Court supports finding that lack of funds no reason to lay off staff

A recent decision from Ontario’s highest court is yet another signal to employers that they should be extremely careful when negotiating their management rights in collective agreements.

The Ontario Court of Appeal has accepted a labour arbitrator’s view that, given the wording of the collective agreement in issue, an operator of homes for the aged could not lay off workers even though it didn’t have the money to pay them.

The trouble arose for the Huronview Home for the Aged when Ontario’s Tory government cut government funding to such facilities and also changed the law on the minimum standard of care required.

Relying on the management-rights portion of its collective agreement with its staff, Huronview served notice of 19 layoffs. The agreement certified that Huronview’s union recognized the employers “right to decide on the number of employees needed at any time” and the right to alter workplace rules and regulations.

But the agreement also stipulated that “Layoff shall mean the discontinuation of a position(s) due to lack of work.”

When the union grieved the layoffs, the arbitrator decided that the layoffs were due not to lack of work, but, as Huronview had told the employees, shortfalls in government support. This was distinct, the arbitrator felt, from the employer’s not having enough work to keep the entire staff busy.

“While I sympathize with the difficult situation faced by the employer,” the arbitrator wrote, “I have no jurisdiction to relieve the employer from its obligations under the collective agreement by considering the employer’s fiscal difficulties.”

Huronview took this decision to the Divisional Court, where it got a more sympathetic hearing. “While there might have been a regular workload up to the time of the government changes,” the court said, “there was indeed a lack of work following the cutbacks, because the scope of the work had been redefined by the employer in the light of the financial cutbacks.

“Taking the arbitrator’s finding on its face, an employer could never react to a negative financial climate. It should be obvious that a lack of work can arise from various factors: diminished resident demand, for example, or the financial inability to continue to provide work. That the lack of work arises from the latter cause makes it no less real than the former.”

Q: If you can’t afford a certain number of workers, doesn’t common sense say that translates into a lack of work for some of them?

A: As reasonable as the Divisional Court decision seems, when the union appealed, the Ontario Court of Appeal said that it was not open to the court to consider the simple reasonableness of the arbitrator’s award.

Canadian labour law generally demands that the courts must stay out of collective agreement disputes, and leave them to the labour experts, in all cases except where an adjudicator’s decision is “patently unreasonable.”

“When applying the patently unreasonable test,” the appeal court says, “a reviewing court should simply ask whether there is a rational basis for the agency’s interpretation, rather than searching for a ‘correct’ meaning of the statute and measuring the rationality of the agency’s decision by its degree of deviation.”

In the Huronview case, the court has found that the arbitrator’s interpretation of the layoff clause was rational. “It is not for the court on judicial review to say whether the arbitrator’s decision was correct or even reasonable: To justify interference, the decision must be patently unreasonable.

“To be patently unreasonable, the decision of the arbitrator would have to be ‘clearly irrational’ and ‘not in accordance with reason.’... The arbitrator’s interpretation,” the Court of Appeal concludes, “was one that the collective agreement could reasonably and logically bear, and it follows that it was not open to the Divisional Court to interfere.”

For more information: Huron (County) v. Service Employees Union, Local 210, Ontario Court of Appeal docket C33492, Oct. 25/00.

A reasonable time for a drink?
Mind you, another recent Ontario case provides a hopeful sign that common sense can prevail in labour relations. Indeed, management might be tempted to file it under “Union Argument of the Month.”

The vice squad of the Hamilton-Wentworth Police Service had a “custom” of surreptitiously drinking the alcohol they seized in raids. Because of this conduct, six of the officers were charged with theft.

At a preliminary hearing the judge dropped charges against one of them, the squad leader, Staff-Sergeant Duerksen, finding that he had participated only in a minor way, so as to get to know the officers working under him and the way the division operated.

However, the five other officers were committed to trial. The Crown ultimately withdrew all the charges against them, as well, but only on the basis that there had been such a long delay in proceeding against the officers that the prosecution violated their right to a speedy trial.

Then the union put forward its argument: The collective agreement provided that the Hamilton-Wentworth Police Services Board would pay legal fees incurred because of “acts done in the attempted performance in good faith of duties as a police officer.”

This, the union said, included drinking the seized alcohol during “debriefings” after raids.

Ergo, the board was obliged to pay the officers’ legal costs of the withdrawn prosecutions.

It gets better. An arbitrator agreed with this argument.

Yes, you read right. As Ontario’s Divisional Court describes it, “The only basis for this conclusion found in the arbitrator’s reasons is his finding it was an established routine for vice squad officers to review events from the previous shift in a relaxed social atmosphere on police premises, a form of ‘debriefing.’ The arbitrator was patently unreasonable in saying that routine boozing was a form of debriefing.

“He then concluded the consumption of the seized alcohol was ‘clearly in the performance of their duties.’”

“Clearly, it was not,” says the court, on a judicial review of the arbitration.

“The finding was patently unreasonable.” And it was irrelevant that the charges against Duerksen were dropped. Duerksen was just trying “to learn the ropes” and “integrate himself into the squad.”

For more information: Hamilton-Wentworth (Regional Municipality) Police Services Board v. Hamilton-Wentworth Police Assn., Ont. Divisional Court file 877/99, Sept. 1/00.

Jeffrey Miller is editor of Canadian Employment Law Today. For subscription information, call (416) 609-3800 or (800) 387-5164.

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