'Bullied' Manager was Constructively Dismissed

In the recent case of Strizzi v. Curzons Management Associates Inc., a manager took on what is always a difficult hurdle in wrongful dismissal litigation: Overcoming the fact that he resigned. But he did so successfully.

Mr. Strizzi started as a sales representative in a health and fitness centre in Ottawa, but within about a year rose to the position of General Manager, where he remained until he resigned about five years later. In that time, the Club deteriorated, as Head Office failed to (despite Strizzi's recommendations) upkeep and renovate the Club. As well, billing issues began to arise, and - despite recommendations from Strizzi - Head Office failed to take any measures to address these. Membership waned in light of the increasingly competitive Ottawa market, and the profitable club slowly went into the red. Other issues included Head Office frequently tinkering and modifying Strizzi's remuneration package, excessive hours, and excessively harsh behaviour by Strizzo's supervisor. One of the Club's managers could no longer handle the atmosphere, and submitted a resignation letter which praised Strizzi's "compassion, guidance and motivation", but expressed that the climate of the workplace was not conducive to his continued health.

Finally, on September 30th, 2003, a telephone argument between Strizzi and his supervisor led to Strizzi's resignation.

The text of the decision portrays Strizzi as an exceptionally hard-working manager who did his best to run the Club, but was thwarted at every turn by a lack of support from the Head Office. Moreover, Strizzi's supervisor, Cardillo, is described as being a "bully", treating Strizzi excessively harshly.

The most serious work-related problem that Strizzi had, however, was in having to deal with Cardillo who was, to put it bluntly, a bully. Strizzi had experienced Cardillo’s unreasonableness and aggressivity during the telephone call in March 2003 which had left Strizzi and his wife in tears. He had again experienced it during the interchange at the beginning of September in regard to the September launch meeting. Cardillo’s behaviour during the opening few minutes of the September 30, 2003 telephone conversation brought home to Strizzi the impossibility of his continuing to work in an environment where his employer yelled at him, called him all kinds of names, falsely accused him of ruining his business, refused to have a dialogue or engage in reasonable, civil conversation, told him repeatedly how useless he was, made threats, and generally treated Strizzi in a way that no employee should be subjected to.

In wrongful dismissal litigation involving small- or mid-sized businesses, this is remarkably common. Involving larger businesses, it is occasionally seen in managers who are not particularly closely supervised and/or are exceptional producers. Aggressive type-A personalities who can be less-than-forgiving when things don't go their way. It can be great for growing a business, and there are definitely times and places where aggression is very useful and productive, but employee relations can require a different approach. The lesson to be learned from such cases is that an employee is not a punching bag. The employment relationship is not conducive to angry speech or behaviour, in either direction. There is appropriate discipline for employee misconduct, but this will never include profanity or name-calling.

Even in this case, where Cardillo's conduct had persisted over years without a complaint by Strizzo, this was still sufficient for Strizzo to make out a constructive dismissal case.

Food for Thought

This matter took nearly 8 years to come to trial, and Strizzo ultimately achieved a $45,000 damage award. $10,000 of it was for wages owing, which the employer had contested until the opening of trial. That is likely to hurt when it comes to the costs award, but costs awards are still just a portion of the actual legal expenses, and those legal expenses could easily be well into the six-digit range.

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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.

Grievance dismissed to pursue Human Rights remedy

The Human Rights Tribunal is quite exceptional in that a bargaining unit employee can seek a remedy directly against the employer without the requirement of involvement by the union.

For many employees who distrust or dislike their unions, this has some appeal, though there are obvious limitations in the Tribunal's jurisdiction.

The central issue for many unionized employees is that they personally are not, in the strictest sense, parties to grievance arbitration proceedings. So unions can decline to advance the grievance, or settle a grievance without the employee signing off, or proceed in a manner with which the employee disagrees. Moreover, it is very rare that the employee can obtain any remedy against the union, because that turns on a high-threshold test of arbitrary, discriminatory, or bad faith conduct by the union.

