Unilateral Changes — Ontario Employment Law
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About Unilateral Changes
In Ontario, your employment relationship is a form of contract, whether it's a detailed written document or a verbal agreement supplemented by company policies. A 'unilateral change' occurs when your employer alters a fundamental term of this contract without your consent. This is a critical concept in employment law because, unlike other commercial contracts, an employer cannot simply decide to change the rules midway through the game.
Not all changes are legally significant. Employers generally have the right to make minor administrative adjustments or changes that are within the reasonable scope of the original agreement. The issue arises when the change is substantial and negatively impacts a core aspect of your job. Common examples include a significant reduction in pay or commission, a demotion in status or responsibility, a forced relocation to a different city, or a drastic change in work hours. These are considered fundamental terms of the employment contract.
Under Ontario's common law, an employer who wishes to make a substantial change to an employee's contract must typically offer fresh 'consideration'—a new benefit, such as a signing bonus or a raise—in exchange for the employee's agreement to the new, less favourable terms. Simply threatening termination if the employee doesn't sign is not legally sufficient and can render the new contract unenforceable, as seen in several Ontario court cases.
If your employer imposes a significant unilateral change, you generally have three options. You can accept the change, either explicitly or by continuing to work under the new conditions without complaint. You can reject the change but continue to work 'under protest,' making it clear you do not agree to the new terms. Or, if the change is fundamental enough, you can treat it as a 'constructive dismissal,' resign, and pursue damages equivalent to what you would have received in a wrongful dismissal. Each path carries significant legal implications, and understanding which one is appropriate for your specific circumstances often requires careful legal analysis.
Frequently Asked Questions
What kind of job changes are considered 'unilateral changes' in Ontario?
A unilateral change is a significant alteration to a fundamental term of your employment without your agreement. This can include major pay cuts, demotions, significant changes to job duties or authority, or a forced relocation. Minor administrative changes are typically not considered legally significant.
My boss cut my salary by 15%. What should I do?
A 15% pay cut is almost always considered a fundamental change. You should not ignore this. You need to decide whether to accept it, reject it and work under protest, or treat it as a constructive dismissal. It is crucial to document your objection in writing immediately to prevent being seen as having accepted the change.
Can my employer change my job title or duties?
It depends. If the change is a minor adjustment to your duties or a title change that doesn't affect your status or pay, it may be permissible. However, if it's a demotion or a change that fundamentally alters the nature of your work and responsibilities, it could be a breach of your employment contract.
My employer wants me to sign a new contract with worse terms. Do I have to?
No, you are not obligated to sign a new contract that worsens your terms. For a new contract to be valid, your employer must provide 'fresh consideration'—something new of value, like a bonus or raise. Simply continuing your employment is not considered valid consideration.
How long do I have to object to a change in my employment terms?
There is no exact deadline, but you must object in a timely manner. If you continue to work for weeks or months under the new terms without saying anything, a court may decide that you have implicitly accepted the change. You should state your objection in writing as soon as possible.
Is it better to quit or work 'under protest' if my job is changed?
Quitting is a very high-risk step that should only be taken after receiving legal advice, as it means you are claiming constructive dismissal. Working 'under protest' while you seek advice is often a safer initial step, as it preserves your rights while you continue to earn an income and explore your options.
When should I talk to a lawyer about a change to my job?
You should consult an employment lawyer as soon as your employer proposes or imposes a change that negatively affects a core part of your job, such as your pay, status, location, or core responsibilities. Getting advice before you accept, reject, or resign is critical to protecting your legal rights.
Common Scenarios
- A company is sold and the new owner requires all staff to sign new employment agreements that eliminate their prior years of service for severance calculation purposes.
- A senior manager is told her team is being reassigned and she will now be in a non-managerial 'individual contributor' role, despite her pay remaining the same.
- A long-haul truck driver who was promised routes within Southern Ontario is suddenly reassigned to cross-border routes requiring him to be away from home for weeks at a time.
- A marketing coordinator has her hours reduced from 40 per week to 20 per week due to budget cuts, effectively halving her income.
- A salesperson is informed via email that their commission structure is changing from a flat percentage to a tiered system that will likely result in lower overall earnings.
What You Should Know
- If your employer imposes a significant negative change, immediately state your objection clearly and in writing (e.g., via email) to create a record that you have not accepted the new terms.
