Executive Summary: Key Legal and Evidentiary Issues

• Scope of an arbitrator’s remedial jurisdiction where a collective agreement allows “without cause” termination but preserves just-cause protections for disciplinary dismissal.
• Proper interpretation of Articles 16.2 and 17 of the Collective Agreement, including whether an employer can convert a disciplinary dismissal into a “without cause” termination simply by labelling it as such.
• Characterization of Ms. Morley’s termination as true “with cause” (disciplinary) rather than genuine “without cause” (non-culpable, organizational/technological) termination, based on the surrounding facts.
• Use of the “disguised discipline” concept and adverse evidentiary inferences where key management witnesses were not called to explain the real reasons for termination.
• Application of The Saskatchewan Human Rights Code, 2018 to workplace discipline, including whether banning the gender-neutral term “human(s)” infringed freedom of expression and conscience and amounted to discrimination on the grounds of sexual orientation and gender identity.
• Standard of review and reasonableness analysis on judicial review of labour arbitration awards, particularly where human rights and Code-based remedies are incorporated into the collective agreement framework.

Background and parties

The case arises out of the termination of Jackie Morley, an Operations Superintendent with the City of Saskatoon’s Roadways division and president of the Saskatoon Civic Middle Management Association. She had been employed by the City since 2002 and was part of a bargaining unit of approximately 400 administrative, supervisory and professional staff represented by the Association. The City is the municipal employer; the Association is the certified bargaining agent; and Ms. Morley is the individual grievor whose dismissal triggered the grievance and subsequent arbitration.

Employment relationship and termination

Ms. Morley became an Operations Superintendent in August 2015, supervising staff who were members of a different bargaining unit and responsible for hiring, training, coaching and discipline within her team. She reported to out-of-scope managers. She also took an active leadership role in the Association and served as its president at the time her employment was ended. On 13 September 2023, the City terminated Ms. Morley’s employment effective immediately by a letter that characterized the dismissal as “without cause” and promised 18 months’ pay in lieu of reasonable notice, but provided no reasons. The termination was preceded by a disciplinary meeting on 10 August 2023, in which Ms. Morley was instructed by management, on the direction of the HR Director, to stop referring to staff as “human” or “my humans.” Ms. Morley, who identifies as queer and is a member of the LGBTQIA2S+ community, explained that she used this gender-neutral term to be respectful and inclusive where gender identity was unknown. A memorandum was placed on her file directing her to cease using those words and warning they were inconsistent with a professional environment and corporate values, but no further discipline was imposed at that time. The arbitrator later found that this meeting and memorandum were the first step in progressive discipline and that the City then abandoned progressive discipline, due to concern about workplace unrest, in favour of summarily terminating Ms. Morley while labelling the dismissal “without cause.”

The collective agreement and termination clauses

The Collective Agreement played a central role in the dispute, particularly Article 16 (Termination of Employment) and Article 17 (Grievance Procedure). Article 16.2 (“Dismissal and Disciplinary Action”) reserves to the Employer the right to dismiss for just cause and describes the process, notice to the Association, and grievance rights where there is dismissal or discipline “with cause.” It also states that, in cases of dismissal or discipline with cause, an arbitrator may substitute a lesser penalty or reinstate the employee, or uphold the employer’s decision. Critically, Article 16.2 then adds that “[f]or a termination without cause, the parties understand and agree that an arbitrator may only determine an amount of fair and equitable compensation applicable,” while providing that certain higher-graded jobs cannot be terminated without cause. Article 17 defines a grievance as a written appeal concerning interpretation or application of the Agreement and expressly acknowledges that an employee may be dismissed either with sufficient notice or for just cause, with such dismissal confirmed in writing and subject to grievance timelines. The arbitrator interpreted these provisions contextually and in light of a Letter of Understanding stating that nothing in the Memorandum of Agreement reduced or limited management’s rights to direct and restructure the workplace to meet technological, organizational and operational needs. He concluded that the “without cause” language was designed to address non-culpable situations such as organizational or technological change—where the employer legitimately restructures or eliminates work—and to confirm that in such non-disciplinary cases an arbitrator’s role is confined to determining fair compensation, not reinstatement. He rejected the City’s position that the wording gave it an unfettered right to terminate any employee at will, for any reason, simply by declaring the termination “without cause,” thereby bypassing just-cause protections and reinstatement remedies.

