While most of us have been busy studying for exams, it’s been a pretty eventful week in labour law.

On April 2nd, the Supreme Court granted leave to appeal from the Ontario Court of Appeal’s decision in Ontario (Attorney General) v. Fraser.

Fraser dealt with the constitutionality of the Agricultural Employees Protection Act. The Act was originally designed to comply with Dunmore , and was upheld by the Superior Court on that basis. But in 2007 the Supreme Court in BC Health Services declared that s.2(d) of the Charter included the right to collective bargaining. As Andrew reported late last year, the Ontario Court of Appeal found that the AEPA violated the workers’ Charter right to collective bargaining and declared it invalid.

In BC Health Services, the Supreme Court said that s. 2(d) protected against “substantial interference” with “the ability of a union to exert meaningful influence over working conditions through a process of collective bargaining conducted in accordance with the duty to bargain in good faith” (para. 90). This was a right to a process, not an outcome, but the court did not specifically define what that guaranteed process consisted of. It was clear that the right did not cover the full scheme of rights provided by the OLRA or any other particular labour relations regime or bargaining method (para. 91).

The AEPA grants employees’ associations the right to make representations (see s. 1(2) & s. 5(1)), and requires employers to listen to them (see s. 5(6)&(7)). Does this “preserve a process of consultation and good faith negotiation” (para. 94) that would satisfy the Charter?

The Court of Appeal was of the opinion that the right to collective bargaining had to include 3 elements:

1. a statutory duty to bargain in good faith;
2. statutory recognition of the principles of exclusivity and majoritarianism; and
3. a statutory mechanism for resolving bargaining impasses and disputes regarding the interpretation or administration of collective agreements. (para. 80)

However, this sounds like the adoption of the particular labour relations regime found commonly in Canadian workplaces, which seems to conflict with BC Health Services.

On April 6th, the Ontario Superior Court of Justice struck down s. 96 of the Royal Canadian Mounted Police Regulations as a violation of the same Charter right to collective bargaining, in Mounted Police Assn. of Ontario v. Canada (Attorney General).

Mounties are excluded from the PSLRA (see s. 2(1) definition of “employee” and the exclusion under paragraph (d)), and have a separate labour relations regime. The purpose of s. 96 of the RCMPR is to designate a particular association (the Staff Relations Representative Program) as the only one which can represent employee interests.

Members of the SRRP are selected by employee vote (s. 96(2)). Consultation with RCMP members is required by private agreement between the SRRP and management, but final decisions on human resources matters ultimately rest with management (para. 16). Does this “preserve a process of consultation and good faith negotiation” that would satisfy s. 2(d) of the Charter?

Answering in the negative, MacDonnell J. stated that BC Health Services required a process that was more than just consultation (para. 47) and that equality of bargaining power was required (para. 49). He commented: “It is difficult to conceive of as a negotiation, let alone as bargaining, a process in which employees can make no offer to management of a quid pro quo because management can have the quid regardless of whether it surrenders the quo” (para. 47).

What is the role of s. 1 in both of these cases? In industries such as agriculture and law enforcement, to what extent should courts defer to legislative decision making? Both cases have different but compelling arguments against workplace disruptions, but the extent of any disruption would depend on what the procedural requirements of collective bargaining entail.

Earlier this year, the Supreme Court of Canada clarified the law on the duty to mitigate damages where employees have been wrongfully (or constructively) dismissed by his or her employer.

In Evans v. Teamsters Local Union No. 31, 2008 SCC 20, a majority of the Court found that Donald Evans, who had served as a Business Agent to the Teamsters Local Union No. 31 for 23 years, failed to fulfill his duty to mitigate his damages stemming from being wrongfully dismissed when he refused to accept an offer of re-employment from Teamsters for the balance of his 24-month notice period.

The circumstances surrounding Evan’s dismissal were quite unusual. He was dismissed on January 2, 2003 after a highly contested Union Executive election. Following his dismissal, he was sent a letter from the Teamsters’ counsel requesting that he return to work to serve out the balance of his notice period. The letter also included that failure to accept this offer of re-employment would constitute cause for termination. A series of negotiations commenced between Evan’s counsel and the Teamster’s counsel, which an included an accusation that a 24-month working notice period upon termination was unreasonable and should be 12 months working notice and 12 months pay in lieu. What is more bizarre is the proposal made by Evans that wanted to a resolution that would allow him to retire and have his wife act as Business Agent for the Teamsters, the position which he was wrongfully terminated. Ultimately, there was no resolution, and Evans commenced a wrongful dismissal suit.

