Though it may surprise some, a lot of employment agreements are made orally. Sometimes it works out well. However, by creating an oral agreement, you put yourself in potential legal liability. With an oral contract, there will be no clear terms of employment. Further, you would be subject to common law notice if you need to terminate the employee. Simply put, if you create an oral employment agreement, you are at the mercy of the court if things go wrong.
It is also important to create written employment policies and then deliver them to your employees. You need to make sure that they acknowledge receipt and accept that it forms part of their employment agreement. Failure to do so will result in the policies being ineffective. The time, effort, and cost of creating the policies will be lost. It becomes an expensive piece of paper in your office.
The importance of having written employment contracts and having workplace policies that are circulated to all employees is obvious even to a semi-competent HR team. Boyer v Callidus (2024 ONSC 20) serves as an important reminder of this obligation, even when it is easier to look the other way.
Boyer v Callidus (2024 ONSC 20)
In Boyer v Callidus, Craig Boyer worked for Callidus Capital Corporation (“Callidus”). He made an oral agreement to work as one of Callidus’ vice presidents, a position that has a net pay of over $200,000, significant bonuses, and a stock option plan as part of the compensation. Callidus did have written workplace policies. However, they did not circulate the policies well, resulting in Mr. Boyer not being aware of most of them. The policies that Mr. Boyer did see were often unclear and required Mr. Boyer to ask for clarification from his employer, creating new elements to his oral employment agreement. Eventually, Mr. Boyer decided to retire. Among other things, Mr. Boyer asked for a payout of his unused banked vacation days, payment of his deferred bonuses, and payment in lieu of getting the stock option plan to which he was entitled to. Callidus claimed that it had a no carry over vacation policy, a policy on the deferred bonus plan, and a policy on when the stocks vest.
The court ruled that Mr. Boyer was entitled to his banked vacation days. The court found that Callidus failed to provide evidence that it had a use it or lose it policy for paid vacation days. Even if it did have such a policy, the court found that Mr. Boyer was not made aware of such a policy and therefore cannot be bound by it. The court also found that Mr. Boyer never received a copy of the deferred bonus policy. As such, Callidus could not use the deferred bonus policy’s requirement to still be employed with Callidus as a condition to get the earned but deferred bonus. The court found that Callidus had a policy on stock options that they gave to Mr. Boyer. However, the policy was not clear in all situations when the stocks would vest. At the time of receiving the policy, Mr. Boyer asked his superior if the stock options would vest upon retirement. Since the superior said yes, the court found that became part of Mr. Boyer’s oral contract and thus entitled him to his stocks upon retirement. In conclusion, the court ruled that Mr. Boyer was entitled to $93,076.92 for the banked vacation days, $525,000 plus 3% interest for the deferred bonuses, and $1,213,856.98 for damages for the value of the lost stock options.
Takeaways from the case
This may be obvious for those with employment law or HR experience, but do not have an oral employment agreement. This case shows that you can end up making new clauses to an oral employment agreement by the employee simply asking the employer a question about the job. The lack of clarity in an oral employment agreement allows a lot to be interpreted, which, as this case shows, can be costly.
This case also shows the importance of drafting clear policies and circulating them to all of your employees with the understanding that they will govern the employment relationship. This case shows how the failure to circulate the employment policy makes it useless. Employees need to be aware of the rules that they are bound to.
How Suzanne Desrosiers Professional Corporation can help
At Suzanne Desrosiers Professional Corporation we have employment lawyers who have experience with drafting both employment contracts and employment policies and can guide you with implementing them. Avoid liability with any oral contracts or policies and get our employment lawyers to draft the relevant legal documents to your wishes. To contact one of our employment lawyers, please call us at 705-268-6492 or email us at info@sdlawtimmins.com.