Supreme Court of Canada Extends Human Rights Protection from Employment Discrimination to Co-Workers

In British Columbia Human Rights Tribunal v. Schrenk 2017 SCC62, a majority of the Supreme Court of Canada found that the British Columbia Human Rights Code’s (“Code”) prohibition against discrimination “regarding employment” prohibits discrimination against employees even where the discriminatory conduct was carried out by a co-worker and not the employer.  The court held that the Code applies whenever the discrimination has a “sufficient nexus” with employment. 

In this case the complainant Sheikhzadeh-Mashgoul (the “Complainant”) filed a complaint with the British Columbia Human Rights Tribunal (“Tribunal”) against the respondent Schrenk (the “Respondent”) alleging employment discrimination based on religion, place of origin and sexual orientation. 

The Complainant worked for an engineering company as a civil engineer on a road improvement project.  The engineering company had certain supervisory powers over employees of a construction company, the primary contractor on the project.  The construction company employed the Respondent as a site foreman and superintendent.  When the Respondent made racist and homophobic statements to the Complainant, he was initially removed from the site but when the harassment continued, the construction company terminated his employment.

The Complainant immigrated to Canada from Iran and identified as Muslim.  When the Respondent learned of the Complainant’s origin and religion he made jokes about being blown up by a suicide bomb, called the Complainant a “fucking Muslim piece of shit”, and asked him whether he was going to call  his gay friend.  After the Complainant complained the Respondent persisted and shouted “go back to your mosque where you came from”.  Such behaviour resulted in the Respondent being removed from the work site.  However, subsequently he sent unsolicited emails to the Complainant in which he made derogatory insinuations about his sexual orientation. 

The Respondent brought an application to dismiss the complaint in which he argued that his alleged conduct was not discrimination “regarding employment” and was consequently beyond the jurisdiction of the Tribunal.  The Respondent’s argument was simple:  he was not in a position of economic authority over the Complainant.  He was neither the Complainant’s employer nor his superior in the workplace.  His conduct, however egregious, could not be considered discrimination “regarding employment” within the meaning of the Code.  

The Tribunal held that it had jurisdiction to deal with the complaint and denied the Respondent’s application to dismiss the complaint.  The British Columbia Supreme Court dismissed the Respondent’s application for judicial review, but the Court of Appeal allowed his appeal and found that the Tribunal had erred in law by concluding that it had jurisdiction over the complaint.

A 6 – 3 majority of the Supreme Court (Moldaver, Karakatsanis, Wagner, Gascon, Rowe and Abella) disagreed with the Court of Appeal and allowed the appeal (Justice Moldaver wrote the majority decision with a separate concurring decision written by Justice Abella).  Justices McLachlin, Cote and Brown dissented. 

The majority held as follows. 

The case involved the interpretation of the meaning of the words “employment” and “person” in the Code.   Reading the Code in line with the modern principle of statutory interpretation and the particular rules that apply to the interpretation of human rights legislation the prohibition against discrimination against employees prohibits discrimination whenever that discrimination has a sufficient nexus with the employment context.  This may include discrimination by their co-workers even when those co-workers have a different employer.   The discrimination in the case had sufficient nexus to the Complainant’s employment because the Respondent was integral to the Complainant’s workplace, the impugned conduct had occurred in the Complainant’s workplace and the Complainant’s work environment was negatively affected.   This contextual interpretation furthers the purposes of the Code by recognizing how employee vulnerability stems not only from economic subordination to their employers but also from being a captive audience to other perpetrators of discrimination such as a harassing co-worker. 

In separate reasons, Justice Abella found that the analysis requires that the meaning of employment discrimination be considered in a way that is consistent with the Supreme Court’s well settled human rights principles and not just the particular words of the Code.  Applying these principles leads to the conclusion that an employee is protected from discrimination related to or associated with his or her employment, whether or not he or she occupies a position of authority.  As a result, the Tribunal had jurisdiction to hear the complaint.

The dissenting three judges held that the prohibition against workplace discrimination in the relevant section of the Code applied only to employer-employee or similar relationships and authorized claims against those responsible for ensuring that workplaces are free of discrimination.  If the section were interpreted to allow claims against anyone in the workplace most of the next section which provides a separate protection against discrimination by unions and associates would be redundant.  The Code required the Complainant to focus on the employer, i.e. the people responsible for maintaining a discrimination free workplace.  Where the employer fails to intervene or prevent or correct discrimination the section is engaged.   

Importantly in this case, the court expanded human rights code protection against employment discrimination to encompass discrimination outside of the confines of the traditional employer-employee relationship. 

Regards,

Blair

Alberta Court of Appeal Closely Examines Employer's Privilege Claims

The Alberta Court of Appeal recently released its decision in Alberta v. Suncor Energy Inc., 2017 ABCA 221.  The court upheld the importance of lawyer-client and litigation privileges, holding that they play a "central role" in the Canadian justice system,.  However, where an employee had been fatally injured, the court took a closer look at the factual basis for the employer's claims of privilege over documents that formed part of its investigation into the death. 