The Case Before the Supreme Court

Although the Yukon Territory Supreme Court ruled that it was unreasonable for Evans to return to work for the Teamsters, the Yukon Court of Appeal overturned the decision. Upon further appeal to the Supreme Court of Canada, Justice Bastarache, writing for the majority, agreed with the Yukon Court of Appeal that Evans failed to mitigate his damages when he refused to accept the offer or re-employment. In his reasoning, he explained that:

“[A]ssuming there are no barriers to re-employment, … requiring an employee to mitigate by taking temporary work with the dismissing employer is consistent with the notion that damages are meant to compensate for lack of notice, and not to penalize the employer for the dismissal itself.”

Justice Bastarache describes some objective criteria for determining barrier to re-employment which included, but were not limited to:

• whether salary was the same;
• whether working relations were the same or were more acrimonious; and
• the nature of the employee’s work history with the employer.

Furthermore, in the analysis of determining whether it is reasonable for an employee to accept re-employment to mitigate his or her damages, Justice Bastarache also emphasizes “subjective” factors, such as the loss of dignity and work atmosphere. Still, it is arguable that Justice Bastarache strongly endorses that objective factors as being the focus of the inquiry.

Moving Forward

Due to the somewhat bizarre set of facts in Evans, it will be interesting to see how this decision (including the objective approach endorsed by the SCC) will be treated by the Courts in various jurisdictions across Canada.

Interestingly, in a wrongful dismissal case heard last month by the Alberta Court of Appeal called Magnan v. Brandt Tractor Ltd., 2008 ABCA 345, the Court distinguished Evans when dealing with the issue of mitigation of damages. In that case, the employer argued that Evans applied, but the Court disagreed and on the basis that the circumstances leading to the employee being constructively dismissed made it unreasonable for him to return to work for the same employer. In particular, the Court pointed out the employee never expressed interest to return to work, unlike Evans where the employee “was willing and had proposed to return to work for at least part of the notice period”. As such, the Court ruled that the employer had not met its onus of demonstrating that the employee had an obligation to mitigate his damages stemming from being wrongfully dismissed. It seems as though the employee’s “willingness”, a purely subjective factor,  was a key factor in the Court coming to its decision on whether it would be reasonable for an employee to return to work for a former employer.

It will be interesting to see if other Courts also focus on the employee’s “willingness” or if an objective approach is preferred to an employee’s circumstances when assessing his or her duty to mitigate damages, as was endorsed by the SCC in Evans.

On Thursday October 9, 2008, the Supreme Court of Canada delivered its judgment in RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. In this case, the manager of an RBC branch coordinated a mass departure of nearly all investment advisors to a competitor.  None of the departing employees gave RBC any notice, leaving the branch “all but collapsed” (para. 1).

The trial judge awarded huge damages including:

• Compensatory damages for failure to give notice: profits that would have been earned by each of the departing employees during the 2.5 week notice period;
• Punitive damages against all defendants: $5000 each for regular employees, $10,000 each for the branch managers at both RBC and Merrill Lynch, and $250,000 against Merrill Lynch;
• Compensatory damages for unfair competition: $225,000 against all defendants jointly and severally; and
• Compensatory damages for breach of duty of good faith: nearly $1.5 million against the branch manager.

The B.C. Court of Appeal affirmed the damages for failure to give notice, as well as the punitive damages, but overturned the trial judge’s findings on unfair competition and breach of duty of good faith.  The case was appealed to the Supreme Court.

According to the trial judge, the employees remained subject to their duty of fidelity during the notice period, and were in breach of that duty by working for a competitor (para. 15).  The Supreme Court disagreed: the contract of employment ends on termination (para. 19).  In other words, the employees were free to work for Merrill Lynch as soon as they left RBC.

The branch manager failed to perform his duties in good faith, specifically the managerial duty to attempt to retain employees, which is an implied term of his employment contract.  The Court of Appeal overturned the damages for this breach on the basis that they did not meet the proximity test set out in Hadley v. Baxendale. But the Supreme Court said that analysis was erroneous.  Rather than asking whether the breach was foreseeable at the time of the contract, one must ask whether the damages would have been foreseeable at the time of the contract had the parties turned their minds to the possibility of the particular breach (para. 12).  Based on this test, the Court upheld the trial judge’s conclusion.

