In many terminations without cause, employees are offered some payment in lieu of termination notice by their employers. Often, the amount initially offered is an employee’s minimum statutory entitlements. In some cases, an employer offers additional amounts – an amount that they may refer to as a ‘reasonable offer’ – of money to help an employee seek new employment. This ‘reasonable offer’ is often conditional on signing a document that prohibits an employee from suing the employer for more money.
Despite their ‘reasonable’ label, an employer’s offer may not be up to the extent of an employee’s actual entitlement. This ‘reasonable’ offer is often much less than an employee’s ‘reasonable notice period’ as defined by the law, and may have significant consequences on the outcome of a lawsuit.
Offers to Settle – What is ‘without prejudice’?
In a typical lawsuit, the parties are customarily prohibited from disclosing offers to settle made in negotiations to the judge that will be hearing the matter. The purpose of this is for twofold: 1) to allow for full and frank discussions to settle, without worry that the offers made will negatively impact a party’s claim in the action; and 2) to allow the hearing judge to make a complete, impartial decision on the issues, without influence from either party’s conduct during negotiations. For these reasons, these offers are considered ‘without prejudice’, cannot be used against the parties at a later point in time, and would be included what’s known in the legal sphere as ‘settlement privilege’, the protection of settlement related negotiations.
A traditional grey area in this sphere of law is the consideration of pre-litigation offers, that is offers made prior to the start of any litigation. Offers made by employers at termination typically fall in this category and, as discussed earlier, may have a significant impact on a case. If introduced as evidence in an action, it may negatively impact an employer or provide a judge with privileged information that they should not know to come to an impartial decision.
In Ramos v Hewlett-Packard (Canada) Co., 2017 ONSC 4413, Madam Justice Bell provides much needed clarity in this area of law. In Ramos, the employer had included the amount they offered to an employee at termination within their Statement of Defence. In a motion brought by the Plaintiff, Justice Bell found that the offer at termination was made ‘without prejudice’ based on the characteristics of the offer, rather than its label, and found that it was irrelevant to the adjudication of the issue for wrongful dismissal. An employer’s alleged ‘reasonable offer’ does not matter when it comes time for a court to decide what is ‘reasonable’ at law. An employer cannot set the ‘ballpark’ reasonable amount with the introduction of a privileged settlement offer.
It is important to know that at the end of the day, any employer would want to protect itself in any termination. Despite claiming a ‘reasonable offer’, it is always in an employee’s best interest to seek professional advice to see if their offer is truly reasonable. If taken at face value, a terminated employee may lose out on some much-needed money to help them in the days to come.
Contact Monkhouse Law today for a free 30-minute consultation to discuss what is reasonable in your position.