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HomeMy WebLinkAboutP-2012-4172.McLennon.15-04-23 DecisionPublic Service Grievance Board Suite 600 180 Dundas St. West Toronto, Ontario M5G 1Z8 Tel. (416) 326-1388 Fax (416) 326-1396 Commission des griefs de la fonction publique Bureau 600 180, rue Dundas Ouest Toronto (Ontario) M5G 1Z8 Tél. : (416) 326-1388 Téléc. : (416) 326-1396 PSGB#P-2012-4172 IN THE MATTER OF AN ARBITRATION Under THE PUBLIC SERVICE ACT Before THE PUBLIC SERVICE GRIEVANCE BOARD BETWEEN Michael McLennon Complainant - and - The Crown in Right of Ontario (Ministry of Community Safety and Correctional Services) Employer BEFORE Kathleen G. O’Neil Chair FOR THE COMPLAINANT Michael McLennon FOR THE EMPLOYER Peter Dailleboust Treasury Board Secretariat Legal Services Branch Counsel WRITTEN SUBMISSIONS February 13, 2015 - 2 - Decision [1] This decision deals with the complaint of Michael McLennon in which he asserts that the employer’s decision to retroactively cancel Pay for Performance based salary increases for the period April 1, 2011 to March 31, 2012 contravenes policy and statute, in particular the Employment Standards Act . The employer takes the position that the matter is governed by the Board’s earlier decisions in which it dismissed similar complaints. The Background Context [2] The complainant is among many who have filed complaints with this Board contesting certain aspects of their compensation, and/or that of some of their colleagues, for the fiscal year 2011/2012 and ongoing, flowing from decisions by the employer related to pay for performance. In that year, pay for performance was set at 0%. In explaining the background of this widespread issue, the Board wrote the following concerning similarly situated complainants in its decision Smith et. al and the Crown in Right of Ontario (Ministry of Community Safety and Correctional Services, PSGB # P-2012-4155, 2014 CanLII 48098 (ON PSGB), dated July 9, 2014 : As employees excluded from collective bargaining, they are covered by the Management Compensation Plan (MCP), which is set by a combination of directives issued by Management Board of Cabinet and government-wide compensation policies consistent with them, rather than by collective negotiations as is the case for members of bargaining units. For several years prior to 2012, employees such as the complainants have been able to increase their compensation by only one route: a favourable pay for performance rating from their superiors. Those ratings were translated, according to annually set policy, into a range of percentage increases. A zero percentage rating was reserved for those with problematic performance ratings, and a person covered by the MCP who met or exceeded performance expectations received an increase in each of the years leading up to this complaint. That changed in 2011/2012 because of fiscal restraint, when the range of performance awards was set at 0%, basically freezing wages, regardless of whether performance was worrisome or wonderful. In the policy dated September 28, 2012 which describes this, one reads that performance pay for the 2011-12 year is set at zero percent for non-bargaining unit Ontario Public Service employees, and that “the earnings of non- bargaining unit employees, who were eligible for performance pay, are to remain at 2011 levels.” [3] As with the Smith complaint, this complaint also contests lump sum payments paid to some managers, which appeared to many as an unfair exception to the general wage freeze. This was explained in the Smith decision as follows: Despite the general lack of increases, some members of the Management Compensation Plan received lump sum payments in the end of 2012, while others did not, and it is this difference that the complainants are seeking to remedy. The employer sees the lump sum payments as a way to ensure that the managers who received them did not experience a decline in their basic annual earnings, while the complainants see them as an arbitrary favouring of the group of employees already at the maximum in 2011, by giving them a payment which was unavailable to others. The payments were provided on December 20, 2012 and were equal to the amount of lump sum performance awards paid in 2011. - 3 - [4] The Smith et.al. complaint was dismissed in part as beyond the Board’s jurisdiction, and in part because it did not disclose a factual basis for a viable complaint, known as a prima facie case, as it would have required the Board to set new terms and conditions of employment in order to grant the complaints. Given the similarity of this complaint to that dealt with in the Smith et.al. decision, the Board wrote to the complainant, pursuant to the Board’s Rule 11, indicating its intention to dismiss the complaint on similar grounds. A copy of the Smith decision was provided as well as the opportunity to make submissions before it did so. Rule 11 reads as follows: Where the Board considers that a complaint does not make out a case for the orders or remedies requested, even if all the facts stated in the complaint are assumed to be true, the Board may dismiss the complaint without a hearing or consultation. In its decision the Board will set out its reasons. Considerations and Conclusions [5] The complainant took the opportunity to make submissions, which the Board has reviewed, together with the original complaint and the employer’s submissions. Mr. McLennon asked for and received disclosure of the employer’s Compensation Policy and Eligibility Procedures, which is the policy basis for the lump sum payments referred to above. The complainant argued in his original complaint a number of points which were dealt with in the Smith decision, including allegations of impropriety related to the retroactivity of the change, the Employment Standards Act, and the fact that others received lump sum payments in the same amounts as they had received as performance related lump sums in the 2011. [6] Mr. McLennon also argues a number of points more individual to himself that were not dealt with in the Board’s previous decisions. Firstly, he submits that when he took his current position as a Field Intelligence Officer, he was given an offer letter by the employer stipulating the starting salary, the salary range, how to further progress through the range and other conditions of employment. He notes that the letter did not contain any reference to any process that would have an adverse impact on the salary or that