Salesman’s contract a lemon: Judge
Author: Daniel A. Lublin
In Bradley Gallagher’s case, a little bit of clarity would have gone a long way.
Making ends meet selling used cars, Gallagher never paid much attention to the calculation of his commission payments. But in 2003, Gallagher’s car dealership demanded that he sign a shady commission plan or face his immediate termination. Having refused, the dealership said he resigned. In the end, the judge said Gallagher was the one who was sold a lemon.
Gallagher joined John Bear Buick Cadillac Ltd. as a used car salesman in 1994. He never signed a formal employment contract but instead was shown yearly “pay packet agreements” outlining how he would earn his commissions. Concerned his commissions were dropping from year to year, despite selling just as many cars as usual, Gallagher asked management how they were calculating his pay. Instead of being given a clear answer, his manager confused him at first and then later told him that his commissions were calculated based on “whatever the dealer said it was.” In January of 2003, Gallagher refused to sign the commission plan for the next year. He was told to leave his company car on the lot and go away to think it over. When Gallagher called into the office a few days later, he was told that if he didn’t sign the agreement, then he wouldn’t be working for the company anymore.
Gallagher never returned to John Bear Buick Cadillac. Although the company argued that he resigned, the Court disagreed. It didn’t matter whether Gallagher left the job and never returned. The company’s ultimatum was a wrongful dismissal, not a resignation. Gallagher won his case and was awarded eight months’ pay.
As John Bear Buick Cadillac found out, when it comes to an employee’s resignation, clarity is the key. Courts are loath to uphold an employee’s resignation in the face of an ultimatum that either he or she accept a new contract or leave the job. If confronted with a situation similar to Gallagher’s, here are three legal principles to remember to ensure that your wrongful dismissal case ends up being worth more than your old used car:
- Resignations are significant. They will only be valid if they are clear and unequivocally given.
- If the company accepts your clear resignation, you will not be entitled to any severance or termination package.
- The law regards a true resignation as a voluntary action. If you are forced to resign because of an ultimatum or if your resignation was given under duress or pressure from your employer, the law will not regard it as valid and enforceable against you. In these circumstances, it is likely that your resignation was really nothing more than a camouflaged termination.