Grievance Arbitration in Ontario
Grievance arbitration is the exclusive dispute resolution mechanism for matters arising under collective agreements in Ontario. The Labour Relations Act, 1995, S.O. 1995, c. 1, s.48 requires every collective agreement to contain a provision for final and binding arbitration of differences arising from the interpretation, application, administration, or alleged violation of the agreement. If the parties do not include such a provision, the Act deems one to be included.
The effect of s.48 is to oust the jurisdiction of the ordinary courts over collective agreement disputes — the Weber doctrine, established by the Supreme Court of Canada in Weber v Ontario Hydro [1995] 2 SCR 929, holds that courts have no jurisdiction where the essential character of a dispute arises from the collective agreement.
The Grievance Process
Grievances typically proceed through multiple internal steps — informal discussion, formal written grievance, and escalating meetings with management — before advancing to arbitration. Collective agreements prescribe time limits for filing grievances and for advancing through each step; failure to meet these limits may result in the grievance being deemed abandoned.
Where a union fails to advance a meritorious grievance, an employee may bring a duty of fair representation complaint against the union to the Ontario Labour Relations Board. The union must not act in a manner that is arbitrary, discriminatory, or in bad faith in its handling of the grievance.
Arbitral Jurisdiction
An arbitrator's jurisdiction is limited to matters that arise under the collective agreement. The question of whether a matter is arbitrable — whether it falls within the scope of the collective agreement — is itself arbitrable: LRA s.48(1). Arbitrators may interpret statutes where the collective agreement incorporates or is affected by the statute (e.g., the Ontario Human Rights Code, the Occupational Health and Safety Act).
Statutory Powers and Jurisdiction
Under s.48(12), an arbitrator or arbitration board has the power to:
- Interpret and apply human rights legislation and other employment-related statutes;
- Award monetary compensation and any other remedy that the arbitrator considers just and equitable;
- Relieve against forfeitures and penalties;
- Extend time limits in the grievance procedure where there is reasonable cause.
Just Cause for Discipline and Discharge
Most collective agreements contain a just cause requirement for discipline and discharge — the employer must have just cause to impose any disciplinary measure. Even without express language, arbitrators have implied a just cause requirement into collective agreements.
The Two-Part Just Cause Test
Arbitrators apply a two-part test:
- Did the employee engage in the conduct alleged? The employer bears the burden of proof — on a balance of probabilities for most workplace misconduct, and a higher (but not criminal) standard for conduct analogous to criminal offences (theft, assault, sexual harassment).
- Did the conduct warrant discipline, and was the discipline proportionate?The arbitrator assesses whether the employer responded proportionately to the seriousness of the misconduct.
Proportionality and Progressive Discipline
The proportionality principle requires that the penalty be proportionate to the severity of the misconduct. Discharge — the capital punishment of labour relations — should be reserved for the most serious offences or for employees who have been given adequate warning but continue to engage in the offending conduct.
Progressive discipline — the practice of imposing escalating penalties (verbal warning, written warning, suspension, discharge) — reflects the principle that employees should have the opportunity to correct their behaviour before termination. An employer that goes directly to discharge for a first offence (absent a very serious act) risks having the arbitrator substitute a lesser penalty.
The Culminating Incident Doctrine
The culminating incident doctrine allows an employer to discharge an employee whose overall record of discipline justifies termination, even where the final incident is relatively minor. Where an employee's record demonstrates a pattern of misconduct that has been the subject of progressive discipline, a further offence — even a minor one — may be the "last straw" that justifies discharge. The final incident must be sufficiently connected to the prior misconduct to constitute a culminating incident.
Mitigating and Aggravating Factors
Arbitrators weigh a range of factors:
- Mitigating: long service, unblemished record before the incident, provocation, personal circumstances, remorse, and prospects for rehabilitation;
- Aggravating: prior disciplinary record, dishonesty, abuse of trust, deliberate or premeditated conduct, harm to the employer or co-workers.
Arbitral Remedies
Reinstatement
Where an arbitrator finds that discharge was not for just cause, the default remedy is reinstatement — the employee is returned to their position. The arbitrator may impose conditions on reinstatement (last chance agreements, demotion, transfer, mandatory counselling). Reinstatement with full back pay is the typical remedy for a completely unwarranted discharge; reinstatement without back pay (or with reduced back pay) may be ordered where the employee contributed to the situation by their own conduct.
Substitution of Penalty
Under s.48(17)(b), an arbitrator may substitute a lesser penalty for a discharge. Where the employer had just cause for discipline but discharge was disproportionate, the arbitrator may substitute a suspension — the employee is reinstated with a suspension on their record and without back pay for the suspension period.
Back Pay and Mitigation
Back pay compensates the employee for wages lost during the period of wrongful discharge. The employee has a duty to mitigate — they must take reasonable steps to find alternative employment. Earnings from mitigation are deducted from the back pay award. The employer bears the burden of proving failure to mitigate.
Standard of Review of Arbitral Awards
Arbitral awards are subject to judicial review in Ontario courts. FollowingCanada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65, the standard of review of arbitral decisions is reasonableness — courts defer to the arbitrator's interpretation of the collective agreement and the relevant statutes, provided the decision is reasonable (justified, transparent, and intelligible). The correctness standard applies only where the question is a constitutional question or a question of general law of central importance to the legal system that falls outside the arbitrator's expertise.
Interest Arbitration and First Contracts
Interest arbitration is used to set the terms of a collective agreement where the parties are unable to negotiate one. In Ontario, the Labour Relations Act provides for interest arbitration for first contracts (s.43) where the parties have been unable to reach a first collective agreement after certification. The arbitrator has broad discretion to determine the terms of the agreement and will consider the parties' bargaining positions, comparable agreements in the industry, and the ability of the employer to pay.
Practice Points for Ontario Labour Lawyers
- Check the grievance procedure time limits in the collective agreement immediately — missed deadlines may result in the grievance being time-barred before the merits are even argued.
- In discharge arbitrations, assemble evidence of the employee's complete disciplinary record, the progressive discipline applied, and any mitigating factors before the arbitration hearing.
- Where the employer relies on evidence obtained through investigation (witness statements, surveillance), consider whether the evidence was obtained in compliance with the collective agreement and the employee's privacy rights.
- In human rights grievances, arbitrators apply the Human Rights Code directly and may award general damages for injury to dignity — ensure the remedy sought reflects the full scope of available relief under both the collective agreement and the Code.
- For judicial review of arbitral awards, the Vavilov reasonableness standard requires a high threshold — courts will intervene only where the arbitrator's reasoning is incoherent, disregards binding legal constraints, or fails to engage with the central issues.