Arbitrators are factoring in the loss of collective agreement benefits when awarding wrongful dismissal damages
Most human resources professionals would agree unionized employees have different protections in the workplace than non-unionized employees. The trade union acts as agent on behalf of employees in the bargaining unit and brings substantial resources and expertise to the bargaining table when it is time to negotiate the terms and conditions of employment.
Union organizers often argue having a knowledgeable and strong bargaining agent representing one’s interests with an employer constitutes a significant benefit in and of itself. On the other hand, many take the position there are substantial trade-offs involved with working in a unionized workplace. Leaving aside those trade-offs, are there benefits or protections generally afforded to unionized employees that may not exist for non-unionized employees? Can those benefits and protections be quantified?
Generally, collective agreements entrench seniority rights, providing greater benefits to employees with more seniority or service with the employer. Senior employees get priority in areas such as overtime opportunities, work schedules, vacation schedules, vacation time, promotion opportunities and sick credits.
Collective agreements have value in termination decisions
Perhaps the greatest protection a unionized employee has relates to termination of employment. Most collective agreements stipulate an employer can only terminate a unionized employee if it has just cause to do so or if it is reducing the size of its workforce through a layoff. Layoff provisions in collective agreements usually require employers must lay off the least senior employees first. Senior employees are almost certain to retain their positions through all but the largest downsizings, provided they are capable of performing the work that remains.
In the non-unionized workplace, the employer is, of course, free to terminate any employee it chooses without just cause as long as it provides the employee with reasonable notice of termination or pay in lieu of notice. It is not restricted to terminating the least senior employees first, nor is it required to have just cause to terminate employment.
The right to file a grievance is also a protection afforded to unionized employees. In most cases dealing with discharge, the union will proceed to arbitration. The employee will then be represented by an experienced union representative or legal counsel retained by the union.
Another protection unionized employees have in the event that their employment is terminated is the ability to seek reinstatement to their position. Arbitrators have the jurisdiction to reinstate employees if they determine the penalty of discharge was too severe for the employee’s misconduct. For a non-unionized employee who is terminated, it is only in extremely rare circumstances they can seek to be reinstated to their employment. Employees can ask for reinstatement for certain breaches of the Employment Standards Act and, in certain circumstances, where there is an alleged breach of the Ontario Human Rights Code.
With a discharged unionized employee, the usual response of an arbitrator who has found the employer did not have just cause is to reinstate the employee and substitute a lesser penalty than dismissal. The employee is usually reinstated with back pay to the date she was terminated. However, in some circumstances, an arbitrator will determine while an employer may have terminated an employee without just cause, reinstatement is not appropriate or feasible.
Two recent arbitration decisions attempted to quantify the value of the collective agreement benefits for the terminated employees where they were not reinstated. Both awarded the employees substantially more than they likely would have received had they been non-unionized employees claiming wrongful dismissal.
In Canvil v. I.A.M. & A.W., Lodge 1547, the arbitrator agreed with a line of arbitral jurisprudence that held the common law approach in cases of wrongful dismissal was not applicable in the context of a collective agreement. The employer terminated a 49-year-old employee on Dec. 3, 2001, for his misconduct a few days earlier. He had been employed by the company for 31 years, his entire working life. The arbitrator held dismissal was too severe a response to the employee’s misconduct and substituted a 30-day suspension without pay as the appropriate penalty. The arbitrator concluded the employment relationship was no longer viable and decided an award of damages in conjunction with the suspension was an appropriate remedy.
The arbitrator in Canvil referred to Metropolitan Toronto (Municipality) v. C.U.P.E., Local 79, where it was noted the collective agreement has value which should be considered in a termination case. The employee should receive a monetary award representing the value of the collective agreement rather than an ongoing loss requiring mitigation. The arbitrator in Metropolitan Toronto awarded the employee one-and-a-quarter months’ salary for each year of service in addition to 15 per cent for loss of collective agreement fringe benefits.
Because the employee was nearly 50 years old and had spent his entire working life with the employer, the arbitrator in Canvil saw fit to award one month’s salary for each of his 31 years of employment, totalling $89,627.20. The arbitrator also awarded loss of collective agreement fringe benefits equalling 15 per cent of wages. The employee also received eight weeks’ pay in lieu of notice and 26 weeks’ severance pay under statutory guidelines for a total of $127,646.48.
In Cassellholme Home for the Aged and Canadian Union of Public Employees, Local 146, the employee had 20 years of seniority at the time of termination. She was working as a health-care aide and was 45 years old. She was one credit short of her high school diploma. She resided in North Bay, Ont., a community the union indicated had limited job opportunities. The union asked for compensation totalling $362,374.60, including $200,000 in damages for pain and suffering.
The arbitrator found the approach set out in Metropolitan Toronto and used in Canvil was the appropriate one to use and declined to award damages for pain and suffering.
Accepting the principles as articulated in Metropolitan Toronto, the arbitrator ordered Cassellholme to compensate the employee with 25 months’ pay, which totalled $70,720 and an additional 15 per cent of the salary payment representing the loss of benefits.