 

On April 20, 2014, an employee of Suncor Energy Inc. (“Suncor”) was fatally injured at a worksite near Fort McMurray, Alberta.  The Alberta Occupational Health and Safety (“OHS”) officers issued a stop-work order that day.  Immediately after the accident, anticipating litigation, Suncor began an internal investigation and threw a privilege blanket over all information relating to the investigation.  Legal counsel for Suncor directed the investigation team to segregate all documents and to endorse all material as “privileged and confidential”. 

 

The Suncor investigation team interviewed witnesses, recorded statements and collected photographs.  On May 5, 2014, OHS issued a demand under relevant section of the Alberta Occupational Health and Safety Act (the “Act”) for Suncor to provide copies of the witness statements, as well as employees’ names and contact information.  Suncor replied and provided the names and contact information of employees but asserted privilege over the witness statements collected by its investigation team.   Later, nearly a year after Suncor had provided OHS with a copy of its report on the accident, OHS issued another demand for information and copies of witness statements, notes, records, photos and other documents collected by Suncor.   Suncor claimed privilege over certain documents and information.  OHS issued an administrative penalty against Suncor.

 

The province of Albert filed an originating application seeking an order that Suncor provide the refused materials and allow OHS to interview Suncor’s internal investigators or at least provide further particulars about the claims of privilege.  At the return of the application, the judge held that the dominant purpose of Suncor’s internal investigation was in contemplation of litigation and upheld its claim for privilege on that basis.  The judge ordered Suncor to meet with a referee who would assess the claims of privilege and provide recommendations to the court. 

 

Alberta appealed that decision to the Alberta Court of Appeal. 

 

The Alberta Court of Appeal concluded that the application judge had erred in finding that the dominant purpose of Suncor’s investigation was in contemplation of litigation so as to clothe all material “created and/or collected” during the investigation with legal privilege.  However, it also held that the judge had not erred in invoking the referee process under the Alberta Rules of Court. 

The Court of Appeal held that the relevant sections of the Act did not preclude claims of privilege.  After the application judge's decision was issued, the Supreme Court of Canada clarified the law pertaining to lawyer-client privilege and litigation privilege in Lizotte v. Aviva Insurance Company of Canada and in Albert (Information and Privacy Commission) v. University of Calgary.   Those decisions confirmed the central role of legal privilege in the justice system as well as the legal and policy reasons behind why privilege must be protected.  The Supreme Court held that both litigation privilege and lawyer-client privilege “cannot be abrogated by inference and that clear, explicit and unequivocal language is required in order to lift it”.

 

Lawyer-client privilege attaches to confidential communications between a client and a legal advisor that are connected to giving or seeking legal advice.  The communication does not have to be in contemplation of litigation and the privilege is of permanent duration. 

 

Litigation privilege attaches to documents created for the dominant purpose of litigation.  This includes any document created for the dominant purpose of preparing for related litigation that “remains pending or may reasonably be apprehended”.  The object of this inquiry is the purpose for which the document was created or came into existence as distinct from the purpose for which it may have been collected or put to use.   

 

Accordingly, the Court of Appeal held that if legal privilege does not cover particular records or information, and the requirements of the Act apply to those records or information, the question of whether the Act operates to override any aspect of privilege disappears.  Once the procedure for assessing the contested materials is complete, records or information sifted out of the scope of privilege will be subject to consideration under the correct legal interpretation of the Act.

 

In this case, the appeal judges found that the application judge had erred in finding that the dominant purpose of the investigation was in contemplation of litigation and that Suncor created and/or collected documents and material with the dominant purpose that they would assist in any litigation.   It held that a referee appointed under the Alberta Rules of Court must focus on the dominant purpose for creating each document as opposed to the purpose for its collection. 

 

Suncor could not simply by having legal counsel declare that an investigation had been commenced, throw a blanket over all materials “created and/or collected during the internal investigation” so as to clothe them with lawyer-client or litigation privilege.  The Court of Appeal held that where a workplace accident has occurred and the employer has statutory duties under the Act and simultaneously undertakes an internal investigation claiming legal privilege over all materials derived as part of that investigation, an inquiry is properly directed to a referee under the Alberta Rules of Court to determine the dominant purpose for the creation of each document.

Regards,

Blair

 

Supreme Court finds no Discrimination in Company's Drug Use Policy

 

In a decision that was made remarkable by the dissent of a single judge, the Supreme Court of Canada dismissed an appeal from an employee of a mining company whose employment was terminated on the basis that he had violated his employer’s drug use policy.  See Stewart v. Elk Valley Coal Corp. 2017 SCC 30.

 

The employee, Ian Stewart, worked driving a loader in a mine operated by the company.  The mine operations were dangerous and maintaining a safe work site was a matter of great importance to the employer and its employees.  To ensure safety the employer implemented a policy requiring that employees disclose any dependency or addiction issues before any drug-related incident occurred.  If they did, they would be offered treatment.  However, if they failed to disclose and were involved in an incident and tested positive for drugs, their employment would be terminated.

 

Stewart used cocaine on his days off.  He did not tell his employer that he was using drugs.  When he was involved in an accident with his loader at work, he tested positive for drugs and later said that he thought he was addicted to cocaine.  The company terminated his employment.  Stewart, through his union representative, argued that he was terminated for addiction and that constituted discrimination under section 7 of the Alberta Human Rights, Citizenship and Multiculturalism Act.

