Verbal Agreements – Running the Risk of Invalidity

Summary of Case

In Fasullo v. Investments Hardware Ltd. the Plaintiff, Mr. Anthony Fasullo, brought an action against the Defendant, his former employer, Investment Hardware Ltd., for wrongful dismissal seeking common law notice in addition to his Employment Standards Act, 2000 statutory minimums. The Defendant alleged that the Plaintiff was not entitled to any additional notice given the terms of both a verbal agreement entered into prior to the Plaintiff beginning his employment with the Defendant, and a written employment agreement signed by the Plaintiff after he began his employment, which restricted the Plaintiff’s notice upon termination without cause to his statutory minimums. The Plaintiff claimed that the verbal agreement entered into with the Defendant did not contain a restriction on his notice entitlement, and that the written agreement was null and void given the Defendant’s failure to provide the Plaintiff with consideration for signing it after he began his employment. After hearing evidence from both parties, the Ontario Superior Court of Justice found that the verbal agreement did not include a restriction on the Plaintiff’s notice entitlements, and that the termination clause in the written agreement was null and void given the Defendant’s failure to provide fresh consideration. As a result, the Court awarded the Plaintiff $23,188 in damages for wrongful dismissal.

Impact of Decision on Employee

The above decision demonstrates the difficulty that employers can have in establishing an employee’s agreement to a restriction on their notice entitlements upon termination without cause. If the terms of employment are verbal, a Court does not have any document to rely upon in determining the validity of such terms and will rely upon the testimony provided at Trial. Additionally, if an employee is provided with a written agreement after beginning their employment which attempts to introduce new terms to their employment, the agreement may not be valid unless fresh consideration is provided in return for the employee’s agreement. When provided with a written agreement, whether it is before or after beginning work, an employee should seek the advice of an Employment Lawyer in regards to the validity of the written agreement and how the terms of the agreement may impact on them during and after their employment.

Impact of Decision on Employer

The above decision demonstrates that employers should ensure that any terms of employment that are to be binding upon an employee, such as a termination clause restricting notice upon termination without cause, are put in writing and provided to the employee prior to their start date. Additionally, if an employer intends on implementing such a term after an employee has begun working, the employer should ensure that an adequate amount of fresh consideration is provided to the employee in return for their agreement to the new term. Employers should seek the assistance of an Employment Lawyer in the above process.

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