Being presented with a Full and Final Release is a pivotal moment for any employee facing termination. This legal document often accompanies severance packages and sets the stage for the future, closing the door on potential claims against your employer in exchange for compensation. Understanding the nuances of this agreement is crucial, as signing prematurely can have significant repercussions.
In this article, we’ll explore the intricacies of full and final releases, including definitions, examples, and real-world cases, to empower you to make informed decisions.
What is a Full and Final Release in the context of employment law?
A Full and Final Release of Employment is a legally binding document provided during termination. It ensures the employee forfeits their right to make any future claims—such as wrongful dismissal or unpaid wages—against the employer in exchange for severance or other compensation. Careful review is essential, as this agreement is often final.
Example of a Full and Final Release in Canada
Here is an example of a full and final release clause in a termination agreement template:
“The Releasor does hereby release and forever discharge the Company, its successors, administrators, assigns, affiliates and related companies, and their directors, officers, and employees (the “Released Parties”) of and from all actions, causes of action, damages, claims, cross-claims, and demands whatsoever (including all damage, loss, and injury not now known or anticipated but which may arise in the future and all effects and consequences thereof), however and wherever arising, which the Releasor had, now has, or which the Releasor, its heirs, administrators, and assigns or any of them hereafter can, shall, or may have in respect of the Releasor’s employment by the Company or the termination thereof.
The Releasor further agrees not to make or continue any claim or take or continue any proceeding against the Released Parties in Canada or elsewhere in the world, with respect to the employment of the Releasor by the Company or with respect to the termination of the Releasor’s employment.
The Releasor warrants that the Releasor has disclosed to the Company any and all human rights complaints, concerns, or issues arising out of or in respect of the Releasor’s employment at the Company. The Releasor confirms that the Releasor is aware of the Releasor’s rights under the Human Rights Code (Ontario) and warrants that the Releasor knows of no violation of the Releasor’s rights under the Human Rights Code (Ontario) during the term of the Releasor’s employment with the Company and is not asserting any rights or advancing any human rights claim or complaint pursuant to the Human Rights Code (Ontario).
It is understood and agreed that both this release and any consideration transferred hereunder are deemed to be no admission whatsoever of liability on the part of the Released Parties.”
Do I have to sign a Full and Final Release right away?
No. You do not need to sign a release immediately. This document is one of the most critical you’ll encounter during termination. Many employees feel pressured to sign quickly to receive severance pay, but rushing could mean waiving significant legal rights or accepting less compensation than you are entitled to.
Additionally, signing a release could relinquish your ability to file claims for wrongful dismissal, workplace harassment, constructive dismissal, or unpaid wages. Employers often include clauses that favour their interests, limiting your opportunities for legal action. Always seek legal advice to ensure the terms are fair and reflect your legal entitlements before signing.
Can a Full and Final Release be invalidated?
It’s important to note that it is exceptionally rare for a court or tribunal to invalidate a signed release. Even if you later discover other issues, the release you signed might still apply. This is why it is essential to ensure the terms are right before signing anything.
That said, there are cases where a termination release has been invalidated because they were unconscionable. Below are examples from Canada where courts ruled in favour of employees under such circumstances
1. Saliken v. Alpine Aerotech Limited Partnership (2016 BCSC 832)
In this case, D’Arcy Wayne Saliken, a 54-year-old helicopter mechanic, was dismissed without notice after a minor workplace incident. The employer claimed just cause for dismissal and pressured Saliken to sign a release waiving all claims during a high-pressure meeting, without providing him time for legal advice.
The court found that:
- The dismissal lacked just cause, as the employer had failed to follow its progressive disciplinary policy.
- The release was invalidated under the Morrison v. Coast Finance Ltd. test for unconscionability, which examines:
- Inequality of bargaining power due to Saliken’s distress and lack of legal counsel.
- Substantial unfairness in the agreement, exacerbated by the employer’s misrepresentation of Saliken’s obligations.
Outcome: The release was deemed unenforceable, and Saliken was awarded six months’ salary in lieu of notice.
2. Howell v. Reitmans (Canada) Ltd. (2002 NLTD 162)
Eileen Howell, a 20-year employee, was terminated from her role as Assistant Manager and offered a $6,000 severance payment contingent on signing a release. The court applied the Stephenson v. Hilti (Canada) Ltd. test for unconscionability, which evaluates:
- Inequality of bargaining power: Howell was financially distressed, lacked legal advice, and was misled into believing signing was legally required.
