How to Quantify Damages for a Union Employee When Reinstatement is Inappropriate

Mar 6, 2019

An arbitrator who upholds a grievance can reinstate the employee, or order the employer to pay the employee damages.

In a 2018 arbitration case, Arbitrator Surdykowksi decided how to calculate damages for an employee who was not reinstated.


Dr. Bernard was a tenured professor in the History Department at Lakehead University (the “University”). Beginning in 2012, the University announced a new joint position for an employee who was to be shared between the History Department and the Women’s Studies Department. Dr. Bernard filed a complaint about the joint hiring committee processes and opposed the hiring of this joint employee. He also complained of harassment and discrimination, stating that the Women’s Studies Department had a bias against him because of his gender. After escalating disciplinary measures and an investigation, the University terminated Mr. Bernard’s employment in 2013. Mr. Bernard was 58 years old at the time.

The Lakehead University Faculty Association filed several grievances on Dr. Bernard’s behalf, claiming that none of the disciplinary measures imposed were justified and that Dr. Bernard’s employment should be reinstated.


At issue in this arbitration were the several disciplinary measures that started in 2012 which included  counselling, a 1-day suspension, a 5-day suspension, and the termination of Dr. Bernard’s employment.


Arbitrator Surdykowksi found that a 1-day suspension was not entirely justified but ordered the University to pay $1000 for failure to properly investigate Dr. Bernard’s human rights complaint. The arbitrator upheld Dr. Bernard’s 5-day suspension but found that termination of his employment was an excessive disciplinary measure.

He reasoned that terminating Dr. Bernard’s employment would be “double punishment” for the same misconduct which could have been the basis for his 1-day suspension. In the alternative, he found that the University may have had just cause for disciplining Dr. Bernard, but it did not have just cause for termination.

Why was Reinstatement Inappropriate?

An arbitrator’s broad authority to fashion an appropriate remedy includes the power to award damages in lieu of reinstatement when the employment relationship is no longer viable. In order to find that reinstatement is not an appropriate remedy, where the employer cannot prove just cause for termination, the onus is on the employer to establish that the employee’s workplace behaviour was so bad that it poisoned the workplace. This is generally a difficult burden for the employer to meet. The employer can also show that it is more probable than not that the employee’s behaviour may poison the workplace if the employee was reinstated.

In determining an appropriate remedy, the arbitrator considered Dr. Bernard’s entire history at the University and concluded that the poisoned quality of the workplace was manifest. He discussed Dr. Bernard’s persistent and often inappropriate conduct dating back to at least 2007. Dr. Bernard often denied engaging in any inappropriate behavior and blamed others instead. He noted Dr. Bernard’s obsession with discrimination and how he asserted it whenever things did not go his way.

Arbitrator Surdykowksi found that it would be impossible to reinstate Dr. Bernard as the employment relationship has been damaged beyond repair, stating that “[i]t is patently obvious that that the grievor does not trust University Administration or Human Resources, and that the University does not trust him.”

Approaches to Calculating Damages in Lieu of Reinstatement

Arbitrator Surdykowski summarized his view of the jurisprudence dealing with the calculation of damages in lieu of reinstatement by splitting the jurisprudence into two schools of thought:

  1. Common Law Wrongful Dismissal ApproachThis is the same approach as the Courts adopt in wrongful dismissal cases. This approach assumes that a wrongfully dismissed employee is entitled to recover his or her damages based on approximately one month of wages and benefits for each year of service, subject to a maximum that reflects that time it should take to mitigate his or her losses.
  2. Fixed Term Approach – Assumes that an employee with a collective agreement will generally continue to work for the employer until retirement, subject to certain contingencies. So, damages using this approach are based on the value of the wages and benefits the employee would have earned from the date of discharge all the way up to the expected date of retirement.

The University argued that the first approach should apply so that Dr. Bernard would be awarded wages and benefits based on three weeks per year of service plus any actual benefit expenses which would have been covered under the collective agreement during that period. The Arbitrator disagreed.

