Contract law is based on three basic principles. To form a contract, you need (1) an offer, (2) acceptance, and (3) consideration. Without these three principles present you do not have an enforceable contract.

In the employment context, these three principles are usually satisfied at the start of the employment relationship. The offer is usually the employer offering a job through an employment contract. The acceptance is typically the employee signing the employment contract. Finally, consideration at the start of the employment relationship is satisfied with the employee getting a paying job in exchange for their services.

If an employer wants to add any additional terms to an employment contract, such as a new termination provision, they need to give additional consideration to the employee to satisfy the third principle of forming an enforceable employment contract. Additional consideration is required because the employee already has the job and therefore it cannot be reused as the consideration. Often employers satisfy this requirement by offering something beneficial, such as a signing bonus, to the employee if they accept the new terms of the employment contract. If an employer fails to do so, the new contract terms will be deemed unenforceable. Recently, an employer learned this lesson the hard way in Adams v Thinkific Labs Inc., (2024 BCSC 1129).

Adams v Thinkific Labs Inc., (2024 BCSC 1129)

In this case, Madeline Adams applied for and successfully got a position with Thinkific Labs Inc., (Thinkific) a technology company. Ms. Adams was sent an email with an offer of employment that included approximately 60 pages which outlined the conditions and compensation of her employment while also requesting her full legal name and desired start date. Six hours after Ms. Adams accepted the employment agreement, Thinkific sent a “Letter Agreement” that included new terms such as a termination and non-competition provision. Ms. Adams signed that document and returned it to Thinkific. Approximately 20 months later, Thinkific terminated Ms. Adams without alleging cause. Ms. Adams filed a wrongful dismissal claim, seeking six months of pay in lieu notice.

The judge found that the “Letter Agreement,” which includes the termination provision, is unenforceable. The judge explained that Thinkific was obligated to provide additional consideration if it wanted to enforce the “Letter Agreement.” The judge was not swayed by Thinkific’s argument that the letter was sent shortly after Ms. Adam’s signed the first document and the court should not be bound by such technicalities. To determine damages, the judge considered various Bardal factors and found that Ms. Adams was entitled to five months of pay in lieu of notice.

Takeaways from Adams v Thinkific Labs Inc., (2024 BCSC 1129)

Adams v Thinkific Labs Inc. demonstrates that if an employer does not provide their employees with additional consideration for new contract terms, they cannot rely on the said contract terms that they tried to impose. It does not matter how long it has been since the original contract was signed or whether the employee signed the document containing the new employment contract terms.

Adams v Thinkific Labs Inc. is also another case in the still growing set of cases where relatively short-term employees are getting longer notice periods. This is because judges understand that there additional challenges that come when speaking to prospective employers when the most recent job was only held for a short period.

How Suzanne Desrosiers Professional Corporation can help

Our office has employment lawyers who are knowledgeable about the requirement to provide additional consideration when providing an existing employee with a new employment contract. We have helped many employers transition their current employees from a verbal employment contract to a written employment contract. If you are seeking more certainty in your employment relationship by imposing a new employment contract, contact one of our employment lawyers who can help draft an enforceable employment contract that protects your interests. To speak to one of our employment lawyers, please call us at 705-268-6492 or email us at info@sdlawtimmins.com.