FPSLREB Decisions

I. Background

1 Stanley Bahniuk (the "grievor"), an employee of the Canada Revenue Agency ("the employer" or CRA), had referred several grievances to adjudication before the Public Service Labour Relations Board (the "Board") pursuant to paragraph 209(1)(b) of the Public Service Labour Relations Act, S.C. 2003, c. 22, s. 2 (PSLRA) (PSLRB File Nos. 566-34-3955 to 3959). The grievor was represented by his bargaining agent, the Public Service Alliance of Canada (the "union"). The applicable collective agreement was that concluded between the employer and the union for the Program Delivery and Administrative Services Group, which expired on October 31, 2010 ("the collective agreement").

2 In Bahniuk v. Canada Revenue Agency, 2012 PSLRB 107 (Bahniuk 2012), I dealt with four grievances: a 3-day disciplinary suspension for unprofessional and disrespectful conduct was upheld (PSLRB File No. 566-34-3958); an indefinite suspension pending investigation into the grievor's conduct was held to be moot (PSLRB File No. 566-34-3957); a 10-day suspension without pay for insubordinate behaviour and a 20-day unpaid suspension for inappropriate use of the employer's harassment policy were reduced to 5 and 10 days respectively (PSLRB File No. 566-34-3956). The grievance contesting the termination of the grievor's employment (PSLRB File No. 566-34-3955) was allowed in part, with the grievor to be awarded compensation in lieu of reinstatement. In Bahniuk 2012, I ordered the following concerning the termination grievance:

379 In Board File No. 566-34-3955, the grievance is allowed in part. The grievor will be awarded compensation in lieu of reinstatement. I will remain seized of this grievance for a period of 60 days from the date of this decision in order that the parties may attempt to arrive at a negotiated settlement, failing which the parties shall advise the Board and a hearing will be scheduled.

3 Acting on his own behalf, the grievor subsequently applied for judicial review of Bahniuk 2012. In Bahniuk v. Canada Revenue Agency, 2014 FC 126, released February 4, 2014, the Federal Court dismissed the grievor's application

4 The parties were unable to reach a settlement and agreed to address the issue of quantum by written submissions. This decision deals only with the issue of the amount of compensation to be awarded to the grievor.

II. Summary of the arguments

A. For the grievor

5 The grievor was employed by the employer from January 6, 1986 until January 22, 2010, a period of 24 years. At the date of termination of his employment, he was 52 years of age. For most of the period of his employment, the grievor held the position of team leader, classified MG-03, in the employer's Revenue Collections, Calgary Tax Services Office. The grievor had extensive training with the employer, including managers' learning, leadership excellence day, union management workshops and technical training.

6 The grievor referred to two arbitral approaches to the award of damages where an arbitrator does not reinstate an employee: that of common law reasonable notice and that of economic loss. The grievor submitted that, as he was a member of the union and enjoyed collective agreement benefits during his employment, the appropriate approach is that of economic loss. The damages awarded should reflect the loss of being a bargaining unit member, the value of "fringe benefits" under the collective agreement and loss of past and future salary, together with interest. The grievor also seeks damages for alleged loss of reputation. The grievor enumerated some of the benefits set out in the collective agreement, as follows:

Article 8 Dental Care Plan
Article 17 Discipline
Article 18 Grievance Procedure
Article 23 Job Security
Article 25 Hours of Work
Article 27 Shift Premiums
Article 28 Overtime
Article 29 Stand by
Article 32 Travelling time
Article 35 Sick Leave with Pay
Article 63 Severance Pay

7 In support of the economic loss approach, the grievor cited the following decisions: Metropolitan Toronto (Municipality) v. C.U.P.E., Loc. 79 (2001), 99 L.A.C. (4th) 1; Cameco Corporation v. United Steel Workers of America, Local 8914, 2008 SKQB 499; Tipple v. Deputy Head (Department of Public Works and Government Services), 2010 PSLRB 83; Tipple v. Canada (Attorney General), 2012 FCA 158; Brown & Beatty, Canadian Labour Arbitration (4^th ed.) ("Brown & Beatty"), on damages.

8 In terms of damages according to the economic loss approach, the grievor seeks the following for loss of past salary: the amount of his salary from the date of his termination until the date of this decision; a factor of 20% representing loss of fringe benefits; interest at the Bank of Canada rate (5% at date of submission).

9 The grievor also seeks damages for loss of future salary on the ground that he was prepared to work for the employer until age 65, plus 20% for fringe benefits and interest.

10 In addition, the grievor seeks damages for alleged loss of reputation in the amount of $250,000 plus interest. This claim is based on the testimony of an employer witness, Ms. Brenda Bauer, referred to in paragraphs 18 (examination-in-chief) and 46 (cross-examination) of Bahniuk 2012 as follows:

18 Ms. Bauer said that the meeting had lasted 45 minutes to 1 hour and that after the grievor left her office, she was shaken. She testified that in her entire experience, she had never had that kind of a meeting with colleagues, subordinates or supervisors. It took her some time to settle down, after which she made some handwritten notes about the meeting (Exhibit E-2). Ms. Bauer said that the same day, she commented to a staff relations advisor that if the grievor had had a gun, he would have used it.

46 Ms. Bauer was referred to section 2c on page 7 of the Discipline Policy titled "Employee Rights and Obligations", the first sentence of which reads: "The employee being investigated is presumed innocent until misconduct has been established." It was put to Ms. Bauer that she was shaken and upset after her meeting with the grievor and that she had told a manager in staff relations that if the grievor had had a gun, he would have used it. Ms. Bauer replied that she had told the other manager that if the grievor had had a gun, she wasn't sure he wouldn't have used it. She said that while the grievor did not mention a gun, it was her perception based on her observation of the grievor's behaviour that he was a very angry person: his face was red, his eyes bulging, spit coming from his mouth and pointing his finger at her angrily while seated. She acknowledged that she didn't notify police. Asked if the grievor was presumed innocent following her meeting with him, Ms. Bauer replied in the affirmative, stating that she had not established misconduct at that point.

11 The grievor pointed out that Ms. Bauer's comments were made during her testimony on June 21, 2011, in a public forum. The grievor submitted that the comments made by Ms. Bauer were reckless, capricious and damaging to the grievor's reputation in seeking further employment.

12 The grievor submitted that his meeting with Ms. Bauer on May 2, 2008 is better reflected in his performance appraisal for the period April 1, 2008 to March 31, 2009 (Exhibit G-5), which includes the following statement: "Stan demonstrates personal integrity on an ongoing basis by speaking forthright on matters of importance to him."

13 In support of his argument, the grievor referred to the following paragraphs of Tipple 2010 PSLRB 83: 289 – remedial powers of an adjudicator; 301 and 302 – compensation of non-tangible employee benefits; 305 – awarding of interest; 330 and 331 – loss of reputation.

B. For the employer

14 The employer began its submission by referring to the following extract from Alberta Union of Provincial Employees v. Lethbridge Community College, 2004 SCC 28:

54 For arbitration to be effective, efficient and binding it must provide lasting, practicable solutions to workplace problems. Commensurate with the notion of exceptional circumstances as developed in arbitral jurisprudence is the need for arbitrators to be liberally empowered to fashion appropriate remedies, taking into consideration the whole of the circumstances….

15 The employer then outlined certain facts which, in its submission, must be considered in order to arrive at an appropriate remedy. The employer referred to the grievor's long-standing difficult relationship with senior management and the employer's concerns with the grievor's conduct in the workplace over a number of years. In this regard, the employer cited the following: Bahniuk v. Canada Revenue Agency, 2009 PSLRB 141 at paragraph 133; Bahniuk 2012 at paragraphs 360 and 361. In addition, the employer referred to the findings that the grievor lacked respect and trust toward senior management which would not be restored were he reinstated and the grievor's resistance to the employer's good faith efforts to improve the working relationship: Bahniuk 2012 at paragraphs 362 and 363.

16 The employer also referred to the following extracts from Bahniuk 2012:

365.…

The evidence shows that the grievor is unable to accept direction from senior management, and I am not persuaded this attitude would change were he to be reinstated. Indeed, I am convinced that it would not….

372.…

Based on the evidence of his behaviour, in my view, the grievor's reinstatement would inevitably lead to further confrontation and tension, requiring further energy and resources of management to deal with him.

17 The employer stated that the circumstances to be considered in determining the remedy included the grievor's disciplinary record at termination, namely: a written reprimand; a 1-day suspension; suspensions of 3, 5 and 10 days: see Bahniuk 2012 at paragraph 341.

