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They Do Exist! Unionized Employers Do Have Management Rights – Just Be Careful How You Exercise Them

A recent case involving the Association of Justice Counsel was before the Supreme Court of Canada for a pronouncement on the exercise of management rights where a collective agreement is otherwise silent. 

It is well understood that, in the absence of a specific provision in the collective agreement prescribing or limiting the exercise of authority on any specific aspect of the workplace, management retains the right to make and implement decisions, policies and conditions.  However, it has also been a long-recognized principle that any such “residual management rights” must be exercised in a manner that is reasonable and consistent with the terms of the collective agreement.  In Association of Justice Counsel v. Canada (Attorney General), 2017 SCC 55, the Supreme Court of Canada had occasion to consider what constitutes such fair exercise of management rights, in the context of a decision by the Employer (the Department of Justice Canada) to make changes to its standby system for lawyers working in the Immigration Law Directorate’s Quebec Regional Office.  Prior to 2009, the Employer asked for  volunteers to work standby; such lawyers working standby were then compensated with paid leave of 2.5 days’ time off for each week of evening and weekend shifts that they were on standby, regardless of whether or not they were actually called in to work.

In 2009, the Employer and the Association of Justice Counsel negotiated a collective agreement that entitled more lawyers to overtime pay, although some more senior lawyers could still receive lieu time.  Consequently, even though not addressed in the collective agreement, the Employer revised the standby system to operate such that lawyers would only be compensated for standby time if they were actually called in to work on a matter. As a result volunteer rates for the standby shifts plummeted.  In order to ensure that operational needs were met, the Employer issued a directive making it mandatory for each lawyer to work standby shifts one to three weeks per year. The Association of Justice Counsel grieved the implementation of this directive.

As mentioned, the collective agreement was silent on standby shifts.  However, the parties, and the arbitrator, focused on Articles 5.01 and 5.02 of the collective agreement as the proper considerations in determining the grievance.  Article 5.01 states:

All the functions, rights, powers and authority which the Employer has not specifically abridged, delegated or modified by this Agreement are recognized by the Association as being retained by the Employer.

However, Article 5.02 requires that the Employer “act reasonably, fairly and in good faith in administering the Agreement.”

The arbitrator held that the mandatory standby directive was neither reasonable nor fair and was therefore contrary to the collective agreement. The arbitrator also found that the requirement violated the employees’ section 7 liberty rights under the Charter, although that finding was overturned by the Federal Court of Appeal and the Supreme Court of Canada as an unreasonable finding.

On an appeal by the Employer, the Federal Court of Appeal agreed that the arbitrator had erred in finding a violation of the collective agreement, reasoning that the adjudicator had placed an unreasonable burden on the employer to justify the need for the standby directive and had ignored evidence that showed there were not enough volunteers after the lawyers were informed that they would no longer be compensated for being on standby.

The Supreme Court of Canada, by contrast, overturned the Court of Appeal and found the arbitrator’s decision to be reasonable.  The Employer argued that the arbitrator’s task in determining the question of whether the standby directive represented a “reasonable and fair exercise of management rights” was simply to decide whether its directive was “within the range of possible, reasonable choices that have a supportable relationship with the employer’s operational needs.”  However, the Supreme Court disagreed, relying on the “well-established approach” of the “balancing of interests, as articulated in Re Lumber & Sawmill Workers’ Union, Local 2537, and KVP Co. (1965), 16 L.A.C. 73 and relied upon in Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp & Paper, Ltd., 2013 SCC 34 (CanLII), [2013] 2 S.C.R. 458:

Determining reasonableness requires labour arbitrators to apply their labour relations expertise, consider all of the surrounding circumstances, and determine whether the employer’s policy strikes a reasonable balance. Assessing the reasonableness of an employer’s policy can include assessing such things as the nature of the employer’s interests, any less intrusive means available to address the employer’s concerns, and the policy’s impact on employees.

While we might disagree with the Arbitrator’s initial finding, this case highlights two important considerations for unionized employers:

1. management rights must always be exercised reasonably, and consistently with the collective agreement; and
2. the level of deference provided to labour adjudicators upon judicial review remains quite high.

In any instance where management is considering unilateral implementation of a policy or directive in a unionized environment, it is crucial to review the context and your collective agreement to ensure it is truly within management’s rights to do so: the experienced team at CCPartners regularly guides employers through this process and can make sure that your decisions stand up to an arbitrator’s scrutiny.  We can also assess when is the right (or wrong) time to take an arbitrator’s decision to judicial review, if you find yourself with an unfavourable decision.