Remedies in Employment Law (9:VI)

A. The Employment Standards Branch

The Employment Standards Branch is the only forum an employee can go to if they have a complaint arising from a breach of the ESA. If the complaint is instead regarding a contractual issue, see section V.B: Small Claims Court.

The ESA established the Employment Standards Branch to deal with complaints and to disseminate information about the Act to both employees and employers. The Employment Standards Branch is responsible for informing employers and employees of their rights under the ESA, and for administrating all disputes arising under the Act. The Employment Standards Branch’s Industrial Relations Officers and Employment Standards Officers are trained to interpret the ESA and to assist both employers and employees with problems arising under the Act. Employees should be referred to the Employment Standards Branch if they have a complaint arising under the ESA.

In WG McMahon Canada Ltd v Mendonca (16 September 1999), BCEST Decision No 386/99, the Employment Standards Tribunal set forth the “make whole remedy”, which permits the employee to receive compensation instead of reinstatement. The employee is essentially “made whole” financially by way of a compensation order, such that the employee would be in the same economic position he or she would have been in had the infraction not occurred. This is an extraordinary remedy but one which allows for significant compensation. The above case can be located on the Employment Standards Tribunal website.

Although the ESA also allows for reinstatement as a possible remedy, there are no published decisions in which it has actually been ordered.

Provincially regulated employees may still be able to seek reinstatement under other statutes such as the Worker’s Compensation Act or the Human Rights Code if their situation qualifies.

1. Application

The ESA gives the Director of Employment Standards power to investigate complaints made under the Act. The complaint must be made in writing and within certain time limits. The Branch will deal only with complaints that have arisen within six months from the date of the complaint, if the complainant is still employed by the company. If the complainant is no longer employed with the defendant company, the complaint must be filed within six months of the termination date (s 74). When an employee is terminated after a temporary layoff, the last day of the temporary layoff is deemed to be their last day of employment for the purpose of calculating the six-month limitation period. If this six-month time period has elapsed, there may still be an action in Small Claims Court.

NOTE: Time during which an employee was not working because he or she was on sick leave, pregnancy leave, Workers’ Compensation benefits, etc. is nonetheless considered part of the term of employment.

2. The Employment Standards Branch Self-Help Kit

Complainants must first use a “Self-Help Kit” as a means of weeding out complaints that do not need to be filed. In the Kit, the claimant must first contact his or her employer with a written explanation for their claim and how much they want as compensation. The employer then has a chance to reply. If there is a still a conflict between the two, or the employer does not reply, the claimant can then file a complaint with the Employment Standards Branch. The Employment Standards Branch will generally not accept a complaint unless it has written proof that the complainant has tried to solve the problem using the Kit. In a limited number of circumstances, complainants do not first have to use the Kit. These exceptions include where the complaint is related to a leave provision of the ESA (e.g. pregnancy leave), or the complainant is a farm worker, textile worker, garment worker, or domestic worker. Links to the list of exceptions, and the self-help kit, can be found on the Employment Standards Branch’s Filing a Complaint fact sheet.

Complainants who have less than 30 days remaining until the end of the six month limitation period should first file their complaint with the Employment Standards Branch and then use the Self-Help Kit.

3. Filing a Claim with the Employment Standards Branch

After completing the Self-Help Kit, the complainant may file their complaint with the Employment Standards Branch in one of three ways:

• filling in a form and mailing or delivering it to the nearest Employment Standards Branch (available here: http://www.labour.gov.bc.ca/esb/forms/pdf/complaint.pdf);
• filling in a form at the nearest Employment Standards Branch office; or
• submitting an online complaint form (available here: http://www.labour.gov.bc.ca/esb/forms/esb_comp.htm ).

The Director may refuse to investigate a complaint if it is not made in good faith or if there is insufficient evidence to support it. The complainant may request, in writing, that any identifying information gathered for the purpose of the investigation remain confidential. However, the Director may disclose information if disclosure is deemed necessary to the proceeding or in the public interest (s 75).

Most employment standards complaints are resolved through a process of education of the parties, mediation, and/or adjudication, but some are referred to investigation. The officer reviewing the case has the discretion to determine the approach taken. Breach of any section of the ESA may be a basis for an investigation. At the conclusion of an investigation, the Director will give their determination (their decision) based on the evidence given. The Director has the power to settle the claim in a variety of ways, including:

• arranging payment to the complainant;
• forcing compliance with the Act; or
• requiring a remedy or cessation of the action (ss 78-79).

