When Release is signed, it's a done deal
When an employer terminates an employee who is not in a union, some termination pay is almost always due. Assuming there was not just cause for the termination the employer can pay out the Employment Standards Act minimum payments, and hope the employee is re-employed quickly enough that they cannot claim for more pay in lieu of notice. Or they can offer something more than just the Employment Standards Act minimums in exchange for the employee signing a full and final release.
Releases are anywhere from one to three pages long. For the average person, reading them can be a little mind boggling. If it appears that the release is saying the same thing over and over again, it’s not just an appearance, that’s what they do. Paranoid lawyers are so afraid of being sued by their clients for creating faulty documents that we say the same thing in five different ways to make sure that nobody can say that we missed the point.
At the end of the day, all releases say the same thing: “If you sign this release, we’ll give you some money over and above the minimum entitlement but you are agreeing that that’s it, there is no more, there is nothing else, speak now or forever hold your peace, amen.”
Every once in a while I get a phone call from an employee who has signed a release, put the money in the bank, spent it and then had second thoughts. I have never taken one of these cases because it would be extraordinary for a judge to actually nullify a release. Of course, everyone thinks that their story is extraordinary.
Most often the claim is duress: “The mortgage was due, I was out of a job, we were going to be kicked out on the street, I had no choice.” Unfortunately, the courts have held that economic duress is always part of any contractual relationship. People don’t sign the release because they’re independently wealthy and don’t need the money. They sign the release because they want the money in their bank account. The courts do not get into an assessment of how badly they needed the money.
The next reason I hear is that people did not speak to a lawyer as they felt they couldn’t afford to speak to a lawyer. Again, a judge is not going to sit around having a trial about whether a particular person at a particular moment at time, given their assets, could have afforded a one hour consultation with a lawyer to review their legal entitlements.
Somewhere near the end of the release, there is often a paragraph indicating that the employee is signing the release voluntarily and that they have had an opportunity to seek independent legal advice.
The key word is opportunity. Employers do not and should not require an employee to see a lawyer before they sign the release. If the employee is an adult of sound mind they can make their own choice.
Even if the release signed by the employee doesn’t have this clause, it is hard to convince a judge you did not know what a lawyer was or how to find one.
Then there is the explanation hinted at above: “I was so distraught and depressed as a result of the termination that I lacked the legal capacity to know what I was doing.”
Releases can be overturned on the basis that a person was of unsound mind and incapable of understanding what they were doing. They would have to prove, however, that the employer knew or ought to have known that they were of unsound mind. So first you are going to have to find a doctor to go on the stand and say that at the time you signed the release you were so ill you did not even understand what you were signing. Being depressed or anxious is not nearly enough.
Then have to prove that the employer knew or ought to have known that you lacked capacity. A tough hill to climb.
The last explanation I get from people trying to overturn releases is: “This deal is so unfair and I didn’t know it. I was totally ripped off and it’s unjust that I should be treated this way.” This is the unconscionability argument. In order to win on this one, you have to prove four things: 1. The deal was grossly unfair, 2. That you received no legal advice, 3. That there was an overwhelming imbalance in bargaining power between you and your employer, perhaps because you don’t read English or suffer from some other disability and 4. That the employer knowingly took advantage of your vulnerability.
The fact is that sometimes employers get away with paying far less than the maximum they would have to pay if the employee looked for work and couldn’t find it for a long time.
I’ve often seen employees sign off on such offers quickly because they firmly believe that they are going to be re-employed within the next few weeks and they don’t want to lose money being offered over and above the minimums.. They are making an educated guess and taking a risk by signing off. If the job they thought they were going to get falls through then they lose. They made a judgment call and it was the wrong one. That happens every day in casinos and people don’t get their money back.
I think you can see why I’ve never taken one of these cases. When the deal is done, the deal is done. The only time I have ever seen a release overturned is on those rare occasions where a belligerent employer terminated an employee, handed them a severance offer and told them if they didn’t sign it before they left the building they would get nothing. Of course, as long as that employee has a lawyer send a letter very soon after, these kinds of cases never even make it to court because everyone knows the release will not survive a judge’s scrutiny.
As published in the Hamilton Spectator, November 28, 2008