Author: Daniel A. Lublin
Advanced notice can no longer be used to change important terms of employment
As the economy dwindles, employers continue to seek creative means to reduce their bottom line. They have tightened budgets through dismissals, temporary layoffs and reduced hours, and by slashing more generous terms of compensation. Some employees will resist these changes, and our courts are increasingly asked to intervene. As an Ontario court recently ruled, while employees have no legal entitlement to continued employment, they do retain some basic rights.
Just promoted, Darrell Wronko had negotiated a new contract promising him two years’ severance if he was fired. His elation was short-lived. Shortly after signing the contract, his employer, Western Inventory Service Ltd., hired a new company president who reviewed Wronko’s contract and determined that it had to be changed.
Considering Wronko to have negotiated a “sweetheart” deal for himself, Western’s president sent him a letter enclosing a new contract that provided him with only seven months’ severance in the event that he was fired. Relying on his current contract, Wronko refused to sign. As Wronko saw it, he had a deal and that deal could only be changed with his consent. In response, the president then sent Wronko a memo advising him that in two years’ time, the clause in his contract would be changed.
Two years later, Western’s president sent Wronko an email enclosing the new contract and advising him to either accept its revised terms or Western would not have a job for him anymore. Believing that such a change could not be imposed on him, Wronko treated Western’s ultimatum as though he had been terminated and sued for the original two years’ severance that he had negotiated.
At trial, the court ruled that Western had a right to vary the terms of his contract by providing him with sufficient notice. If Wronko could be fired with two years’ notice, then Western could amend his contract by providing him with an advance warning consisting of that same amount of time.
Wronko appealed the decision, and recently he succeeded. It wasn’t sufficient for Western to simply provide Wronko with working notice that his contract would change. Western had to provide him with the ultimatum that he would lose his job right from the start; otherwise, it could not be given credit for the two years’ notice it gave him.
The Court of Appeal’s judgment may be a sign of the times. Employers cannot adapt to new economic constraints at the expense of fundamental employee rights. The lessons for employees are clear:
- Once your employment commences, you have the option to reject any significant changes your employer wishes to introduce.
- Protest changes to your job in writing and insist on adherence to the original terms of your contract.
- Seek legal advice as soon as notice of the change is given rather than waiting for an important time period to elapse.
- Take notes of important conversations. Although credibility was not a turning point in Wronko’s trial, the Court preferred his version of the events because he had made notes after disputed conversations.