Sunday, 22 March 2015

Ontario Small Claims Court Awards Human Rights and Punitive Damages after New Mom Constructively Dismissed

There is a saying in law that “bad facts make bad law.” Of course, the opposite is also true; good facts make good law. In a clear demonstration of the latter, the case of Bray v Canadian College of Massage and Hydrotherapy, 2015 CanLII 3452 (ON SCSM) demonstrates what happens when experienced counsel appears before an experienced trial judge with some pretty decent facts.

While Bray looked at a number of issues of importance to Ontario employment law, the four most interesting features are:

  1. The judge’s finding that an indefinite layoff is a constructive dismissal;
  2. The judge’s finding that he had no power to award damages for an act of reprisal following a complaint to the Ontario Ministry of Labour;
  3. The judge’s award of human rights damages in an Ontario Small Claims decision; and
  4. The judge’s award of punitive damages for a breach of the duty of honest performance created by the Supreme Court of Canada in Bhasin v. Hrynew, [2014] S.C.C. 71.

Facts

The plaintiff employee, Ms. Kelly Bray sued her former employer, the Canadian College of Massage and Hydrotherapy for wrongful dismissal. After nine years of employment with the defendant as a massage therapy instructor, and returning from maternity leave in October 2013, she was advised in December 2013 that her services would not be required for the term starting January 2014. She alleged that: (1) this was a constructive dismissal; (2) her termination it was a reprisal for a complaint she had made to the Ministry of Labour; and (3) her termination constituted discrimination against her as a new mother. She claimed damages in lieu of reasonable notice, damages for discrimination and reprisal, aggravated damages and punitive damages. The total amount claimed was limited to $25,000.

The plaintiff went on maternity leave starting in October 2012 for one year. Her anticipated return to work in October 2013 would have been one month into the September 2013 term.

On July 10, 2013, the employer emailed Ms. Bray the draft schedule for the September 2013 term. Ms. Bray responded later that same day asking “Will I be leading treatments again when I come back?” The employer responded two minutes later, “No I have you in as TA for that. You will be leading Palp 2 when you return.”

Later that afternoon, Ms. Bray responded saying in part that her “understanding of the labour laws is that I am supposed to be reinstated to the position I held when I went on mat leave which means I should be leading treatments.”

Ms. Bray’s maternity leave ended in September 2013 and she returned to work as anticipated, for the start of October 2013.

The plaintiff’s schedule for the September 2013 term as set by the employer was reduced to 19 hours per week from 25. The judge accepted that Ms. Bray had not requested reduced hours. In addition she was not returned to the lead teaching position for the treatments 1 class. Before her maternity leave that class had involved 7.5 of her 25.5 hours per week. Upon return from leave, she was given the TA position for that class and not the lead, and her overall hours were reduced to 19 per week. Her gross weekly pay was reduced by one-third, from $832 to $558.

In November of 2013, the employer advised the plaintiff that she would not be scheduled for the subsequent term. When Ms. Bray complained, the employer advised her that she was not being terminated. Ms. Bray disagreed and sued.

Decisions

There were no fewer than six issues before the court in this matter. The judge’s decisions on the salient points can be summarized as follows.

Constructive Dismissal

The judge agreed that the plaintiff had been constructively dismissed. He found that once Ms. Bray was advised that she would not be scheduled for the upcoming term her employment had been ended. In responding to the employer’s position that she was simply being laid off, the judge said:

[23] It is well-established that at common law, an employer has no inherent right to lay off an employee, even temporarily.

[27] I reject without hesitation the College’s blinkered submission that Ms. Bray’s employment was not terminated. To paraphrase what Justice Molloy said in Martellucci (at para. 29 & 35), it is difficult to imagine a more fundamental term of employment than the payment of remuneration. Effective January 1, 2014, Ms. Bray was not working and was not being paid. There had been a unilateral fundamental change to the terms of employment. The plaintiff was constructively dismissed.

On the issue of her entitlement to reasonable notice, the judge found that the plaintiff was entitled to 8 months’ pay in lieu of notice. On this point the judge commented:

Ms. Bray was a nine-year employee. She was a teacher and supervisor with responsibility to oversee and teach students and teaching assistants. She was 34 years of age at the time of dismissal. I accept her evidence that teaching positions were not plentiful at that time.

