Executive Summary: Key Legal and Evidentiary Issues

• Whether an employee's refusal to submit to a drug test constitutes misconduct under subsection 30(1) of the Employment Insurance Act, disqualifying the employee from receiving employment insurance benefits.

• Determination of misconduct focuses on the employee's willful conduct and knowledge that such actions could interfere with employment duties, not on whether the employer's request or policy application was valid.

• Social Security Tribunal lacks jurisdiction to adjudicate wrongful dismissal claims or assess the validity of employer policies and their application, as it is a forum for determining entitlement to social security benefits only.

• Appeal Division's decision to deny leave to appeal was reviewed under the reasonableness standard, requiring assessment of whether there was any reasonable chance of establishing a reviewable error by the General Division.

• Federal Court of Appeal's role is limited to determining whether the Federal Court selected the correct standard of review and properly applied it when reviewing the Appeal Division's decision.

• Precedent established in Sullivan v. Canada (Attorney General), 2024 FCA 7 confirms that the misconduct test is employee-focused and does not permit tribunals to become forums for challenging employer conduct or dismissal validity.

Background and employment termination

Lawrence Gould was employed and subject to his employer's drug policy. Paragraph 15(h) of that policy provided that an employee's refusal to submit to a drug test was considered a violation of the policy and cause for immediate termination. When Mr. Gould's employer requested that he take a drug test, he refused. Mr. Gould did not dispute that the employer requested that he take a drug test or that he refused the request. He also did not dispute the content of the drug policy. However, Mr. Gould argued that his refusal to take a drug test should not have resulted in his dismissal because the request did not comply with the drug policy in certain respects, and therefore he was justified in refusing the drug test. As a result of his refusal, his employment was terminated.

Application for employment insurance benefits

Following his termination, Mr. Gould immediately found another employer. When that new employment came to an end, he sought employment insurance benefits. The Social Security Tribunal, General Division (General Division) denied Mr. Gould employment insurance benefits on the basis that he had lost his job for misconduct, as contemplated in subsection 30(1) of the Employment Insurance Act, S.C. 1996, c. 23.

General Division's analysis of misconduct

The General Division noted that the concept of misconduct does not require that the employee do anything wrong. Instead, it focuses on whether the employee's conduct was wilful, that is, conscious, deliberate or intentional. As noted at paragraph 27 of the General Division's decision, there is misconduct if the Appellant knew or should have known that his conduct could get in the way of carrying out his duties toward his employer and that there was a real possibility of being let go because of that. Based on this definition, the General Division was satisfied that Mr. Gould's dismissal was for misconduct.

Appeal Division decision

Mr. Gould sought leave to appeal the General Division's decision to the Social Security Tribunal, Appeal Division (Appeal Division). The Appeal Division denied Mr. Gould leave to appeal on the basis that he had no reasonable chance of success in establishing a reviewable error by the General Division.

Federal Court judicial review

Mr. Gould then sought judicial review of the Appeal Division's decision before the Federal Court. His application was dismissed in a decision reported as 2024 FC 877. The Federal Court found no reviewable error in the Appeal Division's decision. Importantly, the Federal Court cited this Court's decision in Sullivan v. Canada (Attorney General), 2024 FCA 7, [2024] F.C.J. No. 31 (Sullivan), which confirmed this Court's jurisprudence to the effect that the test for misconduct focuses on the employee's knowledge and actions and not on the employer's behaviour. This Court stated in Sullivan at paragraph 6 that were the applicant's submissions to be upheld, the Social Security Tribunal would become a forum to question employer policies and the validity of employment dismissals, but under any plausible reading of the legislation that governs the Tribunal, it is a forum to determine entitlement to social security benefits, not a forum to adjudicate allegations of wrongful dismissal.

Appeal to the Federal Court of Appeal

Mr. Gould appealed the Federal Court's decision to the Federal Court of Appeal. He attempted to distinguish Sullivan on two bases. First, he argued that he did not take issue with the drug policy itself, but with the manner of its application. The Federal Court of Appeal found that this difference could not assist Mr. Gould because this Court's jurisprudence, including Sullivan, applies to both scenarios. Second, he contended that in his case there was no practical avenue to address his allegations of wrongful dismissal because he immediately found another employer after his dismissal and therefore suffered no damages, and he sought employment insurance benefits after the new employment came to an end. The Court found that this difference could not assist Mr. Gould because the availability of damages for wrongful dismissal is irrelevant to entitlement to employment insurance benefits. Mr. Gould also took issue with the validity of this Court's jurisprudence on the issue of misconduct. However, he did not convince the Court that the jurisprudence was manifestly wrong in the sense contemplated in Miller v. Canada (Attorney General), 2002 FCA 370, [2002] F.C.J. No. 1375 at paragraph 10, which would be necessary to overrule it.

Ruling and outcome

This Court's task in the appeal was to assess whether the Federal Court selected the correct standard of review of the Appeal Division's decision and whether it properly applied that standard of review, as set out in Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, [2013] 2 S.C.R. 559 at paragraph 45. The Federal Court of Appeal found that the Federal Court was correct in selecting reasonableness as the applicable standard of review of the Appeal Division's decision. Further, the Court found that the Federal Court properly found that the Appeal Division's decision was reasonable. For these reasons, the Federal Court of Appeal dismissed the appeal. The Attorney General of Canada was the successful party. The respondent did not seek costs and the Court awarded none, meaning no monetary amount was ordered in favor of the successful party.