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No Take-Backs! Labour Arbitrator Refuses Union’s Attempt to Arbitrate Settled Grievance

A recent labour arbitration decision in Service Employees International Union, Local 1 Canada v Evergreen Retirement Community illustrated the finality of settlements made between parties to a legal dispute.

The Union and Employer were bound to a collective agreement.  The Union filed a grievance when the Employer terminated an employee, Mr. P-B, for failing to return from an approved compassionate leave in a timely manner.  The parties entered into a settlement agreement with respect to several matters, including this grievance, on January 22, 2020.  The Union referred it to hearing anyway, and the Employer agreed that the arbitrator would address the issue of arbitrability on a preliminary basis.

The parties provided the arbitrator with an agreed statement of facts, some of which included the following:

• The Grievor was a maintenance technician employed by the Employer as of June 11, 2011.
• The Grievor took a compassionate leave of absence beginning on February 27, 2017, and failed to return until his dismissal on March 21, 2018.
• The Union grieved the termination on March 26, 2018, and the parties met to discuss multiple grievances, including Mr. P-B’s termination, on December 18, 2019.From that meeting, several grievances were settled.
• The Union advised the Employer that it wanted to “clear up” three outstanding termination grievances related to Mr. P-B, Ms. T, and Mr. T. The Union suggested that a small payment to the Grievor would resolve his grievance.
• The Employer countered that it would be willing to make a payment to Mr. T in exchange for the Union withdrawing all three grievances. It provided the Union with a settlement document to that effect on January 22, 2020.
• The Union executed the settlement document, and returned it to the Employer, who then executed on their own behalf.
• On January 31, 2020 the Employer then paid out the settlement funds to Mr. T pursuant to the settlement agreement.
• Via email dated February 25, 2020, the Union advised the Employer that it would not accept resolution on Mr. T’s grievance if it meant withdrawing the other grievances. Mr. T did not return the money paid to him by the Employer.

The Employer, of course, argued that it is a fundamental principle of labour relations that settlements be upheld, since that brings finality to matters and allows unions and employers to move forward knowing that a settled matter will not be revived.  The Employer relied on a long line of case law in support of two propositions:

1. Where a settlement is reached by persons with authority to bind each party, it must be given effect; and
2. It is not uncommon for one party or the other to reconsider its position or suffer buyer’s remorse after a settlement is concluded, but neither is a reason to relieve a party from effect of the settlement.

In case you are wondering, it does not matter that the Grievor himself did not sign the settlement, because it is the Union who legally speaking has exclusive carriage of a grievance.

The Union, on the other hand, argued that there was no valid settlement of Mr. P-B’s grievance.  It submitted that there was no consideration for the withdrawal of the grievance – meaning that the Grievor did not receive anything in exchange for the withdrawal.  It also argued that the Union was simply mistaken as to the effect of the settlement, and that the Employer must have known there was a misunderstanding for the Union to have accepted a settlement with no compensation to the Grievor.

The Arbitrator ultimately (and thankfully) agreed with the employer, stating in part that “There is no question that in the labour relations context parties must be held to their agreements save and except in certain exceptional circumstances whereby it would be unfair to do so.”  Exceptions to the general rule, such as mutual mistake or frustration, are rare and require specific facts that would render it unfair to hold a party to their bargain.

With respect to the argument of no consideration, the Arbitrator noted that Unions routinely withdraw grievances without receiving something tangible from an employer in return.  Withdrawal is a unilateral act by a union that does not require contractual agreement from the employer.  Further, the fact that the Employer made payment to Mr. T in exchange for withdrawal of the three grievances identified constituted consideration in this matter.  Remember, the parties to the grievance are the Employer and the Union.  The Union received a commitment from the Employer to make payment to one of its members (Mr. T) and so the legal elements of an enforceable contractual settlement were present.

The Arbitrator did not accept that mistake or bad faith could revive the grievance.  The Arbitrator noted that in labour relations grievances, it is not actually necessary for a grievor to sign a settlement, or even acknowledge that their grievance was being withdrawn by their Union.  In fact, Unions will, in appropriate circumstances, withdraw grievances over the objections of the actual grievors.

Ultimately, the Arbitrator ruled that the Grievance was validly withdrawn, and the settlement agreement must be given its full effect.

This should be a welcome decision for employers, but a good lesson for all parties to labour relations agreements.  Labour relations require that employers and unions carry on their relationships throughout times of relative peace, and relative disagreement.  An important element of that relationship is knowing that a matter, once settled, will not come back to create further disturbance.  Proper diligence then needs to be taken when entering into what will be a final and binding settlement.  The professionals at CCPartners are experienced in labour relations disputes and in particular, can help employers ensure that their interests are properly protected with settlements that respect labour relations.

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