 

The Albert Human Rights Tribunal (“Tribunal”) held that Stewart was terminated for breaching the company policy, not because of his addiction.  Its decision was affirmed by the Alberta Court of Queen’s Bench and by the Alberta Court of Appeal.

 

There were three sets of reasons written by the judges of the Supreme Court.  Six judges for the majority, two in separate but concurring in the result, and one dissent.

 

The majority (reasons written by Chief Justice McLachlin) held that the Tribunal decision was reasonable.  There was evidence that was capable of supporting the Tribunal’s conclusion that the reason for Stewart’s termination was not addiction but breach of a policy.  The separate concurring reasons were written jointly by Justices Moldaver and Wagner.  They held that the Tribunal’s conclusion that Stewart’s direct dependence was not a factor in his termination was unreasonable but that the Tribunal reasonably held that the employer had met its obligation to accommodate Stewart to the point of undue hardship.  Justice Gascon, the only dissenting judge, held that the Tribunal had improperly considered the issues in the case and effectively excluded Stewart from the scope of human rights protections.  While the Tribunal had cited the proper legal test for prima facie discrimination, the matter in which it applied the test and the lack of an evidentiary foundation for its findings demonstrated that its holding on “contribution” was unreasonable and thus unworthy of deference. 

 

Six Justices for the Majority

 

The majority decision was supported by  Justices McLachlin, Abella, Karakatsanis, Cote, Brown and Rowe.  The Tribunal had found that Stewart had not established prime facie discrimination.  The majority held that the issues before the Tribunal were within its purview and attracted deference.  The only questions was whether the Tribunal’s decision was reasonable.  They found that there was evidence capable of supporting the Tribunal’s conclusion that the reason for the termination was not addiction but breach of the policy.  On the facts of this case, the Tribunal concluded that Stewart had the capacity to comply with the terms of the policy and that he would have been fired whether he was an addict or a casual user.  It was therefore not unreasonable for the Tribunal to conclude that there was no prima facie discrimination.  The Tribunal had unequivocally and repeatedly stated that addiction was not a factor in the company’s decision to terminate Stewart’s employment.  It also rejected the argument that denial prevented Stewart from disclosing his addiction prior to the accident.  While Stewart may have been in denial about his addiction, he knew he should not take drugs before working, had the ability to decide not to take them as well as the capacity to disclose his drug use to his employer.  Accordingly, the majority found that denial about Stewart’s addiction was irrelevant in this case.

 

The Two Concurring Justices

 

Justices Moldaver and Wagner held that the Tribunal’s conclusion that Stewart’s direct dependency was not a factor in his termination was unreasonable.  To show prima facie discrimination, Stewart was not required to show that his termination was not caused by his drug dependency, rather he had only to show that there was a connection between the protected ground – his direct dependency – and the adverse effect.  His exercise of some control over his drug use merely reduced the extent to which his dependency contributed to his termination.  It did not eliminate it as a factor in his termination. 

 

The two justices found that notwithstanding these factors, the Tribunal reasonably held that the employer had met its obligation to accommodate Stewart to the point of undue hardship.  Given the employer’s safety objectives and responsibilities at the coal mine, it was crucial to deter employees from using drugs in a manner that could negatively affect their work performance and potentially lead to devastating consequences.  Subjecting Stewart to an individual assessment or imposing an unpaid suspension for a limited period as a disciplinary measure instead of imposing the serious and immediate consequence of termination of his employment would have undermined the policies deterrent effect.   

 

The Lone Dissenter

 

Justice Gascon viewed the matter much differently than did the other 8 judges.  His dissent is logical and forceful.  .  He held that although drug dependence is a protected ground of discrimination in human rights law, stigma surrounding drug dependence – like the belief that individuals suffering from it are the authors of their own misfortune or that their concerns are less credible than those people suffering from other forms of disability – sometimes impair the ability of courts and society to objectively assess the merits of their discrimination claims.  He held that the improper considerations by the Tribunal effectively excluded Stewart from the scope of human rights protections. 

 

Justice Gascon held that a drug policy that automatically terminates employees who use drugs prima facie discriminates against individuals burdened by drug dependence.  The legal threshold for prima facie discrimination is whether the complainant’s protected ground is a factor in the harm they suffer (this is also called “contribution”).  In this case, drug dependence was a factor in Stewart’s drug use, so the policy under which Stewart’s employment was terminated for using drugs was  prima facie discriminatory.

 

Justice Gascon ruled that the analysis of prima facie discrimination and, in particular, contribution, is concerned with discriminatory effect, not discriminatory intent.  Contribution addresses the relationship between an employee’s protected ground and harm, not between the ground and the intent to harm that employee.  A ground need only be at least one of the factors linked to the employees harm.  The Tribunal unreasonably held that Stewart’s addiction did not contribute to his termination based on four conceptual errors:

 

