Avoiding Costly Mistakes - Poorly Worded Contracts Can Prove Costly

The B.C. Supreme Court's decision in Alsip v. Top Rollshutters Inc. (c.o.b. Talius), 2015 BCSC 1166 serves as a cautionary tale to employers when they are preparing employment contracts. Ambiguity in employment agreements is likely to be interpreted in favour of employees and can prove very costly, particularly where the contract in question is found to be a fixed term employment agreement.

In 2012 the parties in Alsip negotiated the plaintiff's potential employment as director of sales. Following an initial offer, the parties modified a few terms of the contract and added a term that the agreement was a three year employment contract. The plaintiff signed the modified offer and commenced employment with the defendant. Approximately nine months into the three year fixed term, the plaintiff was terminated without cause and provided with two weeks' salary in lieu of notice. The plaintiff declined an offer of a further six weeks salary in exchange for his signature on a release of further claims. He obtained replacement employment at a lower salary and commenced legal action against the employer.

The plaintiff relied on case law which holds that when an employee is dismissed without cause prior to the end of a fixed term contract the employee is entitled to payment of the balance of the fixed term contract less the amount he/she earned from replacement employment.

The employer argued that the reference in the offer of employment to three years was intended to indicate only that the plaintiff's employment would be for a maximum of three years but that the employer retained the ability to terminate the plaintiff with reasonable notice.

The Court did not accept the employer's argument noting that this argument was not supported by the wording of the employment agreement which had been drafted by the employer: "if the [employer] had intended to include a provision to allow termination on notice, it could...