Some Thoughts

This judgment imposes a fairness obligation on employees, similar to the one already imposed on employers.  While employers may not act in bad faith in the manner of dismissal (see Wallace v. United Grain Growers), employees (such as the branch manager) may not to act in bad faith in the manner of departure.  However, the potential liability varies greatly.  In this case, the branch manager was liable for huge losses in profit; but if the tables were turned, the employer would have been liable for mental distress damages (see Leanna Dejneka’s earlier post in Honda v. Keays).  Loss of profits may greatly exceed damages given to employees for mental distress.   As such, employers acting in bad faith likely have less damages to worry about than employees such as the manager in the RBC case.

Despite this difference, I don’t disagree with this decision.  The branch manager should have known the potential loss he was causing when he orchestrated the departure.  If this disparity in potential liability contributes to the power imbalance between employees and employers, that imbalance is properly dealt with when notice periods are awarded in subsequent cases.  What are your thoughts?

Justice Abella, in dissent, took a different view of the facts, contending that the branch manager was entitled to plan for future employment opportunities and to discuss those opportunities with coworkers (para. 57).  She felt that the majority decision inappropriately created a new quasi-fiduciary duty for a non-fiduciary manager (para. 51).

Do you agree?  Or were the manager’s actions, as the majority contends, a breach of the duty of good faith already owed by employees to employers (para. 22)?

The recent Supreme Court of Canada decision in Honda Canada Inc v. Keays has adopted the position of Justice McLachlin in the 1997 decision of Wallace v. United Grain Growers Ltd.. Instead of increasing the notice period given to an employee when the employer has acted in bad faith during the dismissal, the courts will now compensate by giving actual or “moral damages.”^[1]

In determining the notice period, courts usually look at factors that will likely indicate how long it will take the employee to find new work.  In Honda v. Keays, the Court confirmed that the traditional four Bardal factors are relevant, namely: the character of employment, the length of service, the age of the employee, and the availability of similar employment having regard to the experience, training and qualifications of the employee.  Previously, the Court in Wallace added two other factors: inducement away from previous employment and unfairness or bad faith on the part of the employer during the course of dismissal.

The majority in Honda v. Keays decided that that “true aggravated damages” are not to be compensated by an extension of the notice period but instead by an award that reflects actual damages.  This ultimately extinguishes the second factor added by Wallace. The Court held at paragraph 59:

If the employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, those damages will be awarded  . . . through an award that reflects the actual damages.

Examples that the Court gave at paragraph 59 are as follows:

• Attacking the employee’s reputation by declarations made at the time of dismissal;
• Misrepresentation regarding the reason for the decision;
• Dismissal meant to deprive the employee of a pension benefit or other right.

Departing from the findings in both lower courts, the Supreme Court found that there was no egregious conduct on the part of Honda to justify any award of damages for bad faith.

It remains to be seen how lower courts will respond to this Supreme Court decision on the issue of notice.  In my view, it seems hat the amounts awarded will ultimately be the same, just under a different name.  In other words, if a previous court would have awarded compensation in the form of an increased notice period, the damages would now be a similar quantum because it is compensating for the same wrong.

What are your thoughts? Will this change ultimate sum awarded to employees?

Also of significance is that in finding that there was no egregious conduct on the part of Honda to justify any award of damages for bad faith, the Court commented that Honda should not have been faulted by the trial judge for accepting the advice of its medical experts.

The Court did not make any negative inferences from the fact that the expert was also employed by Honda.  Although the Supreme Court does not comment on this specifically it suggests that unless a conspiracy exists, it is acceptable for employers to use in-house medical professionals to verify employee illnesses.

What are your thoughts? Should the employer be able to rely on experts that it employs?

[1] For an excellent review of the facts of Honda v. Keays see the post by Soloman Lam at The Court.

Discrimination in the hiring process has been a contentious area of both labour and employment law and human rights law. It becomes even more difficult when certain employers are regulated by statute and are required by law to look for and consider qualifications in applicants. The Supreme Court in Montréal (City) v. Quebec (Commission des droits de la personne et des droits de la jeunesse) (“Montreal”) has addressed this very issue and has attempted to clarify the interaction of s.18.2 of the Quebec Charter of human rights and freedoms (“Charter“) and whether an employer can consider the absence of a criminal past as a bona fide occupational requirement.

