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Signed Release Found to be Unenforceable

Signed Release Found to be Unenforceable

In Rubin v. Home Depot Canada Inc., the Plaintiff commenced legal proceedings for wrongful dismissal and claimed that the Release he executed the same day he was terminated should not be enforced under the circumstances.

The Plaintiff, who was in his early 60’s, had worked for Home Depot for over 19 years as a Competitive Shopper. On July 28, 2011 the Plaintiff was called into a meeting and informed that his employment was terminated without cause.  The Company presented him with a letter setting out their severance proposal along with a Release.  The letter offered 28 weeks’ pay in lieu of notice and the Plaintiff was to sign the Release.  The letter also stated that this payment exceeded their obligations. The Plaintiff did not know that his statutory entitlements under the Employment Standards Act were 27 ¾ weeks’ pay and as such, he was signing a release for only ¼ week’s pay.  The Plaintiff did not know that he was not required to sign a release to receive his statutory amounts of 27 ¾ weeks’ pay.  The Plaintiff did not know his statutory rights nor that he had a right to damages for wrongful dismissal at common law. The Plaintiff executed the Release during the termination meeting believing this was his only option and notwithstanding that he had a week to sign back the Release.

The Court looked at the termination letter and found that the letter did not set out any other options  and as such, the approach taken by the Company was to “take advantage of the vulnerability of the employee”.  The Plaintiff signed the Release in the termination meeting because he thought that was all he was entitled to. The Court found that the Company had mislead the Plaintiff into thinking that their offer of 28 weeks in exchange for a release was his only option.  The Court stated:

“These reasons should not be taken, in any way, to detract from the right of parties to contract and be bound by their agreements. It simply confirms that employers cannot use their superior position to mislead an employee into an agreement that is unconscionable.”

The Court set aside the Release.  In reviewing the Bardal factors, the Court determined that the reasonable notice period was 12 months.

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