As we reported four weeks ago (Shocking Arbitration Decision in Ontario), a prominent Canadian arbitrator recently ordered the Greater Toronto Airports Authority (GTAA) to pay more than $500,000 in damages, finding that it failed to take reasonable steps to ascertain the truth about an employee’s medical condition and fired her for sick leave fraud. The question is whether the door to higher damage awards in Canadian labor relations just got a whole lot wider.
What happened?
On February 19, 2004, the grievor (a 23-year employee with a clean record) underwent arthroscopic surgery as a result of a workplace knee injury. On February 24, her surgeon wrote a note authorizing her to be off work for four weeks to recuperate.
Unknown to GTAA, the grievor was living with a fellow employee, Mr. Townshend. Unknown to the grievor, Townshend was under investigation for sick leave abuse. When their relationship came to light, GTAA put the grievor under surveillance on March 9 and 10.
The surveillance showed the grievor attending physiotherapy in the early morning, stopping to perform a few short errands on her way home, and driving once to the airport. GTAA concluded that the grievor could walk and drive and was therefore capable of returning to work. GTAA requested the grievor to provide information from her doctor as to why she required four weeks of recuperation and whether she could return earlier.
Fearing her job was in jeopardy, the grievor asked her doctor to authorize her return to work. He provided a note on March 16 that indicated she could return with restrictions. At the same time, he called GTAA to discuss his diagnosis. GTAA never returned his call.
When the grievor returned to work on March 17, no effort was made to provide modified duties. Video surveillance of the grievor after work showed a pronounced limp. GTAA took the position that the grievor knew she was under surveillance and implied she was faking the limp. It didn’t consider that she may have been unable to take her normal painkillers that day since they might interfere with her ability to drive at work.
GTAA called the grievor to a meeting two days later. According to the arbitrator, GTAA came to the meeting with preconceived notions of guilt and didn’t make any genuine attempt to discover the truth about the grievor’s medical condition. On March 24, GTAA terminated the grievor’s employment, setting out in writing that she had been dishonest in reporting her absence and hadn’t been truthful at the meeting.
The arbitrator believed the grievor that she was devastated, suffered from post-traumatic stress disorder, and went from being a happy, confident, and social individual to a reclusive and introverted person. In the arbitrator’s opinion, the grievor gave 23 years of loyal service and, in the end, GTAA “broke” her.
Arbitrator’s response
In response, the arbitrator awarded a whole lot of money to the grievor, relying on a number of different causes:
1. Breach of the duty to act reasonably and in good faith
Forging new ground, Arbitrator Shime said that there’s an implied obligation on the employer to administer the collective agreement in good faith. Denouncing the actions of GTAA, he concluded that GTAA acted in bad faith when it:
- terminated the grievor based on her association with Townshend;
- failed to verify its assumptions regarding her medical condition; and
- didn’t consider the grievor’s lengthy seniority and loyal service.
2. Employer’s breach of trust gives rise to damages for future economic loss
Shime went on to say that arbitration boards have broad remedial authority to fashion a remedy that reflects the modern labor law regime — not the common law regime where termination is permitted on reasonable notice.
Shime considered the usual remedy of reinstatement. But since GTAA breached its obligation of trust, reinstatement wasn’t appropriate. Instead, the grievor was entitled to compensation for future economic loss.
Shime described the grievor’s seniority as being much like “a capital asset or investment” since it served to enhance her financial future by way of wage and benefit increases and protection from layoffs. Payment in lieu of common law notice wouldn’t compensate for the loss of seniority. Rather, given the grievor’s age and length of service, the arbitrator found it most probable that the grievor would have remained at GTAA until age 55, when she would have been eligible for a full pension, and awarded damages to compensate her for the $30,000 a year drop in her earning potential (and lost pension) to age 55. This was in addition to damages for lost earnings over the six years it took to hear the case.
3. Jurisdiction to award damages for mental stress and punitive damages
Shime didn’t stop there. He also awarded the grievor $50,000 for mental stress. His rationale was the employer’s breach of the collective agreement and its object of providing “psychological benefit and mental security.” Mental stress was a reasonably foreseeable outcome of discharge, he decided.
He also found that GTAA’s treatment of the grievor is “a marked departure from the ordinary standards of decent behaviour” and awarded punitive damages of $50,000 to accomplish the objectives of deterrence and denunciation as to what had occurred.
Takeaways for employers
GTAA has applied for judicial review of this decision. If allowed to stand, we can expect to see more grievances in Canada alleging bad faith and breach of trust on the part of employers, accompanied by increased demands for damages based on loss of “seniority.” As well, in particularly egregious cases of bad faith, mental distress and punitive damages are bound to result. However, regardless of the outcome on judicial review, this case highlights the need to “discharge with care” in Canada and provides some practical lessons for employers, namely:
- If you don’t have the requisite medical expertise to second guess an employee’s physician, don’t. Get clarification of the physician’s diagnosis or a second medical opinion.
- Exercise caution when dealing with videotape evidence. Video surveillance can be a useful tool in dealing with absenteeism problems, but videotapes and reports must be reviewed by people with appropriate expertise.
- There’s really no such thing as zero tolerance for long service employees with a clean record. Their record will likely afford them a second chance.
