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When the Ontario Human Rights Code (the “Code”) was amended in June 2008 to include section 46.1 which allows a court to order remedies for an infringement of a right under the Code, many observers in the employment bar expected to see claims for damages for breach of the Code to be joined with wrongful dismissal claims. It took five years from when that amendment was enacted before an Ontario Superior Court judge exercised this new judicial power in the context of a wrongful dismissal action.

In Wilson v. Solis Mexican Foods Inc., Justice A. Duncan Grace found that the employer discriminated against the employee in the termination of her employment and awarded $20,000 in general damages for the infringement of her rights under the Code in accordance with section 46.1. This decision is significant as it is the first time that a superior court judge has awarded damages for an infringement of the Code pursuant to section 46.1 and it provides a framework for the analysis and assessment of damages in such claims.

The Code was amended on June 30, 2008 to include, among other things, section 46.1 which provides as follows:

46.1  (1)  If, in a civil proceeding in a court, the court finds that a party to the proceeding has infringed a right under Part I of another party to the proceeding, the court may make either of the following orders, or both:

1. An order directing the party who infringed the right to pay monetary compensation to the party whose right was infringed for loss arising out of the infringement, including compensation for injury to dignity, feelings and self-respect.

2. An order directing the party who infringed the right to make restitution to the party whose right was infringed, other than through monetary compensation, for loss arising out of the infringement, including restitution for injury to dignity, feelings and self-respect.

46.1 (2)  Subsection (1) does not permit a person to commence an action based solely on an infringement of a right under Part I.

Prior to this amendment, the court did not have authority to award damages for breach of the Code. Therefore, if an employee wanted to pursue a claim for wrongful dismissal and also felt that she had been discriminated against in violation of the Code, she would have had to pursue a lawsuit for wrongful dismissal before the courts and a complaint or application under the Code.

Section 46.1 was designed to create efficiency and avoid multiplicity of proceedings. While it does not give a former employee the right to commence a civil action based solely on the alleged breach of the Code, section 46.1 does permit her to include a claim for discrimination under the Code in a claim for wrongful dismissal. If the court finds that there was an infringement of a right under the Code, it now has broad powers to award monetary compensation or order remedies other than monetary compensation, in order to remedy the violation.

In Wilson, the court was dealing with the termination of a relatively short-term employee that occurred in the middle of a medical leave of absence.

Wilson was employed by Solis for approximately 16 ½ months as a Business Analyst. Her employment was terminated without notice by way of a letter dated May 19, 2011. No cause for termination was alleged. The reason that Solis stated for the termination was that it was the result of organizational changes (specifically the sale of its New Orleans Pizza division) that made many of her job functions redundant. Wilson received two weeks’ pay in lieu of notice at the time of termination. She was 54 years old at the time of termination. She was successful in finding new employment within five months.

Wilson commenced an action for wrongful dismissal. She also alleged that her employment was terminated, at least in part, because of an ongoing back ailment and made a claim for damages pursuant to section 46.1 of the Code for an alleged violation of her rights under the Code.

The basis for the human rights claim was that Wilson had raised the issue of her back ailment with Solis in December 2010, had taken a leave of absence as a result of her back in March 2011 and was still on that leave of absence when her employment was terminated. During the leave, Solis had requested numerous medical notes from Wilson. When Wilson presented a note that indicated that she was capable of returning to work on a graduated basis, Solis indicated that this was not acceptable and required that Wilson be capable of returning to full-time hours and full duties before she could make the transition back to work. Solis required Wilson’s doctor to complete a Functional Abilities Form. When the doctor did so, Solis raised concern with it and requested a further Functional Abilities Form be completed. The last communication from Wilson’s doctor was delivered three weeks before her employment was terminated and indicated that Wilson was required to be off work for another six weeks. There was also evidence that Solis’ management had been discussing Wilson’s health condition dating back to December 2010 after she disclosed the same.

With respect to the wrongful dismissal claim, Solis conceded that it had not provided reasonable notice of termination or pay in lieu thereof. Solis maintained that a three month notice period was appropriate. Wilson sought damages based on a six month notice period. Considering all of the evidence, Justice Grace found that the reasonable notice period was three months and awarded damages accordingly.

With respect to the human rights claim, Solis maintained Wilson’s termination was unrelated to her back issues but was the result of the sale of the New Orleans Pizza division which eliminated a number of Wilson’s duties – Wilson in fact conceded that her work load would have been cut in half after the sale.

Justice Grace began his analysis by confirming that Wilson’s back ailment, while temporary, nevertheless constituted a “disability” under the Code. He then went on to consider the jurisprudence before the Human Rights Tribunal of Ontario (the “HRTO”) regarding discrimination in the context of termination of employment and accepted the proposition that “a decision to terminate an employee based in whole or in part on the fact that employee has a disability is discriminatory and contrary to the Code”.

