Author: Daniel A. Lublin
Canadian employers often protest that workplace laws favour their employees. My view is otherwise. A well drafted employment agreement can provide an employer with the device to defeat most claims. And, as most employees lack the bargaining leverage or sophistication to renegotiate unfavourable contractual language – by signing these agreements they face an uphill battle should confrontation ensue. But despite an employer’s ability to bulletproof its liability, not all written promises will ultimately 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. I have a number of such cases. In one, the employee claims that she was denied the opportunity to speak to her lawyer, despite requesting it, and told that a demotion would be forthcoming if she did not sign her name. If the judge agrees that these pressures amounted 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 will 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. But beware: improvident deals between parties on unequal footing may be unfortunate, but unless the deal is offensive, it will be enforced.
- If the agreement is illegal, it will be invalid. Employers often attempt to oust their obligation to pay lengthy severance by drafting a contract that provides for some lesser amount. If, however, the terms provide for less severance than the minimum standards found in provincial legislation, the contract, or at least that portion, will be void.
- Agreements must have proper “consideration” to be enforced. Under this doctrine, once a deal is agreed to, it cannot be changed, in any material manner, unless the employer offers some extra value (such as a raise or bonus) so that the employee may decide whether to accept that deal. After a series of interviews, the CIBC extended Mr. 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 that Francis’s 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 the employee receives the benefit of this rule.
- Many employers insert severability provisions into their contracts stating that if a 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.