Canada: Big Things Come In Small (Claims Court) Packages

A veritable smorgasbord of employment law issues was recently served up in the decision of the Ontario Superior Court of Justice (Small Claims Court) in Bray v. Canadian College of Massage and Hydrotherapy.

Ms. Bray worked for the College for nine years as an instructor teaching classes and supervising clinics and outreach programs. Upon Ms. Bray’s return from a pregnancy/parental leave the College reduced her hours and then failed to assign her any courses to teach during the following semester.

Ms. Bray sued for wrongful dismissal, damages for discrimination under the Ontario Human Rights Code, damages for reprisal under the Employment Standards Act, 2000, aggravated damages and punitive damages based upon a breach of the duty of good faith in the performance of the employment contract as recently affirmed in Bhasin v. Hrynew (SCC). She brought the case in Small Claims Court, where procedural simplicity and speed can work in a plaintiff’s favour.

That move worked better than she likely imagined: the court found the failure to schedule any courses to be a constructive dismissal. In doing so, the court dismissed the College’s argument that the refusal to schedule was a proper disciplinary step because, among other reasons, the complaints relied upon by the College had never been disclosed to Ms. Bray. Damages were assessed at $42,700, but the award was limited to $25,000 being the monetary jurisdiction of the small claims court.  In doing so, Deputy Judge Winny reiterated the following statements of law:

  • Reducing Ms. Bray’s hours from 25 to 19 per week to “see if you find it OK with even being in 4 classes and having to be a mother at the same time”, and the later failure to schedule her at all was evidence of discrimination on the basis of sex and family status warranting a $20,000 award of damages for injury to feelings, dignity and self-respect contrary to the Code.
  • An indefinite layoff in the absence of a contractual term allowing for such a layoff constitutes constructive dismissal.
  • Reliance by an employer on termination provisions contained in an employee handbook will be ineffective to avoid the common law right to reasonable notice unless the terms of the handbook become terms of the contract of employment.  The failure to be able to prove that the handbook was provided to the employee at the time that they signed a written employment agreement (or any time thereafter), or the employee was advised or instructed to read the handbook will undermine the ability to rely on its provisions.
  • An employer must ensure the termination provisions which purport to limit the employee’s entitlement to common law damages are clear and unambiguous as they will be interpreted against the interests of the employer as author.  An employer seeking to rely upon the provisions of a handbook should clearly indicate in the written employment agreement to be signed by the employee that the provisions of the handbook significantly alter the employee’s common law rights.
  • The employer must ensure the termination provisions in the handbook are exhaustive and that its subsequent actions are consistent with those provisions.
  • Where the employee had earnings from other employment or self-employment while working with the employer, any mitigation earnings which reduce the employer’s liability will be limited to the difference between what the employee was already earning from the other employment or self-employment and any increase in those earnings from the same source during the reasonable notice period.  In the event the mitigation earnings are from self-employment, expenses incurred to earn the income will be deducted before the net mitigation earnings are calculated.
  • The court has no jurisdiction to award damages for reprisal contrary to section 74 of the ESA (in this case taking advantage of the right under the Act to a pregnancy/ parental leave).

The court also offered at least two new propositions of law which remain to be considered by higher courts.

  • The failure to disclose complaints about the employee’s performance while imposing discipline in the form of an indefinite layoff is contrary to an employer’s duty of good faith in the performance of the employment contract.
  • The court may award punitive damages for breach of the duty of good faith in the performance of the employment contract. 

The amount awarded to Ms Bray for wrongful dismissal constituted less than one-half of the total damages. The real limit on the damages was the forum, the Small Claims Court. Had the matter proceeded in Superior Court with the same findings, the employer would have been liable for an amount equivalent to approximately 14 months’ wages to this 34 year old, nine year, part-time supervisory employee.

This decision stands as a reminder to employers: (1) protected human rights and pregnancy/ parental leave rights cannot be ignored because they are inconvenient; (2) the failure to be honest, reasonable and forthright in dealing with employees, particularly at the time of termination, can lead to sanctions far greater than common law damages in lieu of reasonable notice; and (3) a Small Claims Court action, although limited in the total which can be awarded, can require an employer to defend all of the same claims it would face in Superior Court, with the same potential findings of liability.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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