Think Twice Before You Hit “Send”: Your E-Mail Job Offer Could Be Binding
November 21, 2024
Article by:
Sabrina AnisTana Wang
Previously printed in the LexisNexis Labour Notes Newsletter.
In the recent case of Adams v. Thinkific Labs Inc., 2024 BCSC 1129, the B.C. Supreme Court considered whether a certain e-mail communication constituted an employment contract at common law. The Court relied on basic doctrines under the law of contract such as the need for consideration to find that the e-mail offer created a binding agreement.
Background
On August 19, 2021, Thinkific Labs Inc. (the “Employer”) sent a prospective hire, Madeline Adams, an employment offer by e-mail.
The e-mail included about 60 pages of information and had details regarding compensation, stock options, extended health benefits, vacation, leave entitlements, work schedule and other employment-related items (the “E-mail”). The Employer requested Adams’ full legal name and preferred start date to provide the official employment contract. Notably, the e-mail did not include a termination clause or non-competition clause.
Adams responded to the E-mail. In her response, she said she accepted the offer. That was on August 20, 2021 and she provided the requested information. Later the same day, the Employer sent a formal written document containing terms around termination and non-competition and other details not included in the E-mail (the “Letter Agreement”). Adams signed and returned the Letter Agreement to the Employer.
Adams started working for the Employer on September 20, 2021. She was dismissed from employment on May 23, 2023. She took the position that the E-mail constituted a full and binding employment contract and claimed she was entitled to reasonable notice of termination under the common law because that contract contained no termination provision. She contended that the Letter Agreement was unenforceable because it significantly altered the initial contract by unilaterally imposing terms around termination and non-competition without providing new consideration.
The Employer’s position was that the E-mail did not constitute an employment contract. It claimed that “common sense should prevail” and Adams knew she would not be working without a formal employment contract. The Employer also argued that, in the circumstances, there was no need for consideration for changes in the terms of employment and the absence of Adams’ full legal name and preferred start date confirmed there was no contract until she signed the Letter Agreement.
Court’s decision
The case proceeded through a summary trial before the Court. The issue was whether it was the terms of the E-mail or the Letter Agreement that governed Adams’ entitlements on termination of employment.
The Court found that the E-mail was extensive and detailed. It did not address only minor administrative matters which did not substantively alter the terms of the employment offer. In contrast, the Letter Agreement consisted almost entirely of new restrictive terms that the Employer added without consulting Adams or providing further consideration.
The Court observed that the overall tone of the Letter Agreement and the impression it left seemed to be “we told you about all of the good stuff but, now that you are on board, here are some additional terms that we are imposing on you”.
The Court stated that a modification to a pre-existing employment contract would not be enforced unless there was a further benefit to both parties. Continuing employment alone is not enough; there has to be forbearance or some other incentive to amount to good consideration. Even though Adams had not started working with the Employer yet, the Court found the only consideration was Adams could keep the job if she agreed to the additional onerous and detrimental terms. Those terms had not been included in the E-mail and were not even contemplated by it.
The Court concluded that the initial offer and acceptance of the E-mail constituted a complete agreement between the parties. The Court added that the Employer failed to establish Adams received adequate consideration for signing the Letter Agreement. The Letter Agreement was thus unenforceable and Adams’ entitlement to notice of termination was properly determined on common law principles.
Finally, the Court considered the appropriate amount of notice to which Adams was entitled. In the circumstances, the Court found that the reasonable notice period was five months.
Key takeaways for employers
- Employers should ensure that an initial employment offer is clear, complete and comprehensive. All key terms and conditions should be included in writing to avoid disputes about what constitutes the full agreement.
- Two-part employment offers – where the employer makes an initial short-form offer followed by a more detailed agreement – should be used with caution. Even where employers follow up swiftly with a formal agreement, the initial offer could be found to If a two-step offer is absolutely necessary, it should be clearly conditional on the employee’s entering into a formal written agreement. “Agreements to agree” generally pose a greater risk than a single offer containing all of the relevant terms of employment.
- For any modification to a pre-existing employment contract to be enforceable, there should generally be new consideration that benefits both parties. Courts have repeatedly held that continued employment is not sufficient consideration and, even where employment has not yet commenced, this case suggests that the same reasoning applies.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.
