Employee’s Claims of Economic Duress, Misrepresentation Not Enough to Invalidate Signed Release

Termination for Cause

Considerable stress and emotion surrounds the termination process – for both employees and their employers. During times of economic downturn, many employers face the tough decision of having to cut back on their number of employees. When presented with a termination package, even a generous one, most employees are understandably upset and worried about their economic futures. Many employees feel pressured to sign off on their termination package prior to the deadline provided to ensure there is no interruption of income over the notice period being offered. But what happens when an employee decides after signing the Release that the only reason they did so was due to inaccurate information provided by the employer at the time of termination and stress over finances?

In a decision released August 24, 2016, Nicastro v. Tenaris Algoma Tubes Inc., 2016 HRTO 1128 (CanLII), the Ontario Human Rights Tribunal dealt with this issue. Ms. Jacqueline Nicastro filed a Human Rights Application alleging discrimination on the basis of age and disability, despite previously signing a Release in exchange for a 12 month termination package. Nicastro was terminated by her employer, Tenaris Algoma Tubes Inc. (“Tenaris”), in 2014 after 14 years of service as part of a reduction of the employer’s workforce across Canada. Tenaris began reducing its workforce in 2013 and continued this process into 2015, reducing its total employees from approximately 1400 in 2011 to 550 in December 2015. When presenting Nicastro with her termination package, Tenaris informed Nicastro that she was “the first of many to be terminated and that 12 months is pretty good.” Nicastro negotiated an extension of benefits due to ongoing medical issues but did not negotiate any other terms. There was no discussion as to what would happen if Nicastro did not sign the Release by the date required, nor did Nicastro request an extension of the deadline. In fact, despite being very upset by the termination, Nicastro signed the Release four days prior to the deadline out of fear that if she did not sign off by the deadline, there would be a delay in payment of the termination package. Nicastro did not have the termination package reviewed by a lawyer prior to accepting it as she was experiencing a financial crunch with university tuition payments due for her children. When Nicastro later discovered that she was the only employee terminated at that time, she felt that she had been deliberately misled by Tenaris. Tenaris did terminate many employees and significantly reduced its workforce again 8 months after Nicastro’s termination. Nicastro then filed an application to the Human Rights Tribunal seeking damages for discrimination on the basis of age and disability.

The Vice Chair determined that there was insufficient evidence to establish that the Release should be invalidated on the basis of economic duress or misrepresentation. Although Nicastro was upset by the termination and experiencing a financial crunch as well as arthritis, the Vice Chair determined that she was not forced to accept the termination package and sign the Release. There was no improper conduct by Tenaris in the timeframe provided to Nicastro to accept the termination package, nor did Tenaris suggest that Nicastro would not be provided with her statutory minimums if she did not accept the package by the deadline. Nicastro did not request an extension of the deadline, nor negotiate the terms of the package other than the benefits. Further, Nicastro’s health was not a barrier to her ability to understand or appreciate the implications of signing the Release. Regarding the claim of misrepresentation, the Vice Chair determined that Tenaris did not deliberately mislead Nicastro or induce her into signing the Release. Tenaris did terminate other employees prior to Nicastro’s termination as well as in the months following Nicastro’s termination, and had drastically reduced its workforce by December 2015. As a result, the Release was upheld and Nicastro’s application was dismissed.

Lessons for Employees

While many employees experience emotional and financial distress when they are terminated, this is not always enough for a signed Release to later be deemed invalid. When presented with a termination package and Release, employees must carefully review the terms prior to signing the Release; once the Release is signed, it is very difficult to have it overturned. Employees should not be afraid to ask questions of their employers, including requesting an extension of the deadline so that proper legal advice can be obtained and consideration given. Further, typically a deliberate intention by the employer to deceive the employee and induce the employee into signing the Release based on untrue information is required to have a signed Release declared invalid on the basis of misrepresentation.

Lessons for Employers

Employers should be careful in their dealings with employees during the termination process, both in their actions and communications, to avoid claims of duress and misrepresentation. Employers should not put undue pressure on employees to accept termination packages and sign Releases. Employers should provide their employees with a reasonable period of time to have the documents reviewed and should be open for requests for extensions of the deadlines where reasonable. Employers should also be careful about the information provided to employees regarding the reason for termination and when answering questions asked by their staff to avoid claims of misrepresentation. Prior to terminating an employee, employers should seek the advice of an experienced employment lawyer to provide guidance and recommendations regarding the content of the termination package as well as how best to handle the termination process through to its conclusion.

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