Which makes the direct access to the employer available through the HRTO quite valuable, in the appropriate case.

There is some discord in the jurisprudence where both a grievance arbitration and HRTO application are initiated: While they are both ongoing, the HRTO tends to defer the proceeding until the grievance is dealt with. If the grievance process has already been finalized, the HRTO turns to s.45.1 of the Human Rights Code, which permits it to dismiss a grievance if the subject matter has been "appropriately dealt with" in another proceeding.

The meaning of "appropriately dealt with" is pretty loose. In Barker v. SEIU, Arbitrator Surdykowski had made a finding that the Code hadn't been breached, but the HRTO disagreed with his analysis and so concluded that the subject matter wasn't appropriately dealt with, so refused to dismiss the Application. In Rysinski v. Aecon Industrial, the Union had reached a nominal settlement with the employer over the loud objections of the employee, and the HRTO concluded that the subject matter had been appropriately dealt with, so dismissed the Application. By contrast, in Parliament v. Metro Ontario, where the union had declined to refer the proceeding to arbitration, the HRTO concluded that the subject matter was not appropriately dealt with, so did not dismiss the Application.

In other words, if you pursue human rights remedies through another venue, and in particular through a union grievance, it's hard to tell whether or not the right to pursue an HRTO remedy will remain intact.

In the recent case of Paragon Health Care Inc. v. SEIU, Arbitrator Kaplan was faced with an employee who wanted out of the grievance process. Her lawyer asked the Arbitrator to defer jurisdiction to the HRTO, but lacking party status the request was denied. Her lawyer subsequently wrote several strongly worded letters making it clear that she had no intention of being at all involved with the process moving forward. The employer, accordingly, brought a motion seeking dismissal of the grievance, and the Arbitrator allowed the motion.

The question now is whether or not this dismissal actually opens the door to HRTO consideration of the issue. I suspect that it will, but given the way that "appropriately dealt with" has been applied in the past, it's hard to be certain of that.

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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.

Stranger than Fiction, Volume I

Not to say that workplace law doesn't yield a wide variety of mind-boggling and entertaining cases (the employee who, while on disability leave due to back pain, wins a golf tournament; the Human Resources personnel who, upon being asked to schedule an exam around a required religious observance, told the employee that she was sure God would be very understanding that he had to work...etc.), but civil litigation generally has a wide spectrum of cases that just make you want to shake your head.

Fire-Breathing Dragons on the CBC

Most of you will have heard of the CBC's show Dragon's Den (I believe it's a Canadian syndication of a BBC show). As reality shows go, it's a little less of a game and a little more reality. It involves entrepreneurs (or, in cases that are usually unsuccessful, wannabe entrepreneurs) making a pitch to five of Canada's most successful people (the "Dragons"), trying to get investments.

It isn't free money, even for those who succeed in their pitch: They're trying to sell a part of their company to the Dragons, and the Dragons are trying to make purchases that will make them money. (That said, even for those who don't get an offer, it can be great publicity for good ideas.)

But the Dragons are not only scrutinizing; they can be vicious and unforgiving. Anyone who has watched the show, even once, knows this well. Unfortunately for John Turmel, he had never seen an episode before he went on the show, and was, perhaps, unprepared for the roasting he had in store.

Hence, the litigation, Turmel v. CBC, with three reported decisions:

Justice Lofchik's decision of September 27, 2010, dismissing Mr. Turmel's suit on motion by CBC;
Justice Arrell's decision of March 17, 2011, dismissing a second suit on motion by CBC; and
The decision by the Ontario Court of Appeal, dismissing Mr. Turmel's appeals on both of the above decisions.

So what happened?

