Administrative Law and Labour Law

Teamsters 938 v. Lakeport Beverages

On August 19, 2005, the Ontario Court of Appeal dismissed an appeal by Lakeport Beverages in which it claimed an entitlement to recall laid-off employees and treat them as seasonal employees with no collective agreement rights or benefits.

Teamsters Local 938 brought an application for judicial review after arbitrator Barry Stephens decided that Lakeport Beverages could recall full-time employees from layoff, assign them to jobs identical to those they performed prior to their layoff but to classify them as seasonal employees and pay them at a significantly lower rate. 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 effectively converted seniority employees into seasonal employees.

In this respect, the collective agreement explicitly provided that "Seasonal employees ... have no claim to the benefits, etc. available to seniority employees". The collective agreement also provided that "the provisions of the Collective Agreement which apply to seasonal employees are wages and payment of Union dues". Consequently, the effect of the decision was to strip the seniority employees who agreed to be recalled to the seasonal positions from any of the rights and benefits of the collective agreement. Indeed, following the arbitrator's 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.

On judicial review, the Divisional Court quashed the award, holding 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, it described an employment status.

Lakeport Beverages appealed the Divisional Court's decision. The Court of Appeal dismissed the appeal, holding that the arbitrator's decision was patently unreasonable and led to absurd consequences.

Considering the standard of review, the Court of Appeal affirmed that, despite recent Supreme Court of Canada jurisprudence holding that an arbitrator's interpretation of a collective agreement is reviewable on a standard of reasonableness simpliciter, Ontario courts must show great deference such decisions, reviewing them only against the standard of patent unreasonableness. The Court distinguished the Supreme Court's jurisprudence on the basis that the Alberta labour statute considered by the Supreme Court contained different language than Ontario's Labour Relations Act, 1995.

On 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, the Court concluded, that "seasonal employee" was an employment status and not a classification and that 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.

Teamsters Local 938 was represented by Howard Goldblatt

Click here to read the Court of Appeal's decision