1. It required Stewart to make prudent choices to avoid discrimination.  Justice Gascon commented that requiring a complainant to be prudent in avoiding discrimination amounts to a sort of contributory fault defence in discrimination cases which places a burden on complainants to avoid discrimination, rather than on employers not to discriminate; it is irreconcilable with recently recognized statutory grounds that arguably implicate a complainant’s choices that are significant to their identity; generally contradicts the court’s rejection of drawing superficial distinctions between protected grounds and contact inextricably linked to those grounds; specifically contradicts the courts rejection of the view that choice makes drug users responsible for the harms of their drug use; re-enforces stigma by blaming marginalized communities for their choices; and substitutes the proper inquiry (i.e. whether drug-dependent individuals are adversely impacted by the policy) with an improper inquiry (whether drug dependent individuals are so overwhelmingly impacted by their addictions that any discrimination that they experience is caused exclusively by their addictions);
2. The Tribunal limited Stewart’s protections to an assurance of formal equality.  While both dependant and recreational drug users will receive similar treatment for violating the policy, only drug-dependent persons will uniquely and disproportionately struggle in complying with the terms of the policy. 
3. The Tribunal required Stewart to prove that he was treated arbitrarily or stereotypically, importing substantive consideration into the settled and low threshold for prima facie discrimination and shifting a justificatory burden from the employer onto the complainant; and
4. The Tribunal at all times required Stewart to prove a causal relationship between his ground and harm, a higher bar than the mere “factor” threshold repeatedly adopted by the court.  Justice Gascon held that prima facie discrimination should not be narrowly construed to preserve the enforceability of drug and alcohol policies.  Doing so imports justificatory implications into the prima facie discrimination analysis and narrows the court’s recent jurisprudence that holds that terminating an employee for a reason related to addiction is precisely what it means for that addiction to be a factor in the employee’s harm.

 

Justice Gascon held that under the proper test, the evidence before the Tribunal could not support its conclusion that Stewart’s drug dependence did not contribute to his termination.  His residual control over his choices merely diminished the extent to which his dependence contributed to his harm, it did not eliminate it as a factor. 

 

A workplace policy that accommodates employees through mechanisms which are either inaccessible by the employee due to their disability or only applicable to the employee post-termination, cannot justify prima facie discrimination.  Reasonable accommodation requires that the employer arrange the employee’s work place or duties to enable the employee to do his or her work, if it can do so without undue hardship.  In the human rights context, it is not appropriate for the employer to forego individual assessment in the interest of deterrence even in the safety-sensitive atmosphere of this particular workplace and even though that environment motivates strict drug policies.

 

Finally, Justice Gascon found that none of the employer’s efforts at accommodating Stewart provided him with accessible accommodation during his employment and those efforts failed to consider his individual circumstances in a dignified manner.   Accordingly, the employer could not be said to have discharged its duty to accommodate Stewart as an employee up to the point of undue hardship.  As a result, the Tribunal’s findings to the contrary were unreasonable.    

 

Regards,

 

Blair

 

Supreme Court Unwilling to Reject Canada Labour Code's Unjust Dismissal Scheme

The Supreme Court of Canada recently released its decision Wilson v. Atomic Energy of Canada Ltd. 2016 SCC29.  This case involved the question of whether an  federally regulated employer could terminate the employment of a non-unionized employee without just cause.

 

In this case, the appellant Joseph Wilson worked for Atomic Energy of Canada Ltd. (“AECL”) for 4½ years until he was dismissed in November of 2009.  He had a clean disciplinary record.  Wilson filed an unjust dismissal complaint under the Canada Labour Code (the “Code”) claiming that his dismissal was in reprisal for having filed a complaint of improper procurement practices on the part of AECL.  AECL said Wilson was terminated on a non-cause basis and was provided with a generous dismissal package.

 

A labour adjudicator was appointed to hear the complaint.  AECL sought a preliminary ruling on whether a dismissal without cause, together with a severance package, meant that the dismissal was just.  The adjudicator concluded that an employer could not resort to severance payments, no matter how generous, to avoid a determination under the Code about whether the dismissal was unjust.  Because AECL did not rely on any cause to fire him, Wilson’s complaint was allowed. 

 

On appeal to the Federal Court of Canada, a judge found that the adjudicator’s decision was unreasonable because in his view nothing in the Code prevented employers from dismissing non-unionized employees without cause.   The Federal Court of Appeal agreed but reviewed the issue on a standard of correctness. 

 

The appeal was heard by the Supreme Court of Canada.  In a 6 to 3 decision, the court held that the appeal should be allowed and that the adjudicator’s decision should be restored. 

 

The 6 judges of the majority wrote three separate reasons for their decision. 

 

Justice Abella wrote that at common law, a non-unionized employee could be dismissed without cause if he or she was given reasonable notice or pay in lieu of notice.  However, in 1978, Parliament added a series of provisions to Part III of the Code, i.e. an "unjust dismissal" scheme which consisted of protections like those available to employees covered by a collective agreement and which applied to non-unionized employees who had completed 12 consecutive months of continuous employment.  A dismissed employee could ask the employer for a written statement setting out the reasons for the dismissal.  The employer was required to provide the statement within 15 days.  If an adjudicator determined that the dismissal was unjust, he or she had broad authority to grant an appropriate remedy including requiring the employer to pay the person compensation or to reinstate the person. 

 

Both Wilson and AECL accepted that the standard of review of the adjudicator’s reasons was “reasonableness” because he was interpreting a statute within his expertise.  Applying that standard, Justice Abella found that the adjudicator’s decision was reasonable and consistent with the approach overwhelmingly applied to the unjust dismissal sections of the Code since they were enacted.  It made no sense, as the Federal Court of Appeal had done, to attempt to “calibrate” reasonableness by applying a potentially indeterminate number of varying degrees of deference within it.  Such an approach unduly complicated an area of law in need of greater simplicity.

