Changing terms of employment.

• Author: Bowal, Peter
• Position: Employment Law

Introduction

Darrell Wronko started work at Western Inventory Service Limited (WIS) in 1987, right after graduating from university. He worked at the company for 17 years, including four years as Vice President of National Accounts and Marketing. In 2000, he signed an amended employment contract, which included a significant improvement to his termination clause. The new provision would give him two years of salary and bonus on termination.

In 2002 under a new corporate President, Wronko received a new contract that reduced the termination provision to 30 weeks of salary. Wronko refused to sign the new contract and continued working. WIS gave two years written notice to Wronko that the termination clause in his contract would change to a maximum of 30 weeks' salary.

Over the next two-year period Wronko remained employed by WIS, and continued to oppose the amended contract. In 2004 Wronko was told the new termination provision of 30 weeks was in effect, and if he did not accept the new terms of employment, he no longer had a job at WIS. Wronko walked off and asked for his severance package of two years. The case went to court.

Constructive Dismissal

Employers may make life very difficult for employees without expressly dismissing them. They may humiliate them in public, ask for their resignations, lock them out of their workplace or suddenly demote them or transfer them to a location to which the worker does not want to move. The employers sudden, unilateral change of the job may be more subtle, such as significantly changing one's job responsibilities, title, working conditions, benefit packages or restrictive covenants. If the average person would view this as an act that renders continued employment intolerable, the employee may consider himself to have been dismissed, even though dismissal language was never used. The law views this as a termination without cause and the employee is entitled to compensation for a reasonable notice period. Wronko argued that WIS constructively dismissed him in 2004 when it unilaterally varied the termination clause in his contract. He sought damages of two years' salary.

Ontario Court of Appeal Ruling

In 2008, Wronko's case reached the Ontario Court of Appeal (Wronko v. Western Inventory Service Ltd., 2008 ONCA 327). Did the 2004 letter (reducing the notice period) from WIS constitute a termination, and if so, what consequences flowed from the termination? The Court said a reasonable person would have...