Federal Employer Too Inflexible in Employee Transfer

Written on behalf of Peter McSherry

A recent Federal Court of Appeal case, Canada (Attorney General) v. Lloyd, illustrates some of the processes and rights federal employees have access to compared to their provincial counterparts. In particular, it is a judicial review of a decision by a federal agency to deny an employee’s grievance.

A federal employee working for the Canada Revenue Agency (CRA) was transferred out of her job as a senior investigator with the Criminal Investigation Division due to misconduct. The Federal Court of Appeal found that the CRA’s actions were unreasonable. It stated the CRA had been inflexible in its decision-making and failed to consider all relevant factors.

How does federal employment law differ from provincial employment law?

The employment laws that govern workers in Canada vary by jurisdiction. The law that applies to federal employees is the Canada Labour Code. This includes federal government employees, Crown corporations, banks, and federally regulated industries. For provincially regulated employees, which makes up the majority of Canadian employees, the law depends on the province where they work. For example, most Ontario employees are governed by the Employment Standards Act.

Federal employees have different (and, in some cases, greater) protections, rights, and rules than their provincial counterparts. If a federal employee’s termination contravenes the Canada Labour Code, they may bring a claim of unjust dismissal. On the other hand, provincial employees may, for example, be terminated without cause as long as the reason for termination is not discriminatory.

Another difference between the two types of employment law in Canada is that disputes between federal employers and their employees can be brought before the Federal Court of Appeal.

Canada Revenue Agency employee filed several discrimination and discipline-related grievances

The case of Canada (Attorney General) v. Lloyd arose from several issues between the employee and her employer, the Canada Revenue Agency (CRA), that occurred over many years. The employee filed multiple grievances, including:

• A discrimination grievance based on disability, filed due to a “failure to provide timely and adequate accommodation for her condition” (fibromyalgia, for which the employee took sick and disability leaves) by the employer;
• A discipline grievance, in which the employee stated she faced extreme disciplinary measures that were not in line with the level of misconduct;
• A transfer grievance, resulting from a forced transfer to another position due to past misconduct; and
• A second discrimination grievance accompanying the transfer grievance.

The last three grievances arose after the employee accessed taxpayer and personal information from a non-work computer to gather evidence for the discrimination grievance against the CRA. As a result of this misconduct, the employee was forced to transfer to another position and was threated with termination if she refused to agree to the transfer.

The CRA did not create any opportunities for the employee to return to her previous position. As a result, the dispute was brought before the Federal Court of Appeal on judicial review, where the Court found that the CRA was too inflexible and failed to assess all of the facts and circumstances properly. Therefore, the Court found that the CRA’s decision to dismiss the employee’s grievance relating to the transfer was unreasonable.

CRA stated employee’s credibility could not be rehabilitated

The core element of the appeal was whether Canada Revenue Agency’s Assistant Commissioner correctly applied the reasonableness standard. More specifically, the Court analyzed whether the CRA considered all of the circumstances, including previous board decisions and the employee’s history of conduct, in deciding that it was impossible to supervise and rehabilitate the employee’s credibility so she could return to the Criminal Investigation Division role.

The Court found that the CRA relied mainly on the legal opinions of the Public Prosecution Service of Canada (PPSC). The PPSC stated that the employee was not suited for her role at the Criminal Investigation Division because her serious misconduct could hinder future prosecutions. However, they advised that the employee could return to her position with supervision and gradually increase her responsibilities.

The CRA determined it would be too difficult to provide the supervision required to rehabilitate the employee’s credibility. As a result, it was decided she must be transferred.

Exclusive reliance on legal opinion was too inflexible a decision-making approach

The Federal Court of Appeal found the CRA’s decision was based mainly on the PPSC legal opinion and did not consider any other circumstances. The Court held that the CRA failed to acknowledge that the misconduct did not occur for the employee’s gain but rather to gain information for her discrimination grievance. There was no proof of any future risk of the employee inappropriately accessing more confidential information. Further, the Court found that the CRA’s characterization of the misconduct as “serious” did not match the description provided in their policy.

Finally, the Court found that the Assistant Commissioner did not provide a meaningful justification for prioritizing the legal opinion over all other factors, including managerial opinions. Therefore, the Court held that the CRA’s decision to dismiss the grievance was unreasonable, stating that the CRA’s exclusive reliance on the PPSC legal opinion was:

“… the hallmark of an inflexible approach detached from and impervious to the respondent’s particular circumstances and the overall context and evolution of her misconduct file.”

Ensure Your Employment Law Rights Are Protected With Peter A. McSherry

Peter A. McSherry Employment Lawyer assists employees and employers in Guelph, Ontario and throughout the Greater Toronto Area on termination, wrongful dismissal and severance issues. Peter A. McSherry regularly assists employees and provides guidance during difficult times. For employers, we can help you understand your legal obligations and provide advice on managing the legal and reputational risks that arise when making difficult employment decisions. Contact us online or by phone at 519-821-5465 to schedule a consultation.