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Edition 1 - Volume 1 December 12, 1990

INTRODUCTION

This is the first issue of the CAW-Canada Law Report, published by the CAW-Canada Legal Department. This report is prepared with the knowledge that National Representatives have a lot of reading material to absorb every week. Accordingly, our case reports will be as concise and informative as possible. Complete copies of the decisions referred to are available from the CAW-Canada Legal Department. This issue will focus primarily on recent Supreme Court of Canada decisions that will have an impact on labour relations law in all jurisdictions.

Settling outstanding grievances in the course of collective bargaining to renew a collective agreement is not an unusual practice. However, the Supreme Court of Canada, in a recent ruling, has made it clear that the drive to settle a new agreement should not permit a union to abdicate its duty of fair representation and abandon, without careful consideration, outstanding grievances. The Court is particularly concerned about discharge grievances.

In Centre Hospitalier Regina Ltée v. Prudhomme et. al. (May 31, 1990) a worker filed a grievance against her dismissal for absenteeism. The union and the employer settled the grievance along with several others, as part of contract negotiations and the ultimate final deal. The grievor was not involved in the settlement process and was not told of the settlement of her grievance until months later.

The Supreme Court of Canada decided that the union had breached its duty of fair representation because it settled the grievance (a) without informing the grievor and without obtaining her consent and more importantly (b) for a small sum of money, without a careful consideration of the real merits of her case.

The Court has made two fundamental points in this case. The Court will apply the duty of fair representation quite strictly to discharge matters. Secondly, the Court will reject the idea that a union can swap a discharge grievance that has some reasonable merits in exchange for a new collective agreement.

Everyone in the trade union movement (and elsewhere) has commonly accepted for some time that strike pay benefits are not taxable. That is, everyone except the Federal Court of Appeal which ruled over a year ago that strike pay benefits were taxable.

There was a collective sigh of relief last month (November, 1990) when the Supreme Court of Canada ruled unanimously that strike pay benefits were not taxable. This ruling was handed down in a case called Wally Fries v. Minister of National Revenue. The Supreme Court of Canada has the last word on this question, except of course for the Parliament of Canada.

And further, on the issue of taxes, the proposed G.S.T. will not apply to the payment of union dues. This is confirmed by the provisions of section 189 of the proposed G.S.T. Bill now before the Senate.

When a worker misses work because he/she has suffered an injury in the course of an accident off the job, or fallen ill, the impact on the worker and his or her family is immediate. The loss of income may be devastating. That is why the CAW-Canada has negotiated on behalf of a vast majority of our members income replacement programs which are commonly known as "sickness and accident", or "weekly indemnity" or "long term disability" programs. Many such benefits are provided through the mechanism of a group insurer carrier, for example London Life, or Maritime Life Insurance Co. In some cases, the employer is self insured and directly provides income replacement benefits to the worker.

How are these income benefits treated if a worker suffers, for example an automobile accident and successfully sues the driver at fault?

A recent Supreme Court of Canada decision called Bloomer v. Ratych (May 3, 1990) has offered direction in this area and the direction is not positive.

It should be noted, first, however, that before resort is had to the Supreme Court of Canada decision in Bloomer v. Ratych, reference must be made to the collective agreement which governs the worker and his/her employer. If the agreement provides that the worker must promise to pay over the money he/she receives following a successful lawsuit, up to the amount of income benefits received, then the case of Bloomer v. Ratych has a limited impact.

Essentially, Bloomer v. Ratych stands for the proposition that so called "double recovery" (ie. income benefits and lawsuit proceeds) is not lawful.

Generally speaking, wage benefits paid while a plaintiff worker is unable to work must be brought into account and deducted from the legal claim for lost earnings.

The Supreme Court of Canada has, in my view, committed a serious error which discriminates against hourly rated workers and favours self employed professionals.

The Supreme Court of Canada, in Bloomer v. Ratych has assumed that workers don't contribute to the establishment of an income replacement program because employers pay the cost of the benefit. Therefore, the Court reasoned that wage proceeds from an income replacement program don't cost the worker anything and the worker would receive "double recovery" if he or she received income benefits as well as damages in a lawsuit. Self employed professionals, however, who purchase their own disability insurance are allowed to keep both the proceeds of their insurance and damages from a successful lawsuit, because according to the reasoning of the court, these self-employed professionals have "paid" for their own insurance.

There is, arguably, a way around the Court's decision in Bloomer v. Ratych.

A plaintiff worker has to establish in evidence that he/she, along with all of his/her co-workers in the bargaining unit, have given up something in exchange for the income replacement program. This kind of evidence may require the testimony of local union bargaining committee members, or even the National Representative who assists in the bargaining. If a plaintiff worker can demonstrate, for example, that his/her hourly wage rate is five cents lower than otherwise because the union negotiated an income replacement program, then that plaintiff worker may be in a position to demonstrate the he/she "paid for" their income replacement plan. The benefits therefore would not be deductible from an award of damages in a lawsuit. CAW National Representatives may be receiving an increasing number of phone calls from plaintiffs' lawyers regarding this problem.

Can there be such a thing as a pre-employment contract, governed by common law principles, where a collective agreement exists in a workplace? The Court of Appeal of Ontario has decided yes, pre-employment contracts do exist and they may be enforced, not at arbitration, but in the civil courts.

This issue arose in a case called Johnston v. Dresser Industries Canada Ltd. (January, 1990).

In this case, the company, Dresser Industries Canada Ltd., invited six workers from the United Kingdom to come to Cambridge, Ontario and work for the company in sheet metal and welding classifications. The company made representations to the English workers that there would be at least two years of secure employment for them in Cambridge. The workers relied on these representations and came to Canada. They were not told about the existence of a collective agreement at the Cambridge facility.

Unfortunately, Dresser's business suffered a serious downturn and within 7-8 months all the English workers were laid off.

The English workers sued the company on the basis of the pre-employment contracts, or representations made about secure employment, even though the issue of job security was covered by the collective agreement. They were successful and obtained damages.

The Court of Appeal of Ontario found the pre-employment contracts stood by themselves and did not arise out of the collective agreement and could support a civil action in law.

Finally, the Supreme Court of Canada issued a judgment in August 1990 which again confirmed something the Court had indicated some time ago - collective bargaining is not an activity protected by the Charter of Rights and Freedoms.

In a case called Professional Institute of the Public Service of Canada v. Commissioner of the Northwest Territories the Court held that a territorial statute denying the right to be certified to unions which had not been incorporated by an Act of the government, was constitutional.

In other words, governments are free to discriminate as to which unions will have the right to be certified and which unions will not enjoy such a right.

The freedom to associate means one is free to join a union but not to bargain collectively according to the Court.

That is like saying one is free to join a hockey team, but one is forbidden from playing hockey.

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