Reprisal

With respect to the plaintiff’s claim for damages for reprisal for making a complaint to the Ontario Ministry of Labour, the judge commented as follows:

[49] The plaintiff alleges that one or both of (i) the reduction of her hours upon her return from maternity leave; and (ii) the termination of her employment, were reprisals for her complaint to the Ministry of Labour in July 2013. Such reprisals are prohibited by s. 74(1) of the Employment Standards Act, 2000, S.O. 2000, c. 41. Section 74(2) puts the onus on the employer, in any proceeding under the Act, to prove that it did not contravene s. 74(1).

[50] Plaintiff’s counsel could suggest no source for a civil court’s potential jurisdiction to award damages for a contravention of s. 74, and I am aware of none. Section 96 contemplates a complaint to the Ministry, while s. 132 makes contravention of the Act an offence. Section 133 provides for certain orders the court may make where an employer is convicted of an offence under s. 132 for contravention of s. 74. That reference is to the Ontario Court of Justice, which deals with charges under the Provincial Offences Act, R.S.O. 1990, c. P.33, s. 1(1).

[51] As I find no jurisdiction for this court to award damages for a reprisal contrary to s. 74 of the Employment Standards Act, 2000, this aspect of the plaintiff’s claim is dismissed.

Damages for Breaches of the Human Rights Code

With respect to Ms. Bray’s claims for damages for contraventions of the Ontario Human Rights Code, Deputy Judge J. Sebastian Winny, following the decision of the Ontario Superior Court of Justice in Wilson v. Solis Mexican Foods, which was summarized by this blog in the post Ontario Superior Court Awards Human Rights Damages, and awarded Ms. Bray $20,000.00 as compensatory damages under s. 46.1(1) of the Code, for injury to feelings, dignity and self-respect.

Aggravated Damages

Following a recent theme on this blog with respect to the need for medical evidence concerning any claim for aggravated or moral damages, Deputy Judge Winny wrote the following:

[69] The plaintiff claims aggravated damages but rightly concedes that the law on this issue is stated in Honda Canada Inc. v. Keays, 2008 SCC 39 (CanLII), [2008] 2 S.C.R. 362.

[70] There is no medical evidence in this case and while that is not a condition precedent to an award of aggravated damages for mental distress, its absence does not help the plaintiff. In addition the court must be careful not to make damages awards which overlap in a manner which results in over-compensation.

[71] I find that this claim is not proved.

Punitive Damages

With respect to the plaintiff’s claims for punitive damages, Deputy Judge Winny wrote the following

[72] I find this to be the rare and exceptional type of case in which an award of punitive damages is warranted…

[73] As Ms. Johnson [a representative of the employer] was forced to admit on cross-examination, her treatment of Ms. Bray was not forthright. She had received a complaint about Ms. Bray in about September 2013 which she never disclosed to her and never provided her with an opportunity to respond to. The complaint was itself double-hearsay from a former student of the College reported to Mr. Paterson, in passing, and passed on to Ms. Johnson. Even at trial, the former student’s name was redacted from the College’s documents. Did this former student have some grudge against Ms. Bray? The redaction of his name (once this material was produced during the litigation) is consistent with a desire to prevent the plaintiff from looking into the matter.

[74] The complaint itself was not satisfactorily investigated by the College. It was unclear from the evidence at trial that it amounted to anything more than a trivial miscommunication concerning Ms. Bray’s departure from an outreach program one hour early on one occasion and then failing to report that to the College so as to avoid getting paid for an hour she did not work. The quality of the evidence presented by the College on this issue was very poor at best. And while hearsay can be admitted in this court, its weight is generally discounted precisely because it is hearsay…

[75] Ms. Johnson’s evidence was that she scheduled Ms. Bray for no hours starting in January 2014 as a disciplinary measure in response to the subject-matter of that complaint. But she conceded that she never discussed the matter with Ms. Bray and never disclosed any such rationale to her at the time. I accept Ms. Bray’s evidence that she had heard no suggestion of this issue until shortly before the settlement conference during a meeting with her counsel.

[76] I find that the subject-matter of the complaint could not reasonably have been viewed by the employer as proved or true facts based on the information then within its possession. I find that the failure to disclose this matter to Ms. Bray, involving as it did a question of her honesty, and failing to give her an opportunity to respond, was a violation of the duty of good faith performance of a contract: Bhasin v. Hrynew, [2014] S.C.C. 71.

[77] There was a second matter which the College failed to disclose to Ms. Bray. On August 8, 2013, another instructor wrote an email to Ms. Johnson complaining about Ms. Bray speaking ill of Ms. Johnson. The instructor’s identity, along with a part of the email’s substantive content, is redacted from the email as produced by the College during this litigation.

