Purchasing peace of mind against future litigation by offering a dismissed employee an exit package in exchange for a signed release is a common (and usually good) practice for employers. However, the B.C. Supreme Court’s recent decision in Saliken v. Alpine Aerotech Limited Partnership reminds employers that to rely on that release, it is important that the employee understand its effects and have the opportunity to seek legal advice.
Mr. Saliken was a 54 year old helicopter mechanic who had been working for Alpine Aerotech for 15 months when he was summarily dismissed for cause due to his inappropriate behaviour. Essentially, in response to a safety auditor’s query about unlabelled bottles and uncalibrated tools, Mr. Saliken became annoyed and tossed the bottles and tool in the garbage. This interaction did not particularly upset the auditor or affect the result of the audit, but it enraged Alpine’s President. He decided the negative perception which the incident could have created in the mind of a potential major customer warranted immediate dismissal.
Mr. Saliken was dismissed the next day. He was brought into a meeting, told he was being fired for cause, and given paperwork to review, including a release. He signed the documents on the spot. The whole meeting took 15 minutes.
Despite having signed the release, Mr. Saliken sued for wrongful dismissal, claiming he was entitled to six months’ pay in lieu of notice. While the case turns on two other major holdings: (1) that this incident was cause for discipline but not enough to warrant termination, and (2) that the employer did not offer valid consideration in exchange for the release; the Court also found that the release was unenforceable because it was unconscionable. The Court relied on the following factors in support of unconscionability:
- Saliken was surprised, distressed and concerned at the time of the meeting.
- Saliken did not understand much of what the termination documents said nor were they explained to him.
- The documents inaccurately suggested that Alpine Aerotech had just cause for termination and misled Mr. Saliken with respect to proper consideration.
- Alpine Aerotech’s representatives made no suggestion that Mr. Saliken had the opportunity to seek independent legal advice.
- Throughout the termination meeting Alpine Aerotech exerted intimidation and pressure by silence.
Taken together, these findings suggest that there may be a positive obligation on employers to provide an explanation of the effects of a release and to encourage, or at least suggest, that the employee seek independent legal advice before signing. This case highlights the importance of conducting termination meetings in a thoughtful manner and incorporating certain crucial steps when it comes to obtaining a valid release:
- Offer the employee consideration for the release;
- Explain the legal effect of the release to the employee;
- Give the employee a reasonable deadline to sign and return the release;
- Encourage the employee to take the release home and think about it before signing; and,
- Inform the employee that they may seek legal advice.