Most do not question the enforceability of a signed Release with respect to known claims at the time the Release is signed. But what about “unanticipated” claims that are discovered after the Release has been signed? Can those claims be pursued? In Born v. Regis Corporation, the Human Rights Tribunal determined that the Employee’s Application to the Tribunal pursuing a new claim could not proceed due to the fact that the employee had previously signed a full and final Release with respect to a wrongful dismissal claim, and allowing the Application to proceed would be an abuse of process pursuant to the Statutory Powers Procedure Act.
The Employee, Rosella Born, and her former Employer, Regis Corporation, entered into a binding settlement at Mediation held to resolve wrongful dismissal claims brought by the Employee. The terms of settlement included the Employee signing a full and final Release that included the Employee releasing the Employer from all claims, including any pursuant to the Human Rights Code, that she “had, now had, or hereinafter may have” against the Employer. The Employee did not realize at the time she signed the Release that she was entitled to payment of employment expenses incurred during her employment. This was only discovered by the Employee several months later. After discovering that the Employer had paid similar expenses for other employees, the Employee commenced an application against the Employer for discrimination on the basis of sex, sexual solicitation or advances, and reprisal.
At a preliminary hearing at the Tribunal, the Employee took the position that the Release was not binding and did not prevent her Application from proceeding because she signed the Release under duress and without knowing that the Employer should have paid her employment expenses. The duress argument was based on the fact that the Mediator, who revealed at the start of the Mediation that his sister worked for the Employer, allegedly bullied the Employee into accepting the settlement and that the Employee was in poor health, having not fully recovered from a car accident earlier that year, and was very vulnerable to the alleged bullying.
The Tribunal reviewed the facts, along with section 23(1) of the Statutory Powers Procedure Act and relevant case law. The Tribunal stated that in some cases an Application may proceed despite the existence of a signed Release without the Application being an abuse of process. However, in this circumstance, allowing the Application to proceed would be an abuse of process. The Tribunal reviewed the test for duress and determined that the Employee did not sign the Release under duress despite the alleged conduct of the Mediator, as the Employee had both legal counsel and her husband present at the Mediation to provide legal and emotional support. The Employee received legal advice with respect to the content and legal implications of the Release, including the language regarding the release of claims that the Employee “had, now has, or hereinafter may have”, and did not have to resolve matters at the Mediation. The Tribunal held that the Employee clearly released the Employer from “claims for any and all specific head of damages, including those that may or may not have been anticipated or considered by the [Employee] at the time she signed the release.” The fact that the Employee did not know at the time the Release was signed that her employment expenses should have been paid by the Employer was not a valid justification for voiding the Release. Accordingly, the Application was dismissed.
Lessons for Employees
Employees should be aware that while there may be very narrow circumstances where a signed Release will later be deemed to be null and void, typically Releases will be upheld to prevent further legal action against the Employer. Depending on the language, the signed Release will likely apply to “unanticipated” claims that are not known at the time of signing and are discovered at a later time. For this reason, employees should be very careful when entering into a Release and consider not only the present, known claims that are being released, but also potential claims that may arise in future. Obtaining the advice of an experienced Employment Law Lawyer prior to signing a Release or similar settlement documents is critical. If properly drafted and entered into, full and final Releases will be binding forever!
Lessons for Employers
This decision demonstrates that although there is typically finality to a matter once an employee signs a full and final Release, there may be some circumstances in which a subsequent legal action may proceed without there being an abuse of process or another legal barrier to the legal proceeding. While this appears to be rare, the right circumstances may arise. To prevent such an occurrence, it is crucial that the language of the Release be carefully drafted to eliminate any loopholes and that the Release be signed under proper circumstances. Prior to providing a Release to an employee to sign, the advice of an experienced Employment Law Lawyer should first be sought to obtain assistance with respect to the content and implementation of the Release.
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