In Café La Foret Ltd. v. Cho, 2023 BCCA 354, the British Columbia Court of Appeal (BCCA) upheld a lower court’s determination that an employee’s sexual harassment of his subordinate was not sufficiently serious to justify his dismissal, and only varied the lower court’s order to read that the $25,000 award made globally for aggravated and punitive damages would be made exclusively for aggravated damages.

Background

The employee, age 60, worked at a café as head baker from December 1, 2017 to November 30, 2018, and from April 1, 2019 to November 9, 2020 (Employee).  A female subordinate, age 30, reported to him during the second timeframe (Subordinate). On November 9, 2020, the Employee briefly touched the Subordinate’s shoulder while telling her about a massage he received the day before, and lightly touched her buttock while discussing the pain in his lower back.  The employer did not have a sexual harassment policy. 

The Subordinate reported what occurred to colleagues who informed the general manager (GM). The GM met with the Subordinate and then the Employee who admitted that while explaining where his body hurt he touched the Subordinate, said it was a mistake, and asked if he should apologize to her or quit his job.  The GM said he would consult management and investigate and told the Employee to go home and wait for a call. After speaking with the café’s owner, the GM advised the Employee not to attend work the next day. 

The Employee believed he had been terminated on November 9, 2020, when the GM told him not to come to work on November 10.  He repeatedly asked the GM to forward his Record of Employment (ROE) and termination letter. 

The Subordinate told the GM that she wanted an apology in writing from the Employee so she could report the incident to the police. On November 11, the GM sent a text message to the Employee asking him to call but he did not respond.  On November 15, the GM sent the Employee an Affidavit containing an apology to the Subordinate, requested his signature, and advised him he could keep his job only if he signed it.  The Employee did not sign the Affidavit and again requested an ROE and termination letter.  The employer sent an ROE on November 17, which stated the reason for its issuance was “dismissal,” but then reissued it on November 18 purporting to correct errors in the first ROE, stating the reason for the Employee’s dismissal was “sexual harassment and bullying of female subordinate staff.”

Decision of Lower Court

The lower court found the employer established that the Employee sexually harassed the Subordinate; however, it determined the sexual harassment was not sufficient to justify his dismissal because, “this is not a situation where the misconduct was irreconcilable with sustaining the employment relationship.”  

The court found the Employee was terminated for his refusal to sign the Affidavit admitting his misconduct, rather than for his actual misconduct; however, it was reasonable for the Employee to refuse to sign the Affidavit prior to being reinstated, because by requiring him to do so, “the Employer effectively forced him to choose between incriminating himself and facing possible criminal charges as a result, or keeping his job.”  Accordingly, the court held that the Employee’s termination due to this refusal constituted unjust dismissal.  It found a reasonable notice period was five months but reduced it by two months because the Employee failed to mitigate.  

The court also made a global award of $25,000 in aggravated and punitive damages for the manner of the termination, noting the employer was “highly blameworthy” because it knew that if the Employee signed the Affidavit he would risk criminal proceedings, and also that the employer “took advantage of [the Employee’s] emotional and financial vulnerability by refusing to provide him with an ROE unless he signed the Affidavit.”   

Decision of Court of Appeal

The employer appealed the trial judge’s decision arguing that she erred by: (a) finding the Employee was not dishonest; (b) failing to cumulatively consider the Employee’s misconduct in assessing whether there was cause for dismissal; (c) considering irrelevant factors in assessing the nature and extent of the sexual harassment; and (d) making a global award of $25,000 for aggravated and punitive damages.

The BCCA determined that the employer did not establish a material error in the lower court’s reasons: 

Finding the Employee was not dishonest

The employer claimed the Employee was dishonest because: (a) after his termination and throughout the legal proceedings, including at trial, he denied touching the Subordinate on the buttock; and (b) he was dishonest about his remorse because he refused to engage with the employer about the form of the apology.

The BCCA found that (a) the employer could rely only on events after the sexual harassment until the date of termination, and during that period the Employee admitted to the misconduct; and (b) the trial judge concluded the Employee immediately showed remorse by offering to apologize or quit his job, and when, even after he believed his employment had been terminated, he asked for the apology document. 

Failing to cumulatively assess the grounds for dismissal

The employer argued the judge failed to consider the full range of the Employee’s conduct because she considered the sexual harassment “in a silo.”  The BCCA found the trial judge correctly considered the sexual harassment “in isolation” because the other conduct relied on by the employer was not established. 

