There are certain circumstances in which the duty to mitigate does not arise. The first is where there is a termination clause in an employee’s employment agreement which does not expressly require an employee to mitigate their damages during the applicable period of notice. The second is with respect to an employee’s minimum statutory entitlements under employment standards legislation, including an employee’s entitlement to notice/Termination Pay and Severance Pay, which an employee is entitled to receive regardless of their mitigation efforts.
It’s become increasingly common for terminated employees to file complaints with the Human Rights Tribunal of Ontario (the “HRTO”). Such complaints are free to file, applicants don’t need lawyers to file them, and, if unsuccessful, applicants don’t have to worry about paying the employer’s legal fees.
The question is whether an employer can protect itself from human rights complaints by having the dismissed employee sign a release?
The answer is yes – but to be enforced by the HRTO, the release must be properly prepared and entered into. If it’s not, the HRTO has the power to set aside the release.
The Leading Case: Pritchard v. Ontario (Human Rights Commission)
Pritchard, a Sears Canada employee, complained to the Human Rights Commission that she had been let go from her employment and denied re-employment after alleging sexual discrimination and sexual harassment against her employer.
At termination, she was offered two weeks more than her entitlement under the employment standards legislation. In exchange, she signed an agreement that released Sears from all employment-related claims, including those under the Human Rights Code (the “Code”).
The Context Of The Release
Sears gave Pritchard one week to consider the offer. Pritchard contacted a lawyer who requested an extension from Sears. Sears agreed to four additional days, to which the lawyer advised this was not enough time to assess the human rights claim.
Pritchard additionally spoke to an Employment Standards Branch employee who advised her that the release would not be binding. After the four-day extension, Pritchard executed the release, which stated that she obtained independent legal counsel or waived her right to do so.
The Commission’s Decision
Pritchard subsequently filed the human rights complaint. The Commission decided not to proceed with the complaint because Pritchard had signed the release, which was evidence of bad faith on her part in bringing the complaint.
The Ontario Divisional Court’s Decision
The Court held that the Commission improperly limited its discretion and quashed the Commission’s decision. According to the Court, bad faith may be an issue in cases where a person who has signed a release then brings a complaint – but it’s not so in all cases. And this was not such a case.
Pritchard had been told by an employee of the Employment Standards Branch that signing the release would not affect her legal rights, and her lawyer had not been given the time requested to evaluate the human rights claim. Pritchard received little more than her statutory entitlement, and the amount over that entitlement was not clearly broken down for her. As a result, she was not held to the release, and she was allowed to proceed with her complaint.
What this means for employers
To reduce your risk of exposure to human rights complaints, employers should follow these tips:
- Ensure the release has appropriate language to protect against human rights complaints. This includes making reference to the Code and having the employee make the representation that the employer has complied with the Code, and has not discriminated against the employee in his or her employment. Such clauses should be properly drafted by an employment lawyer, and included in any termination letter or agreement given to the employee.
- In the termination meeting, explain to the employee that the release language means the employee is agreeing the employer has not discriminated against him or her contrary to the Code. Text alone isn’t always enough.
- Offer a package that exceeds the minimums required under the Ontario Employment Standards Act, 2000. If an employee signs a release but receives only the minimum under the statute, the release will likely be unenforceable because the employee will not have received any “consideration” – or value – for the release. Have your lawyer set out in the release the specific sums for each head of damages, including severance, termination and vacation pay, wages, and compensation for the alleged human rights issue.
- Give the employee sufficient time to obtain independent legal advice in regard to the meaning of the release, and recommend that the employee seek such advice. Do not let the employee sign the release on the same day.
What this means for employees
- Don’t sign the release on the same day. Ensure that you have a reasonable amount of time to review the release and to secure independent legal counsel before signing. If you don’t have such time, request an extension from your employer.
- Hire a lawyer to review the release before signing away your rights as well as to ensure you receive the maximum you are entitled to.
- If the release doesn’t set out a breakdown of your entitlements, ask for this. It will help your lawyer to negotiate the terms of your settlement.