NEW DEVELOPMENTS IN ARBITRATION:
ARBITRATORS AND STATUTES

Charles E. Humphrey

November, 2003

Overview

There was a time that when a unionized Employer wanted to know the extent of its obligations to employees it could confidently look to the collective agreement for the answer. Life for Employers is no longer so simple. As a result of statutory provisions and court decisions, Employers must look not only to the collective agreement, but to employment related statutes to determine their rights and obligations. In one sense there is nothing new about this. Unionized Employers have been bound to comply with employment related statutes such as the Employment Standards Act, or Human Rights Code, ever since those statutes existed. The courts many years ago made it clear that collective agreement terms which were in conflict with the terms of the statute were unenforceable. 1

What Has Changed?

The Court and legislatures have recently taken matters a step further. Employment related statutes are no longer external to the collective agreement. Employment related Statutes now form part of collective agreements. This has occurred in two ways:

1. Specific Statutory Provisions

The 2000 amendments to the Employment Standards Act, provided for the "downloading" of responsibility for enforcement of the Employment Standards Act to unions in the case of Employers' of unionized employees. Section 99 of the Act provides that,

"If an Employer is or has been bound by a collective agreement, this Act is enforceable against the Employer as if it were part of the collective agreement with respect to an alleged contravention of this Act that occurs,

(a) when the collective agreement is or was enforced;

(b) when its operation is or was continued under Section 58(2) of the Labour Relations Act, 1995; or

(c) during the period that the Parties to the collective agreement are or were prohibited by Section 86(1) of the Labour Relations Act, 1995 from unilaterally changing the terms and conditions of employment" (emphasis added)

The Section goes on to provide:

An employee who is represented by a trade union that is or was party to a collective agreement may not file a complaint alleging a contravention of this Act that is enforceable under Sub Section 1, or have such a complaint investigated.

The statute therefore clearly gives unions the right to grieve ESA violations as if they were breaches of terms of the collective agreement. Employees of unionized employers are prevented from filing complaints with the Ministry of Labour relating to a breach of the Employment Standards Act, but must use the grievance procedure in the collective agreement.

2. Interpretation of Statutory Provisions by Court

Section 48(12) of the Labour Relations Act provides that an arbitrator has the authority, "to interpret and apply human rights and employment related statues, despite any conflict between those statutes and the terms of the collective agreement". The Supreme Court of Canada recently had the opportunity to determine in a case involving Perry Sound (District) Social Services Administration Board the opportunity to determine what these words mean2. The case in which the issue arose involves the termination of a probationary employee. The collective agreement contained the following provision:

"A probationary employee may be discharged at the sole discretion for any reason satisfactory to the Employer and such action by the Employer is not subject to the grievance and arbitration procedures and does not constitute a difference between the parties."

The employee was discharged within a few days of her return from maternity leave. The union claimed on behalf of the employee that the discharge was discriminatory contrary to the Human Rights Code. The employer took the position the arbitrator had no jurisdiction to hear the grievance because of the language of the collective agreement referred to above. The arbitrator agreed with the union that he had jurisdiction to hear the grievance, the language of the collective agreement notwithstanding. The Employer sought juridical review of the decision.

The decision of the Divisional Court helps illustrate the options available to the courts in interpreting the language of Section 48(12). The Divisional Court held that the arbitrator only had jurisdiction to interpret and apply the Human Rights Code if the arbitrator had jurisdiction to hear the grievance under the terms of the collective agreement. The court concluded that since the arbitrator did not have such jurisdiction under the terms of the collective agreement given the language referred to above, the fact that the termination might have constituted a violation of the Human Rights Code did not give the arbitrator jurisdiction to hear the grievance. This did not mean that the grievor was without a remedy, but rather that the remedy would have to be sought from the Human Rights Code complaint process rather than the collective agreement. The Ontario Court of Appeal overturned the decision of the Divisional Court. The Court of Appeal did not rely on the Human Rights Code but specific provisions of the Employment Standards Act which it is interesting to note had not been argued by the union in presenting the arbitration or before the Divisional Court.

The Employer appealed the matter to the Supreme Court of Canada. The Supreme Court upheld the decision of the arbitrator essentially on the grounds that Section 48(12) of the Labour Relations Act means that the terms of the Human Rights Code are in effect part of the collective agreement. As the majority of the court put it, in its reasons for judgement:

"I believe that the amendments, (Section 48(12)) to the legislation affirm that grievance arbitrators have not only the power but also the responsibility to implement and enforce the subtenant rights and obligations of Human Rights and other employment related statutes as if they were part of the collective agreement 3 (emphasis  added)

Given the court's clear statement, there can be little doubt the collective agreements now consist of the all the terms of employment related Statutes.

