Just because the Employment Standards Board rejects an employer’s argument that it had just cause for terminating an employee, that doesn’t preclude the employer from launching a similar defence in a civil proceeding.
The British Columbia Supreme Court’s decision in Read v Rimex Supply Ltd, 2021 BCSC 2157 (“Read”) addressed whether the doctrine of issue estoppel should apply to a just cause determination by the Employment Standards Branch (“ESB”) and bar the defendant employer from advancing a just cause defence in a wrongful dismissal action.
Given the significant differences in the purposes, process and stakes involved in the two proceedings, the Court found that it would be unreasonable to deprive the employer of the opportunity to take advantage of the enhanced procedural safeguards available in the wrongful dismissal action and to properly makes its defence.
The plaintiff Director of Manufacturing, James Read, caused the defendant employer Rimex Supply Ltd. (“Rimex”) to enter into a business relationship with Opus Group for cleaning and recruitment services in March of 2018. Upon learning that Read’s wife became the sole director of Opus Group in December 2018, Rimex terminated Read and told him it was for cause for failing to disclose his wife’s involvement.
Read filed a complaint with the ESB that he was terminated without cause and seeking compensation for length of service. Based on limited evidence, the ESB found that Read was terminated without cause and was entitled to four weeks’ salary. Rimex did not appeal the ESB decision.
In October of 2020, Read filed a notice of civil claim seeking damages for wrongful dismissal, forcing the British Columbia Supreme Court to consider whether issue estoppel applies to the ESB decision such that Rimex cannot advance another just cause defence.
The question was whether the Court should exercise its discretion to apply issue estoppel since it would be unfair to use the results of the ESB process to preclude the defence of just cause in the wrongful dismissal proceedings. The Court concluded it would be unfair to use the results of the ESB process.
The Court’s reasoning turned primarily on the difference in purposes, process and stakes in the two proceedings. Given that the wrongful dismissal claim was potentially worth over 15 times more ($178,262.17 vs. $13,220,77), it would be wrong to fault the employer for not thoroughly litigating and appealing the ESB decision by applying its findings to the wrongful dismissal action. Instead, Rimex should be able to take advantage of the more comprehensive procedural safeguards (i.e. document disclosure, examination for discovery etc.) in the civil action to further its defence.
The Court also noted that the purpose of ESB proceedings (i.e. to provide efficient resolution of disputes and ensure basic standards of compensation) may be interfered with if ESB findings were used in civil actions where liability is significantly larger. It was also relevant that the Employment Standards Act does not give exclusive jurisdiction to the ESB.
Key Takeaway for Employers
An employee receiving a favourable determination on an employment standards complaint does not guarantee that it will be successfully relied upon at a summary trial of a civil action. In other words, employers may not necessarily be bound to the results of a employment standards complaint decision.
Applying issue estoppel in situations where differences in purposes, process and stakes are significant may cause an injustice and distort the purpose of the administrative tribunal or board.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.