Consideration of irrelevant factors in assessing whether the sexual harassment was sufficient cause for dismissal 

• Willingness of employer to remediate the relationship

The BCCA found the employer’s efforts to remediate the employment relationship could be considered as one contextual factor among many in the assessment.

• The Employee’s intention in touching the Subordinate

The BCCA found that a harasser’s intentions may be relevant to whether the employment relationship can be salvaged, and it did not believe the judge erred in finding the sexual harassment fell “on the lower end of the spectrum”/was “relatively minor on the range of physical contact which extends to more prolonged touching, more extensive body contact, forced kissing and fondling.”

• Timing of Subordinate’s complaint

The employer argued the judge erred in downplaying the significance of the power imbalance between the Employee and the Subordinate because the Subordinate reported the sexual harassment to another manager shortly after it occurred.  The BCCA agreed that the timing of the report was irrelevant in assessing the significance of the power imbalance; however, it did not consider this error material, because the trial judge still recognized the Subordinate was distressed by the power imbalance and that it made it more difficult for her to assert herself. 

• The Employee’s age and absence of a warning and opportunity to respond

The employer argued the Employee’s age and length of service did not impose an obligation on the employer to provide a warning to the Employee, because where sexual harassment is on the serious end of the spectrum the employer may not have a duty to warn. 

The BCCA disagreed for the following reasons: (a) the judge found the sexual harassment was relatively minor; and (b) as established by judicial precedent, it was not an error for the judge to consider the nature of the employment relationship (e.g., employment record, age, length of service, and implied or express terms of the employment contract) with respect to warnings or the opportunity to respond. Regarding age, the BCCA emphasized “it may be a consideration in cases of lesser wrongful behaviour in assessing whether the employer has an obligation to impose a lesser consequence than dismissal.”  The BCCA agreed with the trial judge that the employer had a duty to warn or provide an opportunity to respond. 

Although the BCCA acknowledged the judge considered some factors that were irrelevant to whether the sexual harassment conduct warranted the employee’s dismissal, it found they did not materially affect her decision. 

Global award for aggravated and punitive damages

The trial judge made a global award of $25,000 for aggravated and punitive damages.  The employer asked the BCCA to set it aside, arguing that neither type of damages was available on the facts of the case.  

The BCCA acknowledged that the judge erred in making a global award for aggravated and punitive damages, as they are distinct remedies with different objects; however, the BCCA declined to set aside the $25,000 award, concluding that it was an appropriate award for aggravated damages to compensate the Employee for the mental distress he experienced over the form of his dismissal, which involved the employer’s bad faith and unfairness: “[The employer] effectively acted as the complainant’s agent, attempting to lever an admission from [the Employee] by withholding the ROE, knowing that the admission would work to his prejudice in other contexts.” The BCCA did not award anything for punitive damages as it found there was no need to achieve its goals:  denunciation, deterrence and retribution.  Accordingly, the BCCA varied the lower court’s the order to read that the $25,000 award was for aggravated damages only.

Bottom Line for Employers

Employers should not automatically assume that it is appropriate to dismiss an employee for cause in all cases of sexual harassment.  It is important for the employer to consider (a) the harasser’s intentions; and (b) where on the spectrum the harassment lands, i.e., is it relatively minor, or does it involve prolonged, forced, and extensive body contact, e.g., kissing and fondling?

If the sexual harassment is minor in relative terms, employers should consider (a) the harasser’s employment record, age, and length of service; and (b) whether their employment contract contains implied or express terms indicating the employer has a duty to warn the employee and provide them with the opportunity to respond. In cases of sexual harassment that are minor in relative terms, employers may have an obligation to impose a consequence less drastic than dismissal and more proportionate to the severity of the offence.

If a determination is made that an employer is justified in terminating a harasser’s employment for cause, the employer should dismiss the employee fairly and in good faith; otherwise, the employer could find itself liable for a significant sum of aggravated damages to compensate the employee for the mental distress they experienced due to the manner of their dismissal. 

Furthermore, applicable occupational health and safety legislation in Canada may require the employer to have a harassment (including sexual harassment) policy in place, and employers are encouraged to do so; without a sexual harassment policy, employees may be unclear about what constitutes sexual harassment in their workplace, how allegations of sexual harassment will be investigated, and the consequences for engaging in it.

Finally, regardless of whether an employee’s sexual harassment of another individual is minor or severe in nature, employers are encouraged to seek legal advice from experienced employment counsel.