Sometimes, during the hiring process, an employer may opt to send an initial job offer and then, once accepted, follow up with a more detailed set of terms. This procedure, while seemingly innocuous, can prove to be high risk, carrying with it the potential for significant and unintended liability. An employer may find itself unable to rely on the ‘follow-up’ set of terms and be stuck with the deal set out in its initial job offer.
As such, best practice for employers is to avoid a two-step dance. Instead, make one offer to an individual in writing (with all terms on which you may wish to rely) and require that this offer is accepted in writing prior to the commencement of work.
Lessons from a recent case
A recent British Columbia decision, Adams v Thinkific Labs Inc., 2024 BCSC 1129, is a useful reminder of the risks associated with a two-step hiring approach.
On August 19, 2021, a representative of the defendant emailed the plaintiff with a detailed offer of employment (being around 60 pages of content) (“August 19 Email”). The offer addressed, among other things, compensation terms (including salary, equity, and bonus entitlement), parental leave, vacation entitlement, work schedule, and details of the various benefits plans in which the plaintiff would participate. The email offer, however, did not include any language addressing rights and entitlements in the event of a termination of employment.
The plaintiff responded to the August 19 Email the following day to advise that she accepted the job and noting her desired start date. Several hours later, the defendant emailed another document to the plaintiff (“August 20 Email”). The August 20 Email included new terms regarding termination entitlements and non-competition, which the court later found “contained almost nothing save for additional burdens, limitations and obligations on the plaintiff—none of which had been addressed or even mentioned in the original 60 plus pages of offer of employment.”
Regardless, the plaintiff signed and returned the August 20 Email and started work with the defendant on September 21, 2021. The plaintiff remained employed with the defendant until her without cause dismissal effective May 23, 2023. Upon dismissal, the defendant issued termination entitlements in accordance with the August 20 Email.
The plaintiff commenced a court action for wrongful dismissal. In so doing, she asserted that the August 19 Email constituted a full and binding employment contract and, given it contained no termination clause, she was entitled to receive common law reasonable notice of dismissal.
The plaintiff further argued that the August 20 Email was unenforceable as it significantly altered the parties’ agreement by imposing termination and non-competition terms without any new consideration.[1]
The defendant, on the other hand, asserted that the August 19 Email did not constitute a contract of employment and that it was “cumbersome, awkward, and expensive to require employers to provide even a single dollar of consideration in cases like this one where there are changes in the terms of employment.”
The court rejected the defendant’s submissions and concluded that the August 20 Email was unenforceable for want of consideration. In reaching this conclusion, the court opined:
Terms of employment were offered and were accepted. Hours later, new terms were presented, one might say imposed. The only possible consideration was that the plaintiff could keep the job if she now agreed to the additional, onerous and detrimental terms which had not been included in, or even contemplated by, the original agreement.
…
I find that the initial offer and acceptance was a complete agreement between the parties and that the defendant has failed to establish, on a balance of probabilities, that the plaintiff received any or any adequate consideration for the signing of the Letter Agreement—that written document is unenforceable and the plaintiff’s entitlement to severance is to be determined by common law principles.
Takeaway for employers
This decision serves as a reminder for employers to be careful during the hiring process. While there may be a desire to send a prospective employee ‘basic terms’ and then follow up with a more substantive agreement, such an approach will be dangerous unless new consideration (in the form of an additional payment or compensation of some form) is provided.
Best practice is to include all terms in one offer for the prospective employee to accept. The use of a two-step process may lead to the unintended creation of an employment relationship on terms that fail to properly protect the employer’s interests and prove costly in the long run.
1] To learn more about consideration, and how it can affect the enforceability of your employment contracts, see this recent article.
