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Posts tagged: Severance Package

How Important Are The Deadlines In Your Severance Package?

By , December 6, 2018 1:43 pm

You are terminated from your job and your employer offers you a severance package. They give you one week to sign the offer and ask that you sign a full and final release confirming that there will be no further payments. Are you obligated to sign and return the offer within a week?

We often receive this question from recently terminated employees who are scrambling to find legal advice within a few days while also dealing with the stress of their termination.

If we are first contacted close to the deadline we often advise employees to simply request an extension from their employer. In our experience, the vast majority of employers will consent to this request. It is important to remember that it is in your employer’s best interest to reach a reasonable deal with you.  Just because you do not sign and accept their severance package before the deadline, does not make their legal obligations to you disappear. Further, the deadline is only important if you are accepting the offer.

You should have your severance package reviewed by a lawyer before accepting it because, in many cases, it is possible to negotiate a better severance package. It is not unusual for employers to offer severance packages that barely meet the minimum standards set out in the Employment Standards Act. You may be entitled to considerably more pay than the minimum standard.  Even if have signed an employment contract with a legally enforceable termination clause, it is possible that you could be entitled to a large severance package because of conduct that occurred during your employment such as harassment and discrimination. Unless you are certain that their severance package is fair you should not sign a severance offer and release until you have consulted with a lawyer.

At least one Ontario judge has unfavourably viewed stringent deadlines requiring an employee to sign a severance package and release.  In Rubin v. Home Depot Canada Inc., 2012 ONSC 3053 the Court found that even though an employee had signed a “release” shortly after his termination, the release was not binding. The Court found that the employee had not been given sufficient time to consider the offer.  Ultimately the Court awarded him significantly more notice than his employer had offered him.

Lessons for Employees:

  1. If you need more time to obtain legal advice ask your employer for an extension to sign the severance package, particularly if you are given less than 5 business days to consider the settlement offer.
  2. Always consider having your severance package reviewed by a lawyer because it is possible you could be entitled to a greater notice period. Especially if you are a long service employee. Remember: you don’t know what you don’t know.

If you would like to speak to an employment lawyer at the MacLeod Law Firm, you can reach us at [email protected] or 647-204-8107.

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

What to do when you receive a release from your employer?

By , September 26, 2018 10:00 am

When an employee is terminated and offered a severance package, they are almost always asked to sign a release agreement in exchange. A release agreement, as the name suggests, releases the employer from liabilities for employment-related claims. Thus, after an employee has signed a release agreement, if they attempt to sue their employer later on, the release agreement is typically raised as a bar for the employee to proceed with litigation.

There are certain circumstances in which a court will not enforce a release. The Ontario Superior Court of Justice recently allowed an employee to proceed with claims against his former employer regarding long-term disability (“LTD”) insurance, even though he had signed a release in exchange for the severance package when his employment ended.

Facts

In Swampillai v Royal & Sun Alliance Insurance Company of Canada, Mr. Swampillai worked for the employer for several years before he became disabled from working and began receiving LTD benefits. After two years, the insurance company advised he was no longer qualified for benefits. Mr. Swampillai retained a law firm to appeal the LTD denial, and while that appeal was ongoing, the employer advised him that his employment was being terminated. His employer offered him an amount that exceeded his minimum entitlements under the Employment Standards Act, 2000 (“the ESA”) for pay in lieu of notice, and an additional lump sum amount for loss of benefits. Mr. Swampillai was told that if he did not accept the offer and sign the release, the offer would be revoked and he would only receive his ESA entitlements. After some negotiation regarding the amount for pay in lieu of notice, Mr. Swampillai signed the release, which purported to release the employer and insurance company from claims regarding his LTD benefits.

As a result, both the employer and the insurance company brought a motion for summary judgment asserting that the employee was not entitled to make any claim against the employer for disability benefits, or against the insurance company for the administration of those benefits.

Decision

The court found that the release was unconscionable as it related to Mr. Swampillai’s LTD claim, and that Mr. Swampillai was allowed to proceed with the LTD claim despite the language in the release that precluded him from doing so. In other words, although the court found the release was legally binding with respect to the pay in lieu of notice, the court declined to enforce the benefits aspect of the release because it was too unfair to Mr. Swampillai, a vulnerable employee.

The test for unconscionability has four elements:

  1. A grossly unfair and improvident transaction;
  2. The victim’s lack of independent legal advice or other suitable advice;
  3. An overwhelming imbalance in bargaining power caused by the victim’s ignorance of business, illiteracy, ignorance of the language of the bargain, blindness, deafness, illness, senility, or other similar disability; and
  4. The other party’s knowingly taking advantage of this vulnerability.

The court noted that there had not been money specifically allocated towards releasing the LTD claim, that the employer knew Mr. Swampillai was in the process of appealing the denial, and neither the employer nor the insurance company drew Mr. Swampillai’s attention to the fact that the release would bar him continuing in that process.

Lessons to be Learned

Although this story had a happy ending for Mr. Swampillai, it is important to highlight that generally speaking, courts do not take it upon themselves to intervene when people have been handed a raw deal. Therefore, when presented with a release, it is always recommended that you speak to a lawyer so you understand the true nature of the deal you have struck.

However, as this case illustrates, there may be instances where a court does intervene, particularly when dealing with a vulnerable employee.

If you have received a release and want to review it with a lawyer, or if you have cold feet after signing a release and want to know if there is any way around it, you can contact an employment lawyer at MacLeod Law Firm at [email protected] or 647-204-8107.

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

Reviewing a Severance Package: What to Expect from an Employment Lawyer

By , March 7, 2018 12:26 pm

You have just been terminated. You have been given a week or so to accept a severance package but you don’t know if it is fair. That is where we come in.

