BC worker claims changes to title, responsibilities voided employment contract, termination clause
The British Columbia Supreme Court has upheld an employment contract’s termination clause, despite the fact that the worker’s role and responsibilities changed over his decade of employment with his employer.
For Michael Penner, a labour and employment lawyer at Kent Employment Law in Victoria, the decision may be an indicator that courts — at least in BC — may be taking a more employer-friendly stance in certain circumstances around employment contract enforceability.
“To me, it's like a bit of a bellwether for how the legal pendulum is swinging back towards the employer,” says Penner.
The worker initially joined AAA Internet Publishing — a tech company in Kelowna, BC, that provides a network optimization tool for online multiplayer video games — as an independent contractor in September 2013. His role was to provide support in games testing on a month-to-month basis.
About three months later, in early December, the company made the worker a regular employee, giving him the role of junior developer responsible for testing games and writing configuration files. His employment contract specified that the company could alter his position, duties, or reporting relationship as it deemed appropriate without it being a contract breach or constructive dismissal, as long as the changes were consistent with his qualifications, skills, and experience, and they didn’t materially increase his work duties or hours. It also contained a termination clause that allowed for two weeks’ notice if the worker’s employment ended before 12 months, and an additional two weeks per year of service thereafter, up to a maximum of 16 weeks.
Promotions under the same employment contract
Over the next seven years, AAA Internet Publishing gave the worker incremental salary increases as he continued in the same role. In early 2021, the company promoted the worker to the position of manager of the games team as part of a restructuring. In 2022, he was promoted again, this time to operations manager. In each case, he took on some responsibilities helping new hires and received a raise, but his core responsibilities, reporting relationship, and work conditions remained largely unchanged and he continued under the same employment contract.
On July 12, 2023, the company terminated the worker’s employment without cause and paid him 16 weeks’ pay in lieu of notice under the termination clause. The worker sued for wrongful dismissal, arguing that the changes in his role, responsibilities, and compensation during his time with the company invalidated the initial employment contract, entitling him to common law notice rather than the contractual notice stipulated in the termination clause.
The court referred to prior case law establishing that only “dramatic, fundamental change” to an employee’s role can erode the “substratum” of an employment contract and render its terms unenforceable. Incremental changes, even those involving promotions and salary increases, are insufficient unless they fundamentally alter the nature of the job, the court said.
The court found that while the worker’s responsibilities increased, the changes were “incremental and predictable,” not “dramatic or fundamental.” Noting that other than the worker’s salary, most aspects of his employment as a junior developer stayed the same, the court said that the worker continued to report to the same manager and he continued to perform games testing and write configuration files. The worker’s overseeing of new employees performing the same functions was reasonable and “predictable,” said the court.
Contemplating change to position, duties
The court put significant weight on a typical “boilerplate clause” in employment contracts that contemplates changing an employee’s position, title, and duties, according to Penner.
“It's language that obviously has been placed in most contract templates simply because this is an issue that gets raised in many constructive dismissal claims,” he says. “[The worker had] all of the indicia that typically would have gotten him outside of this clause, but he got recaptured on the last bit, which is as long as the changes don’t materially increase the work duties or hours of work.”
Given what the employment contract said, the court considered the employment changes to be part of a continuum, adds Penner.
“The level of responsibility grew, but it was predicated on his original responsibilities — his hours of work didn't change, and I think in this instance the court really exercised its discretion in favour of the employer on this,” he says.
Clear, anticipatory contract language
Penner believes that the decision underscores the importance for employers of clear, anticipatory contract language and proactive documentation when roles evolve.
“When offering a salary increase, for example, it never hurts for the employer to articulate the basis of the increase, such as if it's a reflection on performance of existing duties or of increased duties — and use language to reflect that these increased duties were ones that were contemplated in the original contract,” he says. “When you assign an increase in pay and change of duties that’s significant enough to be a material change, then it creates a vulnerability for the employer.”
There are particular implications for employers navigating remote work, restructuring, and shifting job functions, in situations where the day-to-day realities of the employment relationship aren't reflected in the contract itself.
“It's always best to just capture any changes in writing, acknowledge that the change has occurred, it sets a new set of expectations and responsibilities, and if they’re materially different from the original contract, then it's always best for the employer to revisit the original contract,” says Penner. “And consider what changes to enshrine and do they require fresh consideration in a new contract to replace the old one?”
Review contracts, termination clauses
Despite the fact that the wording in this employment contract around employment changes held up to the court’s scrutiny, Penner suggests that using generic boilerplate employment contracts and termination provisions leaves the door open for trouble for employers.
“Employers might want to take some time and actually contemplate what they see changes might be — if they have a good sense of how any particular person or job might expand, then throw it within that definition and make it bespoke to your unique circumstances,” he says. “Because the court here said that if it didn't have that last little sub-clause [about material changes], it probably wouldn't have.”
It's also important for employers to regularly revisit termination clauses every time they issue a new contract, according to Penner.
“The issue has become such a focal point for employment litigation and the volume of cases that deal with it is so great, that if you operate on your understanding of the law from six months ago, it may be obsolete.”
