Author: Daniel A. Lublin
This is the cautionary tale of two cases that together reveal the fate of employees too quick to sign their names.
Just-fired, after 15 years as a sales manager for Pennzoil-Quaker State Canada, Patrick Barr found himself in a pickle. Presented with an offer of severance, Barr was given two weeks to decide his fate: sign his name on the documents, thus accepting the company’s offer, or receive nothing more.
According to Barr, he was urged several times to sign off on the deal by the HR director, who happened to be his trusted friend, and told not to consult with a lawyer. Barr also claimed that the company, knowing that he had recently been through costly divorce proceedings, “preyed” on his concerns of mounting legal costs by threatening that, if he didn’t agree to its initial offer, he would ultimately get less.
Relying on his friend’s advice and presumably fearful of challenging his ex-employer in court, Barr signed the documents and was paid according to the terms of the offer. But time doesn’t heal all wounds. Later on, believing the deal was unfair, Barr sued Pennzoil, claiming that the agreement was substantially one-sided, signed under duress and should, therefore, be set aside.
But an Ontario court recently disagreed with Barr, dismissing his claim at a preliminary hearing. Barr could have refused his friend’s advice and discussed the deal with a lawyer, the court ruled. In fact, he was given two weeks to do so, even meeting with his financial advisor during this time. The deal was less than what Barr could have received and was “unfortunate,” ruled the court. However, it was not so bad that it was prepared to set it aside.
Similarly, when senior Ontario lawyer Douglas Titus was dismissed by William F. Cooke Enterprises, he immediately agreed to its offer of severance. Titus read the termination documents at the meeting, including the release, which stated in bold, capitalized letters: “I have read this document and I understand that it contains a full and final release of all claims… I am signing this document voluntarily.” He signed his name and left with a cheque in his back pocket.
Later on, however, Titus sued, claiming that the release was signed under duress and the deal he received less than fair. But Titus, a lawyer for more than 20 years, with self-professed experience in employment law, couldn’t convince the Court that the deal he signed was so unfair it should be invalid. He was urged to take time to read the documents and knew that it was open to him to negotiate for a greater amount. But, according to the Court, “with eyes wide open,” he declined both opportunities, preferring to immediately accept the package instead.
These cases provide a stark message for employees when confronted with an offer of severance or an ironclad release: fair or not, seldom will a signed document be set aside. Employees can avoid this result by observing the following advice:
- Like any commodity, a termination package is usually negotiable. Seek specialized counsel before signing your name.
- Duress, coercion or unconscionability are not easily proven – especially when the employee is given time to consider the offer.
- Ask for more time or the opportunity to meet with a lawyer if the terms of an offer or release are unclear.