In the recent case of Preston v. Cervus Equipment Corporation, Ontario’s Court of Appeal offered employers a friendly reminder that well-drafted settlement documents will survive judicial scrutiny.

Key Takeaways for Clients

Preston underscores the necessity of clear and precise language in settlement agreements. Employers should use broad and inclusive release language that can encompass a wide range of claims, even those not explicitly mentioned. By carefully drafting settlement agreements, employers can ensure that the settlement documents have the intended effect of concluding the employment relationship without courts stepping in to frustrate the finality of the settlement documents.

Background

The case revolves around the interpretation of a release and indemnity clause in the settlement documents signed by Mr. Preston after his termination from Cervus Equipment Corporation. Mr. Preston was employed by Cervus from 2014 to 2018 and participated in the company’s Deferred Share Plan.

Upon his termination without cause in January 2018, Mr. Preston had 4,964.04 vested stock units valued at $75,949.81 and 4,499 unvested stock units. Cervus informed him that his vested stock units could be exercised according to the Plan and offered him a severance package of 15 weeks’ pay in lieu of notice. The parties then discussed and settled the matter. The settlement documents included a broad release of claims, which Mr. Preston signed after receiving independent legal advice.

Notably, the release language in the settlement documents did not specifically refer to the stock plan and vested stock units in question, but did reference that Mr. Preston was releasing all claims connected to his employment, and that he had no entitlement or claim with respect to any bonus, share award, stock option, or similar plan that his employer had offered to him.Continue Reading Ontario’s Court of Appeal Highlights the Importance of Respecting Broad Release Language in Employment Settlement Agreements

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Background

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The Decision

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