Date: 20040205
Docket: A-97-03
Citation: 2004 FCA 56
CORAM: ROTHSTEIN J.A.
SEXTON J.A.
MALONE J.A.
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
GREGORY PEACE
Respondent
Heard at Montréal, Québec on January 21, 2004.
Judgment delivered at Ottawa, Ontario, February 5, 2004.
REASONS FOR JUDGMENT BY: SEXTON J.A.
CONCURRED IN BY: ROTHSTEIN J.A.
MALONE J.A.
Date: 20040205
Docket: A-97-03
Citation: 2004 FCA 56
CORAM: ROTHSTEIN J.A.
SEXTON J.A.
MALONE J.A.
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
GREGORY PEACE
Respondent
REASONS FOR JUDGMENT
SEXTON J.A.
Introduction
[1] The issue in this case is whether the Umpire committed a reviewable error by overturning the Board of Referee's decision (the "Board") that the respondent was not entitled to receive employment insurance benefits because he voluntarily left his employment without just cause. The Umpire disagreed with the Board, finding that while the respondent left his employment voluntarily, he was nevertheless entitled to receive benefits because the 10% reduction to his salary constituted just cause for him to leave.
Facts
[2] In December 2001, the respondent resigned from his job as a Logistics Project Manager after his employer announced that the salaries of all of its 1200 Canadian employees would be reduced by 10% as a result of a decrease in company sales. While the employer indicated that the decrease was only for the year 2002, no guarantees respecting wages were given for 2003. To compensate for the 2002 salary reduction, the employer offered stock options to employees.
[3] The respondent took the position that salary was a fundamental element of his employment contract, and that his employer's unilateral 10% reduction to his salary amounted to constructive dismissal, entitling him to treat the employment contract as having come to an end.
[4] The respondent's employer indicated that out of all of its 1200 Canadian employees, the respondent was the only person who resigned as a result of the salary reduction.
[5] After leaving his employment, the respondent applied for employment insurance benefits ("EI benefits") in January 2002.
[6] In February 2002, the Canada Employment Insurance Commission (the "Commission") denied the Respondent's application for EI benefits on the grounds that he voluntarily left his employment without just cause.
[7] The respondent appealed the Commission's decision to the Board arguing that he did not leave his employment voluntarily because he was constructively dismissed. The Board agreed with the Commission's position that the respondent had voluntarily left his employment without just cause, holding that he had a reasonable alternative to resigning after the salary reduction which was to remain at work while searching for new employment. The Board found that there was no evidence that the respondent's work situation was so intolerable that he had no alternative except to leave.
[8] The respondent appealed the decision of the Board to the Umpire on the same grounds that he had appealed previously. While the Umpire found that the respondent had left his position voluntarily, he allowed the appeal on the basis that the respondent had just cause for leaving pursuant to subparagraph 29(c)(vii) of the Employment Insurance Act, S.C. 1996, c. 23 (the "Act"). Subparagraph 29(c)(vii) provides that an employee will have just cause for leaving employment if inter alia he had no reasonable alternative but to leave having regard to a significant modification of terms and conditions respecting wages or salary. The Umpire found that the Board had overlooked this provision of the Act, and that the 10% reduction to the respondent's salary was a significant modification within the meaning of subparagraph 29(c)(vii).
Arguments
[9] The applicant is appealing the Umpire's decision primarily on the grounds that he erred in law by failing to give any deference to the Board's determination that the respondent did not have just cause for voluntarily leaving his position. According to the applicant, this was a mixed question of fact and law which should have been reviewed by the Umpire on a standard of reasonableness simpliciter rather than correctness.
[10] While the respondent agrees with the outcome of the Umpire's decision, he is challenging the Umpire's determination that he voluntarily left his position. According to the respondent, because he was constructively dismissed, he should not be considered to have left his position voluntarily. Since he did not leave voluntarily, he was not disqualified from receiving benefits and it was unnecessary for him to establish that he had just cause for leaving.
Statutory Scheme
[11] Under subsection 30(1) of the Act, an employee is disqualified from receiving EI benefits if he loses his job as a result of misconduct or if he voluntarily leaves his job without just cause. Paragraph 29(c) provides that an employee will have just cause for leaving a job if there is no reasonable alternative to leaving taking into account a list of enumerated circumstances, including significant modifications to the terms and conditions respecting wages or salary. Paragraph 29(c) and subsection 30(1) provide as follows:
| 29. For the purposes of sections 30 to 33,
...
(c) just cause for voluntarily leaving an employment or taking leave from an employment exists if the claimant had no reasonable alternative to leaving or taking leave, having regard to all the circumstances, including any of the following:
(i) sexual or other harassment,
(ii) obligation to accompany a spouse, common-law partner or dependent child to another residence,
(iii) discrimination on a prohibited ground of discrimination within the meaning of the Canadian Human Rights Act,
(iv) working conditions that constitute a danger to health or safety,
(v) obligation to care for a child or a member of the immediate family,
(vi) reasonable assurance of another employment in the immediate future,
(vii) significant modification of terms and conditions respecting wages or salary,
(viii) excessive overtime work or refusal to pay for overtime work,
(ix) significant changes in work duties,
(x) antagonism with a supervisor if the claimant is not primarily responsible for the antagonism,
(xi) practices of an employer that are contrary to law,
(xii) discrimination with regard to employment because of membership in an association, organization or union of workers,
(xiii) undue pressure by an employer on the claimant to leave their employment, and
(xiv) any other reasonable circumstances that are prescribed.
