Publication

The world of labour law has seen many developments in the last few months of 2003 and at the beginning of 2004; therefore we thought it would be useful to review the following matters:

1. The dismissal of an incarcerated employee: the courts rule on this controversial matter;
2. Notice of dismissal of a unionized employee: the Court of Appeal of Quebec rules on the application of Articles 2091 and 2092 of the Civil Code of Québec ;
3. Adoption of Bill 31: the government adopts the Bill despite opposition from the unions;
4. Pay Equity Act : the Superior Court declares chapter IX of the Act invalid;
5. The Court of Appeal rules that the provisions of the Employment Insurance Act relating to parental leaves are unconstitutional;
6. The Supreme Court of Canada makes the final decision: Place des Arts did not infringe the Labour Code .

I. DISMISSING AN INCARCERATED EMPLOYEE

Section 18.2 of the Charter

Pursuant to section 18.2 of the Charter of Human Rights and Freedoms,1  it is prohibited to "dismiss, refuse to hire or otherwise penalize a person in his employment owing to the mere fact that he was convicted of a penal or criminal offence, if the offence was in no way connected with the employment or if the person has obtained a pardon for the offence." It has been claimed that the protection afforded by this provision extends even to those who have been incarcerated following a conviction and consequently that an employer may not dismiss an employee who is absent because of his/her incarceration unless the offence in question is connected to his/her employment. In a recent judgment, Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Maksteel Québec inc.,2  the Supreme Court of Canada rejected this interpretation of section 18.2 of the Charter.

The facts in the Maksteel case

An employee pleaded guilty to charges of fraud and breach of trust; he was therefore sentenced to a term of imprisonment of six months less a day. His employer dismissed him on July 11, 1991, that is to say, the first day he did not appear at work after his vacation time, which coincided with the beginning of his term of imprisonment. On July 22, 1991, the employer had already hired a new mechanic to replace him. On July 29, 1991, following his release on parole, the employee tried without success to resume his position.

A complaint was filed with the Human Rights Tribunal pursuant to section 18.2 of the Charter . The Tribunal found that section 18.2 protects the employment of an incarcerated individual and that the dismissal was a form of indirect discrimination due to the complainant's conviction. Therefore, it ordered the employer to pay the complainant $46,950 in material damages and $5,000 in moral damages due to the employer's failure to make reasonable accommodation for the complainant.

The Quebec Court of Appeal reversed this judgment, finding that section 18.2 of the Charter does not provide any protection to an employee who is dismissed because he is not available to work due to his imprisonment. The complainant, represented by the Commission des droits de la personne, appealed to the Supreme Court of Canada. In the meantime, the employer in this case, Maksteel Québec inc., had gone bankrupt.

Judgment of the Supreme Court of Canada

The Supreme Court of Canada concluded that the protection afforded to individuals convicted of a penal or criminal offence is very circumscribed: it only applies in an employment context and only in cases in which the action taken by the employer is owed to the mere fact that the individual has a criminal record. According to the Court, an employee who cannot work because he/she is incarcerated has not been unfairly stigmatized if dismissed for this reason. Unavailability is an inescapable consequence of incarceration; every incarcerated offender must suffer the consequences that result from being imprisoned, including loss of employment.

The Court also concluded that an employer is not violating section 18.2 of the Charter if it dismisses an employee because the employee is absent due to his/her incarceration. However, the Court added that an employee could be successful if he/she showed that the cause alleged by his/her employer was merely a pretext to cover up a violation of section 18.2 of the Charter. Such a conclusion would have been obvious, for example, if the employee could have served the sentence intermittently, outside working hours; it would also have been the case if the same employee was on leave for the entire term of imprisonment. In Maksteel , the Court of Appeal concluded that the complainant had been dismissed because of his unavailability; the Supreme Court of Canada did not deem it appropriate to review the Court of Appeal's finding of fact.

