A Cautionary Tale: Refusing To Payout Contractual Entitlements Without A Release Could Repudiate The Entire Employment Agreement

In a recent Ontario decision, Timmins v. Artisan Cells, the Court reviewed circumstances often faced by employers considering termination of employment: the employment contract provided for three months' notice/pay in lieu on termination without cause; however, the agreement did not require the employee to sign a release.

The employee in this case held a senior level role and was terminated without cause. The employer offered one week of termination pay (which it claimed was pursuant to the Ontario Employment Standards Act, 2000 (the ESA)) and required a broad release to provide the balance of the three months' pay owed under the employment contract. Notably, with 3.5 years of completed service, the employee was actually entitled to three weeks of termination pay under the ESA.