Judgments

[1993] 1 F.C. 641

A-466-91

Michael W. Clare (Applicant)

v.

The Attorney General of Canada (Respondent)

Indexed as: Clare v. Canada (Attorney General) (C.A.)

Court of Appeal, Heald, Linden and Robertson JJ.A.—Ottawa, November 17, 1992 and January 18, 1993.

Public Service — Termination of employment — Dismissal for cause — S. 28 application to set aside PSC Appeal Board decision dismissing appeal against release for incompetence under PSEA, s. 31 — Employee’s unsatisfactory performance due to family problems, work-related stress — Request for medical assistance under Employee Assistance Program (EAP) refused by employer without reasons — Incompetence, temporary incapacity distinguished — Purpose of Act, s. 31 explained — Case law on temporary incapacity reviewed — Applicant’s incapacity not temporary — Whether “duty to refer” recognized by s. 31 — Duty conditional upon pre-existing “duty to warn”, in case of long-term employee — Respondent failing to discharge duty to refer — Not deemed to have acted in bad faith — Failure vitiating dismissal recommendation.

This was a section 28 application to set aside a decision of the Public Service Commission Appeal Board upholding a departmental recommendation that the applicant be released under section 31 of the Public Service Employment Act on the basis of incompetence. The applicant, who was a long-term employee with the federal government, was transferred from Transport Canada to the Department of Supply and Services in December of 1984. He received “satisfactory” performance appraisals for the period December 1985 - December 1, 1987 but his rating fell to “unsatisfactory” for the period December 1, 1987 to March 31, 1989 and again from April 1, 1989 to January 8, 1991. He explained his poor job performance by saying that, during the relevant periods, he was temporarily incapacitated due to family problems and work-related stress. Moreover, his employer had failed to respond to repeated requests for assistance under the Employee Assistance Program (EAP) and, in his opinion, this failure to comply with a “duty to refer” constituted bad faith. The issues were 1) whether the Appeal Board erred in law in affirming the finding of incompetence made against the applicant and 2) whether the respondent was under a “duty to refer” and if so, whether such duty had been discharged.

Held, the application should be allowed.

1) A finding of just cause for dismissal on the ground of incompetence is exceedingly rare. More often than not, poor job performance is the result of several contributing factors, including poor health and personality clashes with management. Moreover, it is often difficult to determine whether a dismissal is warranted because of incompetence or breaches of discipline. Although a valid distinction can be drawn between the terms “incompetent” and “incapable”, it is misleading to suggest that section 31 of the Act is directed at classifying employees as either incompetent or incapacitated. The purpose of this provision is to determine whether an employee has failed to meet the required level of job performance and not to find out the reasons underlying the failure to meet the expected standard. The word “incapable” is meant to cover situations where employees are unable to perform their duties and hence it is impossible to evaluate their performance in terms of incompetence, that is a failure to meet an objective standard. The applicant has demonstrated that he was capable of performing the duties of his position. Nothing turns on whether the terms “incompetent” and “incapacity” are synonymous, the only issue of importance to the applicant’s case being the matter of “temporariness”, whether it relates to incompetence or incapacity. Section 31 was not intended to allow a department to release employees whose immunity system is unable to protect them against temporal afflictions. Temporary incapacity is a factor to be reckoned with when a recommendation for dismissal is made under section 31. In the instant case, there was no basis on which the applicant’s so-called incapacity could have been characterized as temporary at the time the recommendation to release was made.

2) To answer the question whether a “duty to refer” should be recognized under section 31 of the Act, it is necessary to outline the precise scope of that duty. Once an employer has established an EAP and the employee seeks assistance, a “duty to refer” should arise, if the circumstances are such that the employer is under a pre-existing obligation to comply with the “duty to warn” as outlined in the case of Dansereau v. Canada (Public Service Appeal Board). The “duty to refer”, which should be recognized as a concomitant obligation of the “duty to warn”, is but a logical extension of the law applied in Dansereau and one which is in accordance with the dictates of fairness and modern labour relations. These implied duties to “accommodate”, “warn” or “refer” are for the benefit of long-term employees whose tenure is of itself a direct challenge to a finding of incompetence or incapability. The “duty to refer” neither transforms government policy as reflected in the EAP into law, nor invites consideration of a host of legal issues generated by the establishment and implementation of such programs. The failure of the respondent to take reasonable steps to ensure that the applicant took advantage of whatever the EAP had to offer did work an injustice in that it prevented the employee from making an informed decision with respect to his available options, one of them being a temporary leave of absence. The “duty to refer”, as it is presently cast, does not unduly intrude upon an employer’s rights. It serves another equally valid purpose, namely, to ensure that an employer who is truly acting in good faith arrives at a decision which is in the best interests of both parties.

The applicant, on his own initiative, sought professional assistance to which the respondent replied by a letter of “indifference”, being under the impression that the applicant was already receiving professional counselling. Had the respondent communicated directly with the applicant, any misunderstanding might have been avoided. The respondent’s mistaken notion as to the true facts cannot have the legal effect of negating the “duty to refer”. This duty having not been discharged, it is necessary to prescribe the legal consequences of the breach. There is no factual or legal basis on which the respondent can be deemed to have acted in bad faith. The burden of proof is on the party alleging bad faith; such burden is not easily discharged and in fact, a finding of bad faith, such as that made in Dansereau, is the exception and not the rule. The applicant failed to meet the required standard of work performance and although his work environment may have contributed to the stress he was experiencing because of his family situation, it cannot be said that the actions or omission of the respondent were the causa causans of the applicant’s “unsatisfactory” performance. The respondent’s breach must be regarded as a failure to meet a condition precedent which vitiates the dismissal recommendation. If that were not the effect of a breach, no purpose would be served in recognizing a “duty to refer” or for that matter a “duty to warn”.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Canada Labour Code, R.S.C. 1970, c. L-1, s. 61.5.

