How warehousing grievances boosts back pay risk for Canadian employers

For unionized employers, the danger in a termination grievance may lie less in the merits of the case than in how long it takes to get a hearing.  

That was evident after a federal arbitrator recently reinstated a dismissed employee and ordered substantial back pay after finding that both the employer and the union had “warehoused” the grievance, effectively tolerating years of delay.  

For Toronto employment lawyer Patrick Groom, a certified specialist in labour law with McMillan, the outcome illustrates how warehousing grievances can magnify liability for employers – and such delay patterns are not confined to the rail sector.  

“In other industrial settings, steel plants and auto plants where a similar process is used, it's supposed to be an expedited process,” he explains.  

“It's supposed to create efficiencies.”  

Instead, once grievances are referred to arbitration, they can sometimes be effectively parked, with neither party moving to select an arbitrator or set hearing dates while potential monetary liability continues to build.  

Warehousing grievances and laches 

The arbitration decision details how a CN rail car mechanic was dismissed after a profane outburst at a supervisor. The union grieved the termination, and the case then sat for several years before reaching an arbitrator.  

When it finally did, the arbitrator rejected the employer’s argument that the grievance should be dismissed under the doctrine of laches, which applies when there has been unreasonable delay in moving a matter forward.  

Instead, the arbitrator noted that both sides had tolerated a pattern of delay and that the employer had been reminded the case was still active. Groom explains, “The arbitrator here said, ‘That's not really what happened. The union did remind you this case was outstanding, and perhaps it should have been the union who advanced the case, but you employer, were aware of it, and you took no actions, either.’”  

Within the grievance procedure itself, Groom says employers do have clear tools, and those are the contractual timelines that appear in most collective agreements. That language can support an employer that wants to insist grievances move step by step without open-ended extensions.  

However, Groom stresses that in many agreements, the formal time limit regime ends once the union has referred the grievance to arbitration. The result is a potential delay: the grievance is alive and headed to arbitration, but with no contractual deadline for setting dates.  

“If something is in that limbo state, it's been referred to arbitration but not set down for a hearing, that's where they face some real significant exposure,” Groom says. In other words, once a termination grievance crosses the threshold into arbitration, the meter on potential back pay can keep running until the case is decided. 

That risk, he adds, cuts across sectors.  

“It doesn't matter what industry you're in,” he says. “It doesn't matter if you're federal or provincial. Every unionized employer can face this problem, if the union doesn't set it down for hearing, or an arbitrator is not agreed to.”  

Documenting delay and putting union on notice 

When an employer believes a union is slowing a case down, Groom says the first step is to create a written record of communications with the union about it. Having written correspondence on file can later support an argument against a charge of responsibility for any delay. 

However, “It doesn't necessarily mean that the employer should be the one to refer it to arbitration,” he adds, noting that “this is a very odd and unique process.”  

Groom adds that employers also need to maintain a baseline of good faith communication with their union stakeholders, even when they are concerned about delay. In practice, that means responding promptly to union communications and following up when responses are not received. 

“You want to make sure that you've made a good faith effort to communicate with the union,” he says. 

“That's generally, I would call, good labour relations.”  

However, Groom says employers should not let a desire to preserve a collaborative relationship override their duty to manage risk. If written nudges and good faith negotiations do not move things along, Groom says employers may have recourse to statutory appointment provisions that allow either party to request the appointment of an arbitrator. 

“Acting in good faith shouldn't be let to jeopardize the employer's interests.”