By Lianne Sharvit – Summer Law Student
In a recent blog post titled “Fired at 63, court ups 7-month settlement to 12” (click here), Sheryl Smolkin made an important point very clear: While losing your job without cause can be extremely difficult and stressful, those feelings may be exacerbated if you do not seek independent legal advice to ensure you have been provided with a fair settlement in lieu of notice. That is what happened to Eric Rubin, a former Home Depot Canada employee who was fired after 20 years of working for the company.
In lieu of notice, Rubin accepted 28 weeks pay worth 38,977.81, as well as 28 weeks of life insurance, health insurance and dental benefits that would be terminated when he found a new job. He also received an extension of 8 weeks on his short and long term disability benefits. Rubin accepted this offer on the spot. He also signed a form releasing the company from further obligations, as he was told that the offer exceeded the legal requirements of 27 ¾ weeks of pay and that he had to sign the release within five days in order to secure it.
Realizing later that he had made a mistake, Rubin sued Home Depot, and was awarded one year’s pay by the Ontario Superior Court Justice Lederer (click here). Justice Lederer came to this decision by going through four criteria:
Firstly, Justice Lederer looked at whether the agreement was grossly unfair. The judge was of the opinion that an employee of 20 years that was nearing the end of his working life and was wrongfully dismissed should be entitled to more than 28 weeks notice.
Secondly, the judge looked at whether Rubin had independent legal advice when making the decision. The answer was clearly no, as a lawyer would have advised him that he in fact was entitled to at least 27 ¾ weeks of pay even if he did not sign the release, and that he could sue for more.
Thirdly, Justice Lederer looked at whether there was an imbalance of power. The judge held that there is an inherent power imbalance between an employer and employee, and that there is also an inherent power imbalance created when an employer is terminating the employee. Further, the employee did not mitigate the imbalance in any way, but rather likely exacerbated it by, for example, starting off the conversation by telling Rubin it was his last day.
Finally, Justice Lederer looked at whether Home Depot took advantage of Rubin in his vulnerable state. The judge held that the offer was presented to Rubin in a way which made it seem as if he had no choice but to accept it as he was essentially being given more than he was entitled to.
In the end, Justice Lederer held that the release Rubin had signed could not be enforced and that he was entitled to 1 year of salary and benefits. However, this all could have been avoided if Rubin had sought independent legal advice from the outset, demonstrating the importance of doing so. Fortunately, it also demonstrates that if you have settled for less than you deserve, there may still be legal recourse.