Legal News

Court confirms employee’s refusal to accept fundamental changes during working notice period is not cause

The Ontario Court of Appeal in Nufrio v. Allstate Insurance Co. of Canada, 2017 ONCA 948, re-affirmed that an employee’s refusal to accept unilateral changes to terms and conditions of employment during the working notice period does not constitute “just cause” for termination.

In July 2007, the employer, Allstate Insurance Co. of Canada, provided Michael Nufrio with notice of fundamental changes to his employment contract. He was given working notice up to September 1, 2009. The evidence indicated that Mr. Nufrio accepted the working notice, and communicated an intention to retire from his employment with Allstate at the end of the notice period.

In October 2008, however, Allstate sought to make immediate changes to Mr. Nufrio’s employment, including requiring him to close his neighbourhood office and move to a company-operated office by November 1, 2008. Mr. Nufrio refused, and insisted on continuing his employment under the existing terms for the remainder of the notice period. Mr. Nufrio’s refusal led to Allstate terminating his employment for just cause on November 6, 2008.

The trial judge dismissed Mr. Nufrio’s claim for wrongful dismissal, finding that Allstate had cause for terminating his employment. She found that Mr. Nufrio had been given reasonable notice of the changes to his employment agreement.

On appeal, the Court determined that the trial judge had erred by not addressing the question of whether Allstate could unilaterally implement the change in location, and the change to a different business model, during the working notice period.

The Court accepted Mr. Nufrio’s argument that the proposed relocation to an Allstate-run office was not just a geographic move, but was a fundamental change to the business model that the parties had agreed upon. The Court concluded that Mr. Nufrio was entitled to continue to be employed in accordance with his previous terms and conditions of employment during the period of working notice to September 1, 2009.

In the result, the Court awarded Mr. Nufrio compensation for the balance of the notice period from November 6, 2008 to September 1, 2009, plus costs of the trial and appeal.

This decision is a reminder that employers are not entitled to unilaterally impose fundamental changes to the terms and conditions of employment during the working notice period. An employee’s refusal to accept such changes will not, on its own, constitute just cause for termination.

Employers wishing to implement fundamental changes may be able to do so if they provide reasonable notice of such changes. Employers should seek legal advice prior to imposing changes, as such notice must be carefully drafted in a clear, certain and unequivocal manner.