Canada: Unilateral Amendments To Employment Contracts: The Court Of Appeal Clarifies The Law

Last Updated: May 22 2008
Article by Michelle S. Henry

Most Read Contributor in Canada, September 2016

It has generally been accepted that an employer is permitted to change unilaterally a term or condition of employment, including compensation and benefits, by providing reasonable notice of the change to affected employees. However, in a recent decision, the Court of Appeal of Ontario held that, where an employee does not consent to changes to his/her terms of employment, an employer can make unilateral changes only if it precedes them with reasonable notice of termination and offers re-employment to the employee on the new terms.

In Wronko v. Western Inventory Service Ltd., [2008] O.J. No. 1589 (C.A.), the plaintiff Vice President had negotiated a two-year severance provision in the event of his dismissal without cause. When a new company President was appointed in 2002, the President reviewed all employment contracts in place and sought to reduce the severance provision in Mr. Wronko's employment agreement to two weeks per year of service to a maximum of 30 weeks. Not surprisingly, Mr. Wronko refused to sign any amending agreement. Accordingly, in September 2002, the new President sent Mr. Wronko a letter which explained that after a period of 24 months, the employer would unilaterally amend the employment agreement to provide the lesser termination provision. Mr. Wronko continued to object to the amended termination provision over the next two years. Two years later, in September 2004, the new President sent Mr. Wronko an email indicating that the original contract signed in 2000 was no longer valid and that payments on termination would be limited to 30 weeks. He also indicated to Mr. Wronko that if he continued to refuse to sign the amended agreement, "then we do not have a job for you". Mr. Wronko replied that he understood his employment to be terminated and did not report to work. Mr. Wronko then sued for wrongful dismissal.

Lower Court Decision

The trial judge identified the real issue as being whether the employer had a unilateral right to vary the termination provision in an employment contract upon reasonable notice to the employee. Relying on the Supreme Court of Canada judgement in Farber v. Royal Trust Co., and cases which have followed it, the trial judge held that an employer may make unilateral, fundamental changes to the terms and conditions of the employment relationship if it gives reasonable notice of these changes.

In this case, the period of 24 months was considered more than adequate notice of the change and the amended termination language was valid. Accordingly, it was held that although Mr. Wronko had no intention of resigning, his decision to do so could not be considered a constructive dismissal. In the result, the trial judge dismissed all the claims for damages, except a claim for unpaid vacation pay.

Court of Appeal's Decision

The Court of Appeal saw the issues differently, ruling that the trial judge erred in treating this case as an action for constructive dismissal as in the Farber case. The Court held that the two issues were essentially: whether the September 2004 correspondence constituted a termination of the employment relationship by the employer; and, if so, what consequences flowed from this termination.

Relying on the 1957 Court of Appeal case of Hill v. Peter Gorman, the Court explained that there are three options available to an employee when an employer attempts a unilateral amendment to a fundamental term of a contract of employment:

  1. The employee may accept the change in the terms of employment, either expressly or implicitly through apparent acquiescence, in which case the employment will continue under the altered terms.

  2. The employee may reject the change and sue for damages if the employer persists in treating the relationship as subject to the varied term. This course of action would now be termed a "constructive dismissal".

  3. The employee may make it clear to the employer that he or she is rejecting the new term, but continue to work.

With respect to the third option, the employer may respond to this rejection by terminating the employee with proper notice and offering re-employment on the new terms. If the employer does not take this course and permits the employee to continue to fulfill his/her job requirements, then the employee is entitled to insist on adherence to the terms of the original contract.

Based on the above, the Court ruled that, having been made aware of Mr. Wronko's refusal to accept the new contract, the employer had two choices. It could advise Mr. Wronko that his refusal to accept the new contract would result in his termination, and that re-employment would be offered on the new terms. Alternatively, it could accept that there was no new contract and allow Mr. Wronko to continue working under the existing terms.

The Court concluded that, having failed to terminate Mr. Wronko's employment in 2002, and offer reemployment on the new terms, the employer must be taken to have accepted that the terms of the original contract remained in effect. In the Court's view the September 2004 email was an ultimatum, resulting in a termination by the employer. Accordingly, Mr. Wronko was entitled to two years' termination pay pursuant to his original contract. Conclusion


The Wronko decision makes it clear that providing reasonable notice to an employee of a fundamental change to his/her terms of employment, may no longer be sufficient. Where an employer wishes to amend fundamental terms of employment, such as compensation, pensions, benefits or termination provisions, the employer should continue to provide reasonable notice of the change. However, if an employee objects to the change, the employer may be faced with a wrongful or constructive dismissal claim.

Clearly, the risks of a successful claim are greater where an employment contract does not have an embedded amending power with respect to the specific term of employment. This is not usually the case with pension and benefits plans, as most plans have a right to amend expressly set out. Having said that, in all cases where an employee objects to a change, an employer should assess the risks and consider providing reasonable notice of termination of employment, and then offer to re-employ the individual under the new terms at the end of the reasonable notice period.

This may not be the final word on the Wronko case, as the employer intends to appeal the decision to the Supreme Court of Canada.

About BLG

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.