Whistleblowing Study - Existing Legal Protections

II. EXISTING LEGAL PROTECTIONS

To decide whether whistleblowing legislation is needed in the competition law area, it is crucial to consider the protections for employees that are already in place. There are currently, of course, no provisions that specifically protect employees who allege that their employers are violating the Competition Act. However, there appear to be at least two distinct kinds of protections upon which employees can rely:

(a) the provisions in the Competition Act itself which enable employees to make complaints without disclosing their identities; and

(b) the general statutory and common law provisions that protect employees from being fired without just cause.

A. The Competition Act's confidentiality provisions

The process for receiving and investigating complaints under the Competition Act has a number of safeguards to protect the confidentiality of informants.

First, the Competition Bureau has established a 1-800 hotline that enables any member of the public to complain, either anonymously or not, about an alleged violation of the Act. The toll free line, introduced in the summer of 1995, allows individuals to contact the Bureau 24 hours a day from across Canada. A special unit has been created to answer and respond to these calls. According to figures as of October 1996, the Bureau has received a very high number of calls, between 900 and 1000 calls each week requesting information or filing a complaint. While this service is available for all Canadians, it provides an important means for employees to anonymously register complaints with the Bureau.

Second, where employee informants make their identities known to the Bureau, the Act contains a number of provisions designed to help protect their confidentiality. Section 29 of the Act prohibits any person enforcing or administering the Competition Act from communicating the names of informants to any person other than a Canadian law enforcement agency. Section 10(3) of the Act provides that the Director's inquiries shall be conducted in private. Finally, like other police informants, an employee providing information on a confidential basis in a Competition Bureau investigation is protected by the police informer privilege.

But these safeguards are by no means fool-proof. Even if the identity of an employee informer remains confidential, an employer subject to an investigation may be able to guess the identity of the informant, on the basis of the employee's knowledge, responsibilities and/or past actions. In addition, if the investigation proceeds to trial, and the employee is required to appear as a material witness, the employee's identity will be disclosed.

B. Employment law protections against unjust dismissal

1. Unionised versus non-unionised employees

An employee's protection against unjust dismissal may arise from several different sources, and will vary depending on whether or not the employee is unionised, or is otherwise subject to statutory protections against unjust dismissal. There appear to be three main categories of protection -- unionised employees protected under their collective agreement, employees protected by a statute such as the Canada Labour Code, and non-unionised employees whose rights are governed by the common law of employment.

First, unionised employees will in most cases be protected by provisions in their collective agreement requiring that employees be disciplined or discharged only for "just and reasonable cause". If these employees are disciplined or fired for complaining about an employer's anti-competitive activities, they can bring a grievance to the applicable arbitral board, arguing that the dismissal was not just or reasonable. The arbitral board can order reinstatement or substitute a lesser penalty -- suspension, for example -- instead of discharge. The reported "whistleblowing" cases that have arisen in Canada, discussed below, have all been cases in which employees have brought a grievance before an arbitral board arguing that they have been unjustly discharged.

Second, some non-unionised employees may be protected by legislation requiring that they be dismissed only for just cause. For example, s. 240 of the Canada Labour Code provides that non-unionised employees who work for firms falling under federal jurisdiction cannot be discharged except for just cause. The purpose of the section is to provide the non-unionised employee with substantially similar protections against unjust discharge as those enjoyed by the unionised employee under a collective agreement. Provided the statutory prerequisites are met, employees who believe that they have been dismissed without cause can apply to an adjudicator appointed by the Minister of Labour who has authority to reinstate an employee and otherwise "make whole" an unjustly dismissed employee's losses.

Finally, there are those employees who are not unionised and who do not benefit from statutory protection against unjust discharge. If these employees are fired for complaining about an employer's anti-competitive behaviour, they can bring an action for wrongful dismissal. Although the common law standard of "just cause" is not exactly the same as the arbitral standard, there is a great deal of convergence between the two areas of law. However, unlike arbitral boards or statutory adjudicators, courts have generally been very reluctant to order that employees be reinstated in their employment.

2. Unjust dismissal and the duty of loyalty

A number of arbitral board decisions have dealt with employees who have been dismissed for publicly criticizing their company. Each of these decisions has grappled with the tension between the duty of loyalty owed to the employer, and the public interest in exposing an employer's illegal activity or other serious wrongdoing. Although there have been a few cases where arbitrators have reinstated an employee who has blown the whistle, it appears that in most cases arbitral boards have confirmed the employer's decision to dismiss.

There are two leading Canadian cases which deal with employee whistleblowing. The first is Professor Joseph Weiler's 1981 arbitral decision in Re Ministry of Attorney General, Corrections Branch and British Columbia Government Employees' Union (1981), 3 L.A.C. (3d) 140 (the "B.C.G.E.U. case"). The second, really concerned more with the free speech rights of public servants than with whistleblowing, is the Supreme Court of Canada's decision in Fraser v. Public Service Staff Relations Board, (1985) 2 S.C.R 455.

