It pays to be careful and costs to be careless when asking an employee to sign a release as Home Depot recently discovered when the original notice period it offered was doubled.
Eric Rubin, 63, had worked at Home Depot for almost 20 years, but was terminated in July 2011. Home Depot offered him 28 weeks of pay in lieu of notice, telling him that was above their statutory obligations, which it was – by a quarter of one week. Rubin was entitled to 27 ¾ weeks’ notice under statutory law, but common law entitled him to considerably more because of his long service and age. He was told he could have a week to sign the release, but signed it at the end of the meeting.
The judge found the release “unconscionable” because it met all of four requirements, each of which has a lesson for HR pros, Filion Wakely Thorup Angeletti’s Alex Sinclair said.
The contract was grossly unfair
The judge felt the notice fell short of “community standards” because of Rubin’s age and the narrowness of his past experience.
The employee did not have independent legal advice
“It’s always intelligent for an employer to recommend an employee seek independent legal advice before signing a release,” Sinclair said. “If they had had some discussion and he had obtained independent legal advice it would be unlikely that any subsequent release he signed would be set aside by a court as unconscionable.”
An overwhelming imbalance of power
In an important decision for employers, the judge found there is always an imbalance of power in the favour of the employer, which makes it easier for employees to prove this particular point.
One party knowingly takes advantage of the other party’s vulnerability
The judge found that Home Depot had organized the termination so as to exploit the employee’s vulnerability. Rubin had the impression that to receive the notice in the release he had to complete and return the contract quickly.
Sinclair suggests encouraging employees to seek legal advice, and not accepting a signed release in the termination meeting. It was also important to not “over-sell” the package on offer.
In the end Rubin was awarded 12 months’ notice, which is shorter than some similar recent cases, but that difference may be due to the employee’s lack of seniority or specialization within his role at Home Depot.