The Federal Court of Appeal recently issued a decision overhauling the state of federal employment law. In Wilson v Atomic Energy of Canada Ltd, 2015 FCA 17, the Court  rejected the generally accepted approach to unjust dismissal complaints under the Canada Labour Code (“Code”), which applies to workers who are employed in federally regulated industries. The decision in Wilson has profound implications for non-unionized federally regulated employees. Mr. Wilson is currently seeking leave to appeal the Federal Court of Appeal’s decision to the Supreme Court of Canada.

Background on termination of employment of unionized and non-unionized employees

Unionized workers can only be dismissed with just cause

For most unionized workers, terms and conditions of employment are governed by collective agreements which include a requirement that the employer only terminate an employee where there is just cause for dismissal. Just cause is a high threshold for an employer to meet and provides substantial protection for unionized workers.

Non-unionized federal workers cannot be dismissed “unjustly”

Section 240 of the Code provides non-unionized federal workers with the right to make “unjust dismissal” complaints, provided they have been employed for at least 12 months and they allege that they have been dismissed “unjustly”. The Code also provides statutory remedies for federal workers who are dismissed unjustly, including reinstatement to employment, which are not available to non-unionized provincial workers.

Non-unionized provincial workers can be dismissed without cause

At common law, non-unionized employees who work for provincially regulated employers – the vast majority of employers in Canada – can be dismissed without cause provided that employers provide reasonable notice of termination, or pay in lieu or reasonable notice. A dismissal that is both without cause and without reasonable notice is a wrongful dismissal. Read more about termination in the provincial sphere here.

The Pre-Wilson Approach to Unjust Dismissal Complaints under the Code

Prior to Wilson, there was an established line of cases holding that federal employers could only dismiss employees for cause, similar to the just cause protections provided for in collective agreements. Leading employment law scholars, Innis Christie and Geoffrey England, have explained that the Code’s unjust dismissal provisions were intended to:

“provide the non-unionized employee with substantially similar protections against unjust discharge as the unionized employee enjoys under a collective agreement.”

However, Code adjudicators have disagreed on this point and there are conflicting decisions on whether the Code permits dismissals on a without cause basis. As Code adjudicators are bound by decisions of the Federal Court of Appeal, Wilson settles the disagreement, unless the Supreme Court of Canada grants leave to appeal and weighs in on the issue.

Wilson v Atomic Energy of Canada Ltd

A Code adjudicator determined that AECL had violated the Code by terminating Wilson on a without cause basis. AECL applied for judicial review of this decision at the Federal Court, and the Federal Court overturned the adjudicator’s decision. Mr. Wilson appealed the Federal Court’s decision to the Federal Court of Appeal.

A dismissal without cause is not “unjust”

In Wilson, the Federal Court of Appeal concluded that:

• a dismissal without cause is not automatically unjust under the Code;
• this is consistent with the common law of employment, which allows for dismissal without cause so long as the reasonable notice requirement is met; and
• the Code cannot be interpreted as giving non-unionized employees a “right to the job” or attempting to place unionized and non-unionized employees in the same position.

Code adjudicators must determine if a dismissal is “unjust” in all of the circumstances

The Court also explained the role of Code adjudicators in unjust dismissal complaints:

• it is up to Code adjudicators to look into the circumstances of each case to determine if the dismissal was “unjust”; and
• adjudicators do not have “free rein” to find a dismissal unjust on any basis, although the fact that an employer has paid an employee severance pay does not preclude a finding that the dismissal was unjust.

However, beyond commenting that “unjust” is a term that “sits alongside and gathers much, if not all, of its meaning from well-established common law and arbitral cases concerning dismissal”, the Court declined to interpret the meaning of “unjust”. It will now be up to Code adjudicators to determine the meaning of “unjust” through the development of case law.

Supreme Court will decide whether to weigh in on this dramatic change for federal employees

The Federal Court of Appeal’s decision marks a major departure from an established line of cases, and creates considerable uncertainty in the law going forward. The Federal Court of Appeal left open the meaning of “unjust”, the very basis for section 240 complaints, which may now make it more difficult for a worker to assess the merits of an unjust dismissal complaint. Mr. Wilson’s leave application will thus be closely followed by federal workers and their advocates, who undoubtedly hope the Supreme Court will intervene on this important issue.

Some of the questions that may be raised, if the appeal is heard by the Supreme Court, include:

• What, if any, differences are there between a common law wrongful termination and an unjust dismissal under the Code?
• Is it contrary to the policy reasons for section 240 of the Code to permit terminations “without cause”?
• Will reinstatement remain available as a remedy for unjust dismissal complaints under the Code, if employers are now permitted to terminate without cause? If so, under what circumstances will it be ordered?

It is hoped that an appeal before the Supreme Court will bring clarity to these issues, and resolve them in a manner that is consistent with the protections Parliament intended to afford to federally regulated employees.