Federal Court Act, R.S.C., 1985, c. F-7, s. 28 (as am. by S.C. 1990, c. 8, s. 8).

Public Service Employment Act, R.S.C., 1985, c. P-33, ss. 27, 31.

CASES JUDICIALLY CONSIDERED

APPLIED:

Dansereau v. Canada (Public Service Appeal Board), [1991] 1 F.C. 444; (1990), 91 CLLC 14,010; 122 N.R. 122 (C.A.); Bell Canada v. Hallé (1989), 29 C.C.E.L. 213; 89 CLLC 14,052; 99 N.R. 149 (F.C.A.).

CONSIDERED:

Homstel v. Canada (Public Service Commission Appeal Board), A-303-89, Heald J.A., judgment dated 14/2/90, F.C.A., not reported; Perras v. R., [1982] 2 F.C. 589 (T.D.); Drummond v. Department of Fisheries and Oceans, [1986] ABD [7-1] 3.1 (a)-12 (P.S.C.A.B.); Ahmad v. Public Service Commission, [1974] 2 F.C. 644; (1974), 51 D.L.R. (3d) 470; 6 N.R. 287 (C.A.); Dickinson v. Department of National Revenue (Taxation), [1987] ABD [8-1] 162 (P.S.C.A.B.); Casey v. General Inc. Ltd. (1988), 73 Nfld. & P.E.I.R. 103 (S.C.T.D.); Yeager v. R.J. Hastings Agencies Ltd., [1985] 1 W.W.R. 218; (1984), 5 C.C.E.L. 266 (B.C.S.C.); Rivest v. Canfarge Ltd. (1977), 4 A.R. 164; [1977] 4 W.W.R. 515; 1 B.L.R. 316 (S.C.T.D.); Claver v. Canada, A-1892-83, Pratte J.A., judgment dated 21/2/91, F.C.A., not reported.

REFERRED TO:

Snaauw v. Public Service Commission Appeal Board, [1980] 1 F.C. 78; (1979), 30 N.R. 581 (C.A.); Nelson v. Attorney General of Canada, [1980] 2 F.C. 38 (C.A.); Schecter v. Canada (1986), 8 F.T.R. 144 (F.C.T.D.); Canadian National Railway Company v. Niles, A-481-91, Heald J.A., judgment dated 2/7/92, F.C.A., not yet reported; Roncarelli v. Duplessis, [1959] S.C.R. 121; (1959), 16 D.L.R. (2d) 689.

AUTHORS CITED

Finkelman, Jacob. Employer-Employee Relations in the Public Service of Canada; Proposals for Legislative Change, Part I, March 1974, Ottawa: Information Canada, 1974.

Lehr, Richard I. & David J. Middlebrooks, “Legal Implications of Employee Assistance Programs” (1986), 12 Employee Relations Law Journal 262.

Loomis, Lloyd. “Employee Assistance Programs: Their Impact on Arbitration and Litigation of Termination Cases” (1986), 12 Employee Relations Law Journal 275.

Sproat, John R. Employment Law Manual, Toronto: Carswell, 1990.

APPLICATION to set aside a decision of the Public Service Commission Appeal Board affirming a departmental recommendation that the applicant be released under section 31 of the Public Service Employment Act on the basis of incompetence. Application allowed.

COUNSEL:

Andrew J. Raven for applicant.

Dogan D. Akman for respondent.

SOLICITORS:

Raven, Jewitt & Allen, Ottawa, for applicant.

Deputy Attorney General of Canada for respondent.

The following are the reasons for judgment rendered in English by

Robertson J.A.: This application, under section 28 of the Federal Court Act, R.S.C., 1985, c. F-7 [as am. by S.C. 1990, c. 8, s. 8], is concerned with the rights and obligations of an employer confronted with a long-term employee whose performance is now deficient when measured against an objective standard. As is often the case, the employee seeks to negate the employer’s right to dismiss for cause by asserting the latter’s failure to fulfil an obligation. The nub of this case is whether we are prepared, as a matter of first impression, to recognize and impose an obligation which in the context of the applicable legislation must be characterized as an implied term of the employment contract.

The application is to set aside a decision of the Public Service Commission Appeal Board (hereinafter the “Board”) established by the Public Service Commission (hereinafter the “Commission”) in response to an appeal initiated by the applicant against a departmental recommendation that he be released under section 31 of the Public Service Employment Act, R.S.C., 1985, c. P-33, (hereinafter the “Act”) on the basis of incompetence. The Board having dismissed the applicant’s appeal, the Commission was obligated to “release” this employee after twenty-three years in the federal Public Service.

The applicant submits that the Board erred when it affirmed the Department’s finding of incompetence when in fact and law he was temporarily incapacitated due to family and work-related stress. Correlatively, it is maintained that the Department in question was under a duty to respond to the applicant’s repeated requests for assistance (professional counselling) having regard to the Employee Assistance Program (hereinafter the “EAP”) established by the employer. The failure to comply with, what I shall term, the “duty to refer” is said to constitute bad faith and hence the Board’s decision must be set aside.

The respondent maintains that: (1) there is no basis on which to interfere with the Department’s assessment that the applicant was incompetent; (2) there is no “duty to refer”; and (3) the respondent’s officials did not act in bad faith.

FACTS

The facts relevant to this application touch on three distinct matters: (1) the applicant’s performance appraisals during his tenure with the Department in question; (2) the reasons offered to explain his “unsatisfactory performance”; and (3) the circumstances surrounding his requests for assistance.

In December of 1984, the applicant was given a probationary appointment to the position of Contracting Officer with the Department of Supply and Services (hereinafter the “Department”) on a lateral transfer from Transport Canada. On expiration of the twelve-month probationary period the applicant’s appointment became permanent. From that date until December 1, 1987, the applicant received “satisfactory” performance appraisals.[1] That is to say, he fulfilled all of the basic requirements of the position while needing improvement in some areas.

