Lawyer decries limited judicial scrutiny of arbitration decisions

A senior employment lawyer has criticized what he sees as the lack of judicial scrutiny of arbitration decisions that “ignore” public policy.

Fasken Martineau DuMoulin LLP partner Brian Smeenk has highlighted his concerns about the “flawed” system in a written partial dissent to an arbitration decision between St. Michael’s Hospital, in Toronto, and Ontario Workers’ Union.

The decision, released Aug. 8, increased the pay of members of a new bargaining unit at the hospital by 2.75 per cent retrospectively from April 2013. Their wages had risen by two per cent the previous year. The decision also improved a range of benefits, including healthcare coverage, meal allowances and weekend premiums.

The union had argued this would put its 197 members, including laboratory technicians and support workers, in line with other bargaining units.

But Smeenk’s dissent, as the employer nominee, said the award “exemplifies” what can “go wrong” in these types of public sector interest arbitrations.

“It can be too easy for an arbitration board to award compensation increases, at the public’s expense, without any real regard for what impact it will have on the public service being provided,” he argued.

Ontario’s 2012 budget placed strict constraints on hospital funding for three years. Some say this amounts to a real-terms cut, due to inflation and mounting pressure on health services.

The Hospital Labour Disputes Arbitration Act requires arbitration boards to consider several criteria in making a decision. Smeenk’s dissent warned not all the criteria were considered in the St. Michael’s award, including:

• The extent to which services may have to be reduced, in light of the decision or award, if current funding and taxation levels are not increased;
• The economic situation in Ontario and in the municipality where the hospital is located; and
• The employers’ ability to attract and retain qualified employees

The dissent goes on to conclude: “Arbitration boards can essentially ignore the public policy embodied in the statutory criteria which they are supposed to apply.”

This happens because “these decisions are rarely overturned by the courts.”

Whether due to high legal hurdles for judicial review, or the “courts’ understandable reluctance to interfere in collective bargaining matters”, the result is that “interest arbitration decisions are almost immune from challenge,” it says.

It suggests, if courts will not require arbitration boards to apply legislative policy more strictly, perhaps there should be a stronger legislative requirement in the act for them to do so.

If the majority on an arbitration board ignore the statutory criteria, this is an error of law subject to judicial review, says Martin Teplitsky, a litigator at Teplitsky Colson LLP. The merits of any increase are subject to review on a standard of reasonableness, he adds.

However, Morrison Watts lawyer Georgina Watts, who acted as counsel for the union, says regular resort to judicial review would increase the time and money needed to resolve collective bargaining issues, without necessarily improving the quality or predictability of those decisions.

“The interest arbitration process is already laborious, slow, and expensive. It’s all too common an occurrence for the award to be expired by the time it’s issued,” she adds.

This decision puts the union members in line with comparator groups, says Watts, pointing out the hospital had an operating surplus of $14 million last year.

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