Well, this is best summed up by Justice Lofchik in the second paragraph of his decision:

The producers of the show decided, in their discretion, to include excerpts of Mr. Turmel’s appearance on the show in a one minute segment that was broadcast on the January 13, 2010 episode of the Dragons’ Den. In the segment broadcast, the panel of Dragons was, to say the least, not kind to Mr. Turmel, one member of the panel having told him she had no idea what he was talking about, another invited him to burst into flames, and a third told him he was “blowing air up a dead horse’s ass”.

Mr. Turmel sued in defamation (without having complied with notice requirements under the Libel and Slander Act) though Justice Lofchik noted that "[u]pon examining the statement of claim, one might also glean the suggestion of a claim for breach of contract."

Justice Lofchik examined the information and warnings that had been given to Mr. Turmel prior to the taping of the show, including the Contestant's Guide which warns that "Anything goes" and a Consent giving the CBC full discretion in deciding what to broadcast, if anything. He concluded that there was no genuine issue for trial, and dismissed the action.

In the mean time, eight days before the motion before Justice Lofchik was heard, CBC broadcast the segment again. So Mr. Turmel initiated a second action in November 2010, this time expressly pleading breach of contract, on the basis of the second broadcast.

Not surprisingly, CBC brought another motion for summary judgment, and not suprisingly, they won this too.

Mr. Turmel, of course, appealed both Orders, again unsuccessfully.

Interesting facts: Mr. Turmel represented himself, but has been ordered to pay over $18,000 toward CBC's costs. This is likely a fairly small fraction of CBC's overall costs of defending the action, and enforcing costs awards is not always easy.

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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.

Restrictive Covenant Language

I posted yesterday about the Superior Court enforcing a non-solicitation clause in an employment contract. This is actually fairly rare, as restrictive covenants are quite difficult to enforce.

In order to enforce a restrictive covenant in an employment contract, the employer first has to show that there is some legitimate proprietary business interest which couldn't be protected by lesser means, and then further has to establish that both the geographical restrictions and the temporal restrictions are reasonable. So a non-competition clause that says "You can never compete with my business, anywhere" would likely be unenforceable. What constitutes "reasonable" limitations is a matter of judgment, and varies from circumstance to circumstance. So in a particular circumstance a provision might say "You can't compete within a period of 18 months within 25 km." If the Court finds that only a 12 month covenant is appropriate, the clause doesn't get written down, but is void entirely. This forces employers to err on the side of caution and to be conservative with non-competition agreements.

A couple of years ago, I received a job offer that included restrictive covenant language in it along the following lines:

In the event of termination, commencing with the termination date, [employee] shall not practice law for the greatest of the following periods:
three years, or
two years, or
one year
within the largest of the following areas, being within a radius of:
35 kms, or
25 kms, or
10 kms
of the incorporated municipalities within which [employer] have offices at the time of termination. At the present time [employer] have offices within [location]. The clauses in this paragraph shall be read severally, and any clause found to be excessive or invalid shall be severed, leaving the next most restrictive clause in place.

When I first read it, I couldn't help but think that it was clever. I hadn't seen language like it before. And I was surprised, because it was clear that the specific law firm was not sophisticated in the ways of employment law. (Their HR recruiter - outsourced - found me and essentially the first three questions he asked were my age, marital status, and family status, and later the principals of the law firm asked the same questions repeatedly.)

Now, there are a number of potential problems with the implementation of the clause, but what interests me, and what I would welcome discussion on, is the overall concept of the clause, having a series of lesser alternatives built in.

There's nothing in the concept that is fundamentally at odds with the existing case law on restrictive covenants, but there still seems to be something...perhaps too good to be true...about the clause, from an employer's perspective. Conversely, there is something troubling about the way that it puts the ball entirely into the employee's court in terms of risk and legal costs. Imagine a clause that prevented competition "for the maximum time and geographical scope as a Court of competent jurisdiction finds reasonable". The effect is essentially the same, conceptually, and yet the trouble is that there's a lack of clarity, a failure to tell the employee exactly what terms the employee is going to be held to.