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]

On May 14, 2015, Morgan Rowe and University of Ottawa Professor Ravi Malhotra celebrated the launch of the paperback version of their book, Exploring Disability Identity and Disability Rights through Narratives: Finding a Voice of Their Own. The event was a resounding success, with the first order of the book selling out before the end of the event. Morgan would like to thank everyone who came out and contributed to making the event such a success.

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Morgan Rowe will be celebrating the paperback launch of her book, Exploring Disability Identity and Disability Rights through Narratives: Finding a Voice of Their Own, on May 14, 2015. The book explores the relationship between disability, human rights, and personal identity in the lives of Canadians with disabilities. The book launch is being hosted by Octopus Books. More details about the event can be found here.

Andrew Astritis will be presenting at the 2015 Accommodation Law Conference, hosted by Labour Law Online – Centre for Labour-Management Development. The conference, which takes place on April 22 and 23, 2015 at the Chateau Laurier in Ottawa, will address recent development in human rights and accommodation law, including a summary of recent cases in the area. More information on the conference is available here.

On Friday, March 20, 2015, Andrew Astritis participated in an upper-year human rights seminar in the University of Ottawa’s common law program. The class addressed developments in family status accommodation, including the decision in Canada (Attorney General) v Johnstone. Andrew Raven and Andrew Astritis appeared as counsel on behalf of Ms Johnstone.

RavenLaw was proud to sponsor the 16^th Annual County of Carleton Law Association/ Great Canadian Theatre Company Lawyer Play. The annual fundraiser supports the operations of Great Canadian Theatre Company (GCTC) and benefits a charity partner, which this year was StreetSmarts. Over the last 15 years, the Lawyer Play fundraiser has raised over $1.2 million dollars for GCTC and designated charity partners. Each year, the play’s cast is composed entirely of members of Ottawa’s legal community. This year’s play, Parfumerie, ran from April 15 – 18, 2015 and featured RavenLaw lawyer Amanda Montague-Reinholdt as Miss Ritter.

In addition to compensation for long-term disability benefits, it is possible to also claim damages for mental distress from the insurance company, as well as punitive damages to punish the company for its conduct. However, to successfully claim these amounts, the relevant legal tests must be satisfied. The Ontario Court of Appeal recently rendered a decision which clarifies the test to be applied in determining punitive and mental distress damages.

Background

In Fernandes v Penncorp Life Insurance Company, 2014 ONCA 615, the plaintiff ran a successful brick laying business in Kitchener, Ontario, when he injured his back after two separate falls. After the second fall, he never worked as a brick layer again. Mr. Fernandes was, at the time of his injury, 40 years old with an equivalent of a grade 8 education.

The trial judge awarded the plaintiff approximately $236,000 in compensation, and also awarded significant punitive and mental distress damages. Mr. Fernandes was awarded $200,000 in punitive damages because the insurance company had not “dealt with the claim fairly and in a balanced way”. He was also awarded $100,000 for mental distress damages for the failure of the insurance company to pay him what they had contracted to pay him. Notably, Mr. Fernandes had originally only sought $25,000 for these mental distress damages. Finally, Mr. Fernandes was awarded full legal costs amounting to about $212,000.

The insurance company appealed the trial judge’s decision regarding the awards for punitive and mental distress damages, as well as full indemnity costs.

Decision of the Ontario Court of Appeal

The Ontario Court of Appeal allowed the appeal in part, reducing the legal costs awarded by $30,000 and reducing the mental distress damages awarded. However, the Court upheld the finding that punitive and mental distress damages were payable in respect of Mr. Fernandes’ treatment by the insurance company.

Punitive Damages

The Court summarized the key applicable principles for a finding of punitive damages as follows:

• Punitive damages are designed to address the objectives of retribution, deterrence and denunciation, not to compensate the plaintiff.
• They are awarded only where compensatory damages are insufficient to accomplish these objectives.
• They are the exception rather than the rule.
• The impugned conduct must depart markedly from ordinary standards of decency; it is conduct that is malicious, oppressive or high-handed and that offends the court’s sense of decency.
• In addition to the breach of contract, there must be an independent actionable wrong.
• In a case of breach of an insurance contract for failure to pay insurance benefits, a breach by the insurer of its contractual duty to act in good faith constitute an independent actionable wrong.

Applying those principles, the Court of Appeal found that there was sufficient evidence to support the conclusion that punitive damages were appropriate in Mr. Fernandes’ case.

Mental Distress Damages

The Court noted that the Supreme Court of Canada in Fidler has held damages for mental distress for breach of contract may be awarded “where they are established on the evidence and shown to have been within the reasonable contemplation of the parties at the time the contract was made”. This however, does not obviate the need to prove the actual loss.

Here, both parties agreed that an objective of the insurance policy was to secure a psychological benefit and that at the time, the parties reasonably contemplated that the failure to pay benefits could cause the respondent mental distress. However, the insurance company contested the amount awarded.

