After being terminated, I signed a release. Can I sue for more severance? - The Globe and Mail

The question

My employment was terminated after 20 years of working at the same company. They gave no reason for the termination. They offered me eight weeks of pay and two weeks of severance pay. I signed the paperwork because I have expenses to cover. But is this payout in line with employment regulations? If not, then would it be possible to sue the company, even if I already signed the release?

The first answer

Waheeda Ekhlas Smith, barrister and solicitor, Smith Employment Law, Toronto

Firstly, for most non-unionized employees in Ontario, the Employment Standards Act sets the minimum standards for the amount of reasonable notice of termination or pay in lieu (generally a maximum of eight weeks). If your employer had a payroll of $2.5-million or more, you would have also been eligible for “severance pay” which is different from termination pay, entitling you to an additional 20 weeks, for a total of 28 weeks minimum. Now if you did not have an employment contract limiting you to the minimum, you could be entitled to the common law range which could have been as much as 20 to 24 months.

Secondly, it is often difficult to set aside a signed release and sue the company for damages. But when employers have acted in ways the courts have called high-handed and the parties have signed an unconscionable release, courts have set aside the signed document.

One example includes when a company demands a signed release before agreeing to pay out minimum Employment Standards Act entitlements, something for which a release is not required. Courts have also set aside signed releases when there has been an overwhelming imbalance in bargaining power between the parties and the employer has knowingly taken advantage of an employee. While courts also do not look favourably on employers who threaten employees into signing a release, financial pressure alone (having “expenses to cover”) is insufficient to overturn a release. It would be worthwhile to have the termination package, the events following your dismissal and the release reviewed by an employment lawyer.

The second answer

Susanna Quail, partner, Allevato Quail & Roy, Vancouver

Whether the payout you were offered is in line with employment regulations will depend on what your written employment contract said. Employers often provide written employment contracts that limit termination or severance entitlements to the minimum amounts set in provincial, territorial or federal legislation. As long as these comply with the legislated minimums, they are generally enforceable and workers are typically limited to those amounts.

If you don’t have a written employment contract, or your written employment contract does not stipulate severance entitlements, or it does stipulate these but it is not enforceable for some reason, then you are typically entitled to a longer notice period than the legislated minimums. Where you aren’t given notice, you are entitled to pay in lieu of notice. This longer notice period depends on several factors but courts usually award something in the range of one month per year of service, though this is highly variable.

That said, if you have signed a release you may not be able to sue for more than the 10 weeks you’ve already accepted. This depends mainly on the terms of the release, but also on the circumstances in which you signed it.

As a 20-year employee, there is potentially a lot of compensation owing to you if you are not limited to the legislated minimums and you can get out of the release you signed. It is probably worth paying for legal advice to find out if you have any options based on your specific circumstances.

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After being terminated, I signed a release. Can I sue for more severance? - The Globe and Mail
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