Remedy search

A couple of days ago I wrote a paper for the Ontario Bar Association’s Constitutional, Civil Liberties and Human Rights Section, posted here. The article is re-posted herein. It explores the concept of damages in lieu of reinstatement in the context of the Human Rights Tribunal of Ontario. Since the change to the direct access model in 2008, the Tribunal has never ordered these damages previously, and the failure to award damages in lieu of reinstatement where an employment relationship is not viable compounds the harm experienced by victims of discrimination. This is particular so where the relationship has broken down through no fault of the applicant.

Background: Remedial Principles of Ontario Human Rights Legislation

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One objective of the Ontario Human Rights Code is the elimination of discrimination. To achieve this objective, the Ontario Legislature has given the Human Rights Tribunal of Ontario broad remedial powers to order compensation for loss arising out of the infringement (including lost wages and general damages to compensate for injury to dignity, feelings and self-respect), non-monetary restitution, or “anything that, in the opinion of the Tribunal, the party ought to do to promote compliance” with the Code.[i]

Code damages are not intended to punish an offending party. The intention of the offending party is not a relevant factor in determining the appropriate remedy at the Tribunal.[ii] Rather, the Code is remedial and damages are designed to put the applicant into a position she or he would have been in but for the discrimination experienced.[iii] The ultimate goal is to make the applicant “whole” to the extent reasonably possible.[iv]

The Tribunal’s remedial power is not limited by “proportionality”. Causation is the appropriate guiding principle applicable to human rights remedies.[v] Applicants should only be compensated for the harm experienced from discrimination that is caused by the respondent.

Reinstatement as a Presumptive Remedy

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One potential remedy available to make the applicant “whole” is reinstatement. I often hear practitioners claim that reinstatement is an “exceptional remedy” or “rarely awarded”. This is misleading. Applicants rarely request reinstatement. When it is requested, it is often awarded.[vi] In addressing reinstatement as a viable remedy, the Supreme Court of Canada stated in McKinney v. University of Guelph:

It should be noted that the rights of the appellants which have been infringed pertain to their dignity and sense of self-worth and self-esteem as valued members of the community, values which are at the very centre of the Charter. It would be insufficient, in my view, to make any order which does not seek to redress the harm which flows from the violations of this interest. Reinstatement is clearly the most effective way of righting the wrong that has been caused…[vii]

Reinstatement is often the only remedy that will truly put an applicant into the position she or he would have been in had the discrimination not occurred. Reinstatement, when sought, is only refused by the Tribunal when there is a reason not to order it. In the past the Tribunal has declined to order reinstatement where it has found that the applicant would have been terminated in any event even if the discrimination had not occurred,[viii] or there is animosity between the parties and the employment relationship is no longer viable.[ix] Given that reinstatement is often ordered when sought, and only declined where there is reason to decline it, it seems reinstatement may be more appropriately considered the “presumptive remedy” rather than an “exceptional remedy”.

Damages in Lieu of Reinstatement? – The HRTO Fails to Appreciate the “Make Whole” Remedial Principles of the Code

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As mentioned above, there are relatively few cases where reinstatement is sought. While reinstatement is awarded when sought, there are a handful of cases where it is not awarded, and in these cases a troubling trend emerges – the Tribunal does not order damages ordered in lieu of reinstatement. In these cases, the prejudice of a non-viable employment relationship effectively falls upon applicants and respondents reap the benefit. I will highlight the issue through a brief example:

Joe, a sixty-three year old labourer, has worked for Discrimination Corporation (“DC”) for the past thirty-seven years. Two years ago DC hired a new general manager, who immediately identified DC’s aging workforce as an issue to be addressed. A voluntary retirement program was put into place and older workers were transitioned out of the workforce.

Joe, however, had spent the majority of his life at DC and declined participation in the voluntary retirement program. When it became clear Joe would not leave voluntarily, the new general manager resorted to other tactics. Comments were made to Joe about his age on a regular basis and he was assigned the most physically strenuous jobs in the factory. Not surprisingly, the strenuous jobs took their toll on Joe’s health and he now suffers from repetitive strain injuries to both wrists.

Joe knew that his employer was trying to force him out of the workplace. After months of negative comments and deteriorating health, Joe lost his temper and snapped at his general manager. His employment was immediately terminated for just cause.

