The Ontario Court of Appeal issued a landmark employment law decision a couple of weeks ago called Piresferreira v. Ayotte.
The case is being discussed mostly for the Court’s ruling that the tort of negligent infliction of mental suffering does not apply to the employment relationship. That is another example of the courts’ “special” treatment of the employment relationship. The Court ruled that while the elements of the tort had been satisfied in the case, there were “policy” reasons why employers should not have to answer to this tort.
Other bloggers have explained the facts and rulings in great detail (like The Court and Thoughts from a Management Lawyer), so I will skip a long recounting of the facts and the court’s ruling. See those fine sites for detailed explanations of the case.
I’ll let others talk about the tort issue. I will focus on a different question:
What happened to the breach of contract?
Here are the findings as I read them and as found by the trial judge and accepted by the Court of Appeal.
- The employee was verbally and physically abused by her manager.
- Bell’s Code of Conduct (see p. 22) included a requirement for the employer to maintain a workplace free of verbal and physical harassment and threats, and that requirement was an incorporated term of the employment contract (see CA decision, para. 47)
- That contract term was breached by the employer.
- Due to the breach of contract, the employee suffered physical and psychological harm that effectively prevented her from working, thereby causing lost wages.
- Those damages were reasonably foreseeable (see para. 54).
So why isn’t the employee entitled to damages for breach of the contract term? This seems like a pretty straightforward contract law issue. But the Court never even addresses that question because it focuses exclusively on the tort arguments. The contract term is only referred to as part of the discussion of why a duty of care existed for the purpose of the tort analysis–the Court rules that a breach of contract cannot be the basis for the recognition of a tort (para. 47), but is relevant to deciding if a duty of care existed (para. 51).
The question remains, though, if the employer breached a term of the contract, and the employee suffered quantifiable harm as a direct result, why isn’t the employee entitled to damages flowing from the breach?
What the Court has done is merge the breach of the “no harassment” term with the breach of the “notice of termination term” and assumed they are the same thing. But they are not. An employee is entitled to recover damages for wrongful dismissal (notice damages) and damages for breach of the independently actionable breach of a term prohibiting harassment of the employee. The Supreme Court told us that in Vorvis v. ICBC and in Wallace. I argued back in 2005 in a Queens Law Journal article (download here) that, when a contract includes a term requiring decent treatment of an employee, then damages are recoverable for breach of that term independent of any damages available for “wrongful dismissal”. No one and nothing has yet convinced me that that is wrong.
In Honda, the Court said it is not necessary to look for an independent actionable wrong when the mental suffering is a result of the dismissal of the employee or the manner in which the employee is dismissed and the damages are reasonably foreseeable. But Honda did not rule that damages for breach of an independent term of the contract prohibiting abuse of employees is not recoverable. Of course it is, otherwise, the term is meaningless, and we all know that we are never to assume that the parties intended a meaningless contract term.
The real problem with Piresferreira is that the Court of Appeal treats the abuse of the employee as having occurred in the “manner of dismissal” so that it can sweep all the damage into the Honda framework. That is wrong. When the employee was abused, the employer had no intention of dismissing the employee and in fact the employer did not treat the employment relationship as over until some 4 months after the abuse had occurred. This was abuse during the term of the contract, not “in the manner of dismissal”. Honda (and before that Wallace) don’t apply here, since they only apply to employer misconduct “in the manner of dismissal”.
When an employer abuses an employee during the life of the contract (rather than in the manner of dismissal), the normal rules of contract law apply. If the contract includes a term prohibiting abuse of employees, then damages for breach of the contract should be recoverable according to the normal rules of contract law. Otherwise, we are just bastardizing the employment contract model even further.
Maybe some of these issues will arise before the Supreme Court if leave is granted in the Piresferreira decision.
