Canada: The HR Space: Unionized Employees Can’t Sue Employer, Even In Absence Of Collective Agreement

The HR Space is edited by Louise Béchamp, Karen M. Sargeant and Brian P. Smeenk

An employee covered by a union agreement is typically barred from bringing a claim to court. Instead, he or she is required to use the collective agreement's grievance and arbitration process, with union representation. The recent decision in Baker v. Navistar Canada Inc. ruled that unionized employees cannot bring employment claims to court even where there is no collective agreement at all. 

The Facts

Navistar Canada Inc. and the Canadian Auto Workers Union ("CAW") have a longstanding collective bargaining relationship. The CAW was certified to represent two groups of Navistar employees at a production plant in Ontario. 

The last collective agreements between the parties expired June 30, 2009. Navistar and the CAW tried to negotiate a new collective agreement, without success. 

In July 2011, Navistar closed the plant.

The Company and the Union then tried to negotiate a plant closure agreement. Among other things, such an agreement would address any compensation to be given to employees as a result of the permanent job losses.

The parties were unable to reach a plant closure agreement.

A class action lawsuit was then started on behalf of the Union's members. This was based on the legal theory that each employee now had an individual contract of employment, which had been wrongfully terminated. The CAW actively assisted and promoted the lawsuit in an admitted attempt to push the Company into finalizing the plant closure agreement.

The Company responded by seeking a ruling that such claims could not be brought before the court.

General Principles Re Court Access

In a non-union context, there is an implied and/or written employment agreement directly between the employer and the employee.  Disputes between the employee and employer can be addressed directly between them. Their disputes can go to court if necessary.

In a unionized context, however, the relationship is indirect. The "employment agreement" the employer has is with a union (i.e. a collective agreement). An employee's rights flow through the union's relationship and collective agreement with the employer. 

Because a unionized employee does not have a direct relationship with his or her employer, it is a well-established principle in Canadian law that any grievance connected to the collective agreement or the employment relationship must be pursued through the union. Such grievances are typically pursued by way of the grievance and arbitration process under the governing collective agreement. The courts will reject lawsuits brought by unionized employees in connection with their terms and conditions of employment.

Here, however, since there was no longer a collective agreement in effect, the CAW argued that their members gained the ability to sue the employer directly. Since they could not pursue grievances through the collective agreement, the union argued the court had jurisdiction to hear the case.

The court disagreed.  It clarified that the above principles apply even in the absence of a collective agreement. The employer/union relationship cannot be bypassed through a court action.

Duty of Good Faith Remains Where No Collective Agreement

Navistar argued that the class action sought to impose a plant closure agreement and undermine negotiations. Under Ontario's labour laws, the Company and the Union still had a relationship, and still had an obligation to bargain in good faith with each other.

The Court agreed with Navistar. It found that the bargaining relationship between the Company and the Union continued.  The Court highlighted that the Union had a statutory right to bring a complaint to the Ontario Labour Relations Board against the Company, alleging bargaining in bad faith, if it had grounds to do so.  No such complaint was ever brought.

The Court concluded that the Union's claim was without foundation in law. The lawsuit was dismissed.

Lessons Learned

An individual, unionized employee's rights to bring a claim against an employer are limited by the special legal relationship between the union and employer. Absent a collective agreement, the requirement to bargain in good faith over employee rights and benefits remains so long as the union has representation rights.  Baker v. Navistar Canada Inc. suggests that the courts will not look favourably on a tactic designed to skirt the union/employer relationship and obligations.

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