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Human rights implicitly guaranteed in all employment contracts: Charlton

By Denise Workun on November 2, 2007

Published in Reprints - The Lawyers Weekly  

Human rights violations in the employment context may now be considered contractual breaches warranting the award of mental distress damages.

In Charlton v. Ontario (Ministry of Community Safety and Correctional Services), [2007] O.P.S.G.B.A. No. 4, a non-unionized black female operations manager working at the Toronto Jail was the subject of a serious workrelated incident of racial harassment. A number of anonymous letters were delivered to eight racial minority corrections officers who worked at the Toronto jail, including Charlton. The anonymous letter sent to Charlton was delivered to her home address, and contained very demeaning and abusive racial slurs as well as threats to her personal safety. The identity of the individual who authored the anonymous letter remained unknown at the time of the hearing.

Understandably, this serious incident of racial harassment had a traumatic effect on Charlton's psyche, requiring that she take a medical leave of absence from work. Although Charlton continued to receive her full pay from the ministry during the initial period of her medical leave, she was ultimately awarded Worker Safety and Insurance Board benefits at a rate below her regular salary level, and she suffered a resulting income loss.

In fashioning an appropriate remedy, Don Carter, Chair of the Ontario Public Service Grievance Board, did not rely on the remedial authority conferred on human rights tribunals by s. 41 of the Ontario Human Rights Code. In particular, Carter rejected the ministry's argument that he was restricted by s. 41(1)(b) of the Human Rights Code, which provides for awards not exceeding $10,000 for mental anguish "where the infringement has been engaged in willfully or recklessly."

Instead, Carter characterized Charlton's claim as being one for breach of the "contractual guarantee of freedom from racial harassment in the workplace."

According to Carter, the genesis for this contractual guarantee flowed from one or both of two sources.

First, Carter maintained that the ministry was bound by ss. 26 and 47(1) of the Human Rights Code, which essentially deem it to be a condition of every Crown contract that no statutory human right will be infringed in the performance of the contract. Second, and more significantly, Carter followed the reasoning of the Supreme Court of Canada in District of Parry Sound Social Services Administration Board v. O.P.S.E.U., Local 324, [2003] S.C.J. No. 42, to conclude that human rights guarantees are implicit terms of all individual contracts of employment.

Carter reasoned that, since Parry Sound, it has been clear that employment obligations imposed by human rights legislation are implicit terms of collective agreements. By logical extension, he then concluded that these human rights guarantees must be implicit contractual terms in the individual employment contracts of employees who are not covered by collective agreements.

On the facts in Charlton, Carter had no difficulty finding that the ministry had breached its contractual obligation to guarantee Charlton a workplace free from racial harassment. He awarded Charlton compensation for her financial losses flowing from this contractual breach.

In Fidler v. Sun Life Assurance Co. of Canada [2006] S.C. J. No. 30, the Supreme Court of Canada determined that mental distress damages need not be based on an independent actionable wrong but can, even in the absence of bad faith, flow from the breach of contracts that create the expectation of a "psychological benefit." Without reservation, Carter applied the Fidler analysis to this case. He held that the guarantee of freedom from racial harassment in the workplace is precisely the type of contractual term that creates an expectation of psychological benefit, reasoning that this provision is clearly intended to protect the dignitary interests of the employee. Although Carter found the employer to be "beyond reproach" in attempting to deal with this particularly nasty form of workplace racial harassment after it arose, he also determined that Charlton had suffered very substantial mental distress and disruption to her life and peace of mind. In the circumstances, Carter concluded that the amount of damages warranted to compensate Charlton for her mental distress should be no less than what was considered appropriate in Fidler. He directed the ministry to pay Charlton $20,000 for mental distress arising from the breach of the contractual guarantee of freedom from racial harassment in the workplace.

It is now possible to argue that all human rights guarantees, not just those against racial harassment, are implicit terms of individual contracts of employment, the breach of which may in itself result in the awarding of damages for mental distress. Given this trend in the law, there is also no doubt that employee counsel will soon (if they have not already) argue that an employer's implicit contractual obligation to provide its employees with reasonable notice of the termination of employment is also the type of contractual term that creates an expectation of "psychological benefit," given its purpose is to provide employees with some measure of financial and job security while they search for newemployment. Will the failure to give reasonable notice of termination soon give rise to damage awards in contract for mental distress?

Regardless, Charlton is certainly a welcome legal development for employees and human rights advocates across Canada.

Denise Workun is a partner at the Ottawa law firm of Nelligan O'Brien Payne LLP. She specializes in human rights and employment law.

[This article is reprinted with permission and first appeared in the November 2007 issue of The Lawyers Weekly.]