Re: Decision in Parry Sound (District) Social Services Administration Board v. Ontario Public Service Employees Union, Local 324, [2003] 2 S.C.R. 157

Date: September 26, 2003

In District of Parry Sound Social Services v. Ontario Public Service Employees Union, the Supreme Court of Canada has ruled that labour arbitrators have both the authority and the duty to enforce human rights and other employment-related statutes as if they were part of the collective agreement, regardless of its explicit terms or the mutual intentions of the parties. The Court endorsed an increased public role for collective bargaining and grievance arbitration, based upon a statutory rather than contractual model of collective agreements. However, it declined to answer whether this expanded authority confers exclusive arbitral authority over statutory disputes or if the current concurrency with statutory tribunals will continue.

In a 7-2 decision, the court dismissed the employer’s appeal from the Ontario Court of Appeal ruling which upheld the arbitrability of a probationary employee’s claim of discrimination under section 5(1) of the Ontario Human Rights Code (the Code). An arbitration board chaired by Paula Knopf ruled that they lacked jurisdiction under the collective agreement, which made the discharge of probationary employees inarbitrable and expressly agreed that such a matter would not constitute a “difference between the parties” pursuant to s.48(1) of the Ontario Labour Relations Act (OLRA). However, the board concluded section 48(12)(j) of the OLRA, which confers arbitral power “to interpret and apply human rights and other employment-related statutes”, provided jurisdiction to hear a case arising under s. 5(1) of the Code.

The top court ruled that, absent explicit statutory language to the contrary, the substantive rights and obligations of the Code and other employment-related statutes are incorporated into every collective agreement. As a result of this incorporation, Justice Iacobucci followed what the Ontario Court of Appeal termed a “one level approach” in ruling that “a conflict between the collective agreement and an employment related statute is not a condition precedent of the power to bring that statute into operation.”

The court found that the quasi-constitutional importance of human rights in the workplace requires that a violation of the Code in the exercise of management rights is a violation of the collective agreement. The court effectively ruled that only statutory provisions evidencing a clear “intention to displace or otherwise restrict” these principles would lead to a different result.

The dissent, written by Justice Major, rejects this “serious” and “extraordinary power to take jurisdiction of any claim based on statute” as an expansion of arbitral power unsupported by the legislation. In his view, the parties are free to exclude certain disputes from arbitral jurisdiction, as employees can pursue their rights through the relevant statutory tribunal. The arbitral jurisdiction under s. 48(12)(j) to interpret and apply employment-related legislation should not be interpreted as a plenary authority to enforce these statutes.

The fundamental point of dispute between the court’s decision and dissent is the scope of the arbitrability principle established by the 1972 decision of McLeod v. Egan, in which the Supreme Court circumscribed a management rights clause in a collective agreement by the statutory limit on hours of work. Justice Iacobucci broadly interprets the McLeod ratio as making any violation of employment-related legislation an implicit violation of the collective agreement. The dissent urges a “more restrained reading” of McLeod, voiding any contract provision which violates statutory rights but not thereby compelling the parties to arbitrate all statutory disputes.

One of the biggest questions raised by the Parry Sound decision is how this expansion of arbitral authority is to be reconciled with the concurrent model of jurisdiction for human rights and other employment statutes such as health and safety legislation. Although the Ontario Human Rights Commission appeared as intervener, arguing in favour of concurrent jurisdiction with labour arbitrators, the court declined to answer whether the incorporation of legislative rights into collective agreements ousts the concurrent enforcement jurisdiction of statutory tribunals, and made no comment as to how this concurrency is to be reconciled with the exclusive jurisdiction model of Weber v. Ontario Hydro. Instead, the court has divided the question of the arbitrability of external statutes into two distinct issues of arbitral power and arbitral exclusivity. The Supreme Court may resolve this when it rules in the Quebec case of Commission des droits de la personne (Morin et al) v. A.G. of Quebec, but in the meantime the Ontario Court of Appeal decision in Ford Motor Co. v. Ontario Human Rights Commission (Naraine) probably establishes that concurrency is acceptable where the statutory scheme supports a dual jurisdiction.

The Parry Sound decision may also mark some change in the legal conception of the collective agreement. Although the court purports to uphold the Dayco principle that the collective agreement is the foundation for arbitral authority, the agreement appears to be seen less as a privately negotiated contract and more as a quasi-statutory entity. The four corners of collective agreements “cannot be determined solely by reference to the mutual intentions of the contracting parties as expressed in that agreement” wrote Justice Iacobucci, and employers and unions cannot negotiate issues of arbitral jurisdiction over statutory rights, whether by silence or express provision. This is a reflection, according to the court, of the dual private and public function of grievance arbitration and collective bargaining.

The implications of this emerging public mantle for collective labour arbitration are yet to be determined. Although arbitration was originally conceived as an extension of collective bargaining, and is the legal quid pro quo for strike action, the requirement to arbitrate matters about which unions and employers did not, and indeed cannot, negotiate poses doctrinal challenges to both of these basic tenets. Further, the improved access to justice through what the Supreme Court terms the “accessible and informal” method of grievance arbitration must be weighed against the privatization onto unions and employers of the enforcement of public statutes.

Finally, arbitral decision-making must continue to shift from its traditional compromise of subjective interests towards the aims of objective justice. How will the substantive content and normative status of public, individual rights be affected by increased adjudication in what was once conceived as a private, collective process? It is the view of Mr. Justice Iacobucci that the effects will be favourable as:

Any concerns in respect of this matter are outweighed by the significant benefits associated with the availability of an accessible and informal forum for the prompt resolution of allegations of human rights violations in the workplace. It is of great importance that such disputes are resolved quickly and in a manner that allows for a continuing relationship between the parties.

By: Tim Hadwen

OPSEU General Counsel

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Kristin A. Eliot
Eliot, Smith
Barristers and Solicitors