Employees may be asked to sign a release when they are terminated. In the release, there are typically terms that require the employee to accept an amount of severance pay upon termination. There may also be terms in the release that state that the employee will no longer pursue any claims of wrongful dismissal, etc., upon their termination. In other words, the employee accepts severance pay as the final settlement of their employment claims. However, signing the release may not always be in the employee’s best interests, especially if they are pressured to sign it immediately without consulting a lawyer first. They may be giving up their entitlements after termination. Once the release is signed, it is difficult to find it invalid. However, if the employee was considered not to have the required capacity to sign a contract, the release agreement may be invalid. 

This post will discuss a release agreement in the context of an employee termination. We will also discuss capacity and how a lack of capacity may invalidate a release agreement after an employee is terminated. We will also examine the evidence required to show that the employee could not sign the release agreement, as discussed in Manuel v. Lafarge et al., 2024 ONSC 3790. This post will provide important takeaways for employees seeking to understand their rights regarding release agreements upon termination. Employers can also benefit from understanding when an employee’s lack of capacity may invalidate a release agreement. 

What is a release after an employee is terminated?

When an employee is being terminated, they may be asked to sign a release agreement. The release typically includes terms involving what kind of severance will be provided to the employee, if any. In return, the release agreement will typically also contain terms that the employee will “release” their wrongful dismissal claims and similar claims against the employer. The release agreement guarantees the employer that the employee will not pursue claims against them after termination. The release agreement is typically seen as a final settlement between parties to an employment relationship. 

Power dynamics in the employment relationship typically make an employee feel pressured to sign the release right away. The employer may push the employee to sign a release promptly. It is important to note that employees are not required to sign a release agreement. Sometimes, the severance offered in the release may not cover the employee’s full entitlement upon termination. Therefore, an employee must consult a lawyer before signing a release agreement. 

Release agreements can be invalidated, even if the parties have signed them. They can typically be invalidated on the same grounds as other contracts. One of these grounds is a need for more capacity to understand the contract fully.

What is a lack of capacity?

If a party cannot sign a contract, it can be invalidated after execution. A lack of capacity means the employee needed help understanding the contract and its legal consequences. This can arise if the employee is suffering from mental illness or conditions that would not allow them to fully understand what they were signing and how it would affect their legal position. 

As a result, the agreement would be invalidated even though the employee signed it. The contract terms would not apply, including typically the employee’s agreement to give up wrongful dismissal and other similar claims against their employer. In other words, the employee may be free to pursue these claims, and the employer may not have to pay the severance or other benefits specified in the contract.

What evidence is required to find that an employee lacked capacity to sign a release?

There must be evidence that the employee did not have the mental capacity to sign the release to invalidate a contract-based on a lack of capacity. This goes beyond the evidence that an employee did not consult a lawyer, which is insufficient to invalidate a release.

If an employee is claiming that they could not sign a release agreement, they will typically have to call on the expert evidence of their doctor who diagnosed them with a mental condition that would render them incapable of signing a release. There are also rules that an employee would need to follow if they are seeking to present expert evidence, including providing a copy of the report at least 90 days before their scheduled pre-trial conference. 

Any evidence from an expert, like a doctor, must come directly from the doctor in their affidavit or report. Including the doctor’s notes or letters as part of another witness’s evidence is insufficient, as was determined in the Manuel case discussed below.

Court finds insufficient evidence of employee’s lack of capacity to invalidate release 

In the Manuel case, the employee was terminated due to a corporate restructuring. He claimed that while he was working with his employer, he suffered from sexual harassment. As a result, he experienced several medical issues, took time off work, and received short-term disability benefits. 

When he was terminated, the employee signed a release stating that he would not pursue any claims against his former employer, including sexual harassment. 

At court, the employee claimed that he experienced PTSD from the harassment he experienced in the workplace. As a result, he claimed that he lacked the mental capacity to sign the release agreement, which was therefore invalid. He alleged that he could pursue his claim of sexual harassment against his former employer. 