The applicant’s performance rating fell to “unsatisfactory” for the period December 1, 1987, to March 31, 1989.[2] During that period he failed to meet one or more of the basic requirements of the position such that significant improvement in job performance was needed. Moreover, the situation did not improve.

From April 1, 1989 to January 8, 1991, the applicant continued to perform at the “unsatisfactory” level, save for a brief period of four months (November, 1989—February, 1990) when he was, at his own request, working under close supervision.[3] In summary, the performance reviews reveal that the applicant performed at the “satisfactory” level for the first three years and at the “unsatisfactory” level for the remaining three.

Of immediate relevance are the reasons proffered by the applicant to explain his unsatisfactory performance over a period of three years. In this regard, attention must focus initially on matters arising outside the work environment. From the appeal record, it is apparent that the circumstances surrounding the ill health of the applicant’s wife and the sexual abuse experienced by his son might very well have had a profound impact on this employee and one which intruded into his professional life.

In 1985, Mr. Clare’s wife became extremely ill and nearly died a year later. She had been diagnosed with Crohn’s disease and underwent major surgery. In 1990, she was admitted to hospital because of complications from the disease and the earlier surgery. In June of 1990, she underwent testing for what was thought to be bone cancer but which later proved to be symptomatic of the treatment being administered for Crohn’s disease.

Sometime in 1987, the applicant’s son attended a course organized by a local educational institution.[4] Befriended by an instructor and sexually assaulted over an extended time period, the matter was not fully disclosed until sometime in 1990.[5] During this time frame, the behaviour of the applicant’s son led to physical confrontations with his parents. Consequently, police intervention was required.

The accepted evidence of Dr. Waye, a psychologist who testified on behalf of the applicant, was that the latter was under substantial stress both at work and at home over a two-year period.[6] With respect to work-related stress, Dr. Waye and the Board referred specifically to the “personality conflict” between the applicant and his supervisor which resulted in frequent audits of the applicant’s work.[7] The significance of the so-called “personality conflict” is examined later.

Before the Board, much of the argument was directed at whether the applicant’s requests for assistance went unanswered and, equally as important, whether the Department was obligated to refer the applicant to the EAP. A review of the relevant correspondence leading up to the dismissal recommendation of January 8, 1991, provides the necessary background.

It was not until receipt of the unsatisfactory performance review of June 7, 1990, that the applicant formally advised the Department in writing of the family problems which he believed had a profound and negative impact on his ability to fulfil his job responsibilities. The applicant wrote a memorandum to this effect, as well as asking for personal assistance and a temporary reassignment. He also informed the Department that he was “currently seeking and obtaining assistance from [his] family physician, The Young Offenders Section of Alberta Social Services, a psychiatrist and several other agencies in relieving [his] family problems.”[8]

It appears, however, that it was the applicant’s family that was receiving counselling and not the applicant. The only medical assistance he sought was in regard to recurring insomnia and indigestion for which his family physician had prescribed medication.[9] Hence, as I understand it, the applicant was not receiving any counselling in so far as his familial situation impacted upon his ability to function effectively at work.

With respect to the applicant’s requests for assistance, he was advised on July 23, 1990, that he should see the government’s Public Health Nurse. She advised that there was no government program which provided such counselling, but if he wished his supervisor could request a special medical from the Public Health System. The applicant’s request of August 6, 1990, for such a medical was refused on August 10, 1990. No reasons were offered.

Following that exchange of correspondence, the applicant received a performance appraisal on October 3, 1990, in which he was informed that if his work did not improve within the next thirty days he would be “transferred, reassigned to other duties, demoted to a lower position or have [his] employment terminated.”[10] In effect, the respondent was complying with his “duty to warn” which in circumstances such as those under consideration is, in my opinion, a condition precedent to a dismissal recommendation under section 31.

On November 28, 1990, the applicant again sought a temporary reassignment noting that his family problems had not been resolved.[11] Finally, on January 8, 1991, the applicant received a letter notifying him of the decision to recommend his release under section 31 of the Act. On the following day, during a meeting with departmental officials, the applicant was extended a verbal offer of a position as a “Self-Service Storeperson”. (In all fairness to the applicant, I do not think he can be faulted for rejecting the offer outright given the circumstances in which it was conveyed.)

In addition to the foregoing facts, counsel for the respondent drew specific attention to two. One is a matter of record. The other is, in effect, additional evidence. First, it was emphasized that the applicant had come to the Department by lateral transfer from another because of “family problems”. The nature of those problems has yet to be revealed. Second, we were informed that in the federal Public Service a performance rating of “satisfactory”, which the applicant had received in his first three years with the Department, would invariably be viewed unfavourably by those in the civil service. Even the Board commented on the fact that the applicant had never achieved a “fully satisfactory” rating.[12]

I take it that we are to draw the inference that the applicant has a chronic history of family problems and that in effect his transfer to the Department in 1984 was motivated by a desire to accommodate a “problem” or “troubled” employee. Moreover, the fact that he had never performed at the “fully satisfactory” level supposedly speaks to the incompetence of this employee.

There is a legal response to each of the negative inferences suggested. First, the reasons underlying the applicant’s transfer in 1984 were not pursued before the Board and therefore cannot be made a matter of speculation (see Dansereau v. Canada (Public Service Appeal Board), [1991] 1 F.C. 444 (C.A.) at pages 460-462, as to what evidence can be relied on when justifying a dismissal). Second, the fact that the applicant never attained a “fully satisfactory” rating remains an irrelevancy in light of the government’s established performance ratings.

