Court finds exclusive arbitral jurisdiction in Manitoba human rights disputes

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Court finds exclusive arbitral jurisdiction in Manitoba human rights disputes

by Rhonda B. Levy and Douglas Sanderson of Littler

In Northern Regional Health Authority v. Horrocks, 2021 SCC 42, (NHRA) a six-member majority of the Supreme Court of Canada (SCC) decided that in Manitoba, human rights disputes arising from the interpretation, application, or alleged violation of a collective agreement (CA) fall within the exclusive jurisdiction of a labour arbitrator. As a result, the Manitoba Human Rights Commission (MHRC) lacks concurrent jurisdiction to consider such disputes. 

The employee worked for the NHRA (the employer) in Manitoba.  Because the employee was a member of the employer’s union, the terms and conditions of employment were governed by the CA between the employer and the union. In 2011, the employee was suspended from her employment after she attended work under the influence of alcohol. She disclosed to her employer that she had an addiction to alcohol, which is a disability under Manitoba’s The Human Rights Code (HRC). The HRC prohibits discrimination in employment based on disability. 

The employer presented the employee with a “last chance agreement” (LCA), which required her to abstain from alcohol and participate in addiction treatment.  When the employee refused to enter into the LCA, the employer terminated her employment. The union filed a grievance in relation to the employee’s termination and she was reinstated after she agreed to enter into an abstinence agreement, the terms of which were substantially similar to the terms of the LCA.  Not long after, the employer terminated the employee’s employment for an alleged breach of the abstinence agreement.  The union did not file a grievance in relation to the employee’s second termination. The employee filed a complaint, however, with the Manitoba Human Rights Commission, arguing that her employer failed to adequately accommodate her disability. 

Decision of Manitoba Human Rights Commission

The complaint filed with the MHRC was heard by an adjudicator appointed under the HRC.  The employer contested the adjudicator’s jurisdiction, arguing that the matter was in the exclusive jurisdiction of an arbitrator appointed under a CA, and that this jurisdiction extended to human rights complaints in a unionized workplace. The MHRC disagreed. While it recognized that labour arbitrators have exclusive jurisdiction over disputes that arise from the interpretation, application, administration, or violation of a CA, it held that the essential character of the employee’s dispute was an alleged human rights violation and, after considering the merits of the employee’s complaint, found the employer had discriminated against her.

Decision of Manitoba Queen’s Bench

On judicial review, the Manitoba Queen’s Bench (MQB) disagreed with the MHRC’s characterization of the essential character of the dispute and set aside the MHRC’s decision on the issue of jurisdiction. The MQB’s view was that the essential character of the dispute was whether the employer had just cause to terminate the employee’s employment, and any human rights violation associated with the employee’s termination was within the exclusive jurisdiction of labour arbitration. Accordingly, the MQB did not decide whether the MHRC’s decision on the merits of the employee’s complaint was reasonable.

Decision of Manitoba Court of Appeal

The employee appealed the MQB’s decision. The Manitoba Court of Appeal (MCA) agreed with the MQB’s conclusion that disputes pertaining to the termination of a unionized worker are within the exclusive jurisdiction of a labour arbitrator, including when a human rights violation is alleged.  Regardless, the MCA allowed the appeal holding that the MHRC had jurisdiction over the employee’s complaint because: (a) the employee “made a choice to sever” the employment and human rights aspects of her claim when she did not grieve her second termination; (b) the discrimination claim raised issues that transcended the specific employment context, because an employer’s accommodation of an employee’s alcohol dependency is “larger than the specifics of what occurred in the employment relationship”; and (c) the union was not interested in pursuing arbitration, thus precluding the employee from bringing her claim to any forum if a labour arbitrator were to hold exclusive jurisdiction.  Accordingly, the MCA remitted the matter to the MQB to determine whether the MHRC’s decision on the merits of the discrimination complaint was reasonable.

Decision of the Supreme Court of Canada

The NHRA appealed to the SCC. The majority of the court found that its jurisprudence precluding recourse to the courts in disputes arising from a CA—in particular, Weber v. Ontario Hydro, 1995 CanLII 108 (SCC), [1995] 2 S.C.R. 929 (Weber)—applies equally to jurisdictional contests between labour arbitrators and statutory tribunals.

First Step: Examine the Statutory Scheme to Determine Whether it Grants Exclusive Jurisdiction to the Arbitrator

The first step taken by the SCC was to examine the relevant legislation to determine whether it grants exclusive jurisdiction to the arbitrator and, if so, over what matters. It emphasized that the scope of the arbitrator’s exclusive jurisdiction will depend on the precise language of the statute; however, it will generally extend to all disputes that arise in their essential character from the interpretation, application, or alleged violation of the CA.

The SCC observed that Manitoba’s Labour Relations Act (MLRA) contains a mandatory dispute resolution clause, which it found grants exclusive jurisdiction to labour arbitrators (or other decision‑maker chosen by the parties) over all disputes arising from the CA.  In this case, the parties chose grievance arbitration as the sole dispute resolution mechanism, and this mechanism was binding on the parties.

