Employer bound by payments outlined in termination letter

Employer tried to change notice period after it realized it made a mistake in the termination letter

An Ontario company must stick to the severance discussed in its original termination letter to an employee and can’t claim it made a mistake on the amount it offered once the employee agreed to it, the Ontario Superior Court of Justice has ruled.

Kelly Stowar was an executive assistant at Telehop Communications, a telecommunications company in Toronto. On Nov. 28, 2008, exactly three years after she was hired, Stowar was called into a meeting with the company’s human resources manager and told she was being dismissed. She was given a letter that stated it represented formal notice her employment was terminated effective immediately. The letter also stated she would be given five months’ pay in lieu of notice “as per our obligation under the Employment Standards Act of Ontario” and her benefits would continue for the notice period.

The letter said she would receive all payments within two weeks and Stowar was asked to signed the letter if satisfied with the arrangement. Stowar signed the letter.

A few days later, Stowar returned to Telehop’s office to return some company property she had. She was called into a meeting and Telehop told her it had made a mistake on the pay in lieu of notice. The company said she would actually only receive three weeks’ termination pay instead of the five months. The company asked Stowar to sign a release but she refused.

Telehop claimed the original letter was just a notice of termination outlining its obligations and Stowar’s signature was an acknowledgement she received it, not an acceptance of an offer. However, the court found there was no reason for Stowar to interpret the letter as anything other than a final offer terminating employment and ending any further obligations to her. The request for a release after Telehop revised the amount of termination pay confirmed it intended for its obligations to end with Stowar’s acceptance of the original terms.

“(The letter) represented not only the fulfillment of the employer’s statutory obligations, but also its effort to conclude its common law responsibility to provide reasonable notice or pay in lieu of that notice,” the court said. “The letter is part of the employment contract. It follows from this that the motion to recognized the change to that contract is an improper attempt at rectification.”

The court ruled Telehop was bound by the terms it offered in the termination letter and Stowar accepted. See Stowar v. Telehop Communications Inc., 2009 CarswellOnt 3601 (Ont. S.C.J.).

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