In the world of employment law, reaching a settlement can often feel like the finish line. But what happens if one side agrees to a settlement, and then changes their mind before signing the formal paperwork? A recent decision from the Ontario Superior Court of Justice, Stribling v Starbucks Coffee Canada Inc., 2026 ONSC 1030, sheds light on this common question.
This case confirms an important principle: employers and employees can form a legally binding agreement even if the formal settlement documents have not been signed. This means that once the key terms of a settlement are agreed upon, the settlement can be enforceable, regardless of whether the final paperwork has been signed by the parties.
Background Facts
In this case, the employer offered the employee a voluntary mutual separation package. The offer included:
- an agreed end date for the employment relationship, and
- eight weeks’ base salary, in exchange for the employee signing a full and final release.
The employee responded by email stating:
“I have decided to accept Starbucks’ offer… including the details and compensation as listed in [the employer’s] letter. I will sign the Docusign release once I receive it.”
The employer then sent the settlement documents for signature. However, the employee never signed the release. Instead, several months later, he filed a wrongful dismissal lawsuit.
Court’s Decision
The employer asked the Court to dismiss the employee’s lawsuit as the parties had already agreed to a settlement in their email correspondence. The Court had to decide whether the parties had already formed a binding settlement agreement, even though the employee never signed the release.
The employee argued that there was no binding settlement agreement because the parties had not yet finalized the detailed paperwork, including the release. He claimed the situation was only an “agreement to agree,” which courts generally do not enforce. The Court disagreed.
The Court found that the employer made a clear offer with specific terms, and the employee accepted it. While the agreement required him to sign a full and final release before payment, the key terms of the settlement had already been agreed upon. The Court found the later paperwork was meant only to formalize the deal, not create a new one.
The employee also argued that the employer had repudiated (or abandoned) the contract by sending documents referring to termination for cause. The Court rejected this argument as well. Repudiation occurs when a party clearly indicates that it no longer intends to be bound by the contract. Here, the employer quickly corrected the mistake once it was identified, which showed the opposite of repudiation as it showed that the employer intended to comply with the agreement.
The Court also found that the employee had never objected to any terms of the release, instead, they chose to not sign the release because they had secured other financial supports. However, as the employee had already agreed to sign the release as part of the settlement, his refusal to do so did not cancel the agreement. Rather, the Court found that his failure to sign the release was a breach of the agreement he had already accepted.
As a result, the Court found in favour of the employer and dismissed the employee’s lawsuit as the parties had already reached an agreement.
Key Takeaways
This decision highlights several important principles that arise frequently in workplace disputes:
- A settlement can be binding before the documents are signed.
If the parties agree on the essential terms – such as compensation and the end of employment – a court may enforce the settlement even if the final paperwork is never signed. - Email acceptances can create enforceable agreements.
Saying “I accept” in an email may be enough to form a binding contract. - Settlement communications should be taken seriously.
Once a settlement offer is accepted, backing out later may not be possible.
For employees, this case serves as a reminder to approach settlement discussions with caution. Before accepting a settlement offer, make sure you fully understand the terms. Consider obtaining legal advice before agreeing. An email saying “I accept” may be enough to create a binding agreement – even if you later decide not to sign the formal documents.
For employers, this case emphasizes the importance of ensuring that settlement offers and documents are carefully drafted and carefully communicated. If certain terms, such as payment, are conditional on signing a release, that condition should be stated explicitly in the offer.
For employers and employees alike, the lesson is simple: treat settlement communications as if they may end up in court -because sometimes they do.
Questions About Employment Law in Ontario?
If you are an employee or employer looking for employment law advice in Ottawa or Ontario, please don’t hesitate to contact our Employment Law team at Mann Lawyers.
This blog post was written by Lori Philpott, a member of the Employment Law team. Lori can be reached at 613-369-0382 or at [email protected].