- Do not sign any new contract or addendum that worsens your terms without first understanding the legal consequences and what 'fresh consideration' you are being offered in return.
- Keep copies of your original employment contract, job description, pay stubs, and any written communication from your employer regarding the proposed changes.
- Understand that continuing to work under changed conditions for a prolonged period without protest can be interpreted by law as your acceptance of those new terms.
- Before resigning in response to a unilateral change, seek advice from an Ontario employment lawyer to assess whether the change is significant enough to legally qualify as a constructive dismissal.
Featured Cases
B. v Welcome Home Children’s Residence Inc.
2024 CanLII 151672 (ON SCSM) · 2024-09-25Constructive Dismissal: 6.5 Months Notice Awarded
This case addresses whether an employee was constructively dismissed due to unilateral changes, including reduced hours and removed responsibilities. The court found constructive dismissal occurred and awarded damages, fixing the reasonable notice period at 6.5 months inclusive of statutory notice. The court also addressed mitigation, deducting 30% of the employee's government wages as deductible income, and rejected an after-acquired cause defense based on time theft.
M. v Dynacast Ltd.
2019 ONSC 7146 (CanLII) · 2019-12-17Constructive Dismissal: 28 Months Notice Awarded
This case addresses whether the employer's unilateral reassignment of the plaintiff to a lower-status position with significant changes to duties and compensation constituted constructive dismissal. The court applied the Potter test and found the plaintiff entitled to 28 months' notice. Additionally, the court awarded $25,000 in aggravated damages due to the employer's bad faith conduct and determined that income from inferior employment and self-employment during the notice period was not deductible from damages.
Dawe v. The Equitable Life Insurance Company of Canada
2019 ONCA 512 (CanLII) · 2019-06-19Dawe v. Equitable Life: 37-Year Employee Awarded 24 Months Notice
The Court of Appeal for Ontario heard an appeal regarding the reasonable notice period and bonus entitlements for a senior employee with 37 years of service terminated without cause. The Court reduced the notice period from 30 months to 24 months, finding no exceptional circumstances to justify exceeding the guideline, and upheld the employee's common law entitlement to bonuses during the notice period after finding the employer's unilateral termination provisions unenforceable.
H. v. Coreio Inc.
2017 ONSC 7713 (CanLII) · 2017-12-27Constructive Dismissal: Employee Awarded 20.5 Months Notice
This was a summary judgment motion in a constructive dismissal case involving a plaintiff with 22 years of service. The court found that the employer's unilateral changes to the work-from-home arrangement and bonus calculation constituted a breach of essential terms, resulting in constructive dismissal. The court determined the plaintiff was entitled to 20.5 months' notice in lieu of termination.
L. v. Chatten's Better Hearing Service
2013 ONCA 781 (CanLII) · 2013-12-20L. v. Chatten's: Wrongful Dismissal Appeal
This is an appeal from a trial judge's decision in a wrongful dismissal case where the employer unilaterally changed the employee's terms, constituting a termination. The Court of Appeal upheld the finding that the employer terminated the employment and rejected the employer's argument that the employee failed to mitigate damages by remaining in the new position. The court also affirmed the trial judge's calculation of damages based on the written employment contract and declined to increase the award without a cross-appeal.
F. v. Southmedic Incorporated
2012 ONSC 4472 (CanLII) · 2012-09-11F. v. Southmedic: Commission Agreement Enforceability
This case concerns a dispute over the enforceability of commission and bonus agreements between an employer and a sales representative. The court addressed whether bonus agreements reducing commissions for extraordinary orders were valid, whether implied terms excluded such sales from commission calculations, and whether unilateral notices limiting commissions were effective. The court found the agreements enforceable, rejected the implied term argument, and determined the unilateral notice was ineffective without clear acceptance.
M. v. City of Windsor
2011 ONSC 4669 (CanLII) · 2011-08-12Breach of Employment Contract: Banked Overtime Elimination
This is a merits decision involving a breach of employment contract claim where the plaintiff alleged the City of Windsor breached the employment agreement by unilaterally eliminating banked overtime hours without notice. The court addressed issues of unjust enrichment and negligent misrepresentation regarding assurances about overtime, ultimately awarding damages to the plaintiff under the simplified procedure to place them in the position they would have been in but for the breach.
