Labour Board tackles religious-o�ce exemption

ever, the employee tendered her resignation, only to seek a rescis -sion of her resignation on the ground that it had been made under duress. Canada Post refused to accept the rescission.

The arbitrator held that her choice to resign was a subjective, calculated decision to avoid fur -ther criminal charges. However, the employee did not have a con -tinuing intent to resign and had not, in e�ect, resigned from her position. Having found that there was no e�ective resignation, the arbitrator held that the evidence indicated that the employee had stolen the money, and the employer therefore had just cause for dismissal. ( Canada Post Corp. v. APOC (2011), 109 CLAS 47)

A ‘�awed’ investigation

The employee was a senior store manager with 30 years’ service at British Columbia’s Liquor Distribution Branch (LDB). She had a “no-nonsense” approach to management, rou -tinely swore on the job and was known as the “Little General.” Notwithstanding her manage -ment style, the employee’s per -

formance reviews were excellent and her disciplinary record rela -tively clean.

When a complaint was �led alleging that the employee had engaged in workplace miscon -duct, the LDB launched an inves -tigation. However, the court found that the “investigation was �awed from beginning to end. It was neither objective nor fair.”

Based upon the investigation report, which was also found to be �awed, the LDB determined that summary dismissal was war -ranted. It o�ered the employee the choice of being dismissed for cause or tendering her resigna -tion in exchange for a reference letter. The employee refused to resign and brought an action for wrongful dismissal.

The court found that, while there had been misconduct, the penalty of summary dismissal was disproportionate to the egre -giousness of the employee’s behaviour, particularly in light of her lengthy service and clean rec -ord. The employee was therefore awarded damages for 18 months’ pay in lieu of reasonable notice, to which $35,000 in aggravated damages and $50,000 in puni -tive damages were added because

of the manner in which the employer handled the investiga -tion and dismissal. ( Vernon v. British Columbia (Ministry of Housing and Social Develop -ment) (Liquor Distribution Branch) [2012] B.C.J. No. 169)

Vernon is a timely reminder that it is incumbent upon employers to engage in a fair, impartial and objective investi -gation before taking disciplinary action. All of the cases above con�rm that in assessing whether just cause for dismissal exists, an employer must con -sider all relevant circumstances and ensure the punishment is proportionate to the egregious -ness of the o�ence.

To conclude, I remain of the view that just cause is not a lost cause. However, employers and their counsel should proceed cau -tiously and objectively.

Stuart Rudner is a partner in Miller Thomson’s labour and employment law group. Summer law student Maria Constantine assisted with this article.

Just: Punishment must be proportionate

A recent case before the Ontario Labour Relations

Board revolved around the ques -tion of whether inspectors at a kosher food inspection agency known as the Kashruth Council of Canada were employees of the organization or “holders of reli -gious o�ce.”

If deemed the latter, they would be exempt from, among other things, overtime pay under the Ontario Employment Standards Act, which does not apply to those individuals holding “political, judi -cial or religious o�ce.” (See Kash -ruth Council of Canada/Le Conseil Cacherout du Canada, Applicant v. Morley Rand and Director of Employment Standards, Responding Parties, 1624-10-ES.)

Last November, board vice-chairman Brian McLean ruled that the inspectors in this case were in fact employees and thus not exempt from overtime pay, even though they served a reli -gious purpose in their jobs. The

decision could have wide-ranging implications for scores of reli -gious institutions, not to mention homeless shelters, social-service agencies, and fundraising groups.

The Kashruth Council of Canada is a not-for-pro�t organization that exists to guide the observance of Orthodox Jewish Kosher diet -ary laws in Canada. As the coun -try’s largest kosher-certi�cation agency, it employs food inspectors who are called, in Hebrew, “mash -giachim,” or supervisors quali�ed under Judaic law to supervise the preparation of food in order to ensure that it is kosher.

Morley Rand worked for the Kashruth Council of Canada for 23 years. Before his departure in 2010, he alleged that he had put in many overtime hours to cover special events, such as weddings, bar and bat mitzvahs, etc., but had never received a cent in over -time pay. At the hearing last year, the Kashruth Council argued that Rand was a holder of religious o�ce and, thus, should not receive overtime pay as per Ontario law. Rand’s son Michael held a similar position at the organization, and also made a claim for unpaid wages.

Morley Rand represented him -self at the hearing and took the position that, where it concerns holders of religious o�ce, the

exemption in the act was intended for rabbis, priests and ministers. The question, then, is: Does the exemption only apply for pulpit clergy? Is that what the legisla -ture intended by the term “hold -ers of religious o�ce?” This ques -tion does not appear to have been directly answered.

McLean agreed with the appli -cant, the Kashruth Council, that a mashgiach is a religious pos -ition. However, he concluded that the Rands were not holders of religious o�ce, but employees of the organization, and as such were entitled to overtime pay. “The Council did not treat Mr. Rand as if he was an o�ce holder,” McLean said.

This does not necessarily mean that other individuals may not be found, in the proper circum -stances, to be holders of religious o�ce, even if they are not pulpit clergy. Each case will still have to be determined on its own facts, but a precedent was set; in this case, the labour relations board decided that the individuals were not o�ce holders.

I was recently involved in a case with similarities to this one. Our client was a full-time missionary for a well-known Messianic organization. He was terminated for alleged violations of its code of employee conduct, known as

the “Workers Covenant.” Like the Kashruth Council, the employer took the position that this person was exempt from the act because he was a “holder of religious o�ce.” He sued for wrongful dis -missal, and the matter was set -tled out of court.

What was at issue in both these cases is not merely the legal de�n -ition of a “holder of religious o�ce” or the power of an employer over its employees, but the funda -mental rights of an employee in a dispute with their employer. In our client’s case, it was his pos -ition that the organization had abrogated his basic human rights by the imposition of its Workers Covenant. Moreover, one may question whether such an organ -ization is, indeed, a religious organization at all, or is more aptly characterized as a mission -ary group devoted to proselytiz -ing in order to convert people to its beliefs. If the latter, can its missionaries truly be considered holders of a religious o�ce?

In the case of our client, this question was not answered, as it was settled out of court. However, had it gone to a hearing, it is likely that the Rand decision would have been a compelling precedent in favour of the client’s position that he was an employee and not a holder of religious o�ce.

The potential repercussions of the Rand dispute with the Kash -rush Council of Canada are con -siderable. McLean ruled that “the Rands are not exempted from the Act’s protection by the ‘religious o�ce holders exemption.’” How -ever, that is not the end of the matter, as the Rands’ claims for unpaid wages are still to be heard on their merits. If those hearings conclude that the Rands are entitled to the full amounts claimed, the �nancial conse -quences for the Kashruth Council may be considerable, and the potential fallout arising from claims by other Mashgiachim could be crippling. It is easy to envision this ruling having pro -found consequences for other organizations, religious and otherwise. Such organizations may have wrongly interpreted the Employment Standards Act to provide an exemption for indi -viduals who perform religious duties, but do not hold a religious “o�ce.” On that one, all we can say is — stay tuned.

Barry Goldman is a partner at Shib -ley Righton LLP concentrating in employment law.

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