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Supreme Court of Canada: suspensions with pay permissible in Quebec
September 7, 2004

The Supreme Court of Canada recently held that a Quebec insurance company was entitled to suspend a non-union employee pending the outcome of a criminal charge. However, the employer was obliged to pay the employee his normal compensation for the period of the suspension.

The employee was a sales manager hired under an indefinite contract of employment. Three months after he was hired, he was arrested at his home and charged with attempting to extort money from his securities broker. The company suspended the employee without pay pending the final outcome of the charges because of the connection between the nature of the charges and the duties of his position. When the employee was acquitted two years after being charged, the company reinstated him.

The court found that the company acted in good faith to protect its reputation and its customers. It held that, under Quebec law, an employer has the unilateral power to suspend an employee for “administrative reasons”, including the need to protect its reputation. However, absent exceptional circumstances, the suspension must be with pay, or the employee may sue for constructive dismissal. The court ordered the company to pay the employee his lost salary up to the time of his reinstatement. The court also confirmed that, under Quebec law, an employer may suspend without pay for disciplinary reasons, i.e., for misconduct by an employee.

The Supreme Court’s decision relies on principles set out in the Civil Code of Quebec. Courts in other provinces have not recognized a right to suspend employees in the non-union sector, whether for disciplinary or administrative reasons, unless the right to suspend is set out in the contract of employment. It remains to be seen whether courts in other provinces will extend the Supreme Court’s reasoning in this case to their own jurisdictions.

Cabiakman v. Industrial Alliance Life Insurance Co., 2004 S.C.J. No. 14, 2004 SCC 55, July 29, 2004