The Court noted that there was no good explanation how the trial judge had arrived at the figure of $100,000, or what facts justified such an amount. It noted further that the award appeared inordinately high and entirely disproportionate, as compared to other awards and noted that the award was four (4) times greater than that requested by Mr. Fernandes. It finally noted that mental distress damages are to be compensatory and not punitive and reduced the award from $100,000 to $25,000.

Commentary

In order to successfully bring a claim for punitive damages or mental distress damages in the context of an LTD claim, it is important to advance the facts upon which those claims can be supported. The trial judge must have a factual basis to grant the amounts sought, and which will satisfy the tests as articulated in the Ontario Court of Appeal’s judgment.

When initiating a proceeding regarding a denial of long-term disability benefits, you should discuss the possibility of seeking punitive or mental distress damages with a disability benefits lawyer.

We are here to help navigate the LTD application process. Consult one of our experienced Long Term Disability lawyers at Raven, Cameron, Ballantyne and Yazbeck LLP if you are considering making a claim for disability benefits or if your claim for benefits has been denied.  

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]

RavenLaw was proud to support the 4^th annual Ottawa Rape Crisis Centre Spin-A-Thon on Saturday, April 25^th. The firm provided a financial donation to support the participation of a Ravenlaw team. The ORCC is dedicated to eradication violence against women and providing support to survivors and the people who love them. All proceeds from the event will go towards ongoing short- and long-term counseling for survivors, the 24-hour Crisis Line and raising awareness in the Ottawa community.

Ravenlaw lawyers Amanda Montague-Reinholdt, Dayna Steinfeld and Morgan Rowe participated in the 7-hour Spin-a-Thon with articling students Taylor Akin and Daniel Tucker-Simmons.

Please note that our office will be closed on Friday, April 3, 2015 and Monday, April 6, 2015.

May 1^st, also known as May Day or International Workers’ Day, has long stood as the date on which workers gather to celebrate the past victories of the labour movement and to advance ongoing concerns facing workers around the world. While May Day has its roots in the historical labour struggles in Canada and the United States, it has become a touchstone for worker’s rights and labour activism that remains relevant to this day.

History of May Day

In the late 19^th century, when participating in union activity was a criminal act, workers in Canada and the United States joined in collective action to protest working conditions. This struggle centred on the fight for shorter working hours without a cut in pay. At the time, working conditions were dangerous and workers often had no choice but to work 10 hours a day or longer. Workers organized and agitated to fight for improvements in their working lives.

The Struggles of Canadian Workers

In Canada, the Toronto Typographical Union went on strike in 1872 as part of the “Nine-Hour Day” movement. Although this initial job action yielded little result, a parade held a few weeks later in support of the striking workers drew over 10,000 people. Meanwhile, George Brown, the editor of the Toronto Globe and a politician, sent the police after the striking workers, resulting in 24 arrests. This only further galvanized support for the striking workers, leading to further protest. In response, Prime Minister John A. MacDonald promised to repeal the anti-trade union laws which made participating in union activity criminal, and later the same year, the Trade Unions Act was passed.

In the years following this victory for Canadian workers, parades were organized to mark the catalyst Toronto job action. Eventually, in 1894, the federal government declared Labour Day an official holiday.

The American Origins of May Day

In the United States, the struggle for an 8-hour working day came to a head on May 1, 1886 when more than 300,000 workers across the country walked off the job in peaceful protest. In Chicago, 40,000 workers went on strike. The protest continued and the number of workers swelled each day.

On May 3, police in Chicago began to use violent measures against the striking workers. This led the Chicago workers to organize in protest of the police tactics on May 4. The events of May 4 are now referred to as the “Haymarket Affair”. Towards the end of the day of peaceful protest, when only a few hundred people remained at the protest at Haymarket Square, a delegation of approximately 160 weapons-bearing police officers marched on the Square to disperse the protest. As the police approached, a bomb was thrown, although to this day it is not known who threw it. In the panic that followed, the police began firing their rifles. In the end, seven police officers and four workers died.

The response to the Haymarket Affair was swift and severe. Martial law was declared across the country. Eight men from the labour movement were tried and convicted, with seven sentenced to hang.

In 1889, an American delegate to a labour convention in Paris asked that May 1 be declared International Labour Day to mark the deaths of the men who died in the Haymarket Affair. However, when President Grover Cleveland decided to declare an official holiday in “honour of the working man” in 1894, he chose to follow the Canadian example, recognizing the first Monday in September, instead of May 1, out of concern that celebrating May Day would encourage “rabble-rousing”.

May Day Today

Today, May Day remains an important date for commemorating the gains achieved by trade unionists in the late 19^th century.

Even more importantly, however, May Day has become an international day of labour activism and protest to recognize that struggles that remain for workers today. Workers in countries across the world use this date to hold annual demonstrations advocating for advances to workers’ rights, such as increases to minimum wage, improvements to working conditions, and greater protections for the rights of vulnerable workers.

While May Day marches are sometimes contentious issues, with some governments seeking to ban them outright, May Day’s larger legacy is one of peaceful labour activism. It is a reminder of the progress that can be made when workers join together to pursue their goals collectively.