A reminder regarding senior managerial positions as stipulated in the Act respecting labour standards

Suzy Chouinard, attorney

We know that the Act respecting labour standards chiefly aims to set out the minimum working conditions that Québec employers must meet and prescribe the protection measures for the cases in which these conditions are not respected.

The individuals who hold management positions in the organizational structure of a business or association are specifically excluded from the application of the Act, with the exception of certain provisions (e.g. retirement, psychological harassment, family responsibilities).

However, while first-level and middle managers have recourse against firing without good and sufficient cause, senior managers do not (*1). A senior manager must therefore pursue civil action to defend his/her interests should he/she disagree with the employer’s decision and bear any consequent legal costs (*2).

Seeing as the Act does not provide a definition, what exactly is a senior managerial position?

Through the years, caselaw has advanced several analysis criteria, which are essentially based on the nature and organizational structure of the business or association involved. A senior manager is often a member of the executive team and reports directly to a board of directors, president or business owner –as is usually the case for a top management position.

A manager who is a shareholder in the company in which he/she works does not necessarily hold a senior managerial position. Rather, the criteria must be assessed, taking into account the percentage of shares he/she holds.

The courts have also taught us that it is vitally important to look beyond the person’s title and assess his/her responsibilities, examining how the tasks are truly carried out.

Elements such as the level of decision-making autonomy, freedom of action, an influential participation in establishing corporate strategic directions, an involvement with the board of directors and the number of managers (if any) reporting to the employee should be taken into account. As mentioned, these elements will only be significant based on the nature of the business or association.

Two very recent decisions rendered by the Commission des relations du travail considered the issue. Below is an overview of the verdicts.

• Louise Cossette v. Moisson Mauricie/Centre du Québec (July 16, 2010, 2010 QCCRT 0356) Dismissal of the general director of a non-profit organization whose mission is to collect food and redistribute it to those in need. Despite her hierarchical position and the fact that she reported directly to the board of directors, evidence showed that the general director, in fact, had little autonomy. The organization’s “collegial” way of functioning and the active and constant involvement of the administrators through various permanent and temporary committees in managing specific issues demonstrated that the board actually managed and controlled affairs. The general director was therefore not considered to be a true senior manager and was allowed to file a complaint regarding her dismissal under article 124 of the Act.

• Lynda Johnson v. Services récréatifs Demsis inc. (July 13, 2010, 2010 QCCRT 0352) Dismissal of a project manager in a company that provides management and operational services to Gatineau Park as per an agreement with the National Capital Commission (NCC). Despite the very specific conditions in the NCC contract, the court was of the opinion that the employee acted as the business’ senior manager for the following reasons: she was the highest authority on site to carry out the mandate with respect to the NCC and users; directly and/or indirectly managed first-level and middle management personnel (managers and coordinators); had the power to hire staff, carry out performance assessments and dismiss employees; could enter into contracts with third parties (purchases, equipment sales, resource sharing, space rental); took an active role in the business’ strategic development, recommending major changes to the organizational chart, and benefitted from working conditions that granted her a bonus based on company profits. Considered to be a senior manager, her complaint was inadmissible.

The definition of a senior managerial position should therefore be based on a factual analysis that accounts for the business’ structure and the ways in which decision-making and functional authority is exercised within these parameters.

(*1) Article 124 of the Act stipulates that “an employee credited with two years of uninterrupted service in the same enterprise who believes that he has not been dismissed for a good and sufficient cause may present his complaint. Besides monetary compensation or allowance, job reintegration may be ordered if the dismissal is ill-founded.”

(*2) The interests in determining whether or not an employee is a senior manager are several fold, for example: he/she will not be reintegrated into the organization, even if he/she was dismissed without just cause and he/she will bear the costs and professional fees in a civil suit, while lower level and middle managers may benefit from free services from Commission des normes du travail counsel.

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