'This is a situation where the employer got very lucky that this didn't turn into something quite large'
“Generally speaking, a full and final release [at termination] means that you're releasing for all claims that could arise out of the employment relationship - harassment, either sexual, physical, or just straight-up bullying, is part of an employment law claim. If an employee signs a release, they are letting go of all of those potential claims, even if they have legitimate ones.”
So says Charles Millar, a senior associate lawyer at Achkar Law in Toronto, after an Ontario court dismissed a worker’s workplace harassment claim because he signed a valid release as part of his termination package.
The worker was employed with Lafarge Canada, a building material company based in Mississauga, Ont., as a quality control technician. He was hired in October 2014.
According to the worker, a co-worker bullied, intimidated, and harassed him in the workplace. On June 12, 2015, the co-worker grabbed him by the hips and gyrated against him in front of other employees on two occasions.
The worker reported the incident to Lafarge management, but they told him to ignore and avoid the co-worker.
Mental health issues
However, the worker said that he soon began suffering from panic attacks and other anxiety-related symptoms because of the incident. In May 2016 he went to the emergency room and an angiogram found minor blockages. The worker received medication for his heart issues.
The worker also claimed that he was diagnosed with anxiety and post-traumatic stress disorder (PTSD), but hospital records didn’t refer to any such diagnosis.
The worker went on short-term disability leave and his doctor cleared him to return to work on July 13. The worker provided medical documents to Lafarge indicating that he was still on medication for his heart issues. He returned to work on July 18.
About three weeks later on Aug. 3, Lafarge underwent a reorganization and terminated the worker’s employment. The company offered a termination package with the option of two months’ salary continuance or a lump-sum payment. The package included a full and final release covering all possible claims that the worker could make for damages flowing from his sexual harassment complaint and the employment relationship.
Lafarge told the worker that the package was non-negotiable and it would be revoked if he didn’t sign within two weeks.
“[The termination] was purely a business decision, [the worker] was there for two years and he wasn’t in a managerial position, so [Lafarge] offered him a fairly decent termination package,” says Millar. “By the looks of it, all evidence pointed to this as a straightforward, business-like termination that wasn't done with any sort of nefarious intention.”
Full and final release
It's standard for termination packages to include a full and final release, according to Millar.
“The purpose is to put a matter to bed so that employers don't have a hanging guillotine over their head for the next two years, wondering if the employee will come back and sue them for wrongful dismissal or for any sort of claim that could have arisen out of the employment relationship - such as harassment or bad faith,” he says.
According to the worker, his anxiety and mental health issues diminished his capacity to understand the consequences of the package. He tried to meet with a lawyer but the lawyer was unavailable. He also felt that he needed the money, as his dependant son wanted to pursue post-secondary education.
The worker signed the release on Aug. 13 without receiving legal advice, choosing the salary continuance option. He eventually retained a law firm, which helped him meet with medical specialists about his alleged PTSD.
Medical documents
The worker met with a rheumatologist and a psychotherapist, who both determined that the worker’s PTSD was caused by the June 2015 incident with the co-worker.
The worker filed a claim against Lafarge seeking damages for sexual harassment. Lafarge brought a summary judgment motion seeking a dismissal of the claim, arguing that the worker entered into a binding settlement agreement that resolved all legal disputes between them. The worker countered with a motion seeking a declaration that the release was invalid because he lacked the capacity to sign it, he signed it while under financial duress, or it was signed under “conditions of unconscionability.”
The court noted that “there is a presumption in favour of upholding final releases,” subject to the rules of contract law.
The court found that the worker didn’t provide medical evidence supporting his claim that he suffered from PTSD and anxiety to the point where his capacity to sign the release was affected. There was no diagnosis from the hospital or his doctor, and the only medication he was on was for his heart condition, the court said. While the worker’s rheumatologist and psychotherapist stated that his PTSD was from the workplace harassment incident, they weren’t experts who were qualified to make a PTSD diagnosis, said the court, noting that they could only rely on a doctor’s diagnosis to treat someone for PTSD.
The court found that the only evidence that the worker suffered from PTSD was his “own self-diagnosis.”
Capacity not diminished
The court also found that the worker’s capacity wasn’t diminished when he signed the release, as he was capable of making an informed choice to receive his payment through salary continuance and his attempt to seek legal advice showed that he understood he was signing a legally binding document.
In addition, Lafarge had no basis to believe that the worker lacked the capacity to sign the release, as the termination happened more than a year after the harassment incident and his medical documentation didn’t refer to any mental illness. While the co-worker’s harassment likely harmed the worker “at some level,” there was no evidence that the worker’s issues were debilitating, said the court.
As for economic duress, there was nothing indicating that Lafarge applied illegitimate pressure on the worker, as the company provided options for him and gave him two weeks to seek legal advice. While he was likely stressed at the time, there was no evidence this went beyond what would normally be felt by an employee being terminated, the court said.
The court agreed with the worker that Lafarge had unequal bargaining power when the release was signed, but two months’ salary for a two-year employee in a non-senior role was a reasonable offer based on jurisprudence and statutory minimum entitlements, said the court.
“The worker made a lot of claims but didn't provide any actual evidence to say that he was in such economic duress that he was forced to sign,” says Millar. “He said he had bills, he was worried about a mortgage, his son was going to college, but he didn't provide any bank records or post-secondary cost breakdowns, or any particulars - he had to demonstrate that he was in an economically destructive position.”
Lack of evidence
The court also found that the release denied the worker a chance at claiming “a considerable quantum of money in a potential damages claim” for workplace harassment, but, again, without any evidence that he didn’t have the capacity to understand the release, it wasn’t unconscionable, the court said.
The court determined that the release was binding and granted Lafarge’s summary judgment motion, while also dismissing the worker’s harassment claim.
“This is a situation where the employer got very lucky that this didn't turn into something quite large - when we look at harassment in the workplace, especially issues of sexual harassment, courts take it seriously, and Lafarge basically just told the worker to ignore [his harasser] and pretend like it didn't happen,” says Millar. “Had [the worker] brought a fulsome case forward, Lafarge was winding itself up for some pretty dangerous liability.”
“As an employer, you need to make sure that you’re up to date on human rights content and you always act in the best way possible - even if you don't know what you're doing is wrong, you may still be found liable and you may still be open to liability,” he adds.
This decision also shows how much courts are looking to side with the employee if there’s an opportunity, even with the deference to releases, says Millar.
“[The worker] didn’t have evidence to support his claims, but only after careful consideration the court decided it wasn’t sufficient - meaning there was a very real possibility of the worker succeeding if he had provided any sort of doctor's report proving PTSD or any sort of financial records proving he had financial damage,” he says. “The courts tend to favour employees, so employers have to be almost perfect at the time of termination.”
“We have a situation where a full and final release - which should be a nail in the coffin of any future claims - could have been overturned had the worker brought sufficient evidence to show that he was under duress or incapacitated in such a way he couldn't understand what he was signing,” says Millar.
