Dean Munroe v. Padulo Integrated Inc. and Kamel Mikhael, 2011 HRTO 1410

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Dean Munroe

Applicant

-and-

Padulo Integrated Inc. and Kamel Mikhael

Respondents

DECISION

Adjudicator: Sherry Liang

Date: July 27, 2011

Citation: 2011 HRTO 1410

Indexed as: Munroe v. Padulo Integrated Inc.

APPEARANCES BY

Dean Monroe, Applicant ) Maeve Sullivan, Counsel

Padulo Integrated Inc. and ) Stephen A. Bernofsky, Counsel

Kamel Mikhael, Respondents )

1This is an Application filed on August 24, 2009, under section 34 of Part IV of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”).

2The applicant, Dean Munroe, alleges that the respondents discriminated against him on the ground of disability when they decided to lay him off on the eve of his return from a lengthy medical leave. I heard this Application over the course of three days in August and December 2010. For the reasons that follow, I find that the layoff was not in violation of the Code.

FACTS

3During the hearing I received evidence from the applicant, the personal respondent Kamel Mikhael, and Marilyn Bassin, the applicant’s supervisor. Most of the evidence was uncontroversial. Where there were meaningful differences in the evidence I refer to those and explain my findings, below.

4The respondent Padulo Integrated Inc. (“Padulo”) is in the advertising business. Mr. Mikhael is the company’s CFO/COO (Chief Financial Officer/Chief Operating Officer).

5In March 2006, the applicant was hired to work for Padulo as a Senior Account Supervisor in the direct marketing department, assigned to the company’s CitiCards Canada (“Citi”) account. Mr. Munroe has a lengthy history of work in direct marketing. His work at Padulo involved developing and implementing direct marketing campaigns for Citi. In or around December 2006, his job title was changed to Account Director.

6During the time of the applicant’s employment, Padulo had employees and consultants working in various departments such as production, creative, studio, direct marketing and finance. Although all are involved in advertising, the witnesses distinguished between the “general advertising” part of the firm and the “direct marketing” area. In describing direct marketing, the applicant stated that “our discipline is very different from general advertising”. In the direct marketing department, the applicant reported to Marilyn Bassin, who was responsible for the work for Citi. The applicant understood that he was hired to work specifically on that account.

7Padulo’s work with Citi was governed by a contract signed in December 2005, with an expiry date of December 2010. The contract was renewable on a year-to-year basis, but could be terminated at any time with sixty days’ notice by either party. Work under the contract fluctuated from year to year, depending on the size and number of projects on the go.

8Between March 2006 and February 2009, the number of employees working on the Citi account fluctuated, with a mix of contract and long-term employees. At the beginning, there was only the applicant and Ms. Bassin. Over time, about seven other individuals were hired to work on the Citi team, some for as short as a month and others remaining past the applicant’s lay-off.

9In May of 2007, the applicant learned that he would undergo hip surgery on July 24, anticipating a recovery period of about six months. Unfortunately, he developed complications and required further surgery later in the year, and then again in February 2008. The applicant planned to return to work in the spring of 2008, and after discussions with the company, agreed to take his vacation leave before his anticipated return. During this period however, he was diagnosed with severe depression, and became unable to return to work. He received treatment for the depression and in early January of 2009, in consultation with his doctor, decided that he was ready to resume working as of February.

10Ms. Bassin testified that when she learned that the applicant was scheduled for surgery in July 2007, she asked a temporary employee, Caurie Bregman, to stay on until the end of the medical leave, which the company understood would be about four months. Around this time, the company also hired a new member for the team, Janet McCallum. The applicant testified that it was his understanding that Ms. McCallum was to replace another departing member of the team, Kersti Kahar, but was also to be his temporary replacement. Ms. Bassin’s evidence was that Ms. McCallum was not intended to be a temporary hire. On all the evidence, I accept that although Ms. McCallum may have taken over some of the applicant’s work, as did others, the company saw Ms. Bregman as his short-term replacement rather than Ms. McCallum, who was hired on an indefinite basis.

