If you have recently lost your job and already signed a release in exchange for a severance payment, you may be wondering whether you can still pursue legal action against your former employer. The short answer is: it depends. While signing a release generally closes the door on future claims, there are a few limited situations where a challenge may succeed.
This post breaks down what a release actually does, the narrow exceptions that may apply, and what steps you should take if you are in this situation.
Important: If you are considering legal action and have not yet signed a release, do not sign anything before speaking with a lawyer. You can connection with a Calgary employment lawyer at Cashion Legal to book an evaluation.
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Table of Contents
What Is a Release, and Why Does It Matter?
A release is a legal contract. When you sign one, you are agreeing to give up your right to pursue further legal claims against your employer in exchange for some form of compensation, typically a severance payment beyond what you are already entitled to receive.
Most sophisticated employers use comprehensive releases designed to cover all possible employment-related claims. If the release is properly drafted and supported by genuine additional compensation, it will almost certainly be enforceable.
This decision by the Court of King’s Bench of Alberta highlights the importance of seeking legal advice before signing a release. At the time of the termination, the employee was presented with an offer of severance and a release. He accepted the offer of settlement and signed the release. The employee later filed a complaint with the Alberta Human Rights Commission alleging he was coerced into signing the settlement agreement and release. Both the Alberta Human Rights Tribunal and the Court the release used plain wording and was clear and unambiguous in terms of the amounts of money offered, thereby precluding any claims against the employer.
That is why the most important piece of advice in this area is simple: get legal advice before you sign. Otherwise, you may not be able to pursue claims for wrongful dismissal or discrimination against your employer.
Can You Still Sue Your Employer After Signing a Release?
If you have already signed a release and are now reconsidering, your options are limited, but they are not necessarily zero. Courts have recognized a narrow set of circumstances in which a release can be set aside.
Exception #1: No Additional Consideration
For a contract to be binding, each party must provide something of value, known in law as consideration. In the context of a release, the employer must provide compensation the employee is not already entitled to receive.
This is a more common issue than many employees realize. Statutory termination pay under Alberta’s Employment Standards Code is something every eligible employee is already owed. An employer cannot use statutory minimums as the consideration for a release. If the only compensation offered in exchange for the release was what the employer was legally required to pay anyway, the release may not be enforceable.
This is one of the most frequent errors employers make, and it is worth reviewing carefully if you are in this situation.
Exception #2: Unconscionability
Even where a release is clearly worded and supported by additional consideration, a court can still set it aside if the circumstances surrounding its signing were fundamentally unfair. This is the doctrine of unconscionability.
Alberta courts assess unconscionability through three questions: Was there an inequality of bargaining power? Did the employer exploit that inequality? Was the resulting settlement substantially unfair?
On the first question, courts look at the employee’s full situation at the time of signing. Financial pressure, emotional distress, absence of legal advice, and misinformation about legal entitlements can all create an unequal bargaining position. On the second, withholding compensation already owed until the release was signed, or presenting a take-it-or-leave-it offer with an artificial deadline, has been found to constitute an unconscientious use of power. On the third, a severance package representing a fraction of what a court would have awarded is strong evidence of substantial unfairness.
In one Alberta case, a court set aside a release and substituted four months’ pay after finding all three elements present. The employee was in financial and psychological distress, had received incorrect information about his entitlements, and was told money already owed to him would be withheld until he signed.
If you signed a release while financially desperate, emotionally overwhelmed, or under pressure to sign quickly, a lawyer can assess whether the circumstances meet the threshold for unconscionability.
Exception #3: The Release Does Not Cover Your Specific Claim
Employment law involves a wide range of potential claims, including those arising under contract, common law, the Employment Standards Code, occupational health and safety legislation, and human rights legislation. Not all releases are drafted to cover every type of claim.
If the release you signed addressed some categories of claims but omitted others, you may still be able to pursue the claims that were not covered. In one recent case, a court found that a release did not adequately contemplate the release of human rights claims. The employee was permitted to proceed with a human rights complaint even though other employment claims had been released.
The specific language of the release matters enormously. A careful review by a lawyer can identify whether any viable claims remain outside its scope.
The Bottom Line
In most cases, a properly drafted and supported release will hold up. The exceptions are narrow and the burden of successfully challenging a release is real. That said, they do exist, and if your situation involves any of the circumstances described above, it is worth getting a legal opinion before assuming you have no options.
If you have not yet signed a release, speaking with a lawyer first is the single most important step you can take to protect your rights.
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It is important to take time before signing a release to get independent legal advice. An employment lawyer will ensure that the release is valid, and that the employee isn’t waiving their rights in a situation where they have grounds for bringing a claim against their employer.
Facing a workplace issue? Whether you’ve been terminated without cause, pushed out through constructive dismissal, or are navigating a complex severance offer, getting the right legal advice early can make all the difference. Talk to a Calgary employment lawyer and get advice on your severance entitlements.
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This article is intended to help educate the general public on the legal community on recent developments in employment law. Reviewing this article is not a sufficient substitute for legal advice. If you need legal advice, contact us today.
Does signing a release mean I have no options at all?
Not necessarily. In most cases a properly signed release will hold up, but there are recognized exceptions under Alberta law. If the release lacked real consideration, was signed under duress or unconscionable circumstances, or did not cover the specific type of claim you want to make, you may still have options worth exploring with a lawyer.
How long do I have to challenge a release?
There is no single deadline that applies to every situation, and the answer depends on the type of claim involved. If you are considering challenging a release, you should speak with a lawyer as soon as possible. Delay can affect your options.
What if I signed the release because I needed the money urgently?
Financial pressure is one of the factors courts consider when assessing whether a release should be set aside. If your employer knew you were in financial distress and used that to pressure you into signing quickly, that may support an argument that the release was unconscionable. It is not an automatic win, but it is worth getting a legal opinion.
What if I did not have a lawyer when I signed?
The absence of legal advice does not automatically invalidate a release, but it is a relevant factor, particularly when combined with other circumstances like distress, urgency, or incorrect information about your entitlements. If you signed without advice and now have concerns, a lawyer can review the situation.
Can I challenge a release if the severance was just too low?
A low severance amount on its own is unlikely to be enough. However, if the amount was substantially below what a court would have awarded and the release was also signed under unfair circumstances, the combination can support an unconscionability argument.
What if my employer withheld my final paycheque or vacation pay until I signed?
This is a significant red flag. Withholding compensation you were already legally owed in order to pressure you into signing a release has been found by Alberta courts to be an unconscientious use of bargaining power. It is one of the stronger factual bases for challenging a release.
I already cashed the severance cheque. Is it too late?
Not necessarily. Accepting payment does not automatically prevent you from challenging the release, particularly if the grounds for challenge go to how the release was obtained in the first place. A lawyer can advise you on how this affects your specific situation.
What should I do if I think my release might be unenforceable?
Speak with an employment lawyer as soon as possible. A lawyer can review the release itself, the circumstances under which you signed it, and the compensation you received, and give you an honest assessment of whether you have a viable challenge.