If your employment has been terminated, your employer may ask that you sign a release in exchange for accepting a termination package. Below we discuss what a release is and what you need to know before signing.
What is a Release?
A release is a legal document that records an employee’s agreement to relinquish their right to make any future claims against their employer relating to their employment or the termination of their employment.
A release is essentially a contract between the terminated employee and the employer. In exchange for receiving settlement money, the employee agrees not to bring any claims against the employer and related parties, and the signed release may be relied upon by an employer as a defence for any future claims a former employee may attempt to bring against them.
What Should I Know Before Signing a Release?
Before you give up your right to sue your employer, we encourage you to seek legal advice to understand your rights and assess the limitations of the release. Below, we review some lesser-known facts about releases.
1. You are not required to sign a release
Regardless of whether or not you sign a release, you are entitled to minimum statutory entitlements under Ontario’s Employment Standards Act, 2000, (“ESA”) as amended, upon the termination of your employment.
Further, if your employment agreement indicates that you will be provided with more than your minimum entitlements, you should not be made to sign a release to access your contractual rights at termination of employment, unless that employment contract specifically references a release.
If you are feeling pressured to sign a release, or if your employer is withholding minimum or contractual entitlements unless a release is signed, we encourage you to contact an experienced employment lawyer as soon as possible.
2. You must be given more than your minimum entitlements in exchange for signing a release
Employers generally want terminated employees to sign a release following a termination of employment, as employers are interested in reducing their liability and removing any threat of possible litigation against them.
This means that employers are often willing to offer employees a favourable settlement in exchange for the employee signing a release.
For a release to be enforceable, you must receive fair “consideration” or more than your minimum entitlements in exchange for signing. Consideration is generally something of value to the employee, including an increased notice period, a reference letter or a lump sum payment.
It is very important that employees have their termination packages reviewed before they sign off on a release to make sure that the termination package is fair and provides them with consideration.
3. A release can contain a number of hidden clauses
Employees should be aware that a release can contain a number of clauses aimed at controlling the employee’s actions post-termination.
By way of example, releases may include non-disparagement clauses, confidentiality clauses, and restrictive covenants, such as non-compete clauses.
It is very important that an employee has the release reviewed before signing off to ensure that they understand all terms of the release.
4. A release can be negotiated
The terms of a release are generally negotiable, meaning that employees (ideally with the assistance of experienced counsel) can request changes to the terms of the release to make more it in line with what the employee is comfortable with accepting in exchange for receiving their termination package.
If there are terms of a release that you are concerned about and would like adjusted, we encourage you to consider contacting an employment lawyer in advance of signing a release.
5. A signed release does not necessarily mean you cannot sue your former employer
Before accepting any termination package, and before signing a release, you should consult with an experienced employment lawyer to make sure you fully understand the terms of the package, what rights you will have following termination, and what rights your employer is trying to limit.
If you have already accepted a package or have signed a release and are now concerned this may negatively impact you moving forward, a highly experienced employment lawyer can provide you with your options to remedy the matter.
Takeaways for Employees
It is common for an employer to request that a dismissed employee sign a release. Therefore, employees should be aware that they are not required to sign any documentation immediately, and are permitted to take the time to review the terms being offered and to sign the release at a later time. We encourage any employees who have been presented with a release upon the termination of their employment to take the time to seek proper independent legal advice in order to understand what is being offered and which rights are being limited.
The employment lawyers at Sultan Lawyers provide exceptional guidance to terminated employees. We will review any documentation provided by your former employer, including releases, and will help clarify what you can expect going forward. We will represent you in any ongoing discussions, will negotiate on your behalf, and will ensure your rights are protected in the immediate aftermath of termination and in the weeks and months that follow. We will provide legal representation in any dispute that may arise, including those that relate to signed releases and other termination terms. For further assistance, please contact us at 416-214-5111 or here.
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