We Tell You Whether Your Termination Package is Fair

We only do employment law and we review 100s of severance packages each year.

Before telling you whether we think your termination package is fair we will speak with you for about an hour to find out about the background to your termination so we can provide you with an informed opinion.

What Happens When You Meet with Us?

We ask you a lot of questions.

If you have been terminated without just cause then we will want to know all of the information a judge would take into account when deciding how much termination pay you are owed. If you were terminated with cause we need to discuss the alleged misconduct to assess whether the employer would likely prove just cause.

If you have signed an employment contract with a termination clause we will want to discuss the circumstances surrounding the contract. Recently judges have refused to enforce some termination clauses so we carefully review the termination clause to assess whether it is legally enforceable.

You Don’t Know What You Don’t Know

You may have additional legal claims against your former employer that you did not even consider. We understand you are not an employment lawyer and you don’t know what information is important. We do.

For example, your former employer may owe you more money as of your last day of employment than you thought possible.

Or you may be owed more money because the employer discriminated against you. Did you know that there are 16 personal characteristics that an employer cannot take into account when terminating your employment? Like your age, your gender or the fact you have a disability or a perceived disability.

If an employer treats you poorly during your employment, at the time of your termination, or after your termination then you may be entitled to additional compensation.

We Provide Peace of Mind

At the end of your consultation, we will tell you whether your severance package is fair and if not what we think would be fair. Some people find that going through this process gives them peace of mind and helps them move on with their lives.

For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising emploeers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

How to prove mental distress

By , February 20, 2018 9:27 pm

As we have written before, if an employer mistreats an employee either during their employment or at the time of their termination, that employee may be entitled to aggravated damages (or damages for mental distress). The most common situation in which these damages are awarded is when an employee can prove they suffered mental distress as a result of a particularly insensitive termination.

Last year, I wrote about Saadati v Moorhead, a Supreme Court of Canada decision which arose in the context of personal injury. In this case, the Supreme Court upheld the trial judge’s award of damages for mental injury, which was based largely on the testimony of the plaintiff’s family and friends who testified on significant changes to the plaintiff’s personality after the accident. The Supreme Court clarified that although expert evidence will often be helpful in determining whether the plaintiff has proven a mental injury, it is not a requirement. In my blog post on this case, I predicted that employment lawyers would increasingly cite this Supreme Court decision when arguing a claim for aggravated damages.

In Ensign v Price’s Alarm Systems, a 63 year old salesman who had never signed an employment agreement with his employer, Price’s Alarm Systems, was terminated after 12.5 years of service. After providing notice of termination of employment, the employer made three offers to re-employ Mr. Ensign in different positions and under different terms. Mr. Ensign refused all three offers and sued his employer for wrongful dismissal.

The court found that Mr. Ensign was not required to accept re-employment with his employer for various reasons. Due to Mr. Ensign’s age, length of service, and poor employment prospects, the court concluded that he was entitled to a 12-month notice period.

On the issue of aggravated damages, Mr. Ensign argued that the employer was not forthright about various matters relevant to his termination, including the existence of a written contract of  which limited his entitlement to termination notice, and the reason for his termination. Mr. Ensign and his wife testified that the manner in which the employer terminated his employment caused him to suffer mental distress. However, Mr. Ensign did not have corroborating evidence from any physicians.

The court found that the employer was not truthful and candid about the reason for Mr. Ensign’s termination. Furthermore, the employer had embarked on aggressive and unmeritorious defence tactics that affected Mr. Ensign’s marriage, impacted his ability to sleep and caused him stress and emotional upset. Mr. Ensign was awarded aggravated damages in the amount of $25,000.

Lessons Learned

Surprisingly, Saadati v Moorhead was not cited in the decision, but its effect can be felt in Ensign v Price’s Alarm Systems. If you believe your employer has not been forthright or honest about your termination, and you are suffering from mental distress as a result, it’s highly recommended that you consult an employment lawyer to find out about your rights.  

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

Do I Have to Accept a Demotion if My Job is Eliminated?

By , April 28, 2017 8:59 am

When an employee is terminated, the employee is required to minimize lost income by seeking alternative employment. What happens if your former employer offers to give you another job but at a reduced salary? Are you required to accept this demotion? This situation was recently considered by the Ontario Court of Appeal

The Case: Fillmore v. Hercules SLR Inc.

Due to a restructuring, the employer terminated an employee who had worked for about 19 years. The same day as his termination, the employer provided two offers that had to be accepted by a certain deadline:

  1. a severance package where the employee would agree not to sue the employer; or
  2. a new position but after six months, he would be paid 20% less.

The employee did not accept either offer by the deadline. The employer argued that the employee failed its duty to mitigate by not taking the new position that paid 20% less.

The motion judge decided that the employee did not have to accept a job with this kind of pay cut and the Court of Appeal agreed. In some cases, however, an employee may be required to accept a lesser position. When the salary offered is the same, the working conditions are not substantially different, the work is not demeaning, and the employer-employee relationship is not adverse, courts expect an employee to accept the new job to minimize lost income. The Court of Appeal stated that in this case, a reasonable person would not be expected to accept this new position to mitigate their damages.

Lessons for Employees:

 Terminated employees are required to mitigate their wrongful dismissal damages by seeking comparable employment.

  1. Terminated employees may be required to accept a lessor position with the same employer to mitigate their damages in some cases.
  2. Determining whether you are required to accept a lessor job with your employer is a difficult legal question, and you can obtain legal advice from an employment lawyer who is aware of the current state of the law on this issue.

If you would like to speak to a lawyer at MacLeod Law Firm, you can reach us at [email protected] or 647-204-8107.

“The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.”

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