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HomeMy WebLinkAbout1986-2017.Palmer et al.91-02-07ONiAHlO tw:O~E3DELA COi,HONNE cmbm EMPLOYEES Lxmw,*m* GRIEVANCE C@klMlSSlON DE SETTLEMENT REGLEMENT BOARD DES GRIEFS February 7, 1991 Mr. N. Wilson Gowling, Strathy & Henderson Earristes & Solicitors 2 First Canadian Place Suite 2400 Toronto, Ontario M5X lA4 = Dear Mr. Wilson: 0166;87; 0167/87; 0168;87; 0169/87; 0170/87; 0171;87; 0172/87, 0774/87, 0775/87,077/87, 0778/87, 0779/87, 0780/87, 0781/87, 0783/87, 0785/87, 0786/87, 0788/87, 0790/87, Q791/87, 0793/87, 0795/87, OPSEU (Palmer et al) and the Crown in Right of Ontario (Ministry of Revenue) Enclosed, for your information, is a copy of the Board's decision in the above noted matter. Yours truly, J. Shirlow Registrar JS/sb Encl. cc: K; Park 2017/86, 0149/87, 0150/87, 0151/87, 0152/87, 0153/87, 0154/87, 0155/87, 0156/87, 0159/87, 0160/87, 0165/87, 0166/87, 0167/87, 0168/87, 0169/87, 0170/87, 0171/87, 0172/87, 0774/87, 0775/87,077/87, 0778/87, 0779/87, 0780/87, 0781/87, 0783/87, 0785/87, 0786/87, 0780/87, 0790/87, 0791/87, 0793/87, 795/87 IN TNB NATTBR OF AN ARBITRATION Under THE CROWN EMPLCYEES COLLECTIVE BARGAINING ACT Before - THE GRIEVANCE SETTLEMENT BOARD OPSEU (Palmer et al) - and - Grievor BETWEEN The Crown in Right of Ontario (Ministry of Revenue) . Employer BEFORE: J. D. McCamus Vice-Chairperson I. Freedman Member F. Collict Member FOR THE EMPLOYER HEARING: N. Wilson Counsel Gowling, Strathy & Henderson Barristers & Solicitors D. Costen Counsel Human Resources Secretariat Management Board of Cabinet October 13, 1989 January 5, 12, 19 1990 March 29, 1990 2 In this series of grievances, the Grievors seek a reclassification of their position. The Grievors are all employed as auditors in the Retail Sales Tax Branch of the Ministry of Revenue. Broadly speaking, they are responsible for auditing businesses whose activities bring them within the scope of the Ontario retail sales tax legislation with a view to ensuring that the businesses in question are remitting the proper levels Of retail sales tax to the province. The Grievors are classified in the Financial Officer series at the Financial Officer 2 level (FO2). The Grievors claim that they are entitled to be classified - at the Financial Officer 4 (F04) level. In the alternative, it is urged on behalf of the Grievor-s that the work in which they are engaged does not bring them within the Financial Officer series and accordingly, that this Board should simply order the Employer to properly classify them. That is to say, on this second branch of the grievance, the Board is asked to grant a so-called "Berry" order in an exercise of the Board's jurisdiction in a classification grievance to simply require the Employer to properly classify employees who are not properly classified, a jurisdiction which was affirmed by the decision of the Ontario Divisional Court in Re: Berrv and the Ministrv of Communitv and Social Services (607/85, March 13th, 1986). The grievances arise from certain changes effected by a reorganisation of the Audit Division of the Retail Sales Tax Branch which took effect on October lst, 1986. Two different types of 3 changes occurred at that time. First, the employees of the Division who were engaged in auditing work were reclassified from the' Tax Auditor series into the Financial Officer series. Employees who were classified as either Tax Auditor 1 or Tax Auditor 2 were reclassified as F02 Atypical. Employees previously classified at the Tax Auditor 3~ level were reclassified as F04 Atypical. 'For the sake of completeness, we should note that some employees who had been classified at the TA2 level were reclassified at the F02 level but were required to undertake the same kinds of responsibilities as those conferred upon employees classified at the F04 level. Subsequently, those employees were reclassified at the F03 level with a view to being reclassified at the F04 level once they attained a professional accounting qualification such as that of a Chartered Accountant (CA) r Certified General Accountant (CGA) or Certified Management Accountant (CMA), a professional qualification of this kind being a requirement of the F04 classification. A second and related aspect of the reorganization was the creation of a formal division of the kinds of audits undertaken by the Division into three separate categories. From the Employer's perspective, the various categories are meant to reflect the varying size and complexity of audits. The defining characteristics of the categories rest on the size of the gross revenue or retail tax payable by individual taxpayers (or "vendors"). Thus, the A category of audits, which concern the 4 largest vendors, consists of vendors who either have a gross annual revenue of over $200 million or remit retail sales taxes annually in an amount in excess of $1 million. The B category audits concern vendors whose revenue falls within a range from $30 miilion to $200 million or whose remitted taxes fall within a range from $200,000.00 to $1 million. The C category audits, the category containing the smallest vendors, consists of audits of vendors whose revenues is up to but not in excess of $30 million or :qhose taxes remitted do not exceed $200,000.00. These newly established categories of audits - and this is the important point for present purposes - were then assigned to auditors at specific classification levels. Thus, the C category audits were assigned to auditors classified at the F02 level. B level audits were assigned to auditors at the F04 level and A category audits were assigned to auditors at the FOS level. It was further determined that F04 auditors would work on A category audits under the supervision of an F05 auditor. Further, those F02 auditors who were, some time after the October lst, 1986 changes, reclassified to the F03 level were also expected to work on B category audits. As has been indicated above, it was expected that these F03 auditors would be reclassified at the E'O4 level once they had secured an appropriate professional qualification. The first branch of these grievances involves an attempt to gain a reclassification from the F02 level to the F04 level. To 5 accomplish this objective the Grievors must obviously establish two points. First, they must establish that the work 'they are performing at the F02 level is sufficiently similar to the work being performed by auditors at the F04 level that they can justifiably claim an entitlement to classification at that level. since the work of both F02's and F04's is essentially confined to auditing, this means that the Grievors must establish that work done on C audits is sufficiently similar to the work done by F04's on A and B audits that this claim is made out. Secondly, the Grievors must establish that the requirement of professional qualification which is one of the distinguishing features of the F04 classification is unjustifiable and therefore .to be ignored. From the Employer's perspective, if it can be established either that there are significantdifferences between the work done by F02's and F04's or if the professional qualification is sustainable as a legitimate qualification, it follows that these grievances cannot succeed on their first branch. The bulk of the evidence led in this proceeding related to the first of these two points, that is the Grievers' allegation that the work that in which they are engaged as F02's is sufficiently similar to the work of the F04's that they are entitled to.the latter classification. In support of this proposition, the Grievors have obviously been obliged to argue that there is no significant difference between the conduct of audits on small vendors and the conduct of audits on large vendors. The Grievors 6 do not shrink from this thesis. It is their position that the conduct of a retail sales tax audit on a corner variety store or jewellery store is as complex and difficult a matter as the conduct of such an audit on a huge retailing operation or a large manufacturer. In support of this view, the evidence of the representative Grievor, Mr. Peter de Freitas, currently Classified . at the F02 .level, was to the general effect that while the volume of paperwork would be different in a large audit, the approach taken to both large and small audits is similar in all material respects. Some support for this view was drawn from the Ministry's "Audit Handbook", filed as Exhibit 10, which sets out the general approach to be taken to 'Cl audits to be the same or similar to that taken with 'B' and 'A' audits, respectively. That is to say, they all involve similar steps or stages of work beginning with "In office review of files..." etc. and ending with "Follow-up". Further, Mr. de Freitas noted that prior to October lst, 1986, he himself engaged in audits which would now be considered to be in the B category. The distinction between B and C audits was, in his view, quite arbitrary and artificial. This artificiality is emphasized, he suggested, by the fact that under the current policy, if an F02 auditor begins what appears to be a C'category audit and further investigation demonstrates that it is a B category audit, the F02 auditor may be allowed to continue with the audit on his own. It is urged on behalf of the Employer, on the other hand, that 7 there .are significant differences between the kind of work being done by F04's and F02's. If the stages or steps in each category of audit are, according to the Handbook, the same or similar in each type of audit, the actual planning and implementation of those stages is not. Simply stated, the Employer's position is that the larger audits are both more important and more complex than the smaller audits and accordingly, that it is desirable to have them performed by the more highly skilled and more highly qualified auditors. With respect to the former point - the importance of the larger audits - The Employer provided evidence in the form of 'a chart, fiJed as Exhibit 14, which provided actual numbers in support of the obvious point that the very large vendors provide the most important source of tax revenue. Thus, the 750 A audits yield revenue in the amount of $4 billion and the 3,600 B audits yield revenue of $2 billion. The 207,000 C audits, on the other hand, provide a total of $3 billion. Thus, a tiny fraction of the audits provide two-thirds of the tax revenue collected by the province. The total number of auditors engaged in carrying out the 4,350 A and B audits total 68, whereas the 207,000 C audits can be 7 ~accomplished by 75 F02's. The A and B audits take