Supreme Court of Canada denies Leave; Affirming E-consent as Valid and Binding
The Supreme Court of Canada (SCC) recently denied leave to appeal in Battiston v. Microsoft Canada Inc., 2021 ONCA 727.
The SCC decision reinforces an Ontario Court of Appeal decision which concluded that an employee’s consent through an internal e-consent process was a valid means of bringing an agreement, and in particular, termination provisions to the employee’s attention. The decision also established that e-consent can limit incentive payments during the common law notice periods, if properly implemented.
After working at Microsoft for 23 years, an employee was terminated without cause. The trial judge awarded him 24 months’ pay in lieu of notice, including damages for unvested stock awards despite Stock Award Agreement (the “Agreement”) which stipulated that any unvested stock awards do not vest to an employee if employment comes to an end for any reason.
Every year, for 16 years, the employee participated in the stock award program; the employee received an email notification relating to his share awards. Each notification required the employee to accept the terms of the agreement. Acceptance was considered provided when the employee checked a box included in the email notification confirming that he had read, understood and accepted the stock award agreement. The email notifications contained the following language:
Congratulations on your recent stock award! To accept this stock award, please go to My Rewards and complete the online acceptance process. A record will be saved indicating that you have read, understood and accepted the stock award agreement and the accompanying Plan documents. Please note that failure to read and accept the stock award and the Plan documents may prevent you from receiving shares from this stock award in the future.
At trial, the employee admitted to the court that he did not actually read the Agreement, and therefore did not know about the termination provisions. The employee asserted that he was under the impression that he would get the unvested stock if he was terminated.
The trial judge found that the termination provisions in the Agreement were not properly brought to the employee’s attention. This, despite the fact that the Agreement was brought to the employee’s attention by email every year, which he confirmed. The trial judge concluded that the “…email communication that accompanied the notice of the stock award each year does not amount to reasonable measures to draw the termination provisions” to the employee’s attention. It is unclear what more the Employer could have done to bring this to the employee’s attention.
Microsoft appealed to the Ontario Court of Appeal solely on the trial judge’s conclusion that the respondent was entitled to unvested stock awards after his termination. The Court of Appeal agreed with the employer and concluded that the trial judge’s findings regarding notification of the Agreement could not stand. In particular, the Court of Appeal stated that for 16 years, the employee expressly agreed to the terms of the Agreement. He made a conscious choice not to read it and misrepresented his acceptance of the terms to the employer when he clicked on the check box.
For employers, Battiston does not change the law regarding the implementation of enforceable agreements, which requires (i) termination clauses to be clear and unambiguous; (ii) terms must be consistent with all minimum statutory requirements and (iii) the employer must ensure that the employees are fully informed of the terms. However, Battiston does clarify that employers can implement automatic e-consent mechanisms to communicate the terms of an agreement with an employee, and this can be a valid and enforceable means of communicating with employees. An employee who repeatedly indicates to the employer that they have read, understood and accepted terms of an agreement by clicking on an e-consent box, will not be able to easily resile from that position later on or claim that they did not receive proper notification of terms of any agreement.