11When the applicant’s leave was extended past the end of 2007, Ms. Bassin asked Ms. Bregman to continue on until the applicant returned. Ms. Bregman agreed, but after about 14 months on the job, was unable to stay any longer. At this point, in about June or July 2008, the company did not know when the applicant could return to work, and needed to replace him. Although there is a note from the applicant’s doctor in June stating that she expected him to be able to return to work in September, there was no evidence about when and to whom at Padulo the applicant sent this to. There is no evidence that either Mr. Mikhael or Ms. Bassin were aware of it at that time. In fact, the company understood that the applicant was seeking an extension of his long term disability benefits from the third party insurer. In any event, the applicant decided he was not in fact ready to return to work in September 2008.

12Ms. Bassin testified that at the point Ms. Bregman told the company she could not stay any longer, she learned of a candidate, Sue Pitts, who was interested in joining Padulo. Ms. Pitts was highly experienced, and was in a full-time position elsewhere. Ms. Pitts did not wish to leave her position for a contract job with Padulo. Ms. Bassin testified that she tried to contact the applicant to find out his intentions about returning, but was unable to reach him.

13With the approval of Mr. Mikhael, Ms. Bassin made Ms. Pitts an offer of a permanent position in July 2008. At this point, in Ms. Bassin’s mind, the Citi team was full, and was working together well. She testified that once Ms. Pitts was hired, there was discussion within the company about the possibility of moving the applicant to a different account when he returned to work. However, no one knew when that would be.

14After meeting with his doctor, the applicant phoned Ms. Bassin in early January 2009 to advise her that he was planning to return to work shortly. Ms. Bassin testified that she was taken aback by this news. As will be discussed below, she was aware by this time that the company was going to experience some downsizing, although she was not aware of the specifics. She had not heard from him in several months, nor had anyone else at the company as far as she knew. By this time, the applicant had been away some 18 months, and Ms. Bassin stated candidly that “nothing personal but we weren’t talking or thinking about him anymore at that point”.

15The applicant also sent an email to the company to let them know of his precise return date, which he intended to be February 19, 2009. The evidence was inconsistent about when this email was sent, and whether it was contemporaneous with or following the phone call to Ms. Bassin, but it is unnecessary to make a specific finding on this.

16At the time the applicant planned to return to work, the Citi team consisted of Ms. Bassin and three other individuals. One of these individuals, James Brans, came through an internal company transfer in April 2007, working in a different position and paid at a lower salary than the applicant. As indicated above, the other two individuals, Janet McCallum and Sue Pitts, were hired in July 2007 and July 2008 respectively. These last two individuals were hired into positions equivalent to the applicant’s and received similar salaries. Both had considerable experience in the industry before joining Padulo.

17During 2007 and the early part of 2008, Padulo’s work for Citi kept the Citi team very busy. However, as Mr. Mikhael testified, the advertising business is quite volatile and sensitive to economic cycles. Part of its vulnerability, according to his evidence, comes from the fact that firms tend to depend on single major accounts from different industries. The loss of one of these, therefore, has a considerable impact on a firm.

18During the latter part of 2008, the financial industry in the United States began to experience major turmoil and restructuring. Padulo began to hear from its clients that they planned to cut their advertising budgets. In early December 2008, Padulo received particularly distressing news. Due to major financial troubles with its American parent company Citibank (which resulted in a government bailout), Citi (a Canadian subsidiary) was to be put up for sale in the new year. As a result, Citi planned to (and eventually did) lay off half of its employees before Christmas of 2008. Padulo was advised that it could continue to work on projects then underway, but that there would likely be drastic reductions in new work. Shortly afterwards, Padulo heard from another major client, Rexall, that its advertising budget was to be cut by 60% in the new year. The company lost another major client in late January 2009 and then in March 2009.

19As a result of the impeding shrinkages in work, senior management at Padulo decided it had no choice but to look at staff reduction, through layoffs and attrition. They did not want to give employees bad news before the holidays, and decided to leave specific decisions until January. At a meeting in the first week of January 2009, Padulo identified four individuals, including the applicant, who would receive notices of layoff as of the end of January. As well, it was decided that four members of senior management would receive salary cuts, accompanied by reduction of their work week. Mr. Mikhael’s work week was reduced to three days, and Ms. Bassin’s to four days.

