When an employee is terminated from their job and is offered a termination package, they may feel rushed into signing it. However, obtaining legal advice on an offer before executing the accompanying document is an important step to take. In some cases, an employee may agree to the terms of a particular agreement, however, later they may seek to renegotiate or back out of it. This was the case in a recent decision from the Court of King’s Bench of Alberta, in which a terminated employee sought to litigate the severance package he signed, alleging that he was wrongfully terminated due to a disability.
Employee says he was terminated due to complications following stroke
In the matter of Caponero v Alberta Human Rights Commission (Office of the Chief of the Commission and Tribunals) and Kaizen Auto Group Ltd., the employee was terminated by his employer on August 21, 2020, and was presented with a termination package. He accepted the offer of settlement and signed the release. However, the employee alleged that his employment was terminated due to the ongoing effects he experienced following a stroke he suffered one year prior. He claimed that the employer refused to make the necessary accommodations for his disability. In light of this, he sought to pursue a human rights claim despite having signed a termination package.
The Human Rights Tribunal of Alberta (the “Tribunal”) heard the matter over the course of a five-day hearing and issued a decision on December 13, 2021. The key issue involved the validity of the agreement reached between the parties on the day of the employee’s termination. The employee had argued the release should have been declared invalid for three reasons, specifically that:
- The release was void for being contrary to the Employment Standards Code because it required him to sign the release before being paid the amounts he was statutorily entitled to;
- The release was void because it was ambiguous; and
- The release was unconscionable.
In addressing the first argument, the Tribunal found that the employee was not required to sign the release in order to receive the payments that he was entitled to. Turning to the employee’s second argument, which dealt with ambiguity of the release, the Tribunal noted that:
“The (employer) terminated the (employee) without cause, provided him with his statutory entitlements, offered him an additional without prejudice severance payment, and required him to agree to waive any claims he had or may have against the (the employee) if he chose to accept the additional severance payment. There is nothing ambiguous or unclear about the offer and terms of settlement.”
In its analysis of the third argument, the Tribunal turned to a 2020 decision from the Supreme Court of Canada which has set the standard for claims of unconscionability in similar situations. In that decision, the Court outlined the two part-test that is necessary for a claim of unconscionability to succeed, which requires that “. . . an inequality of bargaining power, stemming from some weakness or vulnerability affecting the claimant and . . . an improvident transaction” must be present.
The employee had told the Tribunal that he was in a weakened and vulnerable state when he signed the release, as he was suffering ongoing symptoms related to his stroke including confusion, poor decision making, poor judgment, and memory issues. The Tribunal accepted that he may have had some symptoms, but not enough to qualify as serious or significant cognitive impairments.
The Tribunal also heard evidence that the employer told the employee he did not have to sign the documents at the time they were presented, and that he was encouraged to take them away in order to seek legal advice. However, the employee failed to do so and accepted the offer by affixing his signature to the release.
Accordingly, the Tribunal dismissed the employee’s claim that the offer was unconscionable. His claim that he was led to sign the agreement under economic duress was also rejected, as the Court noted that he could have accepted the statutorily guaranteed payout, while still planning to pursue further legal action, but decided not to.
Employee seeks to appeal Tribunal’s decision
The employee, not satisfied with the Tribunal’s decision, appealed to the Court of King’s Bench. The Court noted that in this case, the applicable standard of review is reasonableness, which means the Court is to “consider only whether the decision made by the administrative decision maker – including both the rationale for the decision and the outcome to which it led – was unreasonable.”
In its decision, the Court noted that the Tribunal’s decision was thorough, detailed, and showed a clear thought process. The Tribunal had properly identified the competing interests of the parties and the evidence put before it, therefore, the Court found the decision to be rational, coherent, and logical. It was also within the legal framework established by both statute and common law. As such, the Court dismissed the employee’s appeal.
Contact the Calgary Employment Lawyers at DBH Law for Comprehensive Legal Advice on Severance Packages
If you are an employer who is considering terminating an employee, or you are an employee who has been terminated, contact the skilled team of employment lawyers at DBH Law in Calgary. We provide trusted legal advice to clients working across the province in a diverse range of industries and sectors. Our lawyers ensure that our individual and business clients receive responsive and concise tailored legal advice they can trust. Contact us online or by phone at 403-252-9937 to learn how we can help you resolve your employment-related dispute.