Joe filed an application with the Tribunal alleging discrimination on the basis of his age. One and a half years later Joe’s hearing date arrives. By this time, he has exhausted his employment insurance benefits and has been unable to find work, despite applying to every position he came across. Joe is seeking reinstatement to DC Corporation.

The Tribunal finds that Joe was treated adversely and terminated solely as a result of his age. Under cross-examination, Joe admitted that he doesn’t like the general manager and would find it very difficult to work with him again in the future. The Tribunal finds that there is animosity between Joe and the general manager, and concludes that the employment relationship is no longer viable.[x] Lost wages are ordered to the date of the hearing, as well as $15,000.00 in general damages, but reinstatement is not. The Tribunal has refused to order wage loss following the date of the hearing.

It would be a stretch to claim Joe has been made “whole”. Joe is put into the position that he would have been in but for the discrimination to the date of the hearing, but he is now 64 years of age, disabled, un-employed and with no source of income. His chances of finding alternative employment are slim. Reinstatement would have given him the ability to continue to earn a living, but because Joe became resentful and lost his temper after nearly a year of discriminatory treatment and the fact that he no longer likes the general manager who repeatedly discriminated against him, the employment relationship is “not viable”. The Tribunal, quite inappropriately, follows its past decisions and refuses to order wage loss following the hearing date.[xi]

Is it fair that Joe’s story ends with reinstatement being declined? Let’s look at the case scenario above more closely. The employment relationship may not be viable. The reason for that however is that Joe’s manager targeted him for a year and Joe became resentful of the discrimination. Put another way, “but for” the discrimination Joe would not have become resentful and hurt, and the employment relationship would have been viable. Should DC benefit from the discriminatory campaign it undertook to eliminate Joe from the workplace? From a remedial perspective, should Joe suffer as a result of the discriminatory actions taken by DC? If so, that provides respondents with a clear incentive to engage in aggressive behaviours to bolster their position that the employment relationship is no longer viable (if they do so, reinstatement is less likely to be ordered when sought).

To prevent this result, where the Tribunal finds the employment relationship no longer viable through no fault of the applicant, the Tribunal ought to order damages to compensate the applicant for the fact that the discriminatory actions have resulted in animosity and an unsalvageable employment relationship.

In fairness, it may be that applicants don’t ask for damages in lieu of the right to reinstatement. When these damages are sought however, and hopefully they will be sought on a consistent basis by applicants moving forward, the Tribunal would be failing the remedial objectives of the Code in refusing to order these damages.

Framework for Ordering Damages in Lieu of Reinstatement

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The Human Rights Tribunal of Ontario has not substantially addressed damages in lieu of reinstatement. Other forums have made such awards and below are two cases, which could serve as examples for how the Tribunal may determine such damages in the future. In applying the Canada Labour Code, adjudicators have adopted the so-called “modern approach” to damages in lieu of reinstatement.  That approach, which will be highlighted below, may be appropriate, particularly since the remedial principles contained within the Canada Labour Code are similar those in the Ontario Human Rights Code.  

Section 242 of the Canada Labour Code provides for compensatory damages in the form of lost wages and reinstatement, as well as a catch-all equitable provision, which provides that an adjudicator can “do any other like thing that is equitable to require the employer to do in order to remedy or counteract any consequence of dismissal”.

In Taylor v. Exalta Transport Services Ltd.[xii], Adjudicator Williams-Whitt adopted the modern approach from a previous arbitral decision under the Canada Labour Code. The method is a simple formula, whereby the employee receives one and one half months’ pay for each year the complainant worked. In the human rights context, the employee’s length of employment was irrelevant, however the Tribunal could ultimately assess damages in lieu of the right to reinstatement in a similar manner as the Tribunal assesses general damages. The Tribunal avoided speculative future lost wages by ordering damages based on its assessment of a reasonable time period for the employee to find alternative work, taking into consideration the individual circumstances of the applicant.  While the Tribunal does not award common law damages, a reasonable assessment of what the damages may be is more appropriate than a flat-out refusal to make the applicant whole because of the fear of speculative damages.