The decision raised two important questions.

1. What are the employment related statutes that are incorporated into collective agreements?
2. How does the power of arbitrators to consider grievances based on claims of violation of an employment related statue relate to the authority of the Tribunals given authority under the particular employment related statute to enforce that statute?

Employment Related Statutes

It would appear that employment related statutes literally means a statutes some terms of which are related to employment. The phrase in the Labour Relations Act refers to,  "human rights and other employment related statutes". It is clear that to be an employment related statute it is not required that the statute relate exclusively to employment. The Human Rights Code does not only regulate the employment relationship, but also regulates providers of services and their relationship and treatment of customers and clients. It would appear that if a statute has a employment component to it, it makes it employment related. On this basis, it would appear that for purposes of Section 48(12) in addition to the Human Rights Code and Employment Standards Act the following statutes could be said to be employment related:

1. Occupational Health and Safety Act; 
2. Workplace Safety and Insurance Act; 
3. Crown Employees Collective Bargaining Act 
4.  Labour Relations Act; 
5.  Pay Equity Act; 
6. Pension Benefits Act.

The results of the Supreme Court of Canada's decision in the Perry Sound case would appears to mean that these statutes form part of the contents of all collective agreements. The consequence of this being that a violation of any of the statutes by an Employer with a collective agreement will provide the foundation for a grievance.

Arbitrators and Tribunal Jurisdiction

Most employment related statutes have their own enforcement provisions and enforcement bodies. How does this broad jurisdiction of arbitrators to interpret and apply statutes fit with the authority of tribunals created under these statutes: such as, the Labour Relations Board, Human Rights Tribunal or Workplace Safety and Insurance Board. The issue of concern for Employers is if an arbitrator makes a decision for example, in reliance on the Human Rights Code is that an end of the matter? Can the employee take the matter to the Human Rights Tribunal if her or she is unsuccessful with the arbitrator?

The Supreme Court ducked answering this question. The Ontario Human Rights Commission intervened before the Supreme Court of Canada in the Perry Sound case. The Commission took the position that it had concurrent jurisdiction with arbitrator. That is, the arbitrator dealing with the matter, did not remove the right of the Commission to deal with the matter rather the Commission continued to have jurisdiction even though the arbitrator was dealing or had dealt with the matter. The Supreme Court indicated that it was unnecessary to determine the question,

"I make no holding on whether the jurisdiction of the Human Rights Commission is ousted by that of the Board,(of arbitration)4

The question of whether the assumption of jurisdiction by a arbitrator to hear a grievance relating to an alleged violation of an employment related statue is complicated by the decision of the Supreme Court of Canada in another well known case5. In that case, Ontario Hydro hired a private investigator to investigate an employee on sick leave. The union filed a grievance alleging that hiring of a private investigator violated the collective agreement. The grievance was settled. The grievor at around the same time commenced a court action based upon claims of tort and breach of rights under the Charter of Rights, and claiming damages for surveillance.

The Supreme Court held that the claims for tort damages or damages based on Charter violation could not be heard by a court. The Supreme Court held that where as in the case before it, the "essential character of the dispute arises out of the collective agreement, the jurisdiction of the court is ousted and the arbitrator has exclusive jurisdiction"6. The court specifically embraced the notion of arbitrators having exclusive jurisdiction over matters where the essential character arises out of the collective agreement. How the Supreme Court of Canada will ultimately rationalize its exclusive jurisdiction approach in the Ontario Hydro case with its incorporation of statutory terms into collective agreements is anything but clear. If the Supreme Court is consistent in applying the exclusive jurisdiction approach once an arbitrator embarks upon hearing on a claim of breach of the statutory terms under a collective agreement the jurisdiction of other the Tribunals created by the Statute to enforce it would be ousted. However, whether in fact this will be the conclusion reached by the Supreme Court of Canada if, and when it is faced with this issue is anything but clear. Until this issue is resolved, Employers will live with the uncertainly about whether the arbitrator or some other Tribunal has the last word in any dispute involving alleged violation of statutory terms.

Implications Of All Of This For Employers

Employers need to be conscious of the following in light of the decisions of the Supreme Court of Canada:

1. Collective agreement are made up of the text of the agreement and the provisions of employment related statutes;
   
2. Grievances may be filed and pursued alleging violations of an employment related statue unconnected to any violation of a term of the collective agreement;
   
3. Even if an arbitrator makes a decision relating to an alleged violation of an employment related statute, the employee and/or the union may be able to pursue the same issue before another Tribunal created under the statute to enforce the statute.

