Lulled into false sense of security

Employer had employees sign a new employment contract when it had already decided to fire them

In September 1991 Brent Bryde began working for The Prudential Insurance Company of America. By 1993 he was promoted to the position of claims unit manager. From September 1996 Mr. Bryde was on disability. Although he received his last disability payment on Nov. 8, 1996, Mr. Bryde did not return to work due to his ongoing disability.

On Nov. 18, 1996, the employees of Prudential received a letter from both Prudential and Liberty Mutual Insurance Company confirming that Liberty was acquiring Prudential and that the purchase and sale agreement was expected to complete on Dec. 31, 1996.

On that same date each employee of Prudential received a letter from Liberty entitled “Offer of Employment.” Mr. Bryde received such a letter which extended to him an offer of employment with Liberty effective on the day following the closure of the acquisition. His title and salary would remain the same and initially so would his duties and reporting functions. Mr. Bryde accepted the offer, signed the letter and returned it to Liberty.

Accompanying the letter was a copy of the Liberty employee handbook. At the end of the 113-page book was a sheet of paper for the employees to sign acknowledging receipt of the handbook. Mr. Bryde also completed this form and returned it to Liberty. The handbook contained among other things provisions dealing with termination of employment.

On December 31, 1996, two days after Liberty acquired Prudential, the employees of the Burnaby, B.C., claims office where Mr. Bryde was employed were notified that their office was to be shut down effective Jan. 17, 1997.

On March 4, 1997, Mr. Bryde received a termination letter from Liberty and received $4,385 as severance pay. Mr. Bryde brought an action against Liberty, seeking damages for wrongful dismissal. He also argued that the notice period should be extended as a result of the conduct of Liberty.

Mr. Bryde’s position was that Liberty acted in bad faith. Mr. Bryde was asked to sign an employment contract that contained a limitation period and was subsequently dismissed. He argued that Liberty encouraged him to sign the offer of employment while knowing at all times that his job was to be eliminated.

Liberty argued that Mr. Bryde accepted the terms and conditions of employment with Liberty that were set out in the offer of employment and the handbook. When Mr. Bryde signed his acceptance of the offer and acknowledged receipt of the handbook he accepted that contract of employment. Mr. Bryde was offered 18 weeks’ salary in lieu of working notice in accordance with the contract of employment (based on the terms of the handbook). Under the Employment Standards Act, he would only have been entitled to five weeks.

In response to Liberty’s argument that Mr. Bryde accepted the contract of employment by signing both the offer of employment and the receipt acknowledging that he received the handbook, the Court held that there was no evidence that Mr. Bryde had actually read the handbook.

The Court described the handbook as daunting and something the size of a modest book written more suitably for the employer’s legal team. The Court accepted the evidence of Mr. Bryde that he had not read the handbook and that he was unaware of the terms of termination contained in it.

The Court held that by signing Mr. Bryde to a contract of employment knowing they would be letting him go with a matter months, Liberty had lulled him into a false sense of security. Had he known that his employment would have been terminated Mr. Bryde would not have signed the contract of employment.

Having found that he was wrongfully dismissed the Court then considered the issue of reasonable notice. The Court held that the notice period should be lengthened as a result of Liberty’s conduct in having Mr. Bryde sign a contract of employment while knowing that his employment would be terminated shortly thereafter. For this reason, the notice period was set at 14 months and damages were awarded to Mr. Bryde accordingly.

For more information:

Bryde v. Liberty Mutual Insurance Co., 2002 BCSC 606.

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