Canadian Government Executive - Volume 25 - Issue 04

October/November 2019 // Canadian Government Executive / 19 EMPLOYMENT T he Federal Court of Canada recently confirmed in Bank of Montreal v. Li, 2018 FC 1298 Can- LII (Bank of Montreal), that an employee’s signed release and settlement agreement will not preclude a complaint for unjust dismissal under Section 240 of the Canada Labour Code (Code), but may affect the compensation awarded to the employee if the adjudicator determines that the employee was unjustly dismissed. Bank of Montreal has been appealed to the Federal Court of Appeal where it will be heard on December 2, 2019. We will follow these developments as they unfold and report on the outcome. Background In Bank of Montreal, the employer bank terminated an employee without cause. The employee then signed a release and in exchange received a severance pack- age. Despite this accepted package, the employee then filed a complaint for unjust dismissal. The employer requested that an adjudi- cator dismiss the complaint. Specifically, the employer’s contention was that the employee had agreed to a release that con- templated such a termination and under which the employee would receive $27,154 in lump-sum payments in exchange for a release from any claims, damages, or pro- ceedings. The clause in question was set out as fol- lows: In exchange for the consideration set out in paragraphs 2-3, the Em- ployee hereby releases and forever discharges BMO, its subsidiaries, affiliates, and successors and each of their respective officers, directors, em- ployees, and agents from any and all actions, causes of action, claims, de- mands and proceedings for whatever kind of damages, indemnity, costs, compensation, and any other remedy which Employee or Employee’s heirs, administrators or assigns had, may now have, or may have in the future arising out of Employee’s employ- ment or the termination of employ- ment. Section 240(1) of the Code allows federal employees who have completed 12 con- secutive months of employment and who are not subject to a collective agreement to make a written complaint regarding a perceived unjust dismissal within 90 days of the date of dismissal. Section 168(1) states that all provisions under Part III of the Code (Standard Hours, Wages, Vacations and Holidays), which contains the unjust dismissal provisions, apply notwithstanding any law, custom, contract or arrangement, unless the law, custom, contract or arrangement grants rights or benefits to the employee that are more favourable than those granted under Part III of the Code. Decision of the Adjudicator The adjudicator in Bank of Montreal de- termined that he was bound by the deci- sion of the Federal Court in National Bank of Canada v. Canada (Minister of Labour), [1997] 3 FCR 727 (FC), aff’d, 1998 CanLII 8077 (FCA) (National Bank). He agreed with the finding in National Bank that due to section 168 of the Code, it is possible for employees to utilize the unjust dismissal complaint process even when they have signed releases or accepted severance pay- ments. The adjudicator in Bank of Montreal also supported the position taken by the Federal Court in National Bank regarding the impact of an existing settlement agree- ment on the remedy awarded by an adju- dicator that concludes that an employee was unjustly dismissed. Specifically, the adjudicator agreed that the existence of such an agreement is an important factor for consideration. For example, if the adjudicator were to conclude that an employee was un- justly dismissed and was entitled to an amount greater than that provided under the settlement agreement, the adjudica- tor could order the employer to pay that greater amount. However, if the adjudica- tor were to conclude that that the amount the employee received under the settle- ment agreement equaled or exceeded the amount the adjudicator would have ordered in response to an unjust dismissal complaint, no award would be made be- cause of section 168; the amount consid- ered appropriate pursuant to the unjust dismissal provisions of the Code would not be more favourable to the employee than the amount under the agreement, thus the agreement would govern. Decision of the Federal Court The Federal Court heard the employer bank’s application for judicial review of ad_shure_MXC_CGE.qxp_Layout 1 2019-08-06 2:4