Date: 19980616
Docket: A-336-96
OTTAWA, ONTARIO, TUESDAY, JUNE 16, 1998
PRESENT: THE CHIEF JUSTICE
LÉTOURNEAU J.A.
McDONALD J.A.
BETWEEN:
ANIL JINDAL,
Appellant,
(Respondent)
AND:
THE ATOMIC ENERGY OF CANADA LIMITED,
Respondent,
(Applicant)
JUDGMENT
The appeal is dismissed without costs.
"Julius A. Isaac"
C.J.
Date: 19980616
Docket: A-336-96
CORAM: THE CHIEF JUSTICE
LÉTOURNEAU J.A.
McDONALD J.A.
BETWEEN:
ANIL JINDAL,
Appellant,
(Respondent)
AND:
THE ATOMIC ENERGY OF CANADA LIMITED,
Respondent,
(Applicant)
Heard at Winnipeg, Manitoba, Thursday, May 14, 1998
Judgment delivered at Ottawa, Ontario, Tuesday, June 16, 1998
REASONS FOR JUDGMENT BY: LÉTOURNEAU J.A.
CONCURRED IN BY: THE CHIEF JUSTICE
McDONALD J.A.
Date: 19980616
Docket: A-336-96
CORAM: THE CHIEF JUSTICE
LÉTOURNEAU J.A.
McDONALD J.A.
BETWEEN:
ANIL JINDAL,
Appellant,
(Respondent)
AND:
THE ATOMIC ENERGY OF CANADA LIMITED,
Respondent,
(Applicant)
REASONS FOR JUDGMENT
LÉTOURNEAU J.A.
[1] This appeal calls for the interpretation of subsection 242(3.1) of the Canada Labour Code (Code) which deprives an adjudicator of his jurisdiction to hear a complaint for wrongful dismissal when the complainant has been laid off because of a lack of work or the discontinuance of his function. The appeal is from an order of a judge of the Trial Division who, on an application for judicial review, quashed the finding of an adjudicator that the Appellant had been wrongfully dismissed from his employment under subsections 242(2) and (3) of the Code.
[2] The Appellant lost his position in the following circumstances. The Respondent claimed it undertook a massive re-structuring of its organization to increase its efficiency, performance, competitiveness and profits, especially in the marketing and sales department in which the Appellant was employed. The re-structuring followed an Internal Audit Report which concluded that the Respondent needed to eliminate deficiencies, confusion and duplication of certain functions and responsibilities within as well as among departments, including the Appellant's department.
[3] Mr. Campbell, who was the Director of Marketing and Sales, testified before the adjudicator that, pursuant to the reorganization, the number of departments was reduced from 17 to five and these five departments held 62 positions instead of the 87 previously allocated to the 17 departments.
[4] It was in the course of this re-structuring process that the Appellant received, on April 2, 1992, a letter that his employment with the Respondent was "terminated" effective April 30, 1992 and that he would be paid, amongst other benefits due to him, a compensation of up to 11 months' salary from May 1, 1992 should he be unsuccessful in his efforts to secure another position within the company or alternative employment. The letter to the Appellant informed him that the consolidation of all marketing and sales functions under one Organizational Unit had resulted in a reduction of positions devoted to these functions.
[5] The Appellant brought a complaint for wrongful dismissal which was heard by an adjudicator who found in his favour and ordered that he be reinstated with full back-pay. The Respondent successfully sought judicial review before a judge of the Trial Division who quashed the decision of the adjudicator. Hence, the present appeal by the Appellant.
The Decision of the Adjudicator
[6] At the outset of the hearing on the complaint for wrongful dismissal, the Respondent objected to the jurisdiction of the adjudicator to hear the complaint on the basis that the Appellant had been laid off because of a lack of work or because of the discontinuance of the Appellant's function. Subsection 242(3.1) of the Code reads:
No complaint shall be considered by an adjudicator under subsection (3) in respect of a person where (a) that person has been laid off because of a lack of work or because of the discontinuance of a function.