[78] I accept the plaintiff’s submission that the employer’s conduct in this matter is bad faith conduct sufficient to warrant an award of punitive damages. Keeping in mind the need for proportionality in such awards as emphasized by Binnie J. in Whiten, I would fix the amount of punitive damages at $5,000.

Disposition and Award

In an interesting twist, Deputy Judge Winny found that the plaintiff was entitled to damages totalling $42,700. ($17,700 for wrongful dismissal, $20,000 in human rights damages, and $5,000 in punitive damages.) To this point Deputy Judge Winny then added, “It is only the amount claimed which cannot exceed this court’s monetary jurisdiction.” However, because the plaintiff had limited her claims to $25,000.00, the judge limited his award to that amount.

As to which of the damages became payable first, i.e. whether the employer was obligated to pay anything for wrongful dismissal, or whether the employee could ‘elect’ to receive only human rights damages and punitive damages – which could have a real impact on the plaintiff’s actual recovery considering taxation issues and possible EI repayment obligations, no mention is made in the judge’s decision.

Commentary

There is a lot to digest in this Small Claims decision: constructive dismissal, damages for a violation of the Human Rights Code, punitive damages, and taxation issues. The only way to eat an elephant is one bite at a time.

As is explained more fully on our page concerning pregnancy leave questions, Ms. Bray was correct with respect to her right to reinstatement. Section 53 of the Employment Standards Act, 2000 provides that:

Upon the conclusion of an employee’s leave… the employer [is required to] reinstate the employee to the position the employee most recently held with the employer, if it still exists, or to a comparable position, if it does not.

That Ms. Bray had been constructively dismissed should have been conceded by her employer. Its arguments with respect to a layoff were, in this author’s opinion, destined to fail.

With respect to Ms. Bray’s claims for violations of the Human Rights Code, the case reinforces the position taken in Wilson and dispels any concerns that perhaps the Small Claims Court would not have any jurisdiction to award such damages. The award also reflects what appears to be the ‘going rate’ for such damages at this time.

Concerning the claims for aggravated damages, again this blog has looked at this issue in the post Moral Damages for Manner of Dismissal - Meeting the Evidentiary Burden. Nothing more will be added in this post other than it is interesting to see Deputy Judge Winny’s endorsement of the notion that medical records may not be not strictly required.

With respect to the award of punitive damages, it is interesting to see the use of the Supreme Court of Canada’s decision in Bhasin v. Hrynew, [2014] S.C.C. 71., which summarized by this blog in the post Supreme Court of Canada says There is a Duty to Act Honestly in the Performance of Contracts. What Deputy Judge Winny said is that when it comes to complaints made by customers against employees, employers owe their employees a duty to advise them of such complaints and provide them with an opportunity to respond. It will be interesting to see if this duty extends beyond the ‘at the time of termination’ window, to which most of employment law considerations are limited.

Finally, there is the issue of tax. It would be interesting to know how the parties dealt with that issue. As a very high level summary, neither the human rights damages nor the punitive damages would be subject to taxation or trigger a repayment to employment insurance. The wrongful dismissal damages would. Given that that court’s award is limited to only $25,000, the issue of which damages are payable ‘first’ matters. Some guidance from the court on this point would likely have been helpful to the parties.

On the whole this is an excellent decision for employees. It touches a lot of the necessary bases and provides the employee with a big win. Any way this employee looks at this, she has been vindicated.

Takeaways for Employees with Labour Pains

There are several takeaways for employees from this case. The first is that the Ontario Small Claims Court can be a viable alternative for those considering claims for wrongful dismissal and breaches of one’s human rights. However, it also serves as a reminder to be cautious about picking one’s forum. While the Small Claims Court can award damages for human rights abuses, it can do nothing about infringements of the Employment Standards Act, 2000.

Moreover, as was summarized in the post Employees Cannot Make ESA Complaints and Sue: ON SC dismissed employees must be cautious about the forum in which they elect to plead their case.

If you are a worker in Ontario and are looking for advice on whether you may have a case for constructive dismissal, human rights damages, aggravated damages, punitive damages, or otherwise, the professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

Takeaways for Employers with Labour Pains

For employers, this case demonstrates all that can go wrong when attempting to unilaterally impose changes on employees; especially those returning from maternity leave. While the law does permit employers to manage and to make changes, up to termination, those changes must be approached cautiously. Employers would be well served obtaining experienced legal advice before doing anything.

If you are an employer in Ontario and are looking for experienced, pragmatic, and honest legal advice with respect to your workplace issues, the professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

Contact Me

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260. You may also use the contact box at the top of this page.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.



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