I think it is important to recognize the potential folly of either counsel or the Court drawing inferences, invariably negative, with respect to facts not directly in issue. From counsel’s perspective, it must be remembered that such an exercise can be double edged. In the instant case, many inferences adverse to the respondent’s position might be drawn from facts which neither counsel nor the Board wished to pursue for reasons I am unable to appreciate. I propose to elaborate on those facts if only to dispel counsel for the respondent’s apparent concern that the decision of this Court might be nourished more by misguided sentiment than legal acumen.

I was puzzled how it could come to pass that an employee could retain his position after having received “unsatisfactory” performance appraisals over such a protracted period—three years. It could be rationalized in terms of condonation on the part of the employer. On the other hand, the appeal record reveals that two weeks before the applicant’s performance review for the period December 1, 1987, to March 31, 1989, was completed on May 17, 1989, by the respondent’s officials, the applicant and his supervisor had a serious disagreement.[13] This explains why the appeal record contains several references to a “personality conflict” between these two workers.

The most conspicuous reference is found in the reasons of the Board: “Dr. Waye stated that the high demands of the appellant’s work, a personality conflict between the appellant and his supervisor, and the serious family problems added up to an extremely stressful situation.”[14] In a memo prepared by the applicant in response to the performance review for the period December 1, 1987, to March 31, 1989, the extent of the personality clash is clearly revealed:[15]

At this time I would like to state that over the past 18 months there has been a situation present which could be called in its simplicity “An Armed Camp”, between [the supervisor] and Myself. There has been a lack of trust, faith and confidence due to a number of situations that have arisen over the past year. This I feel has clouded [the supervisor’s] judgment in being able to do a fair and just evaluation, even though this report is supposed to be a report on performance only and not have any personal bias.

The foregoing facts might propel one to draw one or more inferences. For example, I might wish to speculate that although the applicant’s work record speaks of “incompetence” the true reasons underlying his dismissal touch on matters of “discipline”. I am fully cognizant of the fact that a finding of just cause on the ground of incompetence is exceedingly rare and more often than not, poor job performance is the result of several contributing factors, including poor health and personality clashes with management (see Sproat, Employment Law Manual, at pages 4-11 to 4-15). Moreover, it cannot be denied that it is often difficult to determine whether a dismissal is warranted because of incompetence or discipline:

No amount of litigation is likely to clarify the distinction between incompetence or incapacity, on the one hand, and misconduct or breaches of discipline, on the other, and it is scarcely likely that there can be any clear-cut statutory definitions of the two concepts. [J. Finkelman, Employer-Employee Relations in the Public Service of Canada; Proposals for Legislative Change, Part I, March 1974, at page 193.]

Certainly, the performance review prepared in May of 1989 might lead one to that conclusion. In that document there is a section headed “Overall Performance Rating” which describes the applicant’s work performance as follows:[16]

Mike is a punctual employee who is interested only in the workload in his station. He reluctantly assists the [supervisor] only when directly requested to do so. Even after a verbal reprimand by the [supervisor] Mike continues to confront and challenge him in a manner that disrupts the office environment.

As well, one cannot ignore the comments of the Review Committee scribbled on the performance appraisal:[17]

The Review Committee has discussed the appraisal with the supervisor and the reviewing officer and recognizes the complexities of this situation. Although there are some incongruencies, we agree with the rating. [Emphasis is mine.]

Neither the complexities nor the incongruencies of the situation are disclosed by the appeal record.

In the end, I am obligated to accept that the applicant’s poor work history and his confrontational attitude toward his supervisor are manifestations of familial stress. That inference is consistent with the applicant’s testimony before the Board: “The family crisis came to a head in April, 1989, just prior to his signing authority being withdrawn by the department.”[18] And, of course, it is common ground that the applicant’s work performance was unacceptable and therefore it would be improper at this stage to infer that the debilitating effects of stress had more to do with his work environment.

Rather than speculating on the merits of this case, I prefer to approach the issues under consideration by thinking in terms of the paradigmatic employee. That is, the long-term employee who is admired and respected by his or her co-workers and supervisors and whose loyalty and ability has, until recently, never been the subject of criticism, let alone disciplinary or dismissive action. My reasoning is straightforward. The obligations which the law imposes upon employers are for the benefit of all employees, even those who fail to obtain a “fully satisfactory” rating.

INCOMPETENCE v. TEMPORARY INCAPACITY

The applicant maintains that the Board erred when it concluded that he “was, for reasons beyond his control, not carrying out the duties of his position in a competent manner.”[19] The general thrust of the applicant’s submission is that the Board misinterpreted and misapplied section 31 of the Act when it failed to appreciate that he was temporarily incapacitated due to family and work-related stress. In other words, the terms “incompetence” and “incapacity” are not synonymous and constitute distinct bases for an employee’s failure to meet a performance standard. Subsection 31(1) reads:

31. (1) Where an employee, in the opinion of the deputy head, is incompetent in performing the duties of the position the employee occupies or is incapable of performing those duties and should be appointed to a position at a lower maximum rate of pay, or released, the deputy head may recommend to the Commission that the employee be so appointed or released, in which case the deputy head shall give notice in writing to the employee of the recommendation.

It is argued that an employee is incompetent within the meaning of the section if he or she lacks the requisite skill and training to perform the assigned responsibilities. On the other hand, an employee should be deemed incapable in circumstances where that employee possesses the requisite skills but, nonetheless, is unable to perform at the required level because of circumstances beyond his or her control. It is common ground that the applicant has demonstrated that he is capable of performing the duties of the position.[20]

The manner in which the applicant has chosen to define each of the terms is unexceptional if only because of their simplicity. Furthermore, I suspect that the non-lawyer would have difficulty in understanding the basis on which an employee could be deemed “incompetent” after having worked for the same employer for twenty-three years. Accordingly, a finding of “incapacity” seems eminently reasonable. However, in my view, it is misleading to suggest that section 31 is directed at classifying employees as either incompetent or incapacitated.

