An employer would be forgiven for thinking that a release of liability related to employment would protect them from all future claims by that employee. However, a recent Alberta Human Rights Tribunal decision, Hutton v ARC Business Solutions Inc., 2015 AHRC 7 ( PDF), suggests that the matter is not that simple. If the release is too general, and does not expressly reference a release of human rights claims, it may not preclude the employee from bringing a future human rights complaint.
Ms. Hutton, the complainant, was an employee of ARC Business Solutions Inc. ("ARC"). Upon terminating Ms. Hutton's employment, ARC offered her two weeks of severance pay (1 week more than the statutory requirement) in exchange for signing a release. The release stated that acceptance of the offer was in "full and final settlement of any and all claims for compensation with respect to the termination of [her] employment" with ARC.
Ms. Hutton accepted the offer and signed the release. After receiving her severance pay, Ms. Hutton filed a human rights complaint with the Alberta Human Rights Commission.
The question before the Tribunal was whether Ms. Hutton's signing of the release extinguished her right to file a human rights complaint against her former employer. Relying on previous Alberta Court of Queen's Bench decisions, the Tribunal listed a number of factors that must be considered when determining the validity and enforceability of a release, including:
- The explicit or implicit language of the release;
- Whether there was an inequality of bargaining power between the parties;
- Whether there was undue influence or coercion;
- Whether the terminated employee obtained independent legal advice;
- Whether the release was signed under duress;
- Whether the employee knew of their right to file a human rights complaint, and whether the employer knew that a potential human rights complaint was contemplated; and
- Other considerations such as lack of capacity to enter into an agreement, the timing of the complaint, mutual mistake, fraud, forgery, etc.
In finding in favour of Ms. Hutton, the Tribunal was influenced by several factors. First, the express language of the agreement, which referenced settlement of "any and all claims… with respect to the termination of [Ms. Hutton's] employment," did not expressly refer to any human rights issues. The Tribunal found that this language only referenced a release from claims relating to wages/salary and benefits; it did not implicitly or intuitively extend to settling potential human rights claims.
Second, the Tribunal found that the compensation paid to Ms. Hutton, although exceeding what was required by the employment standards legislation, was not enough to reasonably compensate her for the release of a potential human rights complaint.
Taken together, the Tribunal found that the release did not prevent Ms. Hutton from bringing a human rights complaint against her former employer.
What does this mean for employers?
There are several important take-aways for employers across Canada when drafting or revising employment releases:
- Be specific: as with any legal document, it is important to be specific when expressing one's intent. This ensures that all parties clearly understand the legal effect of what is being signed. Employers should ensure that the language used in their releases clearly states that it is intended to be a waiver of the employee's right to compensation related to both employment and potential human rights complaints.
- Consider the other factors: even if the release contains specific language relating to human rights complaints, employers should remain conscious of the other factors noted by the Tribunal. Be mindful of the power imbalance that exists between the employer and the employee and make efforts to ensure that employees understand their rights, what they are signing, and the legal effects of the agreement. If the release extinguishes a substantial right to compensation, it is advisable to suggest that the employee obtain independent legal advice. When in doubt, employers should consult with their legal counsel regarding releases and procedures used to ensure they are as protected as they think they are.