Sunday, 10 June 2012

E-mail Entitles Employee

A lesson to Human Resources personnel: beware what you e-mail.  In a decision released May 18, 2012, Bennett v. Sears Canada Inc., 2012 ONCA 344, the Court of Appeal for Ontario affirmed a decision in which a long-service employee was awarded full post-retirement health and welfare benefits, notwithstanding the fact that she did not meet the strict wording of the employment policy.

At issue in the case was whether the employee, Audrey Bennett, was entitled to receive Sears’ post-retirement benefits.  According to the wording of the policy, Ms. Bennett would only be eligible to receive those benefits if she “retired from active employment with 20 years or more continuous full-time service.”

As is set out in the Court’s endorsement, Ms. Bennett began working at Sears as a part-time employee on October 17, 1977.  On May 16, 1999, she became a full-time employee.  

In June 2005, Ms. Bennett inquired about her eligibility for pension-related retiree benefits.  The response from Sears Head Office was in the form of an e-mail dated June 7, 2005, and was as follows:

She would need 20+ to get Group Life/Health & Dental/Discount Card At the moment 28 years of service but due to her going from part-time to full-time this is combined and her total years service 17.153 years which means she would need to retire(e) [sic] in about three years to qualify for the benefits.
As the Court observed, based upon this statement, Ms. Bennett would have qualified for full retirement benefits in or about 2008.

On February 19, 2009, the company informed Ms. Bennett in writing that her employment would be terminated, effective April 16, 2009, due to corporate restructuring.

After her employment came to an end, Ms. Bennett learned from another company representative that she did not qualify for any post-retirement benefits because she did not meet all the eligibility requirements, specifically the condition that the employee "must retire from active employment with 20 years or more continuous full-time service." The company representative informed Ms. Bennett that the information she received in July 2005 confirming her entitlement was an error, and that her entitlement was only to vacation, not to the medical and health benefits provided to those full-time employees who met the eligibility criteria.

Ms. Bennett thus promptly commenced an Application within the Ontario Superior Court asking for a declaration that she was, in fact, eligible to receive the benefits.

Although the Application Judge was alive to the fact that the dispute between the parties was contractual in nature, in paragraph 33 of his Endorsement he wrote as follows:

In the case at hand however [Ms. Bennett] says that agreement reached in the formative discussion stages between [her] and the HR office at Sears was plainly that commutation of her part-time services would entitle her to full pension benefits, upon her working for an additional approximate three years, which she did.

In upholding Justice Richard C. Gates’s decision the panel (O’Connor A.C.J.O., Feldman and Ducharme JJ.A.) held that:

There was evidence to support the Application Judge's conclusion that Ms. Bennett had reached an agreement with the company, based upon her own affidavit evidence and the information contained in the e-mail of June 7, 2005.  [Emphasis added.  Para. 12]

Thus the lesson: although the policy was clear with respect to the employee’s entitlements, the Head Office Human Resources person who ‘erred’ effectively changed that policy by way of an e-mail; an error that was no doubt costly to the employer.

The takeaway should be obvious, one should always be careful before putting something in writing; even if it is ‘only an e-mail.’  If that e-mail comes from a person who may be seen to have the ability to change policy, then the court may force the employer to be bound by the terms of that e-mail correspondence.

Of course, employees must also be aware of what they post on the internet, but that’s another subject and one that is covered in my post entitled “You Can’t Do That on the Internet.

As always, everyone’s situation is different.  The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.

Sean Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer. 

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