Written contracts are employment law’s most ambivalent feature. When will a contract magically transform from an employer’s albatross into its bulletproof vest?
Barring any illegal terms, parties to an employment contract can incorporate almost anything into a deal. Employers often use this freedom to oust their obligation to pay lengthy severance. If, however, terms provide for less generous severance than the minimum standards found in provincial legislation, the contract, or at least that portion, will be unenforceable and struck down.
Rarely will a court consider outside evidence of a party’s intention that wasn’t incorporated into the contract itself. A recent Ontario court decision emphasized that unless there is ambiguity in the language of the contract, the court ought not to consider any other information. Rather, it should interpret only the language of the document. Therefore, if material promises or pre-employment representations are made, get them in writing.
To change the terms of employment, an employer must offer an employee something of extra value (such as a raise or bonus) so he or she may decide whether to accept that deal. After a series of interviews, the CIBC extended Trusty Francis an offer of employment. He signed.
However, on his first day at work, he was presented with a number of forms and agreements that attempted to limit his entitlement to three months’ salary if he was fired. The Ontario Court of Appeal found Francis’ employment contract was consummated when he agreed to the first offer of employment and, because nothing of new value was given to him when he showed up at work, the forms and agreements he was told to sign were unenforceable. Otherwise, the Court reasoned, an employer could unilaterally impose new terms of employment at any time and an employee would be without leverage to negotiate.
Where the language in the contract is not sufficiently clear or can be interpreted in multiple fashions, courts will construe the language in favour of the person who did not draft it. Customarily, it is the employee who receives the benefit of this rule.
Many employers insert severability provisions into their contracts stating if part of that contract is found void, the court should simply carve it out of the contract. These contracts risk being foiled in their entirety, as courts naturally refuse to rewrite the bargain that was previously made.
If the contract was signed under objectionable circumstances, it may be struck down. I have a number of such cases.
In one, the employee claims she was denied the opportunity to speak to her lawyer and the adverse language was buried so deep in the contract she either didn’t see it, or didn’t understand it.
If the judge agrees there was duress, or the deal is unconscionable, the contract may be set aside.