Estopped in the Name of Benefits: Past Practice Prohibits Dismissal of Employees on Long-Term Disability
March 5, 2024
Article by:
Taylor Topliss
Previously printed in the LexisNexis Labour Notes Newsletter.
In the unionized workplace, an employer may dismiss an employee for non-culpable absenteeism (also known as “innocent absenteeism” or “non-culpable cause”) where the circumstances and medical information confirm that there is no reasonable likelihood the employee will return to work for the foreseeable future.
However, as discussed in the recent arbitration decision of Trigon Pacific Terminals Ltd. v. International Longshore and Warehouse Union Canada, Local 523, 2023 CanLII 111663 (Coleman), an employer may be prohibited from dismissing an employee for non-culpable absenteeism due to language in the collective agreement or past practice between the employer and the union.
Background
In Trigon, four employees on long-term disability (LTD) were dismissed for non-culpable absenteeism. Both the employer and the union agreed that there was no reasonable likelihood the employees would return to work.
The employees’ LTD benefits were not impacted by their dismissal from employment. However, their employer-paid health and welfare benefits (the “Benefits”) were impacted and came to an end.
The union filed a grievance on behalf of the employees to reinstate their employment and the Benefits.
Issue
The main issue in Trigon was whether the collective agreement or past practice prohibited the employer from dismissing employees who were on LTD.
Analysis
Collective agreement
Arbitrator Rick Coleman held that the collective agreement did not clearly express an intent to subvert the employer’s right to dismiss employees where there was no reasonable likelihood of a return to work. The language in the contract indicated the intention of the parties to continue the Benefits for regular employees “customarily scheduled” even when they were absent on some kind of leave, but not to extend coverage where there was no reasonable likelihood the employees would return to work.
Estoppel
Estoppel may arise where:
(a) whether intentionally or not, the first party has unequivocally represented that it will not rely on its legal rights;
(b) the second party has relied on the representation; and
(c) if the first party were allowed to change its position, the second party would suffer real harm or detriment.
In Trigon, the agreed statement of facts before the arbitrator confirmed that since 2001, the employer had not formally requested medical updates from employees who were in receipt of LTD benefits and had not terminated the employment of any employee who was receiving LTD benefits for a period of greater than 24 months.
Turning to the first part of the estoppel test, the arbitrator found the evidence was “sufficient to establish that there was in fact a significant, unequivocal and uniform past practice of not terminating the employment of individuals on LTD no matter the length of absence”. He confirmed the past practice was related to the Benefits in the collective agreement and not a management right which the employer could unilaterally alter.
Arbitrator Coleman rejected the employer’s argument that it only became “meaningfully aware” of the past practice when it became the successor employer and was not bound by the past practice of the predecessor employer. Successor employers are “obliged to accept the collective agreement and any inherent obligations arising thereunder, lock, stock and barrel”. Further, the evidence showed the employer did indeed know about the past practice for at least one of the employees and, in any event, should have known through proper due diligence of its obligations and liabilities as the successor employer.
Under the second and third parts of the estoppel test, the arbitrator found there was detrimental reliance in that the union would have taken up the matter in bargaining had it known that the employer intended to change the practice.
In summary, Arbitrator Coleman found there was an unequivocal representation upon which the Union relied to its detriment. The employer was estopped from changing its practice of retaining LTD recipients as employees so as to allow access to the Benefits until the union had an opportunity to negotiate in the next round of bargaining.
Remedies
The employment of the employees was reinstated retroactively to the date they were dismissed and they were to be made whole and compensated for expenses incurred due to the termination of their employment. The arbitrator added that their “status [was] to remain until the next round of collective agreement negotiations [was] completed, which [would] determine their status from that point”.
Takeaways
- Employers may dismiss an employee for non-culpable absenteeism where the employee is unlikely to return to work in the foreseeable future. This is subject to language in the collective agreement or past practice between the parties.
- Successor employers are bound by the pre-existing collective agreement and the past practice between the predecessor employer and the union.
- Successor employers should conduct due diligence to discover obligations and liabilities which actually or potentially arise out of assuming a collective agreement and employees.
- An employer must inform the union of its intention to change a past practice related to collective agreement terms in order to give the union the opportunity to negotiate the matter.
