Contract terms are binding

| Thursday, September 20th, 2007 | No Comments »

Not only had Madhu Suri lost his job, he was told that his hefty severance agreement he thought he had negotiated was no longer an option. Instead of simply ignoring his legal rights, Suri got a lawyer.

Suri had been a senior business manager for a number of companies when he met Riyaz Devji of North American Tea and Coffee Inc. Believing his future with his current employer was limited, Suri seemed to be the perfect fit for Devji’s vacant general manager position. Suri joined Devji’s company after agreeing to a number of employment provisions. Among the terms, was Suri’s right to receive severance pay. If fired without cause, Suri would receive up to 18 months salary.

After a short tenure with NATCO, Suri was terminated without cause. Devji argued that on or around the time of termination, severance was discussed and both parties agreed to a lesser package of only five months pay. Five months later, Suri sent an email to Devji requesting an extension of "financial and medical support". NATCO refused to pay, standing firm on the five month package agreement.

At trial, a B.C. court rejected NATCO’s argument that Suri had agreed to a lesser amount. Justice Hinkson noted that it simply made no sense that Suri would agree to anything less than what he initially bargained for. Although troubled by the more diplomatic than necessary language used in Suri’s email, the court found that it was a result of his non-confrontational personality and the stance that Devji had taken.

Employers and employees can minimize pay-based disputes by following these principles:

  • Replace a simple handshake by committing agreements to writing.
  • Ensure those agreements, especially contracts and releases, are legally reviewed prior to names being signed.
  • Take and then preserve notes of important conversations and events.

You can read the article in full here.

Daniel A. Lublin is a Toronto Employment Lawyer specializing in the law of wrongful dismissal.  He can be reached at dan@toronto-employmentlawyer.com or visit www.toronto-employmentlawyer.com

Leave a Reply