Fine line between arbitration and court

By Gordon Sova
|Canadian HR Reporter|Last Updated: 10/18/2002

In 1998, Larry Olivo was fired. The reason was two packages received by the director of employee relations. They contained anti-Semitic material and the director was of the Jewish faith.

Olivo was a professor in the criminology program at Seneca College in Toronto. He was also a lawyer and the vice-president of the union local. Management and the union were not getting along well.

The odd thing about the material that got Olivo fired was that the two packages had been sent seven and eight years earlier. And the only link with him was his name as a previous recipient of the inter-office envelopes in which they had been sent.

At arbitration, there was unanimity among the members of the board that the length of time between the event and the discipline voided the college’s termination. And, while it was not technically necessary, given the finding of excessive delay, the arbitrator stated she would have overturned Olivo’s termination for the weakness of the evidence in any event.

However, that didn’t end the matter. Olivo wanted the arbitrator to award damages.

Traditionally, arbitrators have stuck close to home. Their jurisdiction comes from the collective agreement. In order for them to rule on an issue, they had to be confident that it arose from the strict language of the agreement. But then, in 1995, the Supreme Court, in Weber v. Ontario Hydro, ruled that any matter that arose “expressly or inferentially” from a collective agreement fell exclusively within the jurisdiction of an arbitrator.

In response to Weber, some arbitrators began to expand the issues with which they would deal. In October 1998, one law firm representing employers explained that “the concept of exclusive jurisdiction in labour arbitration over all matters with an employment connection, even those that had previously been reserved to the courts, appears to be entrenched.”

At this point, however, the courts began to draw back. Three Ontario Court of Appeal decisions in July 2000 essentially returned the law on arbitration of benefit claims to where it had been before Weber, arguing that, in order to fall under the arbitrator’s jurisdiction, specific language tying the employer to the provision of benefits (and not just the payment of premiums) must be found in the agreement.

This argument has been applied in a different context (and without the third-party insurer) in Olivo’s case. The arbitrator ruled that, because the language of the agreement was not adequately specific regarding the fair treatment of employees, the issues in Olivo’s grievance did not arise “expressly or inferentially” from the collective agreement. As a result, she declined to accept jurisdiction to apply the common law of torts and consider damages for the way he was treated during the termination. Crucial to this finding was the fact that the collective agreement did not contain a provision allowing employees to grieve unfair treatment, as the one in Weber did. “In the absence of a clear statement of intent …, a board of arbitration should be loathe to find any basis for inferring that the parties have brought under the collective agreement avenues of redress for a broad spectrum of personal wrongs …”

When the original Weber decision came down, there was a feeling that the role of arbitrators (and, by extension, the relationship between employers and unions) had been seriously shaken up. If the reasoning in the Olivo arbitration reflects the Supreme Court’s thinking, this enthusiasm may have been misplaced. Rather than having been drained of content by subsequent decisions, the broad expansion of powers anticipated by some may not have been there in the first place.

The ruling in Weber contains fodder for both a liberal and a conservative reading. The ruling refers to labour arbitrators as “applying the law of the land to the disputes before them, be it the common law, statute law or the Charter…” While wrongful dismissal and damage to reputation are among the examples the Supreme Court gave of “claims … over which the courts have been found to lack jurisdiction (when collective agreements are concerned),” to fall within the arbitrator’s power they must still arise “expressly or inferentially” out of the collective agreement. Ontario Court of Appeal rulings have severely circumscribed what “inferentially” means, and the Supreme Court has not granted leave to appeal in those cases, at least to date.

The labour movement does not unreservedly support the liberal reading of Weber, according to Tim Hadwen, general counsel of the Ontario Public Service Employees Union. Arguing torts before arbitrators is not his aim. However, he feels there are cases where arbitrators should have the power to use damages to enforce rights and punish egregious behaviour. What employees and their unions do want, he stresses, is “speedy, inexpensive resolution” of workplace disputes.

The reaction among employers is even less positive. According to Lee Shouldice, a management-side lawyer with the Toronto firm of Blake Cassels, the uncertainty of the outcomes, the inexperience of arbitrators in dealing with a different area of law and the lack of formal pleadings and procedures are all factors making employers suspicious of this expansion.

The expertise of arbitrators, he observes, lies in understanding labour relations within a specific workplace and in crafting an outcome that both rectifies a wrong and leaves the sides able to work with each other the next day.

In order to apply a broader jurisdiction for arbitrators, Shouldice said, unions and employers would have to negotiate collective agreements that touched on matters such as damage to reputation and harassment. The standard clauses on harassment may not be sufficient, he adds, suggesting that specific guidance to the arbitrator on procedure and the awarding of damages might be necessary. This would bring their dealings under the Weber umbrella and give the arbitrator exclusive jurisdiction. These collective agreement provisions are currently extremely rare. (And whether employers would be agreeable to entering into such contracts is another matter.)

So, where does this leave Olivo and employees like him? At risk of falling between the two domains of litigation and arbitration, according to Hadwen. Between the cost in money, delays, energy and time limits to filing, it’s a practical impossibility to pursue both paths either concurrently or subsequently. And there is no clear indication of which one is the correct one, if either.

There seems no clear interpretation of the meaning of Weber coming out of rulings to date. Rather than promoting a clearer division between the two spheres and limiting overlap, Weber and the cases following it seem to have created more uncertainty.

Gordon Sova is the editor of CHRR’s companion publication CLV Reports, a newsletter that reports on collective bargaining and other issues in labour relations. He can be reached by e-mail at

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