20There was conflicting evidence about whether, by the time of this meeting, Mr. Mikhael was aware that the applicant planned to return to work in February. It is not disputed, as indicated above, that the applicant phoned Ms. Bassin early in January and advised her about his intention to return to work. She in turn, knowing about the financial difficulties, told him he should speak to Mr. Mikhael. The applicant did have a brief conversation with Mr. Mikhael on the same day in which he affirmed his intention to return to work. Mr. Mikhael told him of the general financial situation and that the company would experience some downsizing and restructuring. Mr. Mikhael testified that as of this phone call, he still did not know how many people would be affected. The applicant testified that Mr. Mikhael told him of a few specific individuals who would be laid off.

21The meeting at which the layoffs were decided and this phone call with the applicant happened within a few days of each other. Mr. Mikhael suggested at one point that he thought the phone call was after the meeting but at another point, testified that the phone call was before the meeting. I do not attribute anything more than forgetfulness to this contradiction in his evidence, as there were several meetings during this period during which the company’s financial troubles were reviewed, but I find it reasonable to conclude that the phone call came before this particular meeting. I find that at the time the applicant spoke with Mr. Mikhael, Mr. Mikhael was aware that layoffs were looming but the company had not yet decided that it would affect the applicant specifically.

22Therefore, by the time senior management met to identify the employees who would be laid off, they were aware that the applicant planned to return to work.

23Kamel Mikhael testified about the decision to lay off the four employees, including the applicant, and how they were selected. He stated that senior management reviewed each of their departments in turn, to identify where there were redundancies. One person had responsibilities in information technology which overlapped with the duties of another individual and the company decided that it did not require two persons in that position. Two others worked together as a team in the creative department and their responsibilities duplicated the work of others in the department.

24It was apparent that with the applicant’s return, there would be a surplus of employees on the Citi team. Mr. Mikhael testified that the senior management team at the meeting decided the applicant was the best candidate for lay-off from the Citi team. He stated that the team in place had established relationships with the Citi employees. Padulo foresaw that the Citi work would soon leave the company but until then, the two companies would finish up existing projects together. Senior management at Padulo felt it would be best to keep the individuals who were familiar with and already working with the Citi employees. Citi had just experienced a 50% reduction in staff and a lot of turmoil, and Padulo felt it was prudent at its end to maintain stability and continuity until the end of the contract. Ms. Bassin was not consulted about the decision to select the applicant for layoff.

25The applicant was advised of his layoff in a letter dated January 28, 2009.

26After the applicant’s layoff, the Citi team continued to work on completing ongoing projects with Citi. The team looked for new clients to replace Citi, but the overall work declined over the next months. Mr. Brans left the company in November 2009. As of the date the hearing started, the others still remained with the company. Ms. Bassin testified that there was still a minimal amount of work from Citi, the team was not very busy, and was spending much time developing new business and attending industry seminars.

27The company submitted a chart showing the individuals affected by the company-wide downsizing, which Mr. Mikhael confirmed through his evidence. Based on the chart, eleven employees were laid off between May 2008 and March 2010, four of these (including the applicant) in January and February of 2009. Following February 2009 there were six additional layoffs, in April, July, August, November and then in early 2010. Two individuals are indicated as having resigned in 2009 due to lack of work and were not replaced. The chart also shows four individuals who, as previously discussed, agreed to take salary reductions and a shortened work week, effective in February 2009. One of these was subsequently laid off despite the salary reduction.

28Mr. Mikhael testified that in addition to the layoffs, the company lost positions through attrition. Between 2007 and the time of the hearing, the company only replaced one person who left the company. Through a combination of layoffs and attribution, Padulo went from about 31 employees to 17 during this period.

29The length of service of the employees who were laid off from 2008 to 2010 ranged from about two to five years. Including his leave, the applicant’s length of service at the time of his layoff was about three years.

SUBMISSIONS

30The Application alleges that the applicant’s layoff was not on the basis of a bona fide downsizing within the Citi group. It alleges that the purported downsizing is insupportable on the facts. At the outset of the hearing, the applicant submitted that his lay off was due solely to the fact of his disability, or the employer’s perception that he continued to be disabled.

31During final submissions, counsel for the applicant submitted that the applicant’s layoff was discriminatory in two ways. First, the applicant questions the bona fides of the restructuring, suggesting that it was a pretext for letting go of a sick employee who had recovered and was ready to return to work. Although the company knew that there was to be a reduction of work from Citi, at the time of the layoffs it was business as usual within the team, at least for a while.

