Articles:

1. Proof of Cannabis Consumption is NOT Proof of Impairment: Policy Wording Matters!
2. To Whom it May Concern: Employer’s Failure to Provide Positive Letter of Reference Results in Lengthier Notice Period
3. Age-Based Benefit Limits Upheld: What Okanagan College Means for Employers

 

Proof of Cannabis Consumption is NOT Proof of Impairment: Policy Wording Matters!

Megan Jenkinson

Employers face uncertainty in regulating recreational cannabis use by employees during and prior to working hours, needing to balance legitimate safety concerns with the privacy concerns of employees.

The recent Ontario arbitration decision of Continuous Colour Coat Ltd. v United Steelworkers, Local 3950-65, 2026 CanLII 6010 illustrates that policy enforcement relating to workplace cannabis use remains an ongoing issue for employers. In that case, the Arbitrator found that the Employer’s termination of the Grievor for smoking cannabis while on lunch break  was too severe, and substituted a three-month suspension without backpay.

Background Facts

The Employer specialized in producing custom coil-coated steel products at a safety-sensitive plant. The Grievor was employed as a Console Operator for the plant’s paint line.

Relevant company policies included the Plant Rules and Safety Rules, which the Grievor had signed in 2016. Plant Rule No. 5 provided that: “reporting to work under the influence of alcohol or other intoxicants…may lead to disciplinary action up to and including termination.”

On July 8, 2025, the Grievor left the plant during his lunch break for a walk, at approximately 12:30pm, returning around 12:45pm. That same day, another employee, Mr. Mazaheri, observed the Grievor smoking when walking in the surrounding residential streets. Mazaheri smelled cannabis and found the odour increased as he neared to the Grievor, and observed the Grievor smoking what looked like a hand-rolled joint.  

Mr. Mazaheri was the only witness to the Grievor smoking, and was confident it was cannabis given the scent. However, Mazaheri acknowledged in cross-examination that he had no formal training in identifying the smell of cannabis. Concerned that the Grievor would return to work in an impaired state, Mazaheri attempted to speak with the General Manager. However, their door was closed, so Mazaheri brought the matter up the following day. There were no safety-related incidents in connection with the Grievor that afternoon.

On July 9, 2025, the Operations Manager, Mr. Hendren, met with the Grievor to advise him of the evidence of him smoking cannabis the previous day.  The Grievor denied doing so. Hendren advised the Grievor his employment was suspended pending completion of an investigation. Upon being asked if he had anything to add, the Grievor responded with, “you are a f***ing joker,” multiple times.

The Employer ultimately terminated the Grievor, having concluded that the Grievor consumed cannabis on his lunch break, combined with his subsequent insolent behaviour.

Existence of Misconduct

The Arbitrator opined that, while being smoked, the smell of cannabis is clear and cogent evidence of cannabis use in that moment. The lack of other evidence of the Grievor smoking was not fatal to the Employer’s position.

Evidence indicated that the Grievor smoked cannabis after he left the plant during lunch hour. Despite no evidence regarding when the Grievor resumed his duties, the Arbitrator was satisfied that the Grievor was under the influence of cannabis when doing so, given the window of time since smoking. Thus, the Arbitrator found that the Grievor was in breach of the Employer’s policy.

The Arbitrator rejected the Union’s submission that, based on the lack of any subsequent incidents or safety issues, the Grievor could not have consumed cannabis during lunch. The Arbitrator disagreed, recognizing that the Grievor may have avoided a safety incident or production problem despite being under the influence, or that a resulting issue had gone undetected.

The Arbitrator characterized the Grievor’s reaction to the suspension of his employment as “significant insolent behaviour towards a high-ranking management employee.” While the Grievor testified that he reacted inappropriately, the Arbitrator found his misconduct was “clearly deserving of discipline.”

Level of Disciplinary Penalty

The Arbitrator substituted a three-month suspension and reinstated the Grievor, but declined to order retroactive wages, citing the Grievor’s insolent behaviour.

In determining the penalty, the Arbitrator cited heightened safety concerns, including the nature of the workplace and the Grievor’s duties, as aggravating factors.

The Arbitrator referred to the particular wording of Plant Rule 5, noting that, “the policy effectively contemplates a range of disciplinary consequences for the use of cannabis during working hours, depending on the severity of the infraction.”

Based on the Employer’s policy, the Arbitrator concluded that any evidence of impairment should be considered. Here, there was no such evidence—which was acknowledged by the Employer. Furthermore, there was no evidence regarding how much cannabis or the level of THC consumed.

Under the circumstances, the Arbitrator concluded that: (a) the Grievor used cannabis during work hours, and (b) the Grievor reported to work under the influence of cannabis. However, the Arbitrator determined that, without specific evidence of impairment, the penalty of discharge was not warranted.