As an alternative to the “modern approach”, a federal tribunal applied remedial principles to reach a damages award that it considered fair in the circumstances. In Turner v. Canada (Border Services Agency),[xiii] the Canadian Human Rights Tribunal found that Canada Border Services Agency discriminated against Turner on the basis of his age, race, colour and perceived disability (obesity), in depriving him of employment opportunities in two separate job competitions. Turner initially sought reinstatement, however at the remedy stage of the hearing, he withdrew his request and instead sought damages in lieu of the right to reinstatement. By the time of the remedy hearing, Turner was employed with Service Canada, earning approximately $13,059.57 per year. As damages in lieu of the reinstatement, the Tribunal ordered the difference in pay between the two jobs for a period of five years, totalling $65,297.85. While the Tribunal did not explain its reasons for choosing a five-year period, the decision nonetheless recognized the harm caused by the forfeiture of the claim to reinstatement.

Conclusion

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The ‘make whole’ remedial principles of the Ontario Human Rights Code ought to necessitate that where reinstatement is sought and not ordered, damages should be ordered in lieu in order to make the applicant whole to the extent reasonably possible. There are different ways to determine the quantum of these damages, but a straight refusal to order any remedy in this respect, is a failure to eliminate discrimination in Ontario and put an applicant into a position she or he would have been in but for the discrimination she or he has experienced. It also fails to recognize the extremely vulnerable circumstances of many applicants and the challenges they will face in obtaining alternative employment.

End Notes


[i] The Human Rights Tribunal of Ontario’s broad remedial powers are found at section 45.2 of the Code.

[ii] While intention is not relevant in determining an appropriate remedy for a violation of the Ontario Human Rights Code, it is relevant federally when determining the appropriate remedy for a contravention of the Canadian Human Rights Act, where section 53(3) provides that the Canadian Human Rights Tribunal may award up to $20,000.00 in additional compensation if the Tribunal finds that the respondent “has engaged in the discriminatory practice wilfully or recklessly”.

[iii] ADGA Group Consultants Inc. v. Lane (2008), 91 O.R. (3d) 694 at para 129 (Div. Ct.) at para 151.

[iv] Ontario Human Rights Commission v. Impact Interiors Inc., [1998] O.J. No. 2908 (Ont. C.A.) at para 2.

[v] Ibid. (ADGA) at para 151 where the Divisional Court states that damages must be “reasonably foreseeable”.

[vi] See British Columbia (Public Service Employee Relations Commission) v. British Columbia Government Service Employees’ Union, [1999] 3 S.C.R. 3 (“Meiorin”) at para 3, where the Supreme Court allowed an appeal and restored the arbitrator’s decision to reinstate an employee, Nilsson v. University of Prince Edward Island, [2013] P.E.I.H.R.B.I.D. No. 2 where the Board of Inquiry ordered a professor reinstated following a finding of age discrimination, Matheson v. Presbytery of Prince Edward Island and Others, [2007] P.E.I.H.R.B.I.D. No. 1 where the Board of Inquiry ordered reinstatement eleven years after the breach of the Human Rights Act had occurred, and, Fair v. Hamilton-Wentworth District School Board, 2013 HRTO 440 where the Tribunal ordered the applicant reinstated to an alternative position almost nine years following her termination.

[vii] McKinney v. University of Guelph, [1990] 3 S.C.R. 229 at para 341.

[viii] Pelletier v. Veolia Transportation, 2015 HRTO 323

[ix] Supra note vi (Fair) at para 17.

[x] It should be noted that there are cases opposing this line of reasoning. For instance, in Narraine v. Ford Motor Co., [1996] O.H.R.B.I.D. No. 43, the Board of Inquiry addressed the damaged working relationship, stating at paragraph 10: This type of reasoning has provoked discussion in human rights jurisprudence as well. One human rights tribunal initially refused to reinstate the complainant to her original position at the Secretary of State office in Regina because it found that the “reunion would be a recipe for disaster,” and that there was “too much bitterness between the parties to think that reinstatement of the complainant to her former job is workable”. [See Pitawanakwat v. Canada (Secretary of State) (1992), 19 C.H.R.R. D/110 (Can. Hum. Rts. Tribunal). This decision was overturned by the Federal Court, Trial Division which concluded that potential for future problmes did not justify a decision to refuse reinstatement, and that failing to grant full reinstatement could “minimize” and “enfeeble” the impact of human rights law. [See Pitawanakwat v. Canada (Attorney General) (1994), 21 C.H.R.R. D/355.

