Layoff due to financial troubles, not discrimination

First Nation band employee claimed layoff was for discriminatory reasons but termination was decision of appointed financial manager, not band council

An Alberta employer terminated an employee after a layoff because of legitimate financial problems, not a clash of personalities with band management, an adjudicator has ruled.

Cheryl McCullough was a membership clerk for Sucker Creek First Nation, located in central Alberta. She was first hired by the band on July 20, 2007, and was laid off on March 12, 2009. The band claimed the layoff was because it was experiencing financial difficulty and had to temporarily shut down its membership program.

Over the course of 2008, the band was unable to meet its payroll and remittances and it had to enter an agreement with the regional council that placed strict budgetary requirements on the band’s operations. By early 2009, the band was in debt and a financial manager began making cuts to programs. The financial manager recommended temporary layoff of several staff, including McCullough.

In late April 2009, Sucker Creek told McCullough it was still assessing its financial situation and couldn’t provide a date when the membership program could resume. By June 2009, a final decision on the layoffs had to be made in order to comply with labour standards legislation. The position of membership clerk was deemed an unfunded, non-essential service and was discontinued. As a result, McCullough’s employment was terminated.

McCullough disputed the termination, saying discrimination was a factor. She claimed her family connections led to unfair treatment by the band’s chief and council and because of that, she was deemed expendable when the cuts came. She also argued her job function was not discontinued and if she was going to be terminated she was entitled to full severance pay.

The adjudicator found there was a legitimate economic basis for the layoff and eventual elimination of McCullough’s position. Sucker Creek provided sufficient evidence of its financial problems and the position of membership clerk was not covered under any funding. Therefore, it was likely at or near the top of the list when it came time to cut the budget.

The adjudicator also found the chief and band council had no authority in the decisions regarding layoffs and cutbacks, because by early 2009 the band had entered agreements with the regional council and a financial manager. The decisions were made by the independent financial manager and not anyone in the band, said the adjudicator.

“Two independent persons (from the financial management company), who had no connection to the Sucker Creek First Nation, assessed all the staff positions to determine which positions could be eliminated, temporarily or permanently,” said the adjudicator. “The membership clerk position at the Sucker Creek First Nation was unfunded and nonessential. As a result, her position was eliminated and she was permanently laid off in June 2009.”

The adjudicator found McCullough was laid off for lack of work and discontinuance of work function and dismissed her complaint. See McCullough v. Sucker Creek First Nation, 2010 CarswellNat 5737 (Can. Adjud. Appointed under the Canada Labour Code).

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