Wednesday, July 13, 2011

Sue in Court? Or Apply to the Human Rights Tribunal?

This is an issue that I frequently have to deal with in practice, and that I've blogged about before in a previous blog I maintained when I practiced in Norfolk County. (Click the link for a detailed discussion on the question of "Now that you can seek a human rights remedy at Court, should you?") To sum it up, there are a lot of pros and cons for a wrongfully dismissed employee going to either venue, remedies you can obtain in one venue but not another, procedural benefits and cost benefits...but in this post I'll briefly discuss the fundamental issue of the difference in establishing liability.

The Facts

Last week, the Human Rights Tribunal of Ontario released its decision in Callwood v. Franchise Management Inc. et al. Mr. Callwood was assistant store manager of a Pizza Pizza in Oshawa East, and that location (with several others) were purchased by the Respondent corporation in October 2008. In early 2009, Mr. Callwood began to be disciplined due to customer complaints. Mr. Callwood believed that this was connected to his race, and sought legal advice. He apparently received a legal opinion that unjustified discipline could warrant a law suit in constructive dismissal, which he brought up with management. In that time period, he initiated this legal proceeding. Around the same time period (though it appears to be somewhat after he obtained the legal opinion and filed the Human Rights Application), the corporation implemented a management review which resulted in downsizing the management team to one assistant manager (Mr. Callwood was the junior of two) in six stores. Accordingly, Mr. Callwood was demoted to the position of shift manager, his wages were cut from $13.00/hour to $11.50/hour, and he lost his guaranteed 45 hours per week. He believed that this, too, was a consequence of his race.

Further discipline occurred throughout the following year, and ultimately Mr. Callwood was terminated in April 2010. He alleges that all the discipline was the consequence of him initiating the Human Rights Application. But the Tribunal disagreed, believing the employer's explanations as to why Mr. Callwood was selected for demotion, why he was disciplined, and why he was terminated. Therefore the Tribunal dismissed the Application.

Here's the key to this discussion:

[36] I am not here to assess whether there was “just cause” in the common law sense for dismissal. My role is to determine whether a prohibited ground (race or colour or reprisal) played a role in the termination. I have concluded that they did not.

The Issue of Liability

When an employer dismisses (constructively or actually) an employee, in a wrongful dismissal action the onus is upon the employer to demonstrate that they had 'just cause' to do so, or else they are liable to pay reasonable notice (or contractual notice, if applicable) to the employee. Just cause is a very high threshold, and it is really only in the clearest cases that the Courts will find just cause to exist. Thus, at Court, the employee has a pretty strong advantage in establishing liability for notice.

But at the Human Rights Tribunal, the question of just cause is unimportant. The burden of proof is on the employee to establish a breach of the Code, and the employee must lead "clear, convincing, and cogent evidence" that the employer's actions were motivated by discrimination. The failure to do so means a recovery by the employee of zero, even in a case where there is no just cause and therefore an entitlement to pay in lieu of notice.

This loss at the Human Rights Tribunal may not be the end of things. It is likely that the applicant could commence an action in Court seeking pay in lieu of notice, arguing that the employer did not have just cause for termination. But there will be a few difficulties in such an action.

(1) Timing. A claim for constructive dismissal based on the 2009 demotion would now be out of time. It is, quite frankly, fortunate for the employee that this process was already underway by the time he was actually terminated, because it puts this decision still well within the timeframes for initiating an action based on the actual termination of his employment. In most cases, a dismissed employee will not have the ability to commence a Court claim after the dismissal of the Human Rights Application, simply because of the timing factor alone. (This makes the question of venue up front much more critical.)

(2) He will find it very difficult to seek damages beyond straight notice. A claim containing human rights allegations would be struck.

(3) It is unclear to what extent the Court would adopt the factual findings of the Tribunal. While the Tribunal expressly disclaimed any decision on 'just cause', and therefore the employer likely could not succeed in taking the position that a wrongful dismissal action is estopped (barred), the Tribunal did reach several conclusions about the bona fides of the employer's actions in disciplining and terminating him, including a finding that Mr. Callwood's performance significantly declined. If I were acting for the employer in a Court action following this decision, I would be arguing strenuously that the fact of Mr. Callwood's misconduct is a matter of record, that Mr. Callwood cannot relitigate the question of whether or not his disciplinary record was justified, and that the only question for the Court is whether or not the discipline rose to the level of just cause.

My Comments

In cases where there is likely a significant liability for pay in lieu of notice, I usually recommend Court to my employee clients. It's clearer cut in cases where the allegations of discrimination are tenuous, but other files have presented more difficult questions. (One file in particular comes to mind, where the employer was engaged in practices some of which probably and others of which certainly infringed the Code protection against discrimination on the basis of gender and religion...the Tribunal would have been easier and cheaper, and also presented the possibility of a "public interest remedy" - i.e. the Tribunal dictating the employer's policies moving forward - which would give us a stronger position for settlements. Yet the risk of ultimately not establishing that the termination itself was discriminatory in nature pushed me towards recommending a Court action.) In cases where the wrongful dismissal liability would be limited, for whatever reason, and there is clear and cogent evidence of discrimination, I continue to believe that the Tribunal is the preferable option for plaintiffs in most cases.

Additional Remarks

The Tribunal's decision raises a couple of concerns in my mind.

First, I question the Tribunal's acceptance of the Respondent's submissions on one point related to the demotions: Five out of six of the people demoted were visible minorities. The fact that one was not is relevant, true, and rebuts (if perhaps only in a lukewarm way) the suggestion that the demotions were discriminatory. However, the Tribunal also accepted that the fact that five out of six managers demoted were visible minorities painted a picture of a a diverse management team generally. This is simply...well...wrong. To draw that conclusion, we would need to see what the rest of the management team in these stores looked like. If it was universally true that 5 out of 6 managers/assistant managers were visible minorities, then that makes any allegation that the demotion was racist extremely tenuous. On the other hand, if it turned out that these five were the only visible minorities in the management team, then the fact that they were all demoted and all the non-minorities left in place...well, that would tend to go the other way, and support an inference of discrimination. That's a minor point, though, and I don't think that it materially affects the integrity of the Tribunal's finding that there was no discrimination.

Secondly, and more importantly from a broader policy perspective, I have concerns about the Tribunal's commentary (though not its disposition) dealing with the employer's response to Mr. Callwood hiring a lawyer. Comments were apparently made expressing concern about Mr. Callwood's choice to get a lawyer involved, saying that "once you mention legal that gets their dander up". The Tribunal's response is basically: "Well, yeah, that's a natural reaction."

The problem, as I see it, is that anti-reprisal provisions in statutes like the Human Rights Code are exactly designed to prevent deterioration of the working relationship based on the employee standing on their rights. (A lofty goal, certainly, but that is the objective. It is illegal for the employer to treat an employee unfavourably just because the the employee has threatened human rights-based legal proceedings.) The suggestion that it is not only acceptable but should be expected that the employer's attitude to the employee will be chilled by the employee seeking legal advice undermines that purpose.

Again, I don't think that the Tribunal was necessarily wrong to find that this wasn't a reprisal, but the obiter could interfere with employees' abilities to stand on their rights in the future.


This blog is not intended to, and does not, provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

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