In both Canvil and Cassellholme, the employee received a substantial compensation package for the loss of reinstatement. The compensation in both cases seems in excess of what a non-unionized employee in similar circumstances would have been able to recover in a wrongful dismissal action. Further, both arbitrators found mitigation was not relevant, nor was the conduct of the employee. The arbitrators in the cases recognized the collective agreement provided benefits they had to factor into their assessments of the employees’ entitlements upon termination. They also recognized the collective agreement limited the entitlement of the employee to certain damages.
Accordingly, based on recent arbitration decisions, unionized employers arguing a terminated employee should not be reinstated even if the employer did not have just cause to terminate their employment must be prepared for the possibility of paying some additional compensation beyond what they would calculate common law damages to be for a non-unionized employee.
For more information see:
• Canvil v. I.A.M. & A.W., Lodge 1547, 2006 CarswellOnt 8408 (Ont. Arb. Bd.).
• Metropolitan Toronto (Municipality) v. C.U.P.E., Local 79, 2001 CarswellOnt 6001 (Ont. Arb. Bd.).
• Cassellholme Home for the Aged and Canadian Union of Public Employees, Local 146, [2007] O.L.A.A. No. 102 (Ont. Arb. Bd.).
Michael S. Smyth is a partner with the Labour and Employment Group at Heenan Blaikie in Toronto. He can be reached at (416) 360-2887 or [email protected].
Unionized employee entitled to extra damages for loss of collective agreement benefits
An Ontario arbitrator has ruled a wrongfully dismissed employee must be compensated for the loss of his union benefits in addition to pay in lieu of notice.
Bruce Stone, 49, was a machine operator for Canvil, a manufacturer of steel pipe fittings in Simcoe, Ont., for 31 years. He was fired on Dec. 3, 2001, after an altercation between Stone and his supervisor on Nov. 30, 2001.
The arbitrator ruled termination was too harsh of a punishment for Stone’s misconduct and found a 30-day suspension was more appropriate. However, the arbitrator also found the employment relationship was too damaged for reinstatement and determined Stone should received damages instead of his job back.
The arbitrator ruled Stone was entitled to eight weeks’ pay in lieu of notice plus a severance payment under the Employment Standards Act because Canvil had dismissed him. Because of his age and the fact he’d been with Canvil his entire working life, Stone was also awarded 31 months’ pay.
On top of this award, the arbitrator felt the remedy for “non-reinstatement” should be compensation for the “loss of rights, benefits and privileges under the collective agreement.” This remedy was separate from his entitlement of damages in lieu of notice and equal t0 15 per cent of the total award.
This case demonstrates an increasing willingness of arbitrators to award extra damages to unionized employees when finding wrongful dismissal. The extra damages are intended to compensate employees for the loss of benefits they enjoy under their collective agreements.
Union organizers often argue having a knowledgeable and strong bargaining agent representing one’s interests with an employer constitutes a significant benefit in and of itself. On the other hand, many take the position there are substantial trade-offs involved with working in a unionized workplace. Leaving aside those trade-offs, are there benefits or protections generally afforded to unionized employees that may not exist for non-unionized employees? Can those benefits and protections be quantified?
Generally, collective agreements entrench seniority rights, providing greater benefits to employees with more seniority or service with the employer. Senior employees get priority in areas such as overtime opportunities, work schedules, vacation schedules, vacation time, promotion opportunities and sick credits.
Collective agreements have value in termination decisions
Perhaps the greatest protection a unionized employee has relates to termination of employment. Most collective agreements stipulate an employer can only terminate a unionized employee if it has just cause to do so or if it is reducing the size of its workforce through a layoff. Layoff provisions in collective agreements usually require employers must lay off the least senior employees first. Senior employees are almost certain to retain their positions through all but the largest downsizings, provided they are capable of performing the work that remains.
In the non-unionized workplace, the employer is, of course, free to terminate any employee it chooses without just cause as long as it provides the employee with reasonable notice of termination or pay in lieu of notice. It is not restricted to terminating the least senior employees first, nor is it required to have just cause to terminate employment.
The right to file a grievance is also a protection afforded to unionized employees. In most cases dealing with discharge, the union will proceed to arbitration. The employee will then be represented by an experienced union representative or legal counsel retained by the union.
Another protection unionized employees have in the event that their employment is terminated is the ability to seek reinstatement to their position. Arbitrators have the jurisdiction to reinstate employees if they determine the penalty of discharge was too severe for the employee’s misconduct. For a non-unionized employee who is terminated, it is only in extremely rare circumstances they can seek to be reinstated to their employment. Employees can ask for reinstatement for certain breaches of the Employment Standards Act and, in certain circumstances, where there is an alleged breach of the Ontario Human Rights Code.
With a discharged unionized employee, the usual response of an arbitrator who has found the employer did not have just cause is to reinstate the employee and substitute a lesser penalty than dismissal. The employee is usually reinstated with back pay to the date she was terminated. However, in some circumstances, an arbitrator will determine while an employer may have terminated an employee without just cause, reinstatement is not appropriate or feasible.
