HomeMy WebLinkAboutUNION-1994-09-12
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IN THE MATTER OF AN ARBITRATION
BETWEEN
HOTEL DIEU KINGSTON
AND
ASSOCIATION OF ALLIED HEALTH PROFESSIOALS:
ONTARIO
VACATION PAY PRO-RATING GRIEVANCE
Arbitrator:
Richard Brown
For the Union:
Judith Allen
For the Employer:
Les Foreman
Hearing:
October 19, 1994
Kingston, ontario
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-----------------------------
1
The question posed by this policy grievance is whether the
taking of pregnancy or parental leave reduces the amount of
vacation pay to which an employee is entitled in the year
when leave is taken. The association contends both the
collective agreement and the Emnlovment standards Act
preclude any reduction.
I
The general formula for determining vacation entitlement is
found in article 18.03(a) to (e) of the collective
agreement. The amount of paid vacation leave increases with
length of "service", ranging from 1.25 days per month of
service for an employee with less than one year of service
to six weeks for an employee with 25 or more years of
service. In other words, employees progress up what might
be called a vacation grid according to length of service.
The employer relies upon an exception to this general
formula which calls for vacation pay to be pro-rated to take
account of unpaid leaves of absence. This exception is
found in article 18.03(f) which states in part:
If any employee works or receives paid leave for
less than fifteen hundred (1500) hours in the
vacation year, she will receive pro-rated vacation
credits.
According to the employer, pregnancy and parental leave is
not paid leave within the meaning of this article. Based
upon this premise, the employer contends time spent on
pregnancy and parental leave is not to be counted in
determining whether an employee has reached the 1,500-hour
2
threshold below which pro-ration applies. Under this
approach, an employee who takes 17 weeks of pregnancy leave
and 18 weeks of parental leave would fall below the 1,500-
hour line and receive pro-rated vacation pay for the year in
question.
The response of the association has two branches. The
first is that the 1,500-hour proviso in article 18.03(f)
does not apply to an employee on pregnancy or parental leave
because they are governed by article 21.05(g):
Credit for seniority and credit for service for
the purposes of salary increment, determination of
vacation entitlement, sick leave or any other
benefit under any provisions of the collective
agreement or otherwise shall continue to accrue
for a period of up to thirty-five (35) weeks of
pregnancy and/or parental leave.
In the alternative, if the 1,500-hour threshold in
article 18.03(f) does apply to some-one who has taken
pregnancy or parental leave, the association submits such
leave is paid within the meaning of this article. Under
article 18.03(f), paid leave must be counted in determining
whether an employee has crossed the 1,500-hour threshold.
In making this argument, the association cites articles
21.05(e) and (f) which provide a supplementary unemployment
benefit to an employee on pregnancy or parental leave.
While the association relies primarily upon the
language of the collective agreement, an argument based upon
the Emplovment Standards Act is also advanced. According to
the association, s.42(4) and s.44 prohibit an employer from
reducing vacation pay as a result of an employee taking
3
parental or pregnancy leave. While conceding the statute
ensures that leave does not interfere with an employee's
progression on the vacation grid, the employer contends
there is no prohibition against pro-rating vacation pay in
the year leave is taken.
The employer's practice with respect to vacation pay
has varied over time. Before s.42(4) of the Emplovment
Standards Act came into effect on December 20, 1990,
vacation pay was pro-rated for employees who took what was
then called maternity leave, and such employees did not
accrue seniority for the purpose of advancement on the
vacation grid. After the statute was amended, changes
occurred on both of these fronts. For a period of about
two years, employees did not have their vacation pay pro-
rated and they accrued seniority for the purpose of
advancement on the grid. This period ended with the
issuance of an interest arbitration decision, dated December
9, 1992 and issued by a board chaired by David Kwavnick,
awarding the exact language now found in article 21.05(g).
Since the Kwavnick award, vacation pay has been reduced but
seniority has not been affected for the purpose of
advancement on the vacation grid.
II
The term "vacation entitlement" in article 21.05(g) is
ambiguous. While this term could mean only an employee's
placement on the vacation grid, it could also include the
4
amount of vacation pay to which an employee is entitled for
a year in which leave is taken.
standing alone, the words
"vacation entitlement" favour the broader interpretation
because no limit is placed on them. Nonetheless, there
remains an ambiguity. For the same reasons as grievance
arbitrators look to negotiation history for guidance in
interpreting an ambiguous article produced in bargaining,
arbitration history should be considered when dealing with
an article awarded in interest arbitration.
Some assistance in interpreting article 21.05(g) is
found in the positions taken before Arbitrator Kwavnick and
his comments. He wrote:
The Employer relied upon the fact that the Act
speaks of "seniority" accruing during such leave
but says nothing of "service" accruing. From
this, the employer draws the conclusion that the
Act does not require that "service" accrues nor
that those benefits which are determined by length
of service (rather than by seniority) be enhanced
by the period of leave.
It is the conclusion of the Board that the
employer is mistaken. For those purposes set out
in the Act, the word "seniority" is used in a
broad generic sense and it is intended to include
what is here meant by the term "service".