[xi] For a critique of the Human Rights Tribunal of Ontario’s refusal to order speculative future lost wages see my previous article located here https://ontariohumanrights.net/2015/07/09/speculate_damages/

[xii] Taylor v. Exalta Transport Services Ltd., [2009] C.L.A.D. No. 110 (Adjudicator Williams-Whitt)

[xiii] Turner v. Canada (Border Services Agency), [2015] C.H.R.D. No. 10 (Member Wallace Craig)

Logical illogical road sign

In the past, the Ontario Board of Inquiry has shown a willingness to abide by the remedial principles of the Code and make complainants “whole”.  Future prospective lost wage orders were not balked at. See the 1992 decision, McKee v. Hayes-Dana Inc. et al.[i] for example. Mr. McKee had worked for the Respondent for over thirty-two years. He was a 57 year old foreman when his employment ended. The Board found that McKee’s age played a material role in the employer’s decision to compel him to choose between indefinite lay-off or early retirement. Two younger foremen were retained, while the two older foremen (including McKee) were forced out. In addressing remedy, the Board stated at page 22:

It is ordered that the Respondent, Hayen-Dana Inc., compensate the Complainant, Allen McKee, for lost wages and benefits from October 1, 1985 to the date of his 65th birthday.

This remedial order, aside from ordering 8 years lost wages, included future prospective lost wages that had not yet crystallized. Notably, the Board did not implement any contingencies to address the fact that Mr. McKee may find alternative employment.

With the changes to the human rights system in 2008, things changed. The “complainant” became the “applicant” and future prospective lost wage orders, for one reason or another, became a thing of the past.  Frankly, I find this surprising given that the remedial principles of the Human Rights Code aim to restore applicants to the position they would have been in had they not experienced discrimination, along with the fact that many applicants are still unemployed and experiencing wage loss on the day of hearing and into the future. There appears to be two primary reasons why future prospective lost wage orders are remote (or perhaps “non-existent” is the more appropriate term):

  1. The Human Rights Tribunal of Ontario fears speculation and recognizes that the Tribunal cannot assess an applicant’s mitigation efforts post-hearing, and
  2. Applicants rarely seek future lost wage damages, perhaps because they are so rarely ordered.
HRTO Jurisprudence Considering Future Prospective Lost Wages

In order to understand the Tribunal’s reluctance to order future lost wages, it is helpful to briefly review two recent decisions addressing the issue.

Loutrianakis v. Clair de Lune, 2010 HRTO 2137

In this case the Tribunal found that the respondent terminated the applicant because of her disability and stated that the “applicant is entitled to compensation for the wages she lost because of the respondent’s actions”. The applicant sought “her prospective wage loss up to the point in time at which it would be reasonable to expect the applicant would have found alternate employment.” Notwithstanding a finding discrimination and recognition of the remedial principles of the Code, Vice-Chair Sheri Price declined to order prospective future lost wages, stating at paragraph 65:

I decline, however, to order the respondent to compensate the applicant for the prospective wage loss she expected to continue to incur following the hearing. Although the applicant invited me to pick some date in the future at which point it would be reasonable to expect her to have found other employment, I find that I lack a sufficient evidentiary or other basis upon which to grant this remedial request.

With this very basic explanation, the applicant was denied future lost wages notwithstanding that she may ultimately be unemployed and experience wage loss well into the future.

Pilon v. Cornwall (City), 2012 HRTO 177

In this decision, the Tribunal found that the respondent had discriminated against the applicant on the basis of disability.  The applicant sought lost wages to the age of fifty-five, when she could have retired. Vice-Chair David Muir declined to order future lost wages, stating at paragraph 14:

As noted by the respondent, the Tribunal has not yet made an order of post-hearing wage loss. In my view such an award would be extraordinary and not likely to be made except in exceptional circumstances. One reason for this conclusion flows from my view that the obligation of the applicant to mitigate his or her damages runs together with a claim to damages for lost wages. It is obviously impossible to assess an applicant’s ongoing efforts to mitigate a wage loss post hearing. As such, any award of post-hearing damages for lost wages would be almost entirely speculative in the majority of cases. [underlining added]

The Tribunal’s concern, in my opinion, is without merit. Other decision-makers are able to deal with the speculative nature of future lost wages awards and the duty to mitigate. For example, in Adjemian v. Brook Crompton North America,[ii] a 2008 summary judgment decision of Justice Perell, the Court ordered damages for payment in lieu of notice for a period which concluded after the trial date. Rather than refuse to order these damages or shy away from the summary judgment process, Justice Perell stated at paragraph 28:

Although Ms. Adjemian is entitled to judgment, her judgment has come so quickly that it comes during the period in which she continues to have an obligation to mitigate. In these circumstances, the court can impose a trust requiring her to account for any mitigatory earnings…

Fear of Speculation Trumps the “Make Whole” Remedial Principles of the Code

In fairness, the Tribunal’s concerns have some merit. Yes it is difficult to assess an applicant’s job search efforts after the hearing. And yes the damages are “speculative” – the applicant could find new work tomorrow or pass away. Are these factors enough for the Tribunal to justifiably conclude that future lost wages would not be ordered except in the most “exceptional circumstances”?

