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September 9, 2010
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September 9, 2010 |
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Issue No. 36 |
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— CONTENT — |
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COLLEGE WAS NOT OBLIGED TO CONSIDER EMPLOYEE'S BEST INTERESTS IN TIMING TERMINATION OF EMPLOYMENT, ARBITRATION BOARD HOLDS A college did not act unreasonably in timing an instructor's dismissal for economic reasons in such a way that his length of service fell just short of what was needed for his pension to vest, an REMOVAL OF SOME OF SENIOR UNIVERSITY OFFICIAL'S RESPONSIBILITIES WAS NOT CONSTRUCTIVE DISMISSAL, JUDGE FINDS A university did not constructively dismiss its provost when the president decided to personally take over the responsibility for enrollment which had been one of her duties, a |
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— DETAILED REPORTS — |
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COLLEGE WAS NOT OBLIGED TO CONSIDER EMPLOYEE'S BEST INTERESTS IN TIMING TERMINATION OF EMPLOYMENT, ARBITRATION BOARD HOLDS The Facts: Hired by SAIT Polytechnic, previously known as the Southern Alberta Institute of Technology, as a welding instructor in the School of Manufacturing and Automation effective August 1, 2007, Peter Vuksanovich would have been eligible to have his pension vest on the second anniversary of his hiring, namely on August 1, 2009. However, in late 2007, the Alberta economy began deteriorating as a result of the global economic downturn. This meant that employers had fewer apprenticeship openings for welders, which in turn caused reduced enrollment of welding students and fewer instructional hours for the Welding Department. The number of students fell from 1,372 in 2007/08 to 672 in 2009/10 and instructional hours dropped from 21,000 to 12,000 over this same period. This was accompanied by significant reductions in the funding that the department received from the Alberta government. With SAIT's budget year running from July 1 to June 30, the dean of the School of Manufacturing and Automation determined by early March that these changes in enrollment and funding required staff reductions and that five welding instructors would have to be dismissed in time for the 2009/10 academic year. Article 16.01 of the collective agreement, dealing with "Position Abolishment," provided that "[t]he employer shall give a permanent academic staff member three (3) months working notice or pay in lieu of notice that the academic staff member's position is to be abolished effective immediately. In addition to such working notice or pay in lieu, the academic staff member shall receive severance pay in the amount of one (1) month pay for each full year of service to a maximum of twelve (12) months." At the time Vuksanovich's position was abolished, he was teaching a three-module course that began on April 6 and was to end on June 26, 2009. The dean decided to abolish all five positions that were to be cut, including Vuksanovich's, effective April 22, 2009. The dean chose this date for a number of reasons: he wanted to terminate the positions before the end of the fiscal year, so that all the severance costs would be incurred in that year and not in the next; he preferred to abolish all the positions on the same day rather than have the process drag out; he believed that carrying out the dismissals in April rather than June would give the instructors more time to find new employment; and he wanted to do it at a time when all the other instructors were still around and not beginning to scatter for the summer, in order to maintain morale by being able to assure them that no further round of cuts was coming. The consequences for Vuksanovich's pension eligibility were not a factor that the dean took into consideration in deciding on the timing of the dismissal or in opting to give him pay in lieu of notice rather than working notice. Upon termination of his employment, Vuksanovich received three months' pay in lieu of notice as well as severance pay and vacation pay, amounting to a total payout of more than $30,000 before taxes and other statutory deductions. He was also offered outplacement services. After Vuksanovich's position and those of the four other instructors were abolished, the department hired two contract instructors, and paid one of them $17,000 to teach for the approximately nine weeks remaining in his course and the other the same amount to do likewise in place of another dismissed instructor. Although allowing Vuksanovich to remain employed long enough to have his pension vest would have saved $17,000 and although the department had used working notice on some occasions in the past, the dean's view was that these decisions had to be made on a case-by-case basis and in this instance the advantages of the April dismissals outweighed the cost savings of the alternative approach. Vuksanovich grieved the timing of his dismissal. The Arguments: Before the arbitration board, the union did not challenge the need to eliminate the five positions or the process by which Vuksanovich was chosen to be one of the employees dismissed. It argued, however, that the employer had to be reasonable in the exercise of its discretion to dismiss employees pursuant to Article 16.0 of the collective agreement, and that it had acted unreasonably in focusing solely on its own interests to the exclusion of Vuksanovich's interests. It submitted that had his position been abolished after August 1, his pension would have vested and he would have been entitled to certain other benefits including recall rights, while the employer would actually have saved money. Maintaining as well that the employer had not presented any evidence that a later termination date would actually have presented any serious problems that were avoided by the April timing, the union asked that the employer's action be declared unreasonable and that the parties be given an opportunity to fashion a remedy for Vuksanovich's loss of pension rights and other benefits. The employer replied that its action was both reasonable and consistent with its contract rights, as there was nothing in the collective agreement that required management to allow Vuksanovich to work during the notice period so as to vest his pension and gain other entitlements. It argued that Article 16.01 expressly left the decision of paid notice versus working notice to management and the right to allocate and distribute work was a fundamental management right under the collective agreement. Moreover, the college emphasized