The B.C.G.E.U. case involved two correctional services guards who were dismissed by B.C.'s Ministry of the Attorney General after repeatedly criticizing in the media, the way in which B.C.'s prisons were being run. Although it was not the first Canadian arbitral decision to deal with the whistleblowing issue, Professor Weiler took the occasion to expand in detail on the nature of an employee's duty of loyalty, and those occasions on which it may be violated in the public interest. At p. 158, he described the duty as follows:

In general terms, an employee must display a certain degree of loyalty to his employer. Malcontents and troublemakers can be so disruptive of normal protection in the work place that they thwart the desires of both employer and fellow employee to get on with the job. These kinds of employees have no constructive role to play in a productive work place and their disloyalty destroys their usefulness as employees.

According to Professor Weiler, employees do not fulfil their duty of loyalty if they deliberately do something that is prejudicial to their employer -- such as publicly criticizing them. However, this duty is not absolute. Weiler states at pp. 162-63:

With respect to public criticisms of the employer, the duty of fidelity does not impose an absolute "gag rule" against an employee making any public statements that might be critical of his employer. ... The duty of fidelity does not mean that the Daniel Ellsbergs and Karen Silkwoods of the world must remain silent when they discover wrongdoing occurring at their place of employment. Neither the public nor the employer's long-term best interests are served if these employees, from fear of losing their jobs, are so intimidated that they do not bring information about wrongdoing at their place of employment to the attention of those who can correct such wrongdoing.

But where employees have evidence of wrongdoing, the duty of loyalty requires them to exhaust internal remedies before going public with that information. As Professor Weiler states at p. 163:

These internal mechanisms are designed to ensure that the employer's reputation is not damaged by unwarranted attacks based on inaccurate information. Internal investigation provides a sound method of applying the expertise and experience of many individuals to all problems that may only concern one employee. Only when these internal mechanisms prove fruitless may an employee engage in public criticism of his employer without violating his duty of fidelity.

The employee's duty to work first through internal mechanisms is designed to create a middle road to reconcile the duty of loyalty with the public interest in an employee reporting employer wrongdoing. But Professor Weiler emphasises that the balance of conflicting interests in these cases will always be difficult, and that each case must be decided on its own facts. He sets out at p. 161 some of the factors that must be considered to decide whether there is just cause for dismissal:

... the content of the criticism, how confidential or sensitive was the information, the manner in which the criticism was made public, whether the statements were true or false, the extent to which the employer's reputation was damaged or jeopardised, the impact of the criticism on the employer's ability to conduct its business, the interest of the public in having the information made public and so forth.

With respect to the merits of the B.C.G.E.U. case, Professor Weiler concluded that the Ministry had just cause to dismiss the corrections guards, since the statements they had repeatedly made to the media were inaccurate, and they had made no attempt to raise their concerns internally.

The Supreme Court's decision in Fraser v. Public Service Staff Relations Board arose from a grievance brought by Neil Fraser. Fraser was fired from his job at Canada Customs and Revenue Agency after continually and very publicly expressing his opposition to metrification and to the constitutional entrenchment of the Charter of Rights. The Supreme Court of Canada upheld the previous decisions confirming Fraser's discharge.

As noted above, this case is really about free speech rather than whistleblowing. Mr. Fraser was fired for expressing his views on policy issues, not for disclosing information about inefficiency or irregularity within the government. However, in his judgment for the Court, Chief Justice Dickson made some important remarks about those occasions in which an employee might legitimately disclose information to the public. As he stated at p. 470:

...in some circumstances a public servant may actively and publicly express opposition to the policies of a Government. This would be appropriate if, for example, the Government were engaged in illegal acts, or if its policies jeopardised the life, health or safety of the public servant or others, or if the public servant's criticism had no impact on his or her ability to perform effectively the duties of a public servant or on the public perception of that ability. But, having stated these qualifications (and there may be others), it is my view that a public servant must not engage, as the appellant did in the present case, in sustained and highly visible attacks on major Government policies. In conducting himself in this way the appellant, in my view, displayed a lack of loyalty to the Government that was inconsistent with his duties as an employee of the Government.

Other arbitral decisions have followed the approaches outlined in B.C.G.E.U. and in Fraser.

In Simon Fraser University, (1985), 18 L.A.C. (3d) 361 (Bird), the University had disciplined employees for criticizing the employer's open-door policy with respect to the periodicals reading-room. The arbitrator, R.B Bird, concluded that the employer was justified in disciplining the employees in question since they had breached the duty of loyalty owed to their employer. The arbitrator stated at p. 368:

Only when some higher purpose is served such as to expose crime or serious negligence, to serve the cause of higher learning, to fairly debate important matters of general public concern related to the employer or those in authority over him, as examples, can the employer be publicly criticised about the employer's conduct without breaching the duty of loyalty. Even then the criticism must be fair in that a deliberate omission and negligent misstatement of significant facts will be treated as a breach of the duty of loyalty, and so will a failure to exhaust all reasonable opportunities to resolve the issue internally before making matters public.

