Slashdot Mirror
Dealing w/ Draconian Severance Contracts?
outOfWork asks: "I've just been recently announced that I was getting laid off from yet another dot-bomb company. I have received my papers and they are simply dragonian! I understand the need not to disclose any information on the company I was with (that's only natural; I have also signed a similar paper when I started working there anyways), however the papers they are requesting me to sign do include such terms as not being to sue (should I require to). I thought suing someone or a company was a fundamental freedom that we enjoyed here in Canada. If I do not sign these papers, they do mention that I will not be entitled to my severence's package. I'm fairly certain that several companies do these sorts of things, however do they have the right to do this? This company has had a bad reputation when it comes to how HR deals with certain issues and I'm wondering if they might be trying to pull a fast one on us. With the market being what it is, I could sure use that severence's package. Your input would be very welcome."
..If only there where a group of people skilled in the way of law you could ask this question to...
The Kruger Dunning explains most post on
Here's the best I can offer: Go See A Lawyer.
Hmmm. Your ideas are intriguing to me and I wish to subscribe to your newsletter.
Be pragmatic.
I don't support crap like this, but ask yourself a few questions first. Do you believe you have a need or cause to sue the company? Laying you off isn't generally a cause.
Is the severance package more than is required by law? check your provincial, or federal labour code (certain companies, Banks for instance, have to meet only federal labour code.)
If the severence package is more than you would normally be entitled to when layed off, and does NOT include any further requirements as to confidentiality, non-compete etc more than your initial contract then you may as well sign it.
On the other hand, if the non-compete/confidential information clauses are more significant than what you signed when you got your employement you probably should NOT sign such an agreement.
however,
It seems to me that if you are *not* already entitled to such a severance package, that they are, in essence,
making you a settlement offer
which you may or may not choose to accept.
However,
if you were already entitled to the package, and they suddently would not give it to you without this additional condition,
then you could possibly, at a future date, argue during the suit that you were forced to agree to the additional condition while under some sort of duress,
in which case the document may be held to be invalid. But this is risky.
Maybe instead of the collective *cough* wisdom of Slashdot, might I suggest that
you see a real lawyer instead?
When you accept the money you fraudulently signed for.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Luckily you're in Canada, where the layoff isn't such a bad thing if you're prepared. Some advice as a survivor (or lottery winner if you look at it that way).
1) Weigh the severance. How long could you coast on what they're giving you before you have to apply for UI?
2) Apply for UI right away (In Canada). You'll be entitled to at least 51% of your previous salary, and there are other benefits like education bonuses and stuff.
3) If you really are going to file a lawsuit, review why. If it's just because you're mad think again. It may end up costing you more than you ever win.
4) Those disclosure agreements are nearly impossible to enforce because they usually do step well beyond the laws they are built around.
Luck favors the prepared, darling.
Is your severance package generous? That is, is it more than two weeks' pay? In any jurisdiction in Canada, you're entitled to two weeks' pay or two weeks' notice when being terminated without cause or laid off. They can't deny you that, end of story. Even if they go bankrupt, the principals of the company are personally responsible for two weeks' pay (if you don't get notice instead).
Now, IANAL.
If you sign away your right to sue, it's gone. You have entered into a binding contract; contract law in Canada is pretty straightforward. The questions become: is the severance package attractive enough? Will I regret signing away my ability to sue?
The third question is "do I want to burn my bridge?" If you refuse to sign, the odds increase that you won't get a good reference for future work, and tech work is harder and harder to find in Canada since the dot-bomb.
Were it me in your shoes and they were offering me (say) a month's pay, I'd sign, ask for a written reference, and start looking for work. Of course, I'd also bitch and moan about their ridiculous terms to anyone who'd listen, but that doesn't cost me anything.
www.kitchengeek.com -- Nosh for
These provisions are in no way unusual, they are boiler plate. And yes, they have the right. You do not have to sign, it's optional. Your severance pay is a courtesy, and they aren't required to pay you any. So if you want your severance pay, sign your papers. You're not going to get it if you don't. Your only reason to not sign these papers is if you believe you have a legitimate cause for legal action against this company.