would delay the progression through the salary grid. He submits that this withheld information severely disadvantaged him in making an informed, responsible decision based on factors that the employer would have known or ought to have known at the time they offered him the job. It is his position that by failing to present all known facts at the time they tendered the offer, the employer essentially made an offer that would, at best, exempt him from the provisions of the Compensation Policy and Eligibility Procedures or at worst, indicate that, given the cancellation of pay for performance, the offer was made in bad faith. Either way, he claims compensation as outlined in the offer letter he received or remedies for what he considers to be the bad faith offer that was made. [7] Mr. McLennon also observes that Operational Managers (OM’s) were recently reclassified with the result that their salary range was increased. He notes that this reclassification resulted in the OM’s being given a 3% increase in their salary and being placed on a new salary grid. He argues that, in - 4 - light of the Compensation Policy and Eligibility Procedures, those OM’s that were once in a position to receive a lump sum payment should have been excluded from receiving these payments. Mr. McLennon is of the view that if the OM’s can be given payments based on previous practice, presumably a reference to the fact that the lump sums were in the same amount as previous performance-based lump sums, then the employer’s obligations under the letter offering him his current position should be honoured. Furthermore, he argues that since the position he accepted was a promotion and not a reclassification, it would be unfair, inequitable, discriminatory and in bad faith to allow those managers who received the lump sum payment to have them in circumstances where no offer letter was involved, while denying him what he considers his rightful compensation under the offer letter. [8] Employer counsel responded to these submissions, making reference to the portion of the Pay for Performance Operating Policy, which states the following: The Minister of Government and Consumer Services is responsible for: Approving the MCP Pay for Performance Payout Grid from within the MCP Pay for Performance Plan Incentive Range established by Management Board of Cabinet which will determine the specific percentage awards for each of the four performance categories, for managers and specialists in the MCP Pay for Performance Plan. The decision on the MCP Pay for Performance Payout Grid for the performance cycle year will be made following the end of the performance cycle year. Performance awards may or may not be approved for any performance cycle. (highlighting from the submission) [9] The employer notes that, within the scope of the pay for performance policy, following the end of the performance year, the Minister set performance pay at 0% for all performance categories for the 2011-12 performance cycle year. Counsel highlights that this policy was not changed, when the new policy (the Compensation Policy and Eligibility Procedures) was implemented in order to maintain earnings. Counsel notes that the offer letter for Mr. McLennon’s position contains a reference to the Pay for Performance Operating Policy as follows: You may be eligible for Pay for Performance on April 1, 2012 to allow for further salary progression. Eligibility for salary progression is based on performance in the position and subject to salary administration provisions in the Management Compensation Plan group [10] Counsel highlights that the letter says he may (as opposed to will) be eligible for pay for performance, and that it is subject to salary administrative provisions. The employer’s position is that one of those provisions was the setting of performance pay at 0% for all performance categories for the 2011-12 performance year. In general, since there was no guarantee of any performance pay in the offer letter received by Mr. McLennon, the employer argues that any allegations of bad faith cannot be sustained. [11] With respect to the remainder of the complaint, the employer argues that the Board dealt with the issues raised by Mr. McLennon in the decision in Smith et al, cited above. - 5 - [12] The Board has carefully reviewed this complaint, in light of the submissions referred to above, and the applicable policy, which is set out in relevant part in the Smith et.al decision. Mr. McLennon’s view that the lump sum payments were unfair echoes that of the complainants in the Smith group and many others who filed complaints with the Board on similar grounds. Given the similarity in the complaints, and the applicability of the same principles, the Board finds that the result must be the sam e as in the Smith et.al decision. The Board is of the view, for the reasons sent out more extensively in the Smith et.al decision, that this complaint is, in substance, all about the denial of pay for performance in the fiscal years from 2011/12 and onwards, and therefore beyond the Board’s jurisdiction. As the Board wrote in Smith et.al: The nub of the complaint is the failure of the employer to pay those not at the maximum of the pay grid in 2011 a lump sum payment in 2012. The basic fact that those not at the maximum of the pay grid in 2011 stayed there, and had no way to increase their basic annual earnings is because they were denied pay commensurate with their performance in that fiscal year. … The undisputed fact is that failure to pay any such lump sum payments flows from the decision to set the performance pay awards at 0% for 2011/2012, and to freeze the basic annual earnings of MCP employees at the level they had reached in 2011. Further, and despite the complainants’ characterization of the lump sum payments as arbitrary, it is also undisputed that the lump sum payments maintained the annual earnings of those who were at the maximum of the pay grid in 2011 at the level they had achieved as a result of the application of pay for performance levels for the fiscal year 2010/2011. Thus, the uncontested facts establish that the compensation policy for 2011/2012 treats both sets of employees the same in terms of leaving them all at the level of basic annual earnings they had achieved in 2011. For those who were at the maximum of the pay grid in 2011, the 2012 payment served to maintain their level of basic annual earnings, rather than limiting them to the maximum of the pay grid, with