Section 31 speaks of a person who is “incompetent in performing the duties of the position” or, alternatively, one who is “incapable of performing those duties” (see Snaauw v. Public Service Commission Appeal Board, [1980] 1 F.C. 78 (C.A.), at pages 82-83, where the distinction is raised). It does not speak necessarily in terms of a person who is incompetent or incapacitated in the sense attributed by the applicant. In my view, section 31 is directed at determining whether an employee has failed to meet the required level of job performance and not the reasons underlying the failure to meet the expected standard, as argued by the applicant. A brief explanation is in order.

A variety of reasons or excuses could be advanced to explain unsatisfactory work performance by employees. For example, they may lack the required skills. Alternatively, they may have simply lost interest in their job or been distracted by other pressing concerns. In both scenarios, they will have demonstrated incompetence in performing their duties. The underlying reasons, in my opinion, remain irrelevant and therefore it is unnecessary, for example, to determine whether an employee has the requisite skills, etc.

More problematic, however, is the meaning to be attributed to an employee who is “incapable of performing his or her duties”. In this regard, I believe a valid distinction can be drawn between the terms “incompetent” and “incapable” without attempting to give the impression that either is to be regarded as a term of art. In my view, “incapable” is meant to cover situations where employees are unable to perform their duties and hence it is impossible to evaluate their performance in terms of incompetence, that is, a failure to meet an objective standard. The notion of “incapability” would be relevant in the case of an employee who is no longer physically able to perform his or her job functions. But irrespective of the reasons for the failure to perform, an employer would be entitled to release the employee. Admittedly, the harsh reality which awaits one who becomes “physically challenged” can be softened by long-term disability insurance schemes, collective agreements and the possibility of the employer accommodating the afflicted employee by finding a job compatible with his or her present capabilities (see Nelson v. Attorney General of Canada, [1980] 2 F.C. 38 (C.A.)).

Applying the above analysis to the facts under review, it is apparent that nothing turns on whether the terms “incompetent” and “incapacity” are synonymous. Hence, the only issue of importance to the applicant’s case is the matter of “temporariness”, whether it relates to incompetence or incapacity. In that regard it can be safely conceded that section 31 was not intended to allow a department to release employees whose immunity system is unable to protect them against temporal afflictions. That concession may explain why the jurisprudence on this point is limited.

In Homstel v. Canada (Public Service Commission Appeal Board), A-303-89, Heald J.A., February 14, 1990, not reported, the Appeal Board was faced with an employee who lost his driver’s licence for fifteen months and had been released under section 31 because a substantial part of his duties involved the operation of motor vehicles. The department’s position was that the loss of driving privileges rendered that appellant incapable of performing an integral part of his duties and that the incapacity was not of a temporary nature. The Board held (at page 17):

Before a department may proceed with a recommendation under section 31 based on an incapacity that incapacity should be seen as one that, at the time the recommendation was made, could be expected to continue into the reasonably foreseeable future and is not of a purely temporary nature.

Thus, the Board concluded that the incapacity was not purely temporary and that in the circumstances the department acted reasonably. The section 28 application to this Court was dismissed on the basis that the Board was reasonably entitled to make a finding of incapacity on the evidence before it.

In some respects, Homstel is more analogous to Perras v. R., [1982] 2 F.C. 589 (T.D.), where the employee was deemed to have abandoned his position, under section 27[21] of the Act, after having been convicted of certain offences and sentenced to fifteen months in jail. Originally, the employer dismissed the employee pursuant to section 31 of the Act on the ground that he was incapable of performing his duties. The employee’s appeal before the Board was successful and rather than seeking judicial review of that decision the employer turned to section 27 and released the employee. The dismissal was upheld by this Court.

While the facts of Homstel bear little resemblance to those under consideration, it does lend support to the notion that temporary incapacity is a factor to be reckoned with when making a recommendation for dismissal pursuant to section 31. If it can be demonstrated that at the time the decision to release was made the incapacity was purely temporary, then it appears that the employer may not have an unfettered right to invoke section 31. Could it be said that incapacity or incompetence resulting from stress is of a purely temporary nature? The issue was raised in the following case.

In Drummond v. Department of Fisheries and Oceans, [1986] ABD [7-1] 3.1 (a)-12 (P.S.C.A.B.), an employee with seven years of service had been dismissed for incompetence. While admitting that her job performance was unsatisfactory, she informed the department that she was suffering from stress whereupon she was referred to a physician with the Department of Health and Welfare. In time, the physician reported that the employee was receiving treatment but that it was not certain that her job performance would necessarily improve. The Appeal Board dismissed her appeal. The employee was found to be incompetent in performing her duties at the time the recommendation to release was made. With respect to the defence of temporary incapacity, the Board commented (at pages 8-9):

In short, I am unable to conclude that the prognosis for Mrs. Drummond’s unconditional return to work is entirely favorable. Therefore, I find that the department has no obligation in the circumstances of this case to allow Mrs. Drummond a further opportunity to demonstrate that she can perform her duties in a fully satisfactory manner.

In my view, the most significant aspect of Re Drummond is that the referral by the employer enabled a disinterested professional to adjudicate on the temporary aspects of the incompetence.

In the instant case, there was no basis on which either the applicant or the respondent could have characterized the former’s so-called incapacity as temporary at the time the recommendation to release was made. Indeed, it was only at the hearing before the Board that the applicant stated that he felt he had time to “get things together” and is now able to fulfil his duties.[22] Consequently, if the applicant is to be successful it is because the Department failed in its duty to respond to his requests for assistance.