However, the court decided that there was insufficient evidence to conclude that the employee was suffering from PTSD. The employee’s doctors did not swear affidavits testifying on the employee’s condition. Also, none of the hospital records or doctor’s notes specified that the employee was suffering from PTSD, even though he had experienced panic attacks. Overall, there was not enough evidence to conclude the employee was suffering from a condition that would indicate that he could not sign the release agreement. Therefore, The release agreement was upheld, and the employee could not pursue his claim of sexual harassment against his former employer, as he gave up that right in the release.

Contact Haynes Law Firm in Toronto for Advice on Termination and Release Agreements

Employees may be asked to sign a release on future claims against their employer before receiving their termination package. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. Our goal for employees is to ensure that they understand their rights and receive maximum compensation in their termination package. Haynes Law Firm also assists employers in avoiding liabilities that may arise from terminations that are not permitted by the legislation. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.

Fixed-term contract employees are hired for a specific period. They have an employment contract that sets out the date that the period of employment will end. Employers often use fixed-term contract employees if they need assistance for specific projects or require cover for an employee who is on leave. 

In contrast to employees hired for an indefinite period that may be terminated at any time upon the provision of reasonable notice or pay in lieu of notice, fixed-term contract employees do not need to be given notice because employment ends when the contract expires.

This article looks at what can happen if an employee is terminated before the end of the term specified in the fixed-term contract. We also look at a recent decision of the Superior Court of Justice of Ontario in which an employee argued that he was terminated under a fixed-term employment contract and entitled to his salary for the remainder of the term. 

What can happen if an employee is terminated before the term expires?

It all depends on the specific terms of the employment contract, so it is important to get advice from an experienced employment law lawyer.

It is possible that a fixed-term employment contract specifically provides for early termination. If this is the case, it may specify a fixed term of notice or payment in lieu. This specified notice period might apply in the event of early termination, meaning that the employee is not entitled to be paid out for the remainder of the term of the contract.

However, if the parties to a fixed-term employment contract do not specify a predetermined notice period, it is possible that the employee is entitled, upon termination of the contract, to the wages that they would have received to the end of the term of the contract. 

An employee was working under a fixed-term secondment contract

In Nader v University Health Network, the plaintiff employee was employed by University Health Network (UHN) as an Executive Vice President. Under his agreement with UHN, he was entitled to 12-months salary if he was terminated without cause. 

In 2019, the plaintiff was seconded to Ontario Health. He entered a secondment contract with both of the defendants, UHN and Ontario Health, which provided “subject to early termination in accordance with this agreement”, the plaintiff will be seconded to Ontario Health for a period of two years from September 3, 2019, to August 31, 2021. The contract provided that he would remain an employee of UHN and continue to be paid by UHN. It also specified that the plaintiff would return to a comparable position at UHN upon termination of the secondment contract, or if such a position didn’t exist, that he would be entitled to the termination entitlement under his agreement with UHN.

The secondment was terminated before the end of the contemplated term

In September 2020, Ontario Health said that the secondment would end in October. In the meantime, UHN had hired a replacement, so the plaintiff’s position was no longer available. UHN terminated the plaintiff and continued paying his salary for an additional 12 months, as required by his employment agreement with UHN.

The plaintiff commenced proceedings and argued that the secondment contract was a fixed-term agreement, the termination of which entitled him to his salary for the balance of the term in addition to payment for 12 months as required by the agreement with UHN.

The secondment contract could be terminated before the end of the two-year term

Justice Black held that the secondment contract implicitly contemplated the scenario in which the contract was terminated prior to the end of the two-year term. Even though there was no explicit termination mechanism, the contract contained the phrase “subject to early termination in accordance with this agreement”.

A fixed-term agreement can be terminated before the term expires – the issue was what compensation flows from the early termination. 

The secondment contract was not an employment agreement

The defendants argued that the secondment contract was not an employment contract, and as such, the rule that the employee is entitled to be paid out for the remainder of the term where the contract does not provide for early termination did not apply. They observed that the plaintiff was asking to be treated as both an indefinite term employee of UHN and a fixed-term employee of Ontario Health, in order to “double collect” damages for termination. 

Justice Black looked at some case authorities that confirmed, against the backdrop of a continuing employment agreement under which the original employer retains responsibility for the payment of salary, a secondment agreement is not an employment agreement per se. It was “something other, and in its own category”.