In assessing the proper balance, the Tribunal fails to recognize that the speculative nature of these damages is also a significant concern for applicants. An applicant who has been terminated for discriminatory reasons and is still without a job come the hearing date has significant reason for “concern”.  Applicants are often in financially-tenuous situations, have families and dependents to support and good reason to question where and when they will get their next paycheque. Perhaps most important in the analysis is the reason why future employment and the quantum of lost wages is speculative – it is because the respondent has violated the applicant’s rights under the Code!

In fact, these factors were explicitly recognized by the Tribunal when dealing with another “speculative” area of loss – opportunity loss. In Chaudry v. Choice Taxi of Cornwall Inc.,[iii] Vice-Chair Leslie Reaume considered whether to order an applicant to become a shareholder as opportunity loss. In grappling with issues very similar to those raised in the two cases already addressed, the Tribunal stated:

…There was no evidence that the applicant was unsuitable as a candidate for shareholder in Choice, in fact, quite the opposite was proven. On the other hand, in April 2007, Choice was not actively looking for new shareholders…After April 2007, there was no reasonable or serious possibility that the applicant would ever have been offered the opportunity to become a shareholder.

Vice-Chair Reaume was uncertain as to whether the applicant would have become a shareholder but for the discrimination. It was “speculative”. Notwithstanding that uncertainty however the Tribunal correctly understood why the Applicant was in that position, ordered the applicant the opportunity to become a shareholder, and remained seized to deal with issues arising from that order, stating, inter alia:

…[the uncertainty] exists because of the conduct of the respondents and not the qualifications of the applicant…I cannot say exactly when after April 2007 the applicant might have become a shareholder but for the violation of the Code, but that is due to the conduct of the respondent… [underlining added]

Practical Realities of the Tribunal’s Refusal to Order Future Prospective Lost Wages

The unfortunate reality is that the refusal to order future prospective lost wages ensures that the Tribunal cannot place an applicant as reasonably as possible into the position he or she would have been in had the discrimination not occurred. Rather, the Tribunal is hinging the “make whole” principles on a superficial and tenuous factor – the hearing date. This carries undesired practical realities.

Respondents will inevitably be motivated to complete the hearing as quickly as possible, knowing that applicants’ wage loss ceases after the matter is concluded. We may see a decline in Tribunal-offered mediations. Why would a respondent mediate after all, when mediation extends the time to a hearing by approximately three to five months? Applicants on the other hand are motivated to extend the length of time to the hearing, which may motivate them to seek otherwise unnecessary adjournments or raise preliminary issues which will likely delay the hearing on the merits.

Hearing dates are mainly dependent on the Tribunal’s case load at any given time and the schedules of legal counsel. It is inherently unfair to cap an applicant’s remedy on this unprincipled and superficial basis.

Is there Hope for the Future?

While extensive jurisprudence has made it clear that the Tribunal does not apply the analysis used at common law in wrongful dismissal actions (character of employment, length of service, age and availability of similar work having regard to experience, training and qualifications of the employee), does that mean there isn’t anything that can be adopted from the common law approach when assessing future prospective lost wages?

Yes, the theoretical underpinning of the two damages are different – wrongful dismissal damages arise out of contract (an implied term in the employment contract), whereas human rights lost wage damages are compensatory. While the reasonable notice analysis does not apply in the human rights context, these concepts could very well apply to a future lost wage analysis beyond the date of the hearing. After all, isn’t that analysis primarily concerned with awarding a period of time that is reasonable in the circumstances for an employee to find alternative employment. Moreover, the reasonable notice period is often assessed prior to the completion of that period, making it, yes, get ready for it – speculative! Mitigation efforts are assessed at the time of trial. Courts do not simply cap the notice period because there is a speculative portion after trial, as we’ve already seen in Adjemian. There are other, more just ways to deal with issues that may arise.

