In Bank of Montreal v. Li, 2020 CAF 22, the Federal Court of Appeal refused the Bank’s argument that a signed release barred access to the unjust dismissal provisions of the Canada Labour Code
34 The facts of National Bank are quite similar to the facts in the present case. A terminated employee signed a release agreement which discharged her employer from any and all claims arising from that termination in exchange for a lump sum of money plus relocation counselling. Two weeks later, after having received the funds and relocation counselling, the former employee filed a complaint alleging unjust dismissal under section 240 of the Code. The employer then brought a judicial review application, arguing inter alia that the Minister was without jurisdiction to appoint an adjudicator given the release, and that to find otherwise would be an impermissible intrusion into the parties’ freedom to contract. The Federal Court (per Justice Rothstein) dismissed this objection on the basis that subsection 168(1) of the Code prohibits employees from contracting out of their statutory right to bring unjust dismissal complaints. The Court accepted the Minister’s justification of this intrusion as being the establishment of a safety net of minimum requirements for employees. In the Court’s view, a consideration of the subjects addressed in Part III of the Code (such as minimum wages and maximum hours of work), as well as the text of subsection 168(1), supports this view. As Justice Rothstein wrote (at para. 8):
In short, if a contract is more beneficial to an employee than rights under Part III, the contract will govern; if less beneficial, Part III will govern. Thus subsection 168(1) provides that while parties may freely enter into binding contracts respecting conditions of employment and termination, such contracts are subject to minimum statutory requirements in favour of employees.
37 The issue before us is whether it was reasonable for the adjudicator to follow the decision of this Court in National Bank FCA. As a matter of principle, an administrative decision-maker is bound to follow applicable precedents originating from any court, let alone a court of appeal; the doctrine of stare decisis calls for no less (Tan v. Canada (Attorney General), 2018 FCA 186, 427 D.L.R. (4th) 336 (F.C.A.), at para. 22 [Tan]). Courts themselves may depart from precedent in exceptional circumstances. The Supreme Court has acknowledged that the certainty and predictability of stare decisis must sometimes give way when a case has been wrongly decided, or where the economic, social and political circumstances underlying a decision have changed (see Fraser v. Ontario (Attorney General), 2011 SCC 20, [2011] 2 S.C.R. 3 (S.C.C.), at paras. 56-57; Craig v. R., 2012 SCC 43, 347 D.L.R. (4th) 385 (S.C.C.), at paras. 24-27; Bedford v. Canada (Attorney General), 2013 SCC 72, [2013] 3 S.C.R. 1101 (S.C.C.), at para. 47; Teva Canada Ltd. v. TD Canada Trust, 2017 SCC 51, [2017] 2 S.C.R. 317 (S.C.C.), at para. 65; Vavilov, at para. 18).
51 Even if I were to accept BMO’s submission that a prospective waiver ought to be distinguished from a retrospective waiver under subsection 168(1) of the Code, I am far from convinced that an employee signing a release agreement upon termination is always in a situation where the rights he or she renounces have accrued, or where it can truly be said that he or she simply decides not to exercise them. This Court explicitly referred to the possibility of an employee not being aware of all the relevant circumstances surrounding his or her termination at the time of signing a release agreement with the employer in National Bank FCA at paragraph 4:
“Indeed, it is not difficult to envisage a situation where an employee could, after having signed such a contract, realize that the termination of his or her employment is not the result of a legitimate business restructuration as he or she was led to believe, but is instead a coloured or disguised attempt at wrongfully dismissing her or him. This shows the wisdom of the Code in protecting an employee’s access to the remedies against unjust dismissal notwithstanding the signature of a termination contract between the parties.”
52 In the case at bar, the respondent argues that it is not entirely clear whether she was terminated “with just cause” or not. In the letter that was sent to her on March 29, 2017, BMO advised the respondent that her employment was terminated “[a]s a result of [her] inability to meet the performance requirements of [her] position”. After she signed the release agreement, BMO issued a Record of Employment stating that she did not meet bank requirements, and a Form 33-109F1 (“Notice of Termination Information for an Individual”) stating the reason for dismissal as “performance related”. Yet, the respondent claims that she was terminated as a result of making a complaint to the human resources division and senior management of her employer alleging discrimination and harassment by her direct manager. She also contends that she is owed outstanding commission payments, and that she was misled as to her entitlement to such commissions in the event that she signed the release. Whether or not these claims have merit, it cannot be said with certainty that the respondent knowingly decided to renounce the rights provided by the Code or knew precisely what they were.
53 In any event, if the adjudicator eventually finds that the respondent was unjustly dismissed and was terminated without cause, this is not the end of the matter. The adjudicator will then have to determine the proper remedy pursuant to subsection 242(4) of the Code, and may require BMO to compensate the respondent, reinstate her or provide her with other relief that is equitable. There is no doubt in my mind that in assessing the proper remedy, the adjudicator will take the release agreement into consideration. Alternatively, the same will be true in those cases that fall outside the unjust dismissal regime. If an employee who has completed twelve consecutive months of employment is terminated, the release agreement will be factored in when calculating the minimum rate of severance pay pursuant to subsection 235(1) of the Code.
54 I find, therefore, that BMO’s argument that National Bank was wrongly decided and should be overturned because it conflates prospective and retrospective waivers of statutory rights is without merit.
The court also concluded that overturning National Bank would not enhance certainty in the law and that it should not be overturned for policy reasons.