Before turning to that issue, I should like to state that even if temporary incapacity or incompetence were proven, prior to a recommendation being formulated under section 31 of the Act, I fail to see how that fact should detract from the employer’s right to demand a minimum standard of performance. Respondent’s counsel argued that if stress did give rise to “temporary incapacity” then the applicant should have sought, for example, a leave of absence on medical grounds. I agree. Other than in trivial circumstances, temporary incompetence or incapacity does not entitle the employee to remain on the job. Other avenues must be pursued such as that envisaged by section 27 of the Act. An employee cannot continue to perform below the required standard by raising as a defence “temporary incapacity” thereby precluding the employer from invoking section 31. This is not to suggest that temporary incapacity is irrelevant for all purposes. Attention must focus on the extent to which the employer is under an obligation to assist the employee who is incapable of making such a prognosis. Hence it is the “duty to refer” which is of true significance and not the notion of “temporary incapacity”.

RECOGNIZING A DUTY TO REFER

I think it is relatively clear that, as a matter of stare decisis, it is open to this Court to superimpose on the employment contract the type of duty advanced by the applicant. In Ahmad v. Public Service Commission, [1974] 2 F.C. 644 (C.A.), Chief Justice Jackett held, inter alia, that an appeal board may not interfere with a department’s finding of incompetence unless there has been [at page 647] “some failure to apply properly some specific statutory or other legal direction”. [Emphasis is mine.]

Recently, this Court had imposed a duty on employers to forewarn employees of the possibility of dismissal if their unsatisfactory performance did not improve within a stipulated time frame (see Dansereau, supra). The majority of the Court in Dansereau adopted the approach set out in an earlier board case (see Dickinson v. Department of National Revenue (Taxation), [1987] ABD [8-1] 162 (P.S.C.A.B.). The reasoning of the Board in that case reflects the reality of how issues are perceived and resolved by those more familiar with the work place (at pages 173 and 176-177):

Of critical importance, however, is the question of notice or warning which is in the realm of fundamental fairness ... the concept of warning an employee of the consequences of continued unacceptable performance is more than a formality or a courtesy to be extended only to employees who are otherwise well-liked; it is elementary fairness.

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As can be seen from the foregoing, an unequivocal warning is a primary requirement prior to taking action in the nature of a demotion or dismissal in the field of labour relations as it equally is, in my experience, a universal practice in the federal Public Service. [Emphasis is mine.]

Writing for the majority in Dansereau, Mr. Justice Décary carefully crafted the parameters of the “duty to warn” with respect to the “established” or “long-term” employee whose job tenure is at risk (at page 460):

... when an employee who has performed the same duties for several years consistently receives satisfactory performance reports and is not the subject of any serious criticism by his employer, a presumption results that he has the necessary competence to perform the said duties and, in the absence of unusual or urgent circumstances, the employer cannot dismiss him for incompetence without telling him of the mistakes he is alleged to have made, without giving him an opportunity to correct them and without indicating to him the risk of dismissal he runs if they are not corrected. Of course, each case will be decided on its own merits and the type of warning and period for correction will vary depending on the circumstances. [Footnote omitted.] In the case at bar the applicant, having to his credit satisfactory performance reports and a career which until then had been without serious reproach in duties he had performed for over ten years, should in the absence of unusual or urgent circumstances have been given a warning before being dismissed, and the Appeal Board erred in law in not finding this lack of a warning to be relevant and not considering whether unusual or urgent circumstances could justify it.

The question we must answer is whether a “duty to refer” should be recognized within the context of section 31 of the Act. Although there appears to be no common law cases in which a “duty to refer” has been argued, there are a few decisions in which “stress” has proven to be a relevant factor in wrongful dismissal actions. Together they reflect a judicial predisposition to tip the scales of justice in favour of long-term employees.

In Casey v. General Inc. Ltd. (1988), 73 Nfld. & P.E.I.R. 103 (S.C.T.D.), the Court held that an employee’s neglect of duty following repeated warnings by the employer would normally constitute just cause for dismissal without notice. However, when the employee suffered from acute stress-related illness brought about by the pressures of his job, the employer was held not to be entitled to terminate without notice even though both parties were unaware of the illness as of the date of dismissal. The facts reveal that the employee had worked for this employer for twenty-two years.

In Yeager v. R.J. Hastings Agencies Ltd., [1985] 1 W.W.R. 218 (B.C.S.C.), the plaintiff employee (a buyer for a manufacturers’ agent) was dismissed after thirty years of service. During the two years preceding the plaintiff’s dismissal in April of 1982, his performance had been deteriorating steadily. In 1979, the president of the defendant advised the plaintiff to seek professional help for his emotional problems thought to stem from marriage difficulties but later found to be work-related. Ultimately it was determined that the plaintiff suffered from a “mild organic impairment” which manifested itself in low temper, frustration control and poor memory function. In view of the defendant’s knowledge of the plaintiff’s problems, the failure of the former to warn the plaintiff that his performance on the job was inadequate was fatal to the defence of dismissal for cause. The reasoning of the Trial Judge is instructive (at page 246):

... the remarks quoted establish a standard that this court expects of an employer when an employee demonstrates an unsatisfactory level of job performance which is inconsistent with either the expectations of the employer or the past performance of the employee. The fact that, in this case, the employer had some knowledge of the cause of the plaintiff’s problems made the standard expected of it all the more exacting. Had [the employer] reacted to the information he had in accordance with that standard, the effect might well have been to assist the plaintiff in appreciating the fact that there was a serious problem associated with his performance at work. [Emphasis is mine.]

It would be misleading to suggest that the foregoing cases reflect a liberalization of the tenets underlying common law doctrine. There are only isolated instances where the courts have recognized that an employment contract involves more than a barter of wages for services. Though in theory employment law, as a species of contract law, remains unconcerned with the reasons underlying non-performance, it is not unexpected that in certain marketplaces employees who have asserted their “blamelessness” have managed to achieve a modicum of protection from an employer’s exercise of its common law rights.[23]

In this regard, this case is no different. In effect, a defence of temporary incapacity is being advanced to support the notion that an innocent failure to meet one’s contractual obligations should fetter an employer’s right to dismiss for cause. In order to reach that result it is necessary to recognize that the latter failed to fulfil an obligation which must be regarded as a condition precedent to a dismissal recommendation or as constituting mala fides.

