In LaPlume v. AAA Internet Publishing Inc., 2025 BCSC 2139 the British Columbia Supreme Court reaffirmed the limited scope of the “changed substratum” doctrine. The court upheld a nine-year-old employment contract on the basis that the contract withstood changes to the employee’s role and rejected the employee’s argument that his position had changed significantly. The “changed substratum” doctrine is a common law concept that recognizes that an employment contract may be invalidated due to significant changes to an employee’s role or other key terms of employment.
This decision is consistent with a recent Alberta decision[1], which confirmed that, for a “changed substratum” argument to succeed, changes to an employee’s role must be significant and not contemplated by the employment contract.
Background
Mr. LaPlume commenced providing services as an independent contractor to AAA Internet Publishing Inc. (AAA Internet) in September 2013. In December 2013, the parties entered into an employment agreement under which Mr. LaPlume was employed as a Junior Developer. His primary responsibilities were to test games and write configuration files for AAA Internet’s network service.
The employment contract included a clause stating that changes to the terms of his employment would not constitute a breach of the employment contract. The employment contract also had a termination clause under which the employee’s termination entitlement was limited to a maximum of 16 weeks’ notice or pay in lieu of notice.
During his employment, Mr. LaPlume received five salary increases in the first six years, similar to other employees of AAA Internet. None of those salary increases were associated with a promotion or a change in his duties and responsibilities as a Junior Developer. This changed in 2021, when Mr. LaPlume was appointed as Manager of the games team and he received a salary increase. As the Manager of the games team, Mr. LaPlume was responsible for a small team of new hires and support representatives, however, he still continued his previous job responsibilities of testing games and writing configuration files and his hours, location of work and reporting relationship remained the same.
In 2022, Mr. LaPlume became the Operations Manager and he also received a salary increase. In this role, he was responsible for helping new hires learn how to do game configurations. In addition, he continued to test games and write configuration files. His work hours, location of work and reporting relationship also stayed the same.
Throughout his employment, Mr. LaPlume’s employment contract was never amended or replaced. In July 2023, his employment was terminated without cause, and AAA Internet paid him 16 weeks’ pay in lieu of notice in accordance with the terms of his employment contract.
Mr. LaPlume argued that the employment contract did not reflect the significantly higher role of Operations Manager and that the changes in his employment from 2013 to 2023 were so significant that they rendered the employment contract, including the termination clause unenforceable. AAA Internet argued that the changes were not so fundamental or dramatic to alter the substratum (foundation) of the employment contract. AAA Internet also relied on the paragraph of the employment contract that expressly contemplated that such change may occur without constituting a breach of the employment contract.
The key issue determined by the court was whether the employment contract, and in particular, the termination clause was enforceable. In conducting its analysis, the court considered the degree of change required to constitute the erosion of the substratum of the employment contract, the degree of changes to the terms of Mr. LaPlume’s employment and whether such changes were contemplated or allowed under the employment contract.
The court reiterated that any change to the terms of employment must be significant in order to erode the substratum of the employment contract, and that incremental changes to the terms of employment are not sufficient to conclude that an employment contract is unenforceable.
The court summarized the principles relating to the “changed substratum” doctrine as follows:
- Significant changes in employment can render an employment contract unenforceable by the time of termination of employment where: (i) the substratum of the employment contract entered into at the time of hiring may have disappeared by the time of termination, or (ii) it may be implied that the contract could not have been intended to apply to the position ultimately occupied by the time of termination;
- Not all changes in employment benefits, duties and responsibilities are sufficient to erode the substratum of an employment contract;
- To erode the substratum of an employment contract, a change must be dramatic and fundamental; incremental and predictable changes in the terms of employment are an insufficient basis on which to conclude that an employment contract is unenforceable; and
- Where an employment contract anticipates and permits changes in employment, the change required to erode the substratum of the contract must be beyond what was anticipated and permitted.
Outcome
The court acknowledged that significant managerial responsibility may be a sufficient basis on which to conclude that the substratum of an employment contract has been eroded and confirmed that additional supervisory responsibility may have that effect.
The Court noted that, despite the salary increases over the years, Mr. LaPlume’s position changed only twice: first when he was promoted to Manager of the games team, and later when he became the Operations Manager. Although the court accepted that the changes in Mr. LaPlume’s employment after 2021 led to an increase in his duties and responsibilities, the court found that all other aspects of his employment as a Junior Developer remained the same. The court held that the changes to Mr. LaPlume’s employment were not dramatic, fundamental or significant. The court also noted that the employment contract had anticipated and permitted those changes, which were incremental and predictable.
Key takeaways
The court summarized the principles relating to the “changed substratum” doctrine. This decision reiterates that, for a “changed substratum” argument to succeed, the changes to the employment must be substantial; incremental or minor changes alone are insufficient to support such a claim. The decision reinforces the importance of including clauses in employment contracts that address potential changes to employment terms to help protect employers.
Whether or not the substratum is eroded will turn on the facts of each case, but it is clear that long length of service alone will not be sufficient to render an otherwise enforceable agreement unenforceable. To ensure enforceability, it remains important for employers to include clear and express language in their employment contracts specifying that the terms of the agreement (including termination provisions) continue to apply notwithstanding any changes to the employee’s duties, role, or other terms and conditions of employment.
It is also critical for employers to review employment agreements periodically, particularly when there is a significant change to an employee’s job duties, compensation or other key terms of employment. Where the “changed substratum” doctrine may apply (in that the changes to the employment are not contemplated by the original employment agreement), it may be prudent for employers to consider having employees sign a new employment agreement (supported by fresh consideration such as a pay increase, bonus or enhanced benefits).
Finally, employers should always maintain accurate records of all changes to employment terms and conditions including documenting changes to job duties and responsibilities that may appear at the time to be minor or not fundamental.
For more information on this topic, please contact Eleni Kassaris, Rachel Akinyemi or any member of the Dentons’ Employment and Labour group.
[1] Taylor Holland, “Termination clause providing for 90 days’ notice enforced despite employee’s C-Suite promotion,” Dentons Canadian Employment & Labour Blog, January 2025, Termination clause providing for 90 days’ notice enforced despite employee’s C-Suite promotion – Dentons Canadian Employment & Labour Law
