FPSLREB Decisions

File: 166-20-27336 Public Service Staff Before the Public Service Relations Act Staff Relations Board BETWEEN JOHN MATTHEWS Grievor and CANADIAN SECURITY INTELLIGENCE SERVICE Employer Before: J. Barry Turner, Board Member For the Grievor: Shawn Minnis, Counsel For the Employer: Gérard Normand, Counsel Heard at Ottawa, Ontario, December 10 to 14, 1998.

Decision Page 1 DECISION John Matthews was employed by the Canadian Security Intelligence Service (CSIS) as a Senior Officer (level 8 classification), Administration and Finance Unit, Policy and Systems Branch until his purported lay-off effective April 1, 1996. His initial grievance regarding the termination of his employment with the CSIS was heard by me at adjudication in November and December 1996. In my decision issued on March 5, 1997 I concluded that, even though the CSIS acted in bad faith when it terminated the grievor’s employment, Mr. Matthews should be awarded damages rather than reinstatement. I awarded him $70,000. Mr. Matthews applied for judicial review of my decision; Richard J., Federal Court Trial Division, (Court file T-623-97), ordered the following on December 8, 1997: That part of the adjudicator’s decision which fixes the amount of the damages awarded to the applicant is set aside and the adjudicator is directed to redetermine the amount of the damages after providing both the applicant and the respondent with an opportunity to make submissions and give evidence to the adjudicator on this specific issue.

The following is the result of the subsequent hearing on the issue of the quantum of damages to be awarded to Mr. Matthews.

Summary of Evidence 1. Mr. Matthews who was born on April 18, 1948, is married with two sons. In 1973 he joined the federal Department of Consumer and Corporate Affairs (CCA), Accounting Section. In March 1989, he was laid off after 16 years with the Department. On October 30, 1989, he began to work for the CSIS.

Mr. Matthews said the Early Retirement Incentive (ERI) Program was an incentive offered to employees to leave the federal Public Service at age 50 without suffering a pension penalty. He was aware in 1995 that the ERI was being offered for a three-year period. When he turned 50 in April 1998 he would have taken it. He added he must now wait until age 60 to receive an unreduced pension. The grievor’s annual salary at termination was $62,552.

Mr. Matthews, an avid golfer, added that a benefit he had while at CSIS was through something called the Buffalo Golf Club, apparently a carry-over to CSIS from RCMP days, that allowed him to play golf at various golf courses within the National

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Decision Page 2 Capital Region at considerably reduced rates. He said one could save sometimes $40 to $45 per round of golf.

The grievor said after the termination of his employment, he pursued a rigid routine searching for new employment. It was hard to get work because of his age and his many years of employment in the Public Service. He sent out approximately 75 applications, while collecting employment insurance for 40 weeks, totalling around $18,000.

The grievor testified, since he lost dental benefits to which he was entitled while employed by CSIS, he piggybacked on his wife’s program that cost him around $57. She works as a nurse for the Ontario government. He also purchased a group term rate of $100,000 for life insurance from the Canadian Automobile Association (CAA) that cost him approximately $1,500. He added the rate doubled when he turned 50. The grievor’s out-of-pocket dental and life insurance costs are shown on Exhibit G-3.

In December 1997, Mr. Matthews began to work as a six-month term employee at Agriculture and Agri-Food Canada in the accounting office as an FI-2 at $49,500. His contract has been extended to March 31, 1999 at $51,000. As a term employee he has reduced benefits, no dental or health plans, but must pay into the superannuation plan.

The grievor identified his legal costs up to the beginning of this hearing, all of which have been paid by him, as Exhibit G-1, total $36,093.17. Mr. Minnis advised me at the end of the hearing that the total would likely reach $45,000.

Mr. Matthews read an impact statement describing how the loss of his job affected him, his family, his friends, his financial situation, and the impact on his future employment. He added that four of his former CSIS colleagues received ERI packages, but he did not. The grievor identified an analysis of his loss of pension benefits, prepared by an actuary, Guy Martel, from the firm Welton, Beauchamps, Parent Inc. (Exhibit G-2).

During cross-examination, Mr. Matthews said when he was laid off in 1989, he could have taken an out placement option with a six-month financial package of pay and benefits in lieu of notice, or worked in another department in a non-audit role. He took the package. At the time, he placed his pension into a self-administered RRSP and

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Decision Page 3 rolled these funds over to the CSIS pension in October 1989. When he left CSIS, Mr. Matthews said he received $7,193.19 in severance pay and $4,258.37 in vacation pay (see Exhibit E-1). He believed the CSIS dental plan covered 90% of expenses when he began work there and 80% when he left, and he paid around $500 annually for CSIS life, disability and dismemberment insurance. He is now covered under his wife’s family plan from her workplace, since as a term employee at Agriculture Canada he is not eligible for certain benefits.

