Arbitrator Clarifies Meaning of Undue Hardship

In Stelco Inc. v. United Steelworkers, Local 1005 (Mansfield Grievance) (July 2, 2008), the arbitrator clarified the limits on an employer’s duty to accommodate, as well as the role that the costs of accommodation play in determining when the undue hardship threshold has been met.

Pursuant to an agreement with the union, the employer created special positions to accommodate disabled employees, rather than modifying existing jobs. The grievor was employed in one of these positions. When business declined, many employees, including the grievor, were laid off. While the grievor was recalled to a different position, economic conditions continued to worsen. The employer told the union that it was planning to eliminate the special positions and would instead accommodate disabled employees in regular jobs. This decision was based in part on the fact that many of the special positions were non-essential, and “make work” positions.

The grievor and other disabled employees were assessed individually by the employer to determine whether they could perform regular work, with or without accommodation. The company concluded that the grievor was medically unable to perform a regular job and he was laid off. However, when the company’s financial position eventually improved, the grievor was recalled to a new position.

The union grieved the lay-offs of the disabled employees, claiming that, because the eliminated positions were created specifically for disabled employees, their elimination constituted a prima facie case of discrimination. The union further submitted that the employer could only eliminate the jobs if it could demonstrate that keeping the positions would amount to undue hardship, and that the employer had failed to demonstrate that it would experience undue hardship in this case. The union asserted that the applicable standard for determining undue hardship was contained in the Ontario Human Rights Commissions’ Policy and Guidelines on Disability and the Duty to Accommodate. The Commission Policy states that the costs of accommodation will amount to undue hardship only if they are so substantial that they alter the essential nature of the employer’s enterprise or substantially affect the company’s viability.

The arbitrator concluded that the Commission Policy was not law and, since it was at variance with established jurisprudence, refused to apply it. According to the arbitrator, the threshold for undue hardship set out by the Commission and relied upon by the union is too stringent, and would render the concept of undue hardship meaningless. The arbitrator concluded that costs, even where they are not a threat to the very existence of the company, are critical to an assessment of whether an employer will suffer undue hardship as a result of accommodating a disabled employee.

The arbitrator went on to clarify that the duty to accommodate does not require employers to continue to have work performed that is not required, even when a disabled employee has been performing that work. However, eliminating a non-essential position must always be a “bona fide decision made for permissible reasons.” As the arbitrator stated, financial losses and even insolvency do not entitle an employer to ignore the Human Rights Code requirement to accommodate disabled employees to the point of undue hardship.

In this case, the arbitrator found that the employer had met its duty to accommodate. Given that the company was on the verge of bankruptcy, to have maintained the special positions when they were not required would have constituted undue hardship. Accordingly, the grievance was dismissed.

This case demonstrates that employers need not continue to staff positions that they no longer require, nor must they wait until the costs of accommodation threaten the very viability of their businesses before eliminating non-essential positions which are staffed with disabled employees. However, this case also shows that, in order to avoid running afoul of the Human Rights Code, the decision to eliminate jobs currently filled by disabled employees must be made on an individual basis. A blanket decision to eliminate all positions belonging to disabled employees would likely not have been upheld in this case, despite the employer’s near-insolvency.