 

Justice Abella then provided what she called "general comments" on the need for greater simplicity with respect to the standards of review of the decisions of administrative bodies.  However, Justices McLachlin, Karakatsanis, Wagner and Gascon, held that although Justice Abella’s efforts to stimulate a discussion on how to clarify or simplify the standard of review jurisprudence was appreciated, it was unnecessary to endorse any particular proposal to redraw the current standard of review framework at this time. 

 

In separate reasons, Justice Cromwell agreed that the standard of review in the case was reasonableness and that the adjudicator’s decision was reasonable but held that reasonableness is a single standard and must be assessed in the context of the particular type of decision making involving all relevant factors.  He held that the standard of review jurisprudence does not need yet another overhaul and he disagreed with the approach developed by Justice Abella in obiter. 

 

Justices Moldaver, Cote and Brown dissented.   They held in a dissenting opinion written by Justice Moldaver, that in the specific context of this case, a correctness review was justified.

The respondent's case was valiantly argued by my colleagues Ronald Snyder and Eugene Derenyi.

Regards,

Blair

 

Court of Appeal: No Duty to Mitigate if Employment for Fixed Term

On April 8, 2016, the Ontario Court of Appeal affirmed that an employee whose employment is subject to a fixed term, is upon early termination of his employment, entitled to payment of an amount equal to his salary and benefits for the unexpired term of the contract, with no duty to mitigate.

 

In the case of Howard v. Benson Group Inc. 2016 ONCA 256 the Ontario Court of Appeal overturned the summary judgment decision of Justice Donald MacKenzie of the Superior Court of Justice.  Benson had employed Howard pursuant to the terms of a written employment agreement.  The agreement provided for a fixed five year term but also provided that Benson could terminate Howard’s employment at any time “in accordance with the terms and conditions of this agreement”.  Specifically, a paragraph of the agreement provided that upon termination, Howard would only be entitled to receive  amounts in accordance with the Employment Standards Act of Ontario. 

 

Accordingly, when Benson terminated Howard’s employment almost two years into the contract, it argued that its liability was limited to two weeks salary in lieu of notice.  The motion judge found that the clause was unenforceable due to ambiguity and awarded Benson common law damages for wrongful dismissal, subject to a duty to mitigate.

 

The Ontario Court of Appeal (Justices Cronk, Pepall and Miller) disagreed with the motion judge.  Justice Miller wrote the decision of the court.  Justice Miller held that the applicable standard of review in this case was one of correctness.  In other words, where the motion judge’s decision contained an "extricable question of law" it was reviewable on the correctness standard. 

 

Justice Miller held that where an employment agreement states unambiguously that the employment is for a fixed term it will oust the implied term of an agreement that reasonable notice must be given for termination without cause.  If the parties to such a fixed term contract do not specify a pre-determined notice period, the employee is entitled, on early termination, to the wages he would have received to the end of the term.  Justice Miller cited an Ontario Court of Appeal case called Bowes v. Goss Power Products Ltd. 2012 ONCA 425  for such authority. 

 

Because the impugned clause was void for uncertainty, Howard’s employment agreement unambiguously remained a fixed term contract. 

 

With respect to Howard’s duty to mitigate his damages, Justice Miller found that the leading case from the Ontario Court of Appeal was Bowes.  Bowes held that a contractually fixed term of notice is distinguishable from common law reasonable notice.  Where the agreement stipulates a fixed term of notice or payment in lieu, it should be treated as fixing liquidated damages or a contractual amount.  In such cases, there was no obligation on the employee to mitigate his damages.  Thus, the duty to mitigate does not apply to liquidated damages or contractual amounts.

 

The Court of Appeal allowed the appeal and remitted the matter to the motion judge for determination of the quantum of damages to which Howard was entitled.

Regards,

Blair

Supreme Court Set to Rule Upon Dismissal Provisions of Canada Labour Code

On January 19, 2016 the Supreme Court of Canada will hear arguments in the case of Joseph Wilson v. Atomic Energy of Canada Limited (“AECL”) (2015 FCA 17).  The case involves the proper interpretation of certain provisions of the Canada Labour Code (“Code”) and whether an employee whose employment is subject to the Code, if dismissed without cause, has automatically been unjustly dismissed. 

 

In this case, AECL had employed Mr. Wilson for four and a half years.  Starting out as a Senior Buyer/Order Administrator, Mr. Wilson had received many promotions.  His last position was Procurement Supervisor, Tooling.  That position was not managerial.  On November 16, 2009, AECL terminated Mr. Wilson’s employment without cause.  AECL offered Mr. Wilson a severance package equal to roughly six months’ pay in exchange for a full and final release.  Had his severance package been determined in accordance with the minimum statutory notice and severance requirements under the Code, he would have been entitled to only 18 days’ pay.

 

Mr. Wilson did not sign the release.  Instead he filed a complaint under Part III of the Code alleging that he had been unjustly dismissed.  At the request of his counsel, Mr. Wilson remained on AECL’s payroll for roughly six months, continuing his access to AECL’s employee benefit programs.  In the end he received the full amount of the severance package AECL had originally offered to him. 

