Extraneous Intervening Factors to Limit Claim for Income Loss

It is important to understand the factors impacting the claim for income loss in a human rights employment law mediation.

The principled discretion analysis uses as a presumption that once the “but-for” causal link has been met, the claim for lost income will continue until such time as an extraneous factor has intervened to cause its cessation. The employer must then introduce evidence to demonstrate that even given liability, the income loss would have ceased at some point in time following the creation of the cause of action.

The latter may include submissions such as that the applicant’s employment was doomed to be ended for extraneous reasons due to economic issues or a similar plea intended to illustrate that the “make whole” argument may not be as generous as claimed.

Such was the successful argument that the lost income claim must cease when the business had closed. ¹

Similarly, an existing contract may show a firm end date of the employment relationship which must mark the end of the income loss.

Equally the employer may argue that the employee had failed in a duty to mitigate which should influence the lost income award.

An example of the application of the “but-for” analysis, discounted by risk, is a case in which an income loss was awarded for a 30 month period. The time period claimed was 5.5 years to the date of the hearing. The discount to the lost income claim was based on “the contingencies” that the applicant would not have been able to work for this entire time period due to medical issues. ²

A similar view was taken by the in determining the appropriate income loss for a case which took five and a half years to reach hearing. The claim was based on physical and mental issues. The decision noted the “make whole” concept but declined to make any finding of fault on either party as to delay or even to assess whether it was systemic in awarding an income loss of 30 months.

A similar application of this but-for concept showed that had the applicant not been unfairly terminated, he would have been laid off in any event due to workplace redundancies and the claim was accordingly reduced. ³

The same view was taken in a case in which adverse treatment due to age was found but the tribunal reduced the award due to its acceptance of the employer argument that the applicant’s employment was in genuine jeopardy and he would have been terminated in any event. ⁴

An RCMP cadet who was terminated adversely during his training period was awarded an income loss from January 2000 to the date of hearing in April of 2008, subject to a total 8% discount to represent the risk of the applicant not graduating and also usual attrition rates. ⁵ A finding of a failure to mitigate was found which reduced the award by the average industrial wage. The lost income award was increased to reflect a likely promotion to corporal after 7 years. ⁶

At the second hearing to re-visit the income loss, the award was reduced to compensate for lost income for an initial period of 2 years and 12 weeks, referenced in the case as a “grace period”.

In this case the decision of the first tribunal that the applicant ⁷ had failed to mitigate was fatal to the continued income loss. The tribunal then looked for evidence to determine if it was the conduct of the employer that had a caused permanent damage to the ability of the complainant to work ⁸ and found none. For this reason, the income loss claim was set only to the end of the grace period.

In a fact situation in which the applicant was denied the right to complete medical testing, the tribunal found liability. The tribunal did agree that there was some uncertainty as to whether the applicant would have completed the testing process and remained employed, but determined that it was the respondent which should bear this risk. The full claim was allowed as was reinstatement. ⁹

This is not the typical manner of assessing the income loss. Usually the tribunal will look to the risk factor and apply a contingency discount. ¹⁰

Issues such as the employer’s solvency and similar factors may be considered to limit the likelihood of the continuum of the income loss. ¹¹

A further example ¹² of the exercise of such discretion was found in the context of an applicant, found to have been adversely treated due to the failure of the employer to accommodate his disability in 2007 and to allow a return to work. No reinstatement was sought. There was no evidence of mitigation offered. The applicant sought lost wages from the default date to the date of submissions on remedy in November of 2011, notwithstanding his retirement one year earlier. The Tribunal noted the extremes within which an order for lost wages may be made from (1) no lost wages due to the likelihood of a termination for non-discriminatory reasons to (2) a claim for lost income to the date of the hearing or beyond it. ¹³ A three year award to the date of retirement was made, given the uncertainties of a successful return to work, influenced by that fact that the applicant had been medically unable to work for three years prior. ¹⁴

The B.C. Human Rights Tribunal considered this issue of income loss in a case in which a medical doctor’s application for a post-graduate specialized training was delayed due to a mental disability of ADHD and Non-Verbal Language Disorder. An income loss was found due to the delay in the applicant’s ability to enter this field for a 6 year period, discounted by contingent risks inherent in not completing the program. The risk factors were assessed based on the possibility that the applicant may not have completed the program (10%) and that he may not have been able to maintain a full-time practice and/or may have been required to take on a reduced volume of patients. (20%)

The total lost income sum was set at $385,000. ¹⁵

It would be expected that, apart from mitigation issues, ¹⁶ or otherwise an application of “principled discretion”, an order of reinstatement would be accompanied by an award for lost income to the date of reinstatement, subject to the limiting arguments as noted above which may negatively impact the award. ¹⁷ Such was the case for a lost income award for an 8.5 year period from the date of dismissal to the date of hearing. ¹⁸_

Similar awards have been made for a wage differential for approximately 8 years ¹⁹ and 9 years. ²⁰  An award of salary arrears was also made of roughly 9 years not only to the applicant but also his spouse who had also been treated unfairly. ²¹

An award of 2 years and 3 months lost income due to a medical discrimination complaint. ²² A potential lost income loss was set in one case at 10 years, ²³ and a loss of 10 years to the date of the hearing in another. ²⁴

The suggestion has been made above, that in a fact situation where the employer argues that the “but-for” lost income claim should be reduced due to a planned closing or other event which would have inevitably brought about the permanent end of the working relationship, the employee should then receive fair additional sums for what would have been the statutory payment or the common law entitlement.

