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BC Arbitrator Applies “Wallace” Principles in Discharge Case
October 25, 2003

In Wallace v. United Grain Growers Ltd., [1997], the Supreme Court of Canada held, in the context of a wrongful dismissal action, that employers have an obligation of good faith and fair dealing in the manner of dismissal, the breach of which will result in an addition to the length of the common law reasonable notice period. The Wallace decision has fundamentally changed the landscape of employment law in Canada. Many wrongful dismissal claims now contain an allegation that the employer violated its obligation of good faith or fair dealing in the manner in which it dismissed the plaintiff employee.

In an arbitration award issued on August 1, 2003, Arbitrator H. Allan Hope, QC applied the Wallace principles to award an additional four months’ pay – over and above the normal award of back wages – to a unionized nurse who had been discharged without just cause. This case is of potential interest to unionized employers, as it creates a risk that extra damages may be awarded where an employer has failed to deal with a discharged grievor fairly and in good faith.

In an earlier award, Arbitrator Hope found that the employer did not have just cause for the grievor’s discharge, and ordered reinstatement with full back wages. After his dismissal, however, the grievor had been unable to find work in BC and he had therefore returned to his family home in Manitoba. There, he was also unable to secure employment, because the employer failed to provide the necessary cooperation for him to renew his certification as a Manitoba nurse. After Arbitrator Hope’s award was issued, the employer challenged the union’s calculation of the back pay that was owing to the grievor, and refused to make any payment until the issue was resolved. The grievor then claimed he could not return to BC from Manitoba due to a lack of funds.

The union made an application back to Arbitrator Hope, seeking additional damages arising from the employer’s alleged misconduct. In the result, the Arbitrator awarded the grievor four months’ additional pay, in accordance with the “Wallace principles”, for the employer’s unreasonable and unjustifiable response to the grievor’s reinstatement. In so doing, Arbitrator Hope ruled that the obligations of good faith and fair dealing “can and should be imported into the law of the collective agreement.”

The arbitrator found that the employer’s conduct had effectively deprived the grievor of the financial capacity to return to his employment. From the outset, the employer had demonstrated what Arbitrator Hope described as “a cavalier indifference to the grievor’s plight,” and had approached the calculation of his wage loss arbitrarily. Additional damages were therefore warranted.

(click here for full text of the judgment)