In a recent post, I highlighted a Federal Court decision about reinstatement for non-unionized employees under the Canada Labour Code. The Federal Court of Appeal recently reviewed the issue in a different case and overturned an adjudicator’s order of reinstatement.
A bank branch manager had a consensual sexual relationship with the assistant branch manager. When the assistant branch manager complained to management that he was stalking her, the bank fired him for cause. The adjudicator appointed under the Canada Labour Code found that the employer did not have just cause for termination and ordered reinstatement.
At the Federal Court, the judge overturned the decision, on the basis that the finding of no just cause was unreasonable. On appeal to the Federal Court of Appeal, the court disagreed with the Federal Court. In language that will give comfort to all adjudicators, the Court of Appeal stated (at para. 80):
It may seem surprising that the facts of the present case would not have been found to warrant dismissal for cause. However, this is a question that Parliament has committed to the Adjudicator. It is not the function of a reviewing court to substitute its view of the merits of a dispute for that of an Adjudicator. The court is limited to the residual role of ensuring that the reasons given by the Adjudicator justify the outcome, and demonstrate that it falls within the range of acceptable outcomes. That range may well include a decision that appears “counter-intuitive” … to the non-specialist.
However, the Court of Appeal had concerns about the decision to reinstate the manager. The Court stated: “even given the degree of deference due to an adjudicator’s exercise of the broad remedial discretion conferred by the Code, the reasons given in this case do not…, provide a cogent justification for the decision to order reinstatement”(para. 87).
The Court relied on the factors set out by the Federal Court in Sherman (the case summarized in my earlier post). In addition, the Court stated (at para. 88):
… A critical question for reinstatement has a pronounced forward-looking character: could the employer ever have confidence in the employee’s judgment again, such that it should be prepared to run the risk of further misconduct? This is not a question that the Adjudicator squarely addresses. It is not the same as the question posed by the Adjudicator: is reinstatement “unrealistic”?
In addition, in this case, the manager’s position had been filled by an employee with many more years of service and she might have to be replaced if he was reinstated.
The adjudicator had relied heavily on providing a chance for the manager to show that he could learn from the errors of his ways and to regain the bank’s trust and confidence in him as a manager. The Court noted that in fact the manager had continued his sexual relationship after being disciplined and in defiance of the bank’s clear directive regarding acceptable behaviour. In the Court’s view this undermined the principal basis of the adjudicator’s conclusion. The Court concluded that it could see “no rational basis, or line of reasoning” to justify reinstatement. Also, his relatively short period of service (5 years) was a factor: he did not have years of unblemished service that might be a basis for concluding that trust and confidence could be restored.
The Court referred the issue of a remedy in lieu of reinstatement back to the parties for discussion. In the event that the parties cannot reach an agreement, the case is to be remitted to a different adjudicator to determine the appropriate remedy.