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Handbook containing termination clause not binding

termination clause

In Cheong v Grand Pacific Travel & Trade, (2016 BCSC 1321), Justice Warren held that an Employee Handbook containing an ESA only termination provision was unenforceable for the following reasons:

1) The handbook came into existence after the Plaintiff was hired and no consideration was provided for her giving up her common law right to reasonable notice upon termination.

2) The handbook did not state that it intended to be a contractual agreement.

3) As the handbook provided that the Employer could unilaterally “repeal, amend, modify add to or delete from the handbook at any time” the Court found that this is inconsistent with a contract as “It almost goes without saying that a contract cannot be unilaterally varied.”

4) Many of the provisions refer to things that the Company “may” provide this or that but is not required to do so. The Court commented that “Such discretionary language is not reflective of a contract document but, rather, a document intended for informational purposes only.”

5) There was no manifest acceptance by the employee, i.e. her signature acknowledging that she was bound by the terms of the handbook. Nor did her silence constitute acceptance.

I find  the third reason the most interesting as almost every employee handbook I have ever read contains such a boilerplate clause. Moreover, some handbooks, especially US based ones, contain an express clause stating that “nothing in this handbook is intended to create a contractual relationship.” This is often mixed in with a clause reiterating the American “at will” concept.

It is now open to counsel to argue that these seemingly boilerplate clauses have the effect of making the booklet unenforceable at least in regards to the enforceability of the termination clause.

There is simply no substitute for  clearly setting out in the employment agreement at the time of hiring the termination provisions that the parties agree on. Why employers continue to try to limit their termination obligations in anything other than the proper way always amazes me.

Barry B. Fisher LL.B.

Barry B. Fisher, LL.B., is a mediator and arbitrator of both employment and labour relations matters. He offers three forms of ADR based on clients’ needs: Mediation, Arbitration and Med/Arb. Barry is from the evaluative school of mediation and brings his over 30 years' experience as an employment lawyer and legal author to the dispute. In addition to his knowledge of the legal issues involved in these disputes, he also has a deep understanding of the psychological factors that motivate both employees and employers. By combining these two skills, Barry is able to achieve a settlement rate of over 80% of the disputes that he mediates.

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