Mr. Matthews believed the CSIS Buffalo Golf Club membership was $100 per year. Eventually he had to abandon two private golf club memberships for him and his wife in the Kanata Lakes Golf Club.

After the termination of his employment, the grievor could only apply to Public Service positions that were open to the public. Now as a term employee he can apply for positions open to employees inside the Public Service. Mr. Matthews said from the 75 applications he sent out, he has had two or three interviews.

During re-examination, the grievor said when he left CCA, he received six months’ salary, sixteen weeks of severance pay, and rolled over approximately $70,000 into a private RRSP. When he joined the CSIS, he bought back his pensionable years of service into the CSIS pension plan. This cost him in the range of $75,000 to $80,000.

He added that while at CSIS, he could bridge the difference between his dental plan and his wife’s plan. He would take advantage of the CSIS Buffalo Golf plan 12 to 15 times per year. He believed the allowable limit was 20 times per year.

Mr. Normand entered Exhibit E-1, pension and benefits calculations for Mr. Matthews prepared on December 11, 1998 by Ms. Ginette Garneau, CSIS Pay Section. Mr. Minnis objected to the unfairness of this exhibit for two reasons: one, this was the first time he had seen it, and two, Mr. Normand had had the grievor’s pension benefits analysis (Exhibit G-2) since June 1998. Before agreeing to Exhibit E-1, Mr. Minnis requested that Mr. Normand agree to the following:

(1) that Ms. Garneau is not an actuary; Public Service Staff Relations Board

Decision Page 4 (2) that the numbers provided deal only with pension amounts on an unreduced and reduced pension basis at a point in time;

(3) that the numbers calculated are according to the superannuation rules as of December 1998.

Mr. Normand agreed. The parties spent the afternoon of the first hearing day trying to reach a settlement in the matter before me. They were unsuccessful.

Mr. Normand also entered a Treasury Board document regarding Central Recording of Downsizing Liability for the Fiscal Year Ended March 31, 1997 dated March 27, 1997 (Exhibit E-2) and a Special Bulletin regarding the End of the ERI Program dated June 10, 1997 (Exhibit E-3).

Mr. Minnis entered a document the grievor received from a Ron Easey, Coordinator, Job Help Resource Centre, Public Service Commission, with questions and answers about the ERI Program (Exhibit G-4). He also confirmed with Mr. Normand the fact that four of the grievor’s former colleagues, Messrs. Gagnon, Klein, Lapointe and Bussière, all took the ERI since 1995.

Mr. Normand agreed that if Mr. Matthews had continued to work at the CSIS, he would have been eligible for the ERI Program if it was offered to him since he had accumulated more than 10 years’ of public service. This was crucial to Mr. Minnis’ argument since it is mentioned in the Martel actuarial report (Exhibit G-2).

Mr. Normand also agreed the grievor was the sole payer for his life insurance premiums while at CSIS, and that if he had continued to work at CSIS, his premiums would have been less than what he paid privately as shown in Exhibit G-3, since CSIS offered a reduced group rate.

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Decision Page 5 Argument for the Grievor Mr. Minnis presented a book of authorities with 23 tabs. Mr. Minnis argued that under subsection 97(4) of the Public Service Staff Relations Act (PSSRA) I have an “open ended power to award any action to the grievor”. Subsection 97(4) reads: (4) Where a decision on any grievance referred to adjudication requires any action by or on the part of the employer, the employer shall take that action.

To substantiate his opinion, Mr. Minnis referred me to Tab 15, the 1970 Board decision in Public Service Alliance of Canada and Canada (Treasury Board) (Engineering and Scientific Support Group – Technical Category) (Board file 166-2-24) on a complaint alleging a failure on the part of the employer to implement a collective agreement within the time specified in section 56 (now section 57) of the PSSRA. In so doing, the Board considered the scope of subsection 96(4) (now subsection 97(4)) of the PSSRA at page 13: ... There is nothing in section 96(4) [now 97(4)] that limits the type of remedial action an adjudicator may prescribe ...

He also referred me to Tab 17, a decision wherein the Supreme Court of Canada considered the scope of an adjudicator’s remedial authority under subsection 61.5(9) of the Canada Labour Code (the Code). In Slaight Communications Inc. v. Davidson [1989] 1 S.C.R. 1038 Lamer J. stated at page 1072: ... Even if I were to admit that the English version should prevail over the French version, which I do not admit, I would still consider that this provision is ambiguous and that the most rational way of interpreting it is to say that the presence of the word “like” in this version does not have the effect of limiting the general power conferred on the adjudicator. This interpretation is in any case much more consistent with the general scheme of the Code, and in particular with the purpose of Division V.7, which is to give non-unionized employees a means of challenging a dismissal they feel to be unjust and at the same time to equip the adjudicator with the powers necessary to remedy the consequences of such a dismissal. Section 61.5 is clearly a remedial provision and must accordingly be given a broad interpretation. ...