1. Federal public sector approach

18 The employer then addressed various approaches used in assessing the amount of compensation in lieu of reinstatement, beginning with the public sector as illustrated by the following decisions of the predecessor to this Board, the Public Service Staff Relations Board (PSSRB): Doucette v. Treasury Board (Department of National Defence), 2003 PSSRB 66 and 2003 PSSRB 106: electrician age 50 with 16 years' service; disciplinary record of 3- 10- and 20-day suspensions; terminated for insubordinate behaviour; reinstatement inappropriate; award of 12 months' salary; Loyer v. Treasury Board (Solicitor General Canada –Correctional Service), 2004 PSSRB 17 and Loyer v. Treasury Board (Correctional Service of Canada), 2004 PSSRB 148: correctional officer age 50 with 23 years' service; disciplinary record of 1-day suspension; terminated for refusal to cooperate and attend at a medical examination; history of negativism toward management; reinstatement inappropriate; award of 12 months' salary at rate of pay at date grievance filed, plus severance pay; McMorrow v. Treasury Board (Veterans Affairs), PSSRB File No. 166-02-23967 (19941021): deputy regional director general (EX-1) age 50 with 17 years' service; no previous discipline; terminated for misconduct related to inappropriate comments and behaviour towards female employees; reinstatement inappropriate; award of 13.5 months' salary; in arriving at award, adjudicator considered that grievor also received salary continuation of four months following termination, severance pay equivalent to 17 weeks' salary, and mitigation through consulting work.

19 The employer argued that in Loyer, the situation was similar to this matter, in that the grievor's conduct made it clear that he could not function in the workplace. In the employer's submission, this is an important distinction from the analysis suggested by the grievor in this case, as the compensation he seeks would essentially pay him for the full value of several years of work, without him actually being required to work. Furthermore, the grievor's analysis does not recognize that the entire exercise was brought about as a result of his actions and the determination that he is not suitable to be reinstated to the workplace.

20 The employer submitted that the approach of the PSSRB decisions quantifying pay in lieu of notice were similar to the common law approach used by the courts, except that some of the decisions note that the employees would have received additional severance payment as part of their federal public sector severance entitlement.

21 The employer submitted that the approach used in the majority of the cases before the PSSRB was that compensation was ordered based on the value of the employee's salary as at the date of termination or filing of the grievance.

22 In terms of compensation, the employer submitted that the grievor would be entitled to 12 weeks' severance pay. The employer bases this calculation on article 63 of the collective agreement dealing with severance pay. The employer stated that while none of the circumstances listed in article 63 apply to the grievor, the provision most analogous to the grievor's circumstances is clause 63.01(b), which deals with resignation, in that the situation in which he finds himself is entirely self-initiated owing to his long-standing attitude toward senior management. The relevant provisions of Article 63 of the collective agreement provide as follows:

ARTICLE 63
SEVERANCE PAY

63.01 Under the following circumstances and subject to clause 63.02, an employee shall receive severance benefits calculated on the basis of the weekly rate of pay to which he or she is entitled for the classification prescribed in his or her certificate of appointment on the date of his or her termination of employment.

…

(b) Resignation

On resignation, subject to paragraph 63.01(d) and with ten (10) or more years of continuous employment, one-half (1/2) week's pay for each complete year of continuous employment up to a maximum of twenty-six (26) years with a maximum benefit of thirteen (13) weeks' pay.

…

(d) Retirement

(i) On retirement, when an employee is entitled to an immediate annuity under the Public Service Superannuation Actor when the employee is entitled to an immediate annual allowance, under the Public Service Superannuation Act,

…

a severance payment in respect of the employee's complete period of continuous employment, comprised of one (1) week's pay for each complete year of continuous employment and, in the case of a partial year of continuous employment, one (1) week's pay multiplied by the number of days of continuous employment divided by 365, to a maximum of thirty (30) weeks' pay.

…

63.02 Severance benefits payable to an employee under this Article shall be reduced by any period of continuous employment in respect of which the employee was already granted any type of termination benefit. Under no circumstances shall the maximum severance pay provided under clause 63.01 be pyramided.

…

23 The other circumstances dealt with in article 63 are as follows: lay-off, rejection on probation, death, and termination for cause for incapacity or incompetence.

24 In addition to severance pay, the employer submitted that the compensation awarded to the grievor should be 12 months' salary plus benefits calculated at 11.3%. The employer's valuation of benefits will be addressed later in this decision.

2. Common law approach

25 The employer referred to the common law principle that in the absence of just cause, an employer may terminate the employment relationship by providing the employee with reasonable notice or pay in lieu of such notice. In assessing the quantum of reasonable notice to be paid, the employer cited the following factors established in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.) at p. 145 and subsequently followed in numerous Canadian cases:

The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant, and the availability of similar employment, having regard to the experience, training and qualifications of the servant.

26 In support of its argument on the common law approach, the employer cited the following cases: Deputat v. Edmonton School District No. 7, 2006 ABQB 549; varied 2008 ABCA 13; engineering technician in position of senior mechanical coordinator for school district, age 56, 24 years' service, annual salary of $73,000; awarded 18 months' salary and benefits; reduced on appeal to 15 months owing to lack of mitigation efforts; McGeady v. Saskatchewan Wheat Pool, 1998 CanLII 13714 (SK QB); varied 1999 CanLII 12311 (SK CA); computer program manager, age 45, 19 years' service, annual salary of $71,126; awarded 14 months' salary reduced to 10 months for failure to mitigate; damages for bad faith termination in amount of six months' salary reduced to one month on appeal; Yerramilli v. Atomic Energy of Canada Ltd. (1990), 34 C.C.E.L. 259 (OntCtGenDiv); program manager, age 54, 22 years' service, annual salary $64,150, awarded 18 months' salary. Wenarchuk v. Comstock Canada, 1997 CanLII 11482 (SK QB); comptroller age 54, 22 years' service, annual salary $55,700, awarded 14 months' salary reduced to 11 months for failure to mitigate.

27 The employer referred to the Bank of Canada inflation calculator to show that the salaries of the plaintiffs in these cases roughly approximated (Deputat, Wenarchuk) or substantially exceeded (McGeady, Yerramilli) that of the grievor.

28 The employer submitted that the awards by common law courts for pay in lieu of notice differ from the PSSRB decisions in that they do not take into account severance payments received by a federal government employee. Accordingly, the courts tend to award higher payments than those ordered by PSSRB adjudicators. In the employer's submission, had the grievor not been in the federal public service and had been dismissed without just cause, under the common law approach he would have been awarded pay in lieu of notice of 14 to 16 months, as public sector severance pay would not have been a factor.

29 The employer further submitted that the rationale for common law pay in lieu of notice awards must also be considered, namely that dismissal without just cause occurs when an employee is terminated through no fault of his or her own. As the grievor was not reinstated because of his own conduct, the awards shown in the common law cases should be discounted, as the grievor's situation cannot be compared with that of a blameless individual. In the employer's submission, the common law reasonable notice awards for individuals in circumstances analogous to those of the grievor provide support for the approach used in the PSSRB adjudication decisions which, in the employer's view, should be adopted in this case. Thus the grievor should be awarded 12 months' salary plus benefits, and 12 weeks' severance pay.

3. Economic loss approach

30 The employer argued that while the grievor advanced the economic loss approach in his submissions, he failed to apply the approach properly and with a due regard for reasonable and necessary discounts for contingencies.The employer submitted that if the economic loss approach were reasonably applied, the result would yield a lesser quantum than that suggested by the grievor.

31 The employer submitted that the following decisions are the most relevant to the facts of this matter: Lâm v. Deputy Head (Public Health Agency of Canada), 2012 PSLRB 96; Hay River Health and Social Services Authority v. Public Service Alliance of Canada (2010), 201 L.A.C. (4th) 345 ("Hay River"); George Brown College of Applied Arts and Technology v. Ontario Public Service Employees Union (2011), 214 L.A.C. (4th) 96 ("George Brown College").

32 In Lâm, the grievor was aged 59 with 8 years and 3 months of service at termination. The adjudicator applied an economic loss approach by considering the value of the grievor's "employment capital", which she deemed to be the compensation the grievor could have earned in the remaining 6.5 years to retirement at age 65. To that amount, she applied a discount of 25% for contingencies, stated as follows in paragraph 48 of the decision: "… risk factors related to employment loss: a decision to change jobs, a decision to retire early, job loss due to economic or technological reasons, compromised health, or unforeseeable family circumstances."

33 In addition to the 25% discount for contingencies, the adjudicator applied a further discount of 50% owing to the employee's extensive disciplinary record, namely two warnings, and suspensions of 2, 10 and 20 days. The employment capital of 6.5 years was therefore discounted by 75%.

34 The employer submitted that the adjudicator's analysis in Lâm raises two concerns: first, her reliance on Hay River without questioning some of the underlying assumptions in that decision, principally seniority, and second, her assumptions with respect to retirement date. In Hay River, the arbitrator determined that the appropriate framework for quantifying damages for pay in lieu of notice should be based on loss of a fixed term position, subject to some modifications. He rejected the common law notice approach because of certain unique features in the unionized work environment.

35 In its analysis of the Hay River decision, the employer pointed out that the arbitrator emphasized at page 386 that under many collective agreements, employees accrue seniority and rights that improve with long service. Furthermore, the arbitrator stated that seniority plays a role in promotion and job protection. The employer stressed that the arbitrator's departure from the common law approach was in large part due to the importance he placed on the value of seniority rights.

36 The employer referred to the Hay River arbitrator's review of the Metropolitan Toronto and Cameco. At page 362 of Hay River, the arbitrator reproduced an extract from Metropolitan Toronto which stated that unlike the non-unionized sector, seniority provides a measure of security of employment for unionized employees, including "… bumping privileges against layoffs, promotions within the workforce based on certain defined criteria, and no discipline without just cause."

