Second agreement contained 'new and burdensome terms', little reference to original offer
A termination clause and other restrictive agreements that an employer sent to a worker after she accepted an employment offer are unenforceable, a British Columbia court has ruled.
The worker, 31, applied for a job with Thinkific Labs, a developer and operator of a software platform that creates and runs online courses, in 2021. On Aug. 19, Thinkific emailed an offer of employment to her.
The offer of employment included documents outlining the position’s compensation, stock options and vesting, a health spending account, hardware bonus entitlements, a learning and development stipend, a parental leave program, vacation and leave entitlements, work schedule, and information on benefit plans. In addition, the package included information on Thinkific’s policies.
The email also requested the worker’s full legal name and desired start date. Once the company received that information, it would provide her with an official employment contract. There was no reference to a termination clause or non-competition agreement.
Accepted offer of employment
The worker accepted the offer the next day, Aug. 20, providing her legal name and desired start date. Later that day, Thinkific sent a formal letter agreement that included terms around termination of employment, intellectual property, and non-competition as well as additional obligations for the worker. None of the terms had been mentioned in the original employment offer, but this agreement stated that it replaced any “prior oral and written agreements.” The worker signed it and started working for Thinkific on Sept. 20.
The worker occasionally co-ordinated and assigned work to contractors but otherwise had little authority in her role.
On May 23, 2023, the company terminated her employment without cause through a termination letter, providing her with three months’ termination pay according to the termination clause.
The worker sued for wrongful dismissal, claiming six months’ pay in lieu of notice. She argued that her notice wasn’t limited by any termination clause because it wasn’t part of the initial email offer, which constituted a full and binding employment contract. The worker also argued that the additional documents she received altered the initial contract by imposing termination and non-competition terms while not providing new consideration, so it was unenforceable.
Initial offer not a contract: employer
Thinkific countered that the initial email offer was not an employment contract because it didn’t yet have the worker’s full legal name and start date until she signed the second document. Those uncertainties meant the initial offer could not be an official contract, the company said, adding that the worker knew that she wouldn’t be working for it until she signed a formal employment contract.
Thinkific also argued that it would be “cumbersome, awkward, and expensive” to require employers to provide consideration for changes in the terms of employment, because “there’s always promotion.” It also asserted that appropriate common law notice would be 2.5 to three months.
The court found that the only outstanding matters with the original employment offer were the worker’s full legal name and preferred start date, which were “minor administrative matters” considering the extent of the information in the offer email. However, the second email contained new restrictive terms that significantly limited the worker’s right to seek employment in her field if she was fired. These terms were added by Thinkific without the worker’s consent and after she accepted the employment offer, without consideration, the court said.
“Put quite simply, the overall tone and impression of the second document seems to be one of ‘We told you about all of the good stuff, but now that you are on board, here are some additional terms that we are imposing on you,’” said the court.
Termination clause unenforceable
The court noted that the formal letter agreement not only imposed “new and burdensome terms” on the worker, but it was completely different from the initial offer and didn’t refer to any of the benefits included in the original offer other than salary and stock options. If the second document was intended to replace the prior agreement, then Thinkific wouldn’t be bound to provide any of the benefits it included in the original offer that was “intended to induce the [worker] to accept,” the court said.
The court determined that the initial employment offer and the worker’s acceptance of it was a complete agreement between the parties. Thinkific failed to establish that the worker received adequate consideration for signing the formal letter agreement sent to her after she accepted the offer, making it unenforceable. As a result, the worker was entitled to common law reasonable notice, said the court.
The court considered that the worker was young and her career was in its early stages, she was qualified to continue with similar employment, there were many available jobs in the technology industry, she wasn’t in a managerial position, and she was employed by Thinkific for 20 months. The worker was entitled to five months’ notice.
Minus the three weeks’ pay already paid to the worker and the workers’ mitigation earnings from a temporary job during the notice period, Thinkific was ordered to pay the worker $31,647.44.
See Adams v. Thinkific Labs Inc., 2024 BCSC 1129.
