As most employers know, employers in Ontario have an obligation under the Human Rights Code [Code] to accommodate employees who are prevented from performing their duties and responsibilities by a protected ground under the Code.
Employers are obligated to accommodate employees to the point of undue hardship, and to not treat such employees adversely because of their Code-related limitations. As a result of these obligations, where an employee’s Code-related limitations prevent them from working full time, employers are often cautious to reduce or vary the employee’s benefits to reflect the amount of work that is being performed. Fortunately, a decision by the Ontario Divisional Court (“Divisional Court” or “Court”) recently confirmed employers’ obligations with respect to providing benefits to employees in these situations.
In City of Toronto v Canadian Union of Public Employees, Local 79 [City of Toronto], the Court held that it is legally permissible and not discriminatory for an employer to not provide a part-time employee with the benefits to which full-time employees are entitled, even where that employee can only work part-time hours due to a disability.
Background & the Arbitrator’s Decision
In City of Toronto, the union filed a grievance against the City of Toronto (“City”), arguing that the City had failed to accommodate the grievor, who was a disabled employee. The grievor worked for the City part-time because of a disability that prevented him from working full time.
The City had permitted the grievor to remain in the full-time bargaining unit (“BU”) for a number of years despite the fact that he was not working full time and had provided medical documentation stating that his need for accommodation was permanent. The grievor’s continued presence in the full-time BU entitled him to greater benefits than employees in the part-time BU. Nevertheless, the City later provided the union and grievor with two years’ notice that he would not be permitted to remain in the full-time BU and would be transferred to the part-time BU if he was still unable to work full-time hours by the end of a two-year transitional period.
At arbitration, the arbitrator allowed the grievance and ordered the City to return the grievor to the full-time BU with full benefits, despite finding that the grievor’s transfer to the part-time BU was not discriminatory in and of itself, and that the City had provided the grievor with reasonable accommodation by allowing him to remain in the full-time BU. The arbitrator held that the City could not alter the accommodation that it was providing to the grievor without proving that there was a change in circumstances that rendered continuing the grievor’s full-time benefits to be an undue hardship, which the City had not proven.
The City applied for judicial review of the arbitration award to the Divisional Court.
The Decision on Judicial Review
The Divisional Court overturned the arbitration award on judicial review, finding that the arbitrator’s decision was unreasonable because it was not supported by existing legal principles and her reasoning process was not transparent and intelligible.
The Court began by noting that the arbitrator correctly recognized that she was bound by the Ontario Court of Appeal’s (“ONCA”) 1999 decision in Ontario Nurses’ Association v Orillia Soldiers Memorial Hospital [Ontario Nurses], but that she nonetheless adopted an approach from arbitral jurisprudence that was explicitly rejected in Ontario Nurses. In Ontario Nurses, the ONCA held that employers are not required to make contributions to an employee’s benefits plan if they are off of work because of a disability in order to comply with the Code. The ONCA specified that because benefits are a form of compensation, it is not discriminatory to distinguish between employees that are providing services to their employer and those that are not for the purpose of determining compensation.
The Court held that, pursuant to the principle from Ontario Nurses, “an employer does not discriminate by failing to provide the added benefits to which a full-time employee is entitled to a person working part-time hours, even if the person is working part-time because of disability.” This is because the differential compensation and/or benefits that a part-time worker receives in such circumstances is a result of the number of hours that they work and not the fact that they are disabled. The employer is not legally required to compensate the disabled employee for time not worked.
Consequently, the Court granted the City’s application for judicial review, quashed the arbitration award, and dismissed the grievance, such that the City was permitted to transfer the grievor into the part-time BU with a corresponding reduction in his benefits.
Takeaways
The Divisional Court’s decision in City of Toronto is good news for employers in that it has affirmed the ONCA’s holding in Ontario Nurses that employers aren’t required to compensate disabled employees for time not worked. In particular, City of Toronto makes it clear that it is not discriminatory to provide a disabled part-time employee with fewer benefits than their full-time counterparts, even where that employee’s disability prevents them from working full-time hours.
Nevertheless, City of Toronto must be understood in its full context. There are circumstances where an employee’s benefits and/or compensation cannot be reduced despite working reduced hours due to statutory prohibitions against reducing benefits in certain circumstances. For example, when an employee is on a protected leave under the Employment Standards Act, 2000, such as parental leave, sick leave or family medical leave, among others, employers are prohibited from reducing the employee’s benefits. Similarly, the Workplace Safety and Insurance Act requires employers to continue benefits for at least one year for employees on leave because of a workplace injury. Therefore, employers should carefully apprise themselves of any statutory obligation to continue a disabled employee’s benefits in the circumstances before reducing or discontinuing them, to avoid a potential breach of their statutory obligations and incurring liability.
As a best practice, employers should consider crafting, instituting and socializing policies that clarify when employee benefits may be discontinued or reduced due to an inability or limited ability to work and when they will not. Clear and effective policies will help to set expectations, maintain transparency, and reduce the likelihood of employees bringing claims in respect of legally permissible benefits reductions.
This blog is provided as an information service and summary of workplace legal issues. This information is not intended as legal advice.