37 The employer submitted that the collective agreement before the arbitrator in Hay River (Employer's book of authorities, tab 1) enshrined seniority as a concept, as did those in Metropolitan Toronto and Cameco. The employer referred to provisions in the Hay River collective agreement which linked seniority to job security with the layoff provision based on "last in first out" (article 33), and seniority being integral to promotion (article 49).

38 The employer argued that by contrast, in the federal public service, seniority is not used as a basis for job protection or for guaranteeing promotion and pointed out that the term "seniority" is absent from the collective agreement between the union and the employer. In the employer's submission, seniority is not a loss which is compensable for a federal public service employee. The employer submitted that if the main justification for using the fixed term contract/economic loss formula is to compensate for the fact that a unionized workplace affords protections that cannot be replicated in the private sector, such as seniority that insulates against layoff and facilitates promotion, one must question whether it is the appropriate model for the federal public service regime.

39 The employer also argued the issue of double counting the job security protection of a unionized workplace as it pertains to the grievor. The employer submitted that, based on the evidence, it had addressed the grievor's conduct. For example, instead of terminating the grievor's employment in 2002, the employer had, among other things, sent him for a fitness to work evaluation, retained a facilitator and provided performance management and coaching. In the employer's submission, the grievor had thus benefited from unionized workplace protection for eight years more than he would have had he been in the private sector. The employer submitted that in such circumstances, the grievor should not be entitled to further damages due to the loss of unionized employment.

40 The employer pointed out that in Hay River, the arbitrator contemplated the connection between damages and an employee's work record and stated as follows at page 387:

…

Where an employee's conduct is such that the employment relationship is beyond repair, it is a factor that can and should be taken into account in assessing the contingencies of how long the job (even with reinstatement) might last.

…

41 The employer also referred to the arbitrator's statement that individual circumstances must be considered when determining the appropriate discount, as set out as follows at pages 389-90:

Applying the loss of a fixed term job approach to damages does not imply they are unlimited. The Court decisions quoted above suggest the types of contingency that need to be assessed. These include such matters as plant closings, bankruptcy, technological change, chance of layoff, chance of illness, quitting for other work and so on. A unionized job is not a guaranteed job, even with seniority and just cause protections. These factors in many cases will reduce considerably the horizon of damages down from any notion of a life time job. However, the appropriate discount depends on the individual circumstances. Similarly, the likelihood of future employment elsewhere needs to be factored in, and if the individual is skilled and employable this too will significantly reduce the level of damage. That too however is dependent on the overall circumstances. Applying this approach allows the flexibility to tailor the estimate of damage to the reasons for the refusal or inability to reinstate; the particular nature of the exception circumstances that allow that step despite the lack of just cause.

42 The employer submitted that if the economic loss approach is adopted in this matter, a substantial discount should be applied to the quantum, given the conclusion in Bahniuk 2012 that the grievor's attitude was unlikely to change. In the employer's submission, there was a strong likelihood that the grievor's employment would have been terminated owing to a further incident of insubordinate conduct.

43 Concerning retirement date, the employer pointed out that in Lâm, the grievor was aged 59 with 8 years and three months of service. The adjudicator assumed that had she continued to work in the federal public service, she would have retired at age 65. At paragraph 40 of Lâm, the adjudicator stated that, "The usual retirement age for a federal employee is 65." According to the employer's submission, the adjudicator's statement was fallacious and further, she had only allowed for the possibility of earlier retirement in the initial 25% discount for the contingencies, which discount included other factors which may have caused the grievor to retire early. In the employer's view, the discounting effect for early retirement was minimal.

44 The employer submitted that the circumstances in Lâm would not apply to the grievor, who would become eligible for an unreduced pension at age 55 after 30 years' service. The employer referred to a Statistics Canada report published in 2008, titled Federal Public Service Retirements: Trends in the New Millennium (Employer's book of authorities, tab 2), which states the following at page 3: "In fiscal year 2006/2007, the average age at retirement of the public servants studied was 58.4 and they retired on average with 29.2 years of pensionable service."

45 The employer quite properly highlighted that the report examined only retirements among permanent employees who occupied positions governed by the Public Service Employment Act (PSEA), thus excluding employees of separate agencies such as the employer, Crown corporations, the Canadian Armed Forces and the Royal Canadian Mounted Police. The report stated at page 4 that at the end of March 2007, there were 168,409 employees with permanent status governed by the PSEA, representing about 70% of all permanent federal civil servants.

46 The employer submitted that this report is buttressed by the document titled, Demographic Snapshot of the Federal Public Service, 2011, prepared by the Office of the Chief Human Resources Officer, Treasury Board Secretariat (Employer's book of authorities, tab 3). In section 3 of this document titled, "Age Profile of the Federal Public Service", Figure 6 indicates that in 2011, 6.1% of federal public service employees were aged 60 or more. In the employer's submission, it is only common sense that an individual such as the grievor would retire as soon as he could do so without penalty, namely at 55 years of age with 30 years of service. The employer urged that notice be taken of this trend and fact, as the data indicates that is what is done by the vast majority of public servants. The employer further submitted that, in light of the grievor's dislike for the employer's management, it is unlikely that, given a choice, he would remain in his position any longer than necessary to attain full pension entitlement. The employer stated that there is no evidence before the Board that the grievor would work to age 65, but only the union's submission to that effect.

47 Concerning severance pay, the employer submitted that should the economic loss approach be applied, as the arbitrator did in Hay River, the grievor should be denied severance pay. The employer stated that the severance pay provisions of the Hay River collective agreement (article 55) are similar to those in the grievor's collective agreement. As outlined earlier in this decision, the grievor did not fall squarely within any of the severance pay provisions, as was the case with the grievor in Hay River. The employer pointed out that severance pay was not addressed in Lâm, presumably because the grievor had less than 10 years' service.

48 The employer reiterated that it is reasonable to provide the grievor 12 weeks' severance pay as if he had resigned pursuant to clause 63.01(b) of the collective agreement only if such payment forms part of an order of 12 months' salary plus benefits calculated at 11.3% of salary. In the employer's submission, such an approach is consistent with established Board practice and with a common law reasonable notice award. Should the economic loss approach be favoured, then, for the sake of consistency, severance pay should not be awarded.

49 The employer next addressed George Brown College, in which a majority of the arbitration board adopted the Hay River approach and applied the following framework at paragraph 26:

…

Step 1: calculate the maximum income the grievor could have received if she had not been wrongly discharged;

Step 2: add to that amount the value of benefits attached to her position;

Step 3: reduce that sum to reflect the various contingencies that might have prevented her from continuing in employment; and

Step 4: further reduce that sum to reflect her obligation to mitigate her loss.

50 In George Brown College, the grievor, aged 51 with 27 years' service, was terminated for incompetence. For Step 1, the arbitration board used the grievor's normal retirement date at age 65. In Step 2, the value of benefits was determined to be 10%, based on the following reasons:

[28] As regards Step 2, we note that the awards have generally added 15% to 20% in respect of benefits. We received no submissions on the value of benefits under this collective agreement. However, we would caution that the only benefits that should be included in this calculation are those which lead to employees receiving income over and above their wages or salary. In particular, vacation leave, which is obviously a major cost for employers, does not lead to any increase in employees' incomes (since their annual salaries or wages include their vacation pay), but merely relieves them of having to work on the days in question. The same can be said for other forms of leave, public holidays and disability income. If these items are excluded from the calculation, as, in our view, they should be, we doubt that benefits would even come close to 15% of wages.

51 In the Step 3 assessment of contingencies, it was determined that an 80% reduction should be applied. While some contingencies such as risk of death, illness or resignation would apply to any employee, the arbitration board stated that contingencies such as collective agreement protections against wrongful dismissal or layoff were of less weight in the grievor's case in view of her considerable seniority. The arbitration board arrived at its determination for two reasons. First, it was likely that the grievor would have taken early retirement because she was eligible to do so and because she experienced frustration in her work. Second, as the grievor was viewed by management as incompetent, the arbitration board believed that the employer would have again attempted to terminate her employment and might well have been successful.

52 The employer submitted that both of these factors are found in this matter. First, it is likely that the grievor would retire early. Second, on the evidence of his conduct, it is likely that the grievor's employment would be of short duration. Furthermore, as seniority does not exist in the federal public service as protection against layoff, the employer submitted that based on the facts of this matter, 85% would be an appropriate reduction for contingencies.

53 In its Step 4 assessment, the George Brown Collegearbitration board reduced the 80% for contingencies by a further 50% on the basis that in mitigation of her loss, the grievor would likely be able to earn half of her pre-termination income. The employer submitted that the same reduction should apply to the grievor here, as he has an obligation to mitigate his loss and is unlikely to remain unemployed.

54 In the employer's submission, if the economic loss approach is applied, the facts in George Brown College are analogous to this matter in terms of the grievor's age, length of service, likelihood of early retirement and difficulties in the work place. Using this approach, the employer submitted that the award would be the following:

(a)   income to age 65: from January 23, 2010 – August 17, 2022:
$74,065 x 12 years, 6 months, 3 weeks	930,085.00
(b)   add value of benefits [at 11.3% of total]	105,099.60
Subtotal:	1,035,184.60
(c)   reduce by 85% for contingencies	155,277.69
(d)   final reduction of 50% for mitigation	77,638.85

55 The employer stated that it did not support this approach for two reasons: first, the deduction for contingencies requires a large degree of speculation that requires the adjudicator to "reverse crystal-ball gaze". As the evidence in Bahniuk 2012 demonstrated, the grievor's inability to accept direction from senior management would not change. Thus had he been reinstated, he would likely have been terminated with cause in a short period of time. In that event, he would not have received any payment at all.

