Employment contracts are hard to navigate and litigate, as this recent case reveals. The court had to consider two separate employment contracts and their validity in order to determine damages in an action for wrongful dismissal.

The First Contract

John Arviss had been employed as an architect with the defendant employer for 20 years when he was asked to sign a contract that allowed for changes to his hours of work and compensation and also contained a term that limited any future termination claim to the statutory minimums with respect to notice. Mr. Arviss agreed and signed the contract as requested.

Yet a Second Contract

Some six years later he was asked to reduce his full-time hours to part-time. He did consent but was then asked to resign from his full-time job and sign a new agreement by which he had waived all his prior years of service history.

Now Terminated as a Three-Year Employee

Three years later, his employment was terminated. He was then treated as an employee with three years’ service, as stated in the then-current contract. In actuality, he had been employed with the employer for nearly thirty years at that point.

He then sued, alleging that the 2013 contract was unenforceable and sought generous notice under the common law based on the entirety of the history of his employment.

Step 1: The Second Contract

This contract had been premised on a resignation followed by a new employment relationship. This argument was rejected by the first court as being unenforceable. The resignation was not genuine and could not be used to support such a contract.

Step 2: The First Contract

Setting aside the second contract still left the prior agreement in place which allowed termination based on the minimum sums of the statute. This court found that this first agreement was valid, which left the plaintiff employee with the statutory sums only.

Court of Appeal

The appellate court came to the same conclusion. The second agreement was indeed out but the first contract allowing only the statutory payments remained enforceable.

This was a lot of costly litigation for a very modest result.

Employers’ Take Away

It will be encouraging for employers to know that a properly drafted agreement does exist which may shield the company from severe common law claims for notice. The company here, however, may well have escaped a serious claim for aggravated damages based on its conduct in requiring a “resignation” and second new contract. Legal advice may well have advised to the contrary.

Employees’ Note of Caution

Litigation requires a strong stomach and indeed a solid bank account. Was the risk of a trial and an appeal, both unsuccessful in this case and with consequential costs obligations to the employer, worth the battle? An experienced employment lawyer can provide much-needed guidance on the relative chance of success and explain the potential consequences of pursuing litigation.

Get Advice Before You Act

For advice on this and similar issues and, indeed, any employment issue, contact the offices of Toronto employment and labour lawyers Mallins Law. We regularly advise employees and employers on legal workplace issues. Contact us online or by phone at 647-792-0310 to schedule a consultation.