In some instances, a fixed-term employment contract may not be enforceable. This issue was addressed by the Ontario Superior Court’s recent ruling in Tossanian v. Cynphany Diamonds Inc. In this case, the court ruled that the fixed term guarantee did not form part of the original deal between the parties and excluded that part of the contract. However, the plaintiff still received the wrongful dismissal damages, but they were lower than what the plaintiff would have received if the fixed-term contract had been enforceable.

Razmig Tossanian, the plaintiff, had moved from Vancouver, B.C. for an employment position at Cynphany Diamonds, a company based in Toronto. As cited during the trial decision, Tossanian was seeking a chance to bring his family to Toronto. He accepted the email offer of employment after lengthy negotiations. The email outlined various issues that had been agreed upon but did not mention the issue of a five-year fixed term. Tasmanian didn’t respond in writing but pointed out that he had called the company’s owner and confirmed the five-year fixed employment term.

In late August 2011, the plaintiff moved to Vancouver and started working without any additional written agreement. The parties signed an employment contract several weeks later, but the document didn’t mention the five-year fixed-term employment. Another document was prepared for mortgage purposes; this document stated that the employee was on a five-year employment term. Another document prepared for mortgage confirmation also referenced the five years. When the bank called for confirmation, the owner of the company confirmed the five-year term.

After working for around eight months for the defendant, Tossanian began having discussions with another potential employer. The plaintiff shared this information with a co-worker and stated that he had another guaranteed job if Cynphany Diamonds fired him. The owner of the company was very upset when he found out about this. There was an intense debate regarding whether Tossanian resigned or was fired, but it was evident that he was fired.

The plaintiff went to the potential employer after dismissal but did not get the job opportunity he was pursuing. He had to go back to Vancouver to his former employer at much lower pay. The plaintiff sued the company for wrongful dismissal. The plaintiff pointed out that he had made great losses, but the court didn’t seem convinced by the plaintiff’s evidence. The court maintained that the initial email between the parties did not reference the five-year employment period.

However, the court still maintained that the employee had been wrongly dismissed. The judge awarded the plaintiff a two-month notice period amounting to slightly over $13,500. The ruling, in this case, is a reminder of the importance of involving an employment lawyer when signing employment contracts. It is also a reminder that:

  • For a contract to be enforceable, both parties should agree upon and contain all the terms. Side agreements, oral representations, and confirmation of employment letters may not be enforceable.
  • Unless there is a plausible reason to do so, many courts will be reluctant to award significant damages if an employee finds alternative employment after dismissal.
  • Whether or not a witness had a favorable impression on the court matters, the consequences may be disastrous if the court doubts the witness’s honesty and character.

The presence of an employment lawyer while signing contracts makes all the difference.