So I think that's the crucial flaw in the language: Saying "this or this or this" doesn't specifically tell the employee which one, and thus becomes unclear and ostensibly unenforceable.

I would back up this assertion with reference to Shore v. Ladner Downs, in which the question was whether or not a termination clause with a formula for notice which exceeded the statutory minimum at the time of termination but failed to formulaically meet the statutory minimums in other circumstances:

The policy considerations applied in Machtinger, supra, would not be served if the contract were to be interpreted in favour of the employer so as to leave the individual employee responsible for determining, at the point of termination, whether the statutory minimum had risen above the notice period stated in the contract. It is neither reasonable nor practical to leave the individual employee in the position of having to keep an eye on the relationship between the statutory minimum and the contractual term.

I would argue that the same policy considerations would lead to a conclusion that it cannot be put on the employee to determine which of several options is the applicable one. (Of course, it occurred to me that, as a labour and employment lawyer, I was ill-positioned to make such an argument. But I didn't accept the position for other reasons.)

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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.

Interlocutory Injunctions and Restrictive Covenants

A recent case from the Superior Court involved a relatively rare event in Ontario: An employer obtained an interlocutory injuntion, relying on a non-solicitation clause, preventing a former employee from soliciting its customers.

In DCR v. Vector, Vector is a company started by a former executive of DCR, Ted Nham, among others. Nham's employment was subject to a non-competition clause that prevented him from doing anything to compete during his employment, and a non-solicitation clause preventing him from soliciting customers for a year after the end of his employment.

Nham provided one month's notice of resignation on July 20th, 2010, to be effective August 20th, 2010. The judge doesn't survey the evidence in much detail, but points out that Nham's evidence is largely undermined by the fact that he appears to have registered Vector's domain name on July 26th, 2010. (Though, quite frankly, if the employer is putting much stock in that fact alone as offending the non-comp clause, I would doubt the viability of that claim. Registering the domain name is purely preparatory. Preparatory actions aren't considered to violate any fiduciary duty, and I would expect the same thing to apply here. Ordering stationery, entering into discussions to rent a facility, etc., are not actually acts of competition. If I'm entitled to set up a competing business on August 20th, 2010, I'm entitled to take every step necessary to be able to actually open my doors to the public on that date.)

The employer became aware that Vector was soliciting its clients (using information taken from DCR) and brought a motion for an interlocutory injunction, which was obtained (presumably on an ex parte basis, without notice to the defendants) on April 12th, 2011, preventing Vector from soliciting DCR's customers. When an injunction is obtained ex parte, it has to be for a short period of time, until the parties can all show up in Court to argue the case. Vector filed affidavits, and DCR wisely cross-examined on the affidavits, and the motion ultimately wasn't heard in full until June 20th, 2011, but the injunction was continued until that time, and from there until the release of this decision on July 13th, 2011.

The judge accepted that the non-solicitation clause was valid and enforceable, finding its terms reasonable, and granted the injunction. However, the judge did not see any reason to impose fiduciary obligations in excess of those contained in the written contract, and so the injunction will expire after August 19th.

Given that the evidence is that Vector doesn't actually have any customers yet, that's actually kind of a loss for the plaintiff.

Commentary

The judge's decision to terminate the injunction after August 19th minimizes the effect of the fact that the defendants apparently misappropriated DCR's customer lists. There is a line of cases involving misappropriated customer lists, starting with 1259695 Ontario Inc. v. Guinchard in 2005, in which abuse of misappropriated customer lists warrants long-term continuation of such injunctions.

The trouble with this decision is that it appears that Vector, a few weeks from now, will be free to pull out DCR's customer list again and start sending out a new round of solicitations.

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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.

Contractual Termination Clauses

One of the best pieces of advice for employers is to include a termination provision in any employment contract. Specifically what the calculation of the notice period must be set out in the provision itself. There are a few rules for making them enforceable: They can't, in any circumstance, provide for notice less than the guaranteed statutory minimum, and if signed after the formation of the initial contract there must be "fresh consideration".