no additional remuneration, which the policy defines as a decrease in annual earnings. [13] As well, the Board found in Smith, in remarks that are equally applicable here, that there was nothing in the material about the lump sums paid in 2012 that established any viable claim of discrimination on any prohibited ground. Further, the policy provisions in evidence do not require that all employees be treated the same. The undisputed pay provisions create differences based on many factors such as classification and service. As in Smith, the complainant does not argue that all jobs should be paid the same, regardless of qualifications, responsibilities, etc., although that might accord with some people’s idea of equality. [14] In this complaint, the complainant seeks pay for performance as part of the terms and conditions of employment set out in the employer’s letter offering him his current position. This is very clearly a complaint about pay for performance. Complaints about “compensation provided or denied to a public servant as a result of his or her performance” are specifically removed from the Board’s jurisdiction by s. 4(2) of Regulation 378/07 which provides that such complaints cannot be the subject of a complaint to this Board. The Board is a creature of statute, with only the powers permitted by statute. Thus, the Board lacks the power to remedy failure to pay the requested performance-based compensation. To - 6 - similar effect is the Board’s July 11, 2014 decision in Kaine v Ontario (Children and Youth Services), 2014 CanLII 48097 (ON PSGB), PSGB # P-2013-1036. [15] As well, one of the remedies requested by the complainant is that he be moved to the top of the grid. There is no evidence before me of any existing term or condition of employment which the Board could enforce to grant that result. In the circumstances, in order to grant that remedy, the Board would be required to create a new condition of employment, rather than enforce a pre-existing one. The Board does not have the authority to do so. [16] As noted above, the complainant also states that the employer’s action breaches the Employment Standards Act. This allegation was dealt with in the Smith and Kaine decisions, cited above, as follows: I have also carefully considered the viability of the claim that the complainants had a legitimate expectation that they would be paid pay for performance or that they would receive reasonable notice if they were not going to receive it. Reference was made in this respect to the City of Toronto decision, [Ontario Ministry of Labour decision, Non-union Staff of the City of Toronto and the City of Toronto ; Claim #s 70063991-1, etc., a decision of Employment Standards Officer Rick Richards, dated March 21, 2011]. Quite apart from the undisputed fact that Part V of The Employment Standards Act, relied on as the basis of that decision, does not bind the Crown, I find the facts of that case sufficiently different that the decision lends little support to the complainants’ case. The findings of fact included that the employer, by way of a vote at City Council, had authorized the payments in question, and then tried to withdraw them after the employees’ right to them had vested. In this case, there is no evidence that the payments sought had been authorized for those who were not at the maximum of the grid in 2011. As well, although there is little doubt that the pay for performance policy is a term and condition of employment of the complainants, just as it was for the non-union City employees, there is nothing in the City of Toronto decision that indicates that part of the City’s policy was an express provision that the levels of pay for performance could be set at 0% in any year. No doubt, the fact that performance awards had been made in all recent years distracted from employees’ concentration on the part of the policy that allowed the employer to refrain from approving performance awards for any given performance cycle. Most basically though, there is no exemption in The Employment Standards Act from the consideration of complaints related to pay for performance as there is in this Board’s governing regulation. [17] In other words, it is true that Pay for Performance is a term and condition of managers’ employment, but is one which the regulation removes from the complaints which the Board has the power to consider or remedy. In any event, the Pay for Performance policies include explicit provisions that awards may not be granted in any given year, and that the amount of any award will be set after the performance cycle. Therefore, although the pay for performance policy is no doubt intended to help motivate managers to perform well, in the form currently in evidence, it does not guarantee any payment in any given performance cycle, and explicitly provides that the level of any payment will be set retroactively. - 7 - [18] As to the allegations related to the offer letter for Mr. McLennon’s position, the same principles referred to above apply. The letter did not guarantee pay for performance in any amount in any year, and the policy referenced in the letter is clear that there may be years when it is not paid. To give Mr. McLennon the remedy he seeks would require the Board to write different terms and conditions of employment than the ones he currently has, something which the Board has no power to do. [19] Concerning the allegations about the reclassification of Operational Managers, and the idea that those who received the lump sum payments should not have received them, there is nothing in the material that convinces the Board that the combination of the reclassification and the receipt of the lump sum payments breaches any of the complainant’s terms and conditions of employment. It appears to be another way of arguing that paying the lump sum payments to some but not all managers was improper. That allegation was dismissed in the Smith and Kaine decisions, and must be dismissed here as well, for the same reasons set out above and in those decisions. [20] For all of the above reasons, the Board finds that the complaint must be dismissed as beyond its jurisdiction as it relates to the denial of pay for performance and in respect of its claims for the setting of new terms and conditions of employment, and as failing to make out a viable case of a breach of any existing term or condition of employment. Dated at Toronto, Ontario this 23rd day of April 2015. Kathleen G. O’Neil, Chair