The Ontario Court of Appeal has overturned a Superior Court decision that allowed an employee to receive his stock option awards throughout his 24 months of reasonable notice on the grounds that the employer had failed to provide adequate notice of termination.
“The decision gives important guidance to employers about what will be appropriate in terms of drawing employees’ attention to termination provisions,” says Tamara Ticoll, counsel in Stikeman Elliott LLP’s employment and labour group. “But it does not change the premise that contractual termination provisions need to be clear and unambiguous.”
Fransic Battiston had 23 years of service when Microsoft Canada Inc. terminated him without cause in 2018. He had been receiving stock awards in addition to his base salary and benefits. But the stock award agreements provided that any unvested awards wouldn’t vest if employment was terminated for any reasons.
In his wrongful dismissal suit, Battiston argued that he hadn’t received adequate notice of the termination provisions relating to the stock awards. He testified that he hadn’t read the lengthy stock agreements and that the company didn’t bring the termination provisions to his attention, making them unenforceable. The trial judge agreed. Although the provisions were unambiguous, they were “harsh” and “oppressive” and the employer had failed to sufficiently draw them to Battiston’s attention.
The Court of Appeal, however, ruled that the emails by which the company had notified employees of the stock awards constituted sufficient notice. They directed employees to complete the online acceptance process, which included employees’ acknowledgments that they had read and understood the stock award agreement and the underlying plan documents.
Failure to read and accept the award and the plan documents, the email concluded, “may prevent you from receiving shares of this stock award in the future.” For 16 years, noted the Court of Appeal, Battiston had clicked a box confirming that he had read, understood and accepted the stock award agreement. Despite doing so, he repeatedly made conscious decisions not to read the agreement. “By misrepresenting his assent to [Microsoft], he put himself in a better position than an employee who did not misrepresent, thereby taking advantage of his own wrong,” stated the court.
The upshot was that the trial judge was wrong in finding that Battiston didn’t receive proper notice. According to Ticoll, the decision confirms that “robust” online acceptance procedures will constitute sufficient notice of termination provisions. “As the court pointed out, the employer notified the employee by email, drew his attention to the acceptance process, advised the employee to read and understand the employment agreement and the plan documents and made it clear that if he didn’t do so he might not receive shares going forward.”
But Andrew Monkhouse of Monkhouse Law Employment Lawyers, who represented Battiston, believes the decision could have dangerous consequences. “The takeaway is that companies may be allowed to hide harsh and onerous terms in a contract and rely on a click to enforce them. That puts the onus on people — even vulnerable people — to read long, complicated contracts to protect themselves against oppressive provisions.”