Friday, September 21, 2012

Should Human Rights Tribunals be able to award punitive damages?

There's a recent case out of the British Columbia Human Rights Tribunal, Kooner-Rilcof v. BNA Smart Payments, which was the subject of an entry in Moneyville.

Ms. Kooner-Rilcof worked as the VP Sales (Western Canada) for BNA Smart Payments, an Ontario-based business.  She started with the company in early June, 2009.  On September 15, 2010, she called the company's president to notify him that she was pregnant and would be starting her leave in December or January.

The next day, the President called her to tell her that she was dismissed, and would receive two weeks pay in lieu of notice.

The company's story was that the B.C. market hadn't been performing well, and they had already planned, two weeks earlier, to close down their B.C. operations and dismiss the employee, and that they decided it was better to get it over with sooner than later in light of her approaching leave.  The Tribunal concluded that the pregnancy was at least a factor in the decision, and therefore the termination breached the Code.

The Tribunal denied the employee's claims for legal costs and mental distress damages, but awarded $8000 in damages for injury to dignity, feelings, and self-respect, and a further two weeks' pay in lieu of notice, for a total of four weeks' pay in lieu of notice.


I'm not a British Columbia lawyer, but I do know that B.C. law is in many respects very similar to Ontario's. The common law doctrines governing both are essentially identical, and the statutory provisions governing employment standards and human rights are quite similar.

On the one hand, when the Tribunal characterizes the $8000 award as being at the 'high end' of the range, I'll take its word for it.  However, the award of only an additional two weeks in lieu of notice seems untenable and deeply unjust.  The employee was asking for a total of four months, reflecting the time until her maternity leave would begin.

The Tribunal's decision in terms of quantum is not entirely clear, but it appears to be premised on the contract and other business realities.

The Employment Contract

The contract between the employee and the employer characterized the employment relationship as being "at will", allowing her to be terminated without notice.  At-will employment is a common phenomenon in the United States, but for almost all employment relationships in Canada, an 'at-will' term of employment is completely unenforceable, and a purported 'at-will' employee will, in fact, be entitled to "reasonable notice" of termination.

The Tribunal, however, gives no indication that it is alive to the problematic nature of the "at-will" language.  Indeed, the language appears to be considered relevant, though not determinative.
"An employment contract does not place either party above the law, and especially not above a statute such as the Human Rights Code.  However, in the exercise of discretion on a principled basis, the Complainant's employment contract can be a factor in the measurement of her claim."
Further, she was "never assured of any measure of continued employment".

She might have been fired anyways

The Tribunal appears to accept that the company was engaged in legitimate cost-cutting measures, and she may have been terminated at some point in the near-future regardless.

She was courting other employers

Two months before her termination, she had told a prospective employer that, because of her pregnancy, it wasn't the right time to be looking at other employment.  But for her pregnancy, therefore, she may have resigned anyways.

My Thoughts

Unless there's something I'm really missing here - some narrow exception in the B.C. ESA which would provide for at-will employment in her context, or some such thing - this analysis seems obviously wrong.

The seminal case for the unenforceability of an "at-will" clause in Canada is Machtinger v. HOJ Industries, a 1992 decision from the Supreme Court of Canada.  This is exceptionally well-established and uncontroversial law in Canada.  Perhaps more importantly, the Supreme Court expressly rejected the argument (which the Ontario Court of Appeal had accepted) that the contract evidenced an intention by the parties to limit the notice payable as much as possible, and therefore only the statutory minimums should be payable:  The Supreme Court concluded, in a decision which continues to shred employment contracts across the country, that the failure of a termination clause to adhere at least to the statutory minimums renders that clause completely void, as if it were not part of the contract at all.

I will grant that a termination clause not being enforced by reason of the Human Rights Code has different analytical dimensions:  It is not generally the case that the provision would have been void ab initio (from the beginning) but rather that a termination even on notice can be unlawful if it is for reasons prohibited under the Code, meaning that the scale of damages is not necessarily limited to contractual notice entitlements.  (This is most obvious when you think about an employee on a contractual probationary period being fired because the employer discovered that the employee is of a particular religion, or sexual orientation, or place of origin, etc.  The contractual right to fire without notice does not disentitle the employee to a remedy for a Code breach.)

The compensation principle means that it is appropriate to look at a "but for" analysis.  But for the breach of the employee's Code rights, what would the employee have received?  If an adjudicator is convinced that the employment relationship would have come to an end in any event, that can factor into the analysis.  (That the employee may have resigned if she wasn't pregnant is beyond irrelevant:  The question isn't "but for her pregnancy", but rather "but for the discriminatory termination".)

However, if I am right to assume that the "at-will" language is void, then dismissing her without notice would have been a breach of contract; the Tribunal is wrong to adjudge her remedies based on the prospect of the employer embarking on a course of action for which it has no legal or contractual justification.

The Punitive Damages Question

This is dealt with summarily by the Tribunal, and it doesn't appear that the complainant was asking for punitive damages, but it bears some commentary.

The Tribunal noted that relief for injury to dignity, feelings, and self-respect "is not granted as a punitive measure against a respondent, but as monetary compensation for the psychological injury suffered by a victim of discrimination."

This is true - no doubt about it.  Human Rights Tribunals have jurisdiction to award compensatory damages, including for injury to dignity, feelings, and self-respect, but the ones with which I am familiar have no jurisdiction whatsoever to award punitive damages.

And maybe they should.

Let's be clear here:  There are a lot of more nuanced human rights cases, where an action may be undertaken in good faith but with discriminatory results, or where a well-meaning act may inadvertently breach a Code right.  Consider, for example, a fitness requirement which indirectly discriminates against women, or an interviewer innocently (and with no discriminatory intentions) asking prohibited questions like "Do you have any children?"  In such cases, punishment may not be appropriate.

But there are still far too many cases where employees are terminated because they become pregnant, or for other blatantly discriminatory reasons.  An $8000 hit for injury to feelings, dignity, and self-respect is relatively trivial.  (In Ontario, an applicant might get more, but the difference isn't particularly significant.)  It does not send a much-needed message to employers that this conduct is unacceptable.  Indeed, in the overall calculation, this employer is better off having fought and lost at the Human Rights Tribunal than it likely would have been had it fought a wrongful dismissal action in Court.

I occasionally see blatant discrimination in my work.  Dismissals for becoming pregnant, for making a sexual harassment complaint, discriminatory dress codes, etc.  Whenever I see these incidents, I am shocked that they are still occurring in 21st-century Canada.  But the law often responds to these infractions with a gentle touch, looking to the innocent employee to prove significant damages, and not punishing the employer based on the objective severity of its misconduct.


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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