The employer negotiated with the employee for a new job. Key terms of the position were discussed in the interview, such as position, start date, salary amount, vacation time and pay, probationary period and benefits, for example.
The employee was leaving an existing job to take this new position.
The employer presented a letter of employment to the employee after the interview. The same key terms were identified in the offer letter, but the employer made no mention of the employee having to sign a full employment agreement for the new position. There was brief mention of this in the e-mail by the employer to the employee delivering the initial offer letter.
The employee resigned from his existing job after receiving the offer letter by the employer.
Subsequently, the employer presented a fulsome employment agreement to the employee, which contained a clause limiting the notice of termination to the employee to only the minimum, statutory notice required by the Employment Standard Act, 2000 (i.e., contracting out of the common law reasonable notice obligation).
The employee signed the fulsome agreement, feeling he had no choice but to do so.
The employer terminated the employee within the year, relying on the fulsome employment agreement. The employee brought an action for wrongful dismissal, seeking damages based on common law reasonable notice, rather than the minimum amount set out by the employment agreement.
The Court decided that an employment contract was formed when the employer received the letter setting out the key terms of employment. The Court did not accept the employers argument that reference to "the contracts" in the email attaching the offer letter was a clear indication that the employment relationship would be governed by a comprehensive agreement. Therefore, it was not made clear that the employees employment was conditional on him signing the employers employment agreement and, because no new or additional consideration was given by the employer when the employee subsequently signed the employment agreement, the Court held that the agreement was unenforceable and did not limit the employees termination entitlements.
So, the common law governed the notice period and the Court awarded damages to the employee based on four months of compensation in addition to payment of his legal fees.
WHAT DOES THIS MEAN?
Employers are, of course, entitled to discuss key terms of employment with potential new employees, but care should be taken to ensure that an offer is not made to the employee that is sufficiently detailed to allow a Court to find that an enforceable contract was formed.
Offer and acceptance is the key if an offer is made, and is accepted by the employee, it may form the contract, even if all of the terms requested by the employer are not identified.
Employers should ensure that any prospective hire is informed clearly that the offer of employment is conditional upon the hire signing a comprehensive employment agreement setting out the terms and conditions that will govern the employment relationship. This condition should be consistently confirmed in any subsequent communications with the hire and the only written offer that should be provided is the fulsome offer that the employer wants the employee to sign.
The case: Buaron v. AcuityAds Inc., 2015 ONSC 5774
This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.
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