substantially longer than do the C audits and, obviously, yield, on average, much more tax revenue. From these facts, the Employer argues that there is much more at stake in the A and B audits and accordingly, that it is important to have highly skilled auditors doing this work. The financial impact of error in an A or B audit is potentially much more grave than the risk of error in a C audit. The work in the A and B audits involves therefore, according to the Employer, a higher degree of responsibility. The Employer argues that the F04 work is not only more important or responsible in this sense, however, but that this work is also more difficult or complex than the work undertaken by the F02's. In our view, the evidence led in these proceedings is, broadly speaking, consistent with this submission. Thus, we view the evidence of both Mr. Robinson, who was called by the Employer and Mr. Smith, who was called on behalf of the Grievdrs, to be consistent with the proposition that the performance of A and B audits requires a different level of skill and training than does the performance of C audits. The point on which these witnesses differ, to which we will return in due course, is whether a professional qualification or designation of some kind is an appropriate requirement for appointment at the F04 level. On the other hand, both Smith and Robinson apparently agreed that in order to conduct A and B audits one must have a good understanding of the kinds of accounting practices employed by firms of a size placing them within the A and B categories. As Robinson explained, the auditing takes place in an accounting environment and the accounting environment of the A and B audits is simply more complicated than the accounting environment of a C audit. The accounting environment of the larger vendors is more likely to inVOlVe complex computer systems and the auditor must understand how those systems function in order to develop an appropriate audit . r 9 strategy. Robinson, who had performed both at the F02 level and at the F04 level in his work for the Employer, identified a number of illustrations of items of a greater complexity which were, in his view, more likely to arise in the' context of A and B audits. Thus, an A and B audit would more likely involve dealing with the retail sales tax complexities that arise in the context,of vendors who have research and development departments, vendors which manufacture items for their own use, vendors which include computer software development departments, vendors which are large enough to have intercompany transfers of various kinds and so on. The larger vendors are likely to have subsidiaries or divisions of their operation which add an element of complexity. The large vendors are likely to require a more elaborate audit Strategy. Thus, for example, in dealing with fixed assets, in a C audit you might well be able to physically see all of the fixed assets. With a large vendor, a testing or sampling strategy of some kind must be developed. With a larger vendor, the information base is likely to be more sophisticated. Thus, the auditor may be required to work with consolidated financial statements and annual reports in an attempt to ferret out the implicationsof the structure of the corporation for retail tax purposes. Further, it is more likely in a large audit that the vendor will be provided with professional advice of various kinds. The larger vendor is likely to have an expert in-house staff - a director of taxation or similar official. Tax counsel are more likely to be involved. The auditor is more likely to be required to make presentations to such individuals or 10 groups of individuals or to engage in spirited negotiations with them. On the basis of this and other evidence to the same effect, we are satisfied that the Employer has amply supported the proposition that A and B audits are typically~more complex and more difficult than C audits. The evidence relied upon by the Grievors, however, has persuaded us that the dividing line between C and B audits is, in some sense, an artificial one. No doubt, there may be some B audits that are not as complicated as some C audits. It would appear that complexity varies to some extent with the type of business involved. Thus, Mr. Robinson, the Employer's witness, indicated that the auditing of a car dealer wouid be quite similar regardless,of whether the volume of business in question placed the car dealer in category C or category B. Further, the fact that F02's were permitted to do what would now be category B audits prior to October lst, 1986 and, on a discretionary basis, are still allceded to do so persuades us that, indeed, no rigid line can be drawn between what might be referred to as "more straight forward" audits and "more complex" audits. In our view, however, the fact that the boundary between B and C audits is, in this sense, somewhat arbitrary does not defeat the Employer's argument with respect to the validity of attempting to draw some distinction between large vendors and small vendors. It appears to be inherent in the nature of this work that a simple "bright line" test cannot be drawn. Indeed, the fact that the Employer does permit, on a v 11 discretionary basis, ~02's to continue with audits which they discover to be B audits