56 Second, the reasons for departing from the common law notice approach do not apply in this matter. In Metropolitan Toronto, Cameco and Hay River, the arbitrators sought to fashion a remedy which would adequately compensate for loss of employment in a unionized workplace where seniority had significant meaning. The employer submitted that seniority is not a factor for promotion or job security in the federal public service, and that recent policies mandating a reduction in the number of employees in the federal public service indicates that employment as a federal public servant does not equate with job security. The employer argued that in the circumstances of this matter, the approach of previous Board decisions and common law notice is the most appropriate.

4. Contractual/contemplation of damages approach

57 In this approach, compensation is based upon the collective agreement severance or layoff provisions. The employer referred to the following decision which adopted this approach: British Columbia (Ministry of Public Safety) v. British Columbia Government and Service Employees' Union (Kambo grievance) (2009), 186 L.A.C. (4th) 168; upheld: 2009 CanLII 67580 (BC LRB).In determining the amount of damages in lieu of reinstatement, the arbitrator applied the value which the parties themselves had placed on a bargaining unit job, namely layoff severance pay of three weeks per year of service.

58 The employer pointed out that while the arbitration board in George Brown College rejected this approach, its reasons for doing so are distinguishable. The arbitration board's first concern was as follows: as a large percentage of layoffs occur as a result of an employer's economic difficulties, it assumed that the parties to a collective agreement may have negotiated modest layoff compensation provisions so as not to cause increased economic difficulties for the employer. The employer submitted that such a concern does not apply to the layoff and workforce adjustment provisions negotiated between the union and the federal government.

59 The George Brown College arbitration board's second reason for rejecting compensation based on layoff provisions was that while no stigma attaches to an employee being laid off, it does attach to employees terminated for alleged incompetence. The arbitration board did not accept that the parties to the collective agreement were of the view that the same compensation should be paid to a laid-off employee and to an employee wrongly dismissed for incompetence. The employer submitted that by contrast, in this matter the grievor was the subject of reported adjudication decisions concerning his conduct in the workplace. Thus he should not receive more compensation than an employee laid off through no fault of his own and having a clean disciplinary record.

60 The arbitration board's third concern was that not every collective agreement contains provisions for compensation for layoff, which would lead to inconsistency and unreasonableness in applying this approach. The employer submitted that there is sufficient standardization of severance pay and workforce adjustment provisions in the federal public service to warrant consideration of such provisions in awarding compensation. In this regard, the employer referred to appendix C of the collective agreement between the parties, titled Work Force Adjustment Appendix to PSAC Collective Agreement (Employer's book of authorities, tab 4) ("the WFA"). Clause 1.1.1 of appendix C provides that "… permanent employees who are affected by work force adjustment situations are not themselves responsible for such situations…." Annex B to Appendix C, titled "Transition Support Measure", indicates that an employee with 24 years' service would receive 52 weeks' pay. Clause 1.1.31 of Appendix C provides that the employee would in addition receive severance pay under the collective agreement. Thus, an employee with 24 years' service who is laid off under the workforce adjustment provisions would be entitled to 52 weeks' salary plus 25 weeks' pay pursuant to clause 63.01(a)(i) of the collective agreement which provides, in the case of a first layoff, for 2 weeks' pay for the first complete year of continuous employment and one week's payfor each additional complete year of continuous employment.

61 The employer submitted that it would be inappropriate to compensate the grievor, whose situation is the result of his own conduct, in a manner that would award him a greater amount than that provided for an employee subject to work force adjustment through no fault of his or her own. The employer stated that while it did not advocate the adoption of this approach, it supports the reasonableness of its position that the grievor should be awarded 12 months' salary and benefits plus severance pay commensurate with resignation, namely 12 weeks' pay.

5. Valuation of benefits

62 The employer submitted that while the grievor suggested that the value of his benefits should be established at 20% of his salary, there was no factual basis for such a claim. In this regard, the employer cited the following comments in George Brown College, in which the value of benefits was set at 10%:

[28] As regards Step 2, we note that the awards have generally added 15% to 20% in respect of benefits. We received no submissions on the value of benefits under this collective agreement. However, we would caution that the only benefits that should be included in this calculation are those which lead to employees receiving income over and above their wages or salary. In particular, vacation leave, which is obviously a major cost for employers, does not lead to any increase in employees' incomes (since their annual salaries or wages include their vacation pay), but merely relieves them of having to work on the days in question. The same can be said for other forms of leave, public holidays and disability income. If these items are excluded from the calculation, as, in our view, they should be, we doubt that benefits would even come close to 15% of wages.

63 The employer argued that the appropriate level of the grievor's benefits should be 11.3% of salary. In support of this argument, the employer relied on the following information provided by the employer's Workplace Relations and Compensation Directorate (Employer's book of authorities, tab 24):

(a)   dental plan (family coverage)      $828 per year

(b)   medical plan (family coverage)    $1208.82 per year

(c)   employer's share of pension contributions       $4,816.87 per year

(d)   employer's share of supplementary death benefits $268.20 per year

(e)   employer's share of disability insurance $1,219.33 per year

Total benefit:    $8341.22; i.e. 11.3 % of salary of $74,064.

64 The employer stated that the employer share represents the benefit that is actually lost, whereas the employee share is deducted from salary, i.e. salary is reduced accordingly. As stated in the document, the above amounts were estimated based on the grievor's salary and contribution rates as of his termination date. The employer submitted that as the grievor in George Brown College was employed by the provincial public service and the value of her benefits was determined to be 10%, then the employer's suggested rate of 11.3% is reasonable.

6. Additional response to grievor's submissions

65 The employer submitted that Tipple does not apply to this matter. The grievor in Tipple had been hired under a specific term contract at an annual salary of $360,000. The award of damages flowed, among other things, from the early termination of the specific term which was found to be a "contrived reliance" on the PSEA by the employer. The factual circumstances are distinguishable from this matter and Tipple has no bearing on the assessment of damages where there has been a breakdown in the employment relationship to the extent that an employee could not be returned to the workplace.

66 Concerning the grievor's claim for loss of reputation based on Ms. Bauer's testimony, the employer stated that Ms. Bauer was under oath to tell the truth at a hearing at which she was required to testify. As stated in Bahniuk 2012, Ms. Bauer's comment about a gun must be placed in context and her testimony on that matter dealt with her perception of the grievor's conduct. The employer submitted that it would be contrary to the interests of justice if witnesses at labour adjudications were constrained from speaking truthfully as to their own observations and perceptions out of concern that their testimony could potentially lead to damage awards. The employer further submitted that the grievor had the opportunity to testify in response to Ms. Bauer's testimony, but chose not to do so.

67 The employer submitted that there is no evidence on which to base an award for damages for loss of reputation. The employer referred to the decisions of the Supreme Court of Canada in Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701 and Honda Canada Inc. v. Keays, 2008 SCC 39 concerning additional damages in the context of termination of employment. The employer referred to paragraph 98 of Wallace, in which the Court stated the following:

98 The obligation of good faith and fair dealing is incapable of precise definition. However, at a minimum, I believe that in the course of dismissal employers ought to be candid, reasonable, honest and forthright with their employees and should refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.…

68 The employer submitted that as there was no evidence of such conduct by the employer, the grievor's claim for loss of reputation should be dismissed.

C. Grievor's reply submissions

69 The grievor first addressed the employer's argument that the grievor's conduct was such that he could not function in the workplace and that the compensation he seeks would essentially pay him for the full value of years of work without requiring him to work.

70 In response, the grievor cited extensively from his performance management reports for the periods April 1, 2007 to March 31, 2008 (Exhibit 12, Tab 13) and April 1, 2008 to March 31, 2009 (Exhibit G-5). He submitted that these reports demonstrated that he functioned very well in the workplace with his subordinates and other team leaders.

71 The grievor referred to the following statement in Exhibit G-5: "Stan has had a less cooperative relationship with senior management as it relates to issues of the past." He submitted that those issues were the manner in which senior management did not respect the personal harassment process which caused numerous delays in an administrative process which also contributed to not maintaining an encouraging relationship with the grievor. In spite of this, the grievor continued to function well in the workplace. In the grievor's submission, the positive performance management reports make his situation more analogous to Tipple and thus distinguishable from the majority of the jurisprudence cited by the employer.

72 The grievor also submitted that he should receive severance pay under the collective agreement of one week's pay for each completed year of continuous employment.

73 The grievor referred to Brown & Beatty concerning the duty to mitigate. He stated that his search for alternative employment in his field in the region in which he lives has been unsuccessful and that he became self-employed as a general contractor handyman as of January 1, 2012. The grievor submitted that the employer failed to demonstrate that his efforts to mitigate were not reasonable in the circumstances.

III. Reasons

74 The power of adjudicators under the PSLRA to award compensation in lieu of reinstatement flows from subsection 228(2), which provides as follows:

228. (2) After considering the grievance, the adjudicator must render a decision and make the order that he or she considers appropriate in the circumstances. …

75 It is well-established that arbitrators have the authority to award damages in appropriate circumstances. See, for example, Lethbridge Community College. Adjudicators under the PSLRA have the same authority: see Tipple, 2012 FCA 158.

76 The arbitral jurisprudence concerning the assessment of damages in lieu of reinstatement has evolved. As stated in an article titled "Damages in Lieu of Reinstatement" by Adam Beatty at page IF-46 of Brown & Beatty :

The manner in which damages in lieu of reinstatement are calculated has undergone a significant evolution since the early 2000s. Whereas damages in lieu of reinstatement were previously calculated based, in large part, on the basis of the common law understanding of reasonable notice or pay in lieu thereof, that is no longer the case. Damages in lieu of reinstatement now recognize the unique attributes of a unionized work environment and the value of belonging to a bargaining unit.

77 At paragraph 2:1507 of Brown & Beatty, the authors state the following: "It is now commonplace for arbitrators to structure damage awards to compensate for the loss of value of employment within a bargaining unit where reinstatement is not warranted." This new approach began with the Metropolitan Toronto decision released in 2001 and followed, with variations, in Hay River and George Brown College.

78 As referred to in paragraph 22 of George Brown College, in Hay River the arbitrator thoroughly canvassed the arbitral and court jurisprudence on this issue. He concluded that the preferred approach was that taken in common law cases concerning loss of fixed term employment, with modifications to take into account employment under a collective agreement. In arriving at this conclusion, the arbitrator reasoned as follows at pages 385-386 of Hay River:

The right violated in a common law action for wrongful dismissal of an indefinite term contract is the right to reasonable notice. The right violated where the contract is for a fixed term is the right to have worked that term. The loss of a job under a union contract, where reinstatement is withheld due to appropriate but exceptional circumstances falls somewhere between the two. It is not like the former in that the contract (usually) expressly precludes the right to dismiss upon notice except for just cause and expressly provides for reinstatement which (as a form of specific performance) is unavailable at common law.

However, the reality, for the employee, when they are dismissed without just cause, but denied reinstatement, is that they suffer a loss similar in some ways to that of the dismissed common law employee. The assumption, at common law, is that the employee will be able to find a similar job after the reasonable notice period and that the parties, as a result, must have intended this to be the limit of the employee's liability. In both situations, the employee, predictably but not inevitably, will suffer at least some transitional period of unemployment while they look for alternative work. However, for the unionized employee, what they expected was to return to and keep their original job.

79 At pages 388-389, the arbitrator provided the following reasons for declining to follow the common law reasonable notice approach:

Many of the cases have opted for a factor (1 month – 2 months) per year of service formula to calculate damages, "grossed up" for the value of collective agreement benefits. Such formulae have served to obscure the basis upon which damages are based, making them look very much like common law damages for lack of reasonable notice.

…

What is missing in such an approach is that it focuses on how much time the employee put in with the former employer but not how much time the employee might, but for the decision not to reinstate, continue to serve. The loss of a collective agreement's benefits for an employee with just one year to go to retirement is not likely to be the same as for an employee with 15 years to go. The period of service to date may alter one's view of the contingencies; a short service employee is probably far more likely to move on to other work than a long service employee. Their accrued benefits including the "golden handcuffs" benefits like pensions, and increased vacations and so on will be higher. Those with more years left in the workforce also have more years to regain some of those seniority based benefits elsewhere.

What the cases have rarely done is addressed the value of collective agreement benefits based on the strength of the specific collective agreement provision. For example, just cause protection can provide security, but less so if the employer has an unfettered layoff right unrelated to seniority. The value of these items may also be lower for an employee on the eve of retirement than for an employee otherwise likely to enjoy that seniority for a number of years.

My conclusion is that the loss of fixed term employment framework is more appropriate and adaptable to situations at hand than the common law damage approach. A position covered by a collective agreement is not a fixed term or lifetime position, but is subject to many of the same contingencies.

80 The PSSRB decisions cited by the employer in its submissions on the public sector approachto assessment of damages were based on the common law cases concerning the wrongful dismissal of employees hired on an indeterminate basis, although some of those decisions indicate that the employee received further payment as part of the public service severance entitlement. McMorrow, issued in 1993, considered the grievor's age and years of service and that he had received salary continuance and severance pay. In Doucette, the adjudicator only considered the grievor's age and length of service. In Loyer,2004 PSSRB 148, the adjudicator took into account the grievor's age, circumstances of dismissal, prospect of future employment and obligation to mitigate, with emphasis on the grievor's age and the nature of his employment. He also stated that the grievor's benefit of severance pay should be taken into account. Metropolitan Toronto was not cited by the parties in Doucette and Loyer.

81 In Lâm, the adjudicator departed from the common law reasonable notice approach and considered the Hay River remedial concepts to be the most relevant to the facts before her. In considering that in assessing damages, a different approach should be applied to unionized employees who are dismissed without just cause but not reinstated, she reasoned as follows:

36 My reasoning, which is to apply a distinct scheme to a unionized employee dismissed without proper and sufficient cause and not reinstated, is based on the fact that this employee's loss is different from that of a non-unionized employee. A non-unionized employee is compensated for a period deemed necessary, based on certain criteria, to find other employment, since specific performance is not available to that employee. A unionized employee expects to be rightfully reinstated if he or she is successful. The difference in status between the two employees lies in the hope of being reinstated, which has unique consequences for the unionized employee.

37 A unionized employee who accepts another job generally will not find himself or herself working at the same level or receiving the same benefits as under his or her collective agreement at the time of dismissal. Those benefits include professional advancement, increasing annual leave depending on years of service, accumulating sick leave and possibly pension entitlement, all of which I refer to as the employee's "employment capital." If the employee accepts a new unionized position, the unionized employee must start at the bottom of the salary scale and rebuild his or her employment capital. The value of that employment capital is the greatest distinction between a unionized and a non-unionized employee.

38 Furthermore, the employment capital of a unionized employee is subject to the same weighting factors as a non-unionized employee, namely, opportunities for advancement, loss of employment due to economic or technological reasons, which occurs now and then in the public service, a decision to change jobs or retire, compromised health, unforeseeable family circumstances, etc. To that list of contingencies I add the employee's employment record, which contributes to career longevity. A unionized employee has no guarantee of long-term job security, and certain contingencies must be considered when calculating a reasonable sum. Incidentally, common law courts apply similar contingencies in their calculations of entitlement to a reasonable notice.

39 Those considerations lead me to the calculation of a reasonable remedy based on the premise of loss at the time of dismissal, taking into consideration the contingencies referred to by Judge Denning in Edwards.

82 The adjudicator's reference to Edwards was set out earlier in her decision as follows:

30 Some courts have acknowledged the notion of a distinct compensation scheme for unionized employees, notably in Rankin v. National Harbours Board (1979), 99 D.L.R. (3d) 631, modified on appeal in Rankin v. National Harbours Board (1981), 127 D.L.R. (3d) 714, Cohnstaedt v. University of Regina, [1995] 3 S.C.R. 451, and Freeman v. BC Tel, [1997] CanLII 2191 (B.C.S.C.).

31 In Rankin, the British Columbia Court of Appeal considered a decision by the United Kingdom [sic] Court of Appeal in Edwards v. Society of Graphical and Allied Trades, [1970] 3 All E.R. 689 (C.A.), which examined the issue of calculating a remedy but also provided a realistic perspective on how to assess damages. Lord Denning observes that a grievor has the right to be reinstated in the best position possible had there been no termination of employment, while considering contingencies and the obligation to mitigate damages. Lord Denning points out that the decision maker's role is to assess the loss while considering all the circumstances and not to perform a scientific, mathematic or actuarial calculation.

83 I agree with the adjudicator in Lâm that with respect to unionized workplaces, any remedy for compensation in lieu of reinstatement should reflect the value of the benefits provided by a collective agreement.

84 In this matter, however, the difference between the protections and benefits enjoyed by employees in a unionized environment and those in non-unionized sectors is not the only distinction to be contemplated when fashioning an appropriate remedy. One must also consider the differences between collective agreement protections and benefits in the general unionized sector, whether private or public, and those in the unionized environment of the federal public service.

85 In Metropolitan Toronto, Cameco and Hay River, the importance of seniority rights was emphasized, particularly in respect of job protection and promotion. This was a primary reason cited by the arbitrators in those cases for departing from the common law reasonable notice approach. While seniority was a significant consideration for the Hay River departure from the common law approach, it was not the only reason. The use of the economic loss approach in cases involving unionized employees is not based solely on the seniority advantages found in certain collective agreements, but by the gamut of advantages provided by a union, seniority being among them.

86  For example, in Metropolitan Toronto, the arbitrator stated the following at page 8:

The most persuasive argument it seems to me, and one that is beginning to receive favourable attention, is the collective agreement provides various benefits that are non-existent in the non-unionized sector. One of the most obvious examples is seniority which extends a measure of security of employment not enjoyed by non-unionized employees. This security encompasses, among other things, bumping privileges against lay-offs, promotions within the workforce based on certain defined criteria, and no discipline without just cause. These are only examples of advantages the collective agreement provides to members in a bargaining unit.

87 To illustrate, in the collective agreement before the arbitrator in Hay River, article 33 titled, "Layoff and Job Security" provided as follows at clause 33.01:

33.01 In the event of layoff, the employee within the position (as defined in Appendix 2) and the worksite affected with the least seniority shall be laid off. …

88 In the same collective agreement, article 49 dealt with vacancies, job posting, promotions and transfers. Clause 49.03 read as follows:

49.03 In making selections, promotions and appointments within the Bargaining Unit, where the required qualifications, skills and abilities demonstrably exceed those of more senior applicants, that applicant may be awarded the position. Otherwise, the senior qualified applicant shall be awarded the position.

89 Although the terms may vary from one collective agreement to another, such protections are generally found in most collective agreements. By contrast, the term "seniority" is not found in the collective agreement governing the grievor in this matter, nor is seniority a factor for purposes of job protection or promotion in that collective agreement. That is not to say that unionized federal public servants are deprived of protection in cases of lack of work or discontinuance of a function. Protection for permanent employees in such circumstances is provided for in the WFA, which forms part of the collective agreement covering the grievor.

90 The collective agreement between the union and the employer contains a job security clause which reads as follows:

23.01 Subject to the willingness and capacity of individual employees to accept relocation and retraining, the Employer will make every reasonable effort to ensure that any reduction in the work force will be accomplished through attrition.

91 The first page of the WFA stipulates as follows under the title "Collective agreement":

Notwithstanding the Job Security Article, in the event of conflict between the present Work Force Adjustment Appendix and that article, the present Work Force Adjustment Appendix will take precedence.

92 Article 24 of the collective agreement concerning technological change provides that where, as a result of technological change, an employee's services are no longer required because of lack of work or discontinuance of a function, the provisions of the WFA will apply.

93 Under the WFA, affected permanent employees are advised whether they will be provided a guarantee of a reasonable job offer of permanent employment within the CRA and if not, are provided a choice of options. These include 12 months of preferred surplus status, a cash payment depending on the employee's years of service or an education allowance. However, an employee's access to such protections under the WFA is not based on the individual's seniority.

94 The employer submitted that as seniority is not a factor in job protection or promotion in the federal public service, it is not a compensable loss. While seniority rights in the federal public service unionized environment may not have the same significance as in other unionized workplaces, there is value to be attached to the protections afforded to permanent CRA employees under the WFA.

95 In Lâm, the adjudicator adopted the Hay River loss of a fixed term job approach to damages and its explanation of how various contingencies may influence the quantum of damages awarded. She cited the following extract from pages 389-90 of Hay River:

Applying the loss of a fixed term job approach to damages does not imply they are unlimited. The Court decisions quoted above suggest the types of contingency that need to be assessed. These include such matters as plant closings, bankruptcy, technological change, chance of layoff, chance of illness, quitting for other work and so on. A unionized job is not a guaranteed job, even with seniority and just cause protections. These factors in many cases will reduce considerably the horizon of damages down from any notion of a life time job. However, the appropriate discount depends on the individual circumstances. Similarly, the likelihood of future employment elsewhere needs to be factored in, and if the individual is skilled and employable this too will significantly reduce the level of damage. That too however is dependent on the overall circumstances. Applying this approach allows the flexibility to tailor the estimate of damage to the reasons for the refusal or inability to reinstate; the particular nature of the exception circumstances that allow that step despite the lack of just cause.

96 As stated as follows by the George Brown College arbitration board in endorsing this approach:

[25] We respectfully endorse arbitrator Sims' approach. In our view, it describes more accurately the loss suffered by a grievor, and it allows for appropriate elements to be factored in for a particular grievor so as to result in a more focused assessment of the loss. This does not mean that the compensation due to a grievor can be calculated with precision since there are so many incalculables. As arbitrator Sims stated in his award, quoting from common law decisions: "One must try to assess. One cannot calculate."

97 In my view, the Hay River approach provides sufficient flexibility to fashion a remedy appropriate to the grievor's circumstances.

98 Before addressing the grievor's claim, I wish to briefly comment on the employer's submission concerning the contractual/contemplation of damages approach. While the employer did not advocate the adoption of this approach, it suggested that this approach recognizes or applies the value that the parties themselves had placed on a bargaining unit job. I do not agree. Severance pay is generally regarded as a form of delayed salary, not a quantifiable amount that the parties consciously chose as an indication of the value of a job in the public sector, to be used to measure damages. There is no evidence that the parties to the collective agreement turned their minds to what the employer suggested when negotiating the severance pay clause.

99 I turn now to the grievor's claim.

100 The grievor was employed for 24 years, from January 6, 1986 until the termination of his employment on January 22, 2010. At the date of termination, he was 52 years of age. The first issue to address is the length of time that the grievor would have continued to work in order to calculate the maximum income he would have received had his employment not been terminated.

101 In his submissions, the grievor stated that he would work until age 65. This is but an assertion, as there was no evidence tendered on this point. The employer submitted that it was likely that the grievor would have retired upon being eligible for an unreduced pension, namely when he was at least 55 years of age and had 30 years of service. Had his employment continued, the grievor would have attained the 30-year threshold when he was 58 years of age. This would have entitled him to a pension equivalent to 60% of his salary.

102 For the purposes of calculating income, a retirement age of 65 was used in Hay River, George Brown College and Lâm. In George Brown College, although the grievor was entitled to early retirement in 2010, the arbitration board used her later possible retirement date of 2025 to calculate income.

103 In Lâm, it is stated at paragraph 40 that, "The usual retirement age for a federal employee is 65." I found no reference to evidence supporting that statement in that decision. In this matter, the employer submitted a Statistics Canada report that found that in fiscal year 2006/2007, the average age at retirement of permanent public servants studied was 58.4 and they retired on average with 29.2 years of pensionable service. That report represented 70% of all permanent federal civil servants. The grievor would have fallen within this average had he decided to retire with 30 years' service, since he would have then been aged 58 years.

104 The age at which an individual retires depends on many factors, some of which are beyond that individual's control. That is a matter to be determined when applying contingencies. In the grievor's case, I am not persuaded that he would have retired upon having attained 30 years' service. Nor do I accept that he would have worked until age 65. I believe it probable that in view of his age and years of service, the grievor would have sought to maximize his pension entitlement. With 35 years of service, at which time he would have been 63 years of age, the grievor would be entitled to a pension equivalent to 70% of his salary. Thus for the purpose of calculating the grievor's income, I assume that he would have worked 11 more years had his employment not been terminated.

105 The grievor, who was classified at the MG-03 group and level, submitted that his annual salary at termination was $74,794.00. That salary was the top rate for the MG-03 classification effective November 1, 2009 in the collective agreement which applied to the grievor at the date of his termination. The employer submitted that the grievor's salary was $74,065.00. That figure is found in the MG-03 pay scale of the subsequent collective agreement concluded between the employer and the union on October 29, 2010, which is not before me. Accordingly, the salary at termination used for calculation of the grievor's income will be $74,794.00.

106 To attain 35 years of service, the grievor would have to have worked an additional 11 years, 6 months, 3 weeks and 4 days. It is not unreasonable to round this to 11 years and 7 months. Thus his loss of income from the date of termination is $866,363.81.

107 The grievor claimed that he should be compensated for loss of salary, fringe benefits and interest from the date of termination to the date of decision, plus loss of future salary, benefits and interest from the date of this decision to retirement at age 65. I do not agree. I agree with the approach stated as follows in Hay River at page 388:

In the ordinary course of events, I agree with the arbitrators in Metropolitan Toronto, NAV Canada and Government of Alberta that it is inappropriate to award the same restorative damages as would have occurred up to the date of the award and then to order a further period of reasonable notice thereafter. In principle it is more appropriate to make one award from the date of termination. As noted above, the only modification to this might be where the grievor was properly justified in making less than stellar mitigation efforts due to the justness or likelihood of reinstatement. In the normal "exception case" situations (if that is not a contradiction in terms) the breakdown in the viability of the relationship should be sufficiently apparent to cause a prudent individual to "set their course elsewhere" in case they lose either the just cause or the reinstatement argument.

108 I turn now to the valuation of benefits. In valuing benefits, the arbitration board in George Brown College stated the following at paragraph 28:

[28] … we note that the awards have generally added 15% to 20% in respect of benefits. We received no submissions on the value of benefits under this collective agreement. However, we would caution that the only benefits that should be included in this calculation are those which lead to employees receiving income over and above their wages or salary. In particular, vacation leave, which is obviously a major cost for employers, does not lead to any increase in employees' incomes (since their annual salaries or wages include their vacation pay), but merely relieves them of having to work on the days in question. The same can be said for other forms of leave, public holidays and disability income. If these items are excluded from the calculation, as, in our view, they should be, we doubt that benefits would even come close to 15% of wages.

109 The grievor claims that the value of his benefits amounts to 20% of his salary. No evidence, data or justification were submitted by the grievor to support that claim. The only objective and factual evidence of fringe benefits applicable to the grievor was that submitted by the employer and set out earlier in this decision, which calculated his benefits at 11.3% of his salary. In the absence of any other evidence, I accept that valuation as reasonable. The monetary amount of the grievor's benefits is therefore $97,899.11. When added to the amount of loss of income, the total is $964,262.92.

