What should an arbitrator do when a fired employee is too bad to be reinstated, but dismissal was for one reason or another unjustified? Surprisingly, for Canadian arbitrators the answer seems increasingly to be: “Give ‘em a big payout.” They are increasingly awarding these unsalvageable employees bigger awards than good employees would get in a non-union context. And more than unionized employees would get when losing their job because of redundancy.
A Canadian court recently upheld just such an award – or should we say reward – to an employee who was too disliked and distrusted by all concerned to be put back to work. And the award was more than double what a nonunion employee would receive upon termination without cause.
We can’t make much sense of these decisions. But we can at least try to explain them.
The Cameco case in Saskatchewan
Cameco fired Mr. Simon after a series of incidents of insubordination and the “serious personal harassment” of a manager. The union took the case to arbitration. The arbitrator found that, “while this case may be close to the line, . . . termination was too severe a disciplinary response.”
The arbitrator then considered whether to reinstate Simon. He concluded he should not, because of:
- the refusal of coworkers to work with him;
- the lack of trust between Simon and the employer;
- the refusal of Simon to accept responsibility for any wrongdoing;
- Simon’s demeanor at the hearing;
- Simon’s animosity toward management and coworkers alike; and
- the risk of a poisoned atmosphere in the workplace.
One would have thought those would all be pretty good reasons to send Simon packing. But this arbitrator instead awarded him a huge monetary package. It consisted of:
- two months’ salary for each of his six years of service; plus
- 25% of a year’s salary, representing further compensation for the loss of the benefit of being covered by the union agreement; plus
- severance pay as calculated under the Canada Labour Code; plus
- 5% interest on those amounts, calculated from the date of his termination to date of payment.
Saskatchewan court decision
Cameco asked the court to overturn the arbitrator’s decision. The court refused. In Cameco Corp. v. United Steel Workers of America, Local 8914 [2008 SKQB 499, 179 L.A.C. (4th) 97], the court ruled that the decision “is not unreasonable.” It reviewed a number of other cases where compensation was awarded in lieu of reinstatement. The court concluded that, “The case law is clear that . . . the grievor’s conduct while employed is irrelevant to the calculation of damages.” What’s more, the money is to “compensate the employee for being wrongfully terminated and unable to continue under the collective agreement.” It should not just replicate what a nonunion employee would get upon termination.
Then the court went on to approve the 25 percent top up for loss of “the value of being a member of this collective bargaining unit.” The court noted the arbitrator had before him evidence of the monetary value of benefits under the union agreement. He also recognized the “enhanced job security” and other nonmonetary benefits found to accrue to unionized employees. Ignoring the fact that the two months’ per year of service formula was already very rich, the court found that there was enough evidence to justify the 25 percent top up.
There was no examination of the additional calculation of severance pay under the Canada Labour Code. This is surprising, given that it seems to duplicate the first payment of two months salary per year of service.
Commentary
There are lots of things wrong with the Cameco court decision. But technically, it’s legally sound. Canadian courts are reluctant to interfere with the judgment calls of labor arbitrators.
Perhaps, however, they should interfere more. How could the court not have agreed that the arbitrator’s decision in unreasonable? The result is that a stubborn, unsalvageable employee, with whom coworkers refused to work, who couldn’t be trusted, and continued to show bad attitude at the arbitration, gets:
- about 125% more money than a model, non-union employee who is terminated without cause;
- money that unionized employees seldom are entitled to when laid off or terminated because of redundancy (severance pay in those situations is the exception);
- an award that doesn’t even consider what his actual losses might have been (while most employees claiming severance must account for their post-termination earnings or job-search efforts);
- an apparent reward for being, simply put, a jerk.
These cases seem to reward the worst employees. Arbitrators seem to be saying: “I won’t impose you upon your managers or coworkers. Just go away – here’s some money – a lot of money.” The normal, reasonable employee or employer sees these results as perverse. So should our courts.
Lessons for unionized employers
The first lesson is obvious: If you fire somebody who has alienated everyone, make sure your case is good enough to win. But secondly, if Canadian arbitrators don’t re-examine their approach, one must wonder about the wisdom of asking an arbitrator to not reinstate an employee. If the alternative to reinstatement is one of these big rewards, perhaps one should ask the arbitrator to figure out exactly what arrangement he or she can think of in the workplace to ensure further harm isn’t done. And to retain jurisdiction for when it doesn’t work out.
Contact the author, Brian P. Smeenk
