Sexual harassment is a specific form of workplace discrimination involving comments, jokes, or conduct relating to sex, sexual orientation or gender that are unwelcome and inappropriate.  

Employees are protected from sexual harassment by law, including under the Ontario Human Rights Code. They may bring a claim against the employer for sexual harassment experienced in the workplace, such as for constructive dismissal. But what happens if the employee signs an agreement releasing the employer from liability?

This article looks at the recent decision of the Human Rights Tribunal of Ontario in Murphy v Anishnabeg Outreach Employment and Training, in which an employer sought to rely on a release signed by an employee who alleged that she was sexually harassed. The case demonstrates that an employee may still be able to claim discrimination or harassment even if they have signed an agreement with the employer to resolve the issue.

What is sexual harassment?

Under the Human Rights Code, every employee has a right to freedom from harassment in the workplace because of sex, sexual orientation, gender identity or gender expression by their employer (or agent) or by another employee. 

Sexual harassment can form small aggressions that continue over time or may be defined by a single incident. The types of behaviours which may be considered sexual harassment in the workplace include communication about sexual activities, jokes relating to sexuality or gender, unnecessary physical contact and demanding sexual favours.

Employee resigned after alleging sexual harassment

In the case before the Human Rights Tribunal, the applicant employee alleged discrimination on the ground of sex and sexual harassment by her employer and its chief executive officer. She claimed that the CEO repeatedly made comments and engaged in inappropriate behaviours.

The applicant resigned from her position and was called to an emergency Board meeting. At the meeting, her resignation was put on hold until an external investigation took place. She was later advised by the investigator that the investigation had been completed and that the CEO would remain in his position. The employee responded that she did not wish to return to work.

Employee signed agreement and release to receive final pay cheque

Shortly after, the CEO emailed the applicant a letter of agreement stating that the Board acknowledged receipt of her resignation and that it would continue to pay her wages until her interview with the investigator, provided that she signed the agreement and was released within two days. The release said that the applicant agreed not to pursue any claims, demands or actions on account of the termination of her employment, including any claims for discrimination under the Human Rights Code

The applicant signed the documents and returned them to another Board member. She did not obtain legal advice and said that “she wanted to end the angst and panic” which she had been experiencing and “just wanted to be done with it all”.

The employer asked the Tribunal to dismiss the application as an abuse of process because the employee signed a full and final release. 

Employee argued economic and psychological duress

Adjudicator Mounsey explained that the release was broad, but the language was clear. The central issue was the circumstances under which the applicant signed the agreement and release and whether there was a valid basis for invalidating these contracts due to duress.

The Adjudicator noted that the Human Rights Code does not expressly bar applications where a release has been signed. However, the Tribunal may make such orders as it considers proper to prevent abuse of its processes. 

While a release should not easily be disturbed where the literal and ordinary meaning demonstrates a clear intention to fully and finally release a party from all claims, there may be compelling reasons to set the contract aside, such as where there is economic or psychological duress. 

Tribunal found that there was no economic duress

The Adjudicator explained that both economic and psychological duress requires an element of threat or coercion that must be experienced at the time of signing. Where economic duress is claimed, a party must establish that their need was so serious that they had no other option but to sign the release or agreement. 

The Tribunal decided that the applicant had not proven that the loss of her position resulted in financial hardship which left her no choice but to sign the settlement documents. 

Tribunal allowed claim to proceed due to psychological duress

However, the Adjudicator was satisfied that the applicant demonstrated that she was under emotional and psychological duress. In particular, the Adjudicator noted that the applicant testified that she found the email from the CEO coercive and threatening and found that this was a reasonable reaction. She had advised the Board that she did not wish to have any further contact with the CEO. 

The Adjudicator also noted that the applicant:

“Was provided with roughly two days in which to consider her legal position and determine whether to execute the Letter Agreement and Release. She was not advised of, or provided with, an opportunity to seek independent or legal advice concerning these documents.”

As a result, the Tribunal found that the release was not a bar to the employee’s application. The application was permitted to continue through the Tribunal’s process, including a substantive determination on the harassment allegations. 

Contact Haynes Law Firm in Toronto for Advice on Sexual Harassment

Too often, employees feel pressured into signing documents without the opportunity to conduct a proper review or consider the implications. Haynes Law Firm can help employees obtain the compensation they are entitled to, including where they have or continue to face sexual harassment at work. We also help employers meet all workplace safety and harassment compliance obligations. To discuss how the employment law team at Haynes Law Firm can assist you, please contact us online or call us at 416.593.2731.