Justice Grace found that Wilson’s ongoing back issue was a significant factor in the decision to terminate. In so doing, he relied on evidence that showed that Wilson had been assessed as performing at a satisfactory level weeks before advising Solis of her back issues in December 2010 and that, after her disclosure of this disability, Solis questioned for the first time whether Wilson was suited for her role. Justice Grace also found that Solis’ requests for documentation and its insistence that Wilson be ready for full-time hours and duties as a condition of her return to be evidence of it being disingenuous and failing to offer or even consider accommodation as required under the Code. He was also critical of Solis’ failure to notify Wilson at any time prior to the termination letter of the pending sale of the New Orleans Pizza division or the potential impact of the sale on her job.

Justice Grace concluded without hesitation that the decision to terminate Wilson’s employment started in December 2010 when she raised issues about her back. Accordingly, he found that her right to equal treatment and to be free from discrimination under section 5(1) of the Code was violated by Solis.

In considering the appropriate award of damages, Justice Grace noted that the only evidence that he had with respect to Wilson’s loss relating to “feelings, dignity and self-respect” was limited to two statements she made in her affidavit about being shocked, dismayed and angered by one of Solis’ letters that pre-dated the termination. Justice Grace nevertheless relied on previous HRTO jurisprudence in concluding that compensation for breach of the Code was not limited to claims for a loss relating to “feelings, dignity and self-respect”. In this regard, he relied on ADGA Group Consultants Inc. v. Lane in which the Divisional Court upheld the HRTO’s award of $35,000 in general damages “to compensate for the intrinsic value of the infringement of rights under the Code” and a further $10,000 for mental anguish. Justice Grace also relied on previous case law for the proposition that employers are under a duty to act fairly and are required to be candid, reasonable, honest and forthright when dismissing employees. He found that Solis did not meet that standard when it claimed in one breath that Wilson was “valued” and then created obstacles for her return and ultimately terminated employment when the time was ripe.

Having considered those principles and all of the evidence, Justice Grace determined that the appropriate award of general damages under section 46.1 was $20,000.

This damage award was significant considering that it represented approximately 30% of the Wilson’s annual salary and it was greater than the amount that was awarded for wrongful dismissal damages.

Also, Justice Grace made this award while recognizing that there was limited evidence as to the effect that the violation had on Wilson. Presumably, if Solis’ conduct had been more serious and had Wilson presented medical or other evidence to demonstrate a more significant impact on her well-being, Justice Grace would have been inclined to award considerably more in damages. Indeed, given the minimal evidence of “loss” or “injury” that was presented in this case, this ruling can be expected to be relied upon by plaintiff counsel as a starting point for damages under section 46.1.

It is clear from the ruling in Wilson that the court will adopt the same principles that HRTO has established in assessing claims of discrimination, in particular the well-established principle that the disability (or other protected ground) need only be a factor (and not the only or a primary factor) in the decision to terminate, in order to constitute a violation of the Code. It is also clear that damage awards for breach of the Code are on the rise.

Accordingly, employers are well advised to take these issues seriously and to ensure that they are complying with their obligations under the Code. Those that do not may be exposed to significant damage awards and other remedies in court.

Article written by: Justin Heimpel
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* * This article is intended only to inform or educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.

Labour and Employment – Michael Letourneau

The Ontario Court of Appeal recently released a decision that clarifies the law with respect to the effect of mitigation on a contractual severance payment.

Prior to this five-judge panel decision, the law in Ontario was divided as to whether a dismissed employee was entitled to receipt of a severance payment or pay in lieu of notice established in an employment contract without any deduction for income earned post-termination.

In Bowes v. Goss Power Products Ltd., the Court settled this uncertainty ruling that, where an employment contract sets out a specified notice period for termination without cause, the employee will not have a duty to mitigate his or her loss and the employer is not entitled to withhold or reduce contractual payments after the employee finds new employment. The duty to mitigate will apply to reduce the contractual severance payment where it is explicitly stated in the employment contract that such a deduction is required.

This decision will have a major impact on both existing employment agreements and the negotiation of new ones. Under existing agreements, employers who terminate without cause may be required to pay out a terminated employee’s full notice period, even if employee finds new work during the notice period.

For new agreements, employers and employees will likely be at odds in negotiating the duty to mitigate. Employers will seek to impose a mitigation clause in order to reduce the amount they ultimately pay out on termination. Employees will likely want such a clause omitted, so they know they will maximize their termination entitlements.