30. (1) A claimant is disqualified from receiving any benefits if the claimant lost any employment because of their misconduct or voluntarily left any employment without just cause, unless
(a) the claimant has, since losing or leaving the employment, been employed in insurable employment for the number of hours required by section 7 or 7.1 to qualify to receive benefits; or
(b) the claimant is disentitled under sections 31 to 33 in relation to the employment.
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29. Pour l'application des articles 30 à 33 :
...
c) le prestataire est fondé à quitter volontairement son emploi ou à prendre congé si, compte tenu de toutes les circonstances, notamment de celles qui sont énumérées ci-après, son départ ou son congé constitue la seule solution raisonnable dans son cas :
(i) harcèlement, de nature sexuelle ou autre,
(ii) nécessité d'accompagner son époux ou conjoint de fait ou un enfant à charge vers un autre lieu de résidence,
(iii) discrimination fondée sur des motifs de distinction illicite, au sens de la Loi canadienne sur les droits de la personne,
(iv) conditions de travail dangereuses pour sa santé ou sa sécurité,
(v) nécessité de prendre soin d'un enfant ou d'un proche parent,
(vi) assurance raisonnable d'un autre emploi dans un avenir immédiat,
(vii) modification importante de ses conditions de rémunération,
(viii) excès d'heures supplémentaires ou non-rémunération de celles-ci,
(ix) modification importante des fonctions,
(x) relations conflictuelles, dont la cause ne lui est pas essentiellement imputable, avec un supérieur,
(xi) pratiques de l'employeur contraires au droit,
(xii) discrimination relative à l'emploi en raison de l'appartenance à une association, une organisation ou un syndicat de travailleurs,
(xiii) incitation indue par l'employeur à l'égard du prestataire à quitter son emploi,
(xiv) toute autre circonstance raisonnable prévue par règlement.
30. (1) Le prestataire est exclu du bénéfice des prestations s'il perd un emploi en raison de son inconduite ou s'il quitte volontairement un emploi sans justification, à moins, selon le cas :
a) que, depuis qu'il a perdu ou quitté cet emploi, il ait exercé un emploi assurable pendant le nombre d'heures requis, au titre de l'article 7 ou 7.1, pour recevoir des prestations de chômage;
b) qu'il ne soit inadmissible, à l'égard de cet emploi, pour l'une des raisons prévues aux articles 31 à 33.
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Analysis
[12] There are two issues on this appeal. The first issue, raised by the respondent, is whether the Umpire erred by failing to overturn the Board's determination that the respondent left his position voluntarily. If the respondent's leaving was involuntary, he should not have been disqualified from receiving EI benefits, and it would have been unnecessary for him to demonstrate that he had just cause for leaving his position. The second issue, raised by the applicant, is whether, if the respondent did leave voluntarily, the Umpire erred by not according sufficient deference to the Board's finding that the respondent did not have just cause for leaving his position.
1. Did the Umpire err by not overturning the Board's finding that the respondent voluntarily left his employment?
[13] In order to determine whether the respondent voluntarily left his employment, a pure question of law must first be answered. That question is whether the common law concept of constructive dismissal is applicable under the Act such that a person who has been constructively dismissed has not voluntarily left employment within the meaning of subsection 30(1) and, as a result, is not disqualified from receiving EI benefits. This is the only ground on which the respondent has challenged the determination that he voluntarily left his employment.
[14] Neither the Umpire nor the Board accepted the respondent's argument that the concept of constructive dismissal is applicable to the issue of voluntariness under subsection 30(1) of the Act. In my opinion, the Umpire did not err by failing to overturn the Board's position on this question of law. According to this Court in Budhai v. Canada (A.G.), [2003] 2 F.C. 57 (F.C.A) ("Budhai"), when an umpire is reviewing a determination of a board of referees involving a pure question of law, the standard of review is correctness. While the Umpire in this case did not expressly discuss the issue of standard of review, in my opinion, the Board's decision that the common law concept of constructive dismissal does not relate to the issue of voluntariness was correct.
[15] Even if the respondent was constructively dismissed at common law as he has argued, I do not accept his argument that this means that he left his employment involuntarily within the meaning of the Act. Constructive dismissal is a common law concept which entitles but does not require an employee to treat the employment contract as having come to an end. It entitles the employee to sue for damages where an employer has substantially changed an essential term of the contract. Whether or not an employee is entitled to treat the employment relationship as having been terminated at common law on the grounds of constructive dismissal is a different issue from the issue of whether an employee has voluntarily left employment under the Act such that he may not be entitled to EI benefits. Under subsection 30(1), the determination of whether an employee has voluntarily left his employment is a simple one. The question to be asked is as follows: did the employee have a choice to stay or to leave?
