There was 'no physically signed employment agreement,' argues company
The Civil Resolution Tribunal of British Columbia recently dealt with a case involving an employment contract dispute between a worker and an employer. The dispute centred around a rescinded job offer and the subsequent fallout, highlighting important considerations for both employers and job seekers in the hiring process.
In this case, the worker claimed $5,000 in damages after the employer withdrew a job offer shortly before the agreed start date. His claim included compensation for lost wages, emotional distress, and punitive damages.
He argued that the employer's actions had put him in a precarious financial position, caused significant stress, and forced him to cancel personal plans. The worker also contended that he had already given notice to his previous employer when the offer was rescinded, complicating his employment situation.
Employer withdraws job offer
On March 31, 2023, the employer emailed the worker with an employment offer for a position paying $55,000 annually, with semi-monthly net pay of "around $1,815". The employer also mentioned potential raises and commission structures after the worker's probationary period ended.
A formal offer letter was sent on April 3, 2023, reiterating the $55,000 annual salary and proposing a start date of April 24. The worker accepted the offer on April 4, requesting a May start date. Both parties agreed on a May 1, 2023 start date.
However, on April 17, 2023, the employer contacted the worker to rescind the employment offer. The employer proposed that the worker consider working as an independent contractor instead, but the worker reportedly ended the phone call.
Contract formation and breach
The tribunal found that despite the absence of a physically signed employment agreement, a valid and binding contract existed between the parties.
This determination was based on the presence of an offer, acceptance, and consideration—the key elements of a legally binding contract.
The tribunal also concluded that the employer had repudiated the contract by rescinding the employment offer. The worker's rejection of the employer's subsequent offer of a contract position was seen as an acceptance of this repudiation, effectively terminating the contract.
"Where an innocent party accepts the repudiation, this ends the contract, both parties are relieved of their obligations under it, and the innocent party may sue for damages immediately," the tribunal noted, citing legal precedent.
Assessing damages and reasonable notice
When it came to damages, the tribunal applied the principle of reasonable notice. While the worker claimed a month's salary, the tribunal determined that a four-week notice period was reasonable, given the circumstances.
The tribunal considered factors such as "the character and length of the employment, [the worker's] age, and the availability of similar employment, having regard to [the worker's] experience, training and qualifications."
Based on the limited information provided, including that the worker had previously worked overseas for 14 years and had been looking for employment for 8 months before securing this position, the tribunal concluded that the position with the employer was relatively entry-level.
However, the tribunal made an important distinction:
"Of the 4 weeks' reasonable notice, running from April 17 to May 14, [the worker] would not have been receiving a salary from [the employer] until May 1 in any event."
This led to the conclusion that the worker was entitled to damages equal to two weeks' pay, covering the period from May 1 to May 14.
Employer’s arguments against damages
The tribunal rejected the employer's argument that the worker failed to mitigate damages by refusing the offer of contract work or the later re-offer of employment. It said that the burden of proving a failure to mitigate lies with the employer.
In considering whether a reasonable person would accept such an opportunity, the tribunal noted:
"Factors to consider include, among other things, whether the salary is the same, the working conditions are not substantially different, the history and nature of the employment, and whether the offer of re-employment was made when the person was still employed or after they already left."
The tribunal found that the employer had not proven its initial offer for contract work was reasonable, as it lacked details about terms, salary, and other important factors.
Additionally, the tribunal noted that the employer's later offer to abide by the initial employment agreement was made only after the worker threatened legal action and after the initial start date had passed.
Worker’s alleged emotional distress
The tribunal dismissed the worker's claims for emotional distress and punitive damages due to lack of evidence. The worker had claimed that the employer's actions put him in a precarious financial position, left him discouraged, and forced him to cancel a college reunion trip due to financial constraints.
Regarding emotional distress, the tribunal stated:
"Employees may be entitled to damages for mental distress when their employer terminated their employment in bad faith. However, there must be some evidentiary basis for awarding damages for mental distress."
As for punitive damages, the tribunal emphasised their exceptional nature:
"Punitive damages are meant to punish a 'morally culpable' [employer] and are usually only granted for malicious and outrageous acts."
The tribunal found that while the employer's breach caused stress to the worker, it did not rise to the level of malicious or reprehensible conduct necessary for punitive damages.
In its conclusion, the tribunal ordered the employer to pay the worker $1,922.40, which included $1,815 in damages and $107.40 in pre-judgment interest.
This decision underscores the importance of honouring employment agreements and the potential costs of rescinding job offers.
It also highlights the need for clear communication throughout the hiring process and the considerations that tribunals may take into account when assessing damages in such cases.
