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Labour (Fed) - Damages. Canada (Attorney General) v. Lyons
In Canada (Attorney General) v. Lyons (Fed CA, 2023) the Federal Court of Appeal considered the awarding of aggravated and punitive damages, here in an unusual JR labour tribunal context:[1] In 2020, the Federal Public Sector Labour Relations and Employment Board (the Board) allowed the respondent’s grievance on the merits, determining that the termination of her employment as a correctional officer with Correctional Service Canada was excessive (2020 FPSLREB 122). The Board substituted the termination of employment by a one-month suspension without pay. The applicant did not seek judicial review of that decision.
[2] Two years after the merits decision, the Board rendered a subsequent decision with respect to damages (2022 FPSLREB 95) whereby it ordered aggravated damages for psychological harm suffered by the respondent ($135,000) as well as punitive damages for the denial of the respondent’s right to natural justice ($75,000) and obstruction to the administration of justice ($100,000). This is the decision challenged by the applicant before our Court.
[3] Essentially, the applicant contends that the aggravated and punitive damage awards are unreasonable as they do not accord with the applicable jurisprudential framework.
[4] During the hearing before our Court, the debate mostly centered around the Supreme Court’s leading decision on punitive damage awards, Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595 (Whiten), and, more particularly, the principle of “proportionality”. The applicant contends that the Board misapplied the Whiten factors and thus failed to consider the “proportionality” of the punitive damages awarded in the present case.
[5] The applicant’s contention is unpersuasive when considered in light of a careful reading of Whiten. Indeed, although the Board does not explicitly refer to a proportionality analysis in its reasons, this is not fatal to the decision. The Board weighed the relevant factors set forth by the Supreme Court in Whiten and, in particular, considered the other damages award, addressed the need for additional damages (punitive), and it is clear, when the reasons are read as a whole, why, in the Board’s view, the punitive damages award was not disproportionate in the context of the specific circumstances of this case, hence falling within the “bounds of rationality” (Whiten at paras 123, 128). The Board’s 67-page decision, again, when read as a whole, addresses the relevant factors throughout its analysis, as is evidenced at paragraphs 179–86, 231–35, 240, 243–44.
[6] Overall, the Board’s decision is detailed and it thoroughly addresses the evidence and relevant jurisprudence. The Board’s decision bears the hallmark of reasonableness: it is justified, transparent, and intelligible and falls within the range of acceptable outcomes (Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th) 1). . Amer v. Shaw Communications Canada Inc.
In Amer v. Shaw Communications Canada Inc. (Fed CA, 2023) the Federal Court of Appeal reviews the development of the employment damages remedy of severance pay, here in a federal labour context:(1) Severance Pay as Part of an Award of Damages in Lieu of Reinstatement
[75] I turn now to the Adjudicator’s damages award, which included compensation for lost wages and benefits and compensation for severance pay. With respect, the Federal Court misunderstood the holding of the Supreme Court of Canada in Wilson. That case says nothing about the heads of damages available in an unjust dismissal case. Rather, as noted, the issue in Wilson was whether payment of a generous severance package barred an employee from accessing the remedy of reinstatement available under Division XIV of Part III of the Code. The Federal Court erred in reading Wilson as somehow circumscribing the Adjudicator’s remedial authority.
[76] A long line of arbitral authority from the unionized context supports the Adjudicator’s award of severance pay. Orders for payment of compensatory damages beyond compensation for lost wages and benefits are often made where an employee is dismissed without cause and reinstatement is not awarded. The amounts so awarded are sometimes significant and are awarded to recognize that, where reinstatement is not appropriate, the employee has lost the right to the job protection that comes with a bargaining unit position from which the employee cannot be terminated without cause.
[77] Indeed, in the leading text, Canadian Labour Arbitration, the authors state at paragraph 2:14 that “it is now commonplace to structure damage awards to compensate for the loss of value of employment within a bargaining unit where reinstatement is not warranted”: Adam Beatty, David M. Beatty & Donald J.M. Brown, Canadian Labour Arbitration, 5th ed (Carswell, 2019) at para. 2:14. The authors cite to dozens of arbitral awards in support of the commonplace nature of such a remedy.
[78] This type of award was also discussed by this Court in Bahniuk v. Canada (Attorney General), 2016 FCA 127, 265 A.C.W.S. (3d) 933 at paragraphs 7-8 as follows:In the decision under review […] the adjudicator stated that he had chosen to apply what has been termed the “economic loss approach” to fashioning damages and attempted to quantify the value of the loss of the appellant’s bargaining unit position […]. Under this approach, which has been adopted by several labour arbitrators, damages are fixed on a different basis than damages at common law for wrongful dismissal, which are based on a reasonable notice period. Under the economic loss approach, damages are premised on the basis that the loss of job security inherent in a bargaining unit position needs to be quantified by applying the following steps:1. Calculate the maximum value of the salary the grievor could have earned in the bargaining unit position had he or she been reinstated;
2. Add to that amount the value of lost benefits associated with the bargaining unit position over the same period; and
3. Reduce the sum to reflect various contingencies that might have prevented the grievor from continuing in the employment. Some arbitrators further reduce the foregoing sum to reflect a grievor’s mitigation obligation.
In most of the decided cases, if there is a reduction for mitigation, it is done on a percentage basis with reference to the entire period in respect of which damages are awarded (see, e.g., George Brown College of Applied Arts and Technology v. Ontario Public Service Employees Union, 2011 CanLII 60727 (ON LA), 214 L.A.C. (4th) 96, [2011] O.L.A.A. No. 459 at paragraphs 35-36 […; Hay River Health and Social Services Authority v. Public Service Alliance of Canada, 201 L.A.C. (4th) 345, [2010] C.L.A.D. No. 407 at paragraphs 143, 149 [79] Similar compensatory awards have sometimes been made in adjudications under Division XIV of Part III of the Code: see e.g. Steven Szabo v. Canadian Pacific Railway Company, 2022 CIRB 1019 at paras. 78-95; Oscar Johnson v. Pabineau First Nation, 2023 CIRB 1056 (CanLII), at paras. 80-89.
[80] I therefore conclude that an adjudicator (or now the Board) may award statutory severance pay under the Code (or even greater amounts), in addition to damages for lost wages and benefits, where reinstatement is not awarded and it is appropriate to compensate for the loss of protection available under Division XIV of the Part III of the Code. Thus, an award of this nature is not, of itself, unreasonable.
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