A Full and Final Release Signed Upon Termination of Employment Does Not Bar an Unjust Dismissal Complaint Under the Canada Labour Code

  • December 16, 2019
  • Behzad Hassibi, Israel Foulon LLP

The Federal Court of Canada recently ruled that a release signed upon termination of employment does not bar an unjust dismissal complaint under the Canada Labour Code (“Code”), as parties cannot contract out of Part III of the Code (Bank of Montreal v. Li, 2018 FC 1298 (CanLII) (“Li”)).

The Facts

Yanping (Kate) Li was a financial planner at the Bank of Montreal (“BMO”) from May 2011 until March 29, 2017, when her employment was terminated. Upon termination of her employment, Ms. Li accepted a settlement package in exchange for a full and final release. One of the key terms of the settlement was as follows:

10. In exchange for the consideration set out in paragraphs 2-3, the Employee hereby releases and forever discharges BMO, its subsidiaries, affiliates, and successors and each of their respective officers, directors, employees, and agents from any and all actions, causes of action, claims, demands 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 employment or the termination of employment.

After accepting the settlement package and signing the release, Ms. Li brought an unjust dismissal complaint under s. 240 of the Code as well as a claim for unpaid wages under s. 247 of the Code. BMO requested that the two matter be heard together.

The adjudicator found that she was bound by the decision in National Bank of Canada v. Canada (Minister of Labour), 1997 CanLII 5297 (FC), which was affirmed by the Federal Court of Appeal, 1998 CanLII 8077 (FCA), and concluded that she had jurisdiction to hear the unjust dismissal complaint but not the claim for unpaid wages. BMO sought judicial review of the adjudicator’s decision.