Introduction

An employee who was repeatedly sexually harassed by a co-worker sued her employer after being dismissed. In addition to normal damages for wrongful dismissal, the trial judge awarded her C$60,000 for moral damages, plus damages for the employer's violation of human rights laws.

The Ontario Court of Appeal recently upheld this award in Doyle v Zochem Inc (2017 ONCA 130) and dismissed the employer's appeal. This decision is a stark reminder of the importance of properly investigating employee complaints. It also confirms that both moral damages and damages under human rights laws may be awarded to an employee without it being characterised as 'double dipping'.

Facts

MD worked at Zochem Inc for nine years, supervising an all-male group of refinery workers. She was the only woman working there. BR was the plant maintenance manager, and Zochem considered him to be irreplaceable. In the course of their work, BR sexually harassed MD, making frequent inappropriate and belittling comments.

Before a July 14 2011 meeting, BR and another co-worker had been informed that MD was to be dismissed. During the meeting, BR and the co-worker ignored the harassment issues raised by MD and demeaned and belittled her. MD left the meeting in tears. Still unaware that she would soon be dismissed, she made a complaint of sexual harassment. Zochem did a cursory investigation and heard from BR, but did not give MD an opportunity to respond. Five days later, MD was dismissed without cause. She had to go on medication for anxiety.

Trial judgment

MD filed a wrongful dismissal claim seeking, among other things, moral damages for the manner of her dismissal. She also sought general damages for breach of the Ontario Human Rights Code arising from the toxic work environment and her retaliatory dismissal following her complaint. Zochem defended itself by arguing that it had discovered just cause for her termination after the fact.

The trial judge found no evidence of just cause and determined that MD had been wrongfully dismissed. She was awarded damages in respect of a 10-month notice period. Further, after finding no documented concerns with her performance, the trial judge held that the manner of her dismissal warranted an additional C$60,000 in moral damages.

Factored into this decision were the facts that:

  • Zochem had known that MD suffered from depression before her dismissal;
  • the response to MD's sexual harassment complaint had been inadequate;
  • the self-serving investigation of MD's complaint had been unfair;
  • the termination itself had been "cold and brusque"; and
  • MD had been pressured to sign a release on her departure.

Finally, the trial judge awarded a further C$25,000 for damages under the human rights statute, as Zochem had had an obligation to investigate MD's complaint properly and the hurried, biased investigation had been insufficient.

Appeal decision

Zochem appealed only the amount of damages awarded, arguing that C$20,000 was a more appropriate amount for moral damages. Zochem also argued that the amount of damages awarded pursuant to the Human Rights Code should be deducted from the award of moral damages. The company's rationale was that the same conduct was the basis for both awards.

The Court of Appeal disagreed and dismissed Zochem's appeal, holding that the amount of damages awarded to MD was not high enough to warrant intervention on appeal. Further, the awards of moral damages and code damages served distinct legal purposes. Moral damages are awarded as a result of the manner of dismissal, where the employer engages in conduct that is unfair or in bad faith. By contrast, code damages are remedial, and not punitive, in nature.

Costs were awarded against Zochem on a "substantial indemnity scale" (ie, recovery of most of her legal costs). This was done on the basis that Zochem's appeal was a continuation of its oppressive conduct towards MD.

Comment

This case highlights the importance of properly investigating employee complaints. Both the trial and appeal judgments were critical of the employer's response to the sexual harassment allegations. To avoid these issues, employers should adhere to the following best practices:

  • A safe, confidential process should be established for employees to lodge a complaint.
  • Complainants should be removed from the work environment while an investigation proceeds.
  • If possible, an external firm or trained human resources staff should conduct investigations.
  • If an investigation is conducted internally, it should proceed in as thorough, uniform and unbiased a manner as possible. Notes of interviews should be recorded in an impartial manner.
  • Complainants should be informed of the outcome of an investigation as soon as possible.

This decision is also an important reminder of the fact that employees may be awarded amounts under various types of damage, even if the underlying conduct overlaps. Employers that do not follow these best practices could wind up with a steep payday.

For further information on this topic please contact Hannah Roskey at Fasken Martineau DuMoulin LLP by telephone (+1 416 366 8381) or email (hroskey@fasken.com). The Fasken Martineau DuMoulin LLP website can be accessed at www.fasken.com.

This update was reprinted with permission from Northern Exposure, a blog written by lawyers in the labour, employment and human rights group at Fasken Martineau, and produced in conjunction with HRHero.com.

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