Do employers have to take an "open book" approach with their employees? Are employers in breach of the good faith requirement if they fail to share information that could influence employees' future decisions? On Feb. 20, 2023, the Quebec Superior Court issued its ruling in the case of Siemens Canada limitée v. Lévesque [1] to provide answers to these questions.
In the Superior Court's ruling, the Honourable Justice Claude Villeneuve, S.C.J., allowed an application for judicial review filed by Siemens Canada Ltd. (Siemens), which was contesting a decision by the grievance arbitrator, Éric Lévesque, who had allowed the grievance filed by a complainant requesting that her own resignation be rescinded. The arbitrator had concluded that under the good faith requirement, Siemens was obligated to inform the complainant that by resigning at that time, she was depriving herself of the benefits of an early retirement program that would be put in place in the near future.[2] Justice Villeneuve overturned the arbitrator's decision, deeming it unreasonable in several respects.
Background
The production employees at Siemens' plant in Drummondville are represented by the union Unifor, Local 244 (Unifor). Their working conditions are governed by a collective agreement between Unifor and Siemens.
Siemens put in place an early retirement program (Program), which was not contemplated in the collective agreement between the parties.
Under the program, employees may receive a premium of up to $50,000 if they take early retirement. The program was made available to Drummondville plant employees by order of seniority. Siemens earmarked a $1 million budget for the program, under which the number of beneficiaries was limited to around 20.
According to one of the program eligibility conditions imposed by Siemens, beneficiaries had to be active employees who had not already submitted or scheduled their departure date (retirement or otherwise). Therefore, employees who had handed in their resignations prior to the program's effective date were deemed ineligible.
Two "excluded" female employees had handed in their resignations shortly before the program was put in place: in one case, over a month before and in the other case, just a few days before. If they had not resigned, both employees would have had the required level of seniority for eligibility and would have received payments under the program.
Unifor filed two grievances on the employees' behalf contesting Siemens' decision to accept their resignations. The grievances alleged that when Siemens accepted the complainants' resignations, it knew the program would be available in the near future. The remedy sought by the union was to rescind the complainants' resignations so they would be eligible for the program and receive $50,000. Unifor and Siemens referred the matter to the grievance arbitrator, Éric Lévesque.
Arbitration decision
The arbitrator indicated that the matter to be decided was whether Siemens had breached its good faith requirement — and its duty to inform — by not telling the complainants at the time they submitted their resignations that they were depriving themselves of the benefits of the soon-to-be-established program.
The arbitrator rejected the grievance filed by the employee who had submitted her resignation over a month before the cut-off date, primarily because he found that the evidence did not prove that Siemens knew at that time that it would be making the program available to its employees. Under those circumstances, the arbitrator found that Siemens was not in breach of its duty to inform.
The arbitrator, however, did allow the grievance of the second employee, who had resigned just a few days before the program was put in place. The arbitrator found that when the employee resigned, Siemens knew she was depriving herself of the program's benefits by resigning on that date. According to the arbitrator, by failing to advise the employee of the program's existence, Siemens was in breach of its duty to inform since this knowledge might have prompted the employee to postpone her resignation.
The arbitrator recognized that Siemens was not in breach of its good faith requirement when it imposed the eligibility condition stipulating that employees must not have already announced their departure date. According to the arbitrator, the program was designed to reduce the impacts associated with closing the plant's circuit-breaker department by encouraging employees to take early retirement, thus saving Siemens from having to lay them off. In light of this objective, the eligibility condition imposed by Siemens was legitimate, according to the arbitrator. In the arbitrator's view, extending program eligibility to employees who had already announced their departure dates would not have achieved the objective of reducing the number of layoffs.
Superior Court ruling
Referring to the Supreme Court of Canada's judgment in the case of Canada (Minister of Citizenship and Immigration) v. Vavilov,[3] the Superior Court ruled that the grievance arbitrator's decision was unreasonable on the grounds that he did not take into account the legal constraints to which he was subject.
The Superior Court initially focused on the legal constraints applicable in the context of collective labour relations. According to the Superior Court, the arbitrator failed to take into account the fact that Unifor, as a certified association, had an exclusive mandate to represent Siemens' production employees. This exclusive status prevented Siemens from dealing with these employees directly:
"[71] However, by deciding that Siemens was required to inform the complainant […] of the imminent Program so she could postpone her resignation by gaining access to secret and privileged information, the Arbitrator completely failed to take into account the fact that direct negotiations between an employer and an employee concerning working conditions constitute a breach of the [Collective] Agreement, potentially giving rise to a union grievance."
In addition, Justice Villeneuve found that the arbitrator had imposed an obligation on Siemens to inform the employee of an upcoming mass layoff, even though this obligation was not set out in either the Act respecting labour standards[4] or the collective agreement:
"[78] Therefore, in the context of collective labour relations, Siemens was absolutely not required to reveal in advance to the employee the mass layoff scheduled to be announced on February 1, 2017. Nor could Siemens hold discussions with [the employee] with a view to encouraging her to postpone her resignation so she could benefit from the Program, which was designed to encourage employees to quit their jobs. On the contrary, it was with Unifor, and not with the employee, that Siemens' management was required to discuss the Program that was going to be made available to the employees concerned.
[79] The Arbitrator thus imposed requirements on Siemens that simply do not exist under the law in a context of collective labour relations."
The Superior Court then examined how the arbitrator had applied the good faith requirement. Citing the Supreme Court's judgment in the case of Churchill Falls (Labrador) Corp. v. Hydro-Québec,[5] Justice Villeneuve stated:
"(…) the good faith requirement must be able to co-exist with one party seeking to 'look after its own interests'. These interests may vary depending on the context of the contractual relationship."[6]
Since the program was designed to reduce the impacts of closing a department — an objective deemed legitimate by the arbitrator — the Superior Court indicated that "Siemens' looking after its own interests" was part and parcel of accepting resignations submitted before the program was announced. In other words, under the circumstances, Siemens' acceptance of the employee's resignation could not be regarded as an indicator of bad faith.
Moreover, the Superior Court held that nothing in the case demonstrated that the employee in question had not submitted her resignation freely and voluntarily; the validity of her resignation was not contingent on a positive duty to inform by Siemens.
The Superior Court offered the following comment by way of conclusion:
"[97] One can certainly be sympathetic to the cause of [the employee in question], who decided to resign just a few days before the Program was announced. Sympathy, however, is a very poor guide when it comes to administering justice." [References omitted]
Conclusion
The Superior Court carried out a major reframing of the good faith requirement and the duty to inform when these notions are referred to in a dispute arising from a collective agreement. On the one hand, the notion of good faith must be carefully applied; on the other hand, it must co-exist with one party looking out for its own interests.
All in all, the Superior Court delivered a clear message: the notion of good faith is not unlimited in scope and cannot be used to justify a decision that is in fact based exclusively on sympathy towards the complainant.
For further information concerning the repercussions of this ruling, please contact a member of Gowling WLG's Employment, Labour and Equalities team.
Original French article by Luc Deshaies and Frédéric Bolduc.
[1] 2023 QCCS 483. This case has not yet been officially translated into English. The translated excerpts in this article are unofficial.
[2] Unifor c. Siemens Canada Ltée, 2021 CanLII 141123 (QC SAT) (available in French only).