[Adjudicator’s note: Subsection 61.5(9) of the Code is now Division XIV, Unjust Dismissal, subsection 242(4)] Public Service Staff Relations Board

Decision Page 6 Mr. Minnis argued that subsection 97(4) of the PSSRA is similar to subsection 242(4) of the Code that gives an adjudicator the power to make a grievor whole again. Subsection 242(4) of the Code reads: (4) Where an adjudicator decides pursuant to subsection (3) that a person has been unjustly dismissed, the adjudicator may, by order, require the employer who dismissed the person to

(a) pay the person compensation not exceeding the amount of money that is equivalent to the remuneration that would, but for the dismissal, have been paid by the employer to the person;

(b) reinstate the person in his employ; and (c) do any other like thing that it is equitable to require the employer to do in order to remedy or counteract any consequence of the dismissal.

Mr. Minnis submitted that as an adjudicator appointed under the PSSRA I have broad powers to make the grievor whole again with a substantial award as is indicated in Tab 20, a decision of an adjudicator appointed under the Code in the matter of George Willberg and Jo-Ann Trucking Ltd., Brooks, Alberta, (1982), that reads in part at pages 22 and 23: . . . The starting point is to recognize the "make whole" philosophy which underpins the section. The section should be applied in order to counteract the mischief at which it was aimed, namely the perceived inadequacies of the measure of damages in a common law wrongful dismissal action. At common law the philosophies underlying the assessment of damages are, first, to put the employee in the same position as if the contract had been performed and, second, the assumption that the employer would have performed his obligations in the manner least disadvantageous to himself. These philosophies are reflected in the fundamental principle that the employee can only recover employment benefits to which he is contractually entitled for the period of the lawful notice to terminate the contract. Consequently, compensation is not awarded for reasonable expectancies not based in the contract, nor for losses which accrue after the notice period, notwithstanding that such losses are attributable to the wrongful dismissal. The common law position is described critically in G. England, "Recent developments in wrongful dismissal laws and some pointers for reform" (1978), 16 Alta. L. Rev. 470, pp. 491-495. In order

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Decision Page 7 to cure that mischief, section 61.5(9)(c) should be applied so as to "make whole" the consequences of the dismissal, i.e. to compensate the employee for the real losses sustained as a result of the unlawful dismissal. This "make whole" philosophy, though sometimes not explicitly acknowledged, clearly underlies the remedial awards of most adjudicators.

. . . Regarding my choice of remedy, Mr. Minnis asked me to review my earlier decision in this matter as to why I found the CSIS responsible for what Mr. Minnis called "bad faith by the employer" when it terminated Mr. Matthews’ employment, particularly since I decided not to reinstate him. He referred me to an Ontario arbitration decision at Tab 18, Re: Tenant Hotline and Peters and Gittens (1983), 10 L.A.C. (3d) 130 at page 139, that reads in part: . . . The point is that the right to continued employment is normally a much more tangible and valuable legal claim under a collective agreement than it ever was under an individual contract of employment, and, as a result, the discharge of an employee (especially one who has performed satisfactorily in the past) is a qualitatively more serious and detrimental event than it would be under the common law. That is why, from the earliest days of labour arbitration, arbitrators routinely directed reinstatement as well as compensation. The "just cause" clause provided employees with the kind of job security they lacked at common law. Today this response is so well entrenched that the British Columbia Labour Relations Board has recently suggested that (except in the most unusual and exceptional of circumstances) it would be inconsistent with the labour law principles embodied in the Labour Code, R.S.B.C. 1979, c. 212, if an employee unjustly discharged were not reinstated.

. . . Counsel reminded me if I had reinstated Mr. Matthews, the grievor could have left CSIS this year after he turned 50 under the ERI Program.

With respect to compensation or damages, Mr. Minnis referred me to four decisions of adjudicators appointed under the PSSRA at Tabs 2, 6, 7 and 14 that awarded compensation ranging from six to 12 months’ pay for employees with ranges

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Decision Page 8 of one to 17 years of service. He considered this a broad range and asked me also to award appropriate compensation to Mr. Matthews.

In making my determination, Mr. Minnis argued I should be guided by the decision of the Supreme Court of Canada in Wallace v. United Grain Growers [1997] 3 S.C.R. 701, Tab 19, and the five principles that are generally applied in the determination of a reasonable notice period referred to on page 737 of the decision as follows: . . . In determining what constitutes reasonable notice of termination, the courts have generally applied the principles articulated by McRuer C.J.H.C. in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), at p. 145:

There can be no catalogue laid down as to what is reasonable notice in particular classes of 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.

