A lesson in the onerous burden shouldered by federally regulated employers in discharging employees was once again driven home by the recent unjust dismissal adjudication of Lancaster v. Sprint Canada, the telephone service provider.
Federally regulated employers are of course those involved in specific works and undertakings within exclusive federal constitutional jurisdiction such as shipping, railways, broadcasting, aeronautics, banking and telecommunications. As employers in those industries know, Division XIV under the Canada Labour Code (the "Code") provides a mechanism for a dismissed employee with at least 12 months continuous service to have his dismissal adjudicated as if he were a unionized employee enjoying the "just cause" protections of a collective agreement. Generally unless the employer can demonstrate either (i) just cause for dismissal, a high standard to meet or (ii) that the employee was "laid off because of lack of work or because of the discontinuance of a function", the aggrieved employee will be provided with a remedy to rectify the breach. That remedy will often include reinstatement and full back pay. It was against these standards that Sprint failed to cross the finish line.
Lancaster had been employed by Sprint for a little more than two years when his employment was terminated in November 2002. Sprint took the position that Lancaster was dismissed as a result of a discontinuance of his function and accordingly the adjudicator did not have the jurisdiction to decide the case on its merits.
On hearing the evidence, the adjudicator disagreed. Noting that a termination resulting from a lack of work/ discontinuance of a function is essentially a non-culpable layoff, he held that the evidence did not support Sprint’s position. In particular, Sprint had hired another person into the same classification as the one the adjudicator held that Lancaster occupied, notwithstanding a temporary assignment prior to his dismissal. Further, since Sprint never took the position that it had just cause per se to terminate Lancaster’s employment, Lancaster’s complaint was upheld.
Next in dealing with the remedy, the adjudicator noted that reinstatement is appropriate "in all but the most exceptional circumstances". He ordered Lancaster reinstated in his position with full back wages, benefits and seniority. Given Lancaster’s annual compensation at the time of his dismissal ($98,579.00), against which was offset his income from alternative employment in mitigation of his losses after termination, the adjudicator awarded Lancaster damages in the amount of $68,000.00.
The Sprint Canada decision once again highlights the perils faced by federally regulated employers in dismissing employees. As any unionized employer knows, meeting a standard of just cause in the eyes of many adjudicators/ arbitrators is an Olympian task. It generally requires evidence of serious misconduct. Moreover, while there indeed may be a lack of work or discontinuance of a function which necessitates a dismissal for economic or non-culpable reasons, the employer must be able to demonstrate that the employee in question was selected for bona fide, good faith reasons objectively applied.
While technically the unjust dismissal provisions of the Code do not apply to employees who are "managers", just who qualifies as a manager within the meaning of the Code is another high threshold as the concept has developed in the case law. Given the enormous protection afforded employees with at least 12 months continuance service, federally regulated employers are well advised to take a long, hard look at any employee coming up on the employee’s first year anniversary.
Sprint has sought judicial review by the Federal Court of the adjudicator’s decision. This race may yet turn into a marathon.
The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.
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