LEGAL ALERT LABOUR & EMPLOYMENT SUPREME COURT OF CANADA REVISITS THE CONCEPT OF UNDUE HARDSHIP THE BACKGROUND JULY 2008

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1 JULY 2008 SUPREME COURT OF CANADA REVISITS THE CONCEPT OF UNDUE HARDSHIP LABOUR & EMPLOYMENT LEGAL ALERT The Supreme Court of Canada has been busy over the past few weeks releasing significant employment law decisions. The impact of these decisions will be felt for many years. On June 27, 2008 the Court released Keays v. Honda Canada. 1 That decision affirmed the principles that are properly considered when determining the period of reasonable notice, the fact that a breach of human rights legislation will not found a claim for punitive damages and the manner in which damages are to be determined in wrongful dismissal cases. Now, on July 17, 2008, the Court released Hydro Québec v. Syndicat des employées de techniques professionnelles et de bureau d Hydro-Québec, section locale ("Hydro Québec") in which it clarifies the duty to accommodate and, more particularly, the nebulous concept of undue hardship. This case provides welcome assistance to stakeholders who struggle in understanding the scope of the obligation under human rights legislation. One of the most common questions is: "how do I know when I ve accommodated to the point of undue hardship?" The Hydro Québec case goes a long way in answering this question. THE BACKGROUND The complainant was a unionized employee, represented by the Syndicat des employées de techniques professionnelles et de bureau d Hydro-Québec (the "Union"). During her employment with Hydro Québec she suffered from a series of physical and mental ailments that necessitated that she absent herself from work for varying and sometimes lengthy periods. She had missed a total of 960 days of work between January 3, 1994 and July 19, 2001 by reason of her medical condition. Over the years, the employer adjusted her working conditions in light of her limitations and accommodated her in different ways. 1 (2008) SCC 39 and Borden Ladner Gervais LLP Legal Alert "Supreme Court of Canada Decides the Keays v. Honda Canada Case" 2 (2008) SCC 43

2 The complainant was absent from work commencing on February 8, 2001 and was under the care of an attending physician who recommended, "she stop working for an indefinite period, until the workrelated dispute is resolved ". The employer also sought medical advice from a psychiatrist who concluded "the complainant would no longer be able to work on a regular and continuous basis without continuing to have an absenteeism problem as in the past ". Hydro-Québec terminated the complainant s employment on July 21, 2001 and, in their letter, informed the complainant that the decision was occasioned by reason of the complainant s "inability to work on a regular and reasonable basis and the fact that no improvement in her attendance at work was expected". The complainant filed a grievance, challenging the dismissal. THE DECISIONS BELOW The Arbitrator dismissed the grievance and held:... that, in principle, the [e]mployer could terminate its contract of employment with the complainant if it could prove that, at the time it made that administrative decision, the complainant was unable, for the reasonably foreseeable future, to work steadily and regularly as provided for in the contract. [Translation] The Arbitrator was persuaded by the employer s expert who opined, "no medication could effectively treat a condition such as a personality disorder, and that psychotherapy can at most alleviate the symptoms very slightly". The expert estimated that there was more than a 90% chance that the complainant would suffer a depressive relapse and that "the future will mirror the past". The Union, on the other hand, presented expert evidence in which they believed that the complainant could:... work in a satisfactory manner provided that it is possible to eliminate the stressors both those related to her work and those arising out of her relationship with her immediate family that affect her and make her unable to work. He suggests a complete change in the complainant s work environment. [Translation] The Arbitrator held that, if the views of the Union s expert were accepted, the employer would "have to periodically, on a recurring basis, provide the complainant with a new work environment, a new immediate supervisor and new co-workers to keep pace with the evolution of the love-hate cycle of 2

3 her relationships with supervisors and co-workers". Furthermore, many of the factors that were impacting on the complainant were beyond the employer s control. In the circumstances, the Arbitrator found that the employer had acted "with patience and tolerance" towards the complainant and dismissed the grievance. The Union challenged this decision in the courts. The Québec Superior Court indicated that the complainant suffered from a handicap within the meaning of the Charter of human rights and freedoms and that the decision to dismiss the complainant was based on her inability to work because of her condition. The Court considered the Arbitrator s assessment of the duty to accommodate and rejected the Union s argument that the employer was required to show that the complainant s absences would have "insurmountable consequences". The Court affirmed the Arbitrator s decision. The Union successfully challenged this decision in the Court of Appeal. The Court was of the view that the Arbitrator had misapplied the approach to accommodation adopted in British Columbia (Public Service Employee Relations Commission) v. BCGSEU 3 ("Meiorin"). According to the Court of Appeal, the complainant was not totally unable to work and, accordingly, the employer had to prove that it was impossible to accommodate individual employees sharing the complainant s characteristics in order to successfully argue that it had met its obligations to accommodate the complainant. Furthermore, in the Court of Appeal s view, the duty to accommodate had to be assessed as of the time the decision to terminate the employment was made and the Arbitrator erred when he took "only the absences into account" in reaching his conclusion. THE DECISION OF THE SUPREME COURT OF CANADA The Supreme Court of Canada allowed the appeal, disagreeing with the Court of Appeal and effectively restoring the decision of the Arbitrator. Writing for a unanimous Court, Madam Justice Deschamps noted (in one of the great judicial understatements we can recall), "despite the large number of decisions concerning the rules developed in Meiorin, the concept of undue hardship seems to present difficulties." Madam Justice Deschamps identified the source of those difficulties as one of interpretation arising from the use of the word "impossible" in the Meiorin decision. 3 [1999] 3 S.C.R. 3 3

