Friday 8 August 2014

When Arbitrators "Get It Wrong": Judicial Review as a Remedy

Section 48 of the Labour Relations Act provides that all collective agreements in Ontario must provide for "final and binding settlement by arbitration, without stoppage of work, of all differences between the parties arising from the interpretation, application, administration or alleged violation of the agreement".  As a result, the courts will generally show considerable deference to the decisions of labour arbitrators.  But what about those instances where the decision of an arbitrator seems to fly in the face of reason?  A couple of recent decisions from the courts indicate that deference only goes so far.

The decision of the Alberta Court of Appeal in Telus Communications Inc. v Telecommunications Workers Union offers an example of just such a case.  The grievor was a service technician for Telus.  He had asked to use vacation to participate in a slo-pitch tournament.  His request was denied, but the employee called in sick for the day, stating that he could not come in "due to unforeseen circumstances".  His manager attended the ball park, and witnessed the grievor pitching in a game.  When confronted, the grievor said that he awoke that day with severe diarrhea, but that he was able to attend the tournament, just to watch.  Upon further questioning, he admitted that he was playing (only pitching, not batting or running the bases), and stated that he felt he could manage his condition at the ball park, but could not have attended customers' homes.  The employer terminated the grievor, and the union filed a grievance.  At arbitration, the Arbitrator acknowledged that the grievor had twice lied to the company during the investigation meeting, and that he had planned to play in the ball tournament despite not being given the day off.  However, the Arbitrator ultimately decided that the company had "over-reacted" and substituted a one-month suspension for the discharge.

On judicial review, the Chambers Judge found that the Arbitrator's decision was subject to a standard of "reasonableness", but that the decision could not stand.  The Judge ruled that the Arbitrator had failed to properly weigh the evidence and that his conclusion that an employee could be too sick to work, but could still pitch in a baseball game, "defies logic and common sense".  Moreover, the Arbitrator's decision that discipline was only warranted where the employer could establish that the employee's absence actually affected customer service was unreasonable.  Rather than sending the matter back to the Arbitrator or a different arbitrator, the Chambers Judge ruled that the only reasonable conclusion available was that the grievor lied about being sick, and that his termination was justified.  In the result, the Arbitrator's award was quashed, and the discharge was upheld.

The Alberta Court of Appeal found that the Judge was "correct" that "the arbitrator's decision was not within the range of possible outcomes defensible in respect of the facts and law".  The Court also agreed that where sending the matter back for re-hearing "would serve no useful purpose", it is open to a reviewing court to quash the decision and uphold the termination.  Accordingly, the appeal was dismissed.

The result in Professional Institute of the Public Service of Canada v. Communications, Energy and Paperworkers’ Union of Canada, Local 3011 was similar.  The grievor was a mail room clerk who engaged in a pattern of sexual harassment and sexual assault of a contract employee who cleaned the offices where the grievor worked.  The grievor had grabbed the complainants buttocks on several occasions, and had tried to kiss the complainant in an elevator, over her objections.  The employer investigated the complaint and found that the grievor had, in fact, engaged in sexual harassment and assault of the cleaner.  He admitted the behaviour, but claimed that the complainant had consented.  The employer discharged the grievor for cause.  At arbitration, Arbitrator Weatherill found as a fact that the grievor engaged in 'sexual banter' with the cleaners and that he occasionally grabbed one cleaner's buttocks, and noted that the grievor had previously been asked not to do so.  Acknowledging that the grievor's behaviour was "improper", the Arbitrator nonetheless pointed out that the grievor had ceased harassing one cleaner when she showed him her fist, and that the primary complainant had indicated in her testimony that she did not want the grievor discharged.  He, therefore, concluded that the grievor's actions were not at the severe end of the spectrum of sexual harassment, and substituted a "lengthy period of suspension" for the discharge.

The employer applied for judicial review, and the Divisional Court had to consider whether the Arbitrator's decision was "reasonable".  The Court recognized that not every case of sexual harassment or assault may demand discharge, but found that the grievor had harassed at least two of the cleaners and that he displayed no remorse or insight into his behaviour.  The grievor had offered a form of "apology" to the complainant that demonstrated no awareness of the impropriety of his actions and no commitment to not engage in similar behaviour in the future.  The Court found that the Arbitrator had placed significant weight on two irrelevant considerations (i.e., the fact that the grievor desisted after one cleaner showed him her fist, and that the complainant did not want him to be discharged), and reached a conclusion that was not "defensible in light of the facts and the law". In the result, the Court set aside the award as to penalty and upheld the termination of the grievor.

While it is not everyday that the courts will intervene in the decisions of arbitrators (or other statutory decision-makers), these decisions demonstrate that where those decisions threaten the function of the administrative tribunal system, the courts will step in.  Employers are well-advised to carefully review arbitral decisions, particularly in cases of serious misconduct where termination is not upheld.  If the punishment does not seem to fit the crime, the courts may be called upon to remedy the outcome, and without the necessity of a re-hearing.

* * *
 
Has your organization received an arbitral award that seems to defy common sense?  Feel free to contact Lance Ceaser to obtain advice and guidance.
 

Did you know...?

... Telling an employee who has given notice of resignation that you no longer require their services and they can leave immediately can convert that resignation into a termination without notice?  If the employee has provided 'reasonable notice' of resignation, but the employer decides to end the relationship before the expiry of that notice, it is the employer who has terminated the contract.  In these circumstances, the employee is entitled to payment in lieu of reasonable notice. 

