More powers to arbitrators, more costs to employers

A look at two recent rulings and what they mean for employers
By David Brown
|Canadian HR Reporter|Last Updated: 12/06/2004

Two recent Ontario employment law decisions suggest employers could find themselves paying more in damages, to more employees, more often, say legal experts.

In one case, the Ontario Superior Court of Justice ruled an arbitration board has the power to award aggravated or punitive damages to a former employee of Seneca College who complained of unjust dismissal. The arbitration board originally said it had no such jurisdiction.

In the other case, an arbitrator ruled the Toronto Transit Commission must pay $25,000 in damages to an employee who suffered years of bullying and harassment at the hands of a supervisor.

Both rulings illustrate the clear expansion of arbitrators’ powers in recent years.

Malcolm Boyle, partner in the Halifax office of McInnes Cooper, said similarities in arbitration jurisprudence make the recent decisions in Ontario noteworthy across the country.

In the past, arbitrators have for the most part only awarded compensatory damages as opposed to punitive damages, he said. The Superior Court decision in Ontario confirms arbitrators can award punitive damages. And the more remedial power given to arbitrators, the more likely employers across the country will face claims for aggravated and punitive damages during arbitration hearings, he said.

The legal foundation that gave rise to the expansion of arbitrators’ powers was actually set in the 1995 Supreme Court of Canada ruling,

Weber v. Ontario Hydro

.

Historically arbitrators only considered matters expressly covered by collective agreements. But in the landmark 1995 ruling the Court ruled that any matter that arose “expressly or inferentially” from the collective agreement fell within the jurisdiction of arbitrators.

This opened the door for arbitrators to hear many issues once settled only in the courts, such as tort claims for damages.

But things did not change over night, said Ian Fellows, a partner with Toronto-based Green & Chercover which represented the union in the TTC case. “Some arbitrators have taken a very narrow view of what they could decide.”

This is still relatively new territory and because of that arbitrators have been fairly cautious in exercising their full powers to award damages arising from tortious conduct claims. They’ve even remained reluctant to hear claims not based expressly on the collective agreement, he said.

Indeed, the TTC initially contended the employee’s complaint should not be heard in arbitration. Citing Weber and other cases since, arbitrator Owen Shime concluded it was in his jurisdiction.

“I think that there has been uncertainty about whether (arbitrators) could award damages for tort claims, or in what circumstances they could or should award damages for non-economic losses,” said Fellows. “So, for instance, there has been uncertainty about whether arbitrators could award damages for pain or suffering for the loss of some right, like the right to be free from harassment.”

Fellows added that employers have more often been subject to awards for damages for clear human rights violations. Last year, in what was also considered a seminal decision, the Supreme Court of Canada ruled in

Parry Sound (District) Welfare Administration Board v. O.P.S.E.U.

that arbitrators can consider allegations of human rights violations, even if the alleged violation does not expressly violate the collective agreement.

The Seneca College and the TTC decisions go a step beyond that, said Fellows. “The Seneca College ruling and (the TTC award) are significant because they are cases that didn’t involve human rights claims.”

Michael Coady, a partner with Harris & Company in Vancouver, said that since the Weber ruling in 1995 several arbitration awards have confirmed the jurisdiction of arbitrators in British Columbia to award damages for the tortious aspects of the breach of a collective agreement.

If the trend continues, employers are more likely to face claims for damages than in the past, said Coady.

“If employees were limited to going to court (to seek damages), the chances are it wouldn’t happen often,” he said. “But if damages can be recognized through the grievance process with the union picking up the cost, then obviously it is more likely the employee will pursue it,” he said.

Fellows also said the TTC ruling shows arbitrators can do something to reduce bullying.

In Quebec new legislation was introduced this year to reduce bullying in the workplace.

“Similar, specific legislation in other jurisdictions would be helpful,” he said. “But given the Shime decision (to order damages from the TTC), and recent developments in the law, I think arbitrators will hold bullies accountable regardless of whether new legislation is enacted.”

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