Canadian Employment Law Today

July 14, 2021

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Seeking repayment when dismissed employee ignores release Question: If a terminated employee signs a release in exchange for an additional severance payment and then begins legal action against the employer anyway, can the employer try to get that payment back? Ask an Expert Have a question for our experts? Email jeffrey.smith@keymedia.com STUART RUDNER, RUDNER LAW, TORONTO with Stuart Rudner Answer: Regular readers know that the reason for obtaining a full and final release at the time of or after dismissal is to prevent litigation. That is why it is often advisable to offer the employee more than they are legally entitled to in order to provide legal consideration for the release. It is relatively rare to see an employee com - mence a claim for wrongful dismissal or some other claim related to their employment or the termination of their employment after they have negotiated a severance package that in - cludes a full and final release. However, it does happen occasionally, either where the employ- ee has had second thoughts or where they did not understand what they were signing. In those situations, the typical question is whether the employer can move swiftly to shut the claim down. Generally speaking, a release should preclude subsequent claims for the same subject matter. However, an employee may be able to pursue a claim despite signing a release if, for example: • the scope of the release was not properly defined • there was insufficient consideration • the employee can show that they signed under duress or without a reasonable op - portunity to seek independent legal advice • the agreement was unconscionable. It is important to note that the case law re- quires very specific wording in order to prevent subsequent claims for alleged violations of human rights legislation. As a result, a release may preclude a wrongful dismissal claim but the employee may still be permitted to pursue a human rights claim. This reader raises the interesting question of whether the employer could try to get the money that they paid back. Usually, the em - ployer will prefer to shut the claim down rather than get their money back, but if that is not possible, or if they prefer to defend the claim for strategic reasons, then in theory they could seek to have the money repaid. That would be based on the premise that the employee repudiated the agreement. Effectively, the par - ties would proceed as if the release, which is a legal contract, had never occurred; neither party would get the benefit that they bargained for, so the employee would have to return any money or consideration they received, but they could pursue claims that would otherwise be precluded by the release. Obviously, in most cases, the employer will be better off seeking to enforce the release and avoid defending claims against them, rather than recovering the money they paid. If that wasn't true, then why pay for the release in the first place? Canadian HR Reporter, 2021 2 | | July 14, 2021 July 14, 2021 CREDIT: ARTEM KNIAZ iSTOCK A second opinion on IMEs Question: If an employee on medical leave undergoes an independent medical examination and is cleared for work, can the employer seek a second opinion? Trying to reclaim a payment would be based on the premise that the employee repudiated the agreement. Answer: In some circumstances it will be ap- propriate for an employer to require medical documentation before allowing an employee that has been on a medical leave of absence to return to the workplace. Obviously, this needs to be a fact-based assessment and it would be unreasonable to require medical documenta - tion before allowing someone to return to work from a brief absence where there is no legiti- mate reason to be concerned about their return. Usually, the question that we receive is whether an employer can require an indepen- dent medical examination (IME) after the em- ployee provides documentation from their own physician. However, this reader's question is premised on the fact that the employee has al- ready undergone an IME. It would therefore be extremely unlikely that there would be a legiti- mate reason to require another opinion. Courts and arbitrators are generally reluctant to allow employers to insist upon an IME. Un- less a contract, collective agreement or appli- cable legislation requires it, IMEs should only be required where the information provided is inadequate, unreliable, or suspicious and the employer has first attempted to obtain more suitable information from the employee's doc - tors. In other words, an IME should be a last resort and not a default; the first step is to go back to the doctors that provided the initial in- formation. It should also be noted that if the employer wants to rely on an allegation that the informa- tion provided by the employee is suspicious, there must be legitimate reasons for that suspi- cion and not just a baseless belief. IMEs are not to be used to second-guess the employee's doctor. Stuart Rudner is the founder of Rudner Law, an employment law firm in Toronto. He can be reached at stuart@rudnerlaw.ca or (416) 864- 8500.

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