Dismissal of public sector employees and the duty of fairness

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When considering the dismissal of employees, public sector employers must take into account one fact which is not of concern to their counterparts in the private sector: some public employees, before being dismissed, are entitled to a form of procedural fairness. Procedural fairness requires that the employee be given notice of the reasons for the dismissal, and an opportunity to respond to those reasons. Failure to discharge the duty of fairness may result not merely in an award of damages, as in the case of wrongful dismissal, but in reinstatement.

KNIGHT v. INDIAN HEAD SCHOOL DIVISION NO.19: LAYING THE GROUNDWORK

Over the years, Canadian courts have developed the duty of fairness as a means of controlling the wide discretion given to public employers with the power to dismiss without cause or notice.

Unless a right to procedural fairness is conferred on an employee by statute or contract, whether or not an employer has a duty to act fairly will depend on three factors: the nature of the decision to be made by the employer; the relationship existing between the employer and the employee; and the effect of that decision on the employee’s rights. The cases are clear that a decision to terminate employment meets the first and third criteria. However, the second factor has occasioned more debate. In Knight v. Indian Head School Division No. 19, [1990] 1 S.C.R. 653, the Supreme Court of Canada distinguished three different categories of employment relationship: (i) a master and servant relationship, where there is no duty to act fairly when deciding to terminate employment; (ii) an office held “at pleasure” where termination can take place without notice or cause; and (iii) an office from which an employee can only be removed for cause. A duty to act fairly is owed in the latter two types of relationships but not in the master-servant situation.

In assessing whether an employment relationship is “at pleasure”, as distinct from a master-servant relationship, the courts will generally examine whether the employee’s position derives in some way from statutory authority, or has a “statutory flavour”. Several recent Ontario cases have dealt with the determination of who is an employee “at pleasure”, and the consequences of this determination.

BRODERICK v. KANATA: LOOK TO THE NATURE OF THE EMPLOYMENT

In this case, released on November 24, 1995, the court was concerned with two employees, one the City’s Director of Human Resources, the other the City Engineer, who had been dismissed by resolution of City Council. Neither was given notice that the matter was on the agenda, and neither had an opportunity to respond. Both, however, obtained severance payments from the City.

The key issue was whether the employees were hired “at pleasure”, or were in a master and servant relationship with the City. Counsel for the City argued that the repeal of a provision in the Municipal Act which had provided that all officers appointed by a council held office at pleasure meant that such employees were no longer to be considered “at pleasure”.

The court disagreed, stating that both employees held permanent positions of responsibility, with rights and duties prescribed by statute or by-law. Clearly, therefore, both were officers who held their positions “at pleasure”. The fact that their positions could be terminated without just cause did not mean that the procedure for dismissal could be totally arbitrary. The failure to adhere to procedural fairness meant that they were entitled to be reinstated to their positions.

KOPIJ v. TORONTO: THE DUTY OF FAIRNESS APPLIES TO CONSTRUCTIVE DISMISSAL

Bohdan Kopij had served as supervisor of labour relations with the Metro Toronto Ambulance Department. After he provided inaccurate information to legal counsel during an arbitration proceeding, the latter and another senior officer refused to work with him any longer. Kopij argued that this effectively removed 50 per cent of his duties and constituted constructive dismissal. In a decision released on June 20, 1996, the court agreed.

In this case, the court was not concerned with determining whether Kopij was employed “at pleasure”, as this point was conceded by the municipality. However, counsel for Metro argued that such employees were not owed a duty of fairness. This assertion was rejected by the court, which held that employees at pleasure were owed a duty of fairness, however paradoxical that might seem:

“Since employment at pleasure means that the employer need not even have a reason for termination, the concept of procedural fairness is somewhat anomalous in this context. However, it was introduced by the Supreme Court because the whole concept of employment at pleasure was recognized as anachronistic, and therefore it was an attempt to inject as much as possible an opportunity for some job protection even in a situation where the original intent was that none exist.”
The court noted that, in cases of constructive dismissal, it was difficult to apply the concept of procedural fairness. However, it stated, it was clear that the decision of the two senior officers to cut off contact with Kopij presented him with a fait accompli, and that a meeting with the Commissioner to discuss the situation was never arranged. Kopij had been denied both notice and an opportunity to respond.