There is some indication the Tribunal may be warming up to these damages (although Pilon, a later decision, seemingly suggests otherwise). In 2010, Vice-Chair Judith Keene released a well written and reasoned decision – McLean v. DY 4 Systems.[iv] In this decision the applicant sought prospective future lost wages and Vice-Chair Keene considered the following factors in determining the issue:

  • There were no performance concerns warranting termination;
  • The applicant enjoyed her work and had no plans to resign;
  • The applicant would have retired when she reached the age of 65;
  • The respondent was in a fortunate position, doing well and hiring more staff;
  • The applicant had a high school education, no “paper qualifications” and developed her skills entirely on the job, and
  • Given the applicant’s “significant disabilities” it would be difficult to find a job (supported by the fact that she was unable to find a job to the date of the hearing).

Rather than dismissing these damages as speculative, Vice-Chair Keene correctly assessed whether the applicant was likely to incur future prospective lost wages by looking at the employment relationship and the likelihood that the employee would have remained employed ‘but for’ the discrimination. The Tribunal also dealt with the risk of an employee finding new employment over a period of time, stating at paragraph 96:

If the applicant finds employment on a short-term or permanent basis, corresponding deductions can be made in the relevant 15-month timeframe between the date of the hearing and the date the applicant would have retired in any event…

One decision in the past two decades is not promising, but McLean offers hope for the future.

What Can Applicant Counsel Do?

Ask for prospective future lost wages. Cite McLean and build off the glimmer of hope Vice-Chair Keene has offered. The Tribunal’s reluctance to order prospective future wage loss is only part of the problem. Another, perhaps more important problem, is that these damages are rarely sought by applicants. Future wage loss (like reinstatement orders) are rarely requested and so rarely ordered. In turn, practitioners assume that future lost wage orders (like reinstatement) are rare and unrealistic. It is time for applicant-side legal counsel to request these damages and ensure that applicants have the opportunity to truly be placed in the position they would have been in “but for” discrimination – even after the hearing date.

End Notes

[i] (1992) 17 C.H.R.R. D/79 (Ont. Bd.Inq.)

Choosing the Right way instead of the Wrong one.

Last Friday, I presented at the Law Society of Upper Canada’s Six-Minute Employment Lawyer program. In front of a large audience, comprised on several management-side employment lawyers, I attempted to explain why the law in Ontario relating to disabled employees and frustration of contract is wrong. If I’m correct in my assessment, it means that employers across the province will be unable to, or at least have a much more difficult time, ending the employment relationship for employees who are absent for medical reasons for lengthy periods of time. I’m not sure I was the most popular presenter in the room (in fact, I’m certain I wasn’t), but perhaps the most nervous. In any event, I tried to provide a thorough analysis of the issue, which is difficult to do in only six minutes. Here is a detailed analysis of the argument I raised.

Let’s start with an example that I will refer to throughout this blog:

For the past 11 years George has been employed as a labourer at Vandalay Industries, a large manufacturing employer in Ontario. 4 years ago, George was diagnosed with depression and been on a medical leave of absence from the workplace since. George has regularly updated his employer on his medical status and last week provided the most recent update, which confirmed that he is still unable to return to work and will be unable to return for the reasonably foreseeable future.

Is George’s employment with Vandalay Industries at an end? Is his employment contract with Vandalay contract “frustrated” (no I don’t mean literally, but rather can the contract no longer be performed or is something so different from what the parties contemplated when George was first hired)? If it is, George’s employment is over.

The Common Law Doctrine of Frustration of Contract

Justice Swinton effectively summarized the doctrine in Antonacci v. Great Atlantic & Pacific Co. of Canada:

The doctrine of frustration applies when a contract became incapable of performance because, in the circumstances, performance would be radically different from that contemplated by the parties at the time they made the contract. Many cases have emphasized that the frustrating event must be beyond the contemplation of the parties…1

In the employment context, frustration of contract typically occurs when an employee becomes injured to the extent that they can no longer perform the essential duties of the job which formed the contract of their employment, or when an employee is temporarily injured, unable to perform their job, it is uncertain when they can return to work and they have been absent from work for a lengthy period of time.

The Common Law meets Statute: Frustration of Contract & the Ontario Human Rights Code

The doctrine of frustration of contract is only one consideration in the example above however. Another, equally important consideration that must be taken into account if the employee suffers from a disability (remember, most injuries or illnesses will be considered a disability for the purposes of the Ontario Human Rights Code) is the duty to accommodate to the point of undue hardship as set out in the Code.

