Earlier this year, Rand A Technology Corporation decided to validly terminate one of their sales staff without cause. This was legally permissible under their existing termination clause, with the staff member, Ms. Perretta, entitled to just two weeks of termination pay. Unfortunately, an HR representative from Rand made the mistake of insisting that Ms. Perretta sign a Full and Final Release in order to receive the compensation.
A fairly standard legal procedure amongst large employers, a Full and Final Release, is administered by the HR department of an enterprise to absolve the company of any claims against them that an employee may have. Unfortunately for Rand, their termination clause at the time had no sections compelling employees to sign this kind of release to receive their statutory pay. Ms. Perretta’s lawyer counseled her to reject signing the release, collect her two weeks’ pay, and then file a lawsuit against Rand. Their claim: Rand breached their own contract when the HR representative insisted that she sign the release.
Despite Rand’s defense that the insistence was a temporary, quickly-rectified mistake, the supreme court of Ontario ruled in favor of Ms. Perretta. Despite no signature being placed on a release by Ms. Perretta and the two weeks’ compensation being delivered, the court found that the initial insistence of the signature was enough to void the employment contract. As a result, Rand had to pay out half a year’s salary, increasing the cost of Ms. Perretta’s severance by over 10 times.