Tricky question can be expensive if employers get it wrong
Two federal court decisions have recently grappled with the question of determining when an employee who performs managerial work is not actually a manager under federal legislation. Why is this important? Under federal legislation, managers are unable to file unjust dismissal complaints and they are not eligible for overtime and holiday pay.
McCracken v. Canadian National Railway Company is a class-action lawsuit where employees are suing CNR for $300 million. They claim CNR breached the Canada Labour Code by intentionally, and erroneously, classifying 1,550 “first-line supervisors” as “managers” to deprive them of holiday wages and overtime to which they would be entitled as non-managerial employees.
Correct classification is not just a question for class actions. Individual employees have also recently asked the federal court to weigh in on whether they are managers under legislation. In Banque Canadienne Impériale de Commerce c. Torre, a branch manager argued she was not truly a “manager” under the code, but rather an “employee.”
Part of the confusion stems from the fact that “manager” is not defined in the code. However, there are cases that have defined the factors which must be examined.
The test to determine if an employee is a manager is whether the person had significant autonomy, discretion and authority in the conduct of the business of the employer.
In applying the test, courts will look beyond the employee’s title and examine the nature of the work being performed. Case law indicates an employee is most likely a manager if:
•Her main responsibility is to direct others, including the power to hire, fire, discipline, review and supervise unilaterally.
•She does not need to have staffing or policy changes approved before they can be enforced.
•She sets a budget, determines the organization’s structure, policies, controls day-to-day operation and determines staffing levels.
•She deals with emergencies.
•She performs administrative rather than operational duties.
•She has the authority to work and make administrative decisions independently and without needing clearance from superiors.
•She represents the employer in collective bargaining, discipline or grievance procedures.
However, the degree of autonomy and decision-making authority need not be absolute, so long as it is significant. This means managers can be located at upper and lower ends of a management chain. A manager can still be a manager despite a requirement to report to more senior managers within the organization. So long as the person has significant decision making authority and responsibility, she can be a manager without being at the most senior level of the organization.
When an employee is likely a “supervisor”
Courts have also indicated some supervisors should be treated as employees under the code. In Torre, the Court looked at the factors above and determined the branch manager was a supervisor, not a manager, because:
•She had no real autonomy — her job was to implement bank policies and directives.
•She could not hire or fire employees on her own, but had to clear the decision with human resources.
•She had no decision making authority over the branch’s budget.
Important lessons for employers
Who is, and who isn’t, a manager, will turn on the facts and the context of the overall organization. In Torre, the court looked at the special nature of the employer’s banking activities, the size of the organization, and the scope of the branch manager’s authority where she performed her duties, as important contextual factors in determining her classification.
Human resources professionals and employers should be aware:
•Simply labeling an employee a “manager” will not insulate the decision from the scrutiny of the courts.
•Be sure that managers in fact exercise a degree of autonomy.
•Roles and responsibilities change within an organization, so make sure titles and classifications do as well. Do a habitual audit of staff and their titles to make sure classifications are current.
Quite simply, a manager in title may not be a manager at law. Every situation will be scrutinized on a case-by-case basis. The courts won’t be satisfied just by the employee’s title, but will examine the roles and responsibilities within the organization. Ensuring managers are actually managers under the code is difficult, and it may change over time, but getting it wrong can be a costly mistake. See McCracken v. Canadian National Railway, 2010 CarswellOnt 5919 (Ont. S.C.J.) and Banque Canadienne Impériale de Commerce c. Torre, 2010 CarswellNat 844 (F.C.).
