Unsigned employment contracts can be enforceable in some circumstances

A recent BC Supreme Court decision demonstrates that an employment contract does not necessarily need to be signed by the employee in order to be enforceable as long as there is clear evidence that the employee agreed to the terms in the contract.

Facts

In Asgari Sereshk v. Peter Kiewit Sons ULC, 2021 BCSC 2570, the plaintiff, Mr. Sereshk worked for the defendant, Peter Kiewit Sons ULC (the “Company”) as a project engineer from 2008 to 2015. He subsequently left to work for a competitor. In 2019, the Company again offered Mr. Sereshk employment as a project manager. The proposed contract had a clause which allowed the Company to terminate Mr. Sereshk’s employment “for any reason, without cause or serious reason” upon giving the minimum amount of advance notice, or pay in lieu of notice, provided for under the applicable provincial employment/labour standards legislation.

Mr. Sereshk rejected the first offer and negotiated a second offer that incorporated several of the changes that he requested, including an increased salary and signing bonus, removal of the probationary period, and restriction of the Company’s ability to reassign him to work outside Canada. However the Company explicitly refused to make any changes to the termination provision and advised Mr. Sereshk that it was non-negotiable. Mr. Sereshk never signed the agreement and began working in November 2019. Mr. Sereshk was terminated without cause 14 months later with 2 weeks’ notice (i.e. his minimum entitlement under BC employment standards legislation).

Mr. Sereshk brought an action for wrongful dismissal, claiming that the unsigned employment agreement was not enforceable and that he was entitled reasonable notice at common law.

Analysis/Decision

The Court held that the contract was enforceable, even though it was not signed by Mr. Sereshk, and that the termination provision was valid to limit Mr. Sereshk’s entitlement to two weeks’ notice.

The Court found that Mr. Sereshk was clearly aware that the termination clause was non-negotiable and knew that the clause remained part of the employment agreement when he began working. The Court noted that the clause was clear on its face and not void for uncertainty and further that employment contracts could incorporate by reference the minimum notice periods in employment standards legislation. The Court found that general reference to the “applicable” provincial legislation did not render the clause impermissibly vague. The employment contract specifically permitted the deployment of Mr. Sereshk across Canada and the contract would have required overly complicated language were it to refer to every provincial statute that addressed the issue of notice.

Implications for employers

The Court’s decision is interesting for employers. It implies that employees do not necessarily need to sign an employment contract in order for it to be valid as long as the evidence clearly shows the employee has accepted the terms of the contract. In this case, the fact that the employee began working for the employer after it had been communicated to him that the termination provision in the contract was non-negotiable was deemed to be sufficient evidence of his acceptance. Nonetheless, in our view, it is still best practice for employers to make sure that employees sign their employment contract before their start date.

The decision also confirms that for employers operating in several provinces, a termination clause that refers to the employee being entitled to the minimum amount of notice under the “applicable employment standards legislation” may be sufficient to displace the employee’s entitlement to reasonable notice at common law (if the other parts of the contract and clause are enforceable). 

Looking for more information about employment agreements? Contact Neal Parker at [email protected] or anyone else listed on our authors page.