Being terminated from your employment can be a very stressful experience. Unfortunately, this can result in poor in-the-moment decision making that you may later regret. Many people that find themselves in such a situation are too quick to agree to a settlement with their employers. They sign release documents only to later realize that they may have been entitled to more than they agreed to and wish that they could bring a claim against their former employer. Release documents in such situations generally prevent a former employee from bringing any claims against his or her former employer, often including human rights claims. Where a signed release applies to human rights claims, the Ontario Human Rights Tribunal (the “Tribunal”) will often refuse to allow the application to proceed. However, there are some circumstances where this will not be the case. This post will provide a brief summary of the law regarding release documents in Tribunal proceedings against former employers.
In Bielman v. Casino Niagara, 2009 HRTO 123, the Tribunal confirmed that the Ontario Human Rights Code does not explicitly bar applications where a release has been signed. Where a human rights application is filed by a former employee who has executed a full and final release, section 23(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 allows the Tribunal to dismiss the application where it finds that the filing of the application constituted an abuse of process. In Perricone v. Fabco Plastics Wholesale, 2010 HRTO 1655, the Tribunal confirmed that the question when determining whether it would be an abuse of process in such circumstances is whether the release is legally binding and final.
Whether a contract, including a release, is legally binding and final depends on a variety of factors. In Pritchard v Ontario (Human Rights Comm), 1999 CanLII 15058 (ON SC), the Ontario Divisional Court outlined several factors relating to whether a human rights claim should proceed where a release has been executed. The Tribunal has since applied the Pritchard factors when determining whether it would be an abuse of process to proceed with an application where a release has been signed (Douse v Hallmark Canada, 2009 HRTO 1254).
Where any of the Pritchard factors are present in a given case, the Tribunal will generally find that the release is void (not legally binding) and will allow the application to proceed. The Pritchard factors are as follows:
- The employee misunderstood the significance of the release;
- The employee received little or no consideration for it beyond statutory entitlements under employment standards legislation; or
- The employee was in such serious financial need that she or he felt there was no choice but to accept the package offered.
The Tribunal has since extended the factors to include psychological or emotional pressure amounting to duress, in addition to economic duress. Further, although the Pritchard factors are useful for the determination of whether it would be an abuse of process to proceed with an application where a release has been signed, the question to be answered remains whether the release is legally binding and final. As such, the Tribunal has frequently applied other relevant legal principles to determine whether a release is legally binding. For example, many applicants have argued that a release is void because it is unconscionable. The Tribunal has applied the Court of Appeal for Ontario’s decision in Titus v. William F. Cooke Enterprises Inc., 2007 ONCA 573 when determining whether a release is unconscionable and, therefore, is not legally binding.
The four elements set out in Titus for proving unconscionability are as follows:
- A grossly unfair and improvident transaction;
- A victim’s lack of independent legal advice or other suitable advice;
- Overwhelming imbalance in bargaining power caused by the victim’s ignorance of business, illiteracy, ignorance of the language of the bargain, blindness, deafness, illness, senility, or similar disability; and
- The other party knowingly taking advantage of this vulnerability.
In some circumstances, it is possible to proceed with a claim at the Human Rights Tribunal against your former employer when you have already signed a release document. However, it should be noted that it can be very difficult to prove that a release document is not legally binding, and the threshold for proving any of the Pritchard factors or unconscionability is high. Anyone who has been notified of their termination should seek independent legal advice prior to signing any settlement or release documents. That way, they can avoid regretting the settlement and having to prove that such documents are not legally binding in order to bring a claim in the future.