In Montreal, S.N. applied for a job as a police officer with the Service de police de la Communauté urbaine de Montréal (”SPCUM”). She was rejected at the initial stage of the selection process because she did not have the qualification of having “good moral character” required under the Police Act and its by-laws. In 1991 at the age of 21, S.N. had pleaded guilty to a shoplifting theft charge and received a conditional discharge, which the employer used to determine her lack of “good moral character”. S.N. challenged this decision on the grounds that she had been pardoned for the offence, as per the Criminal Records Act (“CRA”) which grants an automatic pardon after three years for a conditional discharge, but the SPCUM stood by its position. S.N. then launched a human rights complaint, alleging that the SPCUM had violated s.18.2 of the Quebec Charter which prohibited the refusal to hire “owing to the mere fact” an individual had been convicted of a criminal offence “if the person has obtained a pardon for the offence.”

Among its arguments, the SPCUM took the position that S.N. had not been rejected based on her criminal record, but due to the “good moral character” criterion. It further submitted that its actions were justified under s.20 of the Charter which provides that exclusions or distinctions based on aptitudes and qualifications required for an employment are non-discriminatory.

The issue progressed and reached the Supreme Court, with all lower courts and tribunals finding in favor of S.N.

The majority decision of the Supreme Court, written by Justice Deschamps, dismissed the appeal. In doing so, it applied its reasoning from Therrien (Re) which held that s. 18.2 is engaged when 4 criteria are met:

1. A dismissal, a refusal to hire or any kind of penalty,
2. decided on in relation to the person’s employment,
3. owing to the mere fact that the person was convicted of a penal or criminal offence, and
4. either the offence must be in no way connected with the employment or the person must have obtained a pardon for the offence.

Looking particularly to the third and fourth factors, the Supreme Court found that the pardon under the CRA creates a presumption that the person has recovered his or her moral integrity. The Supreme Court also noted that having a “good moral character” was a required qualification for being a police offer, but it highlighted that as per the statutory provisions dealing with hiring, criminal record and “good moral character” were two separate criteria to be considered. As such, Justice Deschamps held that the SPCUM was entitled to consider the facts surrounding and giving rise to the finding of guilt but that it must also consider the pardon in determining moral character. A decision about moral character could not be based just on the mere fact of a finding of guilt, but could be countered by adducing additional evidence which, when considered in light of the circumstnaces in which the person committed the crime, supported the conclusion that the person is unfit for the job. These points were explained at paragraph 26, 27, and 28:

An employer is therefore entitled to consider the facts that resulted in a finding of guilt in assessing whether a candidate has the qualifications required for a job.  Those facts are inevitably part of the candidate’s past.  However, the employer must also consider the fact that the person has been pardoned.

The Court also noted that the positive effect of a pardon as it reflects on a person’s character may be countered by adducing evidence of delinquent behaviour or of facts indicating a lack of probity, although this evidence cannot be limited solely to the finding of guilt. The employer must show that the decision was not based on the mere fact of the finding of guilt. Justice Deschamps concluded that the decision was made soley on the conviction and not the facts surrounding it and the employer was not entitled to rely on it.

One issue I find with the majority decision is that it creates a certain degree of confusion as to what can and should be considered in rejecting an application for lack of “good moral character”. Although it permits the employer to consider the facts and circumstances in which a person committed a pardoned crime, an employer cannot rely on the mere finding of guilt itself. The tension here is that the facts leading up to the conviction are essentially what results in the eventual finding of guilt. For example, the fact that a person shoplifted is inseparable from the stigma of dishonesty and dubiousness of the act. As such, although the majority reasons on its face seem to suggest that so long as the decision is not made solely on the conviction you can rely on the dishonesty surrounding it, it is difficult to see how all conclusions drawn around it are not inexorably linked to the conviction itself and would contravene s.18.2.

It’s even harder to try and pin down the line between discrimination and bona fide occupational requirements Justice Deschamps was trying to draw. Because Justice Deschamps held that s.18.2 is a self-contained provision, she noted that s.20 of the Charter which essentially provides a bona fide occupational requirement does not apply. The issue with this conclusion is that SPCUM would never be able to argue that “good moral character” includes the bona fide occupational requirement that the candidate have never committed a criminal offence. Although this is less of a concern for candidates with minor offences like S.N., it raises questions about individuals who receive pardons for much more serious offences, particularly where those pardons were automatic by operation of statute. Such a dilemma could be better evaluated under a case-by-case basis of accommodation under s.20 rather than the all-or-nothing approach suggested by the majority reasons. This was explicitly addressed in the dissent by Justice Charron who would have applied the Meiorin test for bona fide occupational requirements and have found the SPCUM’s decision was reasonable under that test.

