new contract and 18 months of working notice being offered, this constituted reasonable notice.”

For more information see:

Lancia v. Park Dentistry, 2018 CarswellOnt 1791 (Ont. S.C.J.).

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