In a pair of recent human rights decisions across Canada, former employees made claims against their employers after signing a release. Despite these challenges to the finality of the releases, these decisions showcase the importance of releases as a tool for employers, as both claims were barred by their validly signed releases.

In Kamal v TRACTEL Swing Stage Limited [Kamal], a former employee made a discrimination Application to the Human Rights Tribunal of Ontario (the “HRTO”) against her employer. The employee alleged her employer failed to adequately investigate her sexual harassment complaint. Pursuant to the Statutory Powers Procedure Act and the HRTO’s Rules of Procedure, the HRTO dismissed the Application for abuse of process and upheld the employer’s signed release as binding.

Similarly, the Human Rights Commission of Alberta (the “HRCA”) in Ismail v Canadian Tire Corporation Limited [Ismail] dismissed the former employee’s discrimination Application against their employer. While the employee in Ismail alleged that their previous workplace harassment complaint was not within the scope of the release, the HRCA disagreed and deemed the signed release to be valid.

Kamal Background

The employee in Kamal alleged that, prior to their dismissal, the employer failed to adequately investigate their complaint regarding workplace sexual harassment. Following the employee’s complaint, the employer dismissed the employee in March of 2018. During the termination meeting, the employer provided the employee with a “Final Account and release letter” (the “Release”).

The employee signed the Release, which protected the employer from all “actions [and] liabilities [that] arise in the future out of, or in any way related to, [the employee’s] employment”, as well as “any claims [against the employer under] the Ontario Human Rights Code”.

Four months after signing the Release, the employee filed her HRTO Application.

Kamal Decision

The HRTO outlined established legal principles regarding the doctrine of abuse of process. Firstly, the HRTO affirmed that the doctrine of abuse of process applies to settlement agreements and releases. Further, the HRTO emphasized that the principle of finality presumptively prevents contracting parties from continuing litigation of settled matters. Therefore, the doctrine of abuse of process prevents contracting parties from further litigation unless there are compelling reasons to set aside the contract.

In Kamal, the employee claimed that the following reasons were sufficiently compelling to set the Release aside:

  • the Release was unfair or lacked consideration;
  • the employer failed to ensure the employee understood what she was giving up by signing the Release and an imbalance of power existed between the parties;
  • the employee “needed income”; and
  • the employee was “not sound of mind when they signed” the Release due to the workplace environment.

For the following reasons, the HRTO refused to set aside the Release:

  • the Release was not unfair, as the employer provided consideration in the form of an additional four weeks of pay beyond the employee’s minimum statutory entitlements, pursuant to Ontario’s Employment Standards Act, 2000;
  • the employer made sufficient efforts during the termination meeting and in writing to ensure the employee’s interests were safeguarded, because the Release was clear and the employee was encouraged to seek legal advice before signing;
  • the employee’s need for income failed to meet the threshold of “economic duress”, as the employer did not use legally illegitimate pressure, nor was there pressure that amounted to coercion of the employee’s will; and
  • no evidence indicated that the employee was not sound of mind when they signed the Release.

Notably, the HRTO did not consider the 2018 decision of the Ontario Superior Court (the “ONSC”) in Watson v The Governing Council of the Salvation Army of Canada [Watson]. In Watson, the employee pursued a civil action against her employer related to a workplace harassment claim after she signed a release barring claims which “arose out of or which in any way related to or connected with [her] employment or the ending of [her] employment.” However, the ONSC found that the scope of the release did not bar sexual harassment claims, despite the fact that the alleged events occurred at the place of employment, and perhaps because of the employment. The Court maintained that improper conduct, such as sexual harassment, was not connected to employment, and thus remained beyond the scope of the release. As the release in Watson did not contain language specific to sexual harassment claims, the employee was entitled to continue litigation. For more information, please refer to our blog post discussing Watson.

Comparatively, the employer in Kamal was released from all “actions [and] liabilities [that] arise in the future out of, or in any way related to, [the employee’s] employment”, as well as “any claims [against the employer under] the Ontario Human Rights Code”. While the Release did not contain express language specific to sexual harassment claims, the Release was still upheld.

The different outcomes in Kamal and Watson may be explained by the fact that the employee in Kamal was self-represented, and they do not appear to have brought the Watson decision to the HRTO’s attention. Regardless, Kamal is distinguished from Watson and represents a “win” for employers, as the Release was upheld despite a failure to include express language which barred sexual harassment claims.

Takeaways for employers

Kamal and Ismail serve as reminders to employers regarding the importance of using well-drafted releases when dismissing an employee. In addition to providing employers with finality of an issue, binding releases are important proactive measure that limit the risks and costs of future litigation.

While the employer’s Release in Kamal was upheld despite inexhaustive language, prudent employers can avoid the risk introduced by Watson by seeking legal advice when drafting releases. To ensure finality of the matter and avoid having an adjudicator refuse to give effect to a release, employers should follow the example set by the employer in Ismail and expressly bar claims of sexual harassment and other improper conduct that could be found to be beyond the scope of a broadly worded release.

 

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.