The Director also has the power to help parties settle a complaint and reach a binding settlement agreement that may be filed in Supreme Court for enforcement (s 78). Section 29 of the ES Regulation provides an augmented penalty provision that grants the Employment Standards Branch more power to enforce the Act. The penalty provision is also used to enforce the offences listed in section 125 of the ESA.

Penalties per offence are:

First Determination:	$500
Second Determination:	$2,500
Third Determination:	$10,000

Under Part 11 of the ESA, an officer or director of a corporation is personally liable for up to two months’ unpaid wages per employee if the officer or director held office when the wages were earned or were payable – however, officers or directors of a corporation are not personally liable on bankruptcy of the corporation (s 96(2)). Also, directors and officers may be considered a common employer and be held jointly and severally liable (s 95). If the business is sold, transferred, or continued after bankruptcy, the subsequent business may be considered a successor business and “the employment of an employee is deemed ... to be continuous and uninterrupted” (s 97).

Under the ESA (s 80), employers’ liability for wages (including payments for length of service upon termination) will only include those wages that became payable within the six months prior to the date of the complaint, or within the six months prior to the date of the employee’s termination – whichever is earlier. However, because some benefits become payable long after they were earned, an employee may be able to recover those benefits that they earned more than six months prior to the date of the complaint or date on which they were terminated. For example, in some cases vacation pay is not payable until two years after it is earned; in these cases, an employee could potentially recover vacation pay that was earned over a period of 30 months (two years, plus the six month limitation period). Similarly, employees may be able to recover wages that were entered into a time bank more than 6 months prior to the date of the complaint.

NOTE: Employers cannot terminate, suspend, or discipline employees because they have filed, or may file, a complaint (s 83). The Branch can order an employee’s reinstatement for contravention of this section and for violations of s 8 and Part 6.

4. Appeals

Anyone who wishes to appeal a determination of the Director must make an application to the Employment Standards Tribunal, a separate body established under Part 12 of the Act, at the conclusion of an investigation (s 115). The request must be made within certain time limits, which depend on the manner in which the decision is served. If the decision is hand-served, faxed, or delivered electronically, an appeal must be filed within 21 days. If the decision is sent by registered mail, an appeal must be filed within 30 days. After reviewing the decision, the Adjudicator of the Employment Standards Tribunal may confirm it, alter it, or refer it back to an officer. The appeal is decided based on the correctness of the Director’s determination.

Sections 112 and 114 of the ESA confine the grounds of appeal to the tribunal to situations where:

• a) The Director erred in law: An error in law may encompass the interpretation of a particular statutory provision, or its application to the facts presented. It can also be used when the appellant feels the Director acted unreasonably, or without evidence.
• b) The Director failed to observe the principles of natural justice in making the determination: This ground of appeal encompasses a wide variety of circumstances such as bias on the part of the decision maker, procedural unfairness (refusing an adjournment without good reason), or when the appellant feels generally they have not been given the right to be heard (a right codified in s 77 of the Act).
• c) Evidence has become available that was not available at the time the Determination was made: The new evidence must be material, in the sense that if the Director had been given the chance to review it the determination in whole or in part would have been different.

Although the Act does not specifically allow a party to appeal the Director’s findings of fact, in certain cases the Director’s fact finding may be so flawed that it amounts to a legal error. Gemex Developments Corp v British Columbia (Assessor of Area #12– Coquitlam) (1998), 62 BCLR (3d) 354) defined an error of law as including instances where the Director was “acting on a view of the facts that could not reasonably have been entertained.” This test has been adopted in a number of tribunal decisions. Delsom Estate Ltd v British Columbia (Assessor of Area No 11 Richmond/Delta, [2000] BCJ No 331 (BCSC) restated the test as being “...that there is no evidence before the Board which supports the finding made, in the sense that it is inconsistent with and contradictory to the evidence” and is “perverse or inexplicable”.

The tribunal may dismiss an appeal without a hearing if the requirements are not met, or if payment of a possible appeal fee, set up by regulation, has not been made. There are provisions for an appeal fee to be charged but there is currently no fee, nor are there plans to charge one.

If the employee is not satisfied with the decision of the Employment Standards Tribunal, they can seek judicial review of the decision; however, this must be done in BC Supreme Court. Employees should speak to a lawyer if they wish to pursue this possibility.

B. Small Claims Court

For information on how to proceed with a claim in Small Claims Court, see Chapter 20: Small Claims Court.

