We recently dumped the Winnipeg Free Press for the National Post. What a welcome change! Anyway, an article today caught my eye: Reasonable Terms of Agreement. Alas, the article doesn’t seem to be available for non subscribers. Summary below.
Basically, a salesman changed companies on the promise of higher commission (among other things). His offer letter spelled out everything except the commission itself, but he was promised that it was forthcoming, and that it would be honoured. Of course, he never gets it.
Less than a month into the job, he gets handed a new contract, and is told to sign it or be fired. The new contract overrode some things the initial offer stated, and also laid down a terrible commission structure. A year later, he’s made $76K but has only been paid $23K, and some people that jumped companies with him got fired. He finds a new job himself, and takes the company to court.
Legal stuff aside, the courts ruled that he wasn’t offered anything in return for signing the new contract. Going back to something I learned in University, that’s the consideration aspect of a contract – you can’t have a contract if both sides don’t get something (even if it’s only $1), and any amendments have to follow that.
The courts said that if there were some indication that they were going to fire him, and if they said something like “sign this contract and your job is guaranteed for 6 months”, it would have been enforcable. Furthermore, mandatory severance can’t be considered something of value either.
The article then goes on to state how a company can effectively make amendments to contracts:
- Make sure that you put everything in the employment offer, ie it’s easier to do it right the first time
- Refer to a separate contract in the employment offer if it’s not practical above
- Give them something for it – a bonus, raise, promotion – and then make it part of the amended contract
And, to quote: “When you obtain any benefit from an employee, offer them more than they are entitled to”.
This was in Ontario, but made reference to Supreme Court cases and B.C. Court of Appeal. I’m not a lawyer. If this situation ever presented itself, though, I’d know to call one instead of blindly signing.