In terms of remedy, Kopij did not ask for retroactive reinstatement, but rather damages in lieu of notice. This was in spite of the fact that, as an employee “at pleasure”, he was not legally entitled to any notice at all. The court noted that there was not much in the jurisprudence about what sort of damages could be awarded for a failure to accord an employee procedural fairness, but held that Kopij should not be denied the lesser remedy of damages.

In the end, Kopij was awarded ten months’ salary, on the basis that this was the severance package that may well have been negotiated had he been offered a timely hearing. He was also awarded damages for mental distress, the court holding that it was negligent of Metro not to have given him procedural fairness, and reasonably foreseeable that this would cause him mental distress.

DEWAR v. ONTARIO: FIXED TERM APPOINTMENTS ARE NOT “AT PLEASURE”

Despite the requirement of procedural fairness, it is still relatively easy to terminate employees hired “at pleasure”. This can be seen by the nature of the dispute in the case of Marion Dewar and Judith Hunter, released on July 25, 1996. Dewar and Hunter were appointed by the former NDP government to serve for two-year terms on the Regional Municipality of Ottawa-Carleton Police Services Board. The appointments were made by Orders in Council, which replaced previous Orders in Council that had appointed them to indefinite terms. In December 1995, in the middle of the terms, both appointments were revoked by the new Conservative government. Dewar and Hunter applied for judicial review of their dismissals, claiming that they had been appointed for fixed terms and not “at pleasure”.

The court agreed, rejecting the government’s contention that the appointments were “at pleasure” despite the stated term of two years. In arguing that it retained its power to dismiss at pleasure, the government had relied on an English case which held that term contracts between the Crown and civil servants did not restrict the Crown’s power to dismiss at will before the conclusion of the term. Here, however, the court held, it was the Crown itself that had restricted its power, not a contract:

“The Dunn case is distinguishable from [this case], in my opinion, because there the provision for a [fixed term] was not contained in an Order in Council. Here, the Orders in Council appointing the applicants were the medium by which the power conferred upon the Crown was exercised. In this case, the powers of the Crown respecting dismissal were restricted by the Crown itself.”
Dewar and Hunter did not request reinstatement. The court therefore declared that the orders dismissing them were invalid, that they should have been allowed to serve the balance of their terms, and that they were entitled to full reimbursement for any loss suffered as a result of the unlawful termination of their appointments.

IN OUR VIEW

Broderick points to the severe consequences of not complying with the duty of fairness, even in situations where severance has been paid. Public employers should therefore carefully consider the nature of an employee’s rights and responsibilities in order to determine whether that person is employed “at pleasure”, and whether the duty is owed.

As Kopij highlights, this determination may now be crucial as well in situations where the employer wishes to alter an employee’s duties. In this context, if there is any possibility that these changes may be perceived as amounting to constructive dismissal, there may also be an obligation to afford the employee notice of the reasons for the change, and an opportunity to respond.

It appears that governments who have restricted their own authority to dismiss without cause or notice by appointing employees for fixed terms will have to honour these terms, in the absence of cause for dismissal. At the conclusion of the fixed term, of course, such appointments may be terminated without adherence to procedural fairness. Also, as the court in Dewar suggested, had the appointments in question been made under a contract as opposed to an Order in Council, the Crown’s power to dismiss at pleasure may not have been affected. The Ontario Court of Appeal has granted leave to appeal in the Dewar case. We will keep readers informed of developments. (See also “Civil service employment “not feudal servitude”, SCC rules” on our Publications page.)

For more information on this subject, please contact Jacques A. Emond at (613) 563-7660, Extension 224.