The Small Claims approach can often yield better results than claims filed with the Employment Standards Branch, particularly for cases involving termination of employment or payment of wages. For example, the ESA only requires an employer to pay one week’s wages per year of service notice to a maximum of 8 weeks for dismissal without just cause, whereas a common law award could extend to as much as 24 months’ wages. The Employment Standards Branch is also only able to award back-pay of up to six months, thus the client may wish to pursue a remedy in Small Claims Court if he or she is owed more than six months’ back pay. It may also be in the employee’s best interest to pursue certain claims through the Employment Standards Branch and others in Small Claims Court. However, keep in mind that civil court will not rule on a matter that is to be decided by the Branch.

Please note that employees may no longer seek to directly enforce rights under the ESA in civil court, and must instead use the Employment Standards Branch to enforce these rights (Macaraeg v E Care Contact Centres Ltd, 2008 BCCA 182). However, many of the interests protected by the ESA have parallel common law (contractual) remedies as well. A significant exception to this is overtime pay: employees have a contractual right to receive their normal hourly pay for all hours they work, but they can only make a claim at the Employment Standards Branch if they wish to receive 1.5 or 2 times their normal hourly rate for their overtime hours (an exception to this is if their employment contract specifically sets out that they will receive a higher rate for overtime pay, in which case this contractual right can be enforced in court). Each particular case should be reviewed fully before determining in which forum to proceed.

Also note that Small Claims Court only has jurisdiction for claims up to $25,000. Employees with claims over $25,000 must either abandon the excess amount of the claim, or proceed to BC Supreme Court. Employees should consult a lawyer before proceeding in BC Supreme Court, as it can be quite complicated and costly.

When naming the defendant in Small Claims Court, the employee should sue the body with which the contract of employment was made, unless he or she is alleging fraud or induced breach of contract – in which case, consider joining the shareholders or directors of the company. The employee may have to sue the parent company and the subsidiary if the parent company does the hiring, paying, and terminating.

C. The B.C. Human Rights Tribunal

If an employee or potential employee has been discriminated against on the basis of one or more of the prohibited grounds, see Chapter 6: Human Rights, Section III.C: The Complaint Process for information on how to proceed with a complaint. If the employee was terminated from their position based on one of the prohibited grounds, they may be able to recover lost wages and compensation for injury to dignity, feeling, and self respect at the Human Rights Tribunal.

The employee also has the option to file a claim in Small Claims Court or BC Supreme Court for wrongful dismissal: See Section IV.E: Termination of Employment for information on wrongful dismissal claims.

In most cases, the employee should choose one of these two options, based on which would provide the most compensation. For low-income employees who were employed for a short period of time, the Human Rights Tribunal can often provide greater compensation. However, in some cases where the employee has worked for the employer for a particularly long time before being terminated, or where the employer has demonstrated particularly egregious conduct, the employee may have better success in Small Claims Court or BC Supreme Court where they may be able to receive a larger severance award, and possibly punitive damages.

It is possible to have the employee’s job reinstated by making a claim under the Human Rights Code. This is a significant remedy in itself, and it can also be used to incentivize a former employer to make a fair settlement offer, as they often do not wish for the employee to return.

D. Limitation Periods

If a client wishes to file a complaint with the Employment Standards Branch, there is a six-month limitation period from the last day of employment. Applications to the B.C. Human Rights Tribunal must be made within six months of the alleged contravention (s 22). It is possible for this deadline to be extended if it is found that it is in the public interest to accept the complaint, and no substantial prejudice will result to any person because of the delay; however, it is rare for this to occur. In the courts, there was formerly a six-year limitation period for pure economic loss arising from breach of contract (wrongful dismissal would qualify); this limitation period continues to apply for any wrongful dismissal claims that arose before June 1, 2013. For wrongful dismissals occurring on or after June 1, 2013, the new Limitation Act applies, and there is instead a two-year limitation period (See Limitation Act, SBC 2012, c 13). Section 124 of the ESA sets a limitation period of two years for any court action arising from an offence under the act.

E. Strategies and Tips

1. Gather Evidence

Employees who face employment issues should document everything so that they will be able to provide better evidence if the case goes to a hearing or trial. Employees who are dealing with work-related or dismissal-related stress should consider seeing a medical professional as soon as possible, as medical evidence can be extremely helpful at the Human Rights Tribunal and in Court. Medical evidence is often necessary if an employee wishes to make a claim for aggravated damages due to the manner of their dismissal, as only actual losses are compensable under this category of damages.