[16] Where an employee has left voluntarily, the only test under the Act to determine whether or not the employee is entitled to receive EI benefits is whether he had just cause for leaving pursuant to paragraph 29(c) and subsection 30(1); this involves asking whether leaving was the only reasonable alternative for the employee considering a number of factors. The factors set out in paragraph 29(c) of the Act, which determine whether an employee had just cause for leaving his employment, resemble the grounds upon which a finding of constructive dismissal could be made at common law. However, the fact that the factors in section 29 resemble the grounds for constructive dismissal does not mean that, where such grounds exist, there has been no voluntary leaving under the Act. Factors such as whether there has been a significant modification of the terms of the employment contract relate to the issue of whether or not an employee had just cause for leaving as opposed to the issue of whether the employee left voluntarily. The courts and umpires have recognized that the factors which may constitute just cause under section 29 of the Act resemble the factors which may result in a finding of constructive dismissal at common law but this does not change the test under the Act as to whether the leaving was voluntary. See Canada (A.G.) v. Sulaiman (23 June 1994), Toronto A-737-93 (FCA); CUB 19432 (1991) (MacKay J.); CUB 47452 (2000) (Marin U.); CUB 18009 (1990) at 3 (MacKay J.); CUB 22778 (1994) (MacKay J.).
[17] The common law action for damages against an employer for constructive dismissal has not been abolished by the Act. As a result, it was open to the respondent in the present case to bring an action against his employer. However, the common law concept of constructive dismissal does not appear in the Act, which creates an insurance scheme for employees who have been fired or laid off or left their positions because they had no other reasonable alternative. As a result, whether an employee has left voluntarily and is not entitled to benefits under the Act and whether an employee has been constructively dismissed and is entitled to sue his employer are different issues.
2. Did the Umpire err by overturning the Board's decision and concluding that the respondent had just cause for voluntarily leaving his employment?
[18] The Umpire, in the present case, proceeded to make his own determination of whether or not the respondent had just cause for voluntarily leaving his employment without first considering the standard of review to be applied to the Board's decision. This was an error. The Supreme Court of Canada stated in Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19">2003 SCC 19 at para. 21 ("Dr. Q") that: "[i]n every case where a statute delegates power to an administrative decision-maker, the reviewing judge must begin by determining the standard of review on the pragmatic and functional approach." In Budhai, supra, this Court held that the reasoning in Dr. Q, supra also applies when an umpire is reviewing a decision of a board. According to Dr. Q, supra, the role of this Court is to determine whether the Umpire selected and applied the correct standard of review. If the Umpire did not select the correct standard of review, this Court must assess the Board's decision in light of the correct standard of review. Since the Umpire did not even address the question of standard of review, it is up to this Court to state the correct standard of review and apply it to the facts as found by the Board.
[19] In Budhai, supra, this Court held that applying the pragmatic and functional approach, where an Umpire is reviewing a decision of a Board involving a mixed question of fact and law, the standard of review should be reasonableness simpliciter. In Canada (Attorney General) v. Sacrey, 2003 FCA 377, this Court also held that whether an employee has just cause for leaving employment is a mixed question of fact and law to be reviewed on a reasonableness standard.
[20] According to the Supreme Court of Canada in Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, 2003 SCC 20">2003 SCC 20, a decision is unreasonable only if there is no line of analysis within the reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived.
[21] In my opinion, the Umpire erred by overturning the decision of the Board. I am unable to say that the Board's decision that the respondent did not have just cause for leaving his position was unreasonable. The respondent's alternatives included staying at his job while looking for other employment and exercising the stock options which had been offered by his employer as compensation for the salary reduction. In addition, the fact that the salary reduction applied to all employees and the respondent was the only employee to resign also militated against a finding of just cause.
[22] Furthermore, the Umpire erred by concluding that the Board erred in law by overlooking subparagraph 29(c)(vii) of the Act, which provides that in certain circumstances a significant salary modification may constitute just cause for leaving employment. It is clear from the reasons of the Board that it was mindful of this provision.
Conclusion
[23] The application will therefore be allowed. The decision of the Umpire will be set aside and the respondent's appeal from the decision of the Board is referred back to the Chief Umpire or his designate for determination in accordance with these reasons.
[24] There will be no costs awarded as the applicant is not seeking them.
"J. EDGAR SEXTON"
J.A.
"I agree
"Marshall Rothstein J.A."
"I agree
B. Malone J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-97-03
JUDICIAL REVIEW IN RESPECT OF THE DECISION CUB 56125 RENDERED BY THE UMPIRE W.J. HADDAD ON JANUARY 23, 2003
STYLE OF CAUSE: ATTORNEY GENERAL OF CANADA and GREGORY PEACE
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: January 21, 2004
REASONS FOR JUDGMENT: SEXTON J.A.
CONCURRED IN BY: ROTHSTEIN J.A.
MALONE J.A.
DATED: FEBRUARY 5, 2004
APPEARANCES:
SOLICITORS OF RECORD:
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