C//
When you take your next job, learn from this. The time for negotiating a severance package is on the way in! A severance package is part of your total compensation, just like vacation, profit sharing, etc.
Get it in writing.
A year and a half ago, my dot.bomb went under, and they gave us a pretty egregious agreement to sign. I signed it and turned it in, because I had not only severance (really, paying out of my vacation) but also several thousand dollars in expenses (training classes I'd put on my credit card).
However, upon further research and advice from others who had done this before, it turned out that I could have instead filed with the California Labor Board, and gotten not only the severance and expenses, but penalties if they were not paid in a timely fashion.
So, if I'd done some research, and been willing to go without the checks for a few extra weeks (or maybe a few months), I might have actually made more money not signing the agreement
In the end, though, the one-sided terms made the agreement a null contract; I was getting nothing (that I was not already entitled to by law), the company was getting something, and a valid contract requires that both parties actually get something from the other. I don't feel bound by the agreement (in areas like confidentiality, not talking trash, etc. -- though I don't have any reason to violate them either), and don't have any reason to test the more expensive clauses (not suing).
The real point here is, if you don't want to sign for some reason, look into your local labor laws. In California, the process for filing is (apparently) fairly simple, and the process of finding against the company is straightforward.
There are usually local organizations, usually not-for-profits, which can advise you of your rights and the law. Look for them via Google, if you can't find someone to give you a direct reference.
Good luck!
When a co-worker was layed off from our rather small company, he refused the deal, much to the consternation of the HR director. The sticking point for him was the non-compete clause. He decided it was foolish to rule out employment from a competitor for a couple weeks worth of pay. Here in my state, the employer isn't required to pay you for saved-up-vacation when you leave, nor any kind of severance, so the difference between what they have to do (pay you for the time you worked) and what they are offering could be quite substantial.
A second cow-worker told me his former boss had threatened to withold the last paycheck unless he signed the papers, which would have been illegal. So he called the guys bluff saying "Keep it, I've already signed everything I'm going to sign back when I was hired." The boss caved and handed him his money.
If you are thinking of not taking the deal, you could try editing the severance agreement yourself and deleting the objectionable parts before signing it as a counter-offer.
Don't moderate flamebait as Troll. Know the difference or you will be Meta-moderated.
Not necessarily 2 weeks.. In BC, you get 2 weeks after being there a year, and more if you were there 3+ years:
. ht m#section63
http://www.qp.gov.bc.ca/statreg/stat/E/96113_01
Liability resulting from length of service
63 (1) After 3 consecutive months of employment, the employer becomes liable to pay an employee an amount equal to one week's wages as compensation for length of service.
(2) The employer's liability for compensation for length of service increases as follows:
(a) after 12 consecutive months of employment, to an amount equal to 2 weeks' wages;
(b) after 3 consecutive years of employment, to an amount equal to 3 weeks' wages plus one additional week's wages for each additional year of employment, to a maximum of 8 weeks' wages.
Last December, I burned out, went on long time disability with my corporate insurance package, and three weeks later, kaboom! Get called in a meeting, where they tell me I'm no longer part of the company's plan.
They tried to have me sign a bunch of papers, which of course, I did not want to sign. Said I had to think it over. They even tried to pressure me into signing. I took them to a lawyer specialized in labor issues. He said I should just tell them to shove it. Legally, when on sick leave, you cannot be fired. So I decided to run with it, lodged a complaint with the labor board in Quebec. Real easy process to start.
Within days, I was contacted by one of their lawyers, saying I had done the right thing. Within a month, I had gone to mediation with my ex employer, got a very fat check out of it, a letter of reference, and a contact person at the company that will by law confirm whatever was written in the letter.
Lesson here: TALK TO A LAWYER.
Lesson 2: Get in touch with the labor board in your province. They are there to protect the WORKERS. They will side with you if you have a cause, or tell you up front you're wasting their time and yours.
'nuff said. Hope things will work out good for you.