Proof of pretext: the Gervais case

We should not jump to the conclusion that as a result of Maksteel, an employer is automatically entitled to dismiss any employee who is absent due to his/her imprisonment. The courts will not hesitate to intervene if they consider that the reason is merely a pretext, as the Court of Québec did in Gervais v. Castel Pro inc.3

In this case, a real estate agent was incarcerated after being convicted of a criminal offence which had no connection to his employment. His employer did not take any measures: his files were simply entrusted to another agent. However, when a newspaper article reported the agent's conviction and identified his employer, the employer immediately reacted by dismissing the agent because of his unavailability and notified the Association des courtiers et agents immobiliers du Québec in order to have his real estate agent's licence suspended.

The Court held that the agent's absence did not cause any hardship to the employer for two months, as long as his conviction and his employment relationship had not been made public by the newspaper article. It was only then that the employer decided that its business had been discredited. According to the Court, under the circumstances, the unavailability to work was obviously only a pretext.

Therefore, the Court ordered the employer to pay its ex-agent compensatory damages in the amount of $4,950.68 (lost commissions and fees for licensing as a real estate agent) and exemplary damages in the amount of $2,000. Evidently, these damages could have been much higher if the agent had not brought his suit before the Small Claims Division of the Court of Québec.

Conclusion

Even though the Supreme Court chose a narrow method of interpretation of section 18.2 of the Charter in Maksteel , it nevertheless recognized the need to take a firm stance against all discrimination based on a criminal record; it stated that:

The saying "once a criminal, always a criminal" has no place in our society. Individuals who have paid their debt to society are entitled to resume their place in society and to live in it without running the risk of being devalued and unfairly stigmatized.

Employers must be able to show that the unavailability resulting from incarceration is the real reason for the dismissal, not simply a pretext to cover up a violation of section 18.2 of the Charter; otherwise, they will expose themselves to similar lawsuits as the one in Gervais.

II. NOTICE OF TERMINATION - UNIONIZED EMPLOYEES

The Court of Appeal has handed down two judgments4  which will have major consequences for all employers who terminate unionized employees. In fact, the Court ruled that these employers are obliged to give their unionized employees reasonable notice of termination, in accordance with Article 2091 of the Civil Code of Québec .

The facts

The facts are substantially similar in both cases.

Both employers announced the closing of their business. The unions then filed a grievance alleging that the employers had not given notice in accordance with Article 2091 of the Civil Code of Québec , which reads as follows:

2091. Either party to a contract with an indeterminate term may terminate it by giving notice of termination to the other party.

The notice of termination shall be given in reasonable time, taking into account, in particular, the nature of the employment, the special circumstances in which it is carried on and the duration of the period of work.

Consequently, both unions were asking for payment of an indemnity equal to four weeks' salary per year of service, relying on Article 2092 C.C.Q., which reads as follows:

2092. The employee may not renounce his right to obtain compensation for any injury he suffers where insufficient notice of termination is given or where the manner of resiliation is abusive.

In both cases, following preliminary objections by the employers, the arbitrators hearing the grievances held that they had jurisdiction to apply Articles 2091 and 2092 C.C.Q. despite the absence of any reference to these provisions in the collective agreement they had to interpret.5  Both these interlocutory arbitration awards were challenged by applications for judicial review before the Superior Court.

In one case, it was decided that the recourse under Article 2091 C.C.Q. was one over which the civil courts had exclusive jurisdiction; therefore the arbitrator had no jurisdiction to hear such a grievance.6  However, the Court decided that the employees had the right to bring a civil suit based on Article 2091 C.C.Q.

In the other case, the Superior Court simply ruled that the employer's action was premature, since the decision was an interlocutory one and it was not obvious that the arbitrator had agreed to hear a grievance over which he had no jurisdiction.7

The Court of Appeal granted the motions for leave to appeal in both cases and rendered the judgment on December 9, 2003.

