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THE QUESTION

One month ago, I started a full-time, permanent job. Now they say they’re changing my contract to be freelance, as needed, because of the recession. The company says they’re allowed to do this because I haven’t passed my probation period. Do I have any rights in this situation?

THE FIRST ANSWER

Busayo A. Faderin, senior associate, Monkhouse Law Employment Lawyers, Toronto

Once an employee and employer agree to employment terms and commence an employment relationship, making a change to a fundamental term of that agreement requires consent from both the employee and the employer. Otherwise, a unilateral change by an employer may potentially be a constructive dismissal.

A constructive dismissal occurs when the employer demonstrates an intention to no longer be bound by the employment contract. A constructive dismissal can occur in two ways:

  1. The employer breaches an express or implied fundamental term of the employment contract.
  2. The employer’s conduct generally shows that it intended not to be bound by the employment contract.

In response to the employer’s unilateral breach, the employee has two choices. They may either:

  1. Accept the unilateral change to their employment agreement. If the employee consents to or condones the change, there is no breach of contract and no constructive dismissal.
  2. Reject the unilateral and fundamental change and allege constructive dismissal.

The employee has a reasonable period of time to “try out” the new arrangement to assess whether it is suitable before deciding to accept the breach or resign. However, it is important for an employee to object to the changes to their employment promptly and make a timely decision about whether they will pursue constructive dismissal to avoid forfeiting the claim altogether. If the employee takes too long, they may be considered by the courts to have condoned or acquiesced to the new changes and this may have a significant impact on the amount of compensation an employee may be awarded.

These issues are quite technical in nature so the sooner you can get legal advice, the better positioned you will be during the process to make effective decisions.

THE SECOND ANSWER

Mary Rolf, labour and employment lawyer, Pink Larkin, Halifax

Working as a full-time employee is fundamentally different from working as a freelancer. A freelancer is an independent contractor, not an employee. Freelancers can have a high degree of control over who they work for and when they work once they have built up a steady client base, but it is different from the certainty of getting a regular paycheque as a full-time employee. Changing a contract from full-time to freelance is a termination of the full-time employment relationship.

Employers have broad latitude to terminate employment during an employee’s probationary period. Under most provincial employment standards statutes, an employer does not need to provide notice of termination or pay in lieu of such notice until an employee has been employed for more than three months.

Employment contracts can specify a longer probationary period, but most often, after three months, some statutory notice or pay in lieu of notice is owed. This notice is still low, usually one week depending on the provincial statute.

The bottom line is that an employee terminated during their probationary period has little recourse. There can be exceptions if other factors are present – for example, if there is evidence that the termination was discriminatory. Most often, though, the best approach both practically and legally is to move on and look for other work.

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