Which Approach to Use?

Answering this question is where confusion and complexity lies. Arbitrator Surdykowksi reviewed numerous cases and concluded that the the fixed term approach was the correct one to apply as it is more “principled.” However, this approach has not always been applied in such a way. For instance, contingencies that will reduce the amount of damages have been applied using unreliable estimates rather than an objective measure. In fact, Arbitrator Surdykowksi shared that Mr. Bernard’s case is the only one he is aware of where the parties retained actuarial personnel to substantiate their identified contingencies. Despite such weaknesses in the fixed term approach, Arbitrator Surdykowksi believed that applying the common law wrongful dismissal approach was incorrect.

Not everyone agrees with Arbitrator Surdykowksi as the wrongful dismissal approach is easier to apply and continues to thrive. Further, with the elimination of mandatory retirement, it is difficult to determine when an employee intended to “retire.”

Accordingly, it is difficult to predict which approach an arbitrator will adopt. To find out which approach to quantifying damages in lieu of reinstatement may apply in your case, contact an employment lawyer.

There are many ways to attack the termination clause in an employment contract. 

I am now surprised if employee counsel does not claim that their client’s  termination clause is not legally enforceable - usually because the termination clause does not allegedly comply with the Employment Standards Act.

This blog considers a case, McKercher v Stantec Architecture Ltd., 2019 SKQB 100, where an employee successfully attacked the termination clause in his contract because he did not explicitly agree to it after being promoted. 

The Facts

In 2006, Mr. McKercher commenced employment as a staff architect. The termination clause in his employment contract stated: 

Termination other than for cause will be with notice or pay in lieu of notice, based on your length of service. If the Employer terminates your employment for other than just cause you will receive the greater of:

  1. a)   Two weeks notice or pay in lieu of notice during the first two years of employment increasing by one week for each additional completed year of employment to a maximum of three months notice or pay in lieu of notice.


  1. b)   The minimum notice of termination (or pay in lieu of notice) required by applicable statutes.

Eleven years later, when Mr. McKercher was employed as a Business Centre Sector Leader, his employment was terminated. The employer paid him the three months termination pay he was owed under his employment contract.


Another way to attack a termination clause: What is the changed substratum doctrine?

An Ontario judge in a 2012 case, MacGregor v National Home Services, 2012 ONSC 2042 (CanLII), described this legal doctrine as follows: "The changed substratum doctrine … provides that if an employee enters into an employment contract that specifies the notice period for a dismissal, the contractual notice period is not enforceable if over the course of employment, the important terms of the agreement concerning the employee’s responsibilities and status has significantly changed."


The rationale for this doctrine has been described by one judge, Schmidt v AMEC Earth & Environmental Ltd., 2004 BSCS 2012 (CanLII), as follows: "In my view, it was incumbent on the defendants to advise Mr. Schmidt that they intended to continue to rely upon the termination provision set out in the Agreement when substantial changes in his employment occurred. This would have allowed him to consider the matter and to negotiate for other terms. If the defendants wished to continue to rely on the termination provisions there ought to have been a ratification of the provisions as the nature of Mr. Schmidt’s employment changed."



The judge hearing this case relied on the following factors when deciding not to enforce the termination clause in the employment contract: ”...there is no evidence that (the employer) made it clear to the (employee) that the notice of termination provisions were intended to apply to the positions to which he was promoted. The employment agreement contains no express wording to this effect, nor does it contain any wording to support the inference of such an intent. Further, and in keeping with the analysis in Schmidt, the Court received no evidence that, as it promoted the plaintiff, SAL reasserted its understanding and expectation that the notice of termination limit would remain in effect.”


Lesson to be learned:

An employer should make it clear that the termination clause in an employment contract applies when an employee is promoted. This expression of this intent should be in writing and should be clear and unambiguous. I recommend that an organization’s employment be reviewed by an employment lawyer every year or two. If your employment contract does not address this issue then think about doing so the next time it is reviewed.


For 30 years, Doug MacLeod of   the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.



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