As we’ve written before, when an employee is terminated and offered a severance package, they are almost always asked to sign a release agreement in exchange. A release agreement, as the name suggests, releases the employer from liabilities for employment-related claims. Thus, after an employee has signed a release agreement, if they attempt to sue their employer later on, the release agreement is typically raised as a bar for the employee to proceed with litigation.
However, there are certain circumstances in which a court will not enforce a release. The Ontario Superior Court of Justice recently allowed an employee to proceed with a sexual harassment claim against her former employer, even though she had signed a release in exchange for a severance package when her employment ended.
In Watson v The Governing Council of the Salvation Army of Canada, Ms. Watson worked at one of the Salvation Army’s thrift store locations for less than a year in 2011. Upon termination, she signed a Memorandum of Settlement and Release. In 2016, Ms. Watson commenced legal action against the Salvation Army and her former supervisor, Mr. Court for negligence, intentional infliction of emotional harm and breach of fiduciary duty. Ms. Watson claimed she had been sexually harassed by Mr. Court during her employment. Ms. Watson settled her claim with the Salvation Army, so the decision only dealt with her claim against Mr. Court.
The release Ms. Watson signed stated that she waived her right to sue anyone that is associated with the Salvation Army for any reason that arises out of, or is related to, her employment with the company. The court found that the employment relationship and sexual harassment are separate matters. In other words, sexual harassment does not arise out of, or relate to, employment. Therefore, the release that Ms. Watson signed did not cover sexual harassment. As the alleged conduct fell outside of the employment relationship, specific language regarding such claims would need to be added to the release to bar a sexual harassment claim.
Lessons to be Learned
Although Ms. Watson was ultimately successful in proceeding with her sexual harassment claim, it is important to highlight that generally speaking courts do not take it upon themselves to intervene when people have been handed a raw deal. Therefore, when presented with a release, it is always recommended that you speak to a lawyer so you understand the true nature of the deal you have struck.
However, as this case illustrates, there may be instances where a court does intervene, particularly when dealing with a vulnerable employee.
If you have received a release and want to review it with a lawyer, or if you have cold feet after signing a release and want to know if there is any way around it, you can contact an employment lawyer at MacLeod Law Firm at [email protected] or 647-204-8107.