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Buaron v. AcuityAds Inc., 2015 ONSC 5774 is a decision which adds to the line of jurisprudence pertaining to termination clause enforceability. The decision is of importance as it establishes that an employer who provides a potential new hire with a casual offer letter, followed by a more concrete employment contract, will not always be able to rely upon the terms within the employment contract.
Joseph Buaron (“Buaron”) was employed by AcuityAds Inc. (“AcuityAds”), a technology company which focuses on marketing innovation and advertising. He was recruited from another company which had the same area of specialization after 7.5 years with that company, and hired by AcuityAds as a Senior System Administrator, the same position he had held at his previous job. Following an interview, AcuityAds provided Buaron with an offer letter, sent via email and Buaron accepted. However, following the offer letter being provided and accepted, AcuityAds provided Buaron with a “Comprehensive Agreement” setting out the details of his employment, including termination, in further detail. Buaron signed the agreement as he had already resigned from his former company and did not want to upset his new employer. Buaron was terminated a mere nine months into his position with AcuityAds, and sued for wrongful dismissal. The matter proceeded to a summary judgment hearing.
The court was faced with the following issues:
1. Was the termination clause in Buaron’s employment contract enforceable?
2. What was the appropriate notice period?
3. Had Buaron been induced into his position?
4. Was Buaron entitled to punitive damages?
Enforce-ability of Clause
The Defendant argued that Buaron was limited in terms of his entitlement of a reasonable notice period for the termination of his employment in consideration of the fact that the “Comprehensive Agreement” provided following the Offer Letter contained a termination clause. However, the learned Justice K. Hood disagreed, finding that the Offer Letter had actually been the contract and that the Comprehensive Agreement, provided after and without adequate consideration, was unenforceable in accordance with the common law (Francis v. Canadian Imperial Bank of Commerce 2004 CanLII 44783 (Ont. C.A.) – a case which set out that an employer is required to provide “consideration”- being an exchange of something either monetary or otherwise, in order for a change to the original contract to be found valid and enforceable at law).
The Plaintiff, a 34 year-old employee in the field of technology with 9 months of service, asked for 5.5 months of notice. AcuityAds argued for 2-3 months. After looking at wide range of notice awards submitted for consideration by the parties, and in consideration of the fact that the Plaintiff mitigated his damages just 22 weeks following his termination, the Court determined that 4 months was a reasonable notice period for Buaron.
The court also considered whether AcuityAds’ recruitment of Buaron constituted inducement in determining the reasonable notice period. However, the argument advanced by the Plaintiff was not accepted, given that the Plaintiff negotiated the terms of his employment with AcuityAds, the fact that he quickly acted upon the opportunity for employment with AcuityAds, as well as the fact that the evidence of the alleged inducement was lacking.
The Plaintiff plead that he was entitled to punitive damages for the Defendant’s actions in wiping his cell phone following the termination of his employment. The Plaintiff further plead that the reason for a damages award was the personal stress and anxiety which had allegedly resulted from the Defendant’s actions in performing the wipe. While K. Hood J. did note that such actions were questionable, they were ultimately not malicious and outrageous enough to warrant a punitive damages award.
Termination clauses can be found unenforceable on multiple bases, and employer actions before and following the signing of an employment contract can affect the enforceability of a termination clause. If you have any questions about your employment situation or your rights and obligations in employment law, contact Monkhouse Law today for a free consultation.