Under common law, employment agreements signed under duress will be void. This is favourable to employees, as upon separation employees may be entitled to larger severance packages than initially created by the terms of the employment contract. To determine duress, the courts will look at a five (5) part test, as used in the case of Riskie v. Sony of Canada Ltd., 2015 (ONSC).
In this case, Mr. Riskie claimed that he was under duress when agreeing to a change in his employment conditions after having served over 20 years with Sony of Canada in a managerial sales position. Mr. Riskie was based in Toronto and was requesting to be accommodated with his move to Ottawa due to family needs. Mr. Riskie sought to work remotely, and come to the Toronto office as-needed. The CEO was opposed to employees working remotely. However, Mr. Riskie persuaded his employer to allow him to work remotely on a trial basis, with a fixed term contract. Even though Mr. Riskie requested a right to renew the contract, no such terms were granted – this was a fixed term agreement without the guarantee of renewal. Mr. Riskie was aware of this fact prior to signing, and also knew that he was free to stay at his Toronto-based job under his existing terms of employment. Mr. Riskie chose this accommodation, however, as he believed he could remain a valuable asset to his employer through this remote set-up. Mr. Riskie’s contract ultimately was not renewed as the company went through restructuring; Mr. Riskie, therefore, did not receive a severance package. The court found the agreement valid, meaning Mr. Riskie was not entitled to further compensation past the contract end-date.
Had the contract been signed under duress, however, Mr. Richie would have been entitled to reasonable notice of termination or payment in lieu equivalent to earnings over the length of the notice period. The court used the following 5 criteria to determine whether the agreement was made under duress:
1. Did the party protest at the time the contract was entered into?
Here, Mr. Riskie did object to the terms of his contract and also renegotiated certain aspects. However, the court determined that he did not protest for being under duress; conversely, he was afforded the time to consider the offer before signing.
2. Was there an effective alternative course open to the party alleging coercion?
Mr. Riskie knew that he had an alternative to stay in his current position based in Toronto. Thus the court determined that there was no coercion here to accept the agreement.
3. Did the party receive independent legal advice?
There was no time constraint that precluded Mr. Riskie from seeking alternative legal advice. The court determined that he was an employee in a senior managerial position with enough sophistication to be proactive by seeking legal advice. It was unknown whether the employer advised him to seek such advise but under the circumstances, this was not necessary on the employer’s end.
4. After entering into the contract did the party take steps to avoid it?
Here, Mr. Riskie did not try to avoid the contract which supports the view that he was not under duress.
5. Was the pressure illegitimate?
The employer here, Sony, had no obligation to accommodate Mr. Riskie’s request. The only pressure applied was the absence of preferred options for Mr. Riskie which does not amount to illegitimate coercion or pressure.
Overall, employees that feel they have agreed to unfavourable terms under duress should seek legal advice. The 5 criteria highlighted above require the analysis of an employment law expert, with every case bringing forth a unique set of facts and circumstances. If in doubt, it is advisable to seek the advice of an employment lawyer.