Counsel added Mr. Wallace was 59 at the time and had 17 years' experience. Mr. Minnis argued that the bad faith conduct by CSIS in this case is an additional factor for me to weigh, as well as the vulnerability of Mr. Matthews, also referred to in Wallace (supra), pages 741 and 742 that read in part: . . . This power imbalance is not limited to the employment contract itself. Rather, it informs virtually all facets of the employment relationship. In Slaight Communications Inc. v. Davidson, [1989] 1 S.C.R. 1038, Dickson C.J., writing for the majority of the Court, had occasion to comment on the nature of this relationship. At pp. 1051-52 he quoted with approval from P. Davies and M. Freedland, Kahn-Freund’s Labour and the Law (3rd ed. 1983), at p. 18:

[T]he relation between an employer and an isolated employee or worker is typically a relation between a bearer of power and one who is not a bearer of power. In its inception it is an act of submission, in its operation it is a condition of subordination....

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Decision Page 9 This unequal balance of power led the majority of the Court in Slaight Communications, supra, to describe employees as a vulnerable group in society: see p. 1051. The vulnerability of employees is underscored by the level of importance which our society attaches to employment. As Dickson C.J. noted in Reference Re Public Service Employee Relations Act (Alta.), [1987] 1 S.C.R. 313, at p. 368:

Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being.

Thus, for most people, work is one of the defining features of their lives. Accordingly, any change in a person’s employment status is bound to have far-reaching repercussions. In “Aggravated Damages and the Employment Contract”, supra, Schai noted at p. 346 that, “[w]hen this change is involuntary, the extent of our 'personal dislocation' is even greater”.

The point at which the employment relationship ruptures is the time when the employee is most vulnerable and hence, most in need of protection. In recognition of this need, the law ought to encourage conduct that minimizes the damage and dislocation (both economic and personal) that result from dismissal. In Machtinger, supra, it was noted that the manner in which employment can be terminated is equally important to an individual’s identity as the work itself (at p. 1002). By way of expanding upon this statement, I note that the loss of one’s job is always a traumatic event. However, when termination is accompanied by acts of bad faith in the manner of discharge, the results can be especially devastating. In my opinion, to ensure that employees receive adequate protection, employers ought to be held to an obligation of good faith and fair dealing in the manner of dismissal, the breach of which will be compensated for by adding to the length of the notice period.

Counsel said in 1997, the Supreme Court of Canada upheld the 24 months' notice period for Mr. Wallace as a ceiling.

Counsel then referred me to the decision of Wilkins J. of the Ontario Court (General Division) in Kilpatrick v. Peterborough Civic Hospital (1998), 38 O.R. (3d) 298 where the notice period ceiling was extended to 30 months. Mr. Kilpatrick was 53 years old with six years of service at the Peterborough Civic Hospital and had been induced to leave his place of employment to go to Peterborough. Mr. Minnis argued

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Decision Page 10 since Mr. Matthews was almost 48 in 1996, and had close to seven years' service, he should get more notice, especially in light of my bad faith finding on the part of the CSIS.

Mr. Minnis referred back to the five principles in Wallace (supra) as they applied to Mr. Matthews as follows: (1) character of employment: Mr. Matthews is a professional who worked in the audit section; (2) length of service: Mr. Minnis asked me to consider all the years of employment in the Public Service by the grievor, that is, his time spent at CCA from 1973 to 1989, as well as his years at CSIS from October 1989 until April 1996. He noted that the grievor was allowed to buy back his earlier years of pensionable service when he joined CSIS, even though Mr. Matthews experienced a six month period of no employment in the Public Service in 1989; (3) age: Mr. Matthews was almost 48 when his employment status ended at CSIS in April 1996; (4) similar employment: It was a hard job market for the grievor to re-enter in 1995/96 and it took him 1½ years to get work at Agriculture and Agri-Food Canada as a term employee in spite of strong efforts to seek new employment; (5) training and qualifications: Mr. Matthews has a business diploma and part of his Certified General Account (CGA) designation, has lots of experience, and is bilingual.

Mr. Minnis concluded Mr. Matthews should have had seven to 10 months' notice, or 16 to 24 months' notice, depending on my determination of his length of employment in the Public Service. He referred me to Tab 23 as a guide in my determination of notice and argued I should use 22 years of service (16 at CCA and six at CSIS) for Mr. Matthews and award him 16 to 24 months' notice. He argued the cases cited at Tab 23 were all determined before the Supreme Court of Canada decision in Wallace (supra) and before the Kilpatrick (supra) decision.