The existence of an employment contract which contains an agreed severance payment or determines a fixed time period of the employment relationship is viewed uniquely in a human rights complaint.

Human rights claims involve a completely different analysis of the legal remedy from that found at common law by the terms of the employment contract where a severance sum or a fixed term contract has been reached.

Such a human rights lost income claim is based on the “make whole” principle which is intended to restore the applicant to his former status, save the wrongdoing.

The existence of a contract may have no impact at all on the employer’s liability when it contains an agreed severance term, given the “make-whole” concept.

A fixed term contract may do the converse as the “make-whole” can do no better than place the employee back into the notional position of the existing contract. Absent arguments for renewal in the normal course based on past practice and the like, the contract may well limit the claim. For example, a fixed term contract with two months remaining on the term, would allow the complainant compensation for only that time outstanding on the contract.

An employment contract which set out sums to be paid or notice provided in the event of a termination would be of no consequence in a lost income assessment in a human rights context. Given the “but-for“ analysis, presumably the employment relationship would have continued and the termination provision in the contract would not be an issue.

A 2013 decision of the Human Rights Tribunal of Ontario ¹ spoke obliquely to this issue. The decision noted that the applicant was paid his termination pay pursuant to his employment contract on termination. The decision continued to award Mr. Morgan fourteen months pay to the date of the hearing. The issue of the employment contract as a means of limiting the sum to be recovered was not even argued by the employer.

The Board of Inquiry ² also came to the same view citing two prior Board of Inquiry decisions ³ to the same end, confirming that such an employment contract containing a limiting term was of no consequence to the determination of the income loss:

However, the same jurisprudence indicates that employment contracts or ex post facto agreements cannot limit the amount of special damages available to successful complainants as counsel for the respondents argued they could.

Such was not the conclusion in the decision of the British Columbia Human Rights Tribunal. ⁴  Apart from the fundamental issue, clearly the contract was in violation of the statutory requirement of minimum notice, an argument which was not made.

The existence of an employment contract likely could be argued to support an argument of the inherent fragility of the employment relationship to buttress a submission that the make whole remedy should be limited due to subsequent events such as redundancy, which the contract implicitly anticipated.

The decision did touch on the issue of the fragility of the relationship and suggested that the contract term, which was an “at-will” term, was reflective of this and hence the lost income was not definitive.

An argument may be also made that the existence of a fixed term agreement would be one which contemplated just that and hence the “make-whole” submission could do no better than that which the parties had agreed. The applicant would hence be entitled only to the sum remaining on the employment contract, absent any apparent likelihood of a renewal or option to do so or such an evident historical practice.

The existence of the contractual relationship between the parties was found to be a factor in assessing the income loss in a decision of the Alberta Human Rights Tribunal. ⁵

Ms. Cowling was employed pursuant to a series of four fixed term contracts commencing in May of 1999 through to May of 2007. There were occasional gaps in the continuum during which she continued to perform her regular duties. Approximately one year prior to the expiry of the last of these agreements, she was advised that there would be no further renewal, a decision which prompted her successful human rights application, based on age.

In assessing the lost income claim for the period of five years to the date of the award, the Tribunal considered that the existence of the contractual relationship was a factor to be considered in the damage assessment and reflected the inherent fragility of same to discount the award by thirty percent.

Such an issue was before a B.C. tribunal in 2012. The applicant had alleged her employment had been terminated due to her pregnancy. She succeeded on the liability issue. The company had shown serious economic issues which required restrictions on its work force. The applicant had signed a contract which allowed for termination or resignation without notice. She sought four months lost income. She was paid 2 weeks voluntarily on termination was awarded a further 2 weeks. The logic of the award is not clear but seemingly was influenced by the contract and the fragile business climate. The contract, which was clearly offside the minimum standards, was not challenged. ⁶ The decision also, parenthetically, stated that “but-for” the pregnancy, the complainant may have resigned her employment, which is an unusual finding.