Judgment of the Court of Appeal

The Court of Appeal ruled first of all that the recent decision of the Supreme Court of Canada in Parry Sound8  "means that all collective agreements implicitly incorporate human rights and other employment-related statutes, establishing a floor beneath which an employer and union cannot contract."9  The Court of Appeal added that the implicit incorporation of rules of public order is expressly contemplated by section 62 of the Labour Code.10

The Court of Appeal then considered that Articles 2091 and 2092 C.C.Q. are indisputably tied to the labour laws which set minimum working conditions; consequently, a grievance arbitrator necessarily has an obligation to recognize the protection afforded by these provisions to any employee who is laid off or dismissed. The two arbitrators whose interlocutory decisions were challenged were therefore right to dismiss the preliminary objections of the employers.

The Court of Appeal added that a collective agreement cannot subsist concurrently with individual agreements between the employer and the employees with respect to the prior notice of dismissal. The Court noted that the collective agreement leaves little place for individual contracts and the related mechanisms of implementation.

The Court noted that the unions were not asking the employer to make specific agreements which would be more beneficial for each employee individually. In fact, the claim was the same for everyone, that is to say, the payment of four weeks' notice per year of service, due to the mandatory nature of Articles 2091 and 2092 C.C.Q.

The Court ruled that it is up to the grievance arbitrator to decide on and implement solutions adapted to the workplace he serves, quoting Justice Monet in Lapointe v. Morin:11  "adjudicators may be innovative and give a certain direction to their decisions having regard for the unique nature of labour law."

Obligations of the employer in the event of a dismissal

It has always been recognized that when dismissing a unionized employee the employer must comply with three distinct obligations:

1. The obligation to give a notice of termination of employment in accordance with sections 82 and following of An Act respecting labour standards;
2. If applicable, the obligation to give a notice of collective dismissal in accordance with section 84.0.1 of An Act respecting labour standards;
3. Any additional obligation which is provided in the collective agreement.

According to the Court of Appeal, employers will now have an additional and more burdensome obligation, because they will have to apply Articles 2091 and 2092 C.C.Q. It is worth mentioning that employers in other Canadian jurisdictions are not subject to such an obligation since the corresponding common law rules, which in any event do not apply to unionized employees, are different from those of the Civil Code of Québec.

Practical conclusions

That said, it is worth noting that the debate on this last issue is far from over.

Both employers in the above-mentioned judgments will present an application for leave to appeal to the Supreme Court of Canada. Considering the importance of the question and the fact that it has never been dealt with before, it is quite possible that the Supreme Court will agree to hear this case. If so, we will have to wait another year or two before drawing any definite conclusion as to the application of Articles 2091 and 2092 C.C.Q. to unionized employees.

If the Supreme Court refuses leave to appeal or dismisses the appeal, the arbitrators in this case will have to determine the terms of the notice that an employer must give to its unionized employees. To date the arbitrators have only rendered preliminary decisions in which they found that they had jurisdiction to apply Articles 2092 and 2092 C.C.Q.

Arbitrators will have to answer several questions including the following:

• Should there be one standard that applies to all employees?
• If so, what should the standard be? One, two, three or four weeks per year of service? Should there be a maximum, such as twelve months, for example?
• If the answer to the first question is no, should other factors be considered, such as age, the nature of the position, etc.?
• Can the employer allege that the employees have an obligation to mitigate their damages?

As soon as we have answers to all these questions we will let you know.

III. ADOPTION OF BILL 31

Bill 31 13  which was summarized in a previous issue (November 2003) was assented to on December 18, 2003 despite many demonstrations organized by the unions. No major amendments were made to the Bill between its introduction and its enactment; however, it only came into force on February 1, 2004. Therefore, the provisions of the Labour Code as they read before the amendments made by Bill 31 continue to apply to all transfers of the operation of part of an undertaking made before February 1, 2004.

IV. PAY EQUITY ACT

On January 9, 2004, the Superior Court handed down a judgment14  declaring that the provisions of chapter IX of the Pay Equity Act15  are invalid, null, inoperative and of no effect because they violate section 15 of the Canadian Charter of Rights and Freedoms and provisions of the Charter of Human Rights and Freedoms. The judgment is several hundred pages long and impossible to do justice to in a few lines.