Russo v. Kerr
2010 ONSC 6053 (CanLII) · 2010-11-02Constructive Dismissal: 37-Year Employee Awarded 22 Months Notice
This is a partial summary judgment decision in a constructive dismissal case where the employer unilaterally reduced salary, discontinued bonuses, and altered the pension plan. The court applied principles from Farber and Wronko to determine that the employee could continue working to mitigate damages without condoning the changes, thereby entitling them to sue for wrongful dismissal. The court awarded $81,965.04 in damages accrued to the date of the motion, with the remaining damages for the 22-month notice period deferred for later determination.
D. v. Canadian Satellite Radio Inc.
2010 ONSC 5628 (CanLII) · 2010-10-14Constructive Dismissal: Unilateral Salary Reduction
This case addresses whether an employer's unilateral reduction of salary and change of a full-time position to part-time amounted to constructive dismissal and breach of employment contract. The court examined if these actions constituted an anticipatory breach by altering fundamental terms of employment without consent. The plaintiff was found entitled to severance payment and damages following the established constructive dismissal.
O. v. Cavalier Tool
2010 ONSC 3937 (CanLII) · 2010-07-09Constructive Dismissal: 18 Months Notice Awarded
This constructive dismissal case involved a plaintiff who was demoted from a supervisory role to a non-supervisory position with reduced pay. The court found that these unilateral changes constituted a fundamental breach of the employment contract, resulting in constructive dismissal. The plaintiff was awarded 18 months' notice based on the Bardal factors, considering their 12.5 years of service and age of 57.
Allstate Insurance Company of Canada v. L.
2008 CanLII 3959 (ON SC) · 2008-02-06Constructive Dismissal: Enforceability of Restrictive Covenants in Employment Contract
A constructive dismissal case where the defendant alleged that unilateral changes to their employment terms under the New Model constituted a repudiation of the employment contract. The plaintiff sought to enforce restrictive covenants in a 1986 employment contract, but the enforceability of those covenants was questioned if constructive dismissal was established.
C. v. Dell Chemists (1975) Ltd.
2006 CanLII 19435 (ON SC) · 2006-04-26Constructive Dismissal: 20-Year Employee Awarded 15-Month Notice Period
A constructive dismissal case where the employer unilaterally changed the employee's hours, workdays, and employment status from part-time to full-time without consent. The court applied the Farber v. Royal Trust Co. test and awarded a 15-month notice period, with damages for loss of income totaling $14,355 plus prejudgment interest.
BMO Nesbitt Burns Inc. v. B.
2002 CanLII 3184 (ON SC) · 2002-09-30Constructive Dismissal: Unilateral Changes Not Found to Be Fundamental
A constructive dismissal case where defendants alleged that unilateral changes to their account transfers and commission structure by the employer constituted a fundamental change to their employment. The court found that the changes were within the employer's contractual rights and did not amount to constructive dismissal. The counterclaim for constructive dismissal and return of monies was dismissed as the promissory note was deemed valid and enforceable.
S. v. Consumers' Assn. of Canada
1999 CanLII 14880 (ON SC) · 1999-03-12Constructive Dismissal: Unilateral Changes to Employment Terms
A constructive dismissal case where the plaintiff alleged the employer unilaterally reduced salary, vacation, and sick leave benefits, fundamentally altering the terms of employment. The case also involves a termination for cause claim based on allegations of sexual harassment and oppressive conduct, as well as a bad faith dismissal claim seeking extended notice under Wallace v. United Grain Growers Ltd.
S. v. Toronto Dominion Bank
1997 CanLII 12329 (ON SC) · 1997-05-15Constructive Dismissal: Senior Executive Awarded 13-Month Notice Damages
A constructive dismissal case involving a senior executive whose responsibilities were unilaterally reduced following the hiring of another executive. The court found that the changes constituted a fundamental breach of the employment contract, establishing constructive dismissal. The employee was awarded damages for a 13-month notice period, including salary, bonus, stock options, and benefits.
P. v. Algoma Publishers Ltd.
1995 CanLII 7277 (ON SC) · 1995-03-08Constructive Dismissal: Unilateral Wage Reduction Found Unreasonable
A constructive dismissal case where the employer unilaterally imposed a 10% wage reduction or reduced hours, and the court found these changes to be unreasonable. The case also addresses the reasonable notice period for a plaintiff with 29 years of service and the duty to mitigate damages by accepting reasonable offers of continued employment.