“That it’s too late to apologize, it’s too late
I said it’s too late to apologize, it’s too late
Too late, oh…”
Apologizing fixes many things, except the past. The past remains well crystalized. We see a fine example of apologizing not fixing the repudiation of an employment contract.
Ms. Perretta started work at Rand as a customer advocate on September 29, 2014, pursuant to a written employment agreement dated September 11, 2014. Rand promoted Ms. Perretta to the position of sales representative effective November 1, 2018, pursuant to a new employment contract dated October 23, 2018. The 2018 contract stated Rand could terminate Ms. Perretta’s employment without cause by providing two weeks notice or pay in lieu of notice plus the minimum notice or pay in lieu of notice, benefits and severance pay required by the Ontario Employment Standards Act.
Rand terminated Ms. Perretta’s employment on March 31st, 2020. However instead of providing her two weeks pay in lieu of notice, Rand provided her with a letter demanding a release prior to payment of the two weeks severance.
Ms. Perretta’s termination letter included an “Enhanced Severance” offer whereby Ms. Perretta would receive the two weeks’ salary only upon within 7 days signing a detailed three page release, returning all company property, continuing to be bound by the Confidentiality and Non-Competition and Non-Solicitation provisions of the 2018 Employment Contract, modifying her LinkedIn profile and repaying Rand in case she breached any of these terms. Her employment contract did not include any such requirements.
Ms. Perretta pointed this out to Rand, but instead Rand reiterated its demand for a full release prior to payment. Rand then proceeded to ask not once, but twice to have the release signed before advancing the severance. Mr. Perretta’s lawyer pointed out the error to Rand that the employment contract did not include such requirements, and it is only after this that Rand proceeded to pay out the severance. Of course, this did not end the matter.
Ms. Perretta’s lawyer (dare I say cleverly) took the position that Rand repudiated the employment contract by acting as if it was no longer bound to the terms of the contract. Ms. Perretta then became entitled to payment in lieu of notice pursuant to the common law.
Justice Sanfilippo in the Ontario Supreme Court held that Rand attempted to deny the entire bargain of the contract. By refusing to pay the two weeks severance, Rand deprived her of the entire monetary benefit of the termination provision. Even if the oversite was an innocent lack of understanding of the employment agreement that Rand had drafted, this innocence did not override the serious nature of the repudiation.
The court applied the test considering the surrounding circumstances whether one party acted as if the contract would no longer apply looking at the matter objectively. This includes looking at what the impact would be upon the innocent party and whether they would be substantially deprived of the benefit of the contract.
With respect, the termination payment seems a small component of the overall total compensation package of five and a half years of salary and benefits. The termination benefit was only .7% of the entire total compensation package over the term of employment. However, at the end of any employment relationship, the termination provisions do loom large. And this is when the employee is at their most vulnerable.
The court took particular notice that Rand’s lawyer did apologize a few days later after the termination. Sometimes apologies can help, particularly in medical malpractice. A sincere apology is an act of humility. This requires that the person recognizes that they have done something wrong and needs to acknowledge this mistake. But this makes the apologizing person vulnerable, and the last thing lawyers want to do is show weakness since this acts as a drop of blood in the water, not withstanding the sincerity.
This recalls George Burns’ quote of “Sincerity – if you can fake that, you’ve got it made.” This is not recommended since one’s sincerity, or lack thereof will always come to light.
Being sincere of course is not sufficient. You should also express regret and be specific about the harm. And of course, you mitigate the harm you have caused.
However, in drafting releases, employers normally try to squeak in as many provisions to their benefit at the end of any employment relationship. Here Rand attempted to include that Ms. Perretta had no other claims or action, consented to an injunctive relief in case she breached the release and agreed to a nondisparagement clause (which at this point every employer wants) and agreed to keep the terms of her employment termination confidential.
The last clause is particularly ironic since this court decision has been discussed in the media and is free on CANLii. And just so you also know, as Ms. Perretta was 5.5-year employee in a non-mangement role, she received 6 months wages.
This raises the question as to where to put these otherwise nice to have clauses. The only other location would be right into the employment contract right at the beginning of the employment relationship. As the employer and employee attempt to forge a positive initial relationship including these termination terms may seem somewhat hard, but as we should remember words of the great jurist Elton John, who sang that in actual fact “sorry seems the hardest word”.