Terms of employment changing? Get advice

The only thing for sure in life is death, taxes and the fact that sooner or later your workplace will be ‘restructured’.
When restructuring occurs, some people are terminated. Others are offered, or told, that they are moving to a new position. Before declining such an offer on the assumption that if you refuse you will get a severance package, you should always talk to a lawyer who specializes in employment law. Sometimes you will have no real choice but to take it, but sometimes you do.
Sylvia had been employed for 10 years as an accounting clerk when the car dealership she worked at was restructured. She was brought into a meeting and told that her position was being eliminated and given a letter offering her continued employment as a receptionist. According to the letter, she would lose 20% of her salary and would no longer be eligible for bonuses. The letter said that she would be on probation for the first six months and could be terminated without notice during that period. It also indicated that she would have to wait three months before she could be covered again by the company benefits plan She would go from three weeks’ vacation a year to two. Although she had never signed anything like it in the past, this letter also indicated that if she was ever terminated after she took the new position, she would receive only the minimum entitlements under the Employment Standards Act and would not receive reasonable notice at common law.
Sylvia declined the offer and her employer terminated her and gave her one month of pay in lieu of notice. She sued for more pay in lieu of notice and the employer claimed that she wasn’t entitled to anything more since she failed to mitigate her damages by accepting the new position.
Basically, the employer was saying that while they had terminated her, she had an obligation to do what she could to lessen her damages by accepting reasonable alternative employment and that by turning down the receptionist job offer, she had foregone the opportunity to make replacement income and the employer should get credit for those monies in calculating anything it owed to Sylvia.
Clearly, the employer had thoughtlessly used a precedent letter it had on its computer that was meant for job offers to new employees. When Sylvia asked about the probation and the benefits suspension, the employer said that that wouldn’t apply to her but couldn’t even bother to take 90 seconds to amend the letter despite repeated requests.
The judge found that while Sylvia might have had to have accepted a 5% to 10% decrease in salary, 20% was too much for the employer to have expected her to swallow.
The employer argued that Sylvia could have simply taken the new job and sued the employer for the loss of the 20% over a reasonable notice period based on her age, seniority and level of responsibility. The judge noted that suing your employer for changes to the terms of your employment without reasonable notice was a nice remedy in the abstract but would likely lead to a subsequent dismissal. Smiling at your boss every day as you are suing him is not an easy thing to do. Your boss will not be smiling back.
Ultimately, the judge decided that the offer, cumulatively, with all its changes to vacation, benefits and salary, was not an offer of reasonable alternative employment. Sylvia was awarded 10 months pay in lieu of notice minus the one month pay in lieu of notice she had already received. The judge was particularly generous in these circumstances since a 10-year accounting clerk would usually receive something around seven or eight months reasonable notice, not 10.
If this employer had simply told Sylvia that she was going to become the receptionist and lose 10% of her salary but that everything else about her employment would stay the same, she probably would have lost this case. There is a bit of an unwritten rule that an employer can reduce your overall remuneration by up to 10% without it constituting a constructive dismissal. Sylvia’s employer, however, not only bungled the original offer, it made an even bigger mistake in taking this matter all the way to trial.
If your employer proposes to change the terms of your employment for any reason, whether it’s a restructuring or not, get advice immediately.  Although Sylvia’s story had a happy ending, making the wrong decision can be an expensive mistake for the employee.
As published by The Hamilton Spectator, March 5, 2012
Ed Canning
Ed Canning
P: 905.572.5809