She called her settlement 'hush money' 13 years later — the court called it binding
ACJ McWatt's panel ruled May 13, 2026, that a former IESO worker must repay her $70,000 settlement after breaching her termination agreement.
Maya Knauth signed her termination agreement with the Independent Electricity System Operator on March 29, 2011. She walked away with $50,000 as a retiring allowance and $20,000 in damages for her harassment and discrimination allegations, paid in exchange for withdrawing her Human Rights Tribunal of Ontario claim. Included in the deal: any future claim tied to her employment or resignation triggered repayment of the full $70,000.
More than 13 years later, she filed one. Knauth filed an Unfair Labour Practice complaint at the Ontario Labour Relations Board in October 2024, calling the agreement unlawful and the money "hush money." The OLRB dismissed it. The IESO grieved the breach, and Arbitrator John Stout ruled on June 25, 2025, that Knauth had to repay the $70,000 less applicable statutory deductions, plus legal costs.
A signed release means what it says
The arbitrator found Knauth had resigned voluntarily, not constructively, and the court agreed. She had argued she was forced out, but the panel pointed to evidence she initiated the exit conversation through her union after going on sick leave in January 2011. The agreement she signed stated she "irrevocably resigned from her employment with the IESO."
Knauth also argued she had lacked the mental capacity to sign. She produced a doctor's letter dated May 9, 2013, describing post-traumatic stress disorder and major depressive disorder. The court was unmoved. The letter post-dated the agreement by two years, and emails she exchanged with her Society representative in 2010 and 2011 showed she understood the terms and "readily accepted them."
The release also stated "the Releasees have complied with the collective agreement in respect of my employment and/or the termination of such employment." That phrase, along with the agreement's reference to her being "represented fairly" by the Society, anchored the deal inside the collective bargaining relationship and gave the arbitrator jurisdiction to enforce it.
‘Hush money’ argument falls flat
Knauth claimed the $70,000 was a payment to keep quiet, alleging the deal functioned as a non-disclosure agreement. The arbitrator and the court rejected that. The agreement carried only a mutual confidentiality provision covering the terms of the deal itself, which the panel called standard in settlements of that kind.
"There is no evidence or jurisprudence to support the proposition that the payments provided to the applicant were illegal or improper 'hush money,'" the decision states. The arbitrator's structure also held up: $50,000 as a taxable retiring allowance under section 248(1) of the Income Tax Act, and $20,000 in non-taxable general damages under the Human Rights Code.
Knauth also alleged she overheard the IESO instruct the arbitrator at the May 13, 2025, hearing to "make sure their grievance goes through" and to "throw the book at her." The court found those allegations unsupported by the evidentiary record.
No standing, and freedom of contract holds
The panel held Knauth had no standing to bring the judicial review, sufficient on its own, to dismiss the application. Under Ontario labour law, the union is the exclusive bargaining agent, and Knauth had not been an IESO employee or Society of United Professionals member for over 13 years. The Society did not take a position adverse to her interests, and her representation was not deficient.
The merits, addressed in the alternative, went the same way. The Charter challenge failed. The panel agreed with the arbitrator that "freedom of contract is of central importance to the legal system" and that Knauth, her union, and her employer had all signed on voluntarily, repayment clause and all.
The application was dismissed. Knauth must pay $2,500 in all-inclusive costs to each of the IESO and the Society, on top of the $70,000 less statutory deductions and the legal costs from the arbitration.
See Knauth v. The Independent Electricity System Operator et al., 2026 ONSC 2769.
