Recent Developments Relating to the Awarding of Damages within an Employment Law Context: A Unifying Theory

• Author: Janice B. Payne and Ted J. Murphy
• Pages: 465-500

Recent

Developments Relating

to the

Awarding

of

Damages

within

an

Employment

Law

Context:

A

Unifying Theory

Janice

B.

Payne

& Ted J.

Murphy"

A.

INTRODUCTION

At

first

blush,

the

particularization

of

employment

law

damage awards

might

appear,

to the

uninitiated,

to be

relatively straightforward.

After

all,

wrongful

dismissal damage awards simply

focus

upon

the fixing of

a

notice period

for the

affected

employee, followed

by the

determination

of

the

employee's various losses during that notice period. This

calcula-

tory

process

is

only mildly complicated

by the

factoring

of any

notice-

period mitigation

on the

part

of the

affected

employee into

the

mix.

Of

course, employment law,

and the

various damage

issues

that

arise

thereunder,

are not

nearly

so

simple

and

straightforward.

The

"straight-

forward"

wrongful dismissal damage calculation

is

becoming increas-

ingly complicated

by

various

sub-issues,

such

as how to

deal with lost

variable

forms

of

income

and the

continuing evolution

of

Wallace

dam-

ages.

In

addition, there

are a

multiplicity

of

available employment

law

heads

of

damages beyond baseline

wrongful

dismissal losses, such

as

damages

for

disability

benefit

losses, mental distress damages,

and ag-

gravated/punitive

damages, that

differ

in

analytic approach

from

the

"typical" notice period mode

of

damage assessment.

Janice

B.

Payne

& Ted J.

Murphy

are

members

of the

Employment

Law

Group with

the

Ottawa-based

firm

of

Nelligan O'Brien

Payne

LLP.

465

*

466

JANICE

B.

PAYNE

& TED J.

MURPHY

In

fact,

perhaps

the

most appropriate means

of

broadly characteriz-

ing

current employment

law

damage issues

is to

recognize that there

is

a

multiplicity

of

such issues

in

play,

and

that

the

majority

of

these issues

are

relatively distinct

from

one

another, structured around disparate

analytical

approaches.

The

goal

of

this paper

is to

provide some commentary

on

recent

de-

velopments with respect

to a

number

of

these various employment

law

damage issues,

and it

will

do so.

However,

a

broader consideration

of

these recent developments suggests

that,

despite

the

marked

differences

in

categorization

and

approach associated with

the

topical areas

in

ques-

tion,

it may be

possible

to

group these disparate strands

of

jurispruden-

tial

development together under

the

umbrella

of a

unifying

theme.

The

recent

jurisprudential

developments highlighted within this

paper

are all

capable, admittedly

to

varying degrees,

of

characteriza-

tion

as

illustrative

of an

increasingly express recognition

on the

part

of

the

courts

of the

relational nature

of the

employment contract,

and

that

inequality

of

bargaining power

and

employee vulnerability

are

factors

endemic

to the

typical employment

relationship.1

While such

an

approach

can be

said

to

have marked much

of the

Supreme Court

of

Canada's big-picture employment

law

jurisprudence

during

the

19905,

our

analysis

of

recent developments

referable

to em-

ployment

law

damages issues suggests that this approach

now

appears

to

be

trickling

down

into

the

various provincial trial-level

and

appellate

courts,

and

into

the

more discrete areas

of

employment

law

develop-

ment, such

as

damage analysis.

B.

THE

EFFICIENCY

PARADIGM VERSUS

THE

RIGHTS

PARADIGM

In the

third edition

of his

employment

law

text,

Geoffrey

England devel-

oped

the

theory that,

from

the

19505

until

the

late

19805,

our

legislators

and

courts were operating primarily under

a

"rights paradigm"

in

their

approach

to the

legal regulation

of

employment.2

This analytical approach

was

inspired

by

Brian Etherington,

Supreme

Court

of

Canada

Decisions

and the

Common

Law

of

Employment

in the

19903:

Shifting

the

Balance

Between

Rights

and

Efficiency

Concerns

(1999)

78

Can.

Bar

Rev. 200. Much

of the

fol-

lowing summary descriptions

of

Professor England's musings

as to the

rights

and

efficiency

paradigms

is

also drawn

from

this

article.

England,

Christie

&

Christie,

Employment

Law in

Canada,

3d

ed.,

looseleaf

(Markham,

ON:

Butterworths,

1998)

at

paras.

1.1-1.36.

Recent

Developments

Relating

to the

Awarding

of

Damages

... 467

Professor

England postulated

that,

when operating under

a

rights

paradigm,

legislators

and

courts

tend

to be

much more

willing

to in-

tervene

to

protect

the

rights

and

interests

of

employees, recognizing

that, under

a

pure

freedom

of

contract model, employees will generally

be

vulnerable

in

their dealings with employers,

who

tend

to

have

far

greater bargaining

power.3

Professor

England pointed

to the

tremendous growth

in

human

rights, employment

equity,

and

employment standards legislation dur-

ing

this time period,

as

well

as to the

adopting

of the

Charter,

the

growth

of

employee-interest-based labour arbitration doctrines,

and the

devel-

opment

of

more employee-friendly contract

and

tort

law

doctrines

as

evidence

of an

ongoing commitment

to

this rights

paradigm.4

More

specific

jurisprudential examples include

a

generalized

in-

crease

to

notice period awards,

the

extension

of

categories

of

damages

for

wrongful

dismissal

by

awarding damages

for

mental distress,

the

interpretation

of

harsh employment agreement provisions against

the

interest

of the

employer,

the

gradual heightening

of the

standard

of

just

cause

for

summary termination,

and the

recognition

of

potential liabil-

ity

in

tort

for

employer negligent

misrepresentations.5

However,

Professor

England went

on to

theorize that,

by the

19805,

significant

social

and

economic changes

had

placed increasing pressure

upon regulators

and

courts

to

move toward

a new

"efficiency"

para-

digm. England opined that

the

globalization

of

capital

and

industry,

technological change,

and new

free

trade arrangements created

signifi-

cant

pressures upon employers, legislators,

and

courts

to

develop

a new

approach

to the

regulation

of the

employment relationship,

and

that

the

development

of

this

efficiency

paradigm interrupted

the

advance

of the

rights

paradigm.6

The

efficiency

paradigm placed greater emphasis

upon

the

notions

that

employment

law

should

not

interfere

with

the

operation

of

mar-

ket

forces

to

determine terms

and

conditions

of

employment,

and

that

freedom

of

contract should generally

be

allowed

to

enable employers

to

organize their

workforces

in a

manner that provides

for the

great-

est flexibility,

efficiency,

and

productivity.

Accordingly,

adherents

to the

efficiency

paradigm would,

for

example, wish

to

ensure that

wrongful

dismissal damage awards

not

rise

too

high,

so

that

the

cost

of

terminat-

3

Ibid,

and

supra

note

i

at

201.

4

Ibid.

5

Supra

note

2 at

paras.

1.37-1.52.

6

Ibid,

and

supra

note

i

at

201-2.