In International Association of Machinists & Aerospace Workers (IAMAW), District Lodge 140 v. Air Canada, an arbitrator was tasked with determining the method of calculating the appropriate compensation for an employee who was dismissed without just cause and who could not be reintegrated into the workplace. Finding that compensation in lieu of reinstatement in such circumstances should be remedial in nature rather than speculative, the arbitrator ultimately endorsed the employer’s proposed approach.
Background
The grievor’s employment with Air Canada (the “Employer”) was terminated after he filed four harassment complaints over a three-month period, which the Employer alleged had been done in bad faith. In May 2025, however, Arbitrator Garzouzi (the “Arbitrator”) determined that the Employer had dismissed the grievor without just cause. More specifically, the Arbitrator held that the Employer had failed to prove bad faith, noting that the grievor’s persistence or expression of dissatisfaction did not amount to an abuse of the complaints process.
Despite quashing the termination, the Arbitrator concluded that reinstatement was not a viable or constructive option due to the irreparable breakdown of the employment relationship. While the matter of remedy was initially remitted to the parties, they were unable to agree on the method of calculating the compensation required to make the grievor whole. Having reached impasse, they returned before the Arbitrator for further direction.
Decision
At the supplementary hearing, the Union advocated for the Hay River approach, which would provide compensation up to the anticipated date of the grievor’s retirement. The Employer, on the other hand, argued for the De Havilland approach, which would instead provide compensation over a reasonable period reflective of the grievor’s age, service and the circumstances surrounding the dismissal. Notably, in addition to the loss of wages, the loss of other collective agreement entitlements is also reflected in this approach, such as the loss of seniority and job security.
In this case, the Arbitrator found that the Hay River approach was unduly speculative in that it assumed that the grievor’s employment – which had been found to be irreparably broken – would have continued until his expected retirement age. Moreover, she noted that the grievor was at a relatively early stage in his career and could still re-enter the labour market. In contrast, she found that the De Havilland approach better aligned with prevailing arbitral practice and with the remedial purpose of labour arbitration. The Arbitrator therefore ordered the parties to apply the De Havilland approach while remaining seized to determine any outstanding issues.
In Our View
Employers facing a grievance alleging unjust dismissal in cases where reinstatement is unlikely to be an appropriate remedy should be reassured by this decision and the emphasis it places on the remedial purpose of labour law. In applying the employer’s proposed approach instead of the method championed by the union, the arbitrator effectively accomplished what the relevant legislation seeks to do – restore a grievor to the position they would have occupied but for the unjust dismissal, without providing them with a windfall at the employer’s expense.
For more information, please contact Steven Williams at (613) 697-6869 or Lauren Jamieson at (613) 404-5058.
