It's a situation that could give an HR leaders cold chills
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If you make a mistake in an employment contract, do you legally have to honour that mistake? It’s a situation that could give an HR leader cold chills. You’ve hired a great new employee, they’ve signed on the dotted line – and then you suddenly realize you made an error in their benefits plan or salary or annual leave allowance.
What exactly are you obligated to do?
“It really depends on what the mistake is, the overall significance of it, and when the error was discovered,” explained Maria Gergin, senior associate at Borden Ladner Gervais LLP and speaker at our Employment Law Masterclass.
“For instance, if a contract states an employee would receive five weeks of annual leave but in reality they should only be getting four, you should assess what the insinuation was when they agreed to take the job.”
If the employer and their manager sat down when signing the contact and both parties were aware that the annual leave should be four, and this is clearly a typo, it shouldn’t be an issue.
“I would advise that the employer sit down with the worker as soon as possible and explain the mistake in order that both parties can commit it to writing,” added Gergin.
“A fresh copy should then be provided to the employee, having been signed by both parties. I would say if this is still in the context of offering an employee a role, and there’s no disagreement between the two over the amount of annual leave, then that’s rather straight forward.”
However, if you’re looking at a situation where an error is discovered a year down the road and there are some questions as to whether both parties agreed on the terms, the legal principle changes.
“If an employer is going to be making any changes to a legal contract, once the employee has commenced working, they must offer ‘fresh consideration’ to make that change.”
‘Fresh consideration’ means the employee has to get something in return for acquiescing to the alteration.
“This is the reason we always advise an employer who wants new hires to agree to additional requests, separate from their basic contract, that they should detail them in the employment letter. All conditions need to be agreed upon at the start, because if the employer doesn’t do this the employee can validly argue that they agreed to the role purely because of what was in their original contract.”
To hear more on the hottest employment law issues, make sure you sign up to our upcoming Employment Law Masterclass in Toronto.