The SCC stressed that the mere existence of a competing tribunal will not displace labour arbitration as the sole forum for disputes arising from a CA.  Rather, consideration must be given to whether the competing statutory scheme demonstrates an express intention to displace the arbitrator’s exclusive jurisdiction by carving into it, for example, by conferring exclusive or concurrent jurisdiction over disputes that would otherwise fall solely to the labour arbitrator for decision.  The SCC indicated that if the competing statute demonstrates such an intention, courts must respect it.

While the SCC acknowledged that Manitoba’s HRC vests broad jurisdiction in the MHRC over violations of the HRC, it held that this did not expressly displace the exclusive jurisdiction of a labour arbitrator established by the MLRA’s mandatory arbitration clause.  The SCC concluded that arbitrators have exclusive jurisdiction under the MLRA over claims that arise, in their essential character, from the interpretation, application, or alleged violation of a CA. Consequently, the MHRC has no jurisdiction over such claims.

Second Step: Examine Whether the Essential Character of the Dispute Falls Within the Scope of the Arbitrator’s Exclusive Jurisdiction

The SCC confirmed that if the relevant legislation confers exclusive jurisdiction on the arbitrator over disputes arising from the CA, the second step is to examine whether the essential character of the dispute falls within the scope of that jurisdiction. This requires an analysis of both the terms of the CA and the facts alleged in the dispute.

The SCC observed that the dispute concerned the employer’s response to the employee’s attendance at work under the influence of alcohol, including its requirement that she sign an abstinence agreement and its termination of her employment after she breached that agreement.  The court also noted that the CA included a management rights clause, and the CA expressly limited the employer’s rights under this clause with a prohibition on discrimination.  The court concluded that the essential character of the employee’s complaint was that her employer exercised its management rights in a manner inconsistent with the express and implicit limits on those rights set out in the CA.  Accordingly, adjudication of the employee’s claim was within the exclusive jurisdiction of the arbitrator.

The Dissent

Karakatsanis J. was the sole dissenting voice on the court. In his view, the majority misread the court’s jurisprudence in concluding that the Weber line of cases established exclusive jurisdiction for labour arbitrators in cases of overlapping mandates and areas of expertise.  Rather, Karakatsanis J. was of the view that the Weber line of case was confined to clarifying that there could be no recourse to the ordinary courts regarding disputes arising out of a collective agreement. The court’s jurisprudence did not establish a rule of exclusive jurisdiction in cases involving two statutory tribunals.

Karakatsanis J. found that the mandatory dispute resolution provision of the MRLA did not explicitly oust the MHRC’s jurisdiction over unionized employees. Karakatsanis J. agreed that the dispute fell within the scope of the collective agreement, but nonetheless found that it was also within the scope of the MHRC’s jurisdiction under the HRC. Karakatsanis J. noted that a concurrent jurisdictional model avoided situations in which unionized employees are left with no recourse if their unions do not file human rights grievances on their behalf. In the circumstances of this case, Karakatsanis J. found that the adjudicator had jurisdiction over the dispute and acted appropriately in proceeding with the case.

Bottom Line for Employers

The decision of the SCC in NHRA establishes the exclusive jurisdiction of labour arbitrators under labour relations legislation over disputes that arise, in their essential character, from the interpretation, application, or alleged violation of the CA. This presumption of exclusivity will only be rebutted where a competing statutory scheme demonstrates the legislature’s express intention to displace arbitrators’ exclusive jurisdiction by carving into it (e.g., by granting exclusive or concurrent jurisdiction over disputes of a specific nature to a competing tribunal).  NHRA establishes that if a competing statutory scheme demonstrates such an express intention, it must be respected by the courts.  

Furthermore, NHRA provides the following precise guidance to unionized employers in Manitoba.  Manitoba’s HRC does not expressly displace the exclusive jurisdiction of the labour arbitrator under the MLRA over disputes that arise, in their essential character, from the interpretation, application, or alleged violation of the CA. As a result, the MHRC has no jurisdiction over such claims.  This raises the issue of how complaints to the MRHC filed by unionized employees prior to the decision in NHRA will be addressed. 

Moreover, unionized employers inside and outside Manitoba should be careful not to draw overly expansive conclusions from the decision of the SCC in NHRA.  For example, unionized employers in Manitoba should note that LHRA does not consider whether administrative tribunals in Manitoba other than the MHRC displace the arbitrator’s exclusive jurisdiction over disputes that arise, in their essential character,  from the interpretation, application, or alleged violation of the CA, by carving into it.  As well, unionized employers outside Manitoba should not automatically assume that NHRA stands for the proposition that human rights tribunals throughout Canada lack jurisdiction over such disputes.

As each Canadian jurisdiction has its own distinct human rights legislation, unionized employers in jurisdictions other than Manitoba are encouraged to closely scrutinize the wording of their own human rights statute to consider whether it demonstrates an express intention to carve into the labour arbitrator’s exclusive jurisdiction over human rights disputes in unionized workplaces. Some human rights commissions and tribunals have been operating under a concurrent jurisdiction model for many years. Elimination of that model in favour of exclusive arbitral jurisdiction would represent a significant change to the manner in which human rights are enforced. 

 

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