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In September 2003 the Supreme Court of Canada released its decision in Parry Sound (District) Social Services Administration Board v OPSEU, Local 3241. The Parry Sound decision has the immediate effect of automatically incorporating human rights legislation into every collective agreement between unions and employers. The effect of Parry Sound may not stop there, however. It could also be seen to read human rights legislation into every contract of employment. In this regard, the Parry Sounddecision will have a significant impact on how all employers and employees resolve their differences amid allegations of discrimination or harassment.

Facts of case

Joanne O’Brien was a probationary employee of the District of Parry Sound Social Services Administration Board and a member of OPSEU, Local 324 when she went on maternity leave. A few days after returning to work upon completion of her leave she was fired. Ms. O’Brien grieved the discharge.

Judicial history

The majority of the arbitration board found although the collective agreement did not restrict the right of the employer to discharge probationary employees, the Labour Relations Act, 1995 obligated a board of arbitration to interpret a collective agreement consistently with the Human Rights Code. The arbitration board therefore decided it had the power and responsibility to hear and determine whether discrimination was a factor in Ms. O’Brien’s discharge.

The employer won on its application for judicial review to the Divisional Court, which held the arbitration board did not have jurisdiction to hear the dispute. The union won on its appeal to the Ontario Court of Appeal, which based its decision on the Employment Standards Act instead of the Human Rights Code as the arbitration board had done. Unlike Ontario's Human Rights Code, the Employment Standards Act was already directly incorporated into all collective agreements.

The Supreme Court's Decision

The Supreme Court of Canada dismissed the employer’s appeal, but went further than the Court of Appeal, concluding “the substantive rights and obligations of the Human Rights Code are incorporated into each collective agreement over which an arbitrator has jurisdiction. An allegedviolation of the Human Rights Code constitutes an alleged violation of the collective agreement and falls squarely within the Board’s jurisdiction.”2

The Supreme Court based its decision in large part on its 1975 decision in McLeod v Egan 3 on the effect of employment-related statutes on the content of collective agreements. In McLeod, the employee alleged he had been disciplined for refusing to work beyond 48 hours a week. The collective agreement did not limit the right of an employer to require an employee to work more than 48 hours per week. The court concluded that an arbitrator must look beyond the four corners of the collective agreement in order to determine the limits on an employer’s right to manage operations. The Employment Standards Act, 1968 limited the hours an employee could work in a week to 48. According to the court it would be illegal for the union and the employer to negotiate a management right to force an employee to work more than that limit.

The key to the Parry Sound decision is this: even if a collective agreement does not expressly prevent the parties from violating a particular statutory right, such a violation will amount to a violation of the collective agreement. “Human rights and other employment-related statutes establish a floor beneath which an employer and union cannot contract.”4 This finding may have significant effects beyond the context of the unionized workplaces. To understand the potential impact of this decision in the non-unionized employment law context one must understand a little about human rights law.

Human Rights and the Courts

In Canada, there are human rights statutes in every jurisdiction. These statutes prohibit discrimination and provide an avenue of recourse to complainants. Complainants lodge complaints with human rights commissions, which investigate and attempt to settle disputes. Commissions decide, based on investigations, whether complaints should be adjudicated by the tribunals. At a human rights tribunal, commissions have carriage of complaints, but do not represent complainants per se. Tribunals have broad powers to award various remedies under human rights statutes, including power to order employers to reinstate, create policies, provide workplace anti-discrimination training, or pay lost wages. Tribunals may also order damages for loss of dignity or hurt feelings, but this head of damages is capped in the statute at $10,000 in Ontario and $20,000 federally.

The statutory human rights regimes were meant to provide a comprehensive means of attaining the legislative objectives of adjudicating discrimination complaints and eradicating discrimination in general. The Supreme Court of Canada endorsed this approach in Board of Governors of Seneca College v. Bhadauria5, when it refused to allow an independent tort claim for discrimination. The result of Bhadauria was to bar access to the courts for anyone who wanted to sue for discrimination.

In 1981 when Bhadauria was decided, human rights regimes were still relatively new, and the Canadian Charter of Rights and Freedoms had not yet been proclaimed. More than twenty years later, an extensive body of equality law has developed. Meanwhile, the promise of the human rights regimes is somewhat tarnished. Human rights commissions have come under attack for long delays in bringing complaints to adjudication. Complainants have found the adversarial process mandated by the human rights regime less than satisfactory in terms of the process and the ultimate remedies. Some complainants would prefer access to the courts in order to escape the statutory cap on damages.

