Benefits Scheme ?

Duprey v Seanix was decided by Barrow, J. of the B.C. Supreme Court in September of 2002. The essential issues became (1)  when was the contract made and (2) was there fresh consideration to support the purported revision to it.

The plaintiff commenced employment with the defendant in February 2000 as a commissioned sales representative. After three months, he was terminated. The plaintiff asserted that he was hired by an oral agreement in mid-January which was supplemented by a job description and the terms of commissions.  His compensation was set at $4,000 a month plus commissions. The offer was accepted, which the plaintiff asked to be put in writing.

Significantly, the trial judge made a finding that “the parties did not discuss all of the details of the plaintiff’s engagement, for example, they did not discuss vacation entitlements, benefits or pension details”.

After this meeting, but before he began employment, the plaintiff received the job description and the commission structure. He began work February 2.

On February 3, he was given a document titled “Terms and Conditions of Employment Agreement” which amended the title to “Manager of Retail Sales” as opposed to the “Director of Sales”, as had been provided previously. The change was made. The same agreement contained the limiting terms as to probation, termination entitlements and commission payout.

The plaintiff rightly argued no consideration, a submission which should have, but did not win the day. Consideration was found in the agreement which provided benefit coverage after a 6 month probationary period and a paid time-off scheme to which he was entitled after 12 months. This decision is questionable, with respect, as clearly the substantive terms were agreed well in advance. These incremental modest issues ought not to have ruled the day.

Vacation and Benefits would not cut it

On comparable facts, in July of 2008, the decision of the Ontario Superior Court of Justice in Rejdak v The Fight Network Inc. found the limiting term in the contract lacking consideration.

The plaintiff was employed with The Score for seven years as a sports editor when he applied for a position with the defendant. The plaintiff asserted an oral offer of employment was extended to him on August 5, 2005 which he accepted. The following Monday, he tendered his resignation with his then employer, proceeded to the office of the defendant when he was given for the first time an employment agreement. He signed and returned it the following day.

TFN went on air September 21, 2005. It hosted a gala event on Friday, October 21. The plaintiff was not at work the following Monday, October 24. He was terminated on Wednesday, October 26.

The court found that the hiring agreement was made on the Friday evening of August 5 as the parties had agreed to salary, title and the start date. The defendant argued that the consideration to support the written agreement was the offer of two weeks’ vacation and a benefits package.

Herman, J. rejected this argument, as the vacation was the two week statutory minimum ¹ and the health benefits were the standard benefits given to all employees. The agreement was found to be unenforceable.

OCA – “Incidental Terms” not Consideration

A similar contrary view of what would be considered such “incidental terms” as described by the Ontario Court of Appeal was seen in Francis v CIBC, which in this case were hence seen as part of the initial contract and not consideration to support what was alleged to be a new contract:

Here, the consideration for the "Employment Agreement" signed by the plaintiff is stated in the document to be the employment of the plaintiff by the bank. The bank was already bound to employ the plaintiff as a result of the exchange of correspondence and the fulfilment of the condition of a suitable reference. The clauses in the "Employment Agreement", other than the termination clause and the probationary period clause, are also reasonably incidental to the nature of the plaintiff's employment and are no more than would be implicit in an employment of this kind. Clause 1 obligates the plaintiff to honestly and faithfully conduct himself in performing his duties while employed; cl. 2 requires him to treat all his dealings in relation to the bank, other personnel, and customers of the bank, in confidence; cl. 3 requires him to account to the bank for all moneys and other property he receives; cl. 4 requires that, unless authorized by the chief general manager, he not engage in any trade or other business; cl. 5 requires him to observe all by-laws, regulations and instructions of the bank; cl. 6 requires him to make contributions under pension and insurance plans and authorizes the bank to deduct these amounts from his salary; cl. 7 requires him to conduct himself in a manner which is not prejudicial to the interests of the bank. None of these clauses would be detrimental to the bank's interests so as to constitute new consideration on the part of the bank for the modification of the reasonable notice implied in the earlier contract of employment. ²

Example of Real Consideration

Consideration for a new contractual term was proven in Clarke v Insight, both at trial and appeal. The plaintiff was offered a substantial promotion to the position of Managing Director for Canada as a term of which he was required to and did affirm a pre-existing policy document which set out the limiting contractual term.

Care should be taken upon relying upon precedent cases. Often the law is misstated, as was the case in the Manitoba Queen’s Bench decision in Metis National Council v Dumont. The trial judge clearly found that the employment of Dumont was in jeopardy should he not accept the terms of reference, which included the non-compete in issue. The court went on to state that continued employment was sufficient to show consideration. In fact, the decision clearly found forbearance and an offer of a new fixed term of five years.