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Supreme Court of Canada Decision on Reasonable and Fair Exercise of Employer’s Management Rights Under Collective Agreement

The Supreme Court of Canada ruled on the reasonable and fair exercise of employer’s residual management rights in Association of Justice Counsel v. Canada (Attorney General), 2017 SCC 55. The Court also ruled on the approach that arbitrators should utilize in cases that consider the exercise of management rights.

Whether the Directive was a Fair and Reasonable Exercise of Management Rights

The employer established a system to have lawyers respond to immigration matters that occurred outside business hours. The employer changed the system with a directive that made standby shifts mandatory, and only compensated lawyers for time they spent working if a request was made during their shift. A grievance was filed on behalf of the lawyers on this change. The Collective Agreement was silent on standby duty.

The labour arbitrator concluded the directive was not a reasonable or fair exercise of management rights. Agreeing with the arbitrator, the Court found the employer’s management rights were not unfettered and the employer was required to act reasonably, fairly and in good faith. The arbitrator’s decision, that the directive was an unfair exercise of management rights, was within the range of acceptable possible outcomes.

The Court concluded the well-established analytical framework, to determine whether a policy is a reasonable exercise of management rights, is the “balancing of interests” assessment. The arbitrator had used this assessment in considering the Collective Agreement, the effect of the directive on the lawyers’ personal lives and the employer’s objective. The Court found the arbitrator’s analysis and approach was reasonable.

Why This Case is Important

This case reiterates the “balancing of interests” assessment as the analytic framework to determine whether an employer exercised their residual management rights in a manner that was reasonable, fair and in good faith.

This case also serves as a reminder that these balancing assessments are highly fact specific. An employer considering implementing a policy which may be seen as an unreasonable or unfair exercise of their management rights, would be well served to consider the interests on both sides.

Lyndsay MacDonald is a consultant with HR Atlantic. HR Atlantic regularly advises employers and organizations on issues of management rights and other employment related issues. Please contact any of our consultants to discuss your workplace needs.