Frustration of contract will not occur until the employer has satisfied the duty to accommodate. 2 The duty to accommodate ends when an employer establishes that it has accommodated an employee to the point of undue hardship. How is the doctrine of frustration reconciled with the duty to accommodate to the point of undue hardship?

If I asked the majority of employment lawyers (or even judges and adjudicators) this question they would likely point to Hydro Quebec, 3 a 2008 decision of the Supreme Court of Canada. This case stands for the proposition that undue hardship is established and the duty to accommodate ends when an employee has been absent for a sufficient period of time and is unable to return to work for the reasonably foreseeable future.

The only additional elements required by the undue hardship threshold in the Code is that the employee, even if accommodated, be unable to return to work for the reasonably foreseeable future. IF this is the correct recital of the current state of the law in Ontario then George is likely out of luck and his employment will come to an end.

Ontario Courts and Tribunals Misapply Hydro Quebec – The Law is Wrong (arguably)

Luckily for George, this quite arguably, is not the correct recital of the law. Let me explain. In Hydro Quebec the Supreme Court clarified the test to be used in assessing undue hardship. The statute the Court was dealing with was the Quebec Charter of Rights and Freedoms. In this statute, the Quebec Legislature did not explicitly set out the factors to be relied upon in assessing undue hardship and the test was left to the courts to determine. That is precisely what the Supreme Court did.

This case has subsequently been applied in Ontario without question and it is here that those courts and tribunals have arguably erred. Unlike the Quebec statute in question in Hydro Quebec, the Ontario Legislature has specifically and explicitly set out the factors to be applied in assessing undue hardship. The three factors set out in the Code are:

1. Cost,
2. Outside Sources of Funding, if any, and
3. Health and Safety Requirements. 4

When the Legislature has specifically set out the factors to be used in the analysis, the common law test set out in Hydro Quebec is unnecessary, and inapplicable. In other words, we don’t need the Court to tell us the test, because the Legislature, our elected representatives, have seen fit to do that for us. In this situation, courts and tribunals are simply tasked with applying the law.

Are the Three Factors to be Applied in Assessing Undue Hardship Exclusive?

One may argue that the factors set out the Legislature are “inclusive” rather than “exclusive”, meaning the courts and tribunals are permitted to consider factors other than those explicitly set out the Legislature.

In my opinion, this is incorrect. The Legislature did not use language to consider those are only “some of the factors” and there are others that can be considered. Rather the Legislature used language to suggest that undue hardship is assessed using the three explicit factors. Its relatively straight-forward – the three factors are exclusive. They are the only factors that can be considered by courts and tribunals. It is inappropriate to assess undue hardship using any other considerations that don’t substantially impact the legislated factors. There is considerable support for this position:

First, in a case commonly referred to as Meiorin, 5 the Supreme Court of Canada itself recognized that the common law test may be inappropriate when the factors have explicitly been set out by the Legislature. Specifically, in relation to the factors to be used in assessing undue hardship, the Court stated at paragraph 63:

…The various factors are not entrenched except to the extent that they are expressly included or excluded by statute. [bolding added]

Second, in Air Canada Pilots Association v. Kelly, 6 the Federal Court found that the Canadian Human Rights Tribunal was unreasonable in relying upon considerations other than those explicitly set out in the Canadian Human Rights Act (which are health, safety and cost). In other words, the Court was suggesting that those factors are exclusive.

Thirdly, the Ontario Human Rights Commission’s position is that three factors are exclusive. In their Policy and Guidelines on Disability and the Duty to Accommodate, the Commission states:

The Code sets out only three considerations. This means that no other considerations, other than those that can be brought into those three standard, can properly be considered under Ontario law…the Ontario legislature has seen fit to enact a higher standard by specifically limiting undue hardship to three particular components…7

Finally, in McDonald v. Mid-Huron Roofing, 8 the Human Rights Tribunal of Ontario addressed undue hardship and the factors that can be considered, stating at paragraph 42:

…The factors to be assessed are spelled out in section 11, and the applicable principles of statutory interpretation suggest that nothing other than those factors and any regulatory provisions be considered. Morale in the workplace has been suggested as a factor in assessing “reasonable accommodation” by the Supreme Court…however, that decision and others were based on human rights legislation of other jurisdictions, which are differently worded…

If Vice-Chair Keene recognized this principle in 2009, why is it that courts and tribunals since that time have applied Hydro Quebec in Ontario without question? Over the past decade decision-makers in Ontario have demonstrated a tendency to follow leading Supreme Court of Canada cases even when the Ontario statute in question or legal framework in Ontario is different. Call it what you will, it does not mean that the legal analysis is proper and often results in legally unsound law (like the application of Hydro Quebec in Ontario).

