The question of independent contractor versus employee has been a hot topic in the world of employment law for years now, and one that frequently makes news outside of legal circles. In a post for Canadian HR Reporter last year, we looked at the case of a Domino’s Pizza driver who gained publicity when the Ministry of Labour accepted his complaint, and determined that he was actually an employee and not an independent contractor. That driver was issued back pay to partially compensate for the misclassification.
Imagine that you have a great benefits package with your employer. This helps you significantly because you have medical conditions requiring you to take expensive medication. You also have a dependent spouse who benefits greatly from your vision care plan.
Suddenly, your employer announced that they are changing your benefits package; you will now be required to pay 20% for all your prescribed medication, whereas before you did not have to pay anything, and your vision care plan has been changed such that your spouse will have to pay a significant amount out of pocket. Can your employer do this without notice or consideration?
Generally speaking, an employer cannot unilaterally change the terms of your employment. We often hear people discuss “constructive dismissal”. A constructive dismissal occurs when the employer makes substantial changes to a fundamental term of the agreement or employment relationship. So the question to ask is whether this is a fundamental term, and whether the extent of the change is substantial. You would also have to consider whether the employer had the right to make the changes; many contracts explicitly provide that benefit plans can be changed at the discretion of the employer. This requires a case by case analysis.
Employers can make such changes if they provide sufficient notice or consideration. For example, your employer could advise that the changes will be effective on a specified date in the future. However, the amount of notice required would be the same as if they were providing notice of dismissal, which can be extensive. Your employer might also provide you with consideration (i.e. something of value), such as cash compensation. You would have to accept this quid pro quo for it to be legally effective.
The bottom line is that in many cases, you do not have to simply accept unilateral changes.
Before you simply resign yourself to a new, less advantageous work situation, you should get advice from an Employment Lawyer. Similarly, if you are an employer looking to implement changes, consult an Employment Lawyer before doing so to ensure you are complying with the law and to minimize potential liability.