 

An adjudicator was appointed to hear Mr. Wilson’s complaint under the Code.  In the agreed statement of facts placed before the adjudicator, the parties identified two “preliminary questions”:  1.  Whether as a matter of statutory interpretation AECL could lawfully terminate Mr. Wilson’s employment on a without cause basis; and 2.  If so, whether the severance package gave rise to a "just dismissal".

 

The adjudicator accepted Mr. Wilson's submission that dismissal without cause is, by that reason alone, unjust dismissal within the meaning of the Code and that he was therefore entitled to a remedy.

 

Having made that decision, the adjudicator adjourned the hearing, directing the parties to discuss the appropriate remedy in the hopes that it might settle.   Absent settlement, he intended to conduct a hearing to determine whether a remedy was warranted and if so what it should be. 

 

AECL applied to the Federal Court for judicial review of the adjudicator’s decision.  The Federal Court dismissed the appellant’s objection that the judicial review was preliminary and found that the adjudicator’s statutory interpretation decision was unreasonable.  The Federal Court quashed the adjudicator’s decision and remitted the matter back to the adjudicator for decision. 

 

On further appeal to the Federal Court of Appeal, the court dismissed Mr. Wilson’s appeal. 

 

The Federal Court of Appeal found that the proper interpretation  of the Code had created two schools of thought which have persisted for decades.  The key consideration by the court was whether Part III of the Code ousted the common law of dismissal or whether it accepts the common law as given, supplementing and building upon it.  At common law, an employer could dismiss a non-unionized employee without cause, but is liable to provide reasonable notice or compensation in lieu of notice.  If the employee is given such notice, he or she is not wrongfully dismissed.

 

The Federal Court found that the provisions found in Part III of the Code do not represent a sea-change in the law of dismissal but rather enhance the remedies that may be available in appropriate cases of dismissal.   It will always be for the adjudicator to assess the circumstances and determine whether the dismissal, whether or not for cause, was unjust.  The dismissal of an employee without cause is not automatically unjust.

 

Part III of the Code sets out a complaints mechanism and remedies for “unjust” dismissal.  Specifically, a subsection of the Code empowers an adjudicator to “consider whether the dismissal of the person who made the complaint was unjust”.   The Code does not define unjust.  The Federal Court of Appeal examined whether Part III ousted the common law of employment or supplemented and built upon it as set out in that subsection.  

 

In reaching its decision, the Federal Court of Appeal held that the legislator is presumed not to depart from prevailing common law.   Such prevailing common law can be ousted only by way of explicit language or necessary implication.  An example of necessary implication is where the legislator has provided for something that conflicts with the common law so that the two can no longer live together.  The common law is not ousted unless Parliament has expressed its intentions to do so with “irresistible clearness”.  The Code does not contain text or necessary implication that can be taken to oust the aspects of the common law of employment.  The Code was enacted against the backdrop of the common law and does not explicitly oust it in this respect.   

Wilson has obtained leave to appeal from this decision to the Supreme Court of Canada.

AECL's case at the FCA was argued by my partner Ron Snyder.  I will keep you posted.

Regards,

Blair

Wal-Mart Ordered to Compensate Former Employee for Workplace Bullying

To state the obvious, there is no precedent until it is done for first time.  So said the Ontario Court of Appeal in confirming a record damage award against an individual employee in the case of Boucher v. Wal-Mart Canada Corp. 2014 ONCA 419.

 Meredith Boucher began working for Wal-Mart in 1999.  She was a good employee.  In 2008, Boucher was promoted to the position of assistant manager at a Wal-Mart store in Windsor, Ontario.   She reported to the store manager, Jason Pinnock. 

 

For health reasons, Wal-Mart is required to maintain temperature logs which record temperatures of food and dairy products stored in its coolers.  Boucher was responsible for ensuring the logs were maintained.

 

In May of 2009, Boucher went on a month long Wal-Mart course and another assistant manager assumed responsibility for maintaining the temperature logs.  However, that employee did not complete the logs.  When Boucher returned to the Windsor store at the end of her course, Pinnock told her that the incomplete log would negatively affect the store’s pending evaluation and in turn would negatively affect his own evaluation as store manager.  Pinnock told Boucher to falsify the log.  Boucher refused to do so.  Because she refused, Pinnock subjected Boucher to a disciplinary “coaching” session.   Subsequently, Pinnock became abusive towards Boucher.  He belittled, humiliated and demeaned her, continuously, often in front of co-workers. 

 

Wal-Mart holds itself out as a business that regards its employees highly.  It has a number of workplace policies intended to reflect its concern for its employees.  One such policy is Wal-Mart's open-door communication policy.  Wal-Mart encourages its employees to report on a confidential basis concerns about how its stores are operated or how its employees are treated. 

 

Wal-Mart also has a prevention of violence in the workplace policy.  It undertakes to take all employee reports of incidents seriously and to protect an employee making a complaint from acts of retaliation.  In addition, Wal-Mart has a harassment and discrimination policy.  The purpose of this policy is to protect employees from unwelcome conduct that offends a person’s feelings.  Wal-Mart, through its policies, requires all of its employees to treat each other with dignity and respect. 

 

Accordingly, Boucher complained about Pinnock’s conduct and his treatment of her to three senior management representatives of Wal-Mart.  The management team said they would investigate her concerns.  They also told her to report any new incidents of misconduct.  But they also cautioned Boucher that if her concerns were found to be unwarranted, she would be held accountable for raising them. 

