How can an employer amend an employment contract?

If you can’t layoff an employee without breaching the contract, can you change the terms of the contract to make it more palatable to the Employer?
What do you think?  Imagine you want to cut an employee’s pay to deal with an economic crisis, or you want to change some other term that is problematic to the employer.  How can you do that?
Two ways, actually.  
1.  Reach an agreement with the employee to amend the contract
One  is to request and obtain the employee’s agreement to the amendment.  But you need to be careful if that is the route you take.  The problem relates to something called ‘consideration’.  That is a contract law principle that requires that both sides receive something of value in exchange for an agreement to amend a contract.  If the amendment only favours the employer, then it is not enforceable.  
So an employer that wants to amend  an employment contract to, say, reduce pay, must give employee something new as consideration for this.  In recent case (2004) called Hobbs v. TDI, employer changed commission rate of salesperson, the salesperson kept working, but then later quit and sued for wrongful dismissal, saying employer constructively dismissed him by changing commission rate.  The Ontario Court of Appeal agreed, and ruled the revised terms of the contract were unenforceable because employee received nothing new in exchange.  
2.  Terminate the employment contract by giving proper notice, and then offer a new contract with revised terms.
One of my favorite recent (2008) cases in called Wronko v. Western Inventory, also a decision of the Ontario Court of Appeal.   I did an earlier post on this case.  It’s a great law case, but terrible for the employer, who made a critical legal error.
In a nutshell, the employer couldn’t get the employee to agree to reduce the notice of termination required in the contract from 2 years to about 4 months.  So employer said, fine, I am hereby giving you 2 years notice that employer will unilaterally amend the notice term.  When the 2 years was up, the employer presented the employee with the revised contract.  The employee quit and sued for constructive dismissal, and won.  The employer was ordered to pay 2 years’ salary as reasonable notice!  
Moral of the story:  if you can’t get employee to agree to amend contract, you need to terminate the entire contract by giving proper notice, and then offer the employee a new contract on the revised terms.