Marriage is considered capital punishment for the theft of a goat in some third world countries...
A lot of companies attempt this sort of thing. One reader suggested that if your dot bomb company is going down the tubes, take the money and run. He's got a pretty good point. There probably won't be anything left to sue them for, unless they were up to some Enron-style activities.
In the United States, there must be an equitable exchange in such a contract for it to be valid. Suppose they get you to agree not to sue them. Then, a while after your departure, they renege on paying you severance as they agreed. Presumably, because you signed that paper you can't sue them. But the truth is, if they don't stand by their part of the agreement, then the contract is null and void. You can sue the crap out of them and collect triple damages.
One of my favorites is the "non-compete" clause, where you agree not to compete against your former company. This never stands in court, because they can't force you not to earn a living. When another company hires you for your skills, technically that means you could be competing against your old company.
Again, in the US, if the compensation you receive is not considered equitable to the conditions that you are being asked to accept, any such contract is null and void. If the severance is good -- take it! But if you have any doubts, maybe you should seek counsel. I live in Massachusetts, and the Attorney General's office is very aggressive in pursuing companies that pull these sort of things. The office offers legal advice and free counsel for people who want to find out if they have a complaint. Maybe your province in Canada offers something similar?
I wish you the best of luck.
Whew! This water sure is cold!
Actually, it's not the LRB you should talk to. The LRB's mandate has to do with unions and their relationships with companies. Individuals should talk to the Labour Standards Branch (that's the BC term, the other Provinces will have similar terminology).
In your case, you should talk to a lawyer. You can get half an hour for very little with most Bar Associations. Just call the local number.
Now, about the suing thing. If you accept a payout, usually that enjoins you from suing - that's protection for you and your former employer. It's another contract - they agree to pay you money to tide you over until you can find another job, and in return you agree not to sue them. If you were forced to sign under duress, that's another matter. If you think that what they are offering is inadequate, then you need to negotiate a better result. Again, a lawyer who specialises in employment law is the best person to talk to, because such people deal with these situations all the time, and can tell you what the market bears.
IANAL, but my field is HR consulting (I'm an Industrial Psychologist), and I deal fairly frequently with people who have been terminated - it's part of my practice. The non-disclosure aspect they may not be able to enforce - they terminated the contract, and a court might find that they thereby waived their rights. Again, you need a lawyer to give you advice on that.
Good luck.
No most of what this person is describing is completely legal and enforcable in the US.
i na tions/sepagreementsT.htm
In the US, if you are entitled to a severance package as part of the terms aand conditions of your employment, the employer cannot require you to sign a no-sue agreement at the time of your departure in exchange for this severence since you were already entitled to it. The employee has to offer you something extra. If they try this, the agreement is valueless.
In addition there are a lot of very strict rules covering the form and execution of this agreement, especially if the employer wishes immunity from suit under ADEA. Some of these can be seen at:
http://www.cbia.com/HRBus/EmploymentIssues/Term
Let me preface this by saying that I am not a lawyer and this post does not constitute legal advice.
I am Canadian and 5 1/2 years ago I went through what you are going through . The most important piece of advice that I can give you is SEE A LAWYER. If you don't know one, get a reference to a good lawyer from friends or family. It won't cost you that much for an initial consultation (maybe $80-$150). It is worth it's weight in gold for the piece of mind of knowing where you stand. Once you know exactly what your rights and the employers obligations are, you can make an informed decision about signing.
The situation that you describe is common these days - the company is looking to limit all liabilities with respect to you employment in order to avoid being blindsided with a costly lawsuit in the future. I worked for a company where that (lawsuit) happened and it cost them big time both financially and in terms of distraction of key management. In exchange for that they offer you a severance package over and above the legal minimum, (which, IIRC, here in Ontario is a paltry one week's pay for each year of service plus vacation pay outstanding). You are legally entitled to your provincially mandated minimum and under no obligation to sign ANYTHING for that minimum.