Essentially, this judgment calls into question the exception made for all pay equity or pay relativity programs completed before November 21, 1996 or which were in progress at that date and which satisfied certain conditions. These programs were introduced by various employers before the adoption of the Pay Equity Act. The legislator chose to recognize them as valid, even if they did not meet all the conditions required in the Act for new pay equity programs. The validity of these programs has been challenged by various union associations claiming that they do not provide the employees in question with pay equity that is equivalent to that generally provided in the Act. The Superior Court ruled that the inequity resulting from the application of programs set up before November 21, 1996 violates the fundamental rights of those employees.

The Attorney General of Quebec has announced his decision not to appeal the judgment of the Superior Court. As a result of this decision, the Minister of Labour will present a new bill to repeal chapter IX of the Pay Equity Act.  Meanwhile, the Chair of the Conseil du trésor has stated that talks will be held with the various union organizations to find a solution that could win the approval of all the parties involved.

The Superior Court has suspended the declaration of unconstitutionality and its effects for a period of six months from the date of the judgment, that is to say, until July 9, 2004, giving the legislator time to determine how the partial invalidity of the Act should be remedied. Various solutions are possible, which means that the numerous employers who had programs which satisfied Chapter IX of the Pay Equity Act cannot be certain of their obligations for the time being.

V. UNCONSTITUTIONALITY OF CERTAIN PROVISIONS OF THE EMPLOYMENT INSURANCE ACT

On January 27, 2004, the Quebec Court of Appeal ruled that the provisions of the Employment Insurance Act16  relating to maternity leave and parental leave are unconstitutional.17  In a unanimous answer to the questions submitted by the Government of Quebec, the Court ruled that the federal government could not offer benefits pursuant to the Employment Insurance Act when such matters lie within the exclusive jurisdiction of the provinces.

According to the Court of Appeal, in 1940, when the federal government acquired jurisdiction over employment insurance, it was clear that this constitutional amendment did not allow it to adopt other social security measures which lie within the exclusive jurisdiction of the provinces. Although this question was not raised, the validity of the recently enacted provisions of the Employment Insurance Act granting employees compassionate care benefits could also be challenged in light of the reasons given by the Court of Appeal.

The Court of Appeal did not issue any specific order since the Court was merely asked to answer certain questions submitted to it. The federal government has the right to file an appeal with the Supreme Court of Canada, which it probably will, if it deems it necessary to obtain a final judgment on this matter from the highest court in the land. In fact, the findings of the Court of Appeal concern not only the rights of the Government of Quebec, but also those of all other provincial governments in Canada.

While awaiting the decision of the Supreme Court, the Government of Canada will continue to apply the relevant provisions of the Employment Insurance Act allowing employees to continue benefiting from the provisions relating to maternity leaves and parental leaves. Intense negotiations between the federal government and the provincial governments will no doubt take place at the same time as the legal proceedings.

We will keep you informed about any new developments in this matter.

VI. THE DECISION OF THE SUPREME COURT OF CANADA IN THE PLACE DES ARTS CASE

As a result of a strike by its stage technicians, Société de la Place des Arts (SPA) was no longer able to provide its tenants with the technical services it had undertaken to supply. Therefore, it notified its tenants that it was definitively shutting down this part of its business leaving the tenants to hire their own stage technicians for the various performances produced at Place des Arts (plays, concerts, ballets, etc.).

The stage technicians' union then brought various proceedings alleging that SPA was infringing section 109.1(b) of the Labour Code. Essentially, it argued that SPA was indirectly using strikebreakers by allowing its tenants to hire their own stage technicians, which they were prevented from doing before the strike in the collective agreement and in the leases with SPA.

The Superior Court accepted the union's arguments and issued an injunction prohibiting SPA from indirectly using strikebreakers;18 the Quebec Court of Appeal upheld that decision.19

The Supreme Court of Canada granted the appeal from the decision of the lower court20  ruling that:

• SPA and its tenants could not be conflated into a single undertaking and that the actual legal and economic structure of complex organizations should not be ignored;
• For the purposes of section 109.1(b) of the Labour Code , the fact that SPA benefited indirectly from the tenants' activities did not amount to utilizing the services of a person employed by another employer; therefore, it could not be said that SPA was using strikebreakers because it benefited from the activities of its tenants which had to hire stage technicians to present performances;
• Any employer has the right to go completely or partly out of business, for whatever reason, even based on socially reprehensible considerations. Therefore, an employer has the right to close up shop rather than agree to negotiate with a union. The courts must ensure, in such a case, that it is not just a ruse and that the decision to go completely or partly out of business is genuine.