[7] The adjudicator dismissed the objection to his jurisdiction. He was of the view that the Appellant's employment was terminated and he was not subject to recall. Therefore, in his view, termination was not a lay-off within the meaning of subsection 242(3.1) of the Code. As subsection 242(3.1) was an exception to the jurisdiction conferred upon an adjudicator, the burden of proving in fact and in law the applicability of that exception was on the employer who, in the adjudicator's view, failed to discharge it.
[8] Having come to the conclusion that the exception to his jurisdiction did not apply and the employer having admitted that there was no just cause for the dismissal of the Appellant, the adjudicator concluded that the Appellant's employment had been wrongfully terminated.
Analysis of the Decision of the Motions Judge
[9] The motions judge reversed the finding of the adjudicator on the basis that the Appellant had lost his employment through a massive reorganization and, therefore, the adjudicator had no jurisdiction to proceed to decide the merits of the complaint.
[10] After careful review of the record and decision of the adjudicator, I am satisfied that the motions judge came to the right conclusion.
[11] In my view, the adjudicator gave an erroneous interpretation to the concept of lay-off in subsection 242(3.1) of the Code. Contrary to his finding, I believe that the word "lay-off" in this provision, used as it is in an open and unqualified manner, refers as much to a permanent as to a temporary cessation of employment. Of course, regardless of the term used by an employer to describe and notify his employee of a cessation of employment, one has to look at all the facts and circumstances leading to such a cessation to determine whether it is meant to be temporary or permanent.
[12] Indeed, the notion of "discontinuance of a function" in subsection 242(3.1) of the Code makes no sense if the word "lay-off" refers only to a temporary cessation of employment with possibility of recall. A discontinuance of a function resulting in the disappearance of the whole function leads inevitably to a permanent lay-off through termination of employment of the persons assigned to such a function. A termination of employment is, in the present context, synonymous with a lay-off or, to use the words of Professor Christie et al., applicable in the present context, "the permanent discontinuance of a position constitutes a lay-off".
[13] In a few cases including the present one, the word "lay-off" has been given by adjudicators the narrow meaning of "temporary cessation of work with a prospect of recall in the future". Not only is such a restrictive interpretation not warranted by the text of subsection 242(3.1) of the Code as it does not limit it to a temporary lay-off, but, as pointed out by N. Grossman, such a narrow interpretation "set a dangerous precedent which might have encouraged employers to classify employees as "laid off" in circumstances where there was, in fact, no hope of recall simply in order to reserve any possible argument arising from paragraph 242(3.1)(a)".
[14] In the present instance, I am satisfied, as was the motions judge, that the termination of the Appellant's employment amounted to a lay-off within the meaning of subsection 242(3.1).
[15] I agree with the motions judge that the adjudicator failed properly to consider the notion of "discontinuance of a function" in subsection 242(3.1). The adjudicator's decision on this issue is sketchy and, at best, ambiguous. Having found that the exception to his jurisdiction did not apply because the Appellant had been terminated rather than laid off, he did not really discuss the concept of "discontinuance of a function". As the motions judge correctly pointed out, a "discontinuance of a function" occurs not only when a function is no longer carried out but also when the activities that form part of a bundle of activities are divided amongst other people.
[16] We do not have to assist us, in the present instance, the transcript of the evidence presented to the adjudicator. However, his decision contains a helpful and sufficient review of the evidence relevant to this issue.
[17] At page 3 of his decision, the adjudicator refers to the Respondent's Internal Audit Report which was filed before him as Exhibit 6. This audit of the commercial activities of the Respondent acknowledges a shifting of the focus in commercial activities from revenue to sustain employment to generating profits to support other initiatives. As a result of such shifting, the Report contained the following observations and recommendations, particularly with respect to the sales functions:
p. 9 of the Audit Report
5.3 Sales and After-sales functions
There is duplication and inefficiency in the sales function and in after-sales services. In general, the functions are split between the commercial offices, the technical divisions and commercial accounting. Furthermore, this split in responsibility is not the same in all organizational units or commercial centres.
Duplication of the sales function in the technical divisions and commercial offices is inefficient and causes some resentments between the two organizations. Duplication of functions also results in unclear division of responsibilities for the after-sales services, causing customer dissatisfaction, which leads to late payments, withholding of final payments and continuing challenges to invoices. Both symptoms compromise the profitability of commercial activities.