4 To reiterate, Meiorin involved the application of a physical demands standard to fire fighters. Meiorin, a female fire fighter, had failed to complete a distance run in the set time to qualify as a fire fighter. She successfully challenged that standard at the Supreme Court of Canada. In reaching its decision, the Court adopted a three-part test to determine whether an employer had met its duty to accommodate in the adoption of a workplace standard. First, the employer must show that the standard was adopted for a purpose rationally connected to the performance of the job. Second, the employer must show that the standard was adopted in good faith. With respect to the first two parts of the test, employers generally have little difficulty meeting them. After all, employers do not generally sit around their workplaces making rules or standards in bad faith that have no rational connection to the work being performed by their employees. However, the third part of the Meiorin test required employers to demonstrate that the rule or standard is reasonably necessary to the accomplishment of the legitimate work-related purpose. To show that the rule or standard is reasonably necessary, the Supreme Court wrote:... it must be demonstrated that it is impossible to accommodate individual employees sharing the characteristics of the claimant without imposing undue hardship upon the employer. Saddled after Meiorin with an apparent test of impossibility respecting undue hardship, it is little wonder that the concept presented difficulties. Madam Justice Deschamps, however, interprets Meiorin in a much more flexible manner. Employers, she writes, need not prove that it is impossible to integrate an employee who does not meet a standard but must prove undue hardship, "which can take as many forms as there are circumstances." With respect to the test of impossibility, she writes: The test is not whether it was impossible for the employer to accommodate the employee s characteristics. The employer does not have a duty to change working conditions in a fundamental way, but does have a duty, if it can do so without undue hardship, to arrange the employee s workplace or duties to enable the employee to do his or her work. Because of the individualized nature of the duty to accommodate and the variety of circumstances that may arise, Madam Justice Deschamps cautioned against adopting rigid standards. Rather, employers must be flexible in applying standards if such flexibility enables the employee in question to work and does not cause the employer undue hardship. Fundamentally, Madam Justice Deschamps recognized 4

5 that the goal of accommodation is to permit an employee who is able to work to do so. The goal, in other words, is not to completely alter the essence of the employment contract, which she describes as the employee s duty to perform work in exchange for remuneration. With respect to chronic absenteeism, the Court wrote:... in a case of chronic absenteeism, if the employer shows that, despite measures taken to accommodate the employee, the employee will be unable to resume his or her work in the reasonably foreseeable future, the employer will have discharged its burden or proof and established undue hardship. Madam Justice Deschamps rejected the notion that the test for undue hardship is total unfitness for work in the foreseeable future. Undue hardship will occur where an employer has attempted to accommodate a chronically absent employee and, in doing so, the proper operation of its business is hampered or the employee remains unable to work for the reasonably foreseeable future. In such a case, the standard adopted by the employer (i.e. that the employee work for remuneration) will be reasonable and a dismissal will be non-discriminatory. CONCLUSION On one level, the decision of the Supreme Court of Canada seems straightforward. The test for undue hardship is not that is it impossible to accommodate an employee, as Meiorin seemed to suggest but, rather, whether the accommodation imposes undue hardship. On the other hand, Madam Justice Deschamps clearly takes a pragmatic approach to the duty to accommodate. She cautions against rigid, self-defeating standards and encourages flexibility in both accommodation and undue hardship. One of the results of the decision should be that employers will have an easier time establishing undue hardship. It is perhaps this pragmatic approach, which is consistent with the approach taken by the Court in Keays v. Honda Canada, that is the most important aspect of the decision. For employers, however, it is fair to say that the concept of undue hardship presented difficulties long before the seeming "impossibility" test in Meiorin. Overly dogmatic and rigid approaches to accommodation and undue hardship developed by some adjudicators presented as much or more 5

6 difficulty. It remains to be seen the extent to which the pragmatic approach adopted by the Supreme Court of Canada will impact the thinking of front-line adjudicators. Michael P. Fitzgibbon Partner (416) Robert W. Weir Partner (416) This newsletter is prepared as a service for our clients and other persons dealing with labour and employment issues. It is not intended to be a complete statement of the law or an opinion on any subject. Although we endeavour to ensure its accuracy, no one should act upon it without a thorough examination of the law after the facts of a specific situation are considered. No part of this publication may be reproduced without prior written permission of Borden Ladner Gervais LLP. This newsletter has been sent to you courtesy of Borden Ladner Gervais LLP. We respect your privacy, and wish to point out that our privacy policy relative to newsletters may be found at If you have received this newsletter in error, or if you do not wish to receive further newsletters, you may ask to have your contact information removed from our mailing lists by phoning BLG-LAW1 or by ing subscriptions@blgcanada.com. Borden Ladner Gervais LLP Lawyers Patent & Trademark Agents C algary 1000 Canterra Tower 400 Third Avenue S.W. Calgary, Alberta, Canada T2P 4H2 tel: fax: Montréal 1000 de La Gauchetière Street West Suite 900, Montréal, Québec, Canada H3B 5H4 tel: fax: Ottawa World Exchange Plaza 100 Queen St., Suite 1100 Ottawa, Ontario, Canada K1P 1J9 tel: legal fax: IP fax: Toronto Scotia Plaza, 40 King Street West Toronto, Ontario, Canada M5H 3Y4 tel: fax: V ancouver 1200 Waterfront Centre 200 Burrard Street, P.O. Box Vancouver, British Columbia, Canada V7X 1T2 tel: fax: Waterloo Region Waterloo City Centre 100 Regina Street South, Suite 220 Waterloo, Ontario, Canada N2J 4P9 tel: fax: IP fax: Borden Ladner Gervais LLP Borden Ladner Gervais LLP is an Ontario Limited Liability Partnership Printed in Canada