Any "fundamental change" to an employment contract
requires careful consideration by the employer. A fundamental
change results where the terms of employment are changed in any
significant way. Examples of fundamental changes include, amongst
others, a reduction of hours and salary, geographical relocation,
or a significant change in the roles and responsibilities of the
Where a fundamental change is instituted
unilaterally by an employer, an employee may sue
for damages based on constructive dismissal. Where the employer
wishes to make a fundamental change to the employment relationship,
the following considerations should be taken into account in order
to avoid a claim for constructive dismissal:
The consent of the employee should always be secured in
writing. This can be done by way of amending agreement to the
employment contract. It is also often helpful to provide an
understandable reason for the change to the employment
To ensure that the contractual amendment is legally
enforceable, there must be an exchange of valuable consideration.
In order to create a valid and binding contract, the employee must
be given some of value, such as a monetary signing bonus.
After an employee receives notice of a change to the employment
relationship, such as a reduction of hours and salary, from its
employer, the employee may make the following decisions (as laid
out by the Ontario Court of Appeal in Wronko v Western
Inventory Services Ltd. 2008 ON CA 327
The employee may accept the change;
The employee may reject the change and sue for damages based on
constructive dismissal if the employer proceeds with the change
without the consent of the employee;
The employee may reject the change and continue on according to
the established terms of employment, unless terminated by the
employer as discussed below.
Where an employee rejects the proposed fundamental change, the
employer has the following options, as laid out in
The employer may terminate the employee by providing an
adequate notice period or pay in lieu of notice, according to the
termination provision in the employment contract, ensuring that
termination notice period does not fall below the Employment
Standards Act minimums, or below the common law reasonable
notice period, if applicable. The employer may then re-offer
employment to the employee on new terms.
The employer may accept that there has been no agreement to the
fundamental change and continue on existing terms.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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