Warning: Pitfalls of conditional employment offers and real consideration

In Sui v. HungryPanda Tech Ltd., 2024 BCSC 1856 the British Columbia Supreme Court held that an employee was entitled to reasonable notice at common law after finding that a subsequent “official” employment agreement was not conditional and that no real fresh consideration was provided.

Background

The defendant, HungryPanda Tech Ltd. (“HungryPanda”) operates an online food delivery platform. The plaintiff, Sui, was employed by HungryPanda as the general manager of its Canadian Operations from May 3, 2021 to October 24, 2022, approximately 18 months in total.

The central issue in this case was determining the actual employment contract. In April 2021, the parties exchanged emails discussing Sui’s potential employment with HungryPanda. Specifically, on April 23, 2021, HungryPanda made an employment offer to Sui by email, which included principal terms such as position, salary, and stock options. Notably the email stated two things:

1. This offer is also subject to you providing relevant documents to the Company proving your legal right to work in Canada; and

2. After your confirmation we will provide you with an official employment agreement for your signature.

Sui responded to this April 23, 2021 email from HungryPanda asking for additional compensation. On April 24, 2021, HungryPanda increased the compensation offered to which Sui accepted the same day.  On April 25, 2021, the official employment agreement was sent to Sui and signed by both parties (the “Official Agreement”). Terms relating to termination first appeared in the Official Agreement. It is also noteworthy that the Official Agreement contained a clause stating that the parties acknowledged the receipt of sufficient consideration.

Decision

The two main issues were:

1. When was the employment contract formed?; and

2. Was consideration provided?

The court found that an employment contract was formed through the offer and acceptance emails exchanged (April 24) and not the Official Agreement (April 25). The emails exchanged contained all the necessary elements to form an employment contract, although some elements such as vacation and termination clauses were absent. The court highlighted the requirement to provide proof of legal right to work in Canada as a true condition of the offer as opposed to the signature of the Official Agreement.

HungryPanda had the burden to prove that fresh consideration passed to Sui. HungryPanda argued that fresh consideration came in the form of extended benefits for Sui and his family, an expense account, and paid time-off (statutory minimum) as outlined in the Official Agreement. The court found that an expense account, which in reality was just the reimbursement of business related expenses, and paid time off pursuant to statutory minimums, were both legal requirements. Therefore, this was not a new benefit provided to Sui and not fresh consideration. In terms of the extended benefits, the Official Agreement promised “only those additional benefits” set out in HungryPanda’s employee manual. However, there was nothing in the employee manual dealing with benefits. The court ultimately found that no fresh consideration was provided to make the Official Agreement enforceable. 

Sui was awarded 6 months of reasonable notice.

Key Takeaways

This is another cautionary reminder that employers need to be extra careful when it comes to two-step or conditional employment offers. Providing consideration can solve this issue, however the consideration must be fresh and REAL.

If you have questions about this or similar topics, please get in touch with a member of our Workplace Law group.