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LEGAL REPORT
WORKPLACE LAW
Parties are held to oral
settlement agreement
Mutual agreement on essential terms will make a severance settlement binding,
says Ontario Divisional Court in Bombardier
IS AN ORAL agreement binding? Case law
has suggested it is; a contract is a contract,
even if it's not in writing. In August, the
Ontario Divisional Court reinforced this in
an employee severance case when it found
that mutual agreement on essential terms
will make a settlement binding.
In Shete, Lada, and Chung v. Bombardier
Inc., 2019 ONSC 4083, the court considered
whether the parties had reached a
settlement agreement even though the three
employees, terminated in November 2015,
had not signed or returned the termination
package documents.
The court found: "Employees' counsel
expressly stated that his clients would
accept the terms of the Dec. 18th [2015]
offer, provided Bombardier agreed to pay
an additional $2500 [per employee] for
legal fees . . . " Bombardier agreed to this
in a letter sent to the dismissed employees
in April 2016. Three months later, the
employees each filed a statement of claim
against Bombardier seeking damages for
wrongful dismissal.
Although a motions judge dismissed
Bombardier 's motions for summar y
judgment, finding that the April 2016 letters
were new offers by Bombardier and not an
acceptance of offers made by the employees,