As important as it is to determine whether such a duty should be recognized, it is still necessary to outline the precise scope of the duty that is to be imposed. The applicant argues that once an employer has established an EAP and the employee seeks assistance then, in effect, a “duty to refer” should arise. I agree, subject to one indispensable qualification. The circumstances must be such that the employer is under a pre-existing obligation to comply with the “duty to warn”.

Should the “duty to warn” arise, as per the criteria outlined by this Court in Dansereau, so too should a “duty to refer” be recognized as a concomitant obligation. That duty is but a logical extension of the law applied in Dansereau and one which is in accordance with the dictates of fairness and modern labour relations. In my opinion, what is of critical significance when determining whether to recognize or impose an implied duty to “accommodate”, “warn” or “refer” is the fact that one is dealing with long-term employees. Normally, their employment tenure is of itself a direct challenge to a finding of incompetence or incapability. For example, in the instant case the applicant’s twenty-three years of service measures against the twenty-two in Dansereau. The inescapable reality is that today an employer owes much more to its long-term employees than it did a century ago. But there are other compelling reasons for acknowledging a “duty to refer”.

Would not a prudent manager recognize the mutual benefits to be derived from open and frank communications when an employee’s job performance and behavioural patterns become noticeably uncharacteristic of that person? Indeed, I would be greatly surprised to learn that managers in the federal Public Service are not schooled to respond accordingly. If, as stated in Dickinson, supra, it is a “universal practice” in the federal Public Service to comply with the “duty to warn”, I cannot fathom the bases on which the “duty to refer” would be rejected. This is particularly so once it is acknowledged that the policy decision to implement an Employee Assistance Program was made in the 1970s.

The objectives of that program are set out in the Personnel Management Manual:[24]

This program is intended generally to provide confidential health assistance or advice to employees who may seek such help, or to those who may require it where work performance is adversely affected due to a health problem. However, due to the predominance of health/behavioural problems related to the misuse of alcohol and the specific techniques required for the identification and treatment of alcoholism, the principles and procedures outlined herein for application by departments, are directed mainly toward that illness.

The responsibility of management is stated to be:[25]

... the supervisor or manager is responsible, in the accepted role of work evaluator, not for diagnosis of a suspected health problem, but solely for the identification of the employee whose work performance is consistently impaired (Refer to paragraph 16). This is the most effective method of identifying and reaching an employee who may need assistance due to a personal health problem.

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21. The success of the program is highly dependent on the early identification of potential health/behavioural problems among employees, through recognition of continuously impaired work performance, or consistently poor or declining interpersonal work relationships.

22. The program requires the active involvement of all supervisory and managerial levels and the exercise of good judgment in the identification and documentation of impaired employee job performance which may be caused by a health/behavioural problem, and in motivating employees to cooperate in arrangements for referral for counselling, and where necessary, treatment.

23. Departments should encourage employees to voluntarily seek assistance for a health problem, and without prejudice to job security. However, where impaired or defective work performance has been documented by a supervisor/manager over a reasonable period of time, a mandatory referral will be arranged for counselling and if necessary, for a health assessment by a health professional, designated by Health and Welfare Canada.

I wish to stress that the “duty to refer” does not transform government policy as reflected in the EAP into law, nor invite consideration of a host of legal issues generated by the establishment and implementation of such programs (see Canadian National Railway Company v. Niles, A-481-91, Heald J.A., July 2, 1992, not yet reported; and generally R. Lehr & D. Middlebrooks “Legal Implications of Employee Assistance Programs” (1986), 12 Employee Relations Law Journal 262, and L. Loomis “Employee Assistance Programs: Their Impact on Arbitration and Litigation of Termination Cases” (1986), 12 Employee Relations Law Journal 275).

The decision in Bell Canada v. Hallé (1989), 29 C.C.E.L. 213 (F.C.A.), serves as persuasive authority that government policy, by itself, cannot be elevated to the status of legal imperative. There the employee challenged her dismissal pursuant to section 61.5 of the Canada Labour Code, R.S.C. 1970, c. L-1, because her employer had failed to follow to the “letter” the “duty to warn” procedures prescribed by the company in its internal policy directives. Company policy was to give six months in which to allow the employee’s performance to improve, while the employee in Hallé was supposedly given three months. Mr. Justice Pratte held that the adjudicator was under a duty to make two determinations: (1) whether her performance was unsatisfactory and therefore there was just cause for her dismissal; and (2) whether the dismissal procedure used by the employer, taken by itself, was fair or unfair regardless of other policy directives adopted by the employer. In regard to the company’s failure to follow its own policy, Mr. Justice Pratte concluded (at page 217):

To begin with, I would say that the respondent’s dismissal, assuming it to be otherwise justified, cannot be regarded as unjust solely because the applicant did not follow the dismissal procedure described in its internal directives to the letter. So far as I am aware, this procedure is not a condition of the employment contracts of Bell Canada employees. The applicant can therefore depart from it without giving rise to any objection, unless the departure causes an injustice.

In my opinion, the failure of the respondent to take reasonable steps to ensure that the applicant took advantage of whatever the EAP had to offer does work an injustice in the following sense. The “duty to refer” serves a practical and valid purpose in that it enables the employee to make an informed decision with respect to his or her available options. For example, in the instant case the applicant might have been advised to seek a temporary leave of absence. Such were the facts in Rivest v. Canfarge Ltd. (1977), 4 A.R. 164 (S.C.T.D.), where Mr. Justice Bowen observed (at page 171):

The Plaintiff had given 19 years of exemplary service to the company. As a result of things beyond his control in the spring of 1974 he was placed in a position of strain and tension that occasioned an illness on his part. If his superiors had taken the time in June of 1974 to assess the situation from a reasonable and understanding point of view undoubtedly he would have been placed on a leave of absence for sickness until he was able to return to work.