In the Bowes case, Mr. Bowes worked as Vice-President for Sales and Marketing for Goss Power Products Ltd. (GPP). His employment contract entitled him to six months notice, or pay in lieu, if he was terminated without cause. GPP terminated his employment, and Bowes started a new job only two weeks later. GPP then informed Bowes that, since he had new employment, they would not pay him more than the three weeks salary he was entitled to under the Employment Standards Act.

Bowes sued GPP, arguing that the company had agreed to give him six months notice, and that he should not be forced to accept less just because he had found alternate work shortly after termination. Although GPP was successful at trial, the Court of Appeal overturned the trial decision and awarded the full six months of notice pay to Bowes. In writing for the five-judge panel of the Court, Chief Justice Winkler held that a specified notice period or payment is equivalent to “liquidated damages” or a “contractual sum,” concept from commercial contracts that provide specified, fixed penalties for breaches. Since the parties agree to such payments in advance, there is no need for one party to mitigate the actual amount of the loss. The duty to mitigate applies only where the court must determine the amount of the damages as they relate to the period of reasonable notice of termination. But where the employer and employee have agreed in advance on the notice period, there is nothing left for the court to decide.

In his decision, Chief Justice Winkler held that it would be unfair to employees to allow employers to negotiate a fixed amount of notice pay, but then to pay the former employees less simply because they had found new work. This rule should apply unless the employer and employee had explicitly agreed otherwise. The Chief Justice acknowledged that the inferior bargaining power of employees and the desire to have predictability in employment contracts in order to reduce conflict and litigation after termination necessitated that employers be bound to the payment of the contractually agreed upon notice.

Employers and employees who would like to review current employment contracts or discuss a new contract can contact the lawyers in our Litigation Group for assistance.

* * This article is intended only to inform or educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.


Author: Michael Letourneau is a Lawyer at Sorbara, Schumacher, McCann LLP, one of the largest and most respected regional law firms in Ontario. Michael may be reached at (519) 741-8010 or <mletourneau@sorbaralaw.com>.   

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Labour and Employment – Seth Jutzi

The Holiday Season may now have come and gone for another year, but did you make sure to track your overtime? Many employees likely did.

While holidays traditionally are a time for celebration and gathering with family and friends, increasingly they are becoming a time to catch up on work. The advent of mobile technology has transformed the world, and along with it the way we engage in work. Now, travelling to Aunt Tricia’s house in Hamilton or riding the chair lift at the ski hill are opportunities to check your smartphone or remotely log into your workplace desktop to catch up on email messages and the latest draft of an important document.

While mobile technology has allowed employers to increase workplace productivity, it has also kicked open the door to lawsuits brought by employees for unpaid overtime. Whether performed in the traditional workplace setting or on a smartphone outside regular office hours, employers have to keep in mind that these are workplace duties being performed for which employees can demand compensation.

In Ontario, overtime pay is governed by the Employment Standards Act, which states that employees shall receive overtime pay of at least one and one-half times the regular rate of pay for each hour worked in excess of 44 hours per week. The Act governs the vast majority of Ontario’s workforce, with a few exceptions for certain classes of workers like those in managerial roles or in certain professions like accounting and medicine.

Answering a few emails every evening and reviewing a set of documents on a Saturday morning can quickly push the average employee well beyond the 44-hour mark. All employers should be aware of this growing legal liability.

Several unpaid overtime cases are making their way through our legal systems. These cases include two high-profile class action lawsuits against the Canadian Imperial Bank of Commerce and the Bank of Nova Scotia. In the CIBC case, 3,000 employees are seeking $600 million in overtime pay, while in the case of Scotiabank, approximately 5,000 employees are claiming $350 million.

Employers who fail to address this issue run the risk of facing either civil litigation (i.e. a traditional lawsuit launched by the employee) or a complaint filed with the Ministry of Labour. If an employment standards officer finds that an employer owes wages to an employee, the officer may award the employee up to $10,000 in compensation.

Additionally, a corporation that is found to have contravened the Employment Standards Act can face a fine of up to $100,000 for a first offence. Fines for second and third offences can be as high as $250,000 and $500,000, respectively. In the case of an individual employer (i.e. a sole proprietorship), a contravention of the Act can lead to imprisonment for up to twelve months.

Employers should be mindful and ensure that there are clear and consistent policies regarding overtime and the use of mobile technology. Wherever such overtime is a likely component of an employee’s position, employers are well advised to address the issue directly in employment agreements.

* * This article is intended only to inform or educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.


Author: Seth Jutzi is a lawyer at Sorbara, Schumacher, McCann LLP, one of the largest and most respected regional law firms in Ontario.  Seth may be reached at (519) 741-8010 or <sjutzi@sorbaralaw.com>.

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