Law Times

Law TiMes • March 1, 2010 FOCUS Lawyers surprised landmark case sparking little judicial discussion Wronko has more impact in practice than law BY JUDY VAN RHIJN For Law Times I t's just over a year since the Wronko case had lawyers predicting a signifi cant shift in the law around the unilateral alteration of contracts. Many lawyers felt employers needed to change how they handled the issue because the recession would spawn a spate of litiga- tion around it. But in fact, legal advisers have been guiding their clients down the path of least re- sistance by implementing practi- cal changes in the way they alter the terms of employment. Lynn Harnden of Emond Harnden LLP in Ottawa is one employment lawyer who has changed his advice since On- tario Court of Appeal Chief Justice Warren Winkler handed down his judgment in Wronko v. Western Inventory Service Ltd. in April 2008. Th e case involved a wrongful dismissal claim against the company by its former vice president of national accounts and marketing. His employment contract, dated December 2000, included a termination provision awarding two years' salary. In September 2002, the com- pany presented a new contract to Darrell Wronko with a pro- vision, due to start in two years' time, awarding only 30 weeks' pay on termination. Wronko re- fused to sign but kept working until September 2004, when the clause came into eff ect. When the employer insisted on the change, Wronko understood his employ- ment was over and didn't report to work. Th e central issue was whether the company could uni- laterally amend the provision in Wronko's employment contract upon reasonable notice. "Ordinarily, an employer could alter terms and conditions by unilaterally advising employ- ees of the proposed change," says Harnden. "Th e employer would indicate that the change would take eff ect on some future date, which coincided with the em- ployee's entitlement for notice for wrongful dismissal. Th e theory was that, insofar as an employee was entitled to reasonable notice of dismissal, if the employee was given equivalent notice of the change of terms and conditions of employment, then there was no recourse against the employer. Even if the employee could estab- lish that the change constituted constructive dismissal, at law the employee was considered with- out remedy since the employer had provided the notice of the changes that was required under common law to dismiss the em- ployee." Cheryl Rovis, of Filion Wakely Th orup Angeletti LLP's London, Ont., offi ce, says Wronko represented a fairly signifi cant shift from that posi- tion. She notes the appeal court resurrected the 1957 decision of Hill v. Peter Gorman Ltd. that talked about the diff erent circumstances that arise when an employer attempts to make a change. It said: "Where an employer attempts to vary the contractual terms, the position of the employee is this: he may accept the variation expressly or impliedly, in which case there is a new contract. He may refuse to accept it, and if the employer persists in the attempted varia- tion, the employee may treat this persistence as a breach of contract and sue the employer for damages or, while refusing to accept it, he may continue in his employment, and if the employer permits him to dis- charge his obligations and the employee makes it plain that he is not accepting the variation, then the employee is entitled to insist on the original terms." "Th ere has been a general understanding despite that de- cision, and many employers did proceed exactly as the employer in Wronko did," says Rovis. But now, Rovis has observed an increase in employees who are aware of their rights and will- ing to engage in some discussion even if they don't get a lawyer. Still, she hasn't seen any repeat of the Wronko situation. "Th e Wronko case was unique on the facts. It was not a typical scenario because employees usually either March web specials accept the change or treat it as a constructive dismissal. Th e Court of Appeal explained the third category as when the employee doesn't accept the change but keeps working," she says. Harnden, however, has seen a change in employers' strategies, which may explain why there has been no substantial judicial discussion of Wronko. "It is some- what surprising that there hasn't been more litigation around the principles laid down in Wronko. Th e decision is well known among the employment law bar, and one would have thought the economic downturn would have produced the opposite eff ect be- cause there is pressure on employ- ers to alter terms and conditions to refl ect the economy. What I do see is that they are off ering employees the option of accept- ing the terms and conditions of an off er, usually in conjunction with some consideration." George Waggott, a partner at Lang Michener LLP in Toronto, agrees the case has had more impact in practice than in law. "Ultimately, the case has been helpful to make employers more clearly aware of what they have to do if they are changing terms of employment," he says, adding he believes employers are now docu- menting purported changes more clearly and appropriately and are off ering incentives such as sign- ing bonuses and increases to base salary. PAGE 15 'It is somewhat surprising that there hasn't been more litiga- tion around the principles laid down in Wronko,' says Lynn LT Harnden. Collective Agreement Handbook A Guide for Employers and Employees Third Edition Revised and updated to include new commentary, recent trends and important legal developments. Collective Agreement Handbook: A Guide for Employers and Employees, Third Edition provides the best framework for a clear understanding of collective agreements in Canada. It includes sample clauses and sets out the common concepts of collective agreements and explains the meaning of the standard provisions and their most frequent variations. The Third Edition includes: • discussion of changes to the Ontario mandatory retirement to prohibit • new commentary and sample clauses on the duty to accommodate • discussion of the expanding jurisdiction of arbitrators to enforce employment-related statutes and disputes • new commentary on witness duty, including a sample clause • new commentary on how holiday pay is calculated under the Ontario ORDER your copy today Perfectbound • 152 pp. March 2010 • $72 P/C 0958010003 ISBN 978-0-88804-497-6 • updated commentary on parental leave, personal emergency leave, family leave and military service leave • expanded coverage of public sector examples No other resource offers such a clear explanation of the collective agreement! LT0110 LT0301 Saxe_Collective Agreement Handbook 3rd Ed (LT 1-4x3).indd 1 For a 30-day, no-risk evaluation call: 1.800.565.6967 Canada Law Book is a Division of The Cartwright Group Ltd Prices subject to change without notice, to applicable taxes and shipping & handling. 2/24/10 2:06:09 PM The Duty to Accommodate in Employment Just Cause: The Law of Summary Dismissal in Canada Pregnancy, the Workplace and the Law Trade Union Law in Canada For a 30-day, no-risk evaluation call: 1.800.565.6967 CA082 www.lawtimesnews.com Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. Stewart D. Saxe and Brian McLean H uman Right Code Employment Standards Act, 2000 Michael Mac Neil, Michael Lynk and Peter Engelmann Melanie Manning The Honourable Justice Randall S Superior Court of Justice (Ontario) cott Echlin, and Matthew L.O. Certosimo Kevin D. MacNeill

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