Key Takeaways for Employers

This decision highlights, among other things, the distinction between impairment and being under the influence: an employee may, technically speaking, be under the influence of a substance without being impaired.  Employers should be careful to consider all relevant factors when discipling employees for reporting to work under the influence, rather than treating discharge as an automatic penalty for any violation of a workplace drug and alcohol policy.

 

 

To Whom it May Concern: Employer’s Failure to Provide Positive Letter of Reference Results in Lengthier Notice Period

Whitney Miller

The recent decision in Carroll v. Oracle Canada ULC[1] provides a cautionary tale for employers who do not provide positive letters of reference for dismissed employees, particularly if they try to advance a failure to mitigate argument. In this article, we discuss why an employer’s failure to provide a positive letter of reference resulted in an elongated notice period, as well as the scope of an employer’s role in assisting dismissed employees with their duty to mitigate their alleged damages.

Background

Mr. Carroll worked for Oracle Canada ULC (“Oracle”) for three years and seven months as a Global Strategic Client Executive. He was 61 years old at the time of the termination of his employment. Though his annual salary was $180,000, he also had significant earnings in commissions and his annual income exceeded $700,000 during each year of his employment with Oracle.

At issue was the appropriate period of reasonable notice in respect of the termination of Mr. Carroll’s employment. Mr. Carroll claimed he was entitled to 12 months’ notice (or pay lieu of notice) of termination while Oracle submitted that this ought to be between 3 and 6 months’ notice.

In its analysis as to what constituted reasonable notice, the Court commented that Mr. Carroll was more than just a “salesperson.” It noted that he was employed in a specialized financial services industry and because of his commissions he had a higher income level, both of which put him into a “more rarefied category of employment.”[2] Despite his shorter length of service, the Court also found that this leaned in favour of a “disproportionally longer notice period”[3] than the general benchmark of one month per year of service.

Oracle argued that Mr. Carroll failed to mitigate his alleged damages and that this should reduce the period of reasonable notice. Specifically, Oracle alleged that Mr. Carroll did not apply for several internal sales positions available during his working notice period.

The Court rejected this argument and held that Oracle did not meet its burden in proving that Mr. Carroll failed to mitigate his damages. The affidavit evidence relied upon by Oracle did not identify any available position with sufficient particularity. There was also no evidence as to who allegedly identified internal positions and provided job searching support to Mr. Carroll.[4]

Next, the Court considered that Oracle’s failure to provide Mr. Carroll with a positive letter of reference warranted an elongated notice period. Oracle’s position was that company policy was not to provide letters of reference but that it instead provided Mr. Carroll with a letter “to assist in his job search.” For reference, the contents of the letter are set out below.

To Whom It May Concern:

RE: Steve Carroll

This letter will confirm Steve Carroll’s previous employment with Oracle Canada ULC on a full-time basis between November 18, 2019 to June 30, 2023.  Steve Carroll’s most recent position was that of a Key Account Sales Representative V.

Steve Carroll had an annual salary of $180,000

Yours truly,

[Name redacted]

HR Representative

[telephone number redacted]

The Court rebuked Oracle for its proposition that this letter was prepared to “assist” Mr. Carroll. Instead, it concluded that “a letter of this sort is damning in an employee’s search for a job hunt.”[5] The Court found that the letter was also contrary to Oracle’s admission that Mr. Carroll earned above target for overachievement.

The Court found that Oracle’s failure to provide a positive letter of reference was so significant that it justified the awarding of a longer notice period. Although Mr. Carroll secured alternate employment eight months following his dismissal, the Court concluded that the appropriate notice period was nevertheless 12 months.

Takeaways for Employers

While it is an employee’s duty to mitigate their damages by taking reasonable steps to search for alternate employment, this decision suggests that an employer’s failure to assist an employee with such search efforts may have consequences, particularly where they later try to advance a failure to mitigate argument.

In this respect, an employer can take various steps to assist an employee with their duty to mitigate, which they can leverage to assist with any failure to mitigate argument. Such steps could include:

1. Providing letters confirming details of employment and making clear that it is company policy not to provide positive letter recommendations.
2. Identifying and compiling job postings to send to an employee to assist with their mitigation efforts.
3. Paying or arranging for outplacement or career counselling services on termination.

Although it remains uncertain as to whether other decision-makers will adopt similar positions with respect to an employer’s failure to provide a positive letter of reference (and it should be emphasized that in this case, Oracle also withheld Mr. Carroll’s statutory entitlements for several months, conduct which earned the Court’s disapproval), this decision nonetheless provides guidance for employers about the difficulty in proving that an employee failed to mitigate their alleged damages as well as the strength of the evidence required when advancing such arguments.