32Second, it was submitted, the layoff was discriminatory because the company failed to consider how it might accommodate the applicant on his rightful return to work. Counsel submitted that the evidence of Mr. Mikhael almost amounts to an admission of liability with respect to the failure to accommodate. The only factor the company considered in selecting the applicant for layoff was the fact that he had been absent from work for a prolonged time, due to illness. The company essentially viewed the applicant as not “being up to speed” due to his lengthy absence.

33Counsel submitted that an individual who has been away on sick leave will never be as “up to speed” as someone who has not been on leave, and the company was obliged to consider whether it could have provided him with time to transition back to work before deciding on the layoffs. It was submitted that there is an element of accommodation in every return to work, as a result of having been absent from the workplace. In these circumstances, the applicant was entitled to be accommodated on his return to work by being given the opportunity to re-integrate into the work so he could compete with the other members on the Citi team on a level playing field. Counsel suggested that Padulo had an onus to show how that they considered the re-integration option before making a decision on layoffs. It had an onus to show that it considered all relevant factors in making its decision, such as seniority, skills and experience. However, there as no evidence that they took any of this into consideration.

34The company submitted that the applicant’s employment was terminated because of a genuine company-wide downsizing, which affected a significant number of individuals at Padulo, and not because of disability.

DECISION

35Section 5 of the Code prohibits discrimination in employment on the grounds of, among other things, disability. Section 17 provides a defence to discrimination where the individual is incapable of performing the essential duties or requirements of the job, subject to the duty to accommodate. The duty to accommodate also arises under section 11, in relation to constructive discrimination.

36The parties did not refer to the specific provisions of the Code in making their submissions, although the applicant did submit that the company had failed in its duty to accommodate his disability. In considering the evidence and the issues, I have had regard to both section 11 and 17 of the Code.

37I find no evidence to support the suggestion that the applicant was targeted for layoff because of his disability, or that the restructuring was a pretext to disguise the termination of employment of an individual who had been or was perceived to continue to be disabled.

38However, the factor of “continuity”, which was the primary consideration in the selection of the applicant for layoff, does have a link to the applicant’s disability given his lengthy absence from work due to medical circumstances. While “continuity” is not in itself a discriminatory consideration, it is possible to view it as a neutral factor within the meaning of section 11(1) that has a disproportionate and adverse effect on a group of persons with disabilities, of whom the applicant was a member. It is also possible to view the decision to lay off the applicant as covered by section 17, in the sense that the company determined, in comparison to other employees, he could not provide the continuity it required. In any event, I must consider whether the decision to lay off the applicant for this reason was justified having regard to the duty to accommodate to the point of undue hardship.

39In assessing undue hardship, s. 17(2) of the Code directs the Tribunal to consider “cost, outside sources of funding, if any, and health and safety requirements, if any”. The Supreme Court of Canada has stated that “[t]he factors that will support a finding of undue hardship are not entrenched and must be applied with common sense and flexibility”. See McGill University Health Centre (Montreal General Hospital) v. Syndicat des employés de l'Hôpital général de Montréal, 2007 SCC 4, at para. 15, applied by the Tribunal in Espey v. London (City), 2008 HRTO 412. In Central Alberta Dairy Pool v. Alberta (Human Rights Commission), 1990 CanLII 76 (SCC), [1990] 2 S.C.R. 489, the Court identified some of the factors that may be relevant to such an inquiry:

I do not find it necessary to provide a comprehensive definition of what constitutes undue hardship but I believe it may be helpful to list some of the factors that may be relevant to such an appraisal. I begin by adopting those identified by the Board of Inquiry in the case at bar -- financial cost, disruption of a collective agreement, problems of morale of other employees, interchangeability of work force and facilities. The size of the employer's operation may influence the assessment of whether a given financial cost is undue or the ease with which the work force and facilities can be adapted to the circumstances. Where safety is at issue both the magnitude of the risk and the identity of those who bear it are relevant considerations. This list is not intended to be exhaustive and the results which will obtain from a balancing of these factors against the right of the employee to be free from discrimination will necessarily vary from case to case.

