Beware of an employee who signs too quickly

The Commission des relations du travail du Québec (the "Labour Board") and the Court of Appeal of Québec recently issued rulings regarding the validity of release & discharge agreements with employees relating to the termination of their employment. These rulings confirm that it is possible for an employer to obtain a waiver by the employee of his right to sue his employer for a reasonable indemnity in lieu of notice after the termination of employment and that it is important to give the employee enough time to review the documents to be signed.

Employee complaint ruled admissible despite signed release

The Labour Board recently allowed the complaint of an employee for a prohibited practice pursuant to An Act Respecting Labour Standards following her dismissal, despite the fact that the employee had signed a release pursuant to which she waived any recourse against her employer1.

The employee suffers from Crohn's disease and was a chemist-compounder in a cosmetic company. After a relapse of her disease, she had to take a leave of absence on the recommendation of her treating physician. When called in to provide in person the medical certificate relating to her leave of absence, she was asked by her employer how she felt. She responded she was in pain and had to take a morphine derivative. Thereafter the employer explained that the goal of the meeting was, in fact, to inform her of her dismissal for inadequate performance.

She was given a letter of termination of employment explaining the terms offered by the employer as well as a release & discharge document (the "Release") which she was requested to sign. The employee signed the documents as she was in a hurry to leave because of her physical discomfort. The meeting only lasted approximately fifteen minutes.

The employee stated that she was unable to read and understand the document since she was feeling unwell. The employer maintained that he had taken the time to explain the consequences of signing the document.

After an hour and fifteen minutes, the employee contacted her employer to inform him that she had changed her mind and that she now rejected the proposed terms of the termination of employment. She then lodged a complaint for prohibited practice relating to her dismissal. The employer invoked the Release to oppose the admissibility of the complaint.

The Labour Board rejected the employer's objection and allowed the complaint on the ground that the most significant fact was that the complainant had not read the Release before signing it. The Labour Board also noted the short time span between the signing of the Release and the repudiation thereof. The Labour Board found that, because of her medication intake, the employee had been unable to properly understand the content of the Release. The Labour Board found that the complainant raised a doubt as to her capacity to contract, which shifted on the employer the burden to prove that she did have the capacity to contract. The Labour Board found that the employer had not discharged itself of this burden and, although it had pleaded the absence of medical proof relating to the incapacity of the complainant to enter into the Release, the employer could have requested an expert's assessment concurrent to the signing thereof since it was aware that the employee had repudiated the Release on the very day she had signed it.

The complaint will now proceed before the Labour Board on the merits.

Pursuant to the Civil Code of Québec, consent to contract must be given by a person who has the capacity thereto. A settlement being a contract within the meaning of the Civil Code of Québec, the signing of such a document by a person who is unable to contract vitiates his or her consent and, as is the case here, it may not be set up against him or her.

The Court of Appeal confirms that an employee may waive a reasonable indemnity in lieu of notice after termination of his or her employment

The Court of Appeal of Québec recently confirmed that the invalidity of a settlement may not be pleaded if it was entered into knowingly after the termination of employment2.

Section 2092 of the Civil Code of Québec provides that an employee may not renounce his or her right to a reasonable notice of termination in case of a dismissal without just cause. Therefore, a provision in a contract of employment providing for a notice of termination of employment does not preclude an employee from claiming a higher indemnity in lieu of notice where the termination of employment is without just cause, if the amount stated in the contract of employment is not reasonable. With regard to release & discharge documents signed after the termination of employment, some Courts have in the past invoked Section 2092 of the Civil Code of Québec in order to invalidate such settlements if the amount negotiated upon termination of employment was not reasonable.

The Court of Appeal now confirms that Section 2092 of the Civil Code of Québec is a law of economic protective public order to which it is possible to renounce after the acquisition of the right. An employee therefore may not try to have a settlement that was signed after the termination of employment invalidated simply because he subsequently feels that the indemnity in lieu of notice was not reasonable.

We applaud this ruling of the Court of Appeal, which upholds the freedom of contract principle and prevents ongoing challenges to amicable settlements.