Employee roles change. Businesses grow, responsibilities shift, and job titles sometimes bear little resemblance to what an employee actually does.
But when an employee’s role changes, employers should ask another question: does the employment agreement still work?
In a recent Ontario Court of Appeal decision, the employee was hired as Chief Technology Officer under a written employment agreement containing a termination provision. Over time, his responsibilities expanded significantly to include sales, business development, managing employees and assisting with securing investment capital.
His title, however, stayed the same.
When his employment was eventually terminated, the Ontario Court of Appeal found that his duties had changed so substantially that the foundation of his original employment agreement had fundamentally changed. Under the “changed substratum” doctrine, the employer could no longer rely on the agreement’s termination provision to limit his notice entitlement. Instead, the employee was entitled to common law reasonable notice, which the Court upheld at 18 months.
The lesson? Keeping the same job title does not necessarily mean you have kept the same job.
This does not mean employers are stuck with an employee’s original job description forever. Employment agreements can — and should — provide appropriate flexibility to make reasonable changes to an employee’s title, duties and responsibilities as the business evolves. They should also expressly provide that the agreement continues to apply despite those changes.
A standard “other duties as assigned” clause may not be enough.
Before changing an employee’s role, dust off the employment agreement. Contact us to review your existing agreements and determine whether any updates are needed before the new role takes effect.
Robin K. Mann, Associate Lawyer