As discussed in a prior post, the issue of legal costs can be an important factor in deciding whether to pursue or settle a civil claim arising from the termination of employment or other employment issues. The origin of this question stems from the default setting in civil cases that the losing party will be required to pay the costs of the successful party.
Human Rights Rule
Unlike civil claims, the human rights process does not require the losing party to pay the legal costs of the successful opponent. Many people, lawyers, in particular, believe that this rule should be reversed and this process should, like civil cases, reward the winning party with compensation for costs incurred.
Advantages of No Costs
For many reasons, however, support does exist to maintain the “no costs” rule in place with respect to human rights matters.
The primary reason is due to the consequences of a settlement offer as set out in the prior post linked above. As noted previously, the offer made by the employer must be less than the recovery achieved in the hearing. If not, the individual claimant will not only be deprived of costs but must pay the costs of the employer.
Once an offer is made, it will place substantial pressure on the claimant to settle the case as the risk of “losing” is likely not worth the money in dispute. In a civil dispute, a claimant would have to take the possibility of facing a costs order into account when considering any settlement offer.
In a human rights context, the lack of costs eliminates this pressure for any claimant faced with an offer to settle. If the claimant is determined to have their day in court for whatever reason, principled or otherwise, there will be no risk of an adverse costs ruling to complicate their decision-making.
A further reason is that because the present system does not allow costs to the employer in the event of a successful defence this provides a better opportunity for settlement. Suppose for example that the employer’s costs of a successful defence will be $50,000. This means that the company will be out of pocket for this sum no matter the result. Add to this mix the possibility of the employer losing the case and paying damage sums for injured feelings, lost income and even reinstatement, this provides the employer with good motivation to settle the case, no matter the degree of risk involved.
Ontario’s Unique Statute
Ontario’s Human Rights Code presents the option to the victim of a human rights violation to sue in civil court for a human rights remedy when the case is accompanied by a second claim, usually wrongful dismissal, although it can be any other related claim.
When this remedy is sought in this manner, it then raises the same costs issues as in a regular civil action. When proceeding in this manner, the individual claimant should consider the costs issues carefully and ponder which process is more aptly suited for their particular circumstances.
On an unrelated but important topic, it must be recalled that the limitation period for a human rights complaint is 12 months, whereas the civil claim seeking a human rights remedy is 2 years. Depending on the timing, this consideration may dictate the best (or only) path forward.
Take Advice and Understand the Risks
It is important to understand the question of costs in the human rights process, particularly with the alternatives in Ontario. This applies only to provincially-regulated employers. Federally-governed employees must proceed under the Canadian Human Rights Act, which is similar in effect to the Ontario Human Rights Code.
If you are seeking legal advice on employment issues, contact the office of Guelph employment lawyer Peter A. McSherry. We can guide you through the issues and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation.