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Employer can’t treat recalled employees as if they are seasonal employees with no rights

August 19, 2005

Ontario courts overturn arbitration award that made “no sense”

In Teamsters 938 v. Lakeport Beverages, the Ontario Court of Appeal held that Lakeport Beverages was not entitled to recall laid-off employees with seniority and treat them as if they were seasonal employees with no collective agreement rights or benefits.


In 2003, Lakeport Beverages advised the Teamsters Local Union 938 that it intended to recall full-time employees from layoff, assign them to the same jobs they performed prior to their layoff, but classify them as seasonal employees and pay them at a significantly lower wage rate. The union grieved.

Arbitrator Barry Stephens decided that the employer could proceed with its plan. The effect of the decision was to strip the seniority employees who agreed to be recalled to the seasonal positions from virtually all of the rights and benefits of the collective agreement, not just their right to a particular wage rate. This was because the parties’ collective agreement provided that “the provisions of the Collective Agreement which apply to seasonal employees are wages and payment of Union dues”, but that “Seasonal employees … have no claim to the benefits, etc. available to seniority employees”.

Although the arbitrator indicated that he would be willing to entertain further submissions as to how these employees “would be treated with respect to seniority, benefits, or other terms of employment aside from wages”, his decision therefore effectively converted seniority employees into seasonal employees. Indeed, following the decision, the employer refused to accept grievances filed on behalf of these employees on the basis that “seasonal employees” had no right of access to the grievance and arbitration provisions of the collective agreement.

The arbitrator’s decision was based largely on his interpretation of one part of Article 20 of the collective agreement, which included “seasonal employees” in a chart of “wages and classifications”. The arbitrator held that employees had no right to be recalled to a particular classification, and that “seasonal employee” was a classification just like any other under the agreement. The union applied for judicial review.

The Divisional Court’s decision

The Divisional Court quashed the award. It held that the arbitrator’s interpretation of the collective agreement, which had the effect of “converting seniority employees into seasonal employees”, was “clearly irrational” and could not have been the intent of the collective agreement. The Court held that “seasonal employees” clearly could not be considered a classification any more than “probationary employees” (which was also included in the list) could be considered a classification. Rather, the Court held, it described an employment status.

The Court of Appeal’s decision

Lakeport appealed, but the Court of Appeal dismissed the appeal. It held that the arbitrator’s decision was patently unreasonable and led to absurd consequences.

Considering the standard of review, the Court of Appeal affirmed that Ontario courts must show great deference to an arbitrator’s interpretation of a collective agreement. It distinguished a recent Supreme Court of Canada case which applied a lower standard of review on the basis that it dealt with an Alberta labour statute that contained different language than Ontario’s Labour Relations Act, 1995.

Turning to the merits, the Court disagreed with Lakeport’s contention that “seasonal employee” was a classification under the agreement. The inclusion of “seasonal employees” in the chart of wages and classifications in article 20.01 gave a “superficial plausibility” to this position, the Court said, but the chart could not be considered in isolation. Rather, the chart must be interpreted in light of article 20 in its entirety, and in light of the collective agreement as a whole. It was obvious from the rest of article 20 that “seasonal employee” was an employment status and not a classification, and therefore seniority employees could not be recalled as seasonal employees. In holding otherwise, the arbitrator essentially rewrote the collective agreement, drew conclusions that made “no sense”, and ignored both the other provisions of article 20 and other articles of the collective agreement.

The Court also held that, although the arbitrator referred to the importance of seniority, he did no more than “pay lip service to it”. Seniority, the Court held, is vital to employees and a cornerstone of the collective agreement. Seniority rights cannot be affected without clear and explicit language in the collective agreement, something which was lacking here. Lakeport had no right to rely on its general management rights to deprive seniority employees of rights they had already attained. Finally, the Court also held that Lakeport did not have the right to hire seasonal employees when seniority employees are on layoff.

The Court of Appeal therefore dismissed the appeal and ordered Lakeport to pay the union’s costs of the litigation.

Read the decision.


Howard Goldblatt

Practice Areas

Administrative Law, Appeals & Judicial Review, Labour Law