The Blog

A modern trend in the law of contract variation has generated some excitement in the employment law world about whether companies may now be able to change employment contracts without providing fresh consideration (or a new benefit) to employees. That would make life easier for HR professionals. But a recent appellate decision will dampen some of that enthusiasm.

A recent case confirms (briefly put) that there is no substitute for the proper drafting of employment contracts. In Rossman v. Canadian Solar Inc. the Ontario Court of Appeal dealt a significant blow to the utility of “saving clauses” to salvage drafting errors when a termination provision is not compliant with employment standards legislation.

A recent case dealt another blow to the utility of “saving clauses” to rectify drafting errors in employment contracts. The Court in Groves v. UTS Consultants Inc. found a clause ostensibly supplanting the employee’s right to reasonable notice of termination was unenforceable and the intention to contract out of the common law was not salvaged by a saving clause that would have limited the employee to Employment Standards Act (Ontario) minimum notice.

Companies generally don’t want to pay their dismissed employees bonuses that accrue after the termination date. But drafting policies to achieve that is easier said than done. The recent Ontario Court of Appeal decision Dawe v The Equitable Life Insurance Company of Canada, 2019 ONCA 512, provides an important example of a policy that was effective in limiting the dismissed employee’s entitlement to bonus.

Workplaces are dynamic and workplace policies must evolve. However, effectively amending a workplace policy so that it is enforceable in court is not as straightforward as one might think. Changes to company policies can affect employee rights, benefits, or entitlements. For those changes to become enforceable elements of employment contracts, employers may have to provide their employees with consideration.