Canadian Employment Law Today

Bill 47 brings new constructive dismissal risks for Ontario employers Reversal of new employment standards changes seen as victory for employers, but rolling them back may not be easy for some BY SETH HOLLAND F lexibility, operational nimbleness, efficiency, profit and productivity maximization — these are the hall- marks of today's most successful organizations, and in particular those that challenge for business on a global scale. For employers, living and breathing those values means making difficult operating decisions, especially when it comes to competing in sectors that face cyclical swings in business. To account for rapidly-shifting economic conditions or to capitalize on key opportu - nities, business owners, managers and HR professionals are more focused than ever before on deploying their human capital in innovative ways to achieve operational goals. Sometimes that means shifting talent to new positions, changing their terms of work or making other employment altera - tions that make sense for the company — asking an employee who has long worked flexible hours and multiple days a week from home to be in the office from 9-to-5, Monday through Friday, for example. e trouble is when an organization makes a significant change to an employ - ee's terms of employment, the employer is potentially facing the risk that affected employees may assert that they have been constructively dismissed. A constructive dismissal occurs when an employer makes a single unilateral act that breaches an es - sential term of an employee's employment contract, or commits a series of acts that, taken together, show that the employer no longer intends to be bound by the employ - ment contract. Constructive dismissals frequently occur in the context where an employer changes an essential term of the employee's employment contract: such as a reduction in the employee's salary, a signifi - cant change in working hours, or a change in authority or position. When making changes to the terms of a worker's employment, employers have two principal options for implementing the changes. e first option is to obtain the employee's consent and provide her with some form of consideration for the change (something of value exchanged in order to make a contract enforceable). is is the most friction-free option as the employee has agreed to the new terms and the consid - eration need not be large, so long as it is of value to the employee. Common examples of consideration include increases in salary, increases in employment benefits, and extra vacation time. If the employee will not consent to the changes, the employer may resort to the second option, which is to provide reason - able notice that the existing employment contract will be terminated and the employ- ee will be rehired under a new employment contract with new terms at the end of the notice period — as outlined in the seminal case Wronko v. Western Inventory Service Ltd. In doing this, the employee's termina - tion entitlements are triggered and, should the employee resign, the employer runs the risk of having to pay the employee her com- mon law reasonable notice entitlement, or a termination entitlement otherwise stipu- lated by contract. Under this approach, the employer is severing the old employment relationship in order to begin a new one on terms it considers more favourable. e em - ployee may then choose to remain with the company under the terms of the new agree- ment or depart for other employment. Ontario's employment standards flip creates risk What many employers in Ontario may have overlooked in the past two months is that a recent 'win' for employers on the HR law front also introduced meaningful constructive dismissal risk for their orga- nizations. How? On Jan. 1, 2019, Bill 47, the Making On- tario Open for Business Act, 2018, ushered in a new era for employers in the province — and for many confusion, after having only just undergone a major overhaul of their workplace policies. at piece of legislation reversed many of the labour and employment law changes introduced in Bill 148, e Fair Workplaces, Better Jobs Act, 2017, the much-maligned package of amendments introduced by the previous Liberal government that was in - tended to level the playing field between workers and employers in the province. e legislation — which did everything from increasing the minimum wage to provid - ing employees with 10 personal emergency leave days, two of them paid — was detested by employers who argued that it delivered too much too fast, impaired their competi - tiveness, and impacted their ability to re- main profitable. Organizations that relied on minimum- wage labour were particularly hard hit — that was, until Bill 47 rolled back almost all of Bill 148's most contentious amendments. Doug Ford's Progressive Conservatives then proceeded to put an unceremonious pause on implementation of the equally un - popular Pay Transparency Act — the odds are good that the legislation, which would have required larger employers to publicize gender-based compensation gaps, list sal - ary ranges in public job postings, and would have allowed employees to openly discuss their salaries, will eventually be scrapped al- together. e Tories also introduced Bill 66, the Restoring Ontario's Competitiveness Act, 2018 that, when passed, will ease em- ployee scheduling and overtime pay rules, among other important changes. While Bill 47 was a clear victory for em- ployers exhausted by so-called progressive 4 Canadian HR Reporter, a Thomson Reuters business 2019 CASE IN POINT: CONSTRUCTIVE DISMISSAL THE EMPLOYMENT standards changes that Ontario's previous Liberal government enacted caused a lot of uproar and upheaval for employers in the province. And just when everyone was starting to adjust to the changes, the new Progressive Conservative government reversed many of these changes when it took power. The reversal is widely seen as positive for employers, but those who have already implemented the previous changes and their HR departments may face headaches if they want to go back to the way things were — including possible constructive dismissal claims. BACKGROUND

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