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Keays has employers breathing easier

|Written By Robert Todd

Employers across the country are breathing a little easier when it comes to handling issues of accommodation and absenteeism after the Supreme Court threw out an unprecedented wrongful-dismissal award.

Honda’s lawyer, Earl Cherniak of Lerners LLP, says employers are “wholly relieved at the decision.”

“Reasonable accommodation is not a one-way street, it is a multi-party process involving the employer, the employee, his or her union, and physicians,” says Michael Fitzgibbon, who practises in the area of management-side labour relations and employment law for Borden Ladner Gervais LLP in Toronto, in reflecting on the decision.

“Where the employer adopts a proactive approach to returning an absent employee to work or dealing with absenteeism, this will not, in and of itself, demonstrate that it is acting in a ‘hardball’ or offensive way.”

The court, in its ruling issued June 27 in Honda Canada Inc. v. Keays, erased a $100,000 punitive damages award and nine-month reasonable notice extension for bad faith that Honda Canada employee Kevin Keays received after being fired in the midst of a battle with chronic fatigue syndrome. The Ontario Court of Appeal previously reduced the amount from the trial judge’s $500,000 award.

Justice Michel Bastarache, writing for the 7-2 majority, disagreed with the appeal court’s finding in terms of Honda’s treatment of Keays.

“A proper reading of the record shows that Honda’s conduct in dismissing Keays was in no way an egregious display of bad faith justifying an award of damages for conduct in dismissal,” wrote Bastarache.

The case involves Keays, who was an employee at the Honda plant in Alliston for 11 years. After working on an assembly line before moving into a data entry position, Keays was diagnosed in 1997 with chronic fatigue syndrome. When he refused in 2000 to meet with a doctor selected by Honda, the company fired him.

Ontario Superior Court judge John McIsaac in 2005 awarded Keays the largest punitive damages to be handed out in a Canadian employment law case, along with 24 months of salary for wrongful dismissal.

But the Supreme Court disagreed with several of the trial judge’s findings in the case, including that Honda’s decision to fire Keays was an attempt to punish him for getting a lawyer to deal with the matter.

The case made some important alterations to the allocation of damages as established in the pivotal 1997 employment case Wallace v. United Grain Growers Ltd.

Fitzgibbon says the court has clarified and redefined how damages are to be considered in employment law. The decision restates the factors that should be considered when determining a reasonable notice period upon termination, and changes the way employees should be compensated for bad-faith conduct on behalf of an employer.

The decision also makes clear that a breach of the Human Rights Code doesn’t constitute an actionable wrong when considering punitive damage awards.

“Each of these items, individually, is significant and together provide assistance to the workplace parties as they navigate this complex legal area,” says Fitzgibbon.

Fitzgibbon says Keays has usurped Wallace in the employment law realm.

“I think people might apply [Wallace] in a sentimental, historical way, but I don’t think it’s going to be applied going forward,” he says.

“Certainly, the Supreme court said bad-faith type conduct is compensable in some way, but it’s compensable in the same way as other damages.”

Honda’s lawyer on the case, Earl Cherniak of Lerners LLP, says employers are “wholly relieved at the decision.”

“The fact that an employee is very upset at the fact that he loses his or her job, is not compensable, because everyone appreciates that a job may terminate, and the employer’s responsibility is simply to give reasonable notice,” says Cherniak.

Hugh Scher, who represented Keays, questions whether the Supreme Court should have engaged in such a factual review of the trial court’s decision.

“The court has repeatedly warned appeal courts against engaging in that process, recognizing the paramount role of the trial judge and the unique perspective of the trial judge to actually hear the evidence and assess credibility and demeanor of witnesses, as well as the entire trial record,” says Scher.

He calls the decision “a terrible blow to workplace fairness” in Canada.

“The elimination of damages for conduct which we put forward is discriminatory and in bad faith, would seem to create an even higher threshold than the present law provides for establishing this type of conduct and makes it far less likely that employees across the country are going to be able to get redress for this type of egregious conduct,” he says.

George Avraam, a Baker & McKenzie LLP lawyer who represented the Alliance of Manufacturers & Exporters Canada in Keays, notes that changes to the Human Rights Code in Ontario mean the case will have a different effect in the province.

The amendments allow employees to sue for breaches of the code as a secondary cause of action.

“So to the degree that this decision deals with the jurisdictional aspects in Ontario, it’s probably not all that relevant anymore,” says Avraam.

“But on the duty to accommodate and the employer’s ability to request medical information to monitor absences, employers will breath a sigh of relief.”

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