'If you send a bare-bones offer letter and the employee accepts, you're stuck with that,' says lawyer offering tips for HR
A recent ruling by the Supreme Court of British Columbia highlights the legal pitfalls employers can face when employment offer letters are not comprehensive.
In Adams v. Thinkific Labs Inc., Justice Caldwell ruled in favor of the plaintiff, Madeline Adams, after her employer failed to provide a termination clause in the initial employment offer.
The decision serves as a cautionary tale for employers about the necessity for clear and comprehensive terms from the outset.
“The court said, basically, the effect on the employee is irrelevant,” says Andrea Raso, partner at Clark Wilson in Vancouver. “If you send a bare-bones offer letter and the employee accepts, you're stuck with that.”
Adams received an email employment offer from Thinkific on August 19, 2021 that detailed her compensation, benefits, and entitlements but omitted any termination or non-competition clauses.
She accepted the offer the next morning, and later that afternoon, Thinkific emailed a second “Protection of Corporate Interests” document, outlining these clauses. Adams signed the new document and started working on September 20, 2021, but was terminated on May 23, 2023.
She claimed wrongful dismissal, arguing that the initial email constituted the binding employment agreement. The court agreed with her, ruling that the second document was unenforceable, regardless of how quickly it had been sent after the initial offer.
“Up until this point in time, we've never seen a case where there was such a quick turnaround,” Raso says.
“That's where employers usually thought, ‘Well, we have an argument, even though we're giving them a second employment contract, that nothing really happened in that period of time that caused them any damages. So with such a short turnaround time here, there's no longer that argument.”
“It's a very common mistake,” Raso says, explaining that employers often assume they can add new terms to employment contracts before a start date without legal consequence. However, she points out that while that belief may have once held water, this latest decision in B.C. shows a more technical – and higher – bar to clear.
“Employers should know that the initial offer letter that they send is going to be deemed to be the contract of employment,” says Raso.
“I'm sure that this one went to trial because the employer thought, ‘Well, you know, it was such a short turnaround time between the original offer letter and then the more fulsome employment contract.’”
In this case, Thinkific Labs failed to offer any new benefits or incentives when it introduced the termination and non-competition clauses. The court's decision aligns with previous rulings on altering employment contracts: that continuing employment alone is not enough and there must be a tangible benefit to justify altering the terms of the agreement.
Raso advises that employers plan ahead and include all necessary clauses, such as termination provisions, in the initial offer; and if the email has been sent but a signing bonus isn’t in the budget – wait. It’s a common occurrence, Raso says, but it’s best to wait before making the contract more fulsome, and instead offering it with the offer of a bonus or promotion as the fresh consideration.
“It’s really, really important to take that pause before you make the offer, and make sure that offer includes all terms and conditions of employment.”
A central lesson from this case is the importance of including termination provisions in employment offers, Raso says. Without these clauses, employers may face expensive common law notice periods if they later terminate an employee. As she notes, employers must be proactive in including these details upfront:
“I cannot emphasize this enough, there isn't a single employee — I don't care what their job is, in the province of British Columbia — that shouldn't have an employment contract in place,” says Raso, adding that this can also mean an offer letter, as the terms are interchangeable.
“As soon as the employee signs off on the offer, it becomes a contract. If an employer wants to have certainty at the time they terminate an employee as to what the employee is going to be entitled to, and to limit those big common-law notice periods, it's essential that they have that termination provision in place.”