Two recent arbitration decisions attempted to quantify the value of the collective agreement benefits for the terminated employees where they were not reinstated. Both awarded the employees substantially more than they likely would have received had they been non-unionized employees claiming wrongful dismissal.
In Canvil v. I.A.M. & A.W., Lodge 1547, the arbitrator agreed with a line of arbitral jurisprudence that held the common law approach in cases of wrongful dismissal was not applicable in the context of a collective agreement. The employer terminated a 49-year-old employee on Dec. 3, 2001, for his misconduct a few days earlier. He had been employed by the company for 31 years, his entire working life. The arbitrator held dismissal was too severe a response to the employee’s misconduct and substituted a 30-day suspension without pay as the appropriate penalty. The arbitrator concluded the employment relationship was no longer viable and decided an award of damages in conjunction with the suspension was an appropriate remedy.
The arbitrator in Canvil referred to Metropolitan Toronto (Municipality) v. C.U.P.E., Local 79, where it was noted the collective agreement has value which should be considered in a termination case. The employee should receive a monetary award representing the value of the collective agreement rather than an ongoing loss requiring mitigation. The arbitrator in Metropolitan Toronto awarded the employee one-and-a-quarter months’ salary for each year of service in addition to 15 per cent for loss of collective agreement fringe benefits.
Because the employee was nearly 50 years old and had spent his entire working life with the employer, the arbitrator in Canvil saw fit to award one month’s salary for each of his 31 years of employment, totalling $89,627.20. The arbitrator also awarded loss of collective agreement fringe benefits equalling 15 per cent of wages. The employee also received eight weeks’ pay in lieu of notice and 26 weeks’ severance pay under statutory guidelines for a total of $127,646.48.
In Cassellholme Home for the Aged and Canadian Union of Public Employees, Local 146, the employee had 20 years of seniority at the time of termination. She was working as a health-care aide and was 45 years old. She was one credit short of her high school diploma. She resided in North Bay, Ont., a community the union indicated had limited job opportunities. The union asked for compensation totalling $362,374.60, including $200,000 in damages for pain and suffering.
The arbitrator found the approach set out in Metropolitan Toronto and used in Canvil was the appropriate one to use and declined to award damages for pain and suffering.
Accepting the principles as articulated in Metropolitan Toronto, the arbitrator ordered Cassellholme to compensate the employee with 25 months’ pay, which totalled $70,720 and an additional 15 per cent of the salary payment representing the loss of benefits.
In both Canvil and Cassellholme, the employee received a substantial compensation package for the loss of reinstatement. The compensation in both cases seems in excess of what a non-unionized employee in similar circumstances would have been able to recover in a wrongful dismissal action. Further, both arbitrators found mitigation was not relevant, nor was the conduct of the employee. The arbitrators in the cases recognized the collective agreement provided benefits they had to factor into their assessments of the employees’ entitlements upon termination. They also recognized the collective agreement limited the entitlement of the employee to certain damages.
Accordingly, based on recent arbitration decisions, unionized employers arguing a terminated employee should not be reinstated even if the employer did not have just cause to terminate their employment must be prepared for the possibility of paying some additional compensation beyond what they would calculate common law damages to be for a non-unionized employee.
For more information see:
• Canvil v. I.A.M. & A.W., Lodge 1547, 2006 CarswellOnt 8408 (Ont. Arb. Bd.).
• Metropolitan Toronto (Municipality) v. C.U.P.E., Local 79, 2001 CarswellOnt 6001 (Ont. Arb. Bd.).
• Cassellholme Home for the Aged and Canadian Union of Public Employees, Local 146, [2007] O.L.A.A. No. 102 (Ont. Arb. Bd.).
Michael S. Smyth is a partner with the Labour and Employment Group at Heenan Blaikie in Toronto. He can be reached at (416) 360-2887 or [email protected].
Unionized employee entitled to extra damages for loss of collective agreement benefits
An Ontario arbitrator has ruled a wrongfully dismissed employee must be compensated for the loss of his union benefits in addition to pay in lieu of notice.
Bruce Stone, 49, was a machine operator for Canvil, a manufacturer of steel pipe fittings in Simcoe, Ont., for 31 years. He was fired on Dec. 3, 2001, after an altercation between Stone and his supervisor on Nov. 30, 2001.
The arbitrator ruled termination was too harsh of a punishment for Stone’s misconduct and found a 30-day suspension was more appropriate. However, the arbitrator also found the employment relationship was too damaged for reinstatement and determined Stone should received damages instead of his job back.
The arbitrator ruled Stone was entitled to eight weeks’ pay in lieu of notice plus a severance payment under the Employment Standards Act because Canvil had dismissed him. Because of his age and the fact he’d been with Canvil his entire working life, Stone was also awarded 31 months’ pay.
On top of this award, the arbitrator felt the remedy for “non-reinstatement” should be compensation for the “loss of rights, benefits and privileges under the collective agreement.” This remedy was separate from his entitlement of damages in lieu of notice and equal t0 15 per cent of the total award.
This case demonstrates an increasing willingness of arbitrators to award extra damages to unionized employees when finding wrongful dismissal. The extra damages are intended to compensate employees for the loss of benefits they enjoy under their collective agreements.
