The URL can be used to link to this page

Home My WebLink About2002-2629.Moran et al.04-02-02 DecisionCrown Employees Grievance Settlement Board Suite 600 180 Dundas St. West Toronto, Ontario M5G 1Z8 Tel. (416) 326-1388 Fax (416) 326-1396 Commission de règlement des griefs des employés de la Couronne Bureau 600 180, rue Dundas Ouest Toronto (Ontario) M5G 1Z8 Tél. : (416) 326-1388 Téléc. : (416) 326-1396 GSB# 2002-2629, 2002-2630, 2002-2631, 2002-2632, 2002-2633, 2002-2634, 2002-2635, 2002-2636, 2002-2637, 2002- 2638, 2002-2639, 2002-2850, 2002-2851, 2002-2853, 2002-2854, 2002-2855, 2002-2856, 2002-2857, 2002-2859, 2002- 2860, 2002-2862, 2002-2863, 2002-2864, 2002-2865, 2002-2866, 2002-2867, 2002-2868, 2002-2869 UNION# OLB251/01, OLB095/01, OLB311/01, OLB310/01, OLB293/01, OLB295/01, OLB294/01, OLB289/01, OLB252/01, OLB250/01, OLB258/01, OLB249/01, OLB247/01, OLB248/01, OLB246/01, OLB244/01, OLB243/01, OLB242/01, OLB241/01, OLB240/01, OLB239/01, OLB238/01, OLB237/01, OLB226/01, OLB225/01, OLB223/01, OLB029/01, OLB296/01 IN THE MATTER OF AN ARBITRATION Under THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT Before THE GRIEVANCE SETTLEMENT BOARD BETWEEN Ontario Liquor Boards Employees’ Union (Moran et al.) Grievor - and - The Crown in Right of Ontario (Liquor Control Board of Ontario) Employer BEFORE Jules Bloch Vice-Chair FOR THE UNION Larry Steinberg Koskie Minsky LLP Barristers and Solicitors FOR THE EMPLOYER Kristen Lopes Ogilvy Renault Barristers and Solicitors HEARING January 15, 2004. 2 Decision 1. This matter deals with associated individual grievances, policy grievances, and group grievances arising out of specific provisions agreed to at the year 2000 set of negotiations. On July 14, 2000, the parties entered into a memorandum of settlement, which includes the following disputed provisions: The Employer agrees to pay to each permanent employee employed by the Employer on the date this Memorandum of Settlement is signed, an amount which would provide such employee with a net payment, after deductions, of five hundred dollars ($500) by separate cheque or direct deposit not later than August 31, 2000. The Employer agrees to pay to each casual employee employed by the Employer on the date this Memorandum of Settlement is signed, an amount which would provide such casual employee with a net payment, after deductions, of three hundred dollars ($300.00) by separate cheque or direct deposit no later than August 31. 2. The union claims that the provisions are clear and unambiguous. The union argues that the LCBO has failed to comply with its obligations under the provisions because the members did not received the $500.00 or $300.00 as a final net payment, but rather the members received a payment which was “grossed-up” by 10% and then the 10% “gross- up” was remitted, by the employer, as a withholding tax to revenue Canada. The union submits that the LCBO is responsible for the full tax burden associated with the $500.00 and $300.00 payment. According to the union, the members were to receive the agreed to amounts, $500.00 or $300.00, as an after tax payment. The union asserts that did not happen. 3. The LCBO states that there is a latent ambiguity in the language of the provisions. The phrase “a net payment, after deductions, of five hundred dollars ($500) by separate cheque or direct deposit not later than August 31, 2000” and the phrase “a net payment, after deductions, of three hundred dollars ($300.00) by separate cheque or direct deposit no later than August 31” has a specific meaning to these parties and that meaning relates specifically to the context of bargaining and the discussions that took place in bargaining. 4. In sum, the LCBO submits that during bargaining it was the parties’ intention to place an amount of money directly in the hands of the members on August 31, 2000. The parties agreed to gross-up the amount by 10% and then remit the10% as withholding taxes. In that way, the members, on August 31, 2000, would receive the appropriate amounts as obligated by the memorandum of settlement. The LCBO advises the panel that the members received the appropriate cheques in the appropriate amounts on August 31, 2000. It is the LCBO position that it has discharged its obligation under the 3 memorandum of settlement. 