- Dismissing employees who are in receipt of LTD benefits raises a number of legal considerations and should be done with the assistance of capable legal counsel.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.
March 5, 2024
Previously printed in the LexisNexis Labour Notes Newsletter.
In the unionized workplace, an employer may dismiss an employee for non-culpable absenteeism (also known as “innocent absenteeism” or “non-culpable cause”) where the circumstances and medical information confirm that there is no reasonable likelihood the employee will return to work for the foreseeable future.
However, as discussed in the recent arbitration decision of Trigon Pacific Terminals Ltd. v. International Longshore and Warehouse Union Canada, Local 523, 2023 CanLII 111663 (Coleman), an employer may be prohibited from dismissing an employee for non-culpable absenteeism due to language in the collective agreement or past practice between the employer and the union.
Background
In Trigon, four employees on long-term disability (LTD) were dismissed for non-culpable absenteeism. Both the employer and the union agreed that there was no reasonable likelihood the employees would return to work.
The employees’ LTD benefits were not impacted by their dismissal from employment. However, their employer-paid health and welfare benefits (the “Benefits”) were impacted and came to an end.
The union filed a grievance on behalf of the employees to reinstate their employment and the Benefits.
Issue
The main issue in Trigon was whether the collective agreement or past practice prohibited the employer from dismissing employees who were on LTD.
Analysis
Collective agreement
Arbitrator Rick Coleman held that the collective agreement did not clearly express an intent to subvert the employer’s right to dismiss employees where there was no reasonable likelihood of a return to work. The language in the contract indicated the intention of the parties to continue the Benefits for regular employees “customarily scheduled” even when they were absent on some kind of leave, but not to extend coverage where there was no reasonable likelihood the employees would return to work.
Estoppel
Estoppel may arise where:
(a) whether intentionally or not, the first party has unequivocally represented that it will not rely on its legal rights;
(b) the second party has relied on the representation; and
(c) if the first party were allowed to change its position, the second party would suffer real harm or detriment.
In Trigon, the agreed statement of facts before the arbitrator confirmed that since 2001, the employer had not formally requested medical updates from employees who were in receipt of LTD benefits and had not terminated the employment of any employee who was receiving LTD benefits for a period of greater than 24 months.
Turning to the first part of the estoppel test, the arbitrator found the evidence was “sufficient to establish that there was in fact a significant, unequivocal and uniform past practice of not terminating the employment of individuals on LTD no matter the length of absence”. He confirmed the past practice was related to the Benefits in the collective agreement and not a management right which the employer could unilaterally alter.
Arbitrator Coleman rejected the employer’s argument that it only became “meaningfully aware” of the past practice when it became the successor employer and was not bound by the past practice of the predecessor employer. Successor employers are “obliged to accept the collective agreement and any inherent obligations arising thereunder, lock, stock and barrel”. Further, the evidence showed the employer did indeed know about the past practice for at least one of the employees and, in any event, should have known through proper due diligence of its obligations and liabilities as the successor employer.
Under the second and third parts of the estoppel test, the arbitrator found there was detrimental reliance in that the union would have taken up the matter in bargaining had it known that the employer intended to change the practice.
In summary, Arbitrator Coleman found there was an unequivocal representation upon which the Union relied to its detriment. The employer was estopped from changing its practice of retaining LTD recipients as employees so as to allow access to the Benefits until the union had an opportunity to negotiate in the next round of bargaining.
Remedies
The employment of the employees was reinstated retroactively to the date they were dismissed and they were to be made whole and compensated for expenses incurred due to the termination of their employment. The arbitrator added that their “status [was] to remain until the next round of collective agreement negotiations [was] completed, which [would] determine their status from that point”.
Takeaways
- Employers may dismiss an employee for non-culpable absenteeism where the employee is unlikely to return to work in the foreseeable future. This is subject to language in the collective agreement or past practice between the parties.
- Successor employers are bound by the pre-existing collective agreement and the past practice between the predecessor employer and the union.
- Successor employers should conduct due diligence to discover obligations and liabilities which actually or potentially arise out of assuming a collective agreement and employees.
- An employer must inform the union of its intention to change a past practice related to collective agreement terms in order to give the union the opportunity to negotiate the matter.
- Dismissing employees who are in receipt of LTD benefits raises a number of legal considerations and should be done with the assistance of capable legal counsel.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.