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THE QUESTION

I work for a hospital and our department was recently restructured. 30 employees used to be part of a separate organization distinct from the hospital legal entity. The hospital has decided to close down that organization and offered to “rehire” individuals under a new contract. Everyone had to complete a job evaluation to assess their title and pay. My title and base pay were unaffected, but I believe I should have been offered a much higher role and salary based on my 10 years of experience. My bonus, which is usually given when I meet certain budget targets, is now being offered as a “transition allowance” and will be paid if I sign the new contract. Is this legal? What can I do to get the title and salary that I believe I deserve?

THE FIRST ANSWER

Sophie Purnell, lawyer, Taylor Janis LLP, Calgary

It is common for employers to restructure their organizations in today’s economy. This presents unique challenges for employees.

Carefully review and compare your existing contract and new contract to identify less favourable terms. Most employees glance at the new contract to make sure their base pay, job title and duties, and vacation days have not changed. There are less obvious, but important, changes to keep in mind during your review. For example, the new contract may include what is referred to as a “termination clause.” A termination clause attempts to limit an employee’s rights to severance after they are terminated. The addition of a termination clause in a new contract may significantly impact your legal entitlements at termination, especially if you have 10 years of experience with the same employer.

If the new contract includes terms that are less favourable than the terms of your original contract, your employer must provide you with some new benefit of value in exchange. Your bonus would not count as a new benefit. You may have already earned your bonus if you met the budget targets prior to the restructuring. In that case, your employer cannot withhold paying your bonus.

You can negotiate a higher role and salary. If you choose not to accept the new contract, you may have a claim for constructive dismissal. Not signing the contract but continuing to work under the new arrangement may implicitly show that you accepted the new contract.

If you are uncertain about the new contract, seek legal advice before signing it.

THE SECOND ANSWER

Waheeda Ekhlas Smith, barrister and solicitor, Smith Employment Law, Toronto

Do not sign anything or agree to any changes in your job without having the new contract (and previous contracts) reviewed by an employment lawyer.

In Ontario, non-unionized jobs are guided by the Employment Standards Act, 2000. This sets out employers’ obligations and employees’ rights, and minimum standards for wages, termination and severance pay. A written employment contract is subject to the ESA, but can provide an employee greater entitlement than ESA minimums.

It is unclear whether the role you believe you should have been offered is even available. Regardless, you can raise your concerns with your employer and try negotiating for the title and salary you want, setting out why you are deserving.

Also, if an employer wants to give existing employees a new contract, they have to provide the employee fresh “consideration” in exchange. This consideration can be a signing bonus, a pay increase or even extra vacation. In turn, the new contract might now contain terms that are less favourable than the previous contract, such as no longer having a bonus or more restrictive termination clauses. If your employer offers fresh consideration (such as a “transition allowance”) and the new contract doesn’t provide less than the ESA minimums, the new contract could be legal.

To sum up, your employer cannot legally force you to sign off on a new contract. You can choose to sign it as is, try to negotiate for a better contract, or quit and claim constructive dismissal. Before you take any of these steps, especially the last one, seek legal advice to make sure you are not giving up valuable employment rights.

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