- Unconscientious use of power: The employer exploited Howell’s vulnerability, using the severance as leverage.
- Substantial unfairness: The severance offer was grossly inadequate for a long-serving employee, denying her statutory and common-law rights.
Outcome: The release was ruled unenforceable, and Howell’s wrongful dismissal claim was allowed to proceed.
3. Rubin v. Home Depot Canada Inc. (2012 ONSC 3053)
Eric Rubin, a 19-year employee, was terminated without warning and presented with a release as part of a severance offer. The court applied the Titus v. William F. Cooke Enterprises Inc. test for unconscionability, finding:
- Grossly unfair terms: Rubin was offered only 28 weeks of severance, barely exceeding the statutory minimum, despite 19 years of service.
- Lack of independent advice: Rubin did not consult legal counsel and was misled about his entitlements.
- Power imbalance: Rubin was distressed, unsophisticated, and unaware of his legal rights.
- Exploitation of vulnerability: The employer pressured Rubin into signing quickly by implying severance was conditional on the release.
Outcome: The release was invalidated, and Rubin was awarded 12 months’ notice.
Key lessons from these cases
These decisions highlight several critical points:
- Releases signed under duress, misrepresentation, or unfair circumstances can be challenged in court.
- Employees should seek legal advice and carefully review the terms before signing.
- Courts may invalidate releases when employers exploit power imbalances or fail to act in good faith during terminations.
By understanding these precedents, employees can better navigate termination situations and safeguard their rights.
Final takeaways on Full and Final Releases
- A Full and Final Release is legally binding; careful review is critical.
- Seek legal advice before signing to ensure fairness.
- Releases can occasionally be invalidated under specific circumstances, such as unconscionability.
- Contact Resolute Legal for legal guidance and support in negotiating your termination agreement.
How an employment lawyer at Resolute Legal can help with a Full and Final Release of Employment
An employment lawyer at Resolute Legal can be your trusted advocate when navigating the complexities of a Full and Final Release. Here’s how we can provide indispensable support:
- Reviewing Terms with Precision: We meticulously analyze your release to identify any unfair or overly restrictive clauses that could impact your future rights.
- Ensuring Compliance with Legal Standards: Our team ensures that your severance offer aligns with your experience, tenure, and the legal entitlements guaranteed under employment law.
- Negotiating Better Terms: We actively negotiate on your behalf to secure a fair and enhanced compensation package, leveraging our deep expertise in employment law.
- Offering Expert Legal Advice: From explaining your rights to crafting a strategy, we guide you through every step to avoid signing unfavourable agreements.
When presented with a release, your next steps are critical:
- Resist the Pressure to Sign Immediately: Employers may urge you to act quickly, but taking time to consult legal experts is vital.
- Engage Resolute Legal’s Employment Lawyers: Our experienced team will review your release to ensure you’re not forfeiting any rights or entitlements.
- Secure What You Deserve: Whether it’s fair severance, damages for wrongful dismissal, or other compensation, we ensure your settlement truly reflects your contributions and circumstances.
Resolute Legal has a proven track record of successfully representing non-unionized individuals across Canada. Don’t leave your future to chance. Contact us today to protect your rights and maximize your compensation.
FAQS: Full and Final Release employment law
What is the definition of a Full and Final Release?
A Full and Final Release is a legally binding agreement where an employee agrees not to pursue any future claims against their employer in exchange for severance or compensation. It typically covers disputes like wrongful dismissal, unpaid wages, and other potential claims arising from employment.
What is Mutual Full and Final Release?
A mutual full and final release is an agreement where both the employer and employee waive the right to bring any claims against each other. It’s a reciprocal arrangement designed to provide closure and prevent future disputes.
What happens if I don’t sign a Full and Final Release form?
If you choose not to sign a full and final release, you can pursue legal claims for wrongful dismissal or unpaid wages. However, refusing may mean forfeiting severance pay or compensation. Seek legal advice to evaluate your rights and ensure you’re making an informed decision about your options.
Can I negotiate the terms of a Full and Final Release?
Yes, the terms of a full and final release are negotiable. An employment lawyer can help you secure fairer severance terms, remove restrictive clauses, or negotiate additional compensation that better aligns with your entitlements, ensuring the agreement reflects your legal and financial rights.
Is a Full and Final Release enforceable in Canada?
Generally, full and final releases are enforceable in Canada if they are signed voluntarily and meet legal standards. However, releases can be challenged in court if signed under duress, misrepresentation, or unfair circumstances, as demonstrated in various legal precedents.
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