Employee Bound to Settlement Agreement
In Johnstone v. Loblaw, 2025 ONSC 4755, an Ontario court ruled that an employee’s acceptance of a severance package via email created a binding settlement, despite having attempted to renegotiate after his housing purchase fell through following termination.
The employee, who had worked for the employer for seven years, had relocated from Winnipeg to Ottawa in 2022 at his employer’s request. Shortly after the move, the employer terminated the employee’s employment without cause while the employee was in the process of closing on a house. The purchase transaction was frustrated and the employee alleged that he sustained damages relating to his inability to receive a mortgage due to his termination.
The employee retained legal counsel to negotiation terms of settlement. The parties agreed to terms that included an 8-month notice period, $1,500 toward legal fees, and confirmation that relocation benefits would be provided with a letter verifying his ongoing salary for mortgage purposes.
The negotiations addressed housing, with the employee outlining standard relocation entitlements, including: up to $25,000 in household goods, $20,000 for temporary accommodation, $8,000 for home purchase closing costs, and a mortgage subsidy of $5,910 over five years. Importantly, the employer made it clear that it would not guarantee the employee’s mortgage payments or make the settlement conditional on the closing of his home purchase.
After multiple email exchanges between counsel, the employee accepted the employer’s proposal. The employer drafted minutes of settlement reflecting all agreed-upon terms. Upon receiving the minutes of settlement, the employee’s counsel raised three additional items that had never been discussed during negotiations: 1) making the settlement conditional on the purchase of his home, 2) extending temporary living expenses, and 3) guaranteeing a specific performance rating.
The employer refused to include these new terms, which were not raised and/or agreed to during negotiations. In the eyes of the employer, the parties arrived at a binding settlement. Although the employee had not signed the minutes of settlement, its terms had been mutually agreed upon in an email between the parties.
The employee commenced an action against his former employer, claiming wrongful dismissal and seeking damages for his failed house purchase.
The Court found that the email acceptance created a binding agreement on all the essential terms outlined: notice period, legal fees, benefits, relocation expenses, and employment verification for mortgage purposes. The Court also found that the employee’s additions were “not changes to the supporting documentation, but attempts to change the essential terms of the agreement.” The employee’s attempt to change their deal was simply “buyer’s remorse” and not a valid legal basis to undo the original agreement. Even without a signed formal release, a binding settlement existed since the terms were agreed upon in correspondence, and thus, the Court dismissed the employee’s claim, enforcing the original agreement.
This case demonstrates just how important clear communication and documented terms are in employment matters. Employers should always be meticulous in the negotiation of offers, because courts will enforce deals based on agreed-upon terms.