If the Hydro Quebec is Inapplicable in Ontario, What is the Law on Frustration of Contract and Undue Hardship?

If Hydro Quebec is inapplicable in Ontario what does that mean? It means that undue hardship can only be established through an assessment of the three factors set out in the Code. Taking this a step further it also means that undue hardship will be not established in Ontario solely on the basis that an employee cannot return to work for the reasonably foreseeable future. This means, that frustration of contract is much more difficult to apply in Ontario than previous thought (and likely still thought by counsel who are unwilling to question what they perceive to be established legal principles).

As previously mentioned, it is well-established that an employment contract will not be frustrated in relation to employee in Ontario with a disability until the employer has discharged the duty to accommodate and established undue hardship. If undue hardship can only be established in relation to the three legislated factors, this poses a significant problem for employers.

Only one of the three legislated factors is related to a lengthy absent and the inability to return to work in the reasonably foreseeable future – cost. Jurisprudence has demonstrated that the threshold to establish undue hardship through cost is a high. The Ontario Human Rights Commission’s position on this issue is that costs must be “so substantial that they would alter the essential nature of the enterprise, or so significant that they would substantially affect its viability”. 9 It is possible that undue hardship can be established in a situation where an employee is absent for a considerable period of time, the employer is relatively small, and the costs of permitting the employee to remain employed on a leave are prohibitive. In most cases, for most employers however, this will simply not be the case.

In relation to employees with disabilities, frustration of contract is not dead per say, but with the correct application of the undue hardship analysis, it is close. The good news is, George might get to keep his job at Vandalay Industries.

One final point I’d like to address is the practical implications of the position I have put forward. Yes, employers may be unable to terminate employees who are absent for a considerable period of time and that may not be desirable by all – or most. To be clear I am not advocating that this should or should not be the case, I am simply advocating for proper legal analysis and sound legal principles. If the outcome is undesirable in your view, it would seem to me that your issue lies with the Ontario Legislature who legislated the three factors to be relied upon in the undue hardship analysis.

ENDNOTES

(1) Antonacci v. Great Atlantic & Pacific Co. of Canada, [1998] O.J. No. 876 at paragraph 37.

(2) Ontario Human Rights Commission v. Jeffrey, [2007] O.J. No. 3767 (Ontario Divisional Court) at paragraph 71.

(3) Hydro-Quebec v. Syndicat des employe-e-s de techniques professionelles et de bureau d’Hydro-Quebec, section locale 2000 (SCFP-FTQ), [2008] 2 S.C.R. 561 (Supreme Court of Canada) at paragraphs 12, 17 and 18.

(4) Ontario Human Rights Code, R.S.O. 1990, c. H.19 – sections 7 and 11.

(5) British Columbia (Public Service Employee Relations Commission) v. BCGSEU (“Meiorin”), [1999] 3 S.C.R. 3 (Supreme Court of Canada) at paragraph 63.

(6) Air Canada Pilots Association v. Kelly, [2011] FCJ No. 152 (Federal Court) at paragraph 402 . (Note this decision was overturned by the Federal Court of Appeal in 2012 FCA 209, however not on the issue of the Federal Court’s interpretation of the Canadian Human Rights Act).

(7) Ontario Human Rights Commission’s Policy and Guidelines on Disability and the Duty to Accommodate, located online at http://www.ohrc.on.ca/en/book/export/html/2461 at page 22 of 36 (under Section 5 entitled “Undue Hardship”).

(8) McDonald v. Mid-Huron Roofing, [2009] O.H.R.T.D. No. 1277 (Human Rights Tribunal of Ontario – Vice-Chair Judith Keene)

(9) Ontario Human Rights Commission’s Policy and Guidelines on Disability and the Duty to Accommodate, located online at  http://www.ohrc.on.ca/en/book/export/html/2461 at page 25 of 36 (under Section 5.3.1)