I don't know what you have been offered but it should be at least one month's pay for each year of service plus vacation pay outstanding. Still, do not sign based on what I just said - get a lawyer to review the terms and advise you. Your lawyer will have a big fat reference book which lists settlements in Canada by industry/job classification/experience. He can tell you whether the financial terms are 'fair' and whether the legal terms are reasonable. The employer is required to give you some time for you to get their 'offer' reviewed by a lawyer. You should not have to sign 'on the spot'.
Also, note that you have a golden one-time (per layoff) opportunity to direct a fairly large chunk of you severance package into your retirement savings (over and a above your allowable annual amount) without income tax deductions under these circumstances. Get the info from your employer or Revenue Canada. You will never see that money - it goes from directly from your employer into the retirement plan that you designate BUT IT IS TAX FREE and once of the few 'gifts' that you'll get.
Best of luck finding a job. Layoffs suck and are a jolt to the system but always keep in mind that you will get another job and probably be better off for it.
Finally, and in case I didn't mention it, this post does not constitute legal advice - please GET A LAWYER TO REVIEW THE PACKAGE AND ANYTHING THAT YOU WILL SIGN !
Sigs are bad for your health.
I am an employment lawyer practicing in Canada (Ontario specifically), so I know this subject very well.
:).
Why do people who know something about computers assume that this makes them qualified to give legal opinions? Do NOT go to the Labour Relations Board with those severance documents - they're not interested in seeing them and, contrary to popular opinion, they're not in the business of reviewing documents like that or giving employees advice about their termination. The labour relations board is, by and large, in the business of adjudicating disputes under the labour relations act of the province in question. The labour relations act deals primarily with disputes between employers and unions, and has virtually nothing to do with individual, non-union employee terminations.
What you want to do is to take those documents to a lawyer experienced in employment law, and get some advice as to whether the offer that is being proposed to you is reasonable or not.
In all the common law provinces of Canada (i.e. every province except Quebec) a non-government employee is entitled to reasonable notice of termination or compensation in lieu of reasonable notice, unless he or she has signed a valid employment contract substituting some other period of notice (and most employees have not done this). This is a common law entitlement enforced through the courts, not the Labour Relations Board, which has nothing to do with this. Of course you're not entitled to this if you're terminated for just cause, but economic downsizing is not just cause. The amount of notice that is "reasonable" depends primarily but not exclusively on your age, length of service and position with the Company and it's not a mathematical formula. It's also subject to a reduction for other earnings in subsequent employment during the reasonable notice period, or for earnings that you could have made during that period with reasonable diligence. For example, if you're terminated without notice, and your reasonable notice period is determined to be six months, your entitlement is six months pay (including things like benefit coverage) less your earnings in other employment in the six month period following your date of termination, either actual earnings or earnings you could have made if you had been diligently searching for other employment instead of spending your days watching TV and reading Slashdot
You're probably in a provincially regulated company (most tech companies would be provincial) so I'm not going to bother talking about unjust dismissal complaints under the Canada Labour Code - your lawyer can tell you about them if it turns out your employer is federally regulated.
There is also a statutory minimum entitlement upon termination which varies from province to province. This amount is often much, much less than the common law entitlement and an employer cannot demand a release in return for paying you this statutory minimum. This entitlement is enforced by making a complaint to an employment standards officer at the Ministry of Labour (or whatever they call it in your province) again, this is NOT the Labour Relations Board. In Ontario for about the past 3 or 4 years the labour relations board has had the jurisdiction to hear appeals from decisions of employment standards officers, but the labour relations board does not make initial decisions about employment standards entitlements and, as I said above, it has nothing to do with common law entitlement, which is the real issue you need to know about.
In Ontario commencing an employment standards complaint precludes you from suing for wrongful dismissal, so watch out. Your province may be different.
It is very, very common for a downsizing employer in Canada to offer an amount in excess of the statutory minimum in return for a release. It's a perfectly acceptable thing to do, but you need to determine whether the amount that is being offered is a realistic approximation of your common law entitlement.
The lawyer experienced in employment law can tell you almost immediately whether the Company's offer is reasonable.