The difficulty with respect to this plea is that the tribunal has traditionally taken the position that it has no jurisdiction to award the statutory severance sum, absent direct discriminatory conduct which led to its denial. ²⁵

The significance of the statutory claim would be emphatic where the employee found alternate employment quickly as the statutory sum is not reduced by mitigated income.

All this places the complainant in a difficult circumstance in the hypothetical situation as described above. There can be no complaint with the relevant ministry for the statutory entitlements as there has been no termination. The employer’s argument that had the relationship been continued but-for the wrongdoing, and that there would have followed a termination as a redundancy or closing, must be seen to be connected to the initial discriminatory wrongdoing for the statutory sum to be ordered, given the state of the law. Clearly the statutory claim comes as a direct loss attributable to the adverse conduct and should be compensated. The path to recovery is an awkward one and is need of rebuilding.

The tribunals have generally taken the position that the common law remedy may not be ordered in a human rights hearing. See the paper on this subject.

 

1.  Hughes v 1308581 Ontario Ltd. (business closed)
2. Alberta Human Rights Tribunal in the March 2012 decision in Schulz v Lethbridge (McFetridge)
3. Canadian Human Rights Tribunal decision in Milano v Triple K (Mactavish)  
4. Ontario Tribunal in Clennon v Toronto East General (Hart); An unsuccessful reconsideration motion followed.
5. CHRT Tahmourpour v RCMP.
6. This decision was reviewed and set aside by the Federal Court, which decision for the most part was, in turn set aside by the Federal Court of Appeal and a new hearing ordered. The main issue for the new hearing was the determination of the income loss beyond the first period of 2 years and 12 weeks
7. This was the evidence used for the second hearing.
8. Due to an administrative error, the employee did not make submissions to the second tribunal hearing on this issue. A subsequent judicial review application was unsuccessful. On the substantive issue of the wage loss beyond the grace period, Near J. concluded that there was no error in making the finding of a failure to mitigate. A further appeal of this decision was made on the procedural issue which failed.
9. Treane v City of Windsor (Sengupta)
10. As for example, as was applied below in Kelly v. University of British Columbia; upheld on judicial review by B.C. Supreme Court
11. Kooner-Rilcof v BNA Smart Payment B.C. HRT; Hughes v 1308581 Ontario Ltd. (business closed) , Milano v Triple K (staff reductions) Schulz v Lethbridge (medical ability to return to work) and Clennon v Toronto East General (termination for performance issues was due to take place). See also Morris v. British Columbia Railway Co. (2003), 46 C.H.R.R. D/162, 2003 BCHRT 14.
12. Backs v City of Ottawa (Muir)
13. McLean v. DY 4 Systems, 2010 HRTO 1107 (CanLII), 2010 HRTO 1107.
14. It is to be noted that, as discussed subsequently, the award was largely academic as the WSIB sums offset the wage loss
15. Kelly v. University of British Columbia; upheld on judicial review by B.C. Supreme Court
16. Mitigation is discussed elsewhere.
17. Hughes v 1308581 Ontario Ltd. (business closed) , Milano v Triple K (staff reductions) Schulz v Lethbridge (medical ability to return to work) and Clennon v Toronto East General (termination due to take place). See also Morris v. British Columbia Railway Co. (2003), 46 C.H.R.R. D/162, 2003 BCHRT 14.
18. Fair v Hamilton-Wentworth, upheld by the Divisional Court, although the lost income award was not specifically challenged. This was upheld by the Court of Appeal in May of 2016. The final lost income award was roughly 12 years, although it is not specifically set out in the decision.
19. Ontario Human Rights Commission and Karumanchiri et al v Liquor Control Board of Ontario 8 CHRR D/4076 (Baum) in which the complainant Karumanchiri was instated to the promoted position of Chief Chemist. This decision was affirmed on review by the Divisional Court 9 CHRR D/4868, although the award for lost income differential was again not a subject raised by the employer on the judicial review.
20. The same conclusion was reached by the Canadian Human Rights Tribunal in Singh v Statistics Canada (Mactavish) in which the applicant was instated to a more senior position due to a finding of adverse treatment due to age and awarded the income differential from August 1989 to the date of instatement in November of 1998.
21. This was also the conclusion of the Board of Inquiry in McKinnon v Correctional Services #3 (Hubbard) in which the Board ordered that the complainant and his spouse each be instated to the rank of OM16 and receive appropriate salary arrears from the date of the initially unsuccessful application for such employment from March of 1989 to the date of the award in April of 1998.
22. Treane v City of Windsor (Sengupta) ordered a lost income claim from September 2008 to the final day of the hearing in December of 2010.
23. The Canadian Human Rights Tribunal in McAvinn v Strait Bridge Crossing (Deschamps) made an order requiring that the first available position of a bridge patroller be awarded to the complainant in its decision of November 2001. The commencement date of the lost income award was May 31, 1997. The award stated that failing such an offer of alternate employment, the total lost income was to be set at a 10 year period. The contingent prospective loss was hence set for a time period of six years and seven months.
24. Turner v Canada Border Services CHRT
25. Puleio v Moneris (Muir); Pilon v City of Cornwall (Muir); Walkinshaw v Complex Services (Slotnick)