In Cottrill v Utopia Day Spa and Salons ( 2017 BCSC 704) Judge Harris was faced with the issue of the validity of an employment contract which was signed on the first day of employment.
Most Courts have ruled that an employment contract containing a restrictive termination clause ( restricting the employee to only the minimum requirements upon termination contained in the Employment Standards Act ) is not enforceable if it is first introduced to the employee on or after the first day of work.
The theory behind this principle is that the deal was already made before the start of work, in that the parties agreed before the actual first day of work on the essential terms of employment, including position, start date and compensation. As this oral agreement did not have a termination clause, the law imposes a term into the agreement that the employee can only be terminated without just cause upon receiving reasonable notice of termination.
For the Employer to introduce a new term, that is a an express termination clause, requires the Employer to now provide fresh consideration, failing which the termination clause is of no effect.
In this case the employee was hired 11 years ago. The Judge described the hiring process as follows:
12 In April of 2004, the plaintiff was interviewed for a position by Ms. Fell. She was subsequently called back for a “practical interview” in a group setting, in which she and other applicants were asked to perform skincare services on staff. She later received a telephone call from Ms. Fell in which Ms. Fell told her that she had been successful and that her first day would be on May 3, 2004.
13 On the first day, she went through an orientation program, which included meeting with various representatives of the company and signing a written contract of employment.
However in deciding that the contract was still valid, this is what the Judge had to say:
13 That said, I will consider the plaintiff’s submission that the 2004 and 2014 written employment contracts do not apply to the plaintiff for lack of consideration. The plaintiff suggests that she was employed on an oral agreement, which provided for common law notice and that it was not effectively modified by the subsequent employment contracts.
114 I start with the general proposition that the standard principles of contract law apply in the employment setting. As noted by Madam Justice Dardi in DeGagne v. Williams Lake (City), 2015 BCSC 816 (B.C. S.C.):
20 The essence of any legally enforceable contract is consensus ad idem; there is no contract without the required meeting of the minds. Both parties to an alleged contract must have manifestly expressed an intention to be legally bound by the agreement and the parties must be shown to have reached consensus on the essential terms of the alleged contract. The parties must have expressed those essential terms such that “their meaning can be determined with a reasonable degree of certainty” by the courts: Frolick v. Frolick, 2007 BCSC 84 (B.C. S.C.) at para. 30.
115 The parties must therefore have reached an agreement on the essential terms for the employment contract to be enforceable.
116 Here, the plaintiff asserts that an oral employment contract was formed in the telephone call in which the plaintiff was told she was “hired”, while the company contends that Ms. Fell told the plaintiff that “she was successful in her interview and to come in for an orientation”. I am not persuaded that, given the effluxion of time, either the plaintiff or Ms. Fell recall precisely what was said in the 2004 phone call. However, I am satisfied from their evidence, that the telephone discussion was brief and that there was no discussion of the terms of the plaintiff’s employment. Although in some circumstances, the court may imply reasonable terms to give effect to the unexpressed intentions of the parties, it must be satisfied that it is appropriate to do so. In this case, I am not satisfied there was any discussion of the essential terms of the employment relationship in the telephone call. I find the written contract of employment was executed before the plaintiff commenced her position as a skincare therapist.
117 I accept Ms. Fell’s testimony that on May 3, 2004, she followed her usual practice with the plaintiff, which was to go through all the required paper work, the company policies, and the terms of the employment contract. The plaintiff does not dispute that she was asked by Ms. Fell if she was comfortable signing the contract and whether she wanted to obtain legal advice. The plaintiff also did not dispute that Ms. Fell reviewed the contract with her, line by line.
118 Further, in cross-examination, when the plaintiff was asked about her 2004 telephone call with Ms. Fell, she testified that she was told by Ms. Fell she “was going to be hired and to show upon on May 3 at the Langley location”. Despite the plaintiff’s suggestion that, as she had trained on the first day, she had worked prior to signing the contract, her evidence was that she did not start her work duties with the company until after she signed the contract.
119 In my view, the instant case can be distinguished from the decision in Francis in which the employee had signed a full offer letter prior to signing a more restricted formal agreement and from the decision in Holland in which the employee had been working for nine months prior to being presented with a written agreement.
120 The decision in Rejdak can also be distinguished. In that case, the evidence supported that the employer and employee had agreed to the salary, position title, and start date on the phone prior to the employee starting work and that the employee had done a full days’ worth of worth before being presented with the written contract. I am not able to find that the plaintiff and the company discussed such essential terms as salary and benefits during the phone call.
121 I find that this case is more analogous to the situation in Bern v. Amec E & C Services Ltd., 2007 BCSC 856 (B.C. S.C.). In that case, Mr. Justice Bauman (as he then was) held that the contractual relationship between the parties did not crystallize until the plaintiff had reviewed all the terms of the written contract. He emphasized that the plaintiff did “not begin performing his duties of employment” until after the written contract had been signed. Here, I find that the plaintiff’s first day was an orientation day, in which she toured the spa facilities, was advised on general procedures and policies, and reviewed the contract of employment. There is no evidence that she provided any skincare services prior to signing the agreement. I am not satisfied that she could be said to have commenced her duties as an employee prior to signing the contract.
122 I, therefore, find that the 2004 agreement was valid and in effect during the plaintiff’s employment.
I have a number of concerns with this decision:
1) The legal analysis should start with the premise that reasonable notice is a term of the employment unless the party claiming otherwise can prove the contrary. Thus the onus of proof in this case always rests upon the Employer to prove that the essential terms of the agreement were not discussed in the earlier two interviews or the phone call prior to the first day of employment. Here the Judge reverses the onus , finds that neither party can really remember what was discussed 11 years ago ( DUH!!) and finds therefore that the Plaintiff loses.
2) There is no dispute that when she showed up on May 3rd, she had not even seen the termination clause. There is no evidence to believe that she was not paid for her attendance on May 3. What possible policy reason could there be to distinguish between an ” orientation day ” and a ” skin care day “? What if the orientation and training period had lasted 2 days or 2 months before the employee actually did any productive work ?
This area of law is confusing enough, and now employees have to have an exact memory of the day they were hired, what time of day they first saw the contract and what activities they did and did not do immediately before and after the signing of the employment contract. This is completely unrealistic.
How onerous could it possibly be to simply tell an Employer that if they wish to restrict the common law duty to provide reasonable notice of termination, that they must provide the employee with that information before the first day of work so that the Employee can have a realistic opportunity to assess whether or not they wish to be employed under those terms?