By Stephen Acker and Joel Henderson
Four years ago in Ottawa, the Federal Canadian Government nipped a nascent spending scandal in the bud when it fired two employees of the Canadian Department of Public Works, Douglas Tipple and David Rotor. Tipple successfully grieved his termination before the Public Service Labour Relations Board, winning the largest individual damage award in Canadian labor arbitration history this past July — $1.3 million. While Tipple waits for the ordeal to be over (the government has appealed the decision), employers can take stock of the immediate fallout.
What happened?
Just nine months before they were fired, Tipple and Rotor had been recruited for three-year contracts. Their missions: to be agents of change in the Department of Public Works implementing ambitious cost-cutting programs. And they were doing a fine job of it, meeting or exceeding their targets. In the spring of 2006 they were approved to take a five-day fact-finding trip to the United Kingdom. The trip was productive, although not without a few hitches caused by miscommunication between Public Works and the Canadian High Commission in London.
Somehow, the media learned of those snafus, and stories characterizing them as wasteful and irresponsible began to circulate. A minor tempest erupted, and by August 2006, Tipple and Rotor were out of a job.
Decision
Public Works argued that Tipple was laid off for lack of work and that his job functions had been “discontinued.” Under the federal law in question, when a federal public servant’s job functions are eliminated or are spread among other positions, the worker can be laid off.
But the adjudicator found no evidence to support that theory and called the supposed layoff a “sham.” Public Works couldn’t show that Tipple was no longer contributing value. Nor had Public Works discussed integrating his functions with other positions in the department. In fact, just eight months after his termination, Public Works created another position substantially the same as Tipple’s. As a result, Tipple was awarded $1.3 million (including lost wages, benefits, and incentive compensation with interest since he had two years to go on a three-year contract) and other damages.
What this means to you
The distinction between layoff and termination should be of particular interest to public-sector employers in Ontario and Saskatchewan. Public service statutes in those provinces contain similar provisions qualifying when an employee can be laid off because of a work shortage or the elimination of a position.
A takeaway for all employers, particularly those dealing with high-profile or executive employees, is the care that must be shown to a terminating employee. Cases going back to the Supreme Court of Canada’s decision in Wallace in 1997 have established that employers owe employees a duty of good faith and fair dealing when they are being terminated. Failing to meet this duty can lead to extra, independently based damages.
The harm in this case?
- When the media ran away with Tipple’s story, his supervisor told him not to worry.
- As discussions occurred between high-ranking government officials on how to deal with the fallout, Tipple was kept in the dark.
- His supervisor never alerted him that there was any thought of his termination.
- A report, prepared at his supervisor’s request, exonerated Tipple’s purported UK junket, but that report was never shared with him.
- Not two months before being terminated, Tipple was given a “surpassed” rating and awarded the maximum bonus.
The adjudicator concluded that Tipple had been lulled into a false sense of security by his employer, which only made the trauma of his sudden and unjustified termination all the more severe. As a result, he was awarded $125,000 for psychological suffering.
But the story didn’t end there. When the media, presumably in their quest for a juicy story, whipped up public anger, Public Works didn’t defend Tipple. In the adjudicator’s opinion, this did swift and irreparable damage to Tipple’s reputation. In that respect, he awarded Tipple $250,000 for loss of reputation.
Moral of the story
Letting an employee twist in the wind, and letting future employers draw negative conclusions from an incomplete record, can be just as wrong as inflicting harm on an employee directly. While this case arose in the federal government under specific federal legislation, its principles are just as applicable in the public or private sectors in other Canadian jurisdictions.