Arbitrators and Employment Related Statutes

From the perspective of Employers, the issues surrounding the role of arbitrators in interpreting and applying employment related statues is anything but academic. A review of recent arbitral decisions discloses much activity by arbitrators interpreting and applying employment related statutes. Areas of particular activity have included interpretation and application of the Employment Standards Act relating to Emergency Leave, termination of employment and greater benefit provisions. In the case of the Human Rights Code arbitrators have been involved in decisions relating to the scope and nature of the duty to accommodate. Arbitrators have also had the opportunity to comment on the relationship between decisions of arbitrators under collective agreements and the Workers' Compensation Board. All of these matters which are considered in more detail below illustrate the reality that for Employers the collective agreement document on its own is not a compete guide to the rights and obligations which may be subject to a grievance.

Human Rights - Duty to Accommodate

The application of the Human Rights Code duty to accommodate has been a frequent topic of Arbitrators Awards in the last few years. Even without the encouragement offered by the Supreme Court of Canada in the Perry Sound case, arbitrators have been interpreting and applying the duty to accommodate obligations under the code in the course of decision relating to grievances filed under collective agreements. In some cases they have relied on the incorporation by reference of statutory provisions contained in collective agreements. In other cases, they have relied on the provisions of Section 48 of the Labour Relations Act.

One recent case illustrates how far arbitrators are prepared to take the duty to accommodate and to impose obligations that appear to have run contrary to the previously held expectations of parties to collective agreements. The case involved a Constable with Essex Police Services7. As a result of a back problem he was prevented from doing the essential duties of his job. The union took the position that the Police Services Board had failed to satisfy its duty to accommodate by refusing to offer the Constable positions occupied by other officers or creating a position assembled from various duties performed by other officers.

The arbitrator's decision indicates how far arbitrators are prepared to take the duty to accommodate. The arbitrator concluded:

1. The notion that the duty to accommodate a disabled employee can never include displacing another is wrong. The arbitrator indicated on the facts of the case that had he found that the grievor could perform the essential duties of the occupied jobs, he would have required the incumbent to be displaced. In reaching this conclusion, the arbitrator appears to have considered the fact that the positions were newly created, the positions were not acquired through the exercise of seniority and were not recognized by the collective agreement, the incumbence would not lose their jobs if displace, but would revert to another position and that if the grievor was not allowed to displace one of the incumbance he would have no job. A consideration of these factors would have tipped the balance in favour of displacing the incumbent in the jobs and making it available to the disabled employee.
   
2. The notion that the duty to accommodate does not require an Employer to consider creating a position assembled from various sources is wrong. The arbitrator indicated that the test of whether an Employer must engage in an accommodation initiative is always undue hardship test. As he put it, "the test as always is undo hardship and the fact that a particular set of duties may not yet exist as a position does not provide a legal obstacle to an accommodation in that form"8 The arbitrator did emphasize that if a job is to be created by combining duties from various sources, the job has to be a productive one, as he put it, "It would, in my opinion, be an undue hardship to require an Employer to provide make work."9
   
3. On a positive note for employers, the arbitrator concluded that were risk to others is of consideration, as in police work, an employee is not entitled to assume the risk of taking a job that is inconsistent with his physical limitations. The union had argued that the grievor should be allowed to take a job, the requirements of which were inconsistent with his limitations.

Workplace Safety and Insurance Board and Collective Agreements

The problem for Employers in determining which decision maker has final say in a matter is well illustrated by a recent decision involving the issue of the interplay between collective agreements, Workplace Safety and Insurance Act, and the Human Rights Code.10 In the case the union claimed that the Employer had failed to accommodate the employee, and thereby violated to Code. The employee had suffered a work-related injury for which he had received benefits. The WSIB adjudicator had determined that there was no accommodation possible in the workplace. The Employer attempted to rely on the decision of the WSIB adjudicator as the basis for a claim that the arbitrator should not hear the matter because the accommodation issue had already been determined by the WSIB. The arbitrator rejected the company's position and assumed jurisdiction to hear the grievance. Amongst other things, the arbitrator held that the rights under the collective agreement are concurrent with and greater then the rights under the WSIB. As the arbitrator put it, "while compliance with the duty to accommodate is obviously within purview of the WSIB (to the extent set out in the governing legislation), it is, likewise within the purview of the Commission (Human Rights Commission) when a complaint has been filed under the Code, it can become, in an appropriate case, like this one, a matter before the arbitrator and, in this case, it has also been the subject of collective agreement negotiations between the parties11.

