Federal Court of Appeal 2023

This question was reviewed by the Federal Court of Appeal in 2023. ¹

The employer had argued that the dismissal fit within the excepting words of the Code as the employee had been terminated due to a general downsizing and restructuring and that his position had been discontinued.

It stated that Mr. Rouleau‑Halpin’s employment was terminated as a result of a general downsizing within the organization and of restructuring and that his position was being discontinued. Thus, Bell Solutions relied on the limitation in subsection 242(3.1) of the Code and argued that an adjudicator could not consider the complaint.

The adjudicator found in favour of the employer and dismissed the complaint. In conducting his review of the case, the adjudicator had used a two part test.

The first step was to determine if there had been a real administrative reorganization and that the position in question had been discontinued.

The second step was to assess whether the process used by the employer to determine which employees were to be impacted was fair. This review included an examination of whether there may have been a scheme in place to terminate any particular persons or whether, to the contrary, the process selected was fair.

The first test was passed, based on the evidence of the parent company requesting a reduction in staff.

As to the second issue, the adjudicator found that the company’s use of leadership criterion to determine which manager would be dismissed was “not without merit” and that it was “not impossible or inappropriate to assess the leadership of managers”. In addition, there was no affirmative evidence offered by the employee that this basis of assessment was lacking.

The adjudicator also considered the submission made that, following the re-organisation, two new vacancies opened due to resignations. This was not of influence, as the review of the decision should be one based on the information known as of the date of the termination. He did offer that a contrary result may have followed, had a hiring process been opened for the appellant’s position soon after the termination.

This aspect of the decision was not, however, as clear cut as this summary would suggest. The termination letter was dated October 1, to be effective January 5. In the interim time period, two supervisor positions became vacant in Gatineau, a move which would have required a move for the employee. Neither was offered to the employee. The complainant provided an affidavit but did not state that he would have been willing to move. This evidence was submitted to be an indicator of the sham intent of the employer. The adjudicator examined this submission and noted that a time span of two months would not be fairly included in what was known as of the date of termination. No issue was taken on this subject on later reviews. The important issue is that the relevant time was determined to be at day one and not when the termination became effective in January. The Federal Court of Appeal saw all this as reasonable. It also noted that this submission as to the relevant time to examine the decision as the date of termination had not be argued before the adjudicator.

The adjudicator also found that whatever animosity may have existed between the appellant and his immediate manager was not a factor in the decision.

The Federal Court of Appeal upheld the adjudicator. It also rejected the employee’s submission that the employee should have been recalled when the business improved.

Federal Court of Appeal October 2011

The above issue was reviewed in a decision which reached the Federal Court of Appeal, which in brief reasons, endorsed the decision of the first review, which in turn had upheld the adjudicator’s award denying the defence. ²

CIBC had argued that the dismissal was due to a national restructuring initiative. The complainant had been selected to be terminated as some of his responsibilities were capable of being done by others. Upon termination, all of his duties were reassigned to others or contracted out.

The adjudicator had noted that an employer’s stated reasons need not be accepted at face value. It may be necessary to determine if the employer acted in good faith, whether there was a “mixed or ulterior reason” behind the move. ³ Such a decision will not allow the defence to stand.

The Bank called two witnesses to explain the rationale of the restructure. Neither witness had met the complainant. The rationale for the decision to deny the defence was as follows:

1. No evidence was submitted as to how the employee become part of this re-organisation. The projected reduction in staffing was 63, but 65 persons were eliminated. It was not known whether this complainant was one of the 63, or the incremental 2.
2. The employer must meet the onus of showing “laid off due to discontinuance of a function”.
3. The employer did not meet this burden.
4. Events which followed the termination is not relevant.
5. The employer must lead evidence of a ‘reasoned, not arbitrary, choice of elimination of a position for cost-saving” and to show that this was the “actual and operative reason” at the relevant time;
6. It was not shown how the complainant fit into the head count restructuring decision.
7. There was little evidence to show the choice of the applicant for termination.

On the first review, the Bank submitted that it has the right to manage its business as it sees fit, an undeniable proposition. The jurisdictional inquiry which follows is one limited to an examination of the bona fides of this decision. The Court noted:

What the Adjudicator is entitled to examine, however, is whether the employer’s decision to terminate was made for protected business reasons or for some other purpose, including a disguised form of discipline.  The assessment of the bona fides of the employer’s decision may require an examination of its ostensible rationale but, where the decision is shown to be legitimately based on a lack of work or the discontinuance of a function, the merits of the choice are of no remaining concern.

In this case, the Court noted that the adjudicator was “simply not satisfied with the quality of the evidence” shown by the Bank. The adjudicator did not examine the wisdom of the decision, but rather whether the Bank had met its burden.

In this case, the Bank failed to call the manager which was responsible for the immediate decision. The pre-termination evidence “offered almost nothing of substantive justification” and the post-termination conduct was fairly discounted by the adjudicator. The important question as to why the complainant was chosen was the central issue, one which was not addressed, as addressed by the Federal Court:

In the face of CIBC’s failure to call a witness with some direct knowledge of the choice of Mr. Muthiah, these further deficiencies in its case provide ample justification for the Adjudicator’s conclusion.

Federal Court of Appeal Feb 2011

This issue was also reviewed by the Federal Court of Appeal, which, in a brief endorsement, upheld the decision of the first reviewing court, which, in turn, had upheld the adjudicator’s award dismissing the employer’s submission that there had been a discontinuance of the job function. ⁴

The employee had held the position of a detachment clerk at the RCMP on the employer First Nation reserve. On April 5, she commenced a maternity leave. Her position had been funded under a three party agreement between the federal and provincial governments and the First Nation. This agreement had expired on or about April 1. A second such agreement followed, one which, however, deleted the funding for the employee’s position. The detachment clerk function became a Public Service Commission position. The staff previously employed by the First Nation became employees of the Public Service Commission.

The employee was instructed that she would need to apply for her position while on maternity leave. She did so unsuccessfully. The complaint followed.

On the facts, the Adjudicator found that the Applicant had not demonstrated a good faith economic justification for the discontinuance of the detachment clerk position. The basis for this finding was that the Applicant “has not shown an economic justification in agreeing to the new Tripartite Agreement that eliminated the ‘detachment clerk’ position” so that the Applicant “had a callous disregard for the effect of the new agreement on Ms. Cooke”.

The maternity leave protective sections of the Code take priority over the provisions of the Code. For this reason, the discontinuance section must be read as being subject to these protected rights. The adjudicator correctly set this out in her reasons.

Further, in this case, the adjudicator concluded that the employer had not provided a good faith economic rationale for the elimination of the detachment clerk position and continued to state that the employer showed a “callous disregard for the effect of the new agreement” upon the complainant. The particulars of these reasons are shown in the first review. ⁵ One of the most telling was that the employer was to be reimbursed for the costs of this function which presented a case of no economic justification.

The adjudicative decision was found to have been reasonable.