Quebec Court of Appeal: a short lesson on last chance agreements

On November 18, the Quebec Court of Appeal handed down a unanimous decision¹ restoring a grievance arbitrator’s finding that dismissal was too harsh a sanction for an employee who had breached the terms of a last chance agreement and that a six-month suspension was more appropriate. Because the agreement did not contain an express waiver of the grievance and arbitration procedure or specify that violating the agreement would automatically result in dismissal, to the exclusion of any other sanction, the court determined that there was nothing preventing the arbitrator, upon assessing the evidence presented by the parties, from substituting a suspension for dismissal.

The facts

In the course of his work, a warehouse forklift operator with 35 years of seniority crashed into a column. He agreed to be tested and his blood alcohol level was found to be more than twice the legal limit for operating a car.

A week later, the employer gave the employee a dismissal letter while offering him, verbally, the chance to resume employment provided he complied with certain conditions and acknowledged and promised to deal with his drinking problem.

The employee accepted the offer but was dismissed a few weeks later by the employer on the grounds that he had breached the conditions of their oral agreement.

The grievance arbitrator in the matter changed the dismissal to a six-month suspension. The Superior Court, upon judicial review, overturned the arbitrator’s decision and restored the dismissal. The union appealed the Superior Court’s decision.

The Court of Appeal judgment

In its ruling, written by Justice Robert M. Mainville, the Court of Appeal analyzes the notion of a last chance agreement, describing it as “[translation] a transaction aimed at avoiding dismissal […] by allowing the employee to continue or be reinstated in his or her position under certain conditions.”² It adds that one “[translation] of the features of this type of agreement is to determine in advance the sanction to be applied if a condition of the agreement is not met, that sanction being (usually) dismissal.”³ The court specifies, however, that a grievance arbitrator’s reinstatement or substitution powers in matters of noncompliance with such agreements may only be neutralized if the last chance agreement contains an express waiver of the grievance and arbitration procedure.

In this case, because the oral agreement between the parties did not include any such waiver and it was also not specified that the only possible sanction in the event of noncompliance would be dismissal, it was open to the arbitrator to find, based on his or her assessment of the evidence, that dismissal was too harsh and a six-month suspension was sufficient. The appeal was therefore allowed and the arbitrator’s award restored.

Analysis

The main lesson to take away from this decision is that employers who give an employee the opportunity to benefit from a last chance agreement should set the transaction down in a written contract that includes an express waiver of the grievance and arbitration procedure and a clause stating that in the event of a violation of the conditions of the agreement, the sole sanction will be dismissal. Doing this will maximize the chances of the agreement being strictly applied by a grievance arbitrator if there is a dispute. If these precautions are taken, this Court of Appeal decision should not have a significant impact, given the particular circumstances of the case at issue.

This decision does not, however, settle the disagreement in case law regarding the impact on grievance arbitrators’ reinstatement and substitution powers of an express waiver of a grievance and arbitration procedure in a last chance agreement providing for the employee’s dismissal in the event of a breach. Consequently, despite the existence of a well-established majority view that such a clause is binding on an arbitrator, there is a certain minority view that such powers remain intact under the public-order provisions of the Labour Code.⁴ The debate is therefore still ongoing and an employer should not take it for granted, even when an employee violates a last chance agreement containing an express waiver of the grievance and arbitration procedure and providing for automatic dismissal in the event of noncompliance, that an arbitrator will necessarily refuse to use his or her reinstatement and substitution powers.

Footnotes

¹ Unifor, section locale 174 c Cascades Groupe Papiers fins inc., division Rolland, 2015 QCCA 1904.

² Id, para 49.

³ Ibid.

⁴ (CQLR c C-27), s. 100.12(f).