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Limits on Grievances: Labour Arbitrator Does Not Have Jurisdiction to Decide Post-Termination and Constructive Dismissal Complaints

Most employees have a contract for employment with their employer.  Even if the contract is not written down, its terms are implied pursuant to the common law – that is, the tradition of legal decisions in similar cases.

The collective bargaining relationship, however, is legally different.  When an employee works under a collective agreement, they do not have an individual employment contract with their employer.  Instead, they are bound to the contract bargained collectively by their union and with their co-workers.  Also, unlike the individual employment contract context, unionized workers are generally required to submit their complaints to the labour arbitration process, where an arbitrator can order the employer to comply with any breached contract term. 

These are important differences to keep in mind to understand how the jurisdictions of labour arbitrators (collective bargaining) and civil courts (individual employment contract) differ.

Arbitrator Bernard Fishbein recently ruled on two preliminary objections stemming from a unionized worker’s complaints against his employer in Canadian Union of Public Employees, Local 79 v Toronto (City).  The first objection from the City was that the Arbitrator could not hear allegations of improper conduct against the worker that occurred after the worker’s employment ended.  The second objection from the City was that the Arbitrator did not have jurisdiction to entertain a complaint of constructive dismissal.

The Grievor worked for the City beginning in 2020 and complained that he was subject to an ongoing pattern of harassment and discrimination thereafter.  In May 2022 the Grievor was put on a paid administrative leave pending an investigation into his conduct, and not into the conduct of the other employees that the Grievor complained about.  The Grievor remained away from work until January 16, 2023, when he resigned.  The Grievor stated that he was forced to resign due to the City’s failure to consider his long-standing complaints of workplace harassment and discrimination, causing him to be off work on a sick leave.

Subsequent to his resignation, the Grievor said that he was subject to further harassment by another former employee in August 2023, and the City must have provided an unsolicited and negative reference for him when he sought employment with the City of Ottawa in October 2023.

No Jurisdiction to Consider Post-Employment Incidents

A collective agreement governs the terms and conditions of work between an employer and its employees.  A grievance is a complaint that the employer has breached one or more of the terms and conditions of the collective agreement.  The collective agreement does not give any protection to people who are not employees covered by the agreement.

In the City of Toronto case, the employer argued on a preliminary basis that the Arbitrator could not hear the post-employment complaints because the Arbitrator’s jurisdiction was limited to the terms of the collective agreement, which itself is limited to alleged breaches against current employees.  The Union argued that the discrimination and harassment complaints were of a continuing nature, and the post-employment incidents were just an extension of the discrimination and harassment that occurred during employment, and therefore could be arbitrated.  The employer disagreed, arguing that once the employee freely resigned from employment, he was no longer an employee and no longer able to invoke the grievance arbitration provisions of the collective agreement to grieve incidents that occurred months after his employment ended.

The Arbitrator allowed the objection, agreeing with the employer.  The Arbitrator ruled that the result of the Union’s position would be that a grievor could practically adduce never-ending evidence, even once their employment ended.  Indeed, the case law established that grievances under a collective agreement should be confined to those arising when someone is actually employed unless there is some post-employment collective agreement right to what is being asserted.

The Arbitrator therefore ruled that he could not hear evidence about the alleged post-employment incidents.

No Jurisdiction to Consider Constructive Dismissal Complaint

Constructive dismissal is a common law principle that if an employer unilaterally changes the terms of employment so fundamentally that they appear to have repudiated the employment contract altogether, the employee is entitled to resign and treat their resignation as a wrongful dismissal.  In the case of a constructive dismissal, the remedy is for the employee to recover their wrongful dismissal damages in the form of pay in lieu of notice of termination.  This is because Courts cannot order an employer to reinstate an employee.

The City of Toronto argued that the Arbitrator did not have the jurisdiction to consider the Grievor’s constructive dismissal complaint since the common law doctrine does not apply in the collective bargaining context.  The Arbitrator reviewed the case law and noted the following principles:

• In order for a constructive dismissal to occur, there must be a fundamental breach by the employer that allows the employee to treat the contract as being at an end. But in the collective agreement context, there is no individual contract, and the collective agreement cannot be treated as being at an end.
• The proper procedure to follow when there is an alleged breach of the collective agreement is to “obey now and grieve later”. An employee is typically not allowed to stop working when they have a grievance.
• An individual employee will not be reinstated when they claim to have been constructively dismissed. They will be entitled to pay in lieu of notice of termination. Employees who work under a collective bargaining agreement and are unjustly dismissed will be reinstated to work.

The Arbitrator upheld these principles, and indeed held that the common law rule of constructive dismissal could not apply to the grievance.  The Arbitrator ruled that he did not have jurisdiction to hear the constructive dismissal complaint.

Key Takeaways for Employers

This decision is a welcome and common-sense application of the law relating to labour relations.  It emphasizes the distinction between individual employment contracts and the collective bargaining regime.  Employers should keep these distinctions in mind and be prepared to object to the grievance arbitration process being used to adjudicate post-employment incidents and constructive dismissal allegations. And as always, contact the Lawyers for Employers at CCPartners for help with navigating these, and other considerations that are specific to the labour relations context.

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