Canada: "Clearly Separate": Workplace Sexual Misconduct Not Captured By Employment Release

Last Updated: August 22 2018
Article by Jason Kully

In the recent decision of Watson v. The Governing Council of the Salvation Army of Canada, 2018 ONSC 1066, the Ontario Superior Court of Justice held an employee's claim for sexual harassment against another employee for conduct at the workplace fell outside the employment relationship. As a result, the alleged conduct was not captured by a release with the employer addressing all claims related or connected to employment. This decision highlights the nature of claims of sexual misconduct and the importance of using specific language in any release used to address the termination of an employee.

The plaintiff, Emma Watson, was employed by The Governing Council of The Salvation Army of Canada ("Salvation Army"), as the manager of one of its thrift stores. David Court was also employed by the Salvation Army. Ms. Watson alleged that Mr. Court sexual harassed her during her employment and that both the Salvation Army and Mr. Court were liable for his conduct. 

Mr. Court brought an application for the summary dismissal of Ms. Watson's claim on the basis that she executed a "Full and Final Release" regarding her employment with the Salvation Army. When Ms. Watson's employment with the Salvation Army ended in August 2011, prior to a complaint of sexual harassment being made against Mr. Court, she received a payment of $10,000 and the continuation of benefits for a period of time. In exchange, she executed a Memorandum of Settlement and the Release.

In the Memorandum of Settlement, Ms. Watson and the Salvation Army acknowledged "... the mutual agreement of separation of employment effective August 8, 2011". The document went on to state:

... 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, actions, disputes etc. between them arising out of the employment relationship or the termination of that employment; ...

The Release signed by Ms. Watson stated:

  1. This Release is given by Emma Oliveira Watson with respect to her employment at The Salvation Army and the ending of her employment.
  2. In accordance with the terms of settlement outlined in the attached letter dated August 8, 2011, I, Emma Oliveira Watson, agree to release any and all claims I have or may have against The Salvation Army, past, present or future, known or unknown, which arise out of or which are in any way related to or connected with my employment or the ending of my employment.
  3. 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.

Mr. Court argued that Ms. Watson's claim for sexual harassment was covered by the language of the Release and that he was entitled to enforce the contractual arrangement. The Court recognized that a third party, could in certain circumstances, enforce a contractual benefit and went on to determine if the Release covered Ms. Watson's claim.

The Court noted the Release was unambiguous and that its scope was the employment relationship, covering all claims arising out of Ms. Watson's employment. While the Court recognized that the alleged events occurred at the place of employment and "perhaps, because of the employment", it concluded that Ms. Watson's claims of sexual harassment, intimidation and improper conduct against Mr. Court were "clearly separate matters" that were not connected to her employment. The Court noted that the settlement pertained to severance only and that the Human Resources manager negotiated the settlement, whereas the Director of Employee Relations handled cases involving sexual misconduct. Given these considerations, the Release could not be considered all-inclusive and Ms. Watson's claims against Mr. Court were not within its scope. Since the alleged conduct fell outside the employment relationship, the Court stated that specific language would be needed in the Release to bar Ms. Watson's claims. The Court held there were issues requiring a trial and dismissed Mr. Court's summary dismissal application.

Unfortunately, the Court did not specifically address how it came to the conclusion that the claim for sexual harassment was not connected to Ms. Watson's employment. This lack of reasoning is troubling; particularly in light of the Court's observation that the events occurred at the place of employment and that they "perhaps" occurred because of the employment. If this is insufficient to "connect" the claim to employment, it is difficult to articulate what more is needed.

While there may be a lack of sympathy for Mr. Court's situation based on the allegations, the distinction between workplace sexual harassment and the employment relationship in this case has the potential to have a broad impact. Employers rely on releases for certainty and this decision raises some doubts about that certainty. In the absence of specific language addressing claims for issues like sexual misconduct, employers may not be able to avoid liability for such claims based on a contractual term releasing them from claims connected to or related to an employee's employment. It is also unclear which other claims may fall "outside" of the employment relationship.

Although an Alberta court is not obligated to follow this decision and the interpretation of the general release language may change going forward, employers should seek to avoid this kind of situation and use specific language in a release addressing all future claims related to the employee's employment or dismissal, including claims related to sexual harassment allegations. Field Law's Labour & Employment Group is available to assist with this exercise.

This case is also good reminder about the impact that workplace sexual harassment or misconduct claims may have. Field Law has experience with these claims and offers both preventative and responsive services to help organizations address these concerns. To discuss how Field Law can help you with training for or navigating sexual misconduct and harassment matters, please contact Kelly Nicholson in Calgary or Ayla Akgungor in Edmonton and Yellowknife.

SAVE THE DATE

Effective Responses to Sexual Misconduct and Harassment Complaints Workshop
Join Field Law's Labour and Employment Group for a comprehensive one-day workshop in Edmonton and Calgary which will address issues organizations may face if dealing with allegations of harassment and sexual misconduct by their employees. Presenters will include Field Law lawyers, an investigator and public relations professionals, all with significant experience advising organizations facing these issues.

Calgary: October 24
Edmonton: October 30

Don't miss out on this informative and interactive session! Sign up for Field Law's invitations and email alerts here, or check the website for updates. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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