A decision from the Ontario Superior Court of Justice suggests that even broadly worded releases won’t cover subsequent lawsuits against employers for “improper conduct” such as intimidation and sexual harassment.
“The decision is problematic because finality is everything when it comes to settlements,” says Arthur Zelikman, a labour and employment lawyer at Zelikman Law Professional Corp. in Vaughan, Ont.
Emma Watson, a manager at the Salvation Army of Canada’s store in Cambridge, Ont., signed a “full and final release” in exchange for a $10,000 payment when she left her employment in August 2011. The release applied to “all claims . . . which arise out or which are in any way related to or connected with my employment or the ending of my employment.”
Five years later, Watson sued the Salvation Army and David Court, the organization’s national director of operations for its national recycling division. Watson alleged that Court, who was terminated for cause in 2015, had sexually harassed her in 2011.
Watson settled with the Salvation Army again, but the terms of the settlement weren’t disclosed. Court, who wasn’t a party to that settlement, moved for summary dismissal, citing the release.
But Justice Donald Gordon ruled that improper conduct was “completely separate” from and not connected to employment. He reached this conclusion despite the fact that the conduct occurred at the place of employment and possibly because of the employment relationship.
Many employment lawyers are puzzled by the reasoning. “This decision is a head-scratcher to me because the language used in the release in some of the broadest language found in the jurisprudence,” says Ryan Edmonds of Ryan Edmonds Workplace Counsel in Toronto.
Edmonds also pointed out the decision appears to be in conflict with recent pronouncements from the Supreme Court of Canada. In particular, the high court has held that protections from discrimination “regarding employment” can extend to the actions of a person other than the complainant’s employer or superior in the workplace.
“The Supreme Court’s view seems to be that courts considering improper conduct should take a broad view as to what’s within the ambit of employment,” he says. “It makes sense that the same approach should apply to releases.”
Still, Edmonds believes that, in the circumstances of this case, the Salvation Army could have been a little more specific in wording the release.
“There’s some reference in the decision to the fact that Watson had raised issues about Court’s behaviour at the time of the termination,” he says. “Having been alerted to that, the Salvation Army probably should have included a statement in the release acknowledging that the employee was aware of her rights under the Ontario Human Rights Code and had chosen not to assert these rights.”
Be that as it may, the uncertainties remain. “. . . the Court did not specify what ‘other improper conduct’ may be, leaving employers to guess, be over-inclusive or take a risk when drafting releases,” writes Inna Koldorf, a labour and employment lawyer at Miller Thomson LLP, in a client bulletin.
On the bright side, Carl Cunningham, a lawyer at Bennett Jones LLP, says Gordon’s ruling has only so much weight because it came in the context of a motion for summary dismissal.
“If there had been a full trial on the merits, the evidence could well have established that Court was caught by the release,” says Cunningham. “Gordon’s decision did not fully decide that issue, but merely allowed it to proceed to trial.”
As well, the decision, released earlier this year, wasn’t appealed and is therefore not binding on other courts. Which isn’t to say that a judge, especially one with so unsympathetic a defendant as Court, won’t look at it carefully.