What is the appropriate remedy for a unionized employee wrongfully dismissed from the federal government?
In the latest installment of Thu-Cùc Lâm’s legal saga, which is a story that commences with her July 12, 2006 termination of employment from the Public Health Agency of Canada (PHAC), the Public Service Labour Relations Board provided its most recent answer to that question.
As set out in Adjudicator Michele A. Pineau’s reasons for decision, Lâm v. Deputy Head (Public Health Agency of Canada), 2012 PSLRB 96 (CanLII):
Thu-Cùc Lâm (“the grievor”) was dismissed from her position with the federal public service on July 12, 2006.
Adjudicator Pineau originally ruled that it was a wrongful dismissal. However, Adjudicator Pineau refused to order Lâm's reinstatement. (2008 PSLRB 61).
Lâm applied for judicial review of the decision on the ground that Adjudicator Pineau had not allowed her to present her arguments on the issue of reinstatement. The Federal Court allowed the application for judicial review in part (2009 FC 913) and ordered that a hearing be scheduled to hear the parties on the issue of the appropriate remedy.
Lâm appealed the Federal Court's decision. The Federal Court of Appeal set aside the Federal Court’s decision and ordered that the case be referred back to Adjudicator Pineau to decide the issue of the appropriate remedy (2010 FCA 222).
Adjudicator Pineau held a hearing on the issue of the appropriate remedy. Given the testimonies and all the circumstances, she decided that reinstating the grievor was not viable and that her reinstatement had no reasonable chance of success (2011 PSLRB 137). Therefore, Adjudicator Pineau denied the grievor’s request for reinstatement in her position, remained seized of the case to determine an appropriate remedy and gave the parties 30 days following the rendering of her decision to come to an agreement on the amount of compensation.
Despite two extensions of the deadline and a mediation session, the parties were unable to agree on an appropriate remedy. Thus, a hearing was held, specifically to address the issue of the appropriate remedy to compensate the grievor for the loss of her employment. This decision (i.e. 2012 PSLRB 96) deals only with the appropriate remedy for this case.
Lâm began working for the PHAC on April 14, 1998 as a program consultant (PM‑04) and reached the top of the salary range for her classification. She was dismissed on July 12, 2006. She had eight years and three months of seniority on the day on which she was dismissed. She was earning a salary of $61,047 plus benefits equal to 15% of her income. She paid $3,288 per year toward the Public Service Pension Plan. She was 59 years old when she was dismissed. After her dismissal, she decided to accept early retirement from the public service, under which she receives a monthly income that is indexed each year. She can pay to receive certain benefits that are similar to those that she received as a public service employee
Lâm argued that she was entitled to a full and complete remedy as if she had been reinstated — that is, the full salary that she would have received between the date of her dismissal and December 3, 2013. In other words, she requests that she be paid the compensation that she would have received until the age of her retirement. (Paragraph 8 of the decision.) Neither I nor the adjudicator appears able to discern the significance of December 3, 2013; December 3rd is not Lâm’s birthday.
The employer argued that labour adjudicators generally base themselves on common law principles (see my comments about wrongful dismissal) and that they do not make a distinction as to what is reasonable for a unionized employee. The employer also argued that the remedy should not include future losses. (Paragraph 17.)
Decision of the PSLRB
In reaching her decision Adjudicator Pineau expressly endorsed most of the principles set out by Arbitrator Sims in Hay River Health and Social Services Authority v. Public Service Alliance of Canada (2010), 201 L.A.C. (4th) 345.
In ruling that there is a difference between the unionized and non-unionized work environment, Adjudicator Pineau held at paragraph 28 of her reasons for decision that:
The justification for considering a distinct compensation scheme for unionized employees lies in the loss of benefits granted by a collective agreement. With few exceptions, an employee covered by a collective agreement cannot be dismissed without proper and sufficient cause, whereas a private-sector employee can be dismissed provided he or she receives sufficient notice. Furthermore, the common law does not generally consider the benefits that are specific to collective agreements, which include the following: the right to be reinstated in the event of a wrongful dismissal, representing greater job security; the role of seniority in professional development; annual leave; benefits; severance pay; and the right to a pension, if applicable.
However, Adjudicator Pineau later, at paragraph 35 of her reasons, added that:
I conclude that the remedy in this case is more or less the same whether I adopt the principles advanced by Adjudicator Sims or the principles advanced by common law courts. If I adopt Adjudicator Sims’ reasoning, the requested remedy will necessarily be discounted by certain contingencies. However, if I adopt the common law courts’ reasoning, I must make an assessment that falls within the framework of reasonable notice. In this case, either one leads to a similar conclusion with respect to the amount to be paid to the grievor.
Adjudicator Pineau’s calculation of Lâm’s remedy is very interesting, and requires a least two readings. Here it is in full:
48. Given that the grievor was close to retirement age when she was dismissed and that she intended to finish her career with the public service, I assess the grievor’s employment capital to be 6.5 years, or 78 months. However, I find that that employment capital must be discounted by 25% based on the contingencies described earlier, which are risk factors related to employment loss: a decision to change jobs, a decision to retire early, job loss due to economic or technological reasons, compromised health, or unforeseeable family circumstances.
49. I will now consider the grievor’s extensive disciplinary record. I find that this factor is the most likely to compromise her chances of maintaining long-term employment with the employer, given the nature of the discipline involved. Before the events leading to her dismissal, the grievor compiled a disciplinary record that included the following…
50. A grievance was filed about the 2-, 10- and 20-day suspensions. Adjudicator Tessier rendered a decision on July 9, 2007 (2007 PSLRB 69) in which the disciplinary measures were upheld in full, and consequently, they were still on her record at the time of her dismissal. In line with the principle of progressive discipline, and independent of the wrongful dismissal, the grievor was at risk of being dismissed if another disciplinary incident occurred. Had she been reinstated, her record would have remained active, and she would have continued to be at risk of dismissal for another disciplinary incident.
51. Consequently, in addition to the 25% reduction mentioned earlier, I find that the grievor’s employment capital should be further discounted by 50% due to her extensive disciplinary record. Therefore, I conclude that her employment capital of 6.5 years should be discounted by 75%. Accordingly, the appropriate compensation amounts to 19.5 months of the grievor’s gross salary, calculated according to the salary scale set out in the collective agreement effective on her dismissal date.
52. Since the remedy being applied to the grievor is based on the value of her loss of employment and not on the common law principle of reasonable notice to seek other employment, I find that the obligation to mitigate damages is not consistent with that principle, and I do not so order. [Emphasis added.]
In the result the Board ordered the employer to pay an amount equal to 19.5 months of gross salary, less applicable deductions, calculated as of July 13, 2006.
A small part of me is torn as to whether Adjudicator Pineau really applied the approach in Hay River, or whether she started from a figure based on common-law principles and then worked backwards to find an approach that would arrive at a similar figure. I guess it may not matter.
In general, I like Adjudicator Pineau's stated approach. But for Ms. Lâm’s extensive discipline record, she would have received considerably more notice than she ever would have under the common-law, an approach that would appear to recognize the fundamental difference of the unionized work environment.
Those comments aside, given the path taken thus far on this matter, a small part of me suspects that this is not the last that we will hear about this matter.
As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.
Sean Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer. He tweets from @SeanBawden.