This concept was illustrated in a recent decision out of the Supreme Court of Canada, Quebec (Commission des normes du travail) v. Asphalte Desjardins inc. The Supreme Court determined that it is a "fiction" for an employer to claim that it has 'renounced' (or 'waived') the employee's notice of resignation, when in fact it has taken unilateral action to bring the contract to an immediate end. While the Asphalte Desjardins case was decided under the Quebec Civil Code, similar rules are applied by the common law courts.  See for example, the decision in Compton v. Partners in Motion Pictures Inc., a 2005 decision of the Saskatchewan Court of Queen's Bench. 

Once an employee provides notice of resignation, the employer can accept it or seek to negotiate a longer or shorter period of notice, but cannot dictate the effective date of resignation.  If the employee is to be sent home prior to the effective date of resignation, the employer should make clear that their active service will not be required, but that the employee should make him or herself available during the notice period to facilitate the transition of duties, projects, etc.  Full salary and benefits must be maintained for the entirety of the notice period, as well.

* * *
 
... That the new Ontario Budget Bill was accompanied by the Building Opportunity and Securing Our Future Act (Budget Measures, 2014) ("Bill 14") which, among other things, amends the Insurance Act to require employers who provide Long-Term Disability ("LTD") benefits to do so through "a contract of insurance undertaken by a licensed insurer"?  No longer can such benefits be self-insured. Health benefits providers have been pressing for this change for some time, as it provides greater security for those receiving benefits coverage.  This measure brings provincially-regulated employers in Ontario into line with federal employers, who have been subject to a similar requirement since 2012. Bill 14 received Royal Assent on July 24, 2014, but has yet to be proclaimed.  Stay tuned...
 
 * * *

... That an employer's duty to accommodate an employee suffering from drug addiction or alcoholism may not be triggered until the employee fully discloses the existence of the disability?  In a handful of recent decisions, adjudicators have been reluctant to overturn employer decisions to terminate the employment relationship where an employee engages in serious misconduct, even where the behaviour has its roots in addiction or alcoholism.

In Bish v. Elk Valley Coal Corporation, the employer had a drug and alcohol policy which offered amnesty to employees who disclosed an addiction, in exchange for their undertaking to go to rehab.  The employee was found to have cocaine in his system when he was tested after an accident on the job.  He had never disclosed an addiction prior to the accident, although he had attended a training session on the drug and alcohol policy.  The Alberta Human Rights Commission dismissed his complaint, finding that the employee was terminated not because of his addiction, but for his non-compliance with the policy, including his failure to reveal his condition and seek treatment. The Commission's decision that there was no prima facie discrimination was upheld by the Alberta Court of Queen's Bench on appeal.

In Huffman v. Mitchell Plastics, the Human Rights Tribunal of Ontario reached a similar conclusion.  Huffman was terminated by the company following grossly inappropriate behaviour at the office Christmas Party.  The employee was drunk, and belatedly claimed that he suffered from alcoholism, which he had 'disclosed' to the employer when he inquired about benefit coverage for the medication "Champix" (commonly used to assist smokers to quit smoking).  The Tribunal found that the Applicant had not properly disclosed his disability or provided sufficient information from which the employer ought to have known that he was an alcoholic.  Accordingly, the employer could not be expected to recognize that it had a duty to accommodate the employee at the point when it terminated him for his conduct.

* * *
 
Are you struggling to manage an employee's resignation?  Have questions about accommodating an addicted employee?  Feel free to contact Lance Ceaser to obtain advice and guidance.

Friday 1 August 2014

Can Fixed-Term Employment Become an Indefinite Hiring? The Quebec Court of Appeal says "Yes".

A recent decision of the Quebec Court of Appeal in Atwater Badminton and Squash Club Inc. c. Morgan (French version only) ("Morgan")  should serve as a reminder to employers that the form of an employment relationship cannot dictate the reality of the situation.  In Morgan, the employee was a badminton professional who had been retained by the Club over the course of 17 years on a series of fixed-term contracts, ranging from 9 months to 3 years in duration.  For a period of four years (1998-2002), the employee did not have any written contract at all, but continued working as a pro.  Several years after a change in ownership of the Club, the employee was advised that his contract would not be renewed beyond its expiry date (August 31, 2010).  The employee sued for the equivalent of 'wrongful dismissal' under the Quebec Civil Code, alleging that he should receive an indemnity equivalent to 21 months' pay in lieu of notice because his employment had been of an indeterminate nature.  The employer argued that the employee had no such entitlement, as he was employed for a fixed term, and his contract had simply expired.

A Justice of the Quebec Superior Court had agreed with the employee, finding that the parties' conduct indicated a common intention that his employment be of an indeterminate nature.  The employee's contract was frequently renewed, sometimes after the prior contract had already expired and with only brief, informal discussion of the terms of renewal.  The employee had even worked for 4 years with no written contract of any kind.  Based on these facts, it appeared to the Judge that the parties had intended the relationship to continue indefinitely, despite the fixed-term form of the agreements that documented that relationship.

In a relatively brief decision, the Quebec Court of Appeal upheld the reasoning of the trial judge with respect to the effect of a series of virtually uninterrupted term contracts, and affirmed the award of a 21-month indemnity to the employee.

While the decision in Morgan emanates under the civil law of Quebec, employers throughout the common law jurisdictions in Canada (including Ontario) would be well served to remember the lesson, as well:  despite the formalities of a fixed-term arrangement, the common law courts will also look to the substance of a relationship to determine whether it is for a definite or indefinite duration.  Where term contracts are frequently and routinely renewed, with little or no negotiation, or if the parties maintain their relationship despite the expiry of the agreement, the employment will take on the contours of an indefinite hiring.  As a consequence, despite the "expiry" of an agreement, ending the relationship could expose the employer to a claim for reasonable notice of termination (or, more likely, payment in lieu thereof). 

Confused about how to manage fixed-term arrangements?  Have questions about how to mitigate the risk?  Feel free to contact Lance Ceaser for assistance.