Home Employment Contracts B.C. court cites lack of consideration in nullifying second contract signed in a day by new hire at Thinkific Labs

B.C. court cites lack of consideration in nullifying second contract signed in a day by new hire at Thinkific Labs

by HR Law Canada

What happens when an employee agrees to an employment contract only to receive a second document hours later with new terms on termination and non-competition? This scenario recently unfolded at Thinkific Labs in British Columbia, where a court ultimately deemed the second document unenforceable.

In August 2021, M.A. received a detailed 60-page email offer from Thinkific Labs, outlining various aspects of her employment, including compensation, benefits, and work schedule. This initial offer did not include terms regarding termination or non-competition. She accepted this offer the following day.

However, later that same day, Thinkific Labs sent her a five-page document titled “Protection of Corporate Interests,” which included new terms regarding termination and non-competition. M.A. signed and returned this document, but the court later found that it introduced significant new burdens without additional consideration, making it unenforceable.

M.A. was employed by Thinkific Labs from September 2021 until her termination in May 2023. She then filed a lawsuit for wrongful dismissal, arguing that the initial email constituted a binding employment contract and that the subsequent document was invalid.

The court’s ruling

The Supreme Court of British Columbia sided with the worker. It said the initial email offer was comprehensive and the subsequent document imposed new, burdensome terms without any new consideration.

“The initial offer and acceptance was a complete agreement between the parties,” the court said, noting that the employer failed to provide adequate consideration for the new terms in the subsequent document.

It awarded her five months’ notice. Based on her $100,000 annual salary, she was entitled to $41,666.67, minus amounts already received and mitigation earnings, resulting in a total of $31,647.44.

Interesting commentary on costs

The court made an interesting comment on costs in this case, noting that the monetary amount recovered by M.A. was “within the monetary jurisdiction of the Small Claims Court.”

It noted that, under the Supreme Court Civil Rules, a plaintiff is not entitled to costs, exclusive of disbursements, unless “the court finds that there was sufficient reason for bringing the proceeding in the Supreme Court and so orders.”

It found no such sufficient reason in the present case. “Based on the plaintiff’s own calculation and ‘best case scenario’ her 6 months’ notice period would have resulted in an award of less than $40,000 — that is less than $5,000 over the monetary jurisdiction of the Small Claims Court,” it said. “The risk of basing the decision of which court to choose based on a best possible outcome must rest with the plaintiff.”

It ordered that costs awarded to M.A. be limited to her “reasonable disbursements as assessed or agreed.”

For more information, see Adams v Thinkific Labs Inc., 2024 BCSC 1129 (CanLII).

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