Pound v. iWave, 2017 PECA 17, a recent decision by the Prince Edward Island Court of Appeal, is a cautionary tale for employers about the legal issues that may arise when standard form employment policies are adopted without management fully understanding their obligations to employees in practice.read more
Labour Arbitration: When are Damages in Lieu of Reinstatement an Appropriate Remedy?
In the context of a unionized work environment, it is generally the case that when an employee is found to be terminated without cause, the employee is ordered to be reinstated. In exceptional circumstances however, where the employment relationship is irreparable, arbitrators will not order an employee to be returned the workplace and instead award damages in lieu of reinstatement. This was at issue in Arbitrator Burkett’s decision of Memorial University of Newfoundland v Memorial University of Newfoundland Faculty Assn. (Ghazala Grievance),  NLLAA No 8.
The Union grieved the dismissal of a tenured professor with a total of 23 years of service at Memorial University (the “University”). The University alleged that the Grievor had committed gross misconduct in academic research which justified termination. The Grievor denied any willful or deliberate misrepresentation in her research grant application that would amount to gross misconduct. The collective agreement defined gross misconduct in research as “fabrication, falsification, or plagiarism, but not factors intrinsic to the process of academic research such as honest error, conflicting data, or differences in interpretation.” The alleged misconduct took place while the Grievor was applying for a grant from the Natural Sciences and Engineering Research Council of Canada (“NSERC”). The NSERC selection process relied on the honesty of grant applicants.
NSERC required that grant applicants employ student researchers on funded projects. Such students must have been supervised by the applicant within the prior six years from the date of the application. The Grievor misrepresented the dates in which she supervised certain students listed in her application so to appear to meet the six-year requirement. Further she misrepresented her supervisory relationship with those students to meet application requirements. Prior to the filing of the application, the Grievor’s lab had undergone two renovations which resulted in the loss of much of the documentation she would have relied upon to complete the application. The Grievor claimed that in attempting to complete the application from memory, certain material errors were made.
The Grievor met with the University’s VP of Research and Associate VP of Research, who both testified that in the meeting, she admitted to falsifying some of the data. The Grievor denied that she made this admission. The University appointed an investigation team as stipulated in the collective agreement, determining that the Grievor committed gross misconduct in research. Further, the Grievor’s testimony was in conflict with the testimony of the VP of Research and the Associate VP of Research. This contradiction, combined with her history of verbally aggressive behaviour that previously resulted in a two month suspension, diminished the Grievor’s credibility.
Analysis & Decision
Given that the NSERC application required honesty in reporting and that the Grievor had control over her reporting, Arbitrator Burkett determined that there was a shift in the evidentiary onus to the Grievor to prove she had acted honestly. Arbitrator Burkett found that the Grievor could have sought to verify the information in the application (as she did in preparation for the arbitration hearing), but failed to do so prior to submitting the application. The Arbitrator questioned the Grievor’s testimony of having made simple errors in dates stating that it was doubtful a tenured professor’s memory would be so bad so as to include individuals that fell well outside the time limitations of the application. The Grievor also claimed there was a software malfunction with the application program; however, no other applicant had reported this.
Arbitrator Burkett found that the Grievor was aware that the quality of the application would be material to its success and that she deliberately falsified her application in order to obtain funding. Nevertheless, Arbitrator Burkett, upon a consideration of jurisprudence from other post-secondary institutions, determined that a lengthy suspension without pay, would have sufficed in this case, highlighting the length of the Grievor’s service at the University and the fact that termination would ultimately end her academic career. Arbitrator Burkett declined, however, to reinstate the Grievor to her employment, based on the following facts:
- The nature of the Grievor’s misconduct which struck at both collegiality and trust (essential components of this employment relationship);
- The Grievor’s refusal to acknowledge her wrongdoing or to otherwise take responsibility;
- The Grievor’s animosity towards her dean and others and the fact that the Grievor called into question the credibility of other faculty members, employees and an official of NSERC;
- The Grievor’s refusal to cooperate in the University’s investigation without a subpoena; and
- The history of verbally aggressive, intimidating and argumentative behaviour on the part of the Grievor.
As such, Arbitrator Burkett decided that exceptional circumstances existed in this case to merit pay in lieu of reinstatement as a more appropriate remedy.
Takeaway for Employers
While reinstatement is the usual remedy where an employer has failed to establish just cause (in a unionized work environment), where there is evidence of “exceptional circumstances” that demonstrate that the employment relationship is no longer viable, an arbitrator will refuse to order reinstatement and instead award damages in lieu. Exceptional circumstances generally involve culpable conduct on the part of an employee which leads to a poisoned or hostile work environment. Employers should be mindful of the following factors in considering whether damages in lieu of reinstatement may be appropriate in the circumstances of a particular case:
1. The refusal of co-workers to work with the grievor;
2. Lack of trust between the grievor and the employer;
3. The inability or refusal of the grievor to accept responsibility for any wrongdoing;
4. The demeanor and attitude of the grievor at the hearing;
5. Animosity on the part of the grievor towards management or co-worker; and
6. The risk of a “poisoned” atmosphere in the workplace.
(see de Havilland Inc. v CAW-Canada, Local 112,  OLAA No 767)
This article was written by Ashley Savinov, Associate, and Luke Hayden, summer student.