The Enforceability of Releases: Top 10 Need-to-know Facts

Attached to most termination packages is a document that, while important, is often filled with legalese and run-on sentences. This document is generally referred to as a Release.

We recommend not signing such a document until you have spoken to an Employment Lawyer.

Below are our top 10 need-to-know facts about employment-related releases and how they can affect your rights:

1. By signing a Release, you are acknowledging that your claims against your employer have been settled and your employer is now released from any future liability; that is, you cannot sue them down the road (subject to some exceptions).
2. The majority of releases will not only include the employer, but also the employer’s officers, directors, employees, insurers, parents, shareholders, agents, heirs, executors, assigns, successors, etc. This means you may also be precluded from bringing an action for something that is unrelated to your termination; for example, a claim for sexual harassment against a co-worker.
3. The majority of releases now include any claim the employee may bring under the Employment Standards Act, 2000 the Pay Equity Act and the Ontario Human Rights Code. However, the courts may find a Release restricting an employee’s potential human rights proceedings to be insufficient.
4. The employer will use this signed Release as a defence for any future claims you may attempt to bring against it or a related party.
5. The majority of releases will include a confidentiality clause. If you, or anyone in your immediate family, breach this confidentiality clause, you may have to repay all settlement funds, other than your minimum entitlements.
6. A court will consider whether the employee was in need of money at the time of signing the Release in deciding whether it should be enforceable.
7. An employee must receive consideration (something of value to them) for signing the Release (i.e. settlement funds). Providing an employee with their statutory minimums under Ontario’s Employment Standards Act will generally not be viewed as proper consideration.
8. Employers should ensure that employees have had ample opportunity to consider the terms of the Release and seek legal advice should they wish to do so.
9. The courts will consider whether the employee’s bargaining power was affected by his/her family needs, trust in his/her employer or ignorance of his/her rights in deciding whether it should be enforceable.
10. The complexity of the language used in a Release is a factor the courts consider to determine its validity.

As you can see, signing a Release can have devastating consequences for an employee by restricting their ability to bring a claim against their employer, among other things. It is highly recommended that you seek the advice of an Employment Lawyer before signing a Release because if you don’t, you may be stuck abiding by this document.

If you have more questions about releases, contact our Employment Law Group.