Howard Levitt: A sacked employee can resign, sue and seek severance — unionized workers are out of luck

Unionized employees didn’t realize how bad they have it until COVID-19 exposed disadvantages of union membership

COVID-19 has only accentuated the disadvantages employees have in being unionized.

In my Newstalk 1010 Toronto and 800 AM Windsor shows this week, I received several calls from unionized employees, who only just realized how bad they have it.

The callers asked how much severance they were entitled to because of their layoffs. The answer is, almost invariably, none at all.

For non-union employees, a layoff is a constructive dismissal, permitting them, in almost every case, to resign and sue as if they had been fired, with 2-26 months severance awaiting them, depending on their re-employability, length of service, position and other factors. My book, The Law of Dismissal in Canada, lists over 150 factors courts can review in determining how much severance an employee will receive.

None of that applies to unionized employees. There is no such thing as wrongful dismissal, let alone constructive dismissal, in the union lexicon. Other than the very rare collective agreement which stipulates some payment for employees temporarily laid off, they can be dismissed for lack of work or downsizing with impunity, having only potential seniority rights as to which employee is selected to be sent home without income.

An employee who could treat a layoff as a wrongful dismissal and claim, let’s say, 18 months of her full remuneration, including increased pension benefits, would be entitled to nothing at all if she is a member of a union.

Now, if the period of layoff exceeds the length permitted by the Employment Standards Acts in each province, it becomes a dismissal for unionized employees. But even then, they are only entitled to Employment Standards Act minimums unless the collective agreement has a greater amount negotiated. Many don’t and most do not have protections equivalent to what a non-unionized employee would receive in wrongful dismissal damages. The ESA “minimums” are just that. An employee who might receive 20 months in a wrongful dismissal case could be entitled to only eight weeks under Employment Standards.

One unionized caller was extremely frustrated. There was a clear violation of the collective agreement and the union grieved on his behalf. Some months later when he followed up, he was casually told that the union had “dropped” his grievance. He saw a lawyer who told him that she could not assist him and he had to go through his union for relief.

That story is commonplace. Unionized employees cannot sue in the courts and can only grieve through the collective agreement. The union has considerable latitude to decide which case, however valid, it will take or not take to arbitration and spend its monies on. The fact that someone is dismissed without cause does not require the union to take the case to arbitration, unlike a non-union employee who can chose to hire counsel and go to court.

Unionized employees cannot sue in the courts and can only grieve through the collective agreement

If the union declines to take the case, the unionized employee cannot hire a lawyer to do so. I had a situation where a faculty member at a university was told the union was not prepared to take his discharge case. He asked if I could act for him at the arbitration at his own expense. The union, which “owns” the grievance, refused to let him proceed and dropped the grievance on his behalf.
What recourse does a unionized employee have if the union does not take up his case? They can file an application to the Labour Relations Board on the basis that the union has been “arbitrary, discriminatory or acted in bad faith.” The fact the union is wrong or even unreasonable is insufficient. It is a very tough test, with a very low success rate and unions, which are viewed as inexpert bodies, are allowed by the labour boards to make mistakes with impunity. Even if the application succeeds, they will only order the union to take the case to an arbitrator. The union, after losing, may bear some hard feelings and the employee may still have no recourse to a court.

Q: Should prior years’ commissions be included in a severance package that only uses base salary in the calculation, even though commissions are success-based remuneration?

A: In determining wrongful dismissal damages, all remuneration that would have been earned during the period of notice awarded by the court is presumptively included. That, of course, includes commissions. Generally, courts look at the average of the last two years’ commissions in determining what to include.

Q: I was let go due to health issues (the company didn’t want to accommodate me) and was offered a severance package that I accepted. Can I revoke the agreement?

A: Firing for health reasons is a human rights violation leading to additional damages. Generally, once a release is signed, it’s too late to return to the matter, but if human rights were not included in the release, you can proceed to the human rights tribunal. Alternatively, if you were given no time to consider the settlement, signed on the spot and are unsophisticated, the court might set the release aside.

Q:Do recent court decisions on cause/without cause language in employment contracts affect an otherwise well-drafted termination provision from last year?

A: The fact that a contract was enforceable when it was signed is irrelevant. The contract must be enforceable at the time of the dismissal. As I said in my recent column, two recent cases have rendered more than 90 per cent of termination provisions in Ontario unenforceable and may have the same impact across most of Canada.

Got a question about employment law during COVID-19? Write to me at levitt@levittllp.com.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers. He practises employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.

Here are some of the questions I received recently.