Concept of disguised discipline and characterization of dismissal

To determine whether Ms. Morley’s termination was truly “without cause,” the arbitrator applied the labour law concept of disguised discipline, drawn from federal public service and other arbitration jurisprudence. Under this concept, employers cannot evade just-cause protections and arbitral review by labelling disciplinary actions as non-disciplinary. The inquiry focuses on the purpose and effect of the employer’s action, the nature of the employee’s conduct, and the surrounding circumstances. Examining the factual matrix, the arbitrator found that the City imposed two disciplinary penalties: first, the August 10 direction and letter placed on Ms. Morley’s file regarding the term “human(s),” intended for future disciplinary use, and second, the September 13 summary termination that immediately followed this dispute. He held that the only concern supported by evidence was her use of the gender-neutral terms “human” and “my humans” for persons whose gender identity was unknown, and that other alleged performance concerns and cultural issues were compiled after the fact in an attempt to craft an alternate rationale. The arbitrator also noted that after dismissing her, the City publicly attributed the termination to alleged leadership style incompatibility, extensive workplace strife and refusal to change, in a press release and internal email—statements he found to be designed to disguise the true reason and lacking credibility on the evidence. On this record, he concluded that Ms. Morley was in substance terminated for alleged culpable behaviour—her refusal to abandon an inclusive, gender-neutral term—and that the dismissal was therefore a disciplinary “with cause” termination within the meaning of the Collective Agreement, not a genuine organizational or technological “without cause” decision.

Adverse inferences and evidentiary assessment

A significant evidentiary feature was the arbitrator’s decision to draw adverse inferences from the City’s failure to call two key management witnesses: HR Director Ashlee Kaszas and Ms. Morley’s direct manager, Tracy Danielson. Evidence showed these individuals played central roles in initiating, directing and explaining the disciplinary process and the ultimate decision to terminate, including instructing the August 10 meeting, crafting the communications placed on Ms. Morley’s file, advising senior management on termination strategy, and communicating reasons to the City Manager. Applying the established adverse inference principles, the arbitrator held that, given their obvious knowledge of material facts and the absence of any satisfactory explanation for not presenting them, it was reasonable to infer their evidence would not have supported the City’s position. At the same time, he placed little weight on the City witnesses who did testify, describing much of their evidence on reasons for termination as hearsay, internally inconsistent, or incoherent and sometimes contradicted by other established facts. These evidentiary assessments underpinned his conclusion that the City’s stated non-disciplinary rationale was a post-hoc reconstruction rather than the true basis for dismissal.

Human rights issues: freedom of expression, conscience and discrimination

The arbitrator issued a Supplementary Award addressing whether the City’s conduct infringed The Saskatchewan Human Rights Code, 2018. Under the Code, every person has rights to freedom of conscience and freedom of expression, and employers are prohibited from discriminating in employment on prohibited grounds, including sexual orientation and gender identity. Ms. Morley identified as queer and a member of the LGBTQIA2S+ community, and she explained that using “human(s)” was part of her inclusive practice, intended to respect individuals whose gender identity she did not know. The arbitrator found that the August 10 direction to immediately stop using “human(s),” reinforced by a memo placed on her file, and the subsequent termination for refusing to abandon that practice, had the purpose and effect of infringing her freedom of expression and conscience. In his view, her refusal to comply was not simple insubordination; it flowed from a combination of principle, personal pride and conscience rooted in her identity and understanding of respect for gender diversity. On discrimination, the arbitrator accepted that the use of the word “human(s)” was not itself “essential” to her gender identity, but reframed the question: whether the City discriminated by unjustifiably banning a term she had chosen with reference to her sexual orientation and gender identity, despite knowing that connection. He concluded that Ms. Morley’s protected characteristics were a factor in the adverse treatment—both the disciplinary direction and the dismissal—and that there was a clear, direct link between her identity as a queer person, her chosen inclusive language, and the termination. Applying the Code’s reverse onus, he held that the City failed to show on a balance of probabilities that its actions were not discriminatory and that it did not establish a reasonable restriction or accommodation to the point of undue hardship.

The arbitration awards and remedies

In the main Award, the arbitrator held that the City violated the Collective Agreement by treating a disciplinary situation as a “without cause” termination and by effectively depriving Ms. Morley of the just-cause protections, progressive discipline framework and reinstatement remedy that flow from the Agreement’s discipline provisions. Having found the dismissal to be “with cause” in substance and that the City lacked just and reasonable cause, he concluded that reinstatement was an appropriate and fair remedy, particularly as the employment relationship had not been irreparably poisoned by the dispute. Accordingly, he ordered Ms. Morley reinstated to her position. In the Supplementary Award, applying the Saskatchewan Human Rights Code, he determined that the City had infringed Ms. Morley’s rights to freedom of expression and conscience and had discriminated against her on the grounds of sexual orientation and gender identity. As a remedy under s. 40 of the Code, he ordered the City to pay Ms. Morley $15,000 in compensation.

