TORONTO, — A new Ontario Court of Appeal decision strongly reinforces a rule that requires employers to provide sufficient compensation to employees when changing terms of an employment contract.

The case — Hobbs v. TDI Canada — effectively means that drivers and other employees are entitled to “consideration” from carriers for entering new contract terms anytime after commencing employment, and the promise of continued employment is not adequate consideration.

In this case, Mr. Hobbs accepted employment from TDI on terms set forth in an offer letter. The offer at the time did not specify commission rates previously agreed upon orally. After commencing employment, TDI presented Hobbs with an agreement with the mutually agreed rate, but indicated that TDI had the right to change it at its discretion and eliminate Hobbs’ right to commissions after termination, even on deals closed prior. Months later, Hobbs filed a lawsuit. A trial judgment sided with TDI, but the Court of Appeal recently overturned that decision.

“The law does not permit employers to present employees with changed terms of employment, threaten to fire them if they do not agree, and then rely on the continued employment relationship as consideration for the new terms,” the court said.

What this effectively means for carriers, says Ron Ouellette, attorney for Toronto-based labour law firm Sherrard Kuzz LLP, is they cannot change, for example, a driver’s rate-per-mile, or other accessorial pay after employment commences without properly giving the driver “consideration”.

Some examples of consideration, Ouellette suggests, can be monetary payments, bonuses, a wage increase, or a lump sum payment.

“At the time an employee starts employment, make sure the terms and conditions in the contract you set forth are everything you want, because if they’re not, and you want to enter a new employment contract later, you’re going to have pay something for that,” he says. “It’s not a free ride, you can’t just change it at your whim or it might be deemed to be invalid or constructive dismissal.”