indicates that the Employer itself does not take a rigid view with respect to this dividing line. More importantly, however, we are satisfied that the division of audit categories by vendor size does constitute a good faith attempt at fixing a rough approximation of levels of auditing difficulty and, accordingly, constitutes a reasonable basis for differentiating the skill levels of the auditors to which it wishes to assign these tasks. It appears to be true that the system that was adopted in October of 1986 is somewhat less flexible than the previous practice. iAlthough the Division had established, prior to October 1st, 1986, an Industrial Services Unit which specialized in large audits, it does appear to be the case that during that period there was no artificial constraint on the ability of the F02 to work in what would now be classified as a B category audit. The fact that the new reorganised system is somewhat less flexi!ble, however, does not undermine the main thrust of the Employer's argument, that is that the work assigned to F04's is of significantly greater importance and difficulty than the work assigned to the FO2's. As we are satisfied that the Employer has established this point, it follows that these grievances cannot succeed on their first branch, that is, the Grievors have failed to establish entitlement to an F04 classification. It also follows that it is unnecessary for this Panel to deal with the second point made by the Grievors on this first branch of the grievance, that is the r 12 suggestion that the F04 requirement of a professional credential or qualification is unjustifiable. We do wish to observe, however, that the evidence on this point is in conflict. It was Mr. Smith's view that the actual credential is not important. Mr. Smith is himself a CA, currently serving as an F04. In Smith's view, it is important for an F04 to have a background in public accounting. But it was not his view that the obtaining of a profession credential was the only way of acquiring that background. Mr. Robinson, on the other hand, who has the CHA designation believes that the professiona credential is relevant for two reasons. First, it was his view that the courses required by the program of study leading to the credential provide necessary instruction with respect to the accounting environment in which the F04 is likely to work. Secondly, it was his view and the view of Mr. Marley, the Senior Manager - Audit, of the Retail Sales Tax Branch - that the designation was important in terms of credibility with large vendors. Large vendors are very likely to be represented by people with similar credentials who will be more likely to take seriously the views of a professionally qualified auditor. In the light of our earlier finding, it is unnecessary for us to resolve the question of whether the professional credential or qualification iS a justifiable requirement for the F04 classification. We do note, however, that we did not find compelling the second of the two justifications offered on behalf of the Employer. It is our View that the expectations of the vendor community with respect to the status or prestige of an individual's professional j i r 13 qualifications is not, in itself, likely to warrant consideration as a satisfactory basis for imposing such a requirement. Accordingly, in our view, a satisfactory justification of the requirement would better rest on considerations such as the relevance of the training in question to the task performed. As we have indicated, however, it is unnecessary.to explore this issue in the present context inasmuch as the Grievors have failed on this first branch of their grievance on the basis that the work performed by F04 auditors is significantly different from that performed by auditors classified at the F02 level. In the second branch of these grievances, the Grievors argue that even if they fail in establishing entitlement to the F04 classification, they should nonetheless succeed in obtaining a Berry order on the basis that they are improperly classified in the Financial Officer series. Accordingly, it is their view that this Board should simply order that they be properly classified. This argument is advanced on behalf of the Grievor-s in, it should be emphasized, rather unusual circumstances. As we have noted, the October lst, 1986 reorganisation involved a reclassification of the auditors within the Branch out of the Tax Auditor classification series into the Financial Officer series. No explanation was given for this change in the evidence before this Panel, ~'but it may reasonably be assumed that it was to the advantage of the parties, broadly speaking, to make such a move. Certainly, there has been no suggestion in the present proceeding that it would be attractive 14 to either party or to the Grievors to move the auditors back into the Tax Auditor series. On the contrary, what is being suggested is apparently that some new series be established for the auditors employed by the Retail Sales Tax Branch. In our view, this is not an appropriate case in which to issue a w order. We have come to this conclusion for two different reasons. First, we are not persuaded, on the merits, that the work of the retail sales tax auditors falls outside this series to an extent which requires the