In this case, the Court ruled that SPA had actually ceased part of its activities, that is to say, the technical services side of its business, even though it continued leasing out its halls. Therefore, SPA was not indirectly using strikebreakers, since it was the tenants themselves that were hiring stage technicians for their own business.

In this unanimous decision by seven judges, the Supreme Court of Canada clearly reaffirmed the right of every business to shut down completely or in part. It also stated that a union's representation monopoly should not affect the rights of other employers, except in cases where section 45 of the Labour Code applies. The Court noted that no application under section 45 of the Labour Code had been made in this case.

1. R.S.Q., c. C-12.
2. 2003 S.C.C. 68 (November 14, 2003).
3. Court of Québec (Small Claims Division), No. 200-32-031950-032, November 20, 2003 (Michael Sheehan, J.C.Q.).
4. Isidore Garon ltée v. Tremblay, C.A.Q. 200-09-003505-010, December 9, 2003; Syndicat national des employés de garage du Québec inc. (C.S.D.) v. Fillion et Frères (1976) inc ., C.A.Q. 200-09-003550-016, December 9, 2003.
5. Syndicat du bois ouvré de la région de Québec inc. et Isidore Garon ltée, D.T.E. 2001T-74 (Mtre Jean-Pierre Tremblay, arbitrator); Syndicat national des employés de garage du Québec inc. (C.S.D.) v. Fillion et Frères (1976) inc., unreported arbitration award of Mtre Denis Tremblay dated August 25, 2000.
6. Fillion et Frères (1976) inc. v. Syndicat national des employés de garage du Québec inc. (C.S.D.), D.T.E. 2001T-353 (Yves Alain, J.S.C. Quebec).
7. Isidore Garon ltée v. Me Jean-Pierre Tremblay , C.S.Q. No. 200-05-014277-003, February 6, 2001 (Edouard Martin, J.S.C.).
8. Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., local 324 , [2003] S.C.C. 42.
9. Isidore Garon ltée, supra , note 1, paragraph 42.
10. It is worth noting that this conclusion is contrary to the Court's conclusion in another judgment rendered in 2003, Syndicat des salariées et salariés de Krispy Kernels (C.S.D.) v. Aliments Krispy Kernels inc ., D.T.E. 2003T-375.
11. 1991 R.D.J. 21.
12. Previously, section 45 of An Act Respecting Manpower Vocational Training and Qualification , R.S.Q., c. F-5, which applied until April 30, 2003.
13. An Act to amend the Labour Code , S.Q. 2003, c. 26.
14. Syndicat de la fonction publique du Québec v. Procureur général du Québec , S.C. 500-05-057633-08, January 9, 2004.
15. R.S.Q., c. E-12.001.
16. S.C. 1996, c. 23.
17. Procureur général du Québec v. Procureur général du Canada , C.A. 200-09-003962-021, January 27, 2004.
18. Alliance internationale des employés de scène et de théâtre, du cinéma, des métiers connexes et des artistes des États-Unis et du Canada, local de scène no. 56 v. Société de la Place des Arts de Montréal , (S.C.) [2001] R.J.D.T. 607.
19. Société de la Place des Arts de Montréal v. Alliance internationale des employés de scène et de théâtre, du cinéma, des métiers connexes et des artistes des États-Unis et du Canada, local de scène no. 56 , DTE 2001T-1025 (C.A.).
20. I.A.T.S.E., Stage Local 56 v. Société de la Place des Arts , 2004 S.C.C. 2.

The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault or any member of the Firm on the points of law discussed.

©OGILVY RENAULT 2004 - All Rights Reserved

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