They can be keyed directly to the Provincial statutory minimum, but even then a large employer has to be cautious: In one case where an employee was transferred from Ontario to B.C., and his contract referred to the Ontario Employment Standards Act, the provision was found void in B.C. because in some circumstances Ontario's minimums are less than B.C.'s.

The advantage of these clauses is two-fold for an employer: Firstly, they usually reduce liability. Common law "reasonable notice", which can be displaced by these clauses, is often quite significant. Secondly, regardless of how much contractual notice is provided for, there is an advantage to having certainty: If the clause is enforceable, then how much is owed is simple arithmetic, and litigation is likely unnecessary.

I recently had a reader find one of my blogs through a search to the effect of "Is an ESA termination clause reasonable for a management position?" Which is an interesting question, and I'd like to discuss it.

The reasonableness of a clause isn't really a legal question. It's hard to argue unconscionability of notice clauses, given that there's a statutory standard set. That being said, there is a line of jurisprudence saying that the termination provisions set for an employee when he signed on with the mail room probably weren't intended to continue through to his rise through the ranks to the executive level. (There are ways of dealing with that scenario, as well.)

Rather, the reasonableness is a practical market question. Does the employee have the bargaining power to go back and say "Please change this"? If the employee does so, will the employer just say "No, forget it, we're withdrawing the offer."

This is the simple reality of employment contracts: The employer often has an immense amount of bargaining power at hire. Canadian law limits the employer's bargaining power after the hire, limiting the employer's ability to change the terms down the road, but the initial contract...well, freedom of contract goes a long way. Few employees will be in a position to dictate the terms of their employment.

The notice provision is particularly difficult to negotiate, because for the employee it means going back and effectively saying "In the event that I fail to prove to you just how invaluable I am, I want more significant entitlements." Still, sophisticated commercial actors should be aware that the notice provision is a reality that needs to be addressed, and that there are plenty of different circumstances that could lead to it being triggered, many of them not being performance related at all. So for an employee taking a high-level position, it's fair ground to bargain the notice provision.

Employees: Remember, it's not about "getting fired", it's about "job security". And that's a key phrase especially for employees leaving existing employment situations - it's pretty natural to want some assurances of job security, and an ESA termination provision is no assurance of job security at all.

It's also worth noting that there are management positions and management positions. I've had employee clients from different organizations with almost identical managerial titles, one of whom supervised from zero to four employees, and the other of whom routinely supervised in excess of fifty employees.

So there's no "one size fits all", and it's impossible to say in general whether or not a specific clause is reasonable. Suffice it to say, however, that if you accept it, you could well be stuck with it.

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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.

Unionized Employees: Court isn't for you

This isn't new, but every so often a new case pops up - and is dealt with quite quickly - involving a unionized employee (the technical term is "bargaining unit member") trying to sue his employer.

Under most circumstances, that's impossible. Collective agreements must provide for a grievance process, and for grievance arbitration. So if somebody who is a member of a bargaining unit gets terminated, then he has to go to his union rep to file a grievance; you can't go retain a lawyer to try to sidestep the union and sue the employer directly.

The underlying principle is that, once a group of employees forms a bargaining unit, that group of employees no longer has a direct relationship with the employer. Rather, they have a relationship with the union; the union has the relationship with the employer.

Nor can such an employee sue his union if he isn't happy with the job it has done representing his interests, generally speaking. Under the Labour Relations Act, the Ontario Labour Relations Board has exclusive jurisdiction over most such issues. There is a select number of issues that an employee can raise directly with his employer at the OLRB, but most issues must go through the grievance process, and an employee displeased with the Union must bring a "DFR" (Duty of Fair Representation) application against the Union. The trouble with DFRs is that the Union has a very wide latitude in deciding how best to represent the interests of the bargaining unit on the whole. If it decides that the bargaining unit can best be served on the whole by refusing to advance your overtime grievance in order to not taint the next round of bargaining, then you're pretty much stuck unless you can establish that the Union's actions were "arbitrary, discriminatory, or in bad faith". The exception is with discharge grievances: A Union generally can't refuse to grieve a discharge grievance, because the consequence of that refusal is that the employee is no longer part of the bargaining unit and - following the above example - won't have any of the benefits that may be obtained in the next round of bargaining.