40In Espey v. London (City), 2009 HRTO 271 (reconsideration), the Tribunal found that collective agreement provisions and potential impact on other employees were relevant to a consideration of “cost” under the Code. In this case, I find that the cost of accommodating the applicant must be assessed having regard to the economic circumstances at the time, the size of the employer’s operations, and the interchangeability of its work force.

41I note that it was not until final submissions that the aspect of the applicant’s case relating to the duty to accommodate became apparent. As a result, there were some issues that were not fully addressed by the evidence, and that the witnesses did not explore. In particular, the respondents’ witnesses were not asked to address the specific question of “undue hardship” under sections 11 or 17. Neither the applicant nor the respondents’ witnesses gave much evidence about whether options short of layoff might have been reasonable in the circumstances.

42I find on the evidence that the applicant’s anticipated return to work coincided with a genuine downturn in Padulo’s business. Due to the loss, or anticipated loss, of most of the work from two major accounts (Citi and Rexall), the company decided in early January 2009 that it had to reduce its workforce, as well as require salary reductions from senior management.

43I therefore accept that the decision to lay off some of its employees, including part of the Citi team, was justified by genuine economic circumstances. Counsel for the applicant suggested that if the primary distinguishing factor between the applicant and other members of the Citi team was “client continuity”, he should have been accommodated by being returned to work for a period of re-orientation, to bring him “up to speed” before any decision on layoffs from the Citi team were made. The respondents’ witnesses were not asked about whether this could have been a possible accommodation although it seems fairly clear this was not considered.

44Although a re-orientation period is a practical and ordinary part of a return to work in many circumstances, in the particular facts of this case, I find it would not have been a reasonable accommodation. This company was in the process of downsizing and cutting costs. Over less than two years, the company would shrink from about 31 employees to about 17. In January 2009, other individuals were being laid off or experiencing significant salary reductions. Further, the team on which the applicant worked was in the process of winding down the work with its major client. The work to which the applicant would have returned was not continuing, but was anticipated to come to an end. In the context of these specific circumstances, it would not be reasonable to expect the company to have brought the applicant back as an additional person on its payroll for a period of re-orientation, for the purpose of delaying a decision on layoffs until later.

45The applicant did not directly assert that a reasonable accommodation of his disability-related need for time to re-integrate into the workforce required the layoff of another member of the City team. Mr. Mikhael was not asked during cross-examination about whether this was a reasonable option. In any event, I find on the facts that it was not. In addition to the company’s stated need for continuity, which is supported by the evidence, there were two members of the team in equivalent positions to the applicant who would have been affected by this. By January 2009, Janet McCallum had been with the company for two-and-a-half years. Sue Pitts had only been there since June 2008, but she was convinced to leave a permanent position to join Padulo, on the understanding that it was a job of indefinite duration. Neither joined the company believing that their jobs were contingent on the duration of the applicant’s leave, or was treated as a short-term employee.

46Mr. Mikhael was also not asked during cross-examination about the possibility of placing the applicant in another department in February 2009. Ms. Bassin did state that upon hiring Ms. Pitts, the company considered the possibility that the applicant might be moved to a different department on his return from leave. The applicant gave evidence to the effect that he did not believe his skills were transferable, at least not without training. Given the particular circumstances at the time, I also do not find this a reasonable alternative available to the company in February 2009.

47Counsel for the applicant suggested that the option of reducing the applicant’s salary should have been explored, but the evidence was that this was a measure the company only applied to senior managers, with a concomitant reduction in work week, and there is no evidence the applicant would have agreed to it or that this would have addressed the surplus of staff on the Citi team.

48In ordinary circumstances, the applicant would have returned to work after his leave. If no work were available on the Citi team, the company would have considered whether he could join another department, with training. Unfortunately, at the time when the applicant wished to return to work, the company was facing extraordinary circumstances. I find on the particular facts that the decision to lay off the applicant was not in contravention of the Code. It did not amount to direct discrimination. To the extent that the applicant’s lack of continuity with the work was the determining factor in his layoff, I find it was a bona fide occupational requirement in the circumstances present at the time, and that his needs could not be reasonably accommodated by the respondent company without undue hardship.

49The Application is dismissed.