5. I received the evidence of Wayne Zachar, Director Employee Relations, and Murray Kane, Sr. Vice-President of Human Resources. They both testified about the year 2000 bargaining. Their testimony is similar in nature and can be summed up in the following way. The parties were towards a “make it or break it” stage of bargaining. The union wanted a 4% increase and the employer was offering a 3% increase. Mr. Zachar requested that Mr. Kane to attend at the session. The mediator requested a sidebar meeting which was attended by Mr. Zachar, Mr. Kane and Mr. Coones, OLBEU’s President. At that meeting a lump sum approach was floated as a way to find a solution to the impasse. Mr. Coones was wary of a lump sum approach because of the flack he received for agreeing to a lump sum of $900.00 in an earlier round of bargaining. Mr. Coones needed a solution which would provide his members with a net payment approach. The mediator raised the possibility of grossing up the amounts by 10%, then withholding the 10% grossed-up amounts and remitting the withheld amounts to Revenue Canada. Both Mr. Zachar and Mr. Kane testified that they believed that the withholding was a legal deduction. The parties did not discuss any other tax implications of the mediator’s approach. Decision 6. I find that the provisions under dispute are clear and unambiguous. The phrase “a net payment, after deductions, of five hundred dollars ($500.00) by separate cheque or direct deposit not later than August 31, 2000” and the phrase “a net payment, after deductions, of three hundred ($300.00) dollars by separate cheque or direct deposit no later than August 31” means that the member, depending on employment status, would receive either $500.00 or $300.00 in after tax dollars, on August 31, 2000. This approach mandates that the employer is responsible for the tax deductions. I find that the term “after deductions” means after lawful deductions. In circumstances where more than one construction is possible, the arbitrator must choose the construction which is consistent, rather than in conflict, with a statute (see: Re Middlesex-London District Health Unit and Ontario Nurses Association (1984) 16 LAC (3d) 98). 7. I find that the evidence tendered supports an interpretation that the net payment on August 31, 2000 is inclusive of the appropriate tax treatment. When the parties met for their “make it or break it” session, the mediator floated a tax approach which both parties believed to be lawful. On the basis of a 10% withholding tax, the parties were able to reach agreement. I find that the parties’ agreement was based on what the parties believed to be a lawful tax approach. It was subsequently determined that the tax approach was unlawful. The discovery that the remittance to Revenue Canada was not proper does not obviate the parties’ agreement. The parties intended that a lawful tax treatment be applied to the money received by the members on August 31, 2000. 8. The parties never intended to simply place an amount of money into the hands of the members as of August 31, 2000. If the parties wanted to simply issue a cheque of either $500.00 or $300.00 on August 31, 2000, they could have so without using a withholding tax approach. 4 9. The parties intended that the August 31, 2000 payment to the members be adjusted for tax consequences. The employer was responsible for the 10% grossing up and equally responsible for the 10% remittance to Revenue Canada as a withholding tax. The tax approach agreed to was not lawful. The employer intended that a lawful tax approach would be applied to the amounts of money agreed to in the memorandum of settlement. The proper tax approach to be applied to the money agreed to in the disputed provisions of the memorandum of settlement is the tax approach used for bonus payments. I find that the employer agreed to be responsible for any lawful tax consequences that resulted from the payments it made to employees in satisfaction of the employer’s monetary obligation found above at paragraph 1 of this decision. 10. I remain seized of this matter. Dated at Toronto this 2nd day of February 2004. Jules Bloch Vice-Chair