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The Question

I was terminated without cause with a four-week termination notice. I was asked to sign a release, but in response, I asked for severance for my four-plus years of service with them.

They refused to offer me a severance. Because I didn’t sign the release, my employer sent in my record of employment as a dismissal with cause to Service Canada. They didn’t provide me with termination pay. What course of action should I take now?

The First Answer

Charles Osuji and Claire Lee, Osuji & Smith Lawyers, Calgary

There are a number of factors involved here, but mainly the issue of release and termination for cause. In the context of employment law, a release typically refers to a written document wherein the employee confirms their intent to release and discharge the employer from any potential and existing liabilities. An effective release may be used as a complete defence to a potential claim the dismissed employee may have against the employer. However, a release would have no real value if it were prepared on the basis that the dismissed employee receives only what they are already entitled to at law (e.g., the statutory minimum or contractual termination notice). In other words, there must be quid pro quo. In Alberta, you would be entitled to at least four weeks of termination notice based on your four-plus years of service; other provinces and territories provide a similar entitlement. Therefore, a release signed in exchange for nothing more than what you already deserve would not have had any force and effect.

Similarly, your employer cannot force you to sign a release in its favour, and your refusal to sign a release would not justify the employer’s decision to terminate the employment relationship for cause. Not to mention that your employment was already terminated on a without cause basis when they asked you to sign the release. While the analysis of “just cause” termination is highly contextual and fact-specific, the employer must prove that there was serious misconduct by the dismissed employee, such as fraud or theft, or that the employee failed to improve their performance despite express and clear warning and reasonable opportunity to do so.

In your case, if your refusal to sign the release was the only ground for the employer to allege cause, there was likely no sufficient basis for such an allegation. In light of the above, you may be owed the four weeks’ statutory minimum and more, subject to the terms of your employment.

The Second Answer

Amiri Dear, lawyer, Hummingbird Lawyers LLP, Toronto

You are not technically entitled to severance pay. This does not however detract from your employer improperly completing your record of employment as you were not terminated with cause.

“Severance pay” under the provisions of Ontario’s Employment Standards Act, 2000 (the “ESA”) is distinct from termination pay. Termination pay is given to an employee in lieu of notice and is calculated based on the number of years of employment, being one week’s wages for each year that s/he has worked for an employer up to eight years. Severance pay is an additional payment to which an employee is entitled if s/he: (a) has worked for the employer for more than five years; and (b) the employer has a payroll of at least $2.5 million or has severed the employment of 50 or more employees in a six-month period because all or a part of its business has recently closed.

Both calculations with respect to termination and severance pay are set by the ESA. The employer cannot contract out of these provisions and must make payments regardless of whether a release is signed or not.

Since your employment was less than five years, under the ESA, you would not be entitled to severance pay, however, you would be entitled to notice or termination pay in lieu thereof.

It is common for employers to ask that a release be signed upon someone’s employment being terminated, especially if they are making an additional payment over and above the statutory entitlements. You are entitled to minimum notice or pay in lieu of notice for a termination without cause. You may also be entitled to further common law damages, which equates to roughly one month’s pay for every year that you have worked for the employer.

The employer is not entitled to punish you for pushing back on your termination entitlements, and they have no right to change the reason for termination on your record of employment from “without cause” to “with cause”. This characterization may impact your entitlement to unemployment insurance and may have other impacts on your future employment.

I would advise you to seek the advice of an employment lawyer to assess your situation and initiate a demand on your behalf.

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