 

Age-Based Benefit Limits Upheld: What Okanagan College Means for Employers

Kaelyn Burns

In a recent decision, the BC Labour Relations Board overturned an arbitration award where the Employer’s LTD plan, which terminated coverage and benefits at age 65, was found to have breached the BC Human Rights Code (the “Code”) because it discriminated on the basis of age.

The Arbitration Award

At arbitration, the Employer relied on section13(3)(b) of the Code which provides that a “bona fide group or employee insurance plan” making distinctions based on age, disability, marital status or sex is exempt from the general prohibition of discrimination in employment. A group insurance plan will be considered bona fide where it is adopted in good faith, is legitimate and I snot a sham, as per the test articulated in the Supreme Court of Canada’s decision in New Brunswick (Human Rights Commission) v. Potash Corporation of Saskatchewan (“Potash”).

The Union’s position at arbitration was that the Potash test ought to be reconsidered and revised to ensure it was consistent with Charter values. The Union further argued the Potash was distinguishable, since it considered a pension plan not group insurance. The Union argued that because group insurance plans can be altered at the request of the policy holder, they deserve stricter scrutiny than the Potash test.

In their analysis, the arbitrator agreed with the Union, and revisited Potash, stating that “a bona fide plan is legitimate, adopted in good faith and not for the purpose of defeating rights.” The arbitrator held that the College’s LTD plan was both legitimate and adopted in good faith, meeting the first two points in the test, but it failed the final component of the revised Potash test. The arbitrator found, based on expert evidence provided, that the Canadian labour market had changed since 2008, and retirement at age 65 was no longer the norm. The arbitrator held that “the costs of a post-65 benefit would not be destabilizing” for the Employer. The arbitrator concluded that the employer “could not reasonably have believed that the Plan was not adopted to defeat protected rights … the [College] knew and accepted that the Plan was continued for the purpose of defeating protected rights.”

BC Labour Board Review Decision

The Employer applied to the BC Labour Board for review of the arbitrator’s decision. On review, the Employer argued that the arbitrator had improperly modified the Potash test, arguing that the award ought to be overturned because “while [the arbitrator] stated it was not his role to rethink or revise the Potash test, he proceeded to do just that.”

The Board agreed with the Employer, stating that the arbitrator had incorrectly applied the Potash test. The Board confirmed that unless there was evidence that a plan as a whole was not legitimate, it was be immune from the conclusion that any particular provision constituted age discrimination.

Since the arbitrator did reach the conclusion that the LTD Plan as a whole was legitimate, finding at paragraph 391 that “…there is little doubt that the LTD Plan is legitimate and was adopted in good faith” the findings in the Award were sufficient for the Board to conclude that the LTD Plan in question was a bona fide plan which did not breach section 13(3)(b) of the Code.

In light of its ruling, the BC Labour Board remitted to the arbitrator the Union’s outstanding alternative argument that 13(3)(b) of the Code violated the equality rights guaranteed by the Canadian Charter of Rights and Freedoms (the “Charter”). No decision has yet been issued on that alternative argument.

Application For Other Employers

The Board’s decision confirms that in order for a group insurance plan to be permissible under the Code,  it must be adopted in good faith and not intended to subvert employee rights, as well as being a legitimate plan that is not a sham. There are no requirements that the specific insurance plan or age cutoff in question be reasonably necessary for the sustainability and operation of the business as a whole. 

This clarification of the correct application of Potash will be a welcome one for employers across Canada, as similar disputes have been litigated in various different provinces. For example, in Ontario, in the recent arbitration decision of Rayonier v Unifor, Locals 256 and 89 (“Rayonier”), the union grieved the age-based termination of LTD coverage for active employees under the parties’ collective agreement. The arbitrator ultimately held that the plan was justified under section 1 of the Charter, due to (among other factors) the eligibility for retirement income and the continuation of overall benefits package.

Employers should continue to carefully consider any decision or policy which automatically terminates a benefits after a certain age, and prepare for the likelihood of any such decision to be challenged. However, as per the recent cases of Rayonier and Okanagan College, when it comes to LTD plans, such decisions may be defensible – but greater certainty on this issue must await, at the very least, the Okanagan College arbitrator’s decision on the outstanding constitutional challenge.

 

 

[1] 2025 ONSC 4889 (CanLII) | Carroll v. Oracle Canada ULC | CanLII.

[2] Ibid at para. 8.

[3] Ibid at para. 13.

[4] Ibid at paras. 28-29.

[5] Ibid at para. 32.

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This newsletter is not intended as legal advice.  Any employer or organization seeking assistance should feel free to contact a Mathews Dinsdale lawyer for assistance.