Although Bhadauria foreclosed any claims in tort for discrimination alone, parties continue to have claims involving discrimination allegations heard outside of the human rights regime. For example, a party may sue for wrongful dismissal after being terminated or constructively dismissed for discriminatory reasons. Such cases have sometimes been seen by courts as veiled attempts to circumvent the human rights regime, however, and have been stayed where the employee was also proceeding with a human rights complaint.6 In other cases, courts have allowed wrongful dismissal law suits to go forward where discrimination is alleged.7 So long as an independent tort recognized by law or a breach of contract is asserted, courts are less and less willing to dismiss claims that also involve discrimination, even when a human rights complaint is proceeding at the same time.8

Another way plaintiffs have attempted to access the courts as a forum for redress against discrimination is through section 15 of the Canadian Charter of Rights and Freedoms. For plaintiffs who are employed by the government, the Federal Court of Appeal has ruled the Federal Court has jurisdiction to "enforce constitutional equality rights in the federal sphere by providing to an aggrieved citizen an appropriate and just remedy under the Charter."9

Yet another way the courts have considered human rights concepts is in cases involving employees who were dismissed for cause due to sexual harassment or discriminatory conduct on their part. In three cases of this type, the Ontario Court of Appeal has dismissed claims of wrongful dismissal, invoking the policy behind human rights legislation in support of the employer’s defence of just cause.10

Thus, although the Supreme Court of Canada in Bhadauria declared matters within the jurisdiction of the human rights regime off-limits to the courts, arguably there has been a trend to provide at least some access to the courts in cases involving discrimination. Furthermore, although the Supreme Court would not fashion a novel tort of discrimination based on the policy laid out in the Ontario Human Rights Code, in later cases, the Ontario Court of Appeal has relied on the policies laid out in the Human Rights Code to justify termination of sexual harassers for cause.

Impact of Parry Sound on Employment Law

This leads us back to the question of what impact the decision in Parry Sound v OPSEU may have on employment law. As demonstrated above, the courts have already had some leeway to consider human rights legislation. What is different now? Analogizing from the court’s decision in Parry Sound regarding collective agreements, an alleged violation of the Human Rights Code would constitute an alleged violation of the employment contract, and fall squarely within the court’s jurisdiction. While this has been the understanding with regard to employment standards statutes for some time,11 this has not been the understanding for human rights statutes. It would be strange, however, if in the aftermath of Parry Sound, an employer and a union were prevented from contracting out of human rights legislation, but and employer and an employee in a nonunionized workplace were not.

Thus, a breach of human rights becomes a breach of the employment contract. Where the parties to an employment relationship take a dispute to court, both employers and employees should be able to invoke breaches of human rights legislation by the other in their favour.

The Parry Sound decision is yet another indication in the developing human rights case law that eventually the Bhadauria decision will no longer be relevant, if it is not overruled altogether.

In the mean time, it seems employees who sue for wrongful dismissal may no longer have to contend with caselaw 12 which suggests wrongful dismissal claims involving discrimination allegations ought to be dealt with only in human rights complaints. Employees alleging dismissal for discriminatory reasons may be able to strategically choose between a wrongful dismissal suit in court or a human rights complaint, or both. Instead of suffering continued discrimination or harassment at work, employees may have more impetus to quit and allege constructive dismissal in a wrongful dismissal suit.

1 [2003] SCC 42 [Parry Sound].

2Parry Sound, supranote 1 at para. 23.

3McLeod v Egan, [1975] 1 SCR 517

4Parry Sound, supranote 1 at para. 28.

5[1981] 2 SCR 181

6Ghosh v Domglas (1986), 57 OR (2d) 710; Meiklem v. Bot Québec Ltée(1992), 41 C.C.E.L. 51 (Ont. Gen. Div.)

7Lehman v. Davis et al. (1993) 16 O.R. (3d) 338 (Ont. GD); Y.S. v. H & R Property Management Ltd. [1999] O.J. No. 5588 (SCJ); White v Bay-Shep Restaurant & Tavern ltd (c.o.b. Sunshines Restaurant) (1995), 16 CCEL (2d) 57 (Ont. Ct. GD).

8Kulyk v Toronto Board of Education(1996), 139 DLR (4th) 114 (Ont Ct. GD)

9Perera v Canada, [1998] 3 F.C. 381 (CA).

10Simpson v Consumers’ Association of Canada (2001), 209 D.L.R. (4th) 214 (Ont. CA); Bannister v General Motors of Canada Ltd. (1998), 164 DLR (4th) 326 (Ont. CA); Gonsalves v Catholic Church Extension Society of Canada(1998), 164 DLR (4th) 340 (Ont. CA).

11Employment Standards Act, 2000, S.O. 2000, c. 41 s. 5.

12 eg. Ghosh v Domglas; Meiklem v. Bot Québec Lté, supra note 4.


This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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