In a 2021 decision of the British Columbia Supreme Court, Verigen v Ensemble Travel Ltd., an issue was raised regarding whether an employee handbook was enforceable such that employees would be limited upon the termination of their employment to the statutory minimum notice period as opposed to common law notice (which often far exceeds the statutory minimum).
This case concerned the employment of Ms. Verigen, a 58-year-old employee working within the travel industry. The travel industry was of course severely and detrimentally impacted by the COVID-19 pandemic. After a series of layoffs, Ms. Verigen’s employment was terminated as a consequence of the pandemic. Ms. Verigen then sought damages against her employer, for an amount reflecting a notice period of nine months.
Her employer argued in response that she had agreed to limit her claim to the statutory minimum notice period. They said her original offer of employment was made contingent on her accepting the terms of the employee handbook, which included a termination clause limiting her claim to the statutory minimum.
However, of critical importance to the ultimate decision was the fact the original offer of employment, made by email and accompanied by many other documents, did not actually provide the employee handbook. The employee handbook was not sent to Ms. Verigen. Ms. Verigen was only sent the employee handbook three months after she began working for the employer. When she finally received the document, she did sign it.
Was the Employee Handbook Enforceable?
Ms. Verigen, having finally signed the employee handbook three months following the start of her employment, appears to have agreed to the termination provision contained therein, limiting her entitlements upon termination to the statutory minimum. The key question, then, is whether or not the handbook is enforceable.
Ms. Verigen, in arguing that the handbook was not enforceable, stated the handbook amended her original employment contract without providing fresh consideration. Recall that she only signed the handbook three months after beginning to work for the employer. In considering this argument, the British Columbia Supreme Court referred to an earlier decision, Matijczak v. Homewood Health Inc., wherein Justice Verhoeven said:
“While the law relating to the requirement for consideration in order to support amendments to an agreement may be in a state of flux, it appears that the law in BC continues to require consideration where an employer seeks to impose an amended employment agreement with significant modifications, detrimental to the employee …” (emphasis added)
It is noteworthy that this also appears to be the approach taken by Ontario courts, as mentioned in the Ontario Court of Appeal decision Braiden v. La-Z-Boy Canada Limited.
In applying this reasoning, the British Columbia Supreme Court held that the employee handbook, as signed by Ms. Verigen after already commencing employment, cannot be binding on her insofar as it limits her claim on termination to the statutory minimum because no fresh consideration was provided in support of it.
What employers can take away from this decision is that if they wish to amend or add to an employment agreement, particularly where the amendment is something that is likely detrimental to the employee, they must ensure that proper and sufficient consideration is given to that new agreement, otherwise, they run the risk of it being unenforceable for lack of consideration.
Having found that Ms. Verigen was entitled to common law notice as opposed to the statutory minimum, the Court awarded her five months’ notice.