Resolving Wrongful Dismissals with Fair Employee Termination Packages |
Some common question employment lawyers are often asked are: how will my wrongful dismissal case be resolved? What is a termination package? What are the steps involved in obtaining my severance compensation?
Imagine yourself as an employee having just lost your job. What do most employees in such circumstances do? Generally, employees will consult with an experienced employment lawyer to understand their legal rights and options. Most often, the employment lawyer will then be retained to provide guidance and assistance with severance negotiations.
If, as in many cases, severance negotiations with an employment lawyer’s assistance are successful, most employees agree to accept a Termination Package settlement with their former employer. But what exactly is a termination package and what does it include?
As a starting point, a termination package is a legal contract that establishes the specific terms and conditions on which the parties have settled their disputed. So, it will usually stipulate an exchange of severance compensation from the employer in exchange for the employee agreeing to close any claims he/she may have by providing the employer with a signed a legal release. (The purpose of a legal release is for the employee to agree to forfeit (waive) any legal claims they may have against their former employer arising from the termination of their employment, including for additional compensation from the loss of their employment).
In most workplace disputes, this is typically the scenario that plays out in a wrongful dismissal dispute, and often requires hard work and detailed negotiations.
In Ontario, the vast majority of termination of employment or wrongful dismissal cases are resolved long before they ever reach a court room. Statistics show that the settlement rate for civil lawsuits in Ontario is over 96%, which means that only about 3% or 4% of cases that go all the way through trial.
Confidentiality: What Can Employees Disclose about a Termination Package?
An employee termination package will vary from case-to-case, but in addition to an exchange of severance compensation for a legal release, most will contain Confidentiality Clause, which states that the employee is not allowed to tell others about the terms of settlement. This is called a confidentiality requirement.
In addition to a confidentiality requirement, a termination package will sometimes include a Non-Disparagement Clause,” which requires either (or both) parties not to make any statements that are disparaging, negative or critical of the other.
If you have signed (or been offered) a termination package agreement, it is not unusual for it to include a legal promise not to disclose the settlement terms, especially severance payment. This means that you are prohibited from speaking to others, including colleagues about the details. This is normally because employers will not want to set a precedent (example) for making payments.
It is important to make sure that the employer allows some exceptions to the settlement confidentiality requirement, to allow the employee to speak freely to their employment lawyer or immediate family and assess the adequacy of the employer’s severance offer under Ontario’s employment law.
What Happens if an Employee Violates a Termination Package Confidentiality Requirement?
Once the termination package has been signed, it becomes a legally binding document (contract). This means that if there is a breach of the settlement terms, the employer may sue the employee breach of contact. Just as an employee can sue the employer it it fails to pay the required severance payment in a severance pay, the employer too can sue the employee for breach of contract and seek damages (losses suffered) if he/she violates the settlement confidentiality obligation.
In most cases, an employer’s decision to sue an employee for breach of settlement confidentiality will rely on an enforceable repayment clause in the termination package, where the employee may be ordered to repay some (or all) of the severance money they were paid by the employer.
Take-Away Lessons
It is important for both employers and employees to comply with negotiated terms of settlement in a signed termination package. That is why parties (especially employees) should carefully review the settlement terms negotiated, and seek clarification from an experienced employment lawyer. Among other things, employees should confirm what they can (or cannot) say regarding the termination of their employment and settlement with their employer.
Contact Bune Law for Help
At Bune Law in Toronto, you will be provided with experienced legal advice on a wide variety of employment matters, including what steps to take if your employment was terminated for cause. Our employment lawyer takes pride in a reputation for excellence in client service. Contact Bune Law online or at 647-822-5492 for a consultation.
If you are an employer, you should speak with an employment lawyer to discuss your options before making the decision to terminate employment and obtain the proper termination documentation for your employee.
If you are an employee who has been terminated with or without cause, you should seek legal advice even if you have a written employment agreement that appears to restrict your notice/severance entitlements. You may be entitled to more generous severance compensation under Ontario common law.
No matter which side you are on, our employment lawyer is constantly up-to-date with the law and ready to assist you. Don’t hesitate to reach out to Bune Law at 647-822-5492.
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