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A Cautionary Reminder: The Impact of Employment Standards Orders on Civil Actions

11-Dec-19

By Jessica Kruhlak

A recent decision out of the Supreme Court of the Northwest Territories, Wong v Gwich’in Tribal Council, 2019 NWTSC 50, illustrates how issues decided by Employment Standards, or other employment tribunals, may prevent adjudication of those issues in later court proceedings.

The Plaintiff, Mr. Wong, filed a complaint to the Employment Standards Officer under Section 66(1) of the Employment Standards Act, SNWT 2007, c 13.  He claimed that he was forced to resign from his employment with the Gwich’in Tribal Council (“GTC”) and sought four months’ of termination pay and payment of his performance bonus, as per the terms of his employment contract.  The Officer found that Mr. Wong’s resignation was voluntary.

Mr. Wong commenced an appeal of the Officer’s decision and obtained legal advice from a lawyer at the Legal Aid Commission.  Following this advice, he withdrew his appeal and filed a lawsuit for constructive dismissal.

McLennan Ross LLP, on behalf of GTC, applied for summary dismissal of Mr. Wong’s claim on the basis that his claim amounted to a re-litigation of the issues and facts already decided upon by the Employment Standards Officer, and thus issue estoppel should apply.  GTC submitted that the determination as to whether or not Mr. Wong’s resignation was involuntary and his entitlement to termination pay was already made by the Employment Standards Officer.  For that reason, GTC advanced the argument that Mr. Wong should be precluded from attempting to have his claim heard again in a different forum.

The Court reviewed the test for issue estoppel, that being:

  1. Is the existing decision judicial in nature? (the threshold question)
  2. Are the same issues at play as in the previous proceeding?
  3. Is the existing decision final?
  4. Are the parties the same?

The Court found that the decision was judicial in nature as it was (1) made by a body capable of exercising judicial authority; (2) as a matter of law, the decision had to be made in a judicial manner; (3) as a question of mixed fact and law, the decision had to be made in a judicial manner.

It was clear that the parties were the same, so that part of the test was easily satisfied.  It was also found that the same key issues decided by the Employment Standards Officer were again before the Court.  Lastly, It was determined that the decision was final in nature.  The Court determined that where the appeal process is not taken advantage of, has been exhausted or commenced but withdrawn, the existing decision is final.  The Court confirmed the finding of the Supreme Court of Canada in Danyluk v Ainsworth Technologies Inc, 2001 SCC 44 that “the employee’s failure to take advantage of an internal review procedure rendered an Ontario employment standards officer’s decision final.”

While issue estoppel is a discretionary in nature, in evaluating the circumstances in this particular case the Court determined its application would not result in any injustice.  Accordingly, GTC’s summary dismissal application was granted.

Although this case deals with an employee who failed to recognize the impact an Employment Standards Decision can have on a civil action, this is also a cautionary case for employers who may be surprised by the effects of an Employment Standards Order in the face of litigation.  For example, a final finding of just cause by an Employment Standards Officer may preclude the employer from alleging a just cause defence in a civil action.

McLennan Ross LLP is widely regarded as a leading Labour and Employment firm in western Canada and the north. For more information on how this decision or any other matter may affect your business contact Jessica Kruhlak or another member of our Labour and Employment Practice Group.

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