Labour & Employment Newsletter
Last Chance Agreements
Our employer clients often refer to a last chance agreement (“LCA”) as a silver bullet in certain situations, such as dealing with a problematic employee. Admittedly, an LCA can be very helpful. However, an LCA imposes procedural steps and possibly triggers human rights obligations. In this newsletter we identify when an LCA can be used and how to avoid problems with them.
- What is an LCA and when would it typically be used?
As its name suggests, an LCA is an agreement between an employer and an employee (and their union if the workplace is unionized) setting out the terms by which the employee’s employment will be continued or restored. Because we most often deal with LCAs in unionized environments, we focus on LCAs in that setting.
LCAs tend to be used in one of two scenarios. The first scenario is when an employee has been moved through progressive discipline (for job performance or attendance, for instance) or has committed gross misconduct but the employer is willing to give the employee one last chance anyway. In a recent labour arbitration decision in Nova Scotia, UNIFOR, Local 823 v K + S Windsor Salt Ltd. (Pugwash Facility, Nova Scotia), 2020 CanLII 64088 (NS LA) <https://canlii.ca/t/j9k28> Arbitrator Gus Richardson commented that “LCAs are in my view an extension of the principles of progressive discipline.” To be clear, we are not saying that an LCA is as a regular step in a progressive discipline or attendance management policy. We are simply recognizing that there might be a situation where it could be beneficial to have an LCA before employment is terminated.
The second scenario in which we see LCAs is as a method to resolve a grievance. While preparing for or presenting at an arbitration, issues might come to light that led the parties to believe that the employee might benefit from having another chance at employment.
- What should an LCA include?
Regardless of the scenario in which it is used, an LCA needs to address a number of aspects of the employment relationship. An LCA should:
- Set out the circumstances that led to the LCA. Include the history of discipline, etc.
- Address how long the LCA will be in place. At some point the LCA will have to end, either because the employee meets the required standards of performance/attendance for a specified period of time so the employee can continue in employment or because the employee does not meet the standards and the employer terminates employment.
- Specify the consequences of not meeting the required standard. Presumably, the LCA would end and the parties would find themselves in the grievance and arbitration process.
- Identify the evidence that can be put in front of the arbitrator and the scope of what the arbitrator can decide.
- Are LCAs subject to human rights legislation?
Arbitrators have been crystal clear that LCAs are subject to human rights legislation. That means, for instance, if the parties entered into an LCA where an employee suffered from alcoholism, there would still be a duty to accommodate the employee’s alcoholism. That situation arose in the Windsor Salt decision mentioned earlier.
The employee in that case had a history of absenteeism. Beginning in 2017 his rate of absenteeism increased and revealed a pattern: 50% of the days missed were before or after a weekend and close to 50% of the time it was before or after the employee had worked overtime. The employer began to move the employee through progressive discipline. The employee advised that, due to a situation in his personal life, he had turned to alcohol. The discipline did not lead to improvements in the employee’s attendance. In fact, the employee’s doctor advised that the employee would require “specialists intervention and would be off work for the foreseeable future”. The employee tried to get into a treatment program and said that he would try the Employee Assistance Program.
The employee was able to return to work in early 2019. However, the employee had lost his license and he sometimes could not attend his shifts due to transportation issues. Also, problems with alcohol continued and the employee was voluntarily re-admitted to a detox unit.
The employer’s Director of Human Resources spoke with the employee and told him that as his attendance was so poor, he could not miss or be late for any other shifts. It was, she told him, his last chance. The grievor continued to have attendance issues. The parties entered into an LCA. One of the terms of the LCA was that the employee was to attend work when scheduled to do so and that any absences were to be reported at least one hour before the start of the shift. The LCA did not refer to alcoholism or human rights legislation.
The employee began to miss shifts. When he did not provide any acceptable reason for doing so the employer terminated his employment.
The Union grieved, arguing that notwithstanding the LCA, the employer still had a duty to accommodate the employee and that it had not done so.
Arbitrator Richardson agreed with the Union. He explained:
An LCA that ignores or seeks to avoid the employer’s duty to accommodate may not be enforceable where the breach complained of stems from a grievor’s disability. That is not to say that the existence of a disability is always a trump card that excuses the breach of an LCA. As a general rule an employee who suffers from a disability of some kind (physical, mental or addictive) that is limiting his or her performance is under a duty to disclose that disability to the employer. An employer is not generally required to accommodate a disability of which it is unaware. An employee who entered into an LCA because of performance issues caused by an undisclosed disability will not often be permitted to offer that disability as an excuse for breaching that LCA… So too where the disability is disclosed, and where an LCA makes the employer’s duty to accommodate a term or condition of the LCA, then an arbitrator may find that reinstating an employee who breached such an LCA would constitute an undue hardship for the employer.
The bottom line is that even with an LCA, employers have to be attuned to whether the employee has a characteristic protected by human rights legislation, whether that characteristic is relevant to the behaviour addressed in the LCA and, if so, whether the employee can be accommodated to the point of undue hardship.
This newsletter is produced by Wickwire Holm to keep our clients and friends informed of developments in the law and emerging issues. It is intended for general information purposes only. In preparing and circulating this newsletter, Wickwire Holm is not providing legal or other professional advice. Readers are encouraged to consult their professional advisers before taking any action on the basis of information contained in this newsletter. If you have any questions about any issues raised within this newsletter or a related issue, please contact us at email@example.com or 902.429.4111.