Executive Summary: Key Legal and Evidentiary Issues

• Jurisdiction over a unionized employee’s challenge to a grievance settlement was the central legal question.

• The court applied the Weber framework to determine whether the matter should be heard by an arbitrator or the courts.

• The appellant alleged unconscionability, undue influence, and unfairness in signing the settlement agreement.

• The court found the dispute arose entirely within the collective agreement’s dispute resolution process.

• No effective remedy was denied, as arbitration and Labour Relations Board processes remained available.

• The appeal was dismissed; the court held it lacked jurisdiction to rule on the enforceability of the agreement.

Facts and outcome of the case

Background and parties involved

Kamal Sarao, a unionized employee of the Fraser Health Authority (operating as Surrey Memorial Hospital), was injured at work and went on long-term disability leave. After failing to successfully return to work, the employer notified her and her union—the Hospital Employees’ Union (HEU)—of its intention to terminate her employment. In response, HEU filed a grievance alleging a failure to accommodate or retrain her, triggering the dispute resolution process under the governing collective agreement.

Before arbitration proceedings formally began, the parties entered into mediated settlement discussions led by Arbitrator Young. The discussions resulted in a signed settlement agreement in which Ms. Sarao agreed to resign, Fraser Health agreed to pay her $30,000 and provide a reference letter, HEU agreed to withdraw all grievances, and Ms. Sarao released Fraser Health from further claims. The agreement also stated that the arbitrator would retain jurisdiction to resolve any issues regarding its implementation or interpretation.

Legal dispute and procedural history

Soon after signing, Ms. Sarao regretted the decision. Her lawyer contacted Arbitrator Young, arguing that the agreement was unfair and unenforceable. However, instead of pursuing recourse through her union or the arbitrator, Ms. Sarao filed a notice of civil claim in the British Columbia Supreme Court. She alleged that she was pressured to sign, that the arbitrator’s role in the settlement was improper, and that she had not given informed consent to the process. She asked the court to declare the agreement null and void on the grounds of unconscionability, undue influence, and unfairness.

Fraser Health applied to strike her claim for lack of jurisdiction, asserting that the matter fell squarely within the collective agreement’s arbitration framework. The Supreme Court agreed and dismissed her claim. When the chambers judge later retired without issuing reasons, another judge reviewed the hearing record and confirmed that the dismissal was consistent with the Weber v. Ontario Hydro framework, which holds that disputes rooted in collective agreements must be resolved through arbitration, not the courts.

Court of Appeal decision

Ms. Sarao appealed the dismissal. The British Columbia Court of Appeal considered whether the courts had jurisdiction over her claim. Applying the Weber and Horrocks decisions, the Court reaffirmed that where a dispute’s “essential character” arises from the collective agreement, it must be resolved by arbitration. It concluded that Ms. Sarao’s complaints stemmed from how the union, employer, and arbitrator conducted themselves during the grievance process—a process mandated by the collective agreement.

The Court further held that an arbitrator has sufficient jurisdiction and authority to determine whether the settlement agreement is enforceable, including whether it was procured by undue influence or is unconscionable. Moreover, Ms. Sarao could have asked HEU to challenge the agreement or filed a complaint with the Labour Relations Board under section 12 of the Labour Relations Code for unfair union representation. Because these avenues remained available, the Court saw no basis to invoke its residual jurisdiction.

Final outcome

The Court of Appeal dismissed the appeal on July 29, 2025, holding that the matter fell within the exclusive jurisdiction of arbitration under the collective agreement. It declined to take jurisdiction or grant relief, noting that Ms. Sarao still had viable remedies through arbitration or a Labour Board complaint. No damages were awarded, and the decision did not expressly mention any order regarding legal costs.