Imagine that you’ve just been terminated from your employment and your employer asks you to sign a severance agreement and a release. What should you do?
What is a release?
When an employer wants to prevent an employee from suing or bringing a claim against them after termination, they may offer a payment over and above the standard severance amount based on Employment Standards Code in exchange to be released from further responsibility or obligation. This is called a release and may be included within a severance agreement.
Once a valid release is signed, it means the employee can no longer pursue legal action against the employer. For example, if an employee has experienced a discriminatory termination and signs a valid release that covers discrimination complaints, they can no longer make a human rights complaint against the employer.
What makes a release valid?
Several aspects of a release will determine whether it is valid, including:
- Is the release worded in a clear, unambiguous way?
- Are the settlement amount and terms of the release fair?
- Does the release provide the employee with a benefit they are not already entitled to?
- Did the employee have time to obtain independent legal advice prior to signing the release?
- Was the employee aware of their rights related to the release?
What should you do if you’ve been asked to sign a release?
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.
A recent decision by the Court of King’s Bench in 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.
After hearing the case, the Alberta Human Rights Tribunal dismissed the complaint, citing that the employee had not established that he was coerced into signing the release and had other options available to him, including seeking legal advice.
The employee sought judicial review of the decision, arguing that the release he signed was ambiguous and shouldn’t be enforced. The employee claimed the release document included both his severance amount and an amount in exchange for the release and it was unclear whether he had to sign the release to obtain payment of his severance amount.
However, the tribunal Court the release used plain wording and was clear and unambiguous in terms of the amounts of money offered and the types of claims he could not file in the future. The Court determined the release was enforceable and dismissed the application for judicial review.
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This case demonstrates the importance of consulting a lawyer before signing a release document or severance agreement upon termination. If you find yourself in a similar situation or have questions about a release agreement, contact Cashion Legal for a consultation. It’s much easier to spend the time getting a legal opinion before signing than it is to file a complaint after the fact.
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.