Canada: Sunset Clause Couldn't Save Employee From Consequences

In a recent B.C. case, Mission Hill Winery v. Service Employees International Union Local 2, Branch 300 (Crozier Grievance), [2019] B.C.C.A.A.A. No. 130 (Glass), Arbitrator Nicholas Glass upheld the discharge of an employee who made a major mistake – not once but twice — in spite of the presence of a sunset clause prohibiting consideration of disciplinary action within a particular timeframe.

Incident Leading to Discharge

The grievor in this case was an employee with 10.5 years of seniority at his employer, Mission Hill Winery.  He worked in the cellar of the winery where the operations included a process for blending wines.

The wines were held in large tanks of varying sizes within the cellar.  To blend wine, it is moved from one tank to another through a system of pipes and hoses.  Valves control the movement of liquid between the tanks.

Before transferring the wine, employees are required to test the system by running water through the assembly.  The water is diverted to floor drains rather than the receiving tank.  If the test is satisfactory, the diverting valve on the receiving tank must be adjusted so wine will flow into it rather than down the drain.  The employee is required to check the process and flow of wine after 15 minutes to ensure it is working correctly and there is a viewing pane which permits observation of any errors.

In performing this process, the grievor failed to close the diverting valve so the wine would run into the receiving tank instead of down the drain.  His error resulted in the loss of 5,680 litres of wine going down the drain.  This is equivalent to 630 cases of wine with a retail value of $162,464.40.

The grievor had made the same mistake approximately two years before and had flushed 11,000 litres of wine down the drain at that time.  He was not suspended after the earlier wine spill.

These incidents were the only occasions on which there had been a total loss of wine in the history of the employer's cellar operations.

Sunset Clause

The collective agreement between the parties contained a "sunset clause" which stated that the employer would not take into consideration any letter of reprimand on the record of an employee after a period of 12 months, or any suspension on the employee's record after a period of 18 months.  This was, however, conditional on the employee not being disciplined for the same kind of offence in the relevant period of time.  The union argued that the sunset clause prevented the employer from taking into account the prior wine spill.

Arbitration Decision

Arbitrator Glass applied the Wm. Scott test in making his decision.  That test involves a consideration of whether there was justification for any kind of discipline and, if so, whether the disciplined imposed was appropriate.  The arbitrator readily found that there was just cause for discipline in the case.  In considering the Wm. Scott factors regarding the appropriate level of discipline, the arbitrator addressed the impact of the "sunset clause" on the analysis.

Sunset Clause

While parties are entitled to negotiate limits on what an arbitrator can consider in assessing discipline, each sunset clause has to be analyzed, Arbitrator Glass held, as to what it excludes from the analysis.  In the case before him, the arbitrator held that the "disciplinary history" outside the time limits had to be excluded, but he was not barred from considering the grievor's "work or employment record".  In this case, the previous mistake survived the sunset clause because it spoke to the grievor's "overall work record and ... attitude as an employee" and the matter of whether he could learn from his mistakes.  Although it was an incident for which the grievor was disciplined, the impact of that previous incident was not solely limited to discipline.

Accordingly, while the arbitrator could not strictly speaking consider the "disciplinary history" of the grievor, he was able to explore the ability of the grievor to appreciate the seriousness of his negligent misconduct and respond to requests for improvement as well as the overall health of the employment relationship.  If the parties had intended to exclude such considerations, this would have been spelled out expressly in the sunset clause.  The arbitrator noted that this was a "legal fiction" but a necessary one.

Discharge Upheld

The arbitrator went on to conclude that discharge was an appropriate employer response in the circumstances.  The grievor had not carried out his duties in error but rather had failed to do his job at all — with a "staggering level of carelessness or negligence".  The magnitude of his previous mistake should have made the grievor aware of the importance of carrying out his duties but it clearly had no effect on him at all.  While he expressed remorse in relation to the mistake, the grievor had expressed similar remorse, the arbitrator noted, after the first incident.

Takeaways for Employers

This case demonstrates the importance of clarity in drafting collective agreement provisions, particularly with respect to sunset clauses which can operate to prevent an employer from relying on previous instances of misconduct.

While the language in this case was narrow enough to allow the arbitrator to reach back to the previous misconduct, an employer that agrees to broad sunset clause language takes on the risk of having to maintain the employment of an employee who makes disastrous mistakes with significant consequences provided sufficient time has passed between those mistakes.

Originally published Apr 29, 2020.

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