In any event, his Honour also found that the plaintiff’s secondment contract contained a predetermined notice period. The clause that referred to the plaintiff’s termination entitlement under his employment contract with UHN governed this situation – in the event of termination without cause, the plaintiff was to receive 12 months’ salary.

Justice Black decided that the plaintiff was not entitled to payment for the balance of the two years contemplated as the probable duration of the secondment. 

Contact Haynes Law Firm in Toronto for Guidance on Regular and Fixed-Term Employment Relationships 

The team at Haynes Law Firm in Toronto has been helping employers understand their responsibilities regarding fixed-term contract employees since 1994. The firm’s founder, Paulette Haynes, has written the country’s definitive text on non-standard employment arrangements and is frequently sought after by employers across various industries for her expertise in this area. She also assists employees that have been terminated to ensure they receive maximum compensation and all eligible benefits from their employers.

Haynes Law Firm helps employers and employees throughout Ontario achieve effective solutions to legal issues and conflict management in employment law and civil litigation. To discuss how our employment law team can assist you, please contact us online or call us at 416.593.2731.

Some employers have instituted mandatory vaccination policies in an attempt to protect people from the spread of COVID-19 at work. Under such policies, failure to be fully vaccinated after a particular date may result in sanctions, possibly including termination of employment.

In Ontario, an employer is entitled to terminate an employee at any time, for any reason. However, if terminated without cause, most employees are entitled to a minimum amount of notice or payment in lieu of such notice. If the employer fails to comply with this, the employee may have been wrongfully dismissed. In addition, some employees may be entitled to severance pay.

Can an employee be terminated with cause, and hence denied these entitlements, if they decline to get fully vaccinated against COVID-19 in contravention of an employer’s mandatory vaccination policy? 

Policies on Mandatory COVID-19 Vaccination

The Ontario Government has only mandated vaccination for employees working in long-term care homes. Each staff member must:

• provide proof of vaccination of each dose;
• provide a documented medical reason for not being vaccinated; or 
• participate in an educational program about the benefits of vaccination and the risks of not being vaccinated. 

The Ontario Human Rights Commission has said:

“Mandating and requiring proof of vaccination to protect people at work or when receiving services is generally permissible under the Human Rights Code (Code) as long as protections are put in place to make sure people who are unable to be vaccinated for Code-related reasons are reasonably accommodated.”

Some employers have instituted mandatory COVID-19 vaccination policies and have begun to terminate employees that have failed to comply. In one example, the City of Toronto introduced a mandatory vaccination policy on September 7, 2021, which requires employees to be fully vaccinated unless exempt for a reason relating to a protected ground set out in the Code. According to a news release, despite a 98.6% compliance rate, 461 of its employees were either unvaccinated or did not report their vaccination status by the deadline, and as a result, have had their employment terminated.

Decisions in a Unionized Context

While there has yet to be a definitive court decision in the employment context, there have been several relevant arbitration decisions involving claims by unions that mandatory vaccination policies were unreasonable.

Mandatory Vaccination Policy Held to be Unreasonable

For example, in the recent case of Electrical Safety Authority v Power Workers’ Union, the Union challenged a mandatory vaccination policy that required all employees to be fully vaccinated unless exempt under a protected Code ground. Those employees who do not comply with the policy may be subject to discipline, up to and including discharge. There was nothing in the collective agreement specifically addressing vaccinations.

Chief Arbitrator John Stout decided that the policy was unreasonable to the extent that employees may be disciplined or discharged for failing to get fully vaccinated. He noted:

“In workplace settings where the risks are high and there are vulnerable populations…, then mandatory vaccination policies may not only be reasonable but may also be necessary and required to protect those vulnerable populations. However, in other workplace settings where employees can work remotely and there is no specific problem or significant risk related to an outbreak, infections, or significant interference with the employer’s operations, then a reasonable less intrusive alternative…may be adequate to address the risks.”

The Chief Arbitrator decided that the policy was not a reasonable exercise of management rights in the circumstances and absent a specific statutory authority or provision in the collective agreement.

Mandatory Vaccination Policy is Permissible in a Different Context

However, in Bunge Hamilton Canada, Hamilton, Ontario v United Food and Commercial Workers Canada, Local 175, Arbitrator Herman upheld a policy that required employees to be fully vaccinated, except those with a medical exemption. Employees that fail to comply with the policy were not permitted to attend the place of work and were placed on unpaid leave pending a final determination on their employment status, up to and including termination.

