By Stephen Dugandzic
In Alberta employment law, the doctrine of changed substratum is basically this idea:
If an employee’s role or job duties change substantially over time from what they were originally hired to do, then the employment contract they originally signed might no longer apply.
In other words, if the “substratum” — meaning the foundation or basic nature of the job — has changed enough, courts might treat the old contract (and its terms, like termination clauses or notice periods) as no longer binding.
Why it matters:
• If the original contract had a termination clause that limited severance, but the employee’s job grew way beyond what they were originally hired for, then on termination, that old contract might be thrown out.
• This could entitle the employee to common law reasonable notice, which is usually a lot more severance than what was written in the contract.
Key points courts in Alberta consider:
• Was the change in duties, responsibilities, or status substantial?
• Did the changes happen gradually or all at once?
• Was a new contract offered or signed to reflect the new role?
• Did the employee accept the new responsibilities without a fresh agreement?
Case Example: Celestini v Shoplogix Inc, 2023 ONCA 131
Facts:
• Mr. Celestini was hired by Shoplogix as its Chief Technology Officer (CTO) under an employment contract signed in 2005.
• His contract included a termination clause that limited his entitlements if he was fired.
• Around 2008, after a change in company leadership, Mr. Celestini’s role changed dramatically:
• He was no longer supervised the same way.
• He took on business development responsibilities and other new duties beyond his original technology-focused role.
• His job became much more expansive — far beyond what he was originally hired for.
• Importantly, there was no new contract signed to reflect these changes.
• In 2017, Shoplogix terminated him without cause and tried to rely on the 2005 employment contract to limit his severance.
Legal Issue:
• Did the old 2005 employment contract still apply?
• Or had the doctrine of changed substratum erased its force because of how much his role had changed?
Ontario Court of Appeal Decision:
• The Court agreed with Mr. Celestini:
• His duties, responsibilities, and seniority had changed substantially.
• The foundation (substratum) of the original 2005 agreement no longer existed.
• Shoplogix could not rely on the termination clause from the 2005 contract.
• Result:
Mr. Celestini was entitled to common law reasonable notice — much more severance than the original contract allowed.
Why Celestini is important:
• It clarified that if an employee’s role materially changes — in scope, authority, duties, or status — without a fresh employment contract, the original contract (including any termination clause) may no longer be enforceable.
• Even gradual changes over time can trigger the doctrine.
• Employers should update contracts when employees’ roles change significantly — or risk paying much more if they terminate them later.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018.