Anything goes with job contracts

Canadian employers often protest that workplace laws favor their employees. My view is otherwise.

Most employees lack the necessary bargaining leverage or sophistication to renegotiate unfavorable contract language. Should confrontation ensue, a well-drafted employment contract creates an uphill battle for the employee.  That being said, not all written promises will be enforced.

Employees faced with an ironclad agreement may argue as follows:

If the employer applies duress or coercion, the agreement may be struck down.

In one case that I am handling, the employee claims that she was denied the opportunity to speak to her lawyer, despite requesting it, and was further told a demotion would be forthcoming if she did not sign her name. If the judge agrees that these pressures amount to a lack of consent, the agreement will be set aside.

Where an agreement forms such a departure from commercial morality, a court may intervene to ensure fairness.

In limited cases, a deal may be set aside where the party with stronger bargaining leverage preys on the weaker party, usually the employee, to create such an inequitable agreement that it would be substantially unfair to uphold. Beware: improvident deals between parties on unequal footing may be unfortunate, but unless the deal is offensive, it will be enforced.

If an agreement is illegal, it will be invalid.

Employers often attempt to oust their obligation to pay lengthy severance by drafting a contract that provides less severance that the minimum standards found in provincial legislation. In these cases the contract, or that portion, will be void.

Agreements must have proper “consideration” to be enforced.

Once a deal has been agreed to, it cannot be changed unless the employer offers extra value (a raise, bonuses, etc.) so the employee may decide whether to accept that deal. For example, Trusty Francis accepted an offer of employment from CIBC. On his first day 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 when he showed up at work, the agreements he was given 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.

Contract language must be clear.

Where the language in the contract is not sufficiently clear, courts will construe the language in favor of the person who did not draft it. Customarily, the employee received the benefit of this rule.

Severability provisions may not always be effective.

Many employers insert severability provisions into contracts stating if a part of the contract is found void, the court should 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.

Daniel A. Lublin is a Toronto Employment Lawyer specializing in the law of wrongful dismissal.  He can be reached at [email protected] or visit