Legal News

Purchaser's Refusal to Hire Employee on LTD Contraves Human Rights Code

The BC Human Rights Tribunal recently concluded that the purchaser of a business discriminated against an employee of the vendor company on the basis of her disability when it refused to hire her because she was on long term disability (LTD) leave at the time of the sale of the business.

On July 13, 2001, Rona Inc. purchased the home centre business of Revy Home Centres Inc. Under the terms of the asset purchase agreement, Rona agreed to offer employment to almost all Revy’s employees, except for some managers, and employees who were on LTD. Approximately 5000 Revy employees were offered and accepted employment with Rona. The complainant, one of 24 employees on LTD, was not offered employment.

The complainant was considered by Revy to be a hard-working and valuable employee. She was 57 years old and had worked for Revy for approximately 15 years. She had been off work for approximately one year at the time of the sale. On July 9, 2001, she informed her manager that she had undergone surgery and could return to work in one month. They arranged a meeting for July 24, to discuss her return to work. At the time of the phone call, the complainant was not aware of the pending sale to Rona. Her manager was aware of the sale and that the complainant would not be offered employment by Rona, but did not advise her about this situation. Between the time of the telephone call and her scheduled return to work meeting, the complainant took active steps with Revy’s LTD carrier to develop a graduated return to work plan.

On July 13, the sale was completed. In the July 24 meeting, the complainant was advised of the sale and that Rona had not continued her employment contract because she was on LTD at the time of the sale. When her LTD claim ended in September, she was offered a choice between remaining on Revy’s payroll for a further nine months, or a lump sum payment. The complainant chose the first option. She also filed a human rights complaint against Rona Revy Inc.

The Tribunal held that Rona discriminated against the complainant on the basis of disability concluding that the only reason she was not offered employment was because she was on LTD and the only reason she was on LTD was because she was disabled. The Tribunal also found that, except for a reference letter, neither Rona nor Revy provided any assistance to the complainant to find a new job. Despite several attempts to find alternative employment, she was unsuccessful in doing so, and decided to retire at age 60.

Further, the Tribunal determined that Rona’s refusal to hire her because she was on LTD was not a bona fide occupational requirement. The Tribunal noted that Rona offered employment to Revy employees on other types of leave, such as maternity leave, adoption leave, workers’ compensation leave or short term disability leave. In addition, Rona did not call any evidence as to why it had determined not to offer employment to employees on LTD. There was also no evidence that the individual circumstances of the 24 employees on LTD were even considered for employment, or that doing so would have imposed an undue hardship on Rona.

The Tribunal awarded the complainant $10,000 as compensation for injury to dignity. In addition, she was awarded lost wages from the date of the expiry of her severance payments to the date on which she began to receive payments under the Canada Pension Plan (approximately 21 months). Finally, Rona was ordered to compensate the complainant for actual expenses, pension plan contributions and adverse tax liabilities.

This decision is important for employers for two reasons. First, the $10,000 award for injury to her dignity matches the highest award ever issued by the BC Tribunal under this category of damages. The only other case in which an award of this amount was made involved sexual harassment of an employee, who suffered severe psychiatric problems resulting from the harassment. This signals that the Tribunal may be moving toward higher damages awards for injury to dignity generally.

Second, many purchase and sale agreements provide that employment will be offered to “active” employees of the vendor company. In light of this decision, such provisions must be carefully considered in terms of the actual impact that they may have on employees who are absent on leave, and the potential exposure to human rights claims which may result.

Fenton v. Rona Revy Inc., 2004 BCHRT 143, October 12, 2004