A Caution Before Expanding an Employee’s Job Duties: Risks of the Changed Substratum Doctrine

By March 7, 2024 No Comments

A change in job duties occurs when the terms of an employee’s role are materially changed over time, such as: a decrease/ increase in work hours, or a decrease/ increase in responsibility.

In demoting an employee, through unilateral changes to the employment agreement, an employer runs the well-known risk of triggering a constructive dismissal claim.

But what is the risk when duties are expanded?

When an employer substantively expands an employee’s duties, it may no longer be able to rely on the provisions of the employee’s written contract – even when the employee retains the same job title.

Employers beware and employees be aware, the “changed substratum” doctrine can render the termination provisions of an employment contract unenforceable.

Consequences of the “Changed Substratum” Doctrine Upon Termination

As recently seen in Celestini v. Shoplogix Inc., where it can be established that there have been fundamental expansions in the employee’s duties after the employment contract was made, the contractual notice period is not enforceable. Instead, the employee will be entitled to reasonable notice at common law.[1]

What constitutes “reasonable notice” at common law depends on the specific factual circumstances of a particular case (also known as the Bardal factors)[2] – but often, common law notice results in a much more favourable payout for the employee.

Recommendations for Employers

The doctrine recognizes the potential inappropriateness and unfairness of applying the contract’s termination provisions to circumstances that were not contemplated at the time of contracting.

So how do employers ensure that these changes are contemplated?

It is recommended that employers consider the following:

  • Ensure new employment contracts feature a term which expressly states that its terms continue to apply notwithstanding any changes to the terms and conditions of employment;
  • Re-visit existing employment contracts and ensure that the employees’ actual duties and responsibilities are an accurate reflection of the written agreement;
  • If the employees’ role has been materially changed from the original terms and conditions of the employment contract, either:
    • offer the employee a promotion and request the employee to sign a new written employment contract; or
    • update the terms of the existing contract by requesting the employee sign a written acknowledgement confirming that the employee remains bound by its terms and conditions.

When drafting a new employment agreement, or a written acknowledgment confirming the enforceability of a previous employment agreement, do not forget the biggest pitfall in contract law: a lack of what is called “consideration.”

Learn more about fresh consideration in the following article: The Challenge of Fresh Consideration in Amended Employment Agreements.

[1] Celestini v. Shoplogix Inc., 2023 ONCA 131.

[2] Bardal v. Globe & Mail Ltd., [1960] 24 DLR (2d) 140, 1960 CanLII 294 (ON SC).

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