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The Workers’ Compensation Appeal Tribunal Issues Decision on the Interpretation of Release Agreements

The Workers’ Compensation Appeal Tribunal (“WCAT”) recently issued a decision in WCAT No. A1803651 (January 14, 2022), which will be of interest to employers as it clarifies the law concerning the interpretation, validity, and enforceability of general release agreements in employment related disputes.

Harris & Company LLP was successful in defending an employer against a worker’s prohibited action complaint in this matter. WCAT accepted the employer’s argument that the worker’s prohibited action complaint had already been “settled” between the parties pursuant to a Settlement Agreement and Mutual Release (the “Release Agreement”). While the parties’ Release Agreement did not did not expressly reference the Workers’ Compensation Act (the “Act”), or prohibited action complaints, WCAT found that the Release Agreement applied to the worker’s prohibited action complaint in the circumstances, barring its adjudication on the merits. This is the first case where WCAT cites the recent Supreme Court of Canada’s decision in Corner Brook (City) v. Bailey, 2021 SCC 29 (“Corner Brook”) on how releases should be interpreted. Drawing from the principles in Corner Brook, and principles arising from other recent WCAT decisions, the panel confirmed that a specific matter or cause of action need not be explicitly identified in a release agreement in order to be contemplated and captured by it.

Background of Case

The worker in this case filed a prohibited action complaint under Part 2 of the Workers’ Compensation Act, against his employer, alleging that his employment had been terminated in retaliation for raising safety issues.

In 2018, WorkSafeBC rendered its initial decision on this prohibited action complaint. The Board determined the Release Agreement did not apply, but nevertheless dismissed the worker’s prohibited action complaint on its merits. The worker then appealed WorkSafeBC’s decision to WCAT.

At or around this time, the worker also filed a complaint with the British Columbia Employment Standards Branch (“ESB”) under the Employment Standards Act, for monies the worker believed were owed to him in respect of his employment with the employer, and for the termination of his employment. In a decision dated February 28, 2019, a delegate of the director of Employment Standards dismissed the worker’s complaint in its entirety. The basis for that decision was a finding that the Release Agreement was a binding agreement, entered in good faith, and applied to that proceeding. The ESB decision was confirmed by a decision of the British Columbia Employment Standards Tribunal (“BCEST”) dated July 9, 2019 (2019 BCEST 64).

Similarly, around this time, the worker also commenced a complaint against the same employer before the British Columbia Human Rights Tribunal (“BCHRT”). In this complaint the worker alleged that the employer had discriminated against him on the basis of disability, contrary to the Human Rights Code. The facts underlying these allegations were essentially the same as those before WorkSafeBC and the ESB. The worker’s complaint was dismissed by a decision from the BCHRT dated October 31, 2019 (2019 BCHRT 232). In dismissing this complaint the BCHRT found that the Release Agreement was a valid, binding settlement agreement between the parties. While the release did not expressly reference complaints under the Human Rights Code, the BCHRT found that it implicitly did as the allegations all arose from the worker’s employment and its termination. The worker sought a reconsideration of the BCHRT decision. On November 18, 2019, the BCHRT denied the worker’s request.

In the case at bar, the employer argued before WCAT that issue estoppel applied given that decisions had been made by various administrative tribunals concerning the matters at issue and that the only issue before WCAT was whether the Release Agreement applied to preclude the worker’s prohibited action complaint.

WCAT agreed with the employer’s position, and importantly, that the BCEST and BCHRT had already made findings of fact as to the validity of the Release Agreement (i.e. that it was not unconscionable, was executed without duress, and was made with the requisite mental capacity). WCAT confirmed the same questions on appeal had been previously decided by the BCEST and BCHRT, the previous decisions were final, and the parties were the same in each of these proceedings, therefore meeting the three pre-conditions of issue estoppel, barring the worker from raising the same issues before WCAT.

Further, while the Release Agreement did not specifically reference prohibited action complaints, WCAT applied the principles from Corner Brook and found that prohibited action complaints were implicitly captured by the “spirit and letter of the release agreement in question.” In other words, it was clear from the circumstances that the parties were contemplating a variety of claims arising out of the worker’s employment. Thus, WCAT dismissed the worker’s complaint.

In this context, WCAT recognized that it made “good sense” for the language of the Release Agreement to be worded broadly to capture all potential claims between the parties.

This decision is noteworthy and will be helpful to employers in future disputes regarding the interpretation of releases, particularly with respect to whether the release captures statutory claims such as prohibited action complaints under the Workers Compensation Act, or complaints made under the Human Rights Code, or the Employment Standards Act.

For more information on this decision, contact Lana Tsang.