2. Make a claim for EI

An employee who is dismissed may receive severance pay eventually; however, sometimes this can involve a long process. If the employee is receiving EI, they may have sufficient financial resources to wait a longer time to receive severance pay, and so they will be less likely to be forced to take a low settlement offer to pay their monthly bills. File for Employment Insurance immediately after being dismissed as Service Canada imposes time limits for filing.

3. Make Reasonable Efforts to Mitigate Damages and Track Mitigation Efforts

Employees must make reasonable efforts to mitigate their damages. This is most relevant if the employee has been dismissed; the employee will be making a claim for damages in lieu of reasonable notice in Small Claims Court, or a claim for lost wages at the Human Rights Tribunal, and they must make reasonable efforts to mitigate these losses by searching for similar work. The employee should document their search for work. Note, however, that if the employee is successful in finding work, they will have successfully mitigated their damages, and will therefore be entitled to less compensation for lost wages or reasonable notice.

Employees should also be encouraged to keep accurate records of their job search efforts, for potential use as evidence at court.

4. File a claim as soon as possible

Once an employee finds a new job, they begin to mitigate their damages and this will reduce their severance award. File a claim as soon as possible; if you can reach a settlement agreement or have the case tried before the employee finds a new job, you may avoid this problem.

5. Complex vs. Simple Claims

If a claim is filed that is relatively simple, the employee is more likely to get through the process more quickly; this is helpful if you wish to try to finish the process before the employee gets a new job and begins mitigating their damages. However, there can also be benefits to adding claims for aggravated or punitive damages or various torts, and benefits to splitting a claim into more than one forum; namely, there is the potential for a greater award and the potential for tax advantages on the damages received. Consider the strength of the claims, how important it will be for the employee to receive money quickly, and the likelihood of the employee finding a new job and mitigating their damages, before deciding whether to make a simple claim for severance pay, or to add additional claims.

6. Consider the Tax Consequences when Negotiating a Settlement

An employee must pay tax on the portion of an award that is given in place of the wages they would have received during their reasonable notice period. However, if part of the damages is instead awarded as aggravated or punitive damages (in Small Claims Court or BC Supreme Court), or as damages for injury to dignity, feelings, and self-respect (at the BC Human Rights Tribunal), this portion of the award may not be taxable. Consider structuring a written settlement agreement to allocate a reasonable portion of the award to these potentially non-taxable categories of damages. Note that this chapter, and LSLAP, cannot provide tax advice, and an employee may wish to consult an accountant or tax lawyer or the Canada Revenue Agency to determine exactly which amounts of a final settlement are taxable.

7. Consider splitting the claim into different forums

In some cases, it may be advantageous to split up the various employment issues an employee faces, and proceed in different forums based on which forum will award the greatest amount of money for each legal issue.

For example, one may wish to claim overtime pay and vacation pay at the Employment Standards Branch, and claim severance pay in Small Claims Court. This could be beneficial because overtime pay (at the 1.5 or 2 times hourly rate) is only legally required under the ESA (unless the employee’s contract calls for overtime pay to be paid), so claims for it can only be brought at the Employment Standards Branch; however, severance pay tends to be significantly greater in Small Claims Court.

Often it will be best to keep the entire claim in one forum. Note that section 82 of the ESA states that once a determination has been made by the Employment Standards Branch, the employee may commence another action only if the Director gives written permission or the Director or tribunal cancels the determination. This prevents the possibility of “double recovery”; if an employee received damages for an action in one forum, they may not receive the same damages in another. However, even if an employee has already gone through the Employment Standards Branch to obtain the minimum statutory entitlement for length of service under the ESA, they are still able to make a claim in court for contractual breaches such as wrongful dismissal, and therefore they may potentially obtain additional severance pay (Colak v UV Systems Technology Inc, 2007 BCCA 220). Nonetheless, proceeding at the Employment Standards Branch to claim the statutory minimum entitlements for length of service can be problematic for several reasons. Firstly, if the employee is also going to be proceeding in Small Claims Court for wrongful dismissal, a claim at the Employment Standards Branch may simply cause an extra expenditure of effort with no additional benefit. Secondly, if the Employment Standards Branch makes a determination as to whether or not there was just cause for dismissal, this determination is likely to be adopted by Small Claims Court if a claim is later filed there. It should be considered that of these two forums, only the Small Claims Court decisions are made by judges, so if it is anticipated that there may be complex legal arguments on the issue of just cause, it may be beneficial to proceed in Small Claims Court.