In a recent Ontario Superior Court of Justice decision in Peng v. Star Choice Television Network Inc., the issue of whether a Judge in an action for wrongful dismissal can deal with allegations of discriminatory conduct was addressed.

The state of the law until quite recently was that allegations of discriminatory conduct were the sole jurisdiction of the Human Rights Commission. The decision in Peng v. Star Choice Television Network Inc. is consistent with the more “modern” view of the law, that allegations of discrimination can be relied upon in a civil action for wrongful dismissal for limited purposes, including (a) a claim for punitive damages; (b) bad faith damages; or (c) grounds for constructive dismissal.

In this case, Ms. Peng alleged that she and other visible minority groups who were terminated as a part of a large layoff, were the victims of discriminatory conduct on the basis of race and gender.

On the issue of whether the Court had jurisdiction to adjudicate upon the claim of discrimination, the Court stated that “insofar as the allegations are relevant to the issues of the alleged wrongfulness of the dismissal, length of reasonable notice and availability of certain heads of damages raised in this particular case, entitles the Court to hear evidence and entertain argument about them within those boundaries…” The Court stated that the Plaintiff’s allegation that the termination was discriminatory and constituted bad faith and entitled her to damages for mental distress, an increased period of notice, as well as punitive damages, was therefore generally relevant to the issue of damages. The Court went to say that “such claims have been permitted and recognized, most recently by the Ontario Court of Appeal which countenanced an award of punitive damages as a result of discriminatory conduct in breach of Human Rights legislation”.

Notwithstanding the finding that the Court could deal with the issue of discrimination in the context of determining whether a wrongful dismissal existed, and whether bad faith or punitive would be warranted, the Court found in this case there was no basis for the allegation of discriminatory conduct. However, the Judge found that Ms. Peng was entitled to wrongful dismissal damages as a result of the employer’s failure to provide adequate notice.

The decision in “Peng” illustrates that litigants should be careful when to make allegations of discrimination and/or bad faith in a civil matter. In hindsight, Ms. Peng may have been better off limiting her claim to damages for wrongful dismissal, that issue not being in dispute. Clearly, the trial and thereby the costs of litigation were increased by the investigation into issues of discrimination which were ultimately determined to be unfounded. There are however, many instances where additional damages whether characterized as “bad faith” or “punitive damages” have been awarded as a result of the employer acting in a discriminatory manner. The difficulty is being able to prove the allegation.

One of the issues that will likely be discussed between counsel and a potential claimant during an initial meeting are the relevant claims available to the terminated employee which may include a civil action for wrongful dismissal, Human Rights claim, Employment Standards claim and WSIB applications, all of which have varying limitation periods, and remedies. Based on ”Peng” and similar cases, the issue will now be expanded to include not only which claim(s) to bring, but in addition, which claim(s) should be included in a civil action. It is important that an employee understand the relevant claims available, remedies, and the interaction between the various claims. The impact of these discussions and ultimate decision will likely have a direct impact to the bottom line.