It is far better that such possibilities be pursued prior to the formulation of a dismissal recommendation as opposed to engaging in costly and time-consuming proceedings which vindicate neither employee nor employer.

In my opinion, the “duty to refer” as it is presently cast does not unduly intrude upon an employer’s rights. The duty is conditioned on there being a pre-existing “duty to warn”, which in turn is restricted to longer term employees (see Claver v. Canada, A-1892-83, Pratte J.A., February 21, 1991, not reported, where the duty to warn did not arise in circumstances where the employee had been hired on a one-year contract, was seriously deficient in meeting his obligations and there was no condonation on the part of the employer). In fact, I believe the more difficult cases will involve employees who have not made a request to their employer and the employer with knowledge of the employee’s situation fails to refer the employee to an EAP or its equivalent. A more difficult case arises where there has been no request by the employee, the employer has not established an EAP but is aware of the employee’s problems as manifested in the work place. As is evident, the duty under consideration is at some distance from those factual contexts.

DISCHARGE OF DUTY

Having established that the respondent was under a “duty to refer”, it remains to be determined whether that obligation was discharged. In this regard, this case presents an additional difficulty. The applicant, on his own initiative, sought professional assistance of the respondent by letter of June 7, 1990. On July 23, 1990, the respondent replied to the applicant’s request in what may be described as a letter of “indifference”. Counsel for the respondent argued that the failure to respond to the applicant’s requests for assistance was premised on the understanding that the applicant was already receiving professional counselling. My response to that submission is short. Had the respondent communicated directly with the applicant, any misunderstanding might have been avoided. The respondent’s mistaken notion as to the true facts cannot have the legal effect of negating the “duty to refer”.

LEGAL EFFECT OF BREACH

Having found that the respondent failed in his duty to refer, it is necessary to prescribe the legal consequences of the breach. Does it vitiate the decision recommending release, is it simply evidence of bad faith or, as argued by the applicant, does the breach constitute bad faith simpliciter?

We can dispense with the applicant’s position summarily. There is no factual or legal basis on which the respondent can be deemed to have acted in bad faith. At best the respondent’s failure to fulfil his obligation arose from a genuine misunderstanding and at worst from the belief that the applicant was seeking to forestall the inevitable by sheltering behind the need for counselling. My understanding of the good faith requirement, as discussed below, does not embrace either of these possibilities. Hence, breach of the duty either vitiates the recommendation or should be treated as evidence leading toward a finding of bad faith.

In Dansereau, the proper legal effect of the failure of an employer to fulfil its “duty to refer” was raised but not resolved (at pages 458-459). A determination was unnecessary as the Court found that the cumulative actions of the employer constituted bad faith. There the failure to warn combined with other evidence served to demonstrate that the employer had not acted in good faith.

In my opinion, the respondent’s breach must be regarded as a failure to meet a condition precedent which vitiates the dismissal recommendation. If that were not the effect of a breach no purpose would be served in recognizing a “duty to refer” or for that matter a “duty to warn”. In reaching this conclusion, I have taken into account the fact that the good faith doctrine is of limited application and hence unresponsive to the legitimate interests of employees.

It is trite law that the burden of proof is on the party alleging bad faith. Moreover, it is well recognized that the burden is not easily discharged and in fact the law reports reveal that a finding of bad faith, such as that made in Dansereau, is the exception and not the rule. In part, the explanation for this phenomenon can be traced to the legal requirement that, in order to establish bad faith, it must be shown that the decision maker was motivated by a desire to effect an improper purpose or objective (see Roncarelli v. Duplessis, [1959] S.C.R. 121, per Rand J., at page 143). In the employment field, an employer who wishes to rid itself of a competent, but unwanted employee, may resort to tactics (e.g. “build a file”) which masks the true reasons for dismissal. The good faith doctrine seeks to expose employers unwilling to abide by the legal rules. On the other hand, the “duty to refer” (or the “duty to warn”) serves another equally valid purpose, namely, to ensure that an employer who is truly acting in good faith arrives at a decision which is in the best interests of both parties.

Though it is unnecessary for the purposes of this application to pursue fully the issue of bad faith, I believe a few remarks are in order.

The fact that the respondent failed in his “duty to refer” and to consider seriously the possibility of the applicant being temporarily reassigned (which the applicant requested on at least two occasions) or demoted might lead some to the conclusion that the former acted in bad faith. I would not agree. It must be remembered that the applicant was permitted to remain in his position for at least a year and a half, during which time his performance did not improve. The indisputable fact is that the applicant failed to meet the required standard of work performance and although his work environment may have contributed to the stress he was experiencing because of his family situation, it cannot be said that the actions or omission of the respondent were the causa causans of the applicant’s “unsatisfactory” performance. A finding of bad faith is not to be made lightly. As Mr. Justice Décary stated in Dansereau (at page 463):

... the record [must be] shot through with instances of bad faith so numerous and so apparent that the Appeal Board could not have concluded that there was no bad faith, as it did, without making a gross error.

CONCLUSION

In my opinion, the Board erred in law when it found that there was no obligation on the respondent to refer the applicant to the Employee Assistance Program. Additionally, it is evident that that duty was not discharged in the circumstances. Accordingly, this section 28 application should be allowed and the decision of the Public Service Commission Appeal Board set aside. In accordance with the suggestion of the parties, made during the hearing of the application, the matter should be referred back to a differently constituted panel of the Board for reconsideration and redeterminaton on the basis of the existing record in this Court and in a manner not inconsistent with these reasons.

Heald J.A.: I concur.

Linden J.A.: I agree.

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