1. The document provides guidance on drafting termination letters and releases to terminate employees legally and minimize potential liability. It discusses clarifying rights, obligations, and resolving issues arising from termination. 2. It emphasizes the importance of compassionate, comprehensible, and comprehensive termination letters. It also recommends consulting relevant policies, statutes, common law, past practices and lawyers when drafting letters. 3. A key decision is whether to allege just cause, and if so the document provides pointers like excluding language about good performance and making offers without waiving legal rights. It also discusses the pros and cons of working notice.

1. Tune Up Your Termination
Letter and Release
By P.A. Neena Gupta

2. Overview
• Legal impact
• Clarifies rights and obligations
• Resolves issues arising from termination
• Human impact
• Letter can soften or sharpen the blow of termination

3. Style Matters – the three “Cs”
• Compassionate
• Comprehensible
• Comprehensive

4. Do Some Homework
• Review any offer letters
• Check any company policies regarding
termination
• Review statutory obligations
• Review any common law obligations regarding
“reasonable notice”
• Consider what has been done in the past in
similar circumstances
• Consult a lawyer, if necessary

5. First Critical Decision
• Are you alleging just cause for termination?
• Is it borderline?
• Just cause at common law?
• Wilful misconduct under statute?
• 95% or more of terminations are without just
cause

6. Just Cause Pointers
• Even if cause/misconduct, are you offering a
package to get a Release?
• “without waiving our rights to assert cause or
misconduct”
• “gratuitously and without legal obligation”
• Exclude any standard language that suggests
employee was a good performer
• Offer confirmation of employment, job title and
job duties, but not positive reference letter

7. Second Critical Decision – Working Notice
Pros Cons
Employee
Employee continues
productivity, morale
to provide value for
and potential for
money
sabotage
Sometimes easier
for employee to find Co-worker
work, because still discomfort
“employed”

8. Rubin v. Home Depot
• Eric Rubin worked as a competitive price
shopper for 19 years and 8 months at Home
Depot
• Terminated due to restructuring at age 63 and
was offered 28 weeks in exchange for Release
• Letter indicated that offer was in excess of
Rubin’s rights under the statute

9. Rubin v. Home Depot
• Letter did not clarify what Rubin entitled to
without Release
• Rubin signed on Release on the same day during
meeting
• Rubin went to accountant to discuss tax
treatment of settlement
• Accountant alerted Rubin to issue
• Shortly thereafter, lawyer stated “Release not
valid.”

10. Rubin v. Home Depot
Was the Release signed by Rubin
valid and enforceable?

11. Rubin v. Home Depot
1. A grossly unfair and improvident transaction
2. Victim’s lack of independent legal advice or
other suitable advice;
3. Overwhelming imbalance in bargaining power
caused by victim’s ignorance of business,
illiteracy, ignorance of the language of the
bargain, blindness, deafness, illness, senility,
or other disability; and
4. Other party knowingly taking advantage of this
vulnerability.

12. Rubin v. Home Depot
• Court overturned Release
• Employer:
• Did not verbally advise Rubin to obtain legal advice
• Told Rubin his options were take package or divert
monies into RRSP

13. Lessons Learned
• Letter could have accurately divided up the offer
under:
• Without Release
• Release
Sample language:
This letter is divided into 2 parts – Part 1
describes your entitlements without a release
while Part 2 explains what the company is
prepared to offer you in exchange for you
executing a full and final release.

14. Part 1 – Entitlements Without Release
• Employee terminated without cause is entitled
to:
• Pay to date of termination
• ESA notice and severance
• In Ontario, benefits to end of statutory notice period
• Offer can NEVER be less than ESA amounts
• Even if employee gets re-employed the next day

15. Part 1 – Entitlements Without Release
• Benefits
• Life insurance
• Short-term disability
• Long-term disability
• Pension
• RRSP

16. Part 1 – Entitlements Without Release
• Compensation can be tricky
• Base salary
• Bonus
• Commission
• Sometimes harder to determine compensation
under ESA, 2000 than at common law

17. Disability and Illness Can Be Tricky
• If employee becomes sick during either ESA or
common-law notice period, may have
entitlements both under disability policy and
arising from termination
• Need to explicitly deal with disability benefits

18. Part 2 – Severance in Exchange For Release
• Consider common-law obligations
• Lump sum versus salary continuation
• Benefits (be clear that disability benefit and out-
of-country benefits cannot be continued)
• What happens if employee finds alternate
employment?
• Do you want to make package contingent on employee
not being employed by competitor?
• Do you want payments to cease, provide a lump sum
of some portion?

19. Additional Matters
• Conversion of benefits
• Usually just life insurance
• Occasionally health and dental
• If conversion privileges exist, must inform
regarding deadlines and method of transfer
• Advise during termination interview

20. Group RRSP and Pension Benefits
• Clarify what will happen to pension benefits
• Is the company contribution vested or not?
• Advise regarding how to access
information/options re Pension
• Advise regarding how to access
information/options re RRSP
• Clarify that pension/RRSP not dependent on
Release

21. Return of Property
• Ensure that you require return of
• Key/passcard/parking passes
• Documentation
• Blackberry/smart phone
• Schedule
• Car
• Samples
• Price List

22. Confidentiality
• Remind employee of duty of confidentiality
• Advise what is confidential
• Price list
• Marketing plans
• Product development and design
• Advise if employee will be required to cooperate
in patent process
• IT lawyers may advise regarding certain consents to
be executed prior to termination

23. Remind of Post-termination Duties
• Non-solicitation
• Of clients
• Of employees
• Any amounts in excess of ESA amounts can be
made contingent on abiding by non-solicitation
or non-competition clause, unless already
promised in contract

24. Important Details
• Advise when ROE will be issued (within week or
after end of salary continuation period)
• Remind employee that tax forms will have to be
sent and request address correction if employee
moves
• Advise if letter of confirmation or reference will
be provided
• To whom should reference inquiries or
questions be directed?

25. Reputation Matters
• Unless reason is abundantly clear, important to
consider how to announce termination internally
and externally
• Offer to work with employee on wording of
announcement
• Give employee a chance to say “good-bye”
• One company gives budget to co-worker (not
manager) to take former employee and peers out
for a “good-bye” lunch

26. Release
• Ensure it releases all related corporate parties
• Ensure release in all jurisdictions where claim might be
brought (e.g. Ontario employee transferred to BC and
California over length of career)
• Cover off explicitly matters which cannot be easily
released (e.g. workers compensation and human rights)
with acknowledgements
• Include acknowledgement re: adequate time to obtain
legal advice
• Refuse to accept executed release on the day of
termination
• Encourage employee to talk to lawyer, financial advisor
and spouse before signing

27. Thank You
P.A. Neena Gupta
Gowling Lafleur Henderson LLP
Barristers & Solicitors
50 Queen Street North
Suite 1020
Kitchener, ON, N2H 6M2
Direct Tel: 519.575.6910
Direct Fax: 519.571.5001
Email: neena.gupta@gowlings.com
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