Last chance agreements are a tool commonly used by workplace parties in Canada to give an employee accused of serious or repeated misconduct one last chance to keep his or her job. These agreements are sometimes used to manage an employee’s absenteeism, poor job performance, or drug or alcohol addiction. They may also be used to manage more serious employee misconduct such as insubordination, fighting, or harassment in the workplace.
In a last chance agreement, the workplace parties agree that the employee will be reinstated to his or her job provided that the employee complies with specific conditions. If the employee later violates these conditions (by, for example, repeating the misconduct or engaging in other misconduct), the consequence is typically the employee’s immediate dismissal.
Given the serious consequences of violating a last chance agreement, it is no surprise that employee dismissals for violations of these agreements are frequently the subject of arbitration. A key issue for employers, therefore, is whether an arbitrator will abide by a clause in a last chance agreement denying the arbitrator the ability to alter the penalty set out in the agreement.
A recent arbitration decision in Quebec confirms an ongoing trend in the province whereby arbitrators are respecting such clauses: Conseil Canadien des Teamsters, Section Locale 931 v Universal Parcel Service du Canada Ltée, 2014 CanLII 2445 (QC SAT).
Facts
In this case, the employer dismissed the employee on October 13, 2011, for demonstrating a lack of respect and professionalism at work. Specifically, the employee called his supervisor a “piece of sh_t” in front of other employees. The union filed a grievance in relation to the dismissal, and negotiations between the union and the employer ensued.
On January 2, 2012, the parties entered into a last chance agreement that reinstated the employee on the condition that he behave civilly at work. The agreement also provided that if the employee failed to adhere to the condition, he would be dismissed and that any arbitrator adjudicating the dismissal would be unauthorized to alter this penalty.
Between January and June 2012, the employee continued to behave inappropriately and swear in the workplace. On June 19, 2012, during a meeting to discuss the employee’s workplace behavior, the employee created a scene and began using foul language. The employer concluded that the employee had breached the last chance agreement and dismissed him.
At arbitration, the arbitrator decided that the employee had committed further misconduct that was specifically contemplated by the last chance agreement. As such, his conduct triggered the consequence set out in the agreement—immediate dismissal.
The arbitrator also considered the clause in the agreement denying the arbitrator the ability to amend or substitute a penalty in place of the dismissal and decided that he was bound by the clause. As a result, the arbitrator declined to analyze the appropriateness of the penalty imposed by the employer and simply upheld the dismissal.
Predominant trend
This decision is representative of the predominant trend in Quebec arbitration decisions whereby arbitrators have agreed that last chance agreements can limit an arbitrator’s decision-making powers. This is also the trend that arbitrators in the rest of Canada follow, at least in cases involving employee misconduct. In cases involving drug or alcohol addiction, however, arbitrators may not necessarily enforce a last chance agreement in the first instance.
Recommendations
Even though many arbitrators enforce last chance agreements, Canadian employers should nonetheless take care when drafting them. Here are a few recommendations:
- Carefully consider the conditions of reinstatement and the penalty to be imposed at the time of drafting the last chance agreement;
- Always examine each case individually and avoid using a “one size fits all” approach to preparing these agreements;
- Consider setting out the employee’s prior misconduct and disciplinary history in the agreement to support the reasonableness of the conditions of reinstatement and the penalty chosen;
- Always include a clause limiting the arbitrator’s authority;
- Consider agreeing with the union in advance as to which arbitrator(s) will preside over any grievance arising out of the agreement and then set out the names of the arbitrator(s) in the agreement; and
- When faced with an apparent breach of the agreement, avoid a “knee-jerk” reaction to trivial misconduct—carefully assess whether the employee’s actions fall within the scope of the last chance agreement and whether the penalty is appropriate in the circumstances.