The Arbitrator decided that the requirements to disclose vaccine status and be fully vaccinated were reasonable. In respect of the requirement to disclose, he said that:

Management can generally establish rules that require the production of employees’ medical information if necessary in order to protect the health and welfare of other employees, which would be the case here. 

The Arbitrator distinguished the Electrical Safety Authority v Power Workers’ Union decision by explaining that failure to institute this policy would place the employer in breach of its lease obligations and would jeopardize its ability to operate the business.

Possible Considerations in a Wrongful Dismissal Claim

These cases demonstrate that prospects in any wrongful dismissal claim are likely to depend on the particular circumstances of the case at hand. 

Relevant factors in determining whether an unvaccinated employee might succeed in a wrongful dismissal claim include:

• the location of the work, such as whether employees are required to attend a workplace or are capable of working from home;
• the nature of the work, for example, whether there is a heightened risk to others as a result of the work, such as exposure to vulnerable populations;
• the employee’s reason for refusing to be vaccinated, such as whether the employee has a medical exemption or religious reason, as opposed to deciding out of personal choice;
• the precise terms of the employee’s contract of employment; and
• the precise terms of the employer’s mandatory vaccination policy.

Contact Haynes Law Firm in Toronto for Advice and Representation in Wrongful Dismissal Matters

Haynes Law Firm helps employers and employees throughout Ontario achieve effective solutions to legal issues and conflict management in employment law and civil litigation. We help wrongfully dismissed employees obtain the compensation to which they are entitled. We also help employers prepare employment policies. To discuss how the employment law team at Haynes Law Firm can assist you, please contact us online or call us at 416.593.2731.

The Termination Process – 10 Tips for Employers

In business, terminations are likely to happen. As an employer, you should establish a workplace policy with regards to termination meetings so that they are handled effectively and are productive both for you, as the employer, and the person who is being dismissed.

1. Retain All Employment Documents

   Keep proper documents about all of your dealings with the employee as they may benefit you in the event of a lawsuit. These documents will include notes about the employee’s performance and any disciplinary problems. Make sure that you keep hard copies as well as electronic versions of the documents, if they are available.

2. Practice Your Delivery

   Prior to the meeting, determine what you will say, how you will say it, and in what order. Try to anticipate a variety of reactions and determine how to deal with each of them.

3. Consult a Lawyer

   A termination package must be planned and prepared in advance. An employment lawyer will inform you of your legal obligations owed to the employee, including things such as termination pay, severance pay, and company benefits. Legal counsel will provide you with the best course of action to take to avoid a lawsuit.

4. Bring in Human Resources (“HR”)

   Contact Human Resources about the termination decision and allow an HR representative to be present during the termination meeting. He/she can ensure that you follow proper protocol.

5. Select a Date/Time for the Meeting

   Select a day and time to conduct the termination meeting, taking into account the nature of your work environment and the possible reactions which you might receive from the employee. For example, avoid setting the meeting on birthdays/anniversaries, both company and personal.

6. Hold the Termination Meeting

   Set up and hold a termination meeting including the employee, yourself, and an HR representative to discuss the termination of employment. Ensure that this meeting takes place in a room which is both private and away from the employee’s work area. The meeting should be brief and should not exceed 15 minutes.

7. Explain the Situation

   Explain what is happening, making it clear to the employee that the decision is final and cannot, under any circumstances, be reversed.

8. Be Sensitive

   Be aware of how difficult the situation is and show sympathy and understanding. You want to be direct and to the point, while using a polite tone of voice that offers compassion to the employee’s situation.

9. Provide Support for Career Transition

   Let the employee know what type of reference you are prepared to provide to him/her. If appropriate, bring in a Career Transition Consultant at the end of the separation meeting to help the employee review the situation and determine his/her future career options.

10. Be Flexible

    Allow the employee to remove any and all personal belongings during a time when his/her co-workers are not around (e.g. outside of office hours). Arrange for the employee’s departure and for the return of any company property.

*This article is intended as general information only and does not constitute legal advice of any kind. This material may not be duplicated or distributed, without the written permission of Haynes Law Firm.