Two options to calculate compensation in lieu of reinstatement after unjust dismissal

02. August 2022 0

Administrative law – Decisions reviewed – Labour and employment boards – Compensation – Judicial review – Appeals – Procedural requirements and fairness – Costs – Standard of review – Reasonableness – Correctness – Employment – Remuneration

Hussey v. Bell Mobility Inc., [2022] F.C.J. No. 790, 2022 FCA 95, Federal Court of Appeal, May 31, 2022, J.D.D. Pelletier, W.W. Webb and M. Rivoalen JJ.A.

The petitioner, Ms. Hussey, was terminated from her employment with the respondent, Bell Mobility Inc.

Ms. Hussey made an unjust dismissal complaint, pursuant to the Canada Labour Code.  The adjudicator found she was unjustly dismissed from her employment.  In a separate decision regarding remedy, the adjudicator refused to reinstate her.  This decision was based, in part, on the adjudicator’s finding that Ms. Hussey’s behaviour and attitude would not change if she was reinstated.

The adjudicator awarded compensation in lieu of reinstatement and costs on a partial indemnity basis.  The adjudicator reviewed the jurisprudence regarding the two approaches for assessing compensation in lieu of reinstatement.  One approach was based on a fixed term, which considers the expected earnings until the employee’s retirement (and then discounts the amount based on contingencies).  The other approach was based on considering the common law reasonable notice amount, and then adjusting for the loss of protection from the Canada Labour Code.

The adjudicator assessed her compensation at eight months’ pay, which included some pay for the loss of her just cause protection.  The adjudicator also awarded costs to Ms. Hussey, on a partial indemnity basis.  The adjudicator was silent on the topic of backpay.  Ms. Hussey then wrote to the adjudicator to ask about backpay.  The adjudicator wrote that he had decided not to award backpay.

Ms. Hussey sought judicial review of the compensation and backpay decisions before the Federal Court.  She alleged a breach of procedural fairness.  She alleged that the compensation decision was wrong because it made reference to common law reasonable notice.  She alleged that the costs decision was wrong because she should have received full indemnity.  The Federal Court dismissed her application for judicial review.

Bell Mobility applied for judicial review of the costs aspect of the decision.  This application was heard at the same time as Ms. Hussey’s application.  The Federal Court dismissed Bell Mobility’s application for judicial review.

Ms. Hussey appealed to the Federal Court of Appeal.  There were four issues on appeal:

  • Was the adjudicator constrained by judicial precedent, including Wilson v. Atomic Energy of Canada Limited, 2016 SCC 29 when considering the appropriate compensation in lieu of reinstatement.
  • Was the adjudicator constrained by arbitral or adjudicative consensus, when considering the appropriate compensation in lieu of reinstatement?
  • Was the adjudicator’s assessment of compensation in lieu of reinstatement reasonable?
  • Was Ms. Hussey afforded procedural fairness?

The Federal Court of Appeal confirmed that the standard of review was reasonableness for the issue of compensation and costs, while the standard of review was correctness for questions of procedural fairness.

On the first issue, the Federal Court of Appeal concluded that “when the Supreme Court held in Wilson that the Unjust Dismissal provisions of the Code displaced the law of wrongful dismissal in federally-regulated employment, it did not stipulate, expressly or impliedly, how the loss of protection from unjust dismissal under the Code should be valued when an employee was not reinstated.”

The Federal Court of Appeal held that there has been no judicial pronouncement that the common law approach is unreasonable or wrong in law.

On the second issue, the Federal Court of Appeal considered Ms. Hussey’s argument that the “fixed term approach” to calculating compensation in lieu of reinstatement has begun to dominate the arbitral jurisprudence and should therefore have been applied.  The Federal Court of Appeal held that there is no consensus among arbitrators or adjudicators and therefore the adjudicator’s choice of the common law approach was not unreasonable.

On the third issue, the Federal Court of Appeal considered the arguments before the adjudicator.  Ms. Hussey was asking for $486,450 (approximately 7 years’ of compensation) in reliance on the fixed term approach.  The adjudicator considered the fixed term approach but chose the common law approach instead.  The Federal Court of Appeal held the adjudicator’s decision was reasonable.

On the fourth issue, the Federal Court of Appeal accepted the Federal Court’s conclusion that Ms. Hussey was not denied procedural fairness.

Finally, the Federal Court of Appeal was not persuaded that the adjudicator’s decision regarding costs was unreasonable.

The Federal Court of Appeal dismissed the appeal with costs to Bell Mobility.  Bell Mobility’s cross appeal was dismissed without costs.

This case was digested by Scott J. Marcinkow, and first published in the LexisNexis® Harper Grey Administrative Law Netletter and the Harper Grey Administrative Law Newsletter.  If you would like to discuss this case further, please contact Scott Marcinkow at smarcinkow@harpergrey.com.

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