Author: Howard Levitt
Publication: National Post
Scott Seltzer was 57 years old and had suffered two heart attacks, the first while on the job. After a year off, he returned to work full-time and was fired three days later.
Allmar International, his employer, said the reason was lack of a backlog of sales. Hardly a surprise. How could there be any sales backlog when he had been away for a year?
The company offered him the three-week severance mandated by the BC Employment Standards Act. If he was to receive any more, he was told, he would have to sign a release. He was in a difficult position. His wife was not working, he had older children at home and his job prospects, after a year of medical leave, were less than encouraging. He needed the money, but could not get it without signing the release.
Rather than spend money on a lawyer, he called the Employment Standards Branch and was assured he “could not sign away his legal rights.” Believing he had nothing to lose and badly needing the money, he signed and received the additional severance.
Seltzer subsequently filed a claim under the BC Human Rights Code saying he had been fired because of his age and disability. And he said he had signed the release as result of duress.
The flipside of this situation is Allmar, struggling financially, chose to fire a dedicated employee who had continued to co-ordinate its sales from his sick bed. In addition, they asked him to sign a release relinquishing his legal rights.
The inference with every release is there are some legal rights the employee is being asked to sign away. In my experience, asking an employee to sign a release can be the precipitating event that leads to their obtaining legal advice and suing.
In concluding there was a binding settlement, the BC Human Rights Tribunal, noted: “The ordinary stress and pressure in the face of termination and a severance offer do not, in themselves, amount to duress.”
The misrepresentation by the employment standards branch that Seltzer could not sign away his rights, did not assist him. Ironically, Employment Standards too often provides misleading advice to employees.
For example, it will tell them what their minimum entitlement is under the legislation, without explaning that a court might provide several times that amount.
Many employees, armed with that misinformation, sign releases that similarly bind them.
When my clients are sued, in a human rights or unjust dismissal tribunal, by employees who have earlier signed releases, I have them respond in kind, with a lawsuit against the employee asking the court to either declare the release to be binding or to force the employee to return the money.
That puts the onus on the employee to hire a lawyer and spend money defending themselves. In every case, that strategy has caused the employee to quickly offer to drop the case in return for my client dropping its.
Still, there are occasions when releases will not be binding, including:
- An employee is asked to immediately sign a release or the offer will be withdrawn. You should always provide the employee several days to consider your offer.
- Absence of the opportunity to seek legal advice can vitiate a release. You should invite the employee to seek such advice and state as much in the release. Have them acknowledge that in writing;
- An employee cannot be extorted or coerced into signing a release;
- When the amount offered is clearly improvident and the employee is in no position to be negotiating with the employer, for example she is uneducated, does not understand what she is agreeing to, etc.
Interestingly, the release itself is often legally irrelevant. It is only evidence of the underlying agreement, which is the contract between the parties to resolve the dismissal in return for a particular amount.