It is unclear the significance this decision will have on hiring, particularly outside of Quebec and outside of the stautory requirement of “good moral character”. In Quebec, the analysis of Justice Deschamps clearly indicates that if any employer wants to use a criminal conviction to refuse to hire because of a lack of moral character, it will require something more for it to be justified than just the pardoned criminal conviction. It may also stand for the principle that the bona fide occupational requirement will never be accessible to Quebec employers in cases of a pardoned offence under s.18.2, leading to difficulties with anyone who wishes to refuse to hire because of a past conviction for a serious offence which has received a pardon, particuarlly automatic administrative pardons. Likely, in other jurisdictions, the proper test will be continue to be Meiorin since no other province has a self-contained provision like 18.2.

How far-reaching is an employer’s duty to accommodate?  This question has been continuously debated in labour and employment jurisprudence for many years.  In the recent decision of Hydro-Quebec v. Syndicat des employé-e-s de techniques professionnelles et de bureau d’Hydro-Québec, section locale 2000 (SCFP-FTQ)  (“Hydro-Quebec”), however, the Supreme Court of Canada has clarified the outer limits of this duty. 

Specifically, the Supreme Court addressed the extent of an employer’s duty to accommodate in light of the test set out in British Columbia (Public Service Employee Relations Commission) v. B.C.G.S.E.U. (“Meiorin”). As per Meiorin, an employer can justify a standard or actions which would otherwise be discriminatory if 3 steps are met. The third step involves demonstrating that it is “impossible to accommodate individual employees sharing the characteristics of the claimant without imposing undue hardship upon the employer”. It is the correct interpretation of this requirement which was addressed by the Supreme Court in Hydro-Quebec. 

The case involved an employee who was plagued by various physical and mental problems, particularly a personality disorder which resulted in deficient coping mechanisms.  This led to a high absence rate as well as difficult relationships with co-workers and supervisors. The situation persisted over several years despite a number of adjustments by the employer to her conditions of work. Eventually, and after receiving a psychiatric assessment which indicated that the employee would not have regular and continuous attendance in the future, the employer dismissed her.

The union challenged her termination. It suggested that the employer could have completely changed her work environment to eliminate the stressors which caused her inability to work in a satisfactory manner. The arbitrator found in favour of the employer, holding that this proposed accommodation, which would require continuous, periodic changes to the employee’s work environment and colleagues, would constitute undue hardship. The Superior Court agreed with the arbitrator’s assessment, but on appeal to the Quebec Court of Appeal the decision was reversed on the grounds that the threshold of impossibility had not been met by the employer. The employer launched an appeal to the Supreme Court.

The Supreme Court needed to assess what the scope of the duty to accommodate was, as per the ruling in Meiorin, and whether or not the employee had been properly accommodated within it.

Even though the Supreme Court emphasized that the goal of accommodation is to ensure that if an employee is able to work they are not unfairly excluded or prevented from doing so, it also concluded that the duty to accommodate, as per the approach articulated in Meiorin, has certain boundaries:

• It does not mean that the employer has to prove it was impossible to accommodate the employee;
• It does mean that the employer has to prove that accommodating the employee would cause undue hardship;
• The employer does not have a duty to change working conditions in a “fundamental way” ;
• The duty to accommodate does not extend to a complete alteration of the “essence” of the employment contract: the performance of work in exchange for remuneration;
• If the nature of an illness is such that the proper operation of the business is excessively hampered or the employee remains unable to perform the work for the reasonably foreseeable future even though the employer has made attempts to accommodate, undue hardship will be met.

The Supreme Court upheld the original decision of the arbitrator and overturned the decision of the Court of Appeal. The test for undue hardship had been met because the employer had tried for a number of years to adjust the employee’s working conditions and attempted to accommodate, but the employee was still unable to work for the reasonably foreseeable future.

In our opinion, this case, while dealing with a situation arising from the labour context, will also have important implications for non-unionized employees and employers. The Supreme Court has clarified several legal points about the duty to accommodate, as well as rejected an interpretation of the Meiorin test which could be the subject of debate in the adjudication of these types of disputes.

Furthermore, it must be recognized that assessing whether or not an employer has met its duty to accommodate obligations to their employee can be a difficult, complicated, and completely fact-driven inquiry. Indeed, the Supreme Court itself in this case recognized that “what is really required is … proof of undue hardship, which can take as many forms as there are circumstances.” While the waters are still (and probably always will be) murky as to what is legally required to satisfy the duty to accommodate to the point of undue hardship, the Supreme Court has, at minimum, clarified what it does not involve.

Authored by:  Heather Robson and Cheryl Waram, ELLSS