Canadian HR Reporter

CANADIAN HR REPORTER September 4, 2017 14 NEWS CAREpath is the only Canadian Health Care navigation program of its kind offered in Canada. We have extensive experience in navigating Canadians through the health care system. Cancer Assistance Seniors' Care Assistance HealthCare Assist Your Wellness Partner he commenced employment. Feldstein argued he had not been provided a medical questionnaire and, in any event, had been led to believe there would be no require- ment he demonstrate good health other than being employed for the probationary period. e trial judge found the em- ployer was negligent in advising Feldstein about his entitlement to LTD benefits and awarded dam- ages equivalent to 40 months of lost LTD benefits ($83,336.80) and $10,000 for aggravated dam- ages. e British Columbia Court of Appeal upheld the decision but eliminated the aggravated dam- ages on the basis the employer's representatives had not acted act in a high-handed, dishonest or morally reprehensible way. Be wary of the "offer letter" – it may mean more than you think While many employers appreci- ate the benefits of an employment contract, some may not under- stand how the timing of when a contract is introduced can be as important as the terms. Too often, an employer, eager to solidify the relationship, will provide an "of- fer letter" or "term sheet" with a "formal" employment contract to follow. is can present problems for the employer if the "offer" and "contract" are materially different. In the 2015 Ontario case of Hol- land v. Hostopia.com Inc., Sean Holland accepted employment based on a two-page offer letter which expressly stated he would be required to sign an employ- ment contract. Nine months af- ter he started work, Holland was provided, and signed, the contract which contained a termination provision limiting entitlement to statutory minimum. ese terms had not been included in the offer letter. Seven years later, Holland's em- ployment was terminated without cause and his employer relied on the termination clause in the con- tract, on the basis the offer let- ter and contract were to be read together. e Court of Appeal disagreed, finding the contract unenforceable and awarding Holland damages in lieu of reasonable notice. Central to this ruling was the court's view the two documents were materi- ally inconsistent on the issue of termination: e offer letter con- tained an implied entitlement to reasonable notice of termination, whereas the contract limited enti- tlement to the statutory minimum. Because Holland had not received fresh consideration for the new, more limiting terms, the contract was not enforceable. Does this mean an employment contract signed after employment has commenced will always be unenforceable? No. In the 2017 Ontario case of Wood v. Fred Dee- ley Imports Ltd., Julia Wood was offered and accepted a job over the phone, following which she received an email outlining the terms of employment and there- after an employment contract. One day after she started work, Wood was provided a hard copy of the employment contract, which she signed. e contract limited her entitlement upon termina- tion to the employment standards minimum, and Wood argued the contract was unenforceable as it was signed after she started work without fresh consideration for its terms. Although the termination clause was struck down on other grounds, the Court of Appeal rejected Wood's argument the contract was signed without consideration, on the basis she had received all salient terms of employment via email prior to starting the job. e timing of the signing was therefore merely "ad- ministrative convenience" and the signed contract changed nothing of significance: "Wood's submission has no merit. A written employment agreement is not unenforceable merely because the employee signs it after starting to work. A written employment agreement might well be unenforceable if an employer includes in it a material term that was not part of the origi- nal employment relationship… But Deeley did not do so." e benefit of a probationary period Generally speaking, an employer is well-advised to implement a probationary period to assess an employee's suitability for the role, limit the employee's entitlement upon termination to the statutory minimum, and potentially rebut a claim of inducement. In the 2017 Ontario case Nagribianko v. Select Wine Mer- chants Ltd., Alexander Nagribi- anko was employed for close to six months when his employment was terminated due to unsuit- ability. e employer relied on a clause in the employment con- tract which stated merely "Pro- bation… Six months," and gave Nagribianko his statutory entitle- ment of one week of notice under the Employment Standards Act. Nagribianko filed a claim seeking wrongful dismissal damages. e trial judge ruled the pro- bationary provision was unclear and awarded four months of pay in lieu of notice. e Divisional Court overturned this ruling and the matter was appealed to the Court of Appeal which agreed with the Divisional Court on the basis the term "probation" is not ambiguous: "e trial judge's decision to treat the term 'Probation… Six months' as having no meaning was wrong. e parties agreed to a probationary contract of employ- ment, and the term "probation" was not ambiguous. e status of a probationary employee has acquired a clear meaning at com- mon law. Unless the employment contract specifies otherwise, pro- bationary status enables an em- ployee to be terminated without notice during the probationary period if the employer makes a good faith determination that the employee is unsuitable for perma- nent employment, and provided the probationary employee was given a fair and reasonable op- portunity to demonstrate their suitability." A probationary clause is also a useful tool to mitigate risk of a claim of "inducement from se- cure employment" which can inflate liability by including prior service when calculating notice. In the 2015 Ontario case Fraser v. Canerector Inc., the court found the use of a probationary clause inconsistent with the notion the employee was "induced" to leave his former employer: "It is noteworthy that (Stuart) Fraser was hired subject to an initial probation period of three months. is factor is inconsis- tent with any allegation that he was 'induced' to leave his former secure employment. One is not induced to leave secure employ- ment with an offer of precarious employment… unless the em- ployee is already more than will- ing to consider the proposition without inducement." What does this all mean for employers? When contemplating a new hire, an employer should consider the following best practices: 1.Make any employment offer conditional on a satisfactory, meaningful reference check. 2.When discussing the nature of the position, including benefits associated with the role, be clear and accurate. If uncertain, direct questions to the insurer. 3.If an "offer letter" is to be used, clearly and precisely outline all important terms and ensure they are consistent with whatever for- mal contract may be signed later. 4.Although it is preferable to have a candidate sign and return the employment contract before starting work, failure to do so is not necessarily fatal to the con- tract's enforceability if all mate- rial terms have been outlined and agreed upon prior to the candi- date accepting the job. 5.Consider the benefits of includ- ing a probationary period. Shana French and Brian Wasyliw are lawyers with Sherrard Kuzz LLP, one of Canada's leading employment and labour law firms, representing management. Shana and Brian can be reached at (416) 603-0700 (main), (416) 420-0738 (24-hour) or by visiting www.sherrardkuzz.com. Consider benefits of probationary periods PRE-EMPLOYMENT < pg. 5 If an "offer letter" is to be used, clearly and precisely outline all important terms and ensure they are consistent with whatever formal contract is signed later.

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