Employment Standards Act - Some Recent Examples

As indicated earlier, arbitrators are specifically given authority under Section 99 of the Employment Standards Act, to enforce the Act against an employer as if the Act were part of the collective agreement. As a result of these provisions, arbitrators today are regularly being called upon to interpret and apply the Employment Standards Act.

Some recent decisions illustrate the range of decisions and issues covered in these decisions.

1. Emergency Leave

The arbitrator upheld the right of an employer to introduce a new requirement that employees fill out and sign a form every time they intended to take emergency leave under the Employment Standards Act.12

2. Scheduling

In a case involving the complex scheduling system of the Toronto Transit Commission, the arbitrator had an opportunity to consider Section 18(1) of the Employment Standards Act which requires an employee to have 11 hours off between shifts13. The question for the arbitrator was whether an employee could be compelled to only sign up for those shifts which gave him 11 hours off between shifts. The arbitrator found that:

(a) Employees do not have an option or a discretion to refuse to accept an offer of 11 hours off and choose to work during this period.

(b) The collective agreement and Employment Standards Act should be interpreted to the extend possible, so as to preserve the arrangements the parties have made in collective agreement, including recognizing seniority rights. In this case the shift selection was to be by seniority.

(c) Employees should be allowed to use their seniority to select a particular six week schedule even though it violated the 11 hour rule to do so because of scheduling on the first day would not give the employee 11 hours off between shifts. In these circumstances, the employee should then be allowed to rely on their rights under the Employment Standards Act, not to work the full 11 hours on that day. That is, they should be allowed to sign up for a shift that would not allow them 11 hours off between work and then only work as permitted under the Employment Standards Act to ensure compliance with that legislation.

3. Severance Pay

What constitutes years of employment for purposes of severance pay entitlement was the subject of a recent decision of an arbitrator. Under the provisions of the Employment Standards Act, employees are entitled to severance pay subject to certain other conditions provided that they have at least five (5) years of employment with the employer. In the case, a high percentage of the workforce that was being terminated had more than four (4) years of service, but less than five (5) years of service at the time of the layoff. The union argued that service for the Employment Standards Act purposes continued to accrue for employee after they were laid off until they were terminated under the loss of seniority Provisions of the collective agreement.

The arbitrator did not agree with the union's argument that service accrued through the whole period of layoff until the loss of seniority. But the arbitrator did determine that service for purposes of the Employment Standards Act did accrue between the date of layoff and the expiry of the 35 week period when a deemed termination occurs under the provisions of Section 58(1) of the Employment Standards Act.

These cases are only examples of a number of Employment Standards Act decisions recently made by arbitrators. Much of the law relating to the application and interpretation of the Employment Standards Act is now being developed by arbitrators in grievances under collective agreements.

Conclusion

As the forging discussion indicates, arbitrators have strong support for their authority to interpret and apply statutes and to consider statutory terms as part of the terms of a collective agreement. This reality has a number of implications for employers:

1. It is more important than ever that employers have a familiarity with and an understanding of the provisions of employment related statutes.
   
2.  It is crucial that employers which are subject to collective agreements in making decisions about the application of the collective agreement to a particular problem, take into consideration the impact of statutory provisions.
   
3.  Employers need to be alert to the possibility that the incorporation of statutory provisions into the collective agreement may at least in some cases operate in their favour.
   
4.  Employers need to be conscious of the need to carefully manage issues of workplace conflict in a way that avoids employees seeking to have the problem litigated or resolved in multiple forms.
   
5.  Employers need to consider when matter may be litigated in more than one form, which is the form most advantageous to them and develop an appropriate strategy to encourage the use of that forum.

Footnotes

1 McLeod v. Egan [1975] 2 S.C.R. 517
2 Parry Sound  (District) Social Services Administration Board v. OPSEU Local 324 [2003] S.C.J. No.  42
3 Parry Sound, supra
4 Parry Sound, supra
5 Weber v. Ontario Hydro [1995] 2 S.C.R. 929
6 Weber, supra
7 Re: Essex Police Services Board (2002) 105 C.F.C. [4th] 193 (Goodfellow)
8 Essex Police Services Board, supra
9 Essex Police Services Board, supra
10 Re: Proboard [2002] 112 L.A.C. (4th) 371 (Kaplan)
11 Proboard, supra
12 Re: Good Humour-Breyers [2003] O.L.A.A. No. 207 (Stephens)
13 Re: Toronto Transit Commission (Scheduling Grievance) [2003] O.L.A.A. No. 391 (Springate)

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Disclaimer: The information contained in this article is general information only and should not be relied upon as a substitute for legal advice or opinion.