For the first time, the British Columbia Supreme Court has addressed the issue of deducting certain amounts awarded under the B.C. Employment Standards Act ("ESA"), from the damages recoverable in a wrongful dismissal action.
In Roy v Metasoft Systems Inc. 2013 BCSC 1190 ("Roy"), the Court accepted the employer's argument that failing to set-off the amount of a Determination under the ESA would amount to an unwarranted double recovery.
In Roy, the plaintiff employee was a sales consultant who advised her employer in 2010 that she had not received all of the commissions to which she was entitled. The employee was not satisfied by the resolution of the matter and proceeded to file a complaint, alleging that the company had failed to pay compensation for length of service and had refused to continue to employ her in contravention of the ESA.
In November 2011, the Director of Employment Standards issued a Determination which found that the employer had contravened the ESA, and rendered a $500 administrative penalty. In addition, as a result of these findings, the employee was also awarded with lost "wages" for a period of six months pursuant to section 79(2)(c) of the ESA, which requires the employer to "pay a person compensation instead of reinstating the person in employment".
Less than six months after the Determination was issued, the plaintiff commenced a civil action claiming, amongst other things, damages for wrongful dismissal. In its Response to Civil Claim, the defendant employer pleaded that the ESA award "constituted both statutory compensation for length of service and compensation to address what the plaintiff would have earned in lieu of reinstatement." The former employee argued that the ESA award was granted as a remedy against an employer for behaving in a way that obstructs the operation of the ESA and as a result, it ought not to be deducted from the common law damage award for breach of contract.
After a thorough analysis, Mr. Justice Joyce agreed with the defendant that section 79(2)(c) of the ESA was largely compensatory in nature, and its purpose is to make the employee "whole". As a result, the failure to set-off this amount would result in double recovery. Further, the Court held that this conclusion accords with the law in Ontario with respect to the same issue involving similar legislation.
The Roy case is important for employers as it now affirms the fact that compensatory payments made under the ESA are to be set-off against wrongful dismissal damages. It is worthy to note, however, that the set-off does not mean an employee is barred from bringing an action when there has been a Determination pursuant to section 79(2)(c). In fact, employers should be aware that the Court noted that, in fact, an employee's damages for wrongful dismissal may actually exceed the amount of the determination. This may lead to the interesting result that employees with employment standards complaints could well now be more inclined to proceed directly with civil claims in the courts.