Author: Daniel A. Lublin
Courts will imply terms
Employees routinely sign contracts replete with unfavourable terms: contracts can give employers the right to eliminate employees with minimum notice, banish them to far away jurisdictions, slash salaries or demote ? with impunity, prevent competition following their departure, and break promises or representations at their pleasure.
Most new employees are reluctant to bargain over terms for fear that the contract will be withdrawn. These fears are generally unfounded. While the employer has the right to withdraw its offer, this typically occurs only if a reference or credit check proves unfavourable ? not because the employee sought to amend any one-sided terms.
In spite of inequitable contracts, employees continue to sign their names. But before doing so, they should, at least, consider the following advice:
Once a contract has been signed and the job has commenced, it is generally too late to negotiate. Unless the contract requires or implies it, employers have no obligation to raise salaries, pay bonuses, provide profit sharing or stock options, or increase vacation time. They must only comply, in good faith, with the bargain that was made. If there is something worth negotiating for, get it in writing before signing the deal.
Where ancillary documents such as policies or manuals are referred to in the contract itself, obtain and read copies prior to agreeing to the contract. Employers rely on these documents and expect their employees to be familiar with their terms – even those that are adverse.
For non-executive level employees, express language surrounding termination is usually punitive. In these “termination clauses” employees agree to displace the right to receive reasonable severance and take a lesser amount instead. If most people understood how this language would affect them upon termination, very few would be agreeable to these terms.
Where pre-employment promises, guarantees or representations are made, commit them to writing. Employees have the onus to demonstrate that such promises were clearly made and that they relied on them in agreeing to the contract.
If the contract was signed under objectionable circumstances, it may be struck down. Despite having this discretion, courts will rarely exercise it in the employee?s favour. In a recent column, I detailed the case of Patrick Barr, who claimed he was essentially forced into signing a broad-ranging release substantially reducing his otherwise hefty entitlement to severance pay. The court found the deal was unfortunate and less than Barr was entitled to, but ruled against him, as duress and coercion are not easily proven. Fair or not, seldom will a signed document be set aside.