Wrongful Dismissal and Associations

Can members of staff associations sue their empl0yers for wrongful dismissal?  According to the B.C. Court of Appeal, the answer is no if there is a valid employment agreement in place and a recognized association.

In the case of Ferrari v. University of British Columbia, the employee had been an Asset and Material Management Supervisor, working for the University of British Columbia.  At the time he was promoted to this supervisory position, he signed an employment agreement.  The agreement included a term that the employee must become a member of the AAPS (Association of Administrative and Professional Staff), which would be the bargaining agent for certain managerial level employees.  AAPS had grievance and arbitration agreements in place with UBC.

In 2010, Mr. Ferrari’s employment was terminated, allegedly for just cause as a result of “fraudulent use and sale of University vehicles.”  Mr. Ferrari denied these allegations and contacted AAPS to file a grievance.  AAPS decided that it would not proceed with a grievance or take the matter to arbitration.  AAPS felt that there was no reasonable prospect of success.  Mr. Ferrari was therefore left without a remedy.  So he filed a wrongful dismissal lawsuit against UBC in the B.C. Supreme Court.

B.C. Supreme Court Decision

UBC brought a motion to stay the proceedings, which would effectively terminate Mr. Ferrari’s lawsuit.  UBC was successful.  The B.C. court held that there was a valid arbitration agreement in place, and Mr. Ferrari was stuck with it even if the association (AAPS) did not take the matter through the process.  The court recognized that since the association was not actually a union, Mr. Ferrari could not complaint to the Labour Relations Board about unfair representation.  Nevertheless, the B.C. court stayed the action and noted that Mr. Ferrari would have the option of bringing a lawsuit against the association for failing in its duty to represent or for breach of fiduciary duty.  The court did not comment on the likelihood of success of either of these types of actions, which would probably be very slim.

B.C. Court of Appeal

Mr. Ferrari appealed to the B.C. Court of Appeal.  He argued that he should not have been treated as a “party” to an arbitration agreement since he had no control over the process and his case was never taken to arbitration.  He also argued that it would run counter to the interests of justice to deny him any kind of remedy.

The Court of Appeal dismissed the appeal for the following reasons:

1.  It held that Mr. Ferrari was a party to the arbitration agreement since his employment agreement incorporated the arbitration agreement by reference.  In other words, this was similar to the situation involving a collective agreement in a unionized context.  Mr. Ferrari had turned over all of his rights of representation to AAPS when he signed the employment agreement.  Ouch!.

2.  While the Court of Appeal speculated that there may be a deficiency int he AAPS by-laws, that would be a matter between Mr. Ferrari and AAPS and would not involve UBC.  In other words, Mr. Ferrari was stuck with the arbitration clause even though AAPS decided not to take the case to arbitration.  The B.C. Court of Appeal reviewed numerous cases in this area, primarily in the unionized context, and concluded that an employee who is represented by an exclusive bargaining unit in this type of situation is simply out of luck if the association will not proceed.  The only remedy is a claim for unfair representation against the association, where the employee must prove that the association has acted in a manner that is “arbitrary, discriminatory or in bad faith.”    Here is the court’s conclusion on this point:

“By accepting employment in an AAPS position, Mr. Ferrari agreed to appoint AAPS his exclusive bargaining agent with the power to decide whether to advance, settle or arbitrate grievances….”

and

“As between Mr. Ferrari and AAPS, it may well be that the Association’s bylaws are inadequate to ensure the necessary scrutiny of the decision not to proceed with his grievance.  However, that is not an issue that arises between Mr. Ferrari and UBC such that Mr. Ferrari should cease to be bound by the arbitration clause.”

Finally the court concluded that “it is well recognized in the history of labour relations that the model of exclusive representation of employees by their association or union carries with it a correlative transfer of authority over the grievance process subject only to the association’s duty of fair representation.”

Conclusion:

This case illustrates the problems with the “exclusive jurisdiction model” of labour relations in Canada in unionized workplaces.  When the union or association is supportive of the employee, the employee has a chance to be reinstated and is provided with representation at no charge.  This can be great and it can sometimes provide a much better remedy than an employee would have had under Canadian common law.

If, however, the union or association chooses not to proceed with a grievance, the employee is left without any real remedy.

The argument that an employee has the alternative of suing the association for “failure to represent” or for “breach of fiduciary duty” is quite unconvincing.  Employees have a very low rate of success in these types of cases, whether at common law or brought as “unfair representation” cases in labour boards across the country.  More often than not, these types of proceedings simply cause the dismissed employee to incur legal fees without getting anywhere.

A dismissed employee should have the right to file a wrongful dismissal lawsuit if the union or association will not proceed or if the employee would prefer this approach.  Given the huge significance of a person’s employment, people should have the right to fight a dismissal decision and to decide how far they wish to go in that fight.  There are many countries in the world in which unionization does not deprive employees of the right to advance their case, even without union backing.

Employers argue that this subjects them to the potential of a multiplicity of proceedings.  While that is true, the Canadian legal system has cost sanctions for lawsuits that are unsuccessful.  There is a balance here between the employer’s right to avoid inconvenience and the fact that employee is left without a remedy when dismissed from a long service position.

Unions and associations also oppose this approach, since they wish to have exclusive control over the bargaining process, relations with the employer and their own costs.  But if the union is not obligated to take the case forward and will not permit the employee to take it forward, this exclusive jurisdiction is useless to some employees, at a time when they most need this support and representation.

The B.C. Court of Appeal decision likely reflects the law as it exists in Canada today.  But maybe it is time for the Supreme Court to revisit this matter and look at other alternatives to “exclusive representation,” particularly in situations involving employees left without real remedies.