In Re Forgie and Treasury Board, unreported, File No. 166-2-15843 (Public Service Staff Relations Bd.); application for judicial review dismissed 32 C.R.R. 191 (F.C.A.), the Deputy Registrar of the Immigration Appeal Board had leaked evidence of procedural irregularities to immigration lawyers, and eventually expressed his criticisms to the press. The Public Service Staff Relations Board confirmed his dismissal. Deputy Chairman Michael Bendel, following the Supreme Court's decision in Fraser, recognized that in certain circumstances an employee can make public, charges of wrongdoing by his employer. However, he found that the employee's statements did not fall within this exception. First, although the employee had made attempts to resolve his concern with his superiors, there was "not a shred of evidence" to suggest he had used the normal internal channels to try to do so. As the Deputy Chairman stated, "there is a heavy onus on an employee who makes public criticism of questionable practices to establish that he has done everything reasonable to resolve the issue internally. This is a facet of the loyalty owed by him to his employer." Second, by the time the employee made his criticisms public, his employer had already taken significant steps to correct the irregularities.

In some cases, employees who have been dismissed for criticizing their employer have been reinstated. For example, in Re Treasury Bd. (Employment and Immigration) and Quigley, (1987), 31 L.A.C. (3d) 156, the Public Service Staff Relations Board reinstated an employee, with a nine months' suspension, after he had been dismissed for disclosing confidential information to a Member of Parliament. In this case, the employee had taken his concerns to management, but had not given them time to respond before he went to a member of Parliament. The Board concluded that he had disclosed information contrary to his code of conduct, but decided to reinstate him because his criticisms of his employer were not entirely unjustified and he had made no public statement.

In brief, the decisions of arbitral panels hearing grievances from whistleblowing employees suggest that the employee's duty of fidelity is a strong one, and is generally breached when an employee criticizes his or her employer publicly or discloses information that damages the employer's interests. An employee may be justified in going public to expose wrongdoing or illegal acts by the employer. But in order to successfully rely on that justification, the employee must first try to resolve the matter internally. Although these same principles would probably apply to common law actions for wrongful dismissal brought by non-unionised employees, there do not appear to be any reported judgments that deal with this issue.

C. Protections Available to Firm Customers and Other Members of the Public

While employees benefit from some protections under common and statutory law, there are very few provisions that offer protection to other members of the public, such as customers, who disclose information about a firm they are dealing with, and suffer reprisals as a result.

Like employees, customers and other members of the public can make anonymous complaints using the 1-800 hotline. If they do serve as informants, they receive the benefit of the confidentiality provisions that protect informants under the Competition Act and the common law. However, their only legal protection from reprisals would be by means of contract or tort. For example, suppose that a local retailer of widgets has its supply of widgets cut off after the retailer complains about abuse of dominant position by the widget manufacturer. If the retailer has a contract with the widget maker entitling it to continue to receive widgets, it can sue for breach of contract. Similarly, if the widget maker intervenes to prevent the retailer from receiving widgets from other manufacturers, it may be able to be sued for committing a tort such as intentional interference with contractual relations. But in many -- perhaps most -- cases the widget maker will have no legal basis for requiring the manufacturer to continue its supply.

D. Summary

Current statutory and common law confidentiality and employment provisions offer some protection for employees who fear reprisals if they report upon their employer's alleged anti-competitive practices. At the investigative stage, at least, employees who act as informers can keep their identity confidential. If the employer finds out their identity and fires or otherwise disciplines or harasses them, they can pursue a remedy for unjust dismissal. But the limitations of these protections must be recognized. Even if an employee's identity is not disclosed, an employer may be able to easily guess it. If the employee is a material witness, and decides to, or is required to, testify, he or she will lose his confidential status.

If a whistleblowing employee is fired, the unjust dismissal remedies provide no guarantee of reinstatement. As the arbitral decisions suggest, these cases will turn on the facts and their outcome is very uncertain. Employees who decide not to use internal procedures to report their suspicions of criminal wrongdoing are less likely to win an unjust dismissal grievance, even though they may have had legitimate reasons for deciding not to share their concerns with their superiors. Employees who do not belong to a union and who are not subject to the Canada Labour Code must rely on common law remedies against wrongful dismissal, which generally do not include reinstatement.

Finally, although customers and members of the public who make complaints about anti-competitive behaviour receive the benefit of the confidentiality provisions, they are not protected from reprisals, unless a contract has been violated, or a tort committed.