If workers waive their rights, can employers evade claims?

THE QUESTION

It seems that more than ever that employees are being required to sign employment contracts that appear to force them to waive their rights. I thought the rationale behind "common law" settlements was to compensate a terminated employee for losses incurred as a result of the termination. Is it really that easy for an employer to evade claims for wrongful dismissal simply by requiring the employee to sign away a right to file for such claims?

THE FIRST ANSWER

Daniel Lublin

Partner, Whitten & Lublin Employment Lawyers, Toronto

If it's too good to be true, it usually is. While many employers now use employment contracts to try to reduce severance obligations to dismissed employees, those employees still retain some fundamental rights. The key is exercising them. First, no contractual-termination clause can ever provide an employee with less than legislated minimum termination and severance pay. A termination clause can only try to limit an employee to those amounts and not more. If the clause is not drafted in a way that respects the legislation, it is void. Many such clauses do not meet this test and courts strike them down. Therefore, employees should not simply assume that a severance-limiting clause is valid – have it reviewed by an expert.

Second, not all employment contracts are binding to begin with. The courts have created various legal tests in order to ensure a more equal playing field when it comes to employment contracts. These tests include ensuring a contract is properly implemented, providing employees with something of value they did not already have in exchange for signing, as well as an opportunity to negotiate terms or have them first reviewed by a lawyer.

For any or all of these reasons, not all contracts or contractual clauses operate to protect employers in the manner they intended.

THE SECOND ANSWER

Bruce Sandy

Principal, Pathfinder Coaching and Consulting, Vancouver

Asking employees to sign contracts that waive their rights to sue if they are wrongfully dismissed is in contravention of fair labour practices, employment standards and legislation.

This is not something that would happen in a unionized work environment because union representatives would never sign off on such an agreement on behalf of the membership. It also likely would not happen with senior executives and managers signing employment contracts if they are consulting an employment lawyer in the negotiation and acceptance process. An employment lawyer would not advise a client to sign an employment contract with this type of clause in it.

If a company is asking its employees to sign a contract with a clause requiring them to waive their right to compensation for being wrongfully dismissed, this will give a prospective employee information about the company and its unfair labour practices. The prospective employee should steer clear of this and other companies with these types of policies and practices. If they need further confirmation around this, they should seek the advice of an employment lawyer.