RELEASE DEADLINE MEANS NOTHING
Today I offer up a nugget of information that might save you considerable anxiety should you ever be terminated and receive a severance offer.
With rare exceptions, when an employer makes a severance offer they ask you to sign a full and final release confirming that there will be no further payments. After outlining the offer the employer is making, the letter will close with wording that looks something like this:
"If you wish to accept this offer please return to me a signed copy of the enclosed full and final Release by no later than the end of the business day on February 3, 2003 (it is usually one week after the letter was given to you). If you do not accept this offer by that time it will be deemed to be withdrawn and you will be paid only the minimum termination and severance pay required by the Employment Standards Act."
Shrewd employees who have been terminated want to have this severance offer reviewed by an employment lawyer before they sign off so they don't wake up in the middle of the night three months later wondering if they missed something. It is not always easy, however, to get an appointment with an employment lawyer within the week deadline you have been provided.
Here is my nugget of wisdom. Completely ignore the deadline. It means nothing.
Employers always give a deadline for acceptance and threaten to withdraw the offer if you have not accepted it by that date for two reasons. The first is that they don't want the matter dragging on forever. They want closure. The second is that they want you to accept their offer and not try to negotiate with them. They want you to think that if you don't accept their offer, all you will get is the Employment Standards Act minimums and they will not reinstate the offer for a larger amount.
All I can say is this: in over ten years of practicing nothing but employment law I have never run into an employer who really meant what they said about the deadline.
If you do not respond by the deadline, the employer may in fact send you a cheque for the Employment Standards Act minimums but I have never seen a case where, if the employee was willing to sign off two or three weeks later for the larger amount, the employer was not willing to pay it.
It is important to remember that, for the most part, employers do not offer payments over and above the Employment Standards Act minimums because they are nice. They offer payments in excess of the Employment Standards Act minimums because you are entitled to reasonable notice at common law in addition to the Employment Standards Act minimums based on your age, seniority and level of responsibility. Unlike the Employment Standards Act minimum payment, the reasonable notice above and beyond those amounts is not a guaranteed amount but a maximum amount. If you were entitled to three months minimum payments under the Employment Standards Act and ten months reasonable notice at common law, you would only get the extra seven months if you could prove to a judge that you made reasonable efforts to look for employment and could not find it. Immediately after a termination nobody knows when the employee is going to find work. They might find work right away or it might take more than the ten months reasonable notice. The employer and employee usually come to a compromised amount between the three-month minimum and the ten-month maximum and sign the deal.
If an employer offers a compromised amount of seven months pay in total, they will be willing to pay it not only the week after termination but two, three and four weeks after termination. The only thing that might change that is if, before the employee has accepted the offer, the employer hears that the employee has already found new work. In that case, an employer could withdraw the offer if it has not been accepted and pay out just the Employment Standards Act minimums.
So, unless you already have a job offer, don't worry about the deadline for responding to the employer. If the deadline date goes by and you get a call from the employer wondering when you are going to sign off on the deal, tell them that you are still thinking about it or tell them that you are consulting a lawyer. If they tell you the offer may be withdrawn, tell them that you are quite willing to take that risk. Don't be bullied.
In some situations, employees who think the offer may be a fairly good one and want to keep things friendly with their old employer for the sake of a reference can ask for an extension of the deadline. A letter or email from the employer confirming the deadline is extended will do the trick. Again, if the employer tells you they will not extend the deadline, don't sweat it.
Remember that it is in your employer's interest to get a deal struck for a reasonable amount if they can. Just because you don't respond and accept the deal by the deadline doesn't make their legal obligation to provide you with pay in lieu of notice disappear. The only thing that would make that disappear is if you found a new job immediately.
If you already know the offer is a bad one and are not going to accept it anyways, who cares about the deadline? The deadline is, at its best, a date by which you have to accept the offer. If you are not accepting the offer and are going to have an employment lawyer send a letter demanding more, it does not matter when you respond. As is noted above, in 99% of the cases, even if you end up accepting the offer, it doesn't matter when you respond.
If you have an employment lawyer send your employer a demand letter for more than was offered, there are four possible responses. The first is that the employer agrees to everything that is demanded. The second is that the employer will not agree to what the lawyer has asked for but will increase the original offer. The third is that the employer will not agree to increase the offer but will put its original offer back on the table if the employee wants to accept it.
I have only ever seen the fourth possibility happen if the employer discovers the employee has found a new job before a deal is concluded. In this scenario, the employer responds to your lawyer by saying that it is not going to reinstate even its old offer and is only paying out the Employment Standards Act minimums since the employee has found work. I have never seen an employer take the fourth route unless it knows the employee is working.
Some employers grumble that they may withdraw their offer but unless the employee is already working that is not what they do. The employer's own economic interests prevail and the employer realizes that it has an interest in getting a deal done rather than facing a lawsuit and perhaps paying the full ten months pay in lieu of notice instead of the seven or eight it can pay through a compromised deal.
As firm and as threatening as that deadline and withdrawal of offer look in the severance letter, employers don't worry much about those deadlines themselves. In most cases where the employee does not ask for an extension or respond by the deadline, the employer does not even call. The employee, if the offer is a reasonable one, returns the signed Release a week or two after the alleged deadline and no one even comments upon it. The money is paid out and life goes on.
As published in the Hamilton Spectator, January 27, 2003