November 21, 2024
Previously printed in the LexisNexis Labour Notes Newsletter.
In the recent case of Adams v. Thinkific Labs Inc., 2024 BCSC 1129, the B.C. Supreme Court considered whether a certain e-mail communication constituted an employment contract at common law. The Court relied on basic doctrines under the law of contract such as the need for consideration to find that the e-mail offer created a binding agreement.
Background
On August 19, 2021, Thinkific Labs Inc. (the “Employer”) sent a prospective hire, Madeline Adams, an employment offer by e-mail.
The e-mail included about 60 pages of information and had details regarding compensation, stock options, extended health benefits, vacation, leave entitlements, work schedule and other employment-related items (the “E-mail”). The Employer requested Adams’ full legal name and preferred start date to provide the official employment contract. Notably, the e-mail did not include a termination clause or non-competition clause.
Adams responded to the E-mail. In her response, she said she accepted the offer. That was on August 20, 2021 and she provided the requested information. Later the same day, the Employer sent a formal written document containing terms around termination and non-competition and other details not included in the E-mail (the “Letter Agreement”). Adams signed and returned the Letter Agreement to the Employer.
Adams started working for the Employer on September 20, 2021. She was dismissed from employment on May 23, 2023. She took the position that the E-mail constituted a full and binding employment contract and claimed she was entitled to reasonable notice of termination under the common law because that contract contained no termination provision. She contended that the Letter Agreement was unenforceable because it significantly altered the initial contract by unilaterally imposing terms around termination and non-competition without providing new consideration.
The Employer’s position was that the E-mail did not constitute an employment contract. It claimed that “common sense should prevail” and Adams knew she would not be working without a formal employment contract. The Employer also argued that, in the circumstances, there was no need for consideration for changes in the terms of employment and the absence of Adams’ full legal name and preferred start date confirmed there was no contract until she signed the Letter Agreement.
Court’s decision
The case proceeded through a summary trial before the Court. The issue was whether it was the terms of the E-mail or the Letter Agreement that governed Adams’ entitlements on termination of employment.
The Court found that the E-mail was extensive and detailed. It did not address only minor administrative matters which did not substantively alter the terms of the employment offer. In contrast, the Letter Agreement consisted almost entirely of new restrictive terms that the Employer added without consulting Adams or providing further consideration.
The Court observed that the overall tone of the Letter Agreement and the impression it left seemed to be “we told you about all of the good stuff but, now that you are on board, here are some additional terms that we are imposing on you”.
The Court stated that a modification to a pre-existing employment contract would not be enforced unless there was a further benefit to both parties. Continuing employment alone is not enough; there has to be forbearance or some other incentive to amount to good consideration. Even though Adams had not started working with the Employer yet, the Court found the only consideration was Adams could keep the job if she agreed to the additional onerous and detrimental terms. Those terms had not been included in the E-mail and were not even contemplated by it.
The Court concluded that the initial offer and acceptance of the E-mail constituted a complete agreement between the parties. The Court added that the Employer failed to establish Adams received adequate consideration for signing the Letter Agreement. The Letter Agreement was thus unenforceable and Adams’ entitlement to notice of termination was properly determined on common law principles.
Finally, the Court considered the appropriate amount of notice to which Adams was entitled. In the circumstances, the Court found that the reasonable notice period was five months.
Key takeaways for employers
- Employers should ensure that an initial employment offer is clear, complete and comprehensive. All key terms and conditions should be included in writing to avoid disputes about what constitutes the full agreement.
- Two-part employment offers – where the employer makes an initial short-form offer followed by a more detailed agreement – should be used with caution. Even where employers follow up swiftly with a formal agreement, the initial offer could be found to If a two-step offer is absolutely necessary, it should be clearly conditional on the employee’s entering into a formal written agreement. “Agreements to agree” generally pose a greater risk than a single offer containing all of the relevant terms of employment.
- For any modification to a pre-existing employment contract to be enforceable, there should generally be new consideration that benefits both parties. Courts have repeatedly held that continued employment is not sufficient consideration and, even where employment has not yet commenced, this case suggests that the same reasoning applies.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.