The Federal Court of Appeal has ordered a labour adjudicator to reconsider a decision involving the dismissal of a manager with more than 30 years of service at CP Rail who was terminated for alleged sexual harassment of a subordinate employee. The court found that the adjudicator’s reasoning lacked sufficient justification, particularly in applying the legal criteria for sexual harassment, and thus remitted the matter for reconsideration.
At the heart of the case is an internal investigation by CP Rail that led to D.S.’s dismissal on July 21, 2017, for violating the company’s Discrimination and Harassment Policy and the Canadian Human Rights Act (CHRA). The company alleged that D.S. had sexually harassed a subordinate employee, referred to as the complainant, during a period from February to early July 2017.
The complainant, hired in November 2016 as a supervisor in D.S.’s department, was unfamiliar with the railway transportation field and required extensive training from D.S. Following a serious work-related injury to an employee on the complainant’s team, D.S. and the complainant grew closer. According to the complainant, when she expressed a desire to end their personal interactions, D.S. showed displeasure, adversely affecting their professional relationship.
Complaint to HR
After the complainant reported the situation to human resources in early July 2017, CP Rail conducted an investigation. The investigator’s report noted D.S.’s admission that “it was inappropriate for him to develop a personal relationship with the complainant while he was her immediate supervisor.”
However, the parties’ versions differed on who initiated the interactions, and some incidents were “one person’s word against the other’s.” The investigator recommended either dismissing D.S. for having an inappropriate relationship with a subordinate or removing him from a management position with a last-chance warning.
CP Rail management decided to dismiss D.S., stating in the termination letter that he had sexually harassed a subordinate, in violation of company policy and the CHRA. D.S. filed an unjust dismissal complaint under section 240 of the Canada Labour Code.
12-day hearing overturns dismissal, substitutes suspension
An adjudicator was appointed and held a 12-day hearing, during which both parties presented extensive evidence and witness testimony, including that of D.S. and the complainant. In his decision dated March 5, 2021, the adjudicator concluded that the relationship was personal and consensual, and that D.S. did not sexually harass the complainant.
He found that while dismissal was not appropriate, D.S.’s actions constituted a serious breach of managerial responsibility. The adjudicator imposed a four-month suspension without pay but dismissed D.S.’s request for reinstatement, citing a deteriorated relationship of trust.
CP Rail sought judicial review of the adjudicator’s decision in the Federal Court, arguing that the adjudicator failed to properly analyze the evidence and apply the law on sexual harassment. On Dec. 19, 2022, the Federal Court dismissed the application, finding the adjudicator’s decision to be reasonable.
CP Rail’s appeal hinged on power imbalance
CP Rail then appealed to the Federal Court of Appeal. The appellate court focused on whether the adjudicator’s decision met the reasonableness standard as outlined in the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. The court held that the adjudicator’s reasons did not demonstrate a rational chain of analysis and lacked consideration of the relevant legal and factual constraints.
Justice S.E.R., writing for the court, stated that the adjudicator failed to apply the criteria for sexual harassment and did not analyze the power imbalance between D.S. and the complainant. The court noted, “The adjudicator’s reasons do not demonstrate that he considered whether the hierarchical relationship and the power imbalance between the respondent and the complainant were likely to have affected the complainant’s consent and whether the actions alleged were unwelcome.”
Furthermore, the court found that the adjudicator did not adequately address the credibility of the testimonies or the evidence presented. “His analysis is surprisingly short, coming as it does after a 12‑day hearing,” Justice S.E.R. observed. The court emphasized that when dealing with allegations of sexual harassment, particularly where consent and power dynamics are in question, a thorough and reasoned analysis is essential.
The Federal Court of Appeal set aside the Federal Court’s decision and allowed CP Rail’s application for judicial review. The matter was remitted to the same adjudicator, if available, to reconsider the decision in light of the court’s findings and to provide reasons that meet the standards established in Vavilov.
For more information, see Canadian Pacific Railway Company v. Sauvé, 2024 FCA 171 (CanLII).
