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What defines a contract?

Many employers believe that if they get into a court room fight with a former employee, the cards are stacked against them. While there is some truth to that assumption, it is never quite that simple.
 
Jean Claude is a chef and resident of France. He applied to participate in a Canadian government program that allowed young French professionals to work for up to 18 months in Canada. After being interviewed by a recruiter, he was offered a job at a restaurant in New Brunswick. To take advantage of the program and get his work Visa, the restaurant had to give him a document outlining the terms. It said, “The present contract is entered into for a period of 18 months under a contract agreement for young professionals. The contract will commence on June 15, 2006 and end 18 months later on December 15, 2007.”
 
Four months into the contract Jean Claude decided he was not making enough money and tried to re-negotiate the terms of his employment with the restaurant manager. The manager would have none of it and Jean Claude became upset. He told the manager it was his intention to return to France and he would let him know when. These comments were made in the heat of the moment and Jean Claude put nothing in writing. Nor did he ever give the employer a date of departure.
 
The employer heard from Jean Claude’s landlord that Jean Claude appeared to be leaving some time in November. A few weeks after this altercation with the manager, the employer terminated Jean Claude even though he had continued to show up for work and said nothing more about leaving.
 
Jean Claude sued the employer claiming that he was owed the other 14 months of his fixed term contract.
 
The employer claimed that it was Jean Claude who ended the relationship. They said that in any case it was not a fixed term contract.  Jean Claude was, at best, owed a couple of weeks pay in lieu of notice given that he had only worked for them for four months.
 
The restaurant claimed that the document referring to the 18 months was simply a formality to get the work visa from the government and didn’t really reflect any commitment between the restaurant and Jean Claude. It pointed out that neither party had actually signed the document for the government so it was not really a contract.
 
People think of the word “contract” as meaning that there is something in writing signed by both parties. Every employee in this country has a contract of employment in the eyes of the law. My guess is that less than 10% have anything in writing. Verbal contracts have been recognized by the courts as valid and enforceable for hundreds of years, especially in employment relationships. Whether or not the document provided to the government was signed by either party, it was very good evidence of the verbal agreement. If the employer wanted to challenge the assumption that it reflected the agreement, they would need to have compelling evidence. They did not.
 
If the restaurant had just cause for Jean Claude’s termination they would not have to pay out the contract. The restaurant said that they did not like Jean Claude’s food and he wasn’t following their recipes but there was no evidence of any progressive discipline process which would have let him know clearly that his job was in danger if he refused to follow recipes.
 
So, did Jean Claude actually end the relationship? Vague statements from employees such as “I am going to retire some time in the future” or “I’m looking for another job” should never be relied upon by employers. Unless the employee puts something definitive in writing or says categorically commits themselves to a particular end date clearly verbally and does not retract them very soon after, there is nothing to rely upon.
 
To be fair, this works both ways. If the boss says, “I will be replacing you”, but does not tell you specifically to go home or that you are terminated, you can’t walk out the door and win a lawsuit for wrongful dismissal. Both a resignation and a termination have to be clear and unequivocal to be relied upon by employees or employers.
 
Sometimes, for employers, it feels like the cards are stacked against them. Almost inevitably, however, if you look at the actual facts of a particular situation, common sense usually prevails. If employers take their time and create a bit of a paper trail that reflects what is actually going on, things usually go in their favour.
 
The utility companies say “Call before you dig”. I tell my employer clients “Call before you fire”.
 
As published in the Hamilton Spectator, June 28, 2010
 
Ed Canning
Ed Canning
P: 905.572.5809
ecanning@rossmcbride.com