that, even if Vuksanovich had been permitted to work until the end of the course, his position would have been abolished around the end of June, still leaving him short of the two years' service as of August 1 that was needed to vest pension and other rights. Vacation time would not have bridged the gap, since lump sum payouts did not count toward pension accrual. The Decision: Finding that "management did meet a test of reasonableness when it abolished [Vuksanovich's] position," the arbitration board dismissed the grievance. In the majority decision of a three-member board, Arbitrator Allen Ponak held that "[t]he evidence established that [the dean] put his mind to the advantages and disadvantages of the alternative sets of dates and, after weighing the various factors, chose the April dates. He was able to articulate the reasons why he considered April preferable to June. His explanation and rationale for the decision were intelligible and understandable. The Board concludes that the decision to carry out the position abolishments in April rather than June meets a test of reasonableness." Arbitrator Ponak acknowledged that "the Board is aware that the dean gave no consideration to [Vuksanovich's] eligibility for pension vesting or entitlement to recall and other contractual benefits. Such rights become available after two years of service. Had the dean waited until the end of June to give [him] his three months' notice of position abolishment, [Vuksanovich] would have obtained the two years of service needed to vest his pension." However, Ponak found that "[t]here is nothing in the collective agreement that specifies such consideration be given. Employee turnover, both voluntary and involuntary, is a fact of organizational life. Had the parties wished that special attention be given in position abolishment decisions to the proximity of employees to two years of service, or other important contractual milestones, they could have done so by restricting management's discretion in that regard. There is no such restrictive language. Instead, management is given the discretion to weight factors it deems appropriate in determining how and when to abolish positions, subject only to the caveat that its decisions be reasonable." He held that "the Board accepts that the dean, the key decision maker, was driven primarily by operational factors and the needs of continuing faculty, consideration which legitimately merit high priority. At the same time, the evidence showed that [he] was not oblivious to the interests of departing faculty.... It is also useful to bear in mind that, at the time the abolishments were being planned, [Vuksanovich] was ... still four months short of two years of service. In these circumstances, the fact that the dean did not explicitly consider whether [Vuksanovich] was close to obtaining two years of service cannot be seen as an oversight that would render the choice of abolishment date unreasonable." Noting that "the dean had the discretion to allow [Vuksanovich] to continue working for up to three months after April 22nd, the chosen position abolishment date, pay [him] three months salary without requiring any further work, or provide a combination of notice and pay in lieu of notice," Ponak stated that "considering that even had [Vuksanovich] been allowed to work during the notice period he would still have less than two years of service, the Board does not find the decision to provide [him] pay in lieu of notice unreasonable." In the result, Arbitrator Ponak concluded that "the Board finds no violation of the collective agreement" and dismissed the grievance. Comment: The outcome of this case turned, ultimately, on a determination by the majority of the arbitration that, as long as the employer acted in accordance with the provisions of the collective agreement, as it had in this case, it was under no obligation to do what would be best for the affected employee. Reasonableness in such circumstances required only that the employer base its decision on a coherent rationale and that there be no evidence of bad faith in the way in which it chose to proceed. Case Name: SAIT Academic Faculty Association v. SAIT Polytechnic |
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REMOVAL OF SOME OF SENIOR UNIVERSITY OFFICIAL'S RESPONSIBILITIES WAS NOT CONSTRUCTIVE DISMISSAL, JUDGE FINDS The Facts: After being hired in 1988 by Acadia University in Wolfville, Nova Scotia as assistant director of admissions and student aid, Paula MacKinnon became deputy registrar in 1995 and in July 1997 was appointed provost of the university, a senior management position reporting directly to the president. MacKinnon had no formal written contract that specified her duties as provost, but in practice her sphere of responsibility included everything except academics, finance and the development and maintenance of the physical facilities. She assumed oversight for liaison; recruitment; admissions; international students; student judicial processes; residence and student life; the medical centre; counselling services; student aid, scholarships and bursaries; athletics; and special projects. A new president of the university, Dr. Gail Dinter-Gottlieb, took office in September 2003, and made two changes that reduced MacKinnon's portfolio, transferring her responsibilities for public relations and alumni affairs elsewhere over her objections, but the two nevertheless enjoyed a friendly and close working relationship. In August 2004, MacKinnon's title changed to vice-president student affairs on Gottlieb's initiative, but her position remained the same. During the first part of MacKinnon's tenure in the job, enrollment at Acadia grew because of the growing number of university-age students and the cancellation of Grade 13 in Ontario in 2003 which created a double cohort. During the period of growth, the university built two new residences and renovated two residences. Recruitment and enrollment were not pressing or difficult issues. Beginning in 2004, however, enrollment declined precipitously as a result of both demographic changes and increased competition for students, and at least one of Acadia's residences was without any residents. By the fall of 2006, enrollment was in crisis and the university's Board of Governors was putting pressure on the president to show some improved results in that regard. In December 2006, MacKinnon presented a new student recruitment strategy to the Board, which approved her recommendation for a doubling of the recruitment budget to more than $1 million but expressed impatience and great concern about declining enrollment and its effect on the operating budget. After