In a striking decision, Arbitrator O.B. Shime ordered an
employer to pay over $500,000.00 in damages after the employer
wrongfully terminated a unionized employee suspected of abusing
sick leave. Extensive damages were awarded for the employer's
"unreasonable" and "bad-faith" conduct.
The employer, the Greater Toronto Airport Authority (GTAA)
closely monitored employees on sick leave after a rash of costly
fraudulent sick leave absences were discovered within the
The grievor had been employed by the GTAA for over 23 years with
no record of discipline. Months after a work-related injury, she
underwent knee surgery and was given an expected recovery time of
four weeks. Unbeknownst to the company, the grievor was living with
another GTAA employee who was under surveillance watch at the time
for an unrelated disciplinary issue. The surveillance obtained by
the company raised suspicions as to the legitimacy of the
The grievor was seen driving and walking through stores without
any obvious indications of her alleged recovery process. The GTAA
requested medical documentation to verify the grievor's
condition, and subsequently the grievor returned to work. GTAA
believed that the limp she displayed during her first day back at
work was further evidence of fraud and confronted the grievor.
During the course of a meeting, the GTAA concluded that the grievor
exhibited inconsistent behaviour and insincerity about her injury
and absence. The grievor was terminated.
The Arbitrator held that the employer has an obligation to act
in good faith with respect to the administration of the collective
agreement. The GTAA was found to have acted egregiously and in bad
faith by acting prematurely and not conducting a full investigation
of the situation. The decision strongly criticizes the employer for
not obtaining medical corroboration before proceeding with the
penalty. Moreover, the employer was penalized for not considering a
lesser penalty given the grievor's history.
The following remedies were awarded:
all record of the incident to be removed from the grievor's
file; GTAA prohibited from discussing the matter; a positive letter
of reference to be provided;
mental distress: award of $50,000.00;
lost wages to the date of the award;
future economic loss damages for loss of seniority, pension and
other benefits reflecting years of service and the likelihood that
the grievor would have retired from the company; and
punitive damages: award of $50,000.00.
Reinstatement was not considered appropriate due to the
employer's "high-handed, arbitrary and capricious"
The GTAA has applied for a judicial review of the decision.
What this means for employers
This case reads as a cautionary tale for employers when
executing disciplinary measures subject to the applicable
Employers should verify any suspicions and corroborate with
professional opinions where possible.
Employers must apply progressive discipline and carefully
consider an employee's history before making decisions about
discipline — particularly termination, which should be a
Management rights must be applied in a good faith manner.
A note about remedies
The decision is the latest in a series of decisions where
arbitrators are expanding on the traditional remedies of
reinstatement and lost wages for unjust dismissal by awarding
significant monetary compensation for mental distress and punitive
damages. Decisions such as this clearly indicate that there is no
immunity for harsh penalties against employers found to have acted
in bad faith.
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