110 In assessing the various contingencies, one must consider the individual's circumstances. Some of the contingencies apply to all employees, such as illness, risk of death, early retirement and other unforeseeable circumstances. As concerns the grievor, while seniority is not a factor in job protection under the collective agreement, the grievor's risk of layoff is attenuated by the provisions of the WFA.

111 However, the most significant factor in assessing the contingencies applicable to the grievor is that of his conduct. On this issue, I agree with the following statement at page 387 of Hay River:

Where an employee's conduct is such that the employment relationship is beyond repair, it is a factor that can and should be taken into account in assessing the contingencies of how long the job (even with reinstatement) might last.

112 In Bahniuk 2012, I found that the employer's decision to terminate the grievor's employment was excessive in the circumstances. While the employer acted precipitously, my decision not to reinstate the grievor was based on the evidence of his conduct, primarily his confrontational attitude towards, and inability to accept direction from, CRA senior management. The employer had had concerns with the grievor's conduct in the workplace since 2002. I found that the employment relationship between the grievor and the employer was no longer viable. The following extracts from Bahniuk 2012 demonstrate why I arrived at this conclusion:

362 … In order to sustain a viable working relationship between the grievor and senior management, it is essential that the parties in this relationship be capable of mutual respect and trust. Based on the evidence of the grievor's past behaviour, I am convinced that those elements are absent from his relations with senior management and would not be restored were he to be reinstated.

365 Even as late as the meeting of January 18, 2010, Mr. Leigh testified that all the employer sought from the grievor was some indication, however slight, that he was willing to move forward to accept responsibility for his conduct and improve the working relationship. In return, the grievor indulged in unprovoked outbursts and insubordinate conduct which indicated his disdain for senior management. … In my view, the employer should not be required to tolerate such recalcitrant conduct from the grievor to the point of utter exhaustion or capitulation. The complexity of an organization such as the CRA makes it necessarily hierarchical in structure. The evidence shows that the grievor is unable to accept direction from senior management, and I am not persuaded this attitude would change were he to be reinstated. Indeed, I am convinced that it would not.

[Emphasis added]

113 In addition, as a result of Bahniuk 2012, the grievor had an extensive disciplinary record at termination, consisting of a written reprimand and suspensions of 1, 3, 5 and 10 days.

114 The employer argued that as the grievor had benefited from unionized workplace protection since 2002, he should not be entitled to further damages. It referred to this as double counting the job protection as it pertained to the grievor. The protection cited by the employer in support of this argument consisted of the employer having referred the grievor for a fitness to work evaluation, having retained a facilitator and having provided performance management and coaching.

115 I am not persuaded by this argument. There is no evidence that the measures deployed by the employer in an attempt to improve its working relationship with the grievor are restricted to unionized employees. Nothing in the collective agreement refers to such measures as being to the exclusive benefit of bargaining unit members. It is reasonable for an employer, having invested in the training and development of an employee, whether unionized or not, to attempt to salvage the relationship.

116 Furthermore, the illogical effect of the employer's argument appears to be that of one-time use, namely that once the grievor had availed himself of any of the protections afforded by the collective agreement, he would have no better status than would a private sector non-unionized employee.

117 If the thrust of the employer's argument is that because of the protections provided by the collective agreement, it tolerated the grievor for eight years more than it would have a private sector employee in similar circumstances, it does not follow that the grievor should be penalized for that situation. If the employer's argument is that it tolerated the grievor's conduct when it could have terminated his employment at an earlier date, it must bear responsibility for its decisions and cannot now deny the grievor compensation for improperly discharging him.

118 In his reply submissions, the grievor referred extensively to his performance management reports for the periods April 1, 2007 to March 31, 2008 and April 1, 2008 to March 31, 2009. He submitted that these reports demonstrated that he functioned well in the workplace with his subordinates and other team leaders. This was first raised in Bahniuk 2012, and was dealt with as follows:

371 While the union placed emphasis on certain aspects of two of the grievor's performance appraisals, this is not a case where the grievor is accused of substandard work performance. Furthermore, as the employer pointed out, most of the positive references cited by the grievor relate to his technical expertise and his interaction with the members of his team.

119 It is my belief that had I ordered the grievor's reinstatement, his conduct would have caused the employer to again terminate his employment within a shorter, rather than longer, time period. In view of his disciplinary record, it seems probable that it would have succeeded. Indeed, I am certain that the grievor would have, had he not been terminated but merely disciplined, continued to behave as he had in the past and that it is a virtual certainty that those continued actions would have provided the employer with just cause for termination. Given the facts in this case and my evaluation of the grievor, such a result is almost a foregone conclusion. Accordingly, it is highly unlikely that the grievor would have continued in his employment until age 63. In the circumstances, my assessment is that the amount of $964,262.92 should be reduced by 90% to reflect this probability, along with the other general contingencies mentioned earlier in this decision. Thus the amount to be paid by the employer to the grievor for loss of employment is $96,426.29.

120 The grievor claimed that he should receive severance pay in the amount of one week's pay for each completed year of continuous employment under article 63 of the collective agreement, although he did not specify the applicable provision. The only clauses under article 63 under which stipulate one week's pay for each completed year of continuous service are those pertaining to retirement (clause 63.01(d)), death (clause 63.01(e)) or termination for incapacity or incompetence (clause 63.01(f)).

121 The employer submitted that under the economic loss approach, the grievor should be denied severance pay, as he did not fall squarely within any of the severance pay provisions of the collective agreement.

122 In my view, the grievor is entitled to severance pay under clause 63.01(d) of the collective agreement as if he had retired. I have determined that had he remained in the employ of the employer, the grievor would have worked until retirement. As the grievor is being compensated for the loss of his employment, under the economic loss approach, he is entitled to all of the benefits of the collective agreement, which include severance pay.

123 While the grievor is not blameless, the reality is that he was improperly terminated. Under the economic loss approach, the reason for that termination and the grievor's role in it, are taken into account in the calculation of damages, not in deciding on which approach to compensation should be used.

124 Any severance pay entitlement the grievor may have accumulated under the terms of the collective agreement is subject to clause 63.02, which reads as follows:

63.02 Severance benefits payable to an employee under this Article shall be reduced by any period of continuous employment in respect of which the employee was already granted any type of termination benefit. Under no circumstances shall the maximum severance pay provided under clause 63.01 be pyramided.

125 Based on the same principles and for the same reasons stated earlier in this decision, any severance pay to which the grievor may be entitled shall be reduced by the 90% contingency assessed earlier in this decision. While McMorrow and Loyer, 2004 PSSRB 148, indicate that the grievors in those cases received severance pay, those were simply accountings of payments which had been made to the grievors and did not arise out of findings made by the adjudicators. Moreover, while in those cases the adjudicators found it appropriate to award compensation in lieu of reinstatement, unlike this matter, there was no consideration or analysis of the duration of the grievors' continued employment had they been reinstated. In my view, those decisions are of no assistance when assessing the amount of severance pay to which the grievor may be entitled in the circumstances of this case.

126 Furthermore, I do not agree with the employer's argument that the grievor's compensation should not exceed that of an employee who is laid off through no fault of his or her own. In other words, the grievor is profiting from his own turpitude. Not only is the grievor not in that situation, he has lost his collective agreement benefits, not least of which is the presumptive right to reinstatement in cases of termination of unionized employees.

127 I shall now deal with the grievor's claim for damages for loss of reputation. In the grievor's submission, Ms. Bauer's comment made during her testimony on June 21, 2011, in a public forum was reckless, capricious and damaging to the grievor's reputation in seeking further employment.

128 Ms. Bauer's comment was made as a witness in the course of a hearing before a quasi-judicial tribunal. She testified that the comment was her perception based on her observation of the grievor's behaviour during her May 2, 2008 meeting with him. The hearing of the grievor's termination occurred more than 3 years after the comment and some 18 months following the termination. Although the grievor had the opportunity to address this issue, he chose not to testify at the hearing. In Bahniuk 2012, the evidence on this point in examination-in-chief (paragraph 18) and cross-examination (paragraph 46), referred to earlier in this decision and reproduced here for convenience, was as follows:

18 Ms. Bauer said that the meeting had lasted 45 minutes to 1 hour and that after the grievor left her office, she was shaken. She testified that in her entire experience, she had never had that kind of a meeting with colleagues, subordinates or supervisors. It took her some time to settle down, after which she made some handwritten notes about the meeting (Exhibit E-2). Ms. Bauer said that the same day, she commented to a staff relations advisor that if the grievor had had a gun, he would have used it.

46 Ms. Bauer was referred to section 2c on page 7 of the Discipline Policy titled "Employee Rights and Obligations", the first sentence of which reads: "The employee being investigated is presumed innocent until misconduct has been established." It was put to Ms. Bauer that she was shaken and upset after her meeting with the grievor and that she had told a manager in staff relations that if the grievor had had a gun, he would have used it. Ms. Bauer replied that she had told the other manager that if the grievor had had a gun, she wasn't sure he wouldn't have used it. She said that while the grievor did not mention a gun, it was her perception based on her observation of the grievor's behaviour that he was a very angry person: his face was red, his eyes bulging, spit coming from his mouth and pointing his finger at her angrily while seated. She acknowledged that she didn't notify police. Asked if the grievor was presumed innocent following her meeting with him, Ms. Bauer replied in the affirmative, stating that she had not established misconduct at that point.