MacKinnon made a presentation to the Board in January 2007 on her recruitment projections, its members expressed great dissatisfaction to Gottlieb about the projections and at least one governor said that MacKinnon should be fired. Gottlieb told MacKinnon about this, but emphasized that she supported her and intended to protect her. On May 13, 2007, Gottlieb had another difficult meeting with the Board, in which some of the members suggested that if better answers regarded the enrollment crisis were not forthcoming, not only MacKinnon's job but also Gottlieb's would be in jeopardy. On May 24, 2007, Gottlieb called MacKinnon to her office and told her that she had decided to take over responsibility personally for enrollment and admissions. She explained that she was doing this to protect MacKinnon as well as her own job in the face of growing pressure from the Board, and also to free up MacKinnon to focus on other important issues in the athletic department and student affairs. There was no mention of changes to MacKinnon's title, salary or other responsibilities. MacKinnon promptly consulted a lawyer, took the view that the removal of her responsibilities for enrollment constituted constructive dismissal, and sued Acadia University in Nova Scotia Supreme Court for damages in lieu of notice. The Arguments: Before the Court, MacKinnon argued that responsibility for enrollment and admissions was a core part of her job as provost/vice-president, and that its removal from her portfolio without her consent constituted a fundamental breach of her employment contract. She maintained that this area of responsibility had accounted for 40 to 50 percent of her time and energy, and that being unilaterally stripped of it was such a humiliation and loss of face that it effectively ended her employment. The university replied that MacKinnon had a wide range of duties and responsibilities, within which enrollment and admissions accounted for no more than some 20 percent. It submitted that she had no rigidly defined job description, and activities changed as assigned depending on changing circumstances. Therefore, the university argued, there had been no change to, or violation of, her employment contract. The Decision: Ruling that "I reject the submission that it was an implied term of Ms. MacKinnon's contract that there would be no change in her portfolio without prior consultation or her consent," Nova Scotia Supreme Court Judge Gregory Warner found that she had not been constructively dismissed. Justice Warner determined on the evidence that, "absent express restriction in a written employment contract, the portfolio of a senior university administrator may be expected to change to meet changing circumstances and priorities within the university. I further conclude that in the ten years that Ms. MacKinnon held the position of Provost (retitled Vice-President Student Affairs) universities, and particularly Acadia University, experienced dramatic changes – changes in demographics, changes in what and how universities teach, changes in the role of Governments (reduced substantially [in] proportion to operating costs), in the change in the competitive landscape for post-secondary education, consequently changes in the vision of what a university is and how it will operate. This matrix leads inevitably to the creation of new spheres of responsibility, the deletion of others, and the reallocation of others. It was unreasonable for the Plaintiff to assume she had ownership of any of her spheres of oversight." That being the case, Warner found that "the time and energy that [MacKinnon] expended on any one part of her portfolio, whether it was of a continuing or ad hoc nature, was not static or constant. It fluctuated with problems and priorities on a regular basis, some seasonal, some on a frequent but unpredictable basis. To describe, in her case, individual parts of her portfolio of responsibilities as 'core' is inappropriate.... The fact that many of the departments in her basket of responsibilities were important, or even very important, to the overall success of the university does not make each of them 'core' to her employment contract. The core of Ms. MacKinnon's job was her oversight of student life outside the classroom, and overall direction of the university through the President." The judge also considered that "[t]he decision of Dr. Gottlieb to take personal responsibility for [enrollment] should not, looking at it from the point of view of a reasonable position with the knowledge that Ms. MacKinnon possessed, have caused her humiliation. Any 'loss of face' would have been temporary, at worst." Justice Warner concluded that, "[w]hile I find that the removal of enrollment and admissions from [MacKinnon's] portfolio was a change in her job, it was not a fundamental change to an essential term of her employment contract. It was implicit in her job that responsibilities would be subject to changes – additions and deletions. [She] was not demoted." Observing that "[n]ot every reversal, in life or at work, justifies walking away," he dismissed the wrongful dismissal action. Comment: The Supreme Court of Canada defined the concept of constructive dismissal in Farber v. Royal Trust Co., [1997] 1 S.C.R. 846, holding that "[w]here an employer decides unilaterally to make substantial changes to the essential terms of an employee's contract of employment and the employee does not agree to the changes and leaves his or her job, the employee has not resigned, but has been dismissed.... [T]he court must therefore determine whether the unilateral changes imposed by the employer substantially altered the essential terms of the employee's contract of employment. For this purpose, the judge must ask whether, at the time the offer was made, a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed." The outcome of the present case turned on the judge's determination, based on the evidence, that the employee's duties and responsibilities were not firmly fixed but rather constituted a "basket" of activities that the employer could add or subtract as required by the changing circumstances. In this case, given the circumstances, the removal of one of those responsibilities, however important the employee considered it to be, was not considered to be a unilateral "substantial change to the essential terms" of her employment contract amounting to constructive dismissal. It must be emphasized, however, that this conclusion was very much a fact-driven determination and the outcome in another case might well, depending on the circumstances, be different. Case Name: MacKinnon v. |
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