Clothing store abused its position of power with $6,000 offer

Howell v. Reitmans (Canada) Ltd., 115 A.C.W.S. (3d) 264 (Nfld. & Lab. S.C.T.D.)

Reitmans sought to dismiss Howell’s claim for wrongful dismissal based on the fact she had signed a release of all claims against the employer. Howell was dismissed after 20 years as an assistant manager. She was given six weeks’ working notice and an offer of a lump sum payment of $6,000 in exchange for the execution of a release. Without obtaining legal advice she signed and returned the release to Reitmans.

In exceptional circumstances a court can set aside or refuse to enforce a release if the agreement is unfair. In this case the court did so because there was an inequality in the bargaining positions of the parties. Howell was shocked by her dismissal and was severely distressed at the time of signing the release. Her financial position, which was known to Reitmans, was extremely precarious since her husband was unemployed. She was also told if she did not sign the release she would not qualify for employment benefits and would not be provided with help in finding a new job. This was a misrepresentation based on the court’s finding there were not sufficient grounds to dismiss her for cause. She would have been entitled to an appropriate reasonable notice period regardless of whether she signed the release or not.

The six weeks’ working notice plus a lump sum payment equivalent to about five-and-a-half months’ notice was held to be substantially inadequate. A reasonable notice period in this case would be in excess of 12 months and possibly as high as 18 months.

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