A Labour & Employment Law Update

14-July-2008

On July 7th, the Alberta Court of Appeal maintained an important line of Alberta jurisprudence and confirmed a departure from the Ontario approach to arbitrability. In Ontario, all disputes can go to arbitration, and the parties cannot bar a collective agreement dispute from going there. In short, if a collective agreement says that a grievance concerning the discharge of a probationary employee cannot go to arbitration, arbitrators completely ignore that. Alberta is very different because our legislation requires collective agreements to include a method to resolve disputes. It does not require that the method must be arbitration.

The case concerned a probationary employee who grieved her termination of employment. The collective agreement clearly stated that those claims could proceed to level 2 of the grievance procedure (a hearing before a designated employer officer), but not to arbitration. In a startling decision, the arbitrator decided that notwithstanding the clear language to the contrary, a claim alleging bad faith in the handling of the termination could proceed to arbitration. After 13 days of arbitration, the arbitrator found there was bad faith and voided the discharge that had occurred several years before.

The Court of Appeal overturned the arbitrator. In the view of the unanimous Court, he was unreasonable for 6 reasons:

1. The collective agreement said that arbitration was not available for that kind of dispute, and that is permissible in Alberta. Alleging bad faith does not change that.
2. The arbitrator amended the collective agreement, which is expressly prohibited by the agreement.
3. The arbitrator failed to consider the Supreme Court of Canada's statement that there is no implied duty of good faith in terminating employees. He also failed to explain why a breach of good faith, assuming there is one, voided the discharge instead of simply giving the employee a claim for damages. The Court of Appeal gave a strong indication that a duty of good faith cannot be implied, nor can it void a management action.
4. The preamble relied on by the arbitrator that addressed “harmonious relations” did not justify any implied obligation of good faith.
5. It is not bad faith to rely on workplace incompatibility to justify releasing a probationary employee. “It is obvious why an employer might contract out of justifying its decision not to retain a probationary employee for reasons that are inherently difficult to enunciate or prove.”
6. It is not unfair to give fewer rights to probationary employees. “There is nothing inherently unfair or unreasonable about allowing an employer the right to select and screen those who will become permanent members of the workforce through a period of probationary employment.”

The Court also gave a reminder to the arbitrator and to other arbitrators that the “redressing of all perceived unfairness [is] not the mandate of arbitrators”.

It is sometimes wrongly assumed that arbitration law is the same in other provinces as it is in Ontario. This case serves as a clear and important example that it is not. Provided that a collective agreement in Alberta is clear that a dispute is to be decided by a method other than arbitration, the collective agreement is taken to mean what it says.

This update is a general overview of the subject matter and cannot be regarded as legal advice. Please contact Vicki Giles in Edmonton, Tom Ross in Calgary, Glenn Tait in Yellowknife, or any member of our Labour & Employment Practice Group for advice on this or any other labour & employment law topic.