‘Arising out of employment’ decision surprises some experts

Ontario judgment looks at release concerning sexual harassment
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 02/28/2019
employment law
A summary judgment by the Superior Court of Justice in Ontario concerning sexual harassment and a release of claims has some legal experts scratching their heads.Shutterstock

A summary judgment by the Superior Court of Justice in Ontario concerning sexual harassment and a release of claims has some legal experts scratching their heads.

The case involved Emma Watson, who worked at a Salvation Army store in Cambridge, Ont., from April to August 2011. In 2016, she sought a damage award for negligence, intentional infliction of emotional harm, and breach of fiduciary duty. She alleged acts of sexual harassment by David Court, a director at the company who was fired in 2015 after several employees made complaints against him.

Watson had signed a memorandum of settlement and a release in 2011, receiving payment from the Salvation Army for $10,000. The settlement stated: “The employer and employee, having regard to their respective rights, duties and obligations, have determined that they wish to resolve any and all claims, complaints, action, disputes, etc., between them arising out of the employment relationship or the termination of that employment.”

Court sought a summary judgment dismissing Watson’s actions but the court, in its dismissal of the judgment, concluded the release could not be considered all-inclusive: “While many of the alleged events occurred at the place of employment and, perhaps, because of the employment, sexual harassment, intimidation and other improper conduct are not connected to employment. They are clearly separate matters… As the alleged conduct falls outside of the employment relationship, specific language to such claims would need to be added to the release to bar the present claim.”

But this is stretching the law further than it should be, according to Roxanne Davis, a partner at Carbert Waite in Calgary.

“It doesn’t make sense to rely on this argument that sexual harassment is not something that is in anybody’s job duty, and because it’s not anybody’s duty to harass anybody else. When they do that, they’re breaching their duties and, accordingly, it’s not covered by releases of things that happened in the course of employment,” she said.

“It’s inconsistent with what is a very well-developed area of law, which is that employers can be liable for actions of their employees that breach the law; they can be liable for acts of their employees that are negligent. There are certainly a number of cases where they’ve been held liable for bullying and harassment and sexual assault committed by employees.”

This concept of “arising out of the employment relationship” has taken many employment lawyers aback in trying to understand “What does it have to be in order to ‘arise from the employment relationship?’” said Andrew Shaw, a partner at Baker McKenzie in Toronto.

“If you look at legislation and past practice, normally this kind of activity is either happening at the workplace or at some sort of... work event and would, we would think, be deemed to be arising out of the employment relationship, so it is surprising,” he said. “I assume what the court thought was because, by definition, sexual harassment is not something that is acceptable at a workplace, then it must not have arisen out of the employment relationship; in other words, it’s so odd, it’s such odd behaviour, that it couldn’t have arisen out of that — but I’m not sure that that’s really the test.”

This decision seems contrary to the Occupational Health and Safety Act and Ontario Human Rights Code, said Shaw, which “explicitly try to create a hook with the employment relationship in order to obligate the employer to do whatever is necessary to create a safe environment for employees.”

In theory, the decision could mean employers can terminate someone and say any claim of sexual harassment has nothing to do with them, he said.

“It doesn’t help employees in the long term, and it creates a lot of confusion for employers.”

But the court did not think Watson’s release was broad enough to include the claim for workplace sexual harassment, said Michael Hackl, a lawyer at Iler Campbell in Toronto.

“(The court said) ‘The release is narrowly worded, and we’re going to interpret it narrowly because workplace sexual harassment, while it may occur at the workplace, doesn’t arise out of employment.’ So I was glad to see that the court took a narrow approach, where it was useful as a tool to achieve a just result,” he said.

“It’s an approach that has some logic to say, ‘You know, if you want to include sexual harassment, you’ve got to say something more than ‘arising out of employment,’ because otherwise we’re going to interpret that as issues that are typically understood as accepted as part of your employment.’”

Going forward, this would mean releases should use more general language that refers to any claims arising out of anything — not just employment — to cover off the sexual harassment piece, said Shaw.

“And then, in order to be totally fulsome, what you would need is to specifically — and I’m not sure to be honest how employers can do this — enumerate what is being released… you can’t really name everything, and then you create confusion because what if there’s something you didn’t name, does that mean you purposely carved it out?”

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