 

Wal-Mart’s management team investigated Boucher’s complaints.  They told her that they found the complaints to be “unsubstantiated”.  They also told her that she would be held accountable for making these unsubstantiated complaints but they had not yet decided what discipline she would face.  Pinnock on the other hand was not disciplined for his conduct or even cautioned about it.  He was spoken to only about his use of inappropriate language.   

 

Here is a sampling of Pinnock’s conduct.  He repeatedly told Boucher in front of other employees how stupid she was and that her career was blowing up; he pounded his chest and said “let me know when you can’t fucking handle it anymore”; he berated Boucher in front of other managers and customers saying “this is a fucking shit show, look at this fucking mess”; he constantly called Boucher an idiot and stupid.

 

After the management investigation at the end of Boucher’ shift, Pinnock again berated her because 10 extra skids of product had not been unloaded.  Pinnock grabbed Boucher by the elbow in front of co-workers.  He told her to prove to him that she could count to 10.  He prompted her by initiating the count, then told her to count out loud along with him.  Boucher was so humiliated she left the store.  Boucher sent Wal-Mart an email advising that she did not intend to return to work until her complaints about Pinnock were resolved to her satisfaction.  They never were and Boucher never returned to work.  Boucher commenced an action for constructive dismissal and damages.

 

The Court of Appeal commented on Pinnock’s motives.  Pinnock had told other managers at the store that he would not stop harassing Boucher, “not until she fucking quits”.  He was overjoyed when she did so.

 

At trial the jury awarded damages against Pinnock of $100,000 for intentional infliction of mental suffering and punitive damages of $150,000. 

 

Against Wal-Mart, the jury awarded damages of $200,000 for aggravated damages and $1 million in punitive damages. 

 

Pinnock and Wal-Mart appealed to the Ontario Court of Appeal.  The Court of Appeal reduced the damages against both Pinnock and Walmart.  It found that the jury had reasonably found Pinnock liable for intentional infliction of mental suffering.  His conduct was flagrant  and outrageous.  He intended to produce the harm that eventually occurred and Boucher had suffered a visible and provable illness.  The damages award of $100,000 was high but not unreasonable.  However, the award of punitive damages against Pinnock should be reduced to $10,000.  An award of $150,000 was not required for the purposes of retribution, denunciation and deterrence. 

 

As for Wal-mart, the Court of Appeal held that the award of aggravated damages against Wal-Mart in the amount of $200,000 was not excessive and did not result in double recovery by Boucher.  While Pinnock’s misconduct brought about Boucher’s mental anguish, the unfair way Wal-Mart dealt with that misconduct brought about her constructive dismissal.  Wall-mart’s own conduct justified a separate and substantial award for aggravated damages.

 

The Court of Appeal found that the trial judge had erred in instructing the jury that the tort committed by Pinnock could be an actionable wrong by Wal-Mart that supported a finding of punitive damages against it.  However, the error was harmless as Wal-Mart had committed an actionable wrong that supported an award of punitive damages by breaching its duty of good faith and fair dealing towards Boucher.  In light of the compensatory damages awarded, an award of punitive damages in the amount of $1 million was not rationally required to punish Wal-Mart or to give effect to denunciation or deterrence.  The Court of Appeal reduced the punitive damages against Wal-Mart to $100,000. 

Regards,

Blair

 

Ontario Appeal Court Reduces 70 Year Old's Dismissal Notice Period By Six Months

In a recent ruling, the Ontario Court of Appeal reduced the wrongful dismissal award of a 70 year old employee by 6 months.

 

In the case of Kotecha v Affinia Canada ULC (2014 ONCA 411).  The Court reduced the motion judge’s award of a 24 and one-half months to 18 months on the basis that "there were no exceptional circumstances that would justify" the longer award.

 

Affinia is a manufacturer of auto parts.  Kotecha was 70 years old and had worked for Affinia for 20 years as a machine operator.  He installed rivets on brake pads.  At the time of his dismissal, Kotecha was earning $18.23/hour.  Based on a 40 hour work week, this wage equated to approximately $38,000.00 per year. 

 

Affinia admitted that Kotecha was dismissed without cause.  Kotecha brought a motion for a summary judgment to fix the length of the notice requirement and his damages. 

 

At the motion, the judge considered the factors in Bardal v. Globe and Mail Ltd  as set out by the Supreme Court of Canada i.e. the character of the employment, length of service, age of the employee and the availability of similar employment having regard to the experience training and qualifications of the employee.  The judge concluded that this was a simple case of wrongful dismissal and having regard to other cases with similar facts, fixed the notice period at 22 months.  Her ruling did not include the 11 weeks of working notice that Affinia had given Kotecha. 

 

Affinia appealed to the Court of Appeal.  Before the appeal court, Affinia argued that the motion judge had erred in disregarding an unreported judgment of another judge in a case against it (Sharma v Affinia Canada) and that on almost identical facts, that judge in that case had awarded 13 months as reasonable notice.  Affinia argued that the motion judge was bound by the doctrine of stare decisis to award a similar period of reasonable notice in this case.