Recommendation
Management should assign clear responsibility and accountability for the sales and after-sales functions to eliminate as far as possible the same functions being performed by different organizations. The functional relationships, responsibility and accountability for sales and marketing between the new Marketing organization, the commercial offices and the technical divisions' need to be defined.
[18] The management agreed with both recommendations in the Report. It acknowledged that there was considerable duplication in the marketing and sales functions among the 17 different commercial entities within its Research division responsible for marketing and sales and undertook to reorganize and re-structure the marketing and sales division.
[19] The Director of Marketing and Sales, Mr. Phil Campbell, whose credibility was not in doubt, testified about the existing confusion in particular in the sales division and the reorganization undertaken pursuant to the Internal Audit Report to rationnalize that function and make the Respondent more competitive. He asserted that the Appellant was simply a casualty of this process as can be seen from this excerpt at pp. 9 and 10 of the decision of the adjudicator:
An audit report was prepared, which was dated November 13, 1991, and which was filed in this matter as Exhibit 6; it detailed the confusion in particular in the sales divisions. There were 17 commercial offices. These operated like a confused maze. Campbell advised that often, offices would be inadvertently competing with one another, or be working at cross purposes. A reorganization, he said was vital to make the company rational and competitive. In the reorganization which followed, these 17 departments were truncated down to 5 departments. There were 87 positions in the 17 departments; there were to be 62 positions in the 5 departments. Although this meant a shrinking of 25 positions, because a number would be relocated only 8 net positions would be lost. Jindal, he said, was simply a casualty of this process. The concept of the reorganization was heavily focussed in commerce. Revenue-expense ratios were targeted, as were revenue projections. Campbell, as the director of sales, was the person chosen to appoint the managers of the 5 departments. He was able to identify his choices for 4, but had not as yet found someone for a section entitled "advanced technology projects".
[20] In my view, the conclusion of the motions judge that there was a discontinuance of the Appellant's function as a result of the reorganization of the sales division, the suppression of the Appellant's position and a division of his activities among other people was supported by the evidence before the adjudicator who failed to apply the appropriate legal principles to this notion.
[21] Once the Respondent had established, as it did, that the lay-off of the Appellant was for legitimate business reasons, the adjudicator was deprived of jurisdiction to proceed with the complaint for wrongful dismissal.
[22] For these reasons, I would dismiss the appeal without costs.
"Gilles Létourneau"
J.A.
"I agree,
Julius A. Isaac
C.J."
"I agree,
F.J. McDonald J.A."
FEDERAL COURT OF CANADA APPEAL DIVISION
NAMES OF SOLICITORS AND SOLICITORS ON THE RECORD
COURT FILE NO.: A-336-96
STYLE OF CAUSE: Anil Jindal v.
The Atomic Energy of Canada Limited
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: May 14, 1998
REASONS FOR JUDGMENT OF THE CHIEF JUSTICE, LÉTOURNEAU J. A.; McDONALD J.A.
DATED: June 16, 1998
APPEARANCES
Mr. Paul Walsh Q.C. FOR APPELLANT
Mr. Paul Edwards FOR RESPONDENT
SOLICITORS OF RECORD:
Anhang Walsh & Company FOR APPELLANT
Winnipeg, Manitoba
Duboff Edwards Haight & Schachter FOR RESPONDENT
Winnipeg, Manitoba
See p. 13 of his decision at p. 19 of the Appeal Book.
Christie, England and Cotter, Employment in Canada, 2nd ed., Butterworths, Toronto, 1993, p. 680. See also S.R. Ball, Canadian Employment Law, Canada Law Book Inc., Aurora, 1998, p. 21-12; H.A. Levitt, The Law of Dismissal in Canada, Canada Law Book, Aurora, 1992, pp. 46-47; Air Canada v. Davis, (1994) 72 F.T.R. 283 (F.C.T.D.).
Norman Grossman, Federal Employment in Canada, Carswell, Toronto, 1990, ch. 8, p. 118.
See p. 10 of the Internal Audit Report, at p. 60 of the Appeal Book.
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