In the decision of Battiston v. Microsoft Canada Inc., 2020 ONSC 4286, the Ontario Superior Court of Justice ruled that the termination provisions in the Stock Award Agreement were unenforceable because the employer failed to draw these provisions to the employee’s attention. Consequently, the Court awarded the employee damages in lieu of stock awards that would vest during the reasonable notice period.
Mr. Battiston worked with the Defendant for nearly twenty-three (23) years before he was terminated without cause. Mr. Battiston Apart from his base salary, Mr. Battistion received cash bonus and stock awards that collectively accounted for approximately thirty (30) percent of his compensation.
For the stock awards, Mr. Battiston received an email link that directed him to a website to complete an online acceptance process. Mr. Battiston was required to click acceptance of the stock plan, which indicates that he had read, understood and accepted the Stock Award Agreement and the accompanying documents. Mr. Battistion confirmed that he received such emails each year. He simply clicked acceptance without reading the Agreement given the length of it.
The employer took a position that the termination provisions in the Stock Awards agreement were enforceable, and thus he was not entitled to the awarded but unvested stock awards upon his termination. In response, Mr. Battiston sued his employer for wrongful dismissal and claimed that he was entitled to the damages arising from the failure to vest shares over the reasonable notice period.
The Court noted that there is no dispute that the stock awards were an integral part of Mr. Battiston’s compensation package, thus triggering a common law entitlement to damages in lieu of stock awards.
The Court determined that Stock Award Agreement unambiguously displaces Mr. Battiston’s right to unvested stock awards upon termination without cause. However, the termination provisions were unenforceable as they were not drawn to Mr. Battiston’s attention by his employer. Relying upon the contract law principle and a number of case law, the Court noted that “reasonable measures must be taken to draw harsh and oppressive terms to the attention of the other party” (para. 36). The termination provisions in the Agreement were harsh and oppressive. The email communication that accompanied the notice of the stock award did not amount to reasonable measures to draw the termination provisions to Mr. Battiston’s attention. Therefore, the termination provisions of the Stock Award Agreement were unenforceable. Mr. Battiston was entitled to the damages in lieu of stock awards that would vest over the reasonable notice period.
This case serves as a reminder that employers should adopt reasonable measures to highlight harsh and oppressive terms in the employment contract and bring them to the employees’ attention. It appears that by sending employees an email notification where a click of acceptance is required, employers are doing far from enough. Employers could summarize those terms in a memorandum or in an email that attaches the agreement and require employees to sign an acknowledgment letter in which the employee acknowledges having received and read the terms in the agreement. It is advisable for employers to consult a lawyer when drafting termination provisions in the employment contract.
It is also strongly recommended for employees to consult an employment lawyer before signing any settlement documents when they are terminated. If you are experiencing any employment law issues in regard to your termination, Top Toronto employment lawyer, Stacey ball can help you determine your legal options. Please call us at 416-921-7997, extension 227.