 

The Court of Appeal rejected that argument.  It reiterated that the principle of stare decisis required that courts render decisions that are consistent with the previous decisions of higher courts.  While other decisions of the Superior Court are persuasive, they are not binding.  Moreover, the Court held that the determination of the appropriate notice period is a very fact-specific exercise and is calculated in accordance with numerous factors set out in Bardal.

 

However, the Court held that judges should strive to ensure that notice periods, which are inherently individual, are consistent with the case law.  The Court found that was not done in this case.  Taking into account the period of working notice that Affinia had given Mr. Kotecha, the total notice period awarded to him was 24 and ½ months.  The Court held that this was excessive and that there were no exceptional circumstances that would justify the award.  It did not accept Affinia’s position that a 13 month notice period was appropriate but rather “adjusted” the notice period to 18 months, less the working notice of 11 weeks. 

The decision seems harsh given that, at 70 years old,  Mr. Kotecha has virtually no chance of getting another job.  One would have thought that his advanced age was an "exceptional circumstance" that would have persuaded the court to award a period of notice in the 20 to 24 month range. 

Regards,

Blair

 

Fired Employee Entitled to Both Damages and Full Pension Benefits

Richard Waterman had worked for IBM for 42 years when the company fired him without cause.  IBM provided him with 2 months notice of the termination of his employment.  He was 65 years old.  Waterman sued IBM to enforce his contractual right to be given reasonable notice of termination.  The trial judge set the appropriate period of notice at 20 months.  When he was fired, Waterman had a vested interest in IBM's defined benefit pension plan.  Under the terms of the plan, IBM had contributed a percentage of Waterman's salary to the plan on his behalf.  Upon termination, Waterman was entitled to a full pension and his termination had no effect on the amount of his pension benefits.  The trial judge declined to deduct the pension benefits paid to Waterman during the notice period in calculating his damages.  IBM's appeal was dismissed by the British Columbia Court of Appeal.  

 

The Supreme Court of Canada, Justice Cromwell writing for the majority, dismissed IBM's further appeal.  Chief Justice McLachlin and Justice Rothstein dissented.

 

Justice Cromwell held that the rule that damages are measured by the plaintiff's actual loss does not cover all cases.  He ruled that pension benefits are a form of deferred compensation for an employee's service and constitute a type of retirement savings.  They are not intended to be an indemnity for wage loss due to unemployment.  

 

In this case, it was clear to the court that a "compensating advantage" had arisen:  Waterman received both his full pension benefits and the salary he would have earned had he worked during the period of reasonable notice.  Had IBM given him working notice, he would have received only his salary during that period.  A compensating advantage arises if a source other than the damages payable by the defendant ameliorates the loss suffered by the plaintiff as a result of the defendant's breach of a legal duty.  A problem only arises with a compensating advantage when the advantage is one that: (a) would not have accrued to the plaintiff but for the breach; or

(b) was intended to indemnify the plaintiff for the sort of loss that resulted from the breach.

 

Justice Cromwell saw this case as akin to the "private insurance exception" - in general a benefit will not be deducted if it is not an indemnity for the loss caused by the breach and if the plaintiff has contributed in order to obtain entitlement to it.  In addition, the deduction issue was subject to broader policy considerations. 

 

Justice Cromwell held that in this case the factors clearly supported not deducting Waterman's retirement pension benefits from his wrongful dismissal damages.  Waterman's contract of employment was silent on the issue but it did not have any general bar against receiving full pension entitlement and employment income.  Waterman's retirement pension was not an indemnity for wage loss, but rather a form of retirement savings.  While IBM had made all of the contributions to fund the plan, Waterman had earned his entitlement to benefits through his years of service.  Therefore, as in the private insurance exemption, the pension benefits were not an indemnity and Waterman had contributed to the benefits.

 

Finally, the broader policy concerns in this case supported not deducting the pension benefits.  Justice Cromwell held that the law should not provide an economic incentive to dismiss pensionable employees rather than other employees.

 

In his dissenting opinion, Justice Rothstein wrote that the private insurance exception has no application to this case.  The case required an assessment of Waterman's loss under the terms of a single contract which gave rise to both the right to reasonable notice and a right to pension benefits.  Waterman's entitlement therefore turned on the ordinary governing principle that he should be put in a position that he would have been in had the contract been performed.  If his pension benefits were not deducted, he would have been given more than he bargained for and IBM would have been charged more than it had agreed to pay. 

 

Justice Rothstein wrote that employer-provided benefits are an integral component of the employment contract so deductibility of such benefits turns on the terms of the employment contract and the intention of the parties.  Under the terms of Waterman's employment contract he would have been eligible to receive pension benefits only upon being terminated or retiring.  Therefore, his contractual right to wrongful dismissal damages and his contractual right to his pension benefits were based on opposite assumptions about his availability to work.  Damages could not be paid on the assumption that he could have earned both. 

 

Unlike a defined contribution plan, a defined benefit plan guarantees the employee fixed predetermined payments upon retirement for life.  Deducting the benefits would provide the wrongfully terminated employee with exactly what he would have received had the employment contract been performed:  an amount equal to his salary during the reasonable notice period and thereafter defined benefits for the rest of his life.

 

In this case, Waterman's wrongful dismissal had no impact on his pension entitlement and he could not have received both his salary and his pension benefits had he continued to work for IBM through the reasonable notice period.

 

Regards,

 

Blair