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."

Comments

hhhmm..

[geekoid]

..If only there where a group of people skilled in the way of law you could ask this question to...

be pragmatic

[topham]

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.

I am not a Canadian lawyer,

[io333]

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?

it'll also be fraud

[Trepidity]

When you accept the money you fraudulently signed for.

As a layoff winner...

[Nijika]

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.

It depends

[scowling]

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.

Been there, done that

[Alderete]

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!

Re:Usual, not unusal

[IIRCAFAIKIANAL]

Not true in Canada, for example, in Alberta (where I live):

The length of notice an employer is required to give depends on the duration of employment and must be in writing. The minimum notice requirements that employers must give are:

one week - for employment of more than three months, but less than two years
two weeks - for employment of two years, but less than four years,
four weeks - for employment of four years, but less than six years,
five weeks - for employment of six years, but less than eight years,
six weeks - for employment of eight years, but less than 10 years, and
eight weeks - for employment of 10 years or more.
An employer may choose to give pay for the required notice period instead of providing notice. A combination of written notice and pay in lieu of notice (termination pay) is also acceptable.

Taken from here

been there... somewhat...

[Cedric C. Girouard]

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.

Severance Contracts

[Frightened_Turtle]

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.

Do NOT go to the Labour Relations Board

[Anonymous Coward]

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.