Canadian Employment Law Today

6 | | May 14, 2014 May 14, 2014 Canadian HR Reporter, a Thomson Reuters business 2014 Cases and Trends/Ask an Expert Cases and Trends/Ask an Expert the contract specifi ed that termination "for good reason" would not be considered a voluntary resignation. "Good reason" was defi ned as a "material and detrimental al- teration" of his duties or responsibilities, a decrease in his salary of at least ten per cent, exclusion from any profi t sharing, bonus or other incentive plan, a "material breach" of the contract by BlackBerry, or a relocation of his principal offi ce more than 50 km from its current location. BlackBerry didn't announce Marineau- Mes' promotion because it had placed a freeze on promotions earlier in 2013. Only senior executives knew about it. Disgruntled exec went looking elsewhere Late in 2013, BlackBerry went through some tough times, including the appointment of a new CEO. Marineau-Mes was told his role might end up being narrower in scope than originally thought. Marineau-Mes wasn't pleased with this development and began talks with rival tech company Apple. In December 2013, Apple off ered him a vice- president position involved with developing operating system softeware. On Dec. 23, Marineau-Mes gave Black- Berry his notice of resignation in writing. He said he would probably join Apple in two months. BlackBerry told him he was bound to his contract, which required him to be available for a six-month notice period. Marineau-Mes challenged the contract, arguing it wasn't enforceable because his original intended role as an EVP changed and qualifi ed as a "good reason" to end the contract. He also said the contract violated the Ontario Employment Standards Act be- cause employees are entitled to accrue vaca- tion during both active and inactive periods of employment, the six months notice was an unenforceable non-compete covenant, and it was unfair for BlackBerry to try to prevent him from joining Apple. e court disagreed with Marineau-Mes' claim that the contract's vacation term was contrary to the Employment Standards Act. Marineau-Mes argued the date of termina- tion was the last day of service — which for him was Jan. 6, 2014, well before the end of the notice period — but the court found the date of termination would be the end of the notice period. In fact, BlackBerry con- tinued to pay Marineau-Mes his salary and vacation pay after his last date of work. e fact he wasn't called to active service wasn't surprising due to the dispute, said the court. e court also noted that even if the con- tract allowed for the failure to pay vacation pay until the end of the notice period, only that provision would be null and void, not the entire contract. e court found Marineau-Mes did get promoted to the position of EVP, as he re- ceived a pay increase and the promotion was confi rmed by the BlackBerry board. Even when the company went through tough times, Marineau-Mes continued to play an important role in discussions for the company's direction, said the court. e fact he was told the scope of his role might not be quite what was originally planned didn't change the fact he was already an EVP. Such conversations would not constitute a "good reason" for resigning, said the court. In addition, the court found it wasn't sur- prising Marineau-Mes' role changed after he announced his resignation. Notice period reasonable for transition of important position As for the six-month notice period, the court found it was reasonable for Black- Berry to ask Marineau-Mes to be available to perform duties for that amount of time, given the importance of his position. And, said the court, it was not equivalent to a non-compete covenant because Marineau- Mes was still being paid during the notice period. "I do not think that requiring Marineau- Mes to assist with his transition out of the company, rather than performing his usual duties as senior vice-president, constitutes a material and detrimental alteration within the meaning of the contract," said the court. e court declared the contract between BlackBerry and Marineau-Mes was binding and Marineau-Mes was obligated to provide six months' written notice of his resignation — meaning his services should be available to BlackBerry and he would continued to be paid until June 23, 2014. See BlackBerry Ltd. v. Marineau-Mes, 2014 CarswellOnt 3522 (Ont. S.C.J.). 6-month transition period reasonable « from BLACKBERRY on page 1 ed from an ensuing complaint or challenge from the employee if it fails to do so. As an alternative, it is possible for the em- ployer to give proper and reasonable notice of a fundamental change to the employment contract in order to aff ect that change. e prevailing case authority, the Ontario Court of Appeal's 2008 decision in Wronko v. West- ern Inventory Service Ltd., would seem to suggest an employer must give the employ- ee reasonable notice of the implementation of a change if the employee does not agree to it. e appropriate notice period is cal- culated based on the usual factors, such as length of service, age, and level of position. e case law further suggests that such no- tice of change should clearly and explicitly function as termination of the current con- tract and an off er of re-employment under a new one which includes the changes to the terms and conditions. At the expiry of the reasonable notice period, the employee must then either accept the change and the off er of re-employment or become eff ec- tively terminated from that workplace. In this case, new consideration is not an issue because one employment relationship has ended and another has begun, so the origi- nal exchange of value suffi ces. e bottom line is that to scale back the terms and conditions of an employment contract mid-term, the employer must ei- ther provide additional consideration to the employee to eff ect such changes or, in the case of contracts with an indefi nite term, provide reasonable notice that an exist- ing contract is coming to an end and a new one is to commence. In the former, it must be something more than simply the prom- ise of continued employment, which on its own will not constitute "additional consid- eration." In the latter, if the employer has properly terminated the existing contract by providing the appropriate notice, then the consideration for the new contract, with the changes, is re-employment. At the extreme end, the consequences of an eff ort to scale back could be problematic. If too many terms and conditions are scaled back, and fundamental changes to the em- ployment contract are made without proper notice, then the employer could be exposed to a constructive dismissal claim from the employee if it is determined the employee could not continue in that employment un- der the new circumstances imposed unilat- erally by the employer. In the unionized context, any changes to the benefi ts outlined in the collective agree- ment, which are the subject of the collective bargaining process, may not be reduced without further negotiation with the union. For more information see: • Wronko v. Western Inventory Service Ltd., 2008 ONCA 327 (Ont. C.A.). Brian Kenny is a partner with MacPherson Leslie and Tyerman LLP in Regina. He can be reached at (306) 347-8421 or bkenny@ mlt.com. « from ASK AN EXPERT on page 2 Proper consideration needed for change

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