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Difference between revisions of "Employment Law Issues (9:V)"
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Employment Law Issues (9:V) (view source)
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==== b) Consideration ==== | ==== b) Consideration ==== | ||
Once a job offer is made and accepted, a contract is in place (though as discussed above, it may be unwritten). In order to change the terms of the contract after it is in place, there must be fresh consideration flowing from each party to the other. Consideration in contract law is the benefit one party receives from another as a result of entering into a contract with another party. This means that to change an existing contract, the new contract must contain a new benefit for both the employer and the employee. Because of this, an entire written contract might be invalid if the contract was imposed on the employee after they had already accepted the job offer: the employee would already have a contract, and the written contract would need to have some new benefit, or “fresh consideration”, for the employee. Compare the signature dates on the written contract to the actual start dates. | Once a job offer is made and accepted, a contract is in place (though as discussed above, it may be unwritten). In order to change the terms of the contract after it is in place, there must normally be fresh consideration flowing from each party to the other. Consideration in contract law is the benefit one party receives from another as a result of entering into a contract with another party. This means that to change an existing contract, the new contract must contain a new benefit for both the employer and the employee. Because of this, an entire written contract might be invalid if the contract was imposed on the employee after they had already accepted the job offer: the employee would already have a contract, and the written contract would need to have some new benefit, or “fresh consideration”, for the employee. Compare the signature dates on the written contract to the actual start dates, to determine if there is an argument that the contract is unenforceable for lack of consideration. | ||
Be aware that the BCCA case of Rosas v. Toca, 2018 BCCA 191, while not an employment law case, may present some arguments for employers that new employee contracts entered into during the course of employment should be enforceable, even if there is no valid consideration. At paragraph 183 of Toca: “When parties to a contract agree to vary its terms, the variation should be enforceable without fresh consideration, absent duress, unconscionability, or other public policy concerns, which would render an otherwise valid term unenforceable.”. As this Toca case is new a note up of employment law cases referencing or applying Toca will be important to an analysis under this topic. | |||
==== c) Invalid Contracts – Vagueness or Ambiguity ==== | ==== c) Invalid Contracts – Vagueness or Ambiguity ==== | ||
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Vague or ambiguous contract terms may be unenforceable. Courts will examine the wording of the contract terms to determine whether a clause is enforceable for vagueness or ambiguity. If a clause is not enforceable, courts may rule on the term of agreement based on the conduct of the employer and employee and pre-contractual communication between the parties. See ''Alsip v Top Rollshutters Inc. dba Talius'', 2016 BCCA 252. | Vague or ambiguous contract terms may be unenforceable. Courts will examine the wording of the contract terms to determine whether a clause is enforceable for vagueness or ambiguity. If a clause is not enforceable, courts may rule on the term of agreement based on the conduct of the employer and employee and pre-contractual communication between the parties. See ''Alsip v Top Rollshutters Inc. dba Talius'', 2016 BCCA 252. | ||
=== d) Employment Standards Cap Severance Clauses and Enforceability === | |||
Many employers enter into written employment contracts that purport to allow the employer to dismiss the employee without cause by providing only the Employment Standards Act minimum severance. These clauses will often be enforceable. However, some arguments are available to attempt to have these ESA severance termination clauses unenforceable. | |||
Termination Clause Does Not Meet ESA Minimums | |||
Any term of the written contract that does not meet the minimum standards set out by the Employment Standards Act (for provincially regulated employees) or the Canada Labour Code (for federally regulated employees) is invalid. | |||
A contractual termination clause is not enforceable if, at any time, the clause would provide the employee with less than his entitlement under the ESA. See Shore v Ladner Downs, [1998] 160 DLR (4th) 76. | |||
If a term of the contract is invalid, then the employee will likely receive whatever the common law provides instead of what the contract said. | |||
For example, a termination clause might say the employee will receive 30 days notice if they are being terminated without cause. Under the ESA, the employee could receive up to 8 weeks notice. The contractual termination clause would be invalid because it purports to provide the employee with less than the minimum statutory entitlement. | |||
In this example, the employee would be entitled to reasonable notice under common law. This can be very beneficial for the employee in cases where the common law provisions, such as the reasonable notice period, are better than the contractual provisions. | |||
Note that in assessing whether a term of a contract breaches the ESA, one must consider the maximum entitlement that an employee could ever receive under the ESA at any point in time, rather than their current entitlement. | |||
In | In the previous example, it is irrelevant whether the employee has worked for the employer long enough to be entitled to more than 30 days of notice under the ESA. | ||
However, this principle may have been qualified with respect to severance clauses and fixed term contracts (see Miller v Convergys CMG Canada Limited Partnership, 2013 BCSC 1589 (upheld on appeal); Rogers v Tourism British Columbia, 2010 BCSC 1562). | |||
No Severance Ceiling Set out in Termination Clause | |||
If a contractual ESA severance termination clauses does not set out that this severance is the maximum an employee will receive, the employee may not be limited to such a severance. | |||
In the | In Holm v AGAT Laboratories Ltd, 2018 ABCA 23, the Alberta Court of Appeal looked at whether a termination clause was sufficient to limit a constructively dismissed employee’s entitlement to severance. The termination clause provided for dismissal in accordance with the Alberta Employment Standards Code, but did not clearly state that this entitlement was a ceiling. As a result, the clause was ambiguous, and did not act to limit the employee’s severance entitlement. | ||
In Movati Athletic ( Group) Inc v Bergeron ( 2018 ONSC 7258), the Ontario Divisional Court also found a termination clause that allowed the employer to terminate employment without cause at any time upon providing notice or pay in lieu of notice pursuant to Ontario Employment Standards was also not sufficient to limit the employee’s severance, as it did not clearly state that the minimum statutory severance was a cap. | |||
==== e) General Contract Construction Rules Apply ==== | ==== e) General Contract Construction Rules Apply ==== | ||