Judicial review before the King’s Bench

The City applied to the King’s Bench for Saskatchewan for judicial review of both the Award and Supplementary Award. It argued that the arbitrator misinterpreted the Collective Agreement, exceeded his jurisdiction by effectively narrowing the scope of “without cause” termination, misapplied the disguised discipline concept, breached procedural fairness by drawing adverse inferences without submissions from the parties, and applied incorrect legal tests to freedom of expression, conscience and discrimination under the Code. The Association, representing Ms. Morley, maintained that the arbitrator’s decisions were entitled to deference and comfortably met the reasonableness standard articulated in Canada (Minister of Citizenship and Immigration) v. Vavilov. Justice Wempe first addressed the standard of review. Both parties largely agreed that reasonableness applied, although the City argued for correctness on alleged jurisdictional issues relating to the Human Rights Commission. The Court rejected the correctness argument, noting that labour arbitrators have well-established jurisdiction to apply human rights legislation and that no true jurisdictional boundary dispute with the Saskatchewan Human Rights Commission was raised. The Court therefore applied a reasonableness standard to both awards.

Assessment of the arbitrator’s reasoning

On the interpretation of Articles 16 and 17, Justice Wempe held that the arbitrator’s reading was firmly grounded in established principles of collective agreement interpretation: words must be given their plain and ordinary meaning in the context of the entire agreement, informed by the purpose of collective bargaining and long-standing labour relations norms. The Court accepted that limiting “without cause” terminations to non-culpable, organizational or technological changes, and restricting an arbitrator’s role in such cases to compensation only, fell within a reasonable range of outcomes and was supported by the Letter of Understanding and statutory definitions of organizational change. The Court rejected the City’s argument that the arbitrator had effectively ignored authorities on common law “without cause” dismissal and the employer’s residual rights, distinguishing non-union employment principles from the collectively bargained regime and noting that any true at-will termination right in a collective agreement would require very clear, explicit language. On disguised discipline, the Court endorsed the arbitrator’s use of that concept as a useful analytical tool for uncovering the true nature of the termination. It held there was no basis to disturb his factual findings that the dismissal was genuinely motivated by Ms. Morley’s stance on the gender-neutral term and that later rationales were post-hoc.

Procedural fairness and adverse inferences

The City’s procedural fairness challenge focused on the arbitrator’s adverse inferences for failure to call the HR Director and direct manager as witnesses. Justice Wempe reviewed the classic adverse inference test and confirmed that the arbitrator correctly applied the governing principles. Given the central role of those individuals in the events leading to termination, their unique knowledge of material facts, and the absence of a persuasive explanation for not presenting them (despite their being available to be subpoenaed), drawing an adverse inference was open to the arbitrator and did not create unfairness. The Court also noted that the arbitrator’s overall credibility assessments did not hinge solely on adverse inferences; he had independently found serious weaknesses and contradictions in the testimony of the City’s actual witnesses.

Human rights analysis and the Code

Turning to the Supplementary Award, Justice Wempe held that the arbitrator’s treatment of freedom of expression, conscience and discrimination under the Saskatchewan Human Rights Code was reasonable. The Court rejected the City’s argument that the arbitrator had effectively barred employers from giving communication guidance to managers, emphasizing that the decision was confined to the specific circumstances where a gender-neutral term closely tied to the grievor’s identity and conscience was singled out and banned. On discrimination, the Court accepted that the arbitrator had, in substance, applied the settled three-part test for prima facie discrimination—as clarified in Stewart v. Elk Valley Coal Corp.—and correctly invoked the Code’s reverse onus in s. 48(2). It found that the arbitrator’s conclusion of a clear and direct link between Ms. Morley’s protected characteristics and the adverse employment action was justified on the evidence and that it was reasonable to hold the City had not met its burden to show the termination was not discriminatory.

Outcome and remedies

Justice Wempe concluded that both the Award and Supplementary Award were reasonable, internally coherent and firmly justified in relation to the facts and law, and that they fell well within the range of acceptable outcomes under the Vavilov framework. The application for judicial review was therefore dismissed. The Court ordered the City of Saskatoon to pay the Saskatoon Civic Middle Management Association its costs on Column II, without specifying an exact dollar figure for those costs. Overall, the successful party across the arbitration and judicial review stages is the Association on behalf of Ms. Morley, who secured reinstatement to her position, a human rights compensation award of $15,000, and an order for costs in her union’s favour, with the total monetary value of the costs component not precisely determinable from the decision itself.