creation of a new' classification. Secondly,, we are of the view that special circumstances just adverted to provide an additional reason for refusing to issue a Berry order 'in the present case. With respect to the first point, it is indeed the case that much of the language of the Financial Officer 2 class standard, filed as Exhibit 10, does not apply to the work of the Grievors. This is not surprising inasmuch as the series appears to be designed to capture positions which involve essentially accounting and financial advisory work. Nonetheless, the description does refer to auditing and the language of a number of paragraphs applies with reasonable accuracy to the work of the Grievors. In particular, the language of the first, second and fifth paragraphs appears to be applicable. Much of the rest of the document appears to apply Only uncomfortably to the Grievers' work or, indeed, not at all. The fact that substantial portions of the standard do not 15 apply to the position in question is not, however, fatal to classification of a position within that standard. Class 'standards are, by their nature, generic in character and it is therefore quite conceivable that a properly classified position may not manifest all of the characteristics set forth in the Standard. This point has been made in previous decisions of the Grievance Settlement .Board. See, for example, OPSEU (Boileau) and Ministry of Natural Resources (724/88. November 27th. 19891; OPSEU (Anderson et al. and Ministrv of Natural Resources (0497/85. Ausust ~26th. 1986). The burden to be discharged by the Grievors in making an argument of this kind is that they must establish that significant aspects of the work of the position in question fall outside the Class Standard which has been applied to it. No such argument has been made in the present case. It has been urged on behalf of the Grievors simply that significant portions of the Financial Officer Standard do not apply to them. No duties or responsibilities of the Grievors which fall outside of this Standard have been identified in the presentation made to this Panel. Accordingly, it is our view that the Grievors have not successfully established that their position falls outside the Financial Officer 2 Standard. Our,second reason for declining to issue a a order in the present case relates to the particular circumstances referred to above - the transition from the Tax Auditor series to the Financial Officer series effected on October lst, 1986. In our view, the making of a Berry order in such circumstances should only occur if r - 16 this Board is satisfied that such an order would be appropriate in the light of a careful examination of the nature of and reasons for such a transition. In the present case, we have not been made aware of the reason for moving out of the Tax Auditor series. We have not been made aware of the contents of the Tax Auditor standards themselves. We have not been made aware of any injustice pertaining,to the Grievor-s or to others that may have resided in the application of the Tax Auditor series to the Grievors or to other auditors within the Branch. Further, we have been given no reason to believe that the Tax Auditor series is not potentially applicable-to the Grievors. The Grievors have not asked to be reclassified into the Tax Auditor series, but this Panel has been given no basis for understanding why this alternative is thought to be inappropriate on classification grounds or whether, for some other reason, a move back to the Tax Auditor series is unappealing. Although it is not our view that a Berry order could not be issued in circumstances where a shift of this kind has occurred, it is our view that such an order should not be issued in such circumstances in a state of ignorance about matters of this kind. Failure to take into account such circumstances would, in our view, run a serious risk of ordering, in effect, the creation of new classification series in circumstances where there is in fact no need to do so. Further, indiscriminate use of the Berry order in cases of this kind might have the effect of creating a device whereby individual units can escape from the confines of a Particular Classification series for reasons unrelated to the 17 accuracy or merits of the original classification. Aga not our view that a Berrv order could not be used ,in, it is in such circumstances. Rather, our point is that there should be a reluctance to use the order in a case where such a transition has taken place without an examination of the reasons for the transition and the contents of the original classification series from which the Grievors have moved. The Berry order is obviously a very useful remedial device but it is one which ought to be deployed, we suggest, with some sensitivity to the possibility that it might, through overuse, undermine the basic objectives of equity and consistency of treatment which the classification exercise is s meant to serve. For this reason, as well, we are disinclined to issue a w order in the present circumstances. For the foregoing reasons, then, we have come to the conclusion that these grievances should not enjoy success and they are, therefore, dismissed. Dated at Toronto this 17th day Of February -, 1991 . I. Freedman (Member) $J5Qs4d F. Collict (Member)