In law, however, every rule has its exceptions. The OLRB's jurisdiction specifically excludes certain types of employee associations, such as fire associations. I have had occasion to opine that a Court proceeding might be instituted by a firefighter against the fire association, under the right circumstances, in a similar fashion to a DFR application. As far as I can tell, however, that hasn't happened. It's peripheral, in any event.

Moving along, consider the recent Paonessa v. Lifemark Health Management Inc. case. Health management companies are essentially external human resources departments working with disabled employees to assist in assessing them and facilitating an accelerated return to work. (Essentially, they track disabled employees, determine the length of treatment, limitations, and accommodations which might be made to phase them back into the workplace asap.)

The Facts

The employee was off work, receiving disability benefits, for three and a half years. At that point, the employer retained Lifemark to conduct a Functional Abilities Evaluation (FAE). The assessor concluded that the employee was not capable of returning to work, and the employer proceeded to discharge the employee.

The employee grieved the discharge, settled it on terms involving a return to work, then was discharged again following an alleged failure on her part to comply with the terms of the settlement. She grieved the second discharge, and settled again with the employer.

Then she proceeded to sue Lifemark, alleging interference with economic relations. Lifemark turned around and claimed for indemnification against the employer.

The Issues

The biggest and most obvious problem with suing Lifemark is this: Any settlement she would have agreed to with the employer would almost certainly have included the execution of a "Full and Final Release" including a clause preventing the employee from initiating proceedings against the employer or any other person who might seek indemnification from the employer.

When I explain these clauses to my clients, I put it this way: Suppose I hire a general contractor to renovate my home, and he subcontracts to an electrician, who performs his work in a negligent manner, causing me damages. Now suppose I sue the electrician for his negligence, and reach a settlement with him.

After settling with the electrician, imagine that I proceed to sue the general contractor in breach of contract, because he didn't provide the renovations I bought in a good and workmanlike manner. What is he going to do? Well, he'll issue a Third Party Claim against the electrician, saying "It's his fault, so he should have to pay me back for anything I'm required to pay." The electrician, already having settled this matter directly with me, won't be pleased with this turn of events...and would point to the release and say, "Sorry, the statement of claim has to be struck because the plaintiff already has his settlement for anything for which I might be responsible." Ultimately, in this case, the judge similarly finds that the plaintiff had her remedy through the grievance process, so the litigation is an abuse of process.

The other issue in whether or not the action is barred because of the fact that she's a bargaining unit employee. The judge's answer is that the subject matter of this law suit (namely, the conduct of the FAE) is squarely the subject matter of the collective agreement, and therefore the action is barred by the Labour Relations Act.

Thoughts

I don't doubt the correctness of this decision, I think the justice of it is in the right place, and I'm impressed by the judge's clarity in explaining his reasoning...but I'm still left with some nagging concerns: In any other circumstance, there would be the potential for a freestanding action against the organization that administered the FAE, and in the occasional circumstance there might be good reason to sue that organization in addition to the employer. That's not possible for bargaining unit members. So what happens if the organization carrying out the FAE does something beyond what the employer could reasonably be held responsible for in the grievance process?

I think the answer to that question is likely that such a scenario can't be permitted to occur. It cements the agency relationship. If an action against the assessor is statute-barred, then this must have the result that everything the assessor does in carrying out the FAE must be considered actions of the employer, for which the employer may be liable. (Of course, there's nothing stopping the employer from suing the assessor, in the right case.)

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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.

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.

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