The Consequences of an “Innocent” Covering E-mail
Previously printed in the LexisNexis Labour Notes Newsletter.
New technology has undoubtedly impacted the employment relationship. The relationship is changing and, perhaps more importantly, the way in which the relationship is conducted is changing. While many employers would not think twice about the impact of a covering e-mail to an offer letter, the recent decision in Ballim v. Bausch & Lomb Canada Inc., 2016 ONSC 6307 confirms that an e-mail which attaches an agreement or offer can be used to determine the intention of the parties.
In or around October 2015, Sandra Ballim was approached by Bausch & Lomb Canada Inc. about possible employment. The position involved replacing an employee who was going on maternity leave.
Following two successful interviews, the company sent Ballim an e-mail with the subject matter noted as “Offer” and stating, “It is a one year contract. You will receive benefits.” The e-mail attached an employment agreement which did not contain a termination clause.
Just over a month after commencing her employment, Ballim requested an unpaid leave of absence for personal reasons. Ballim advised the company that she would return to her duties on February 18, 2016 or earlier. The company approved Ballim’s leave of absence. Ballim in fact took an extended leave of absence and did not return to work until February 22, 2016. That day, the company informed Ballim she was being dismissed without cause.
As Ballim had been employed for three months, the company took the position that she was entitled to one week of pay in lieu of notice in accordance with the Employment Standards Act, 2000. As well, the company provided her on a gratuitous basis with two weeks of pay and an amount in payment of accrued but unused vacation.
In May 2016, Ballim obtained alternate employment earning $14,000 more per year than what would have been her annualized salary with her former employer.
Positions of the parties
Ballim argued that she had a fixed-term contract and was therefore entitled to recover all damages for the unexpired term of the contract. The company took the position that Ballim was hired for an indefinite term and was lawfully dismissed after being provided with reasonable pay in lieu of notice.
The case was decided by way of summary judgment, with the Court finding in favour of Ballim.
The Court found that the body of the covering e-mail formed part of the employment contract. In the Court’s view, the e-mail was a representation by the company to induce Ballim to accept the offer. In these circumstances, it was “inextricably tied to the terms set out in the … employment agreement”, and accordingly was part of the contract.
In determining whether the contract was for a fixed or indefinite term, the Court noted that it is the employee who has the burden of establishing that the contract is for a fixed term and that, in order for the term to be fixed, the intention of the parties must be clearly expressed and unequivocal. In the circumstances of this case, the Court concluded that the parties entered into a binding one-year contract. In particular, the surrounding context was: a maternity leave, which implied a one-year position; the employment agreement indicating that the employment was on a “contract basis”; and there was no “entire agreement” clause in the contract which might have cancelled out the effect of the e-mail or other related discussions.
In the result, Ballim was entitled to damages for the balance of the 38.5 weeks, less the two weeks which the company had already paid, notwithstanding the fact that she had found alternate, higher-paying employment in May 2016. Ballim had a windfall.
While each case will turn on its own facts, this decision highlights two of the risks which fixed-term contracts can have for employers. Absent an agreement to the contrary: 1) if an employer terminates a fixed-term contract without cause prior to the end of the agreed term, the employer might owe the employee damages for the remainder of the unexpired term; and 2) an employee under a fixed-term contract might have no obligation to mitigate and an employer will not get the benefit of any mitigation income that the employee earns after termination.
This decision also confirms that an employee is entitled to rely on the representations made by an employer in a covering e-mail with respect to the terms of his or her employment. This outcome serves as an important reminder to employers to take great care in how they manage recruitment communications and to ensure that all documentation which refers to or relates to employment agreements is consistent.