129  In Bahniuk 2012, I stated that Ms. Bauer's comment had to be put into context, as follows:

268 The grievor argued that Ms. Bauer's perception of the incident was an extreme one in view of her comment to a staff relations manager that if the grievor had had a gun, she wasn't sure he wouldn't have used it. While that comment may not have been the most felicitous, it should be placed in context. According to the evidence, the comment was made to another manager the same day the meeting took place, at a time when Ms. Bauer indicated that she was shaken. Ms. Bauer testified that the comment was based on her perception of the grievor's demeanour. She stated in cross-examination that she had not established the grievor's misconduct at that point. In that regard, the fact-finding meeting with the grievor was held on May 15, 2008, almost two weeks following the incident, with the discipline having been imposed some two weeks later. In my view, this timeline and Ms. Bauer's testimony concerning her consultations with staff relations and other managers about the appropriate discipline demonstrate that her comment did not influence her objectivity in imposing discipline on the grievor.

130 Witnesses testifying in the course of a judicial or quasi-judicial proceeding benefit from an absolute privilege. The state of the law on this issue was referred to in Samuel Manu-Tech Inc. v. Redipac Recycling Corporation, 1999 CanLII 3776 (ON CA) as follows:

[19]

…

The law is set out in Halsbury's Laws of England, Fourth Edition Reissue, 1997, Vol. 28 at para. 97:

97. Absolute privilege. No action lies, whether against judges, counsel, jury, witnesses or parties, for words spoken in the ordinary course of any proceedings before any court or judicial tribunal recognised by law. The evidence of all witnesses or parties speaking with reference to the matter before the court is privileged, whether oral or written, relevant or irrelevant, malicious or not. The privilege extends to documents properly used and regularly prepared for use in the proceedings. Advocates, judges and juries are covered by this privilege. However, a statement will not be protected if it is not uttered for the purposes of judicial proceedings by someone who has a duty to make statements in the course of the proceedings.

…

131 In Ayangma v. NAV Canada, 2001 PESCAD 1, the Court stated as follows:

[38] It is trite that the defence of absolute privilege attaches to statements made by judges, tribunal members, counsel, parties and witnesses in a proceeding before bodies which are not only judicial but are quasi-judicial in the nature of their functions. In Gatley on Libel and Slander, 9^th ed. (Sweet& Maxwell), p.295, the authors state the general rule as follows:

General. The doctrine that an absolute immunity exists in respect of statements made in the course of proceedings before a court of justice has been held to apply to statements made in the course of any proceedings before a tribunal (which word covers a commission or [sic] inquiry) recognized by law which, though not a court in the ordinary sense, exercises judicial functions, that is to say, acts in a manner similar to that in which a court of justice acts in respect of an inquiry before it… . The absolute privilege extends also to advocates, litigants, and witnesses, in the same way as in the case of proceedings before courts proper.

[39] The principle upon which the defence of absolute privilege is afforded to statements made in a judicial or quasi-judicial setting is the defence is necessary to further the proper administration of justice. Participants in a proceeding before a quasi-judicial or judicial tribunal must have the freedom to speak without the threat of a defamation suit. If participants, including witnesses or potential witnesses, are inhibited from speaking freely, there is a substantial risk the truth may not be discovered and the proper administration of justice may be thwarted.

132 That Ms. Bauer's testimony is protected by absolute privilege is sufficient to dispose of the grievor's claim.

133 I would add that the grievor has not submitted any evidence in support of his claim on this issue. While he cited Tipple, those were entirely different circumstances and the comments in issue were not the subject of testimony before a court or tribunal. As stated in that decision, the matter was raised in the House of Commons and widely reported in the media. I therefore reject the grievor's claim for damages for loss of reputation.

134 I turn now to the issue of mitigation. In Metropolitan Toronto, the arbitrator declined to take into account as mitigation earnings subsequent to the date of termination. In Lâm, the adjudicator found that since the remedy she applied was based on the loss of the grievor's employment, the obligation to mitigate was inconsistent with that principle. In both Hay River and George Brown College, the arbitrators applied the duty to mitigate.

135 In Hay River, the arbitrator referred to IATSE, Local 295 v. Saskatchewan Centre for the Arts, 2008 SKCA 136, where the Saskatchewan Court of Appeal was dealing with the decision of an arbitration board which awarded damages in lieu of reinstatement. The facts were summarized in Hay River as follows at page 375:

The employee had been dismissed, wrongfully so in the arbitration board's view. However, bad feelings between the grievor and his colleagues led to an award of damages in lieu of reinstatement. The arbitration board set the damages after considering the approaches in Metro Toronto, NAV Canada, DeHavillandand Health Sciences. It expressly did not take post-termination earnings into account. However, it did base its award on a formula. The employee had worked for 17 years and was awarded 5 week's salary per year plus a 14% top-up plus eight weeks pay in lieu of labour standards legislation notice and interest.

136  The Court stated the following concerning the mitigation principle at paragraphs 25 and 26:

[25] As noted above the fundamental principle in assessment of damages for breach of contract is that the wronged person is entitled to be put into the same position as if the contract had been performed and the board, and the awards it followed seemed to have accepted that principle. The damages claimed are compensatory damages, that is, damages to compensate for actual loss. There was no claim for punitive or aggravated damages and the board did not suggest that such damages were appropriate, so that the damages cannot have any element of punishment of the employer. Notwithstanding the insistence in the awards followed by the arbitration board in this case that the loss "does not represent an ongoing loss from the time of termination which would normally require mitigation", that cannot be so. The damages in such cases, including the damages for loss of benefits under the collective agreement, are to compensate for the loss of the employment that the grievor would have had, but for his termination, after the date of his termination. There can be no loss until the grievor has been without employment and without compensation for that loss of employment or has taken employment providing lesser remuneration or benefits. That being so, the damages simply cannot be disconnected from what happens after the termination.

[26] And a corollary of this is that any income earned by the grievor from another employment after the termination must be taken into account to the extent that it alters the actual loss. Otherwise, it is conceivable that a person in the position of the grievor could collect substantial damages far exceeding his actual loss. For he could begin a new job with equal or better pay and benefits commencing soon after his termination and suffer very little loss, yet collect full damages. That is what happened here. The grievor was awarded 85 weeks of salary when he was out of work for about six months, or 26 weeks. Neither simple logic nor the law allows such a result because the damages would no longer serve only the purpose of compensating the grievor for his actual loss, but to reward the grievor and punish the employer. In sum, it was unreasonable of the board to find that earnings of the grievor after termination should not be taken into account in assessing damages because that would compensate the grievor for a loss that he did not in fact incur.

137 I agree with the reasoning in Saskatchewan Centre that under the economic loss approach, the grievor has a duty to mitigate his loss.

138  The grievor's submission on mitigation was minimal, but it was the only evidence on the issue. He stated that his search for alternative employment in his field in the region in which he lives has been unsuccessful and that he became self-employed as a general contractor handyman as of January 1, 2012.

139 The employer submitted that the grievor has a duty to mitigate. It suggested that the approach in George Brown College was appropriate, but went no further than that. In that decision, the arbitration board reduced the 80% it had applied for contingencies by a further 50% on the basis that in mitigation of her loss, the grievor would likely be able to earn half of her pre-termination income. The employer made no submissions on the grievor's failure to mitigate or that his efforts to mitigate his losses were unreasonable.

140 In the circumstances of this matter, I find it inappropriate to apply a further percentage reduction to the grievor's damages based on a failure to mitigate. Since the grievor has submitted that he was eventually able to earn income subsequent to the termination of his employment, any income so earned will be deducted from the amounts which I have determined are owed to him.    

141 As the grievor requested the payment of interest and the terms of paragraph 226(1)(i) of the PSLRA provide me with jurisdiction to award interest in this case, it will be allowed at the rate prescribed by section 1 of the Alberta Judgment Interest Regulation (Alta. Reg. 215/2011), pursuant to the Judgment Interest Act (R.S.A. 2000, c. J-1),from the date of termination to the date of this award.

142 For all of the above reasons, I make the following order:

Order

143 Within 60 days of the date of this decision, the employer will pay to the grievor the following amounts:

1. damages for loss of his employment in the amount of $96,426.29, less any amounts earned by the grievor since the date of the termination of his employment to the date of this decision;
   
2. any accumulated severance pay entitlements under the terms of the collective agreement, subject to a reduction of 90%;
   
3. interest on the above amounts, for each year or part of a year, from the date of termination to the date of this decision, as follows:
   
   • 2010:      0.825 %
     
   • 2011:      1.85 %
     
   • 2012:      1.20 %
     
   • 2013:      1.40%
     
   • 2014:      1.10%

144 Upon written direction from the grievor, the employer will pay the said amounts in any lawful manner to minimize any tax consequences to the grievor.

145 I will remain seized of this matter for a period of 60 days from the date of this decision in the event the parties require assistance in its implementation.

July 25, 2014.

Steven B. Katkin,
adjudicator