Non-disclosure agreements have made headlines in recent months due to their use to cover up allegations of sexual harassment in the workplace. Over the summer, a bill was introduced in the United States that aimed to prevent employees from using non-disclosure agreements in instances of sexual harassment. A recent case before the Ontario Superior Court of Justice saw the court ruling on whether an employer could rely on a release to prevent a former employee from suing another former employee for sexual harassment.

The background

The employee worked as a manager of a store owned by the employer from April to August 2011. Another employee (the “Director”) was also employed before and after this period of time. Upon leaving the job, the employee received $10,000 after signing a Memorandum of Settlement and a Release, which had a paragraph reading,

“This release of claims shall include any claims against anyone or any organization in any way associated with The Salvation Army which arise out of or which are in any way related to or connected with my employment or the ending of my employment.”

The Director was fired on June 4, 2015 after the employer received a written sexual harassment complaint from another person. An independent investigation uncovered eight complaints by current and former employees. This is in addition to the complaint brought forward by the employee.

On August 16, 2016, the employee commenced an action by statement of claim, seeking damages for negligence, intentional infliction of emotional harm, and breach of fiduciary duty by the Director. Her allegations included sexual harassment by the Director both at work and outside of work.

An application for summary judgment

The Director sought summary judgment dismissing the claim on the following grounds:

1. The employee executed a full and final release;
2. The Ontario Human Rights Tribunal has exclusive jurisdiction; and
3. The evidence does not support the claims.

In regards to the first grounds, the court did not dispute that in certain circumstances, employees and employers could enforce a contractual benefit. However in this case, the court asked whether the release was intended to cover all possible matters, and whether it was based on employment.

After reviewing the release, the court found that the use of the words “arise out of…my employment” define the scope of the release. As a result, it can’t be used to prevent the disclosure of events that took place outside of the workplace. In its decision the court wrote,

“I conclude the Release cannot be considered all inclusive, including the claims herein, as the scope was the employment relationship.  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.

“The Salvation Army, quite properly, acknowledges that sexual misconduct does not arise from the employment relationship.  Here, the settlement was negotiated by the Human Resources manager.  Cases involving sexual misconduct are handled by the Director of Employee Relations.  The settlement pertains to severance only.  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”

Regarding the question of jurisdiction, the court held that the claim involves more than sexual harassment, including the intentional infliction of emotional harm, which is a common law claim.

Finally, the court addressed the Director’s argument that the evidence does not support the claims. The court found the employee had indeed provided a detailed account of multiple events, adding that a trial should still take place regardless as victims of sexual misconduct and harassment often do not report such events. A trial would be necessary to allow the evidence to be presented.

The employment law team at HMC Lawyers has over 130 years of cumulative litigation experience and offer insightful legal advice to employers and employees about matters relating all areas of employment law. Our Employment Team helps employers and employees address challenging workplace disputes with a minimum disruption to relationships wherever possible. We strive to resolve matters through mediation and other formal methods of alternative dispute resolution to minimize costs, but where necessary, are tireless trial advocates on behalf of our clients. 

To make an appointment with one of our Employment Team members, call 1-800-480-3534 or contact us online. We represent employers and employees in Calgary, throughout Alberta, and across Western Canada.