Accordingly, for the purposes set out in the Act,
"service" must accrue as if the employee had
worked her normal hours of work during each week
of the leave.
with respect to part-time employees, the
employer must continue to pay the share of the
premiums for benefit plans to which the employee
is entitled under the terms of the collective
agreement. It must follow, then, that in the case
of employees who receive percentage in lieu of
such benefits the employer must continue to pay
the percentage in lieu during the leave. Length
of service, which determines the length of the
annual vacation entitlement, continues to accrue
during leave.
Despite the assertion by the Union at page 40
of its brief that: "The Act requires the Employer
5
to continue to pay its share of benefits and
continue the accrual of vacation" there is no
requirement in the Act that actual vacation time
or vacation pay shall continue to accrue during
leave. Accordingly, those employees who receive a
payment in lieu of vacation pay are not entitled
to receive that payment while they are on leave.
(page 8)
The repeated references to entitlements found in the
Emnlovment Standards Act indicate Arbitrator Kwavnick did
not intend to confer upon employees greater protection than
they enjoyed under the Act. His award was intended to bring
the collective agreement into compliance with the statute
and no more. This is evident from the way he treated
matters other than vacation pay. As Mr. Kwavnick
interpreted the reference to "seniority" in s.42(4) to
include "service", he inserted both terms in the collective
agreement. He awarded a percentage in lieu payment to part-
time employees for periods of leave because he believed the
statute created this entitlement.
As with the meaning of seniority and entitlement to
percentage in lieu, Mr. Kwavnick based his award on the
Emplovment Standards Act when he came to vacation pay.
While the association proposed that part-time employees
receive both vacation pay and percentage in lieu payments
for the period of leave, the third paragraph of article
21.05(g) entitles a part-timer to the percentage in lieu
payment but makes no mention of vacation pay.
The last
paragraph quoted from the award bears directly on this
issue. In the final sentence, Mr. Kwavnick clearly states
the legislation does not entitle a part-time employee to
6
vacation pay for a period of leave. As the Act does not
distinguish between part-time and full-time employees, it
follows that Mr. Kwavnick was of the view that no employee
has a statutory entitlement to vacation pay for a period of
leave. I believe this is what he meant when he said "there
is no requirement in the Act that actual vacation time or
vacation pay shall continue to accrue during leave."
What then did Mr. Kwavnick intend when he awarded
article 21.05(g) saying "credit for service for purposes of
... vacation entitlement shall continue to accrue"
during leave? As he did not mean employees were entitled to
vacation pay for a period of leave, the only reasonable
interpretation of these words is that time on leave counts
towards advancement on the vacation grid.
I have not overlooked the fact that article 21.05(g)
says service accrues for the purpose of "any other benefit
under any other provision of the collective agreement". Mr.
Kwavnick's clear intention throughout was to bring the
agreement into compliance with the Act. As he held it did
not confer an entitlement to vacation pay for a period of
leave, ~ conclude he did not intend these words to create
such a right.
It follows that article 21.05(g) was not intended to
create an exception to the l,500-hour proviso in article
18.03(f) and does not do so.
7
III
If pregnancy and parental leave is "paid" within the meaning
of article 18.03(f), then the taking of such leave would not
reduce vacation pay under this article. In contending such
leave is paid, the association relies upon article 21.05(e)
and (f) under which an employee on pregnancy or parental
leave receives a "supplemental unemployment benefit" (SUB)
equal to the difference between 75% of regular earnings and
unemployment insurance benefits. As unemployment insurance
benefits are now between 55% and 60% of insurable earnings,
this SUB benefit currently is between 15% and 20% of regular
earnings for anyone earning less than maximum insurable
earnings, but more for those earning in excess of this
maximum.
The question whether employees receiving such a benefit
are on paid leave for the purpose of pro-rating vacation pay
was considered in Group of Hosnitals and ontario Nurses'
Association, unreported award dated May 30, 1989 (Brent).
An employee on maternity leave received a supplementary
unemployment benefit equal to the difference between 75% of
regular earnings and unemployment insurance benefits.
Vacation pay was pro-rated for any employee who received
paid leave or worked for less than 1,525 hours in the
vacation year. Arbitrator Brent wrote:
In this case we have a collective agreement which
does not use the term "leave with pay" or "paid
leave" in Article 11.07 [the maternity leave
provision]. There is no reference to money until
Article 11.07(h) [dealing with top-up]. We were
informed that prior to April 1, 1988 there was no
8
Article 11.07(h), and therefore no mention of
money in Article 11.07 at all. As a consequence,
there is no doubt that prior to April 1, 1988
maternity leave was leave without pay. This
conclusion is probably reinforced by Article
11.07(a), which refers to the Emnlovment Standards
Act. That Act does not require paid maternity
leave.
Before the parties added Article 11.07(h),
nurses who qualified for Unemployment Insurance
benefits during their maternity leave were in fact
paid during their leave in the sense that they
were receiving money during the, leave. The mere
receipt of that money did not change the nature of
the leave as being unpaid under the collective
agreement. We agree with the Hospitals that in
order to appreciate the nature of the SUB payment
referred to in Article 11.07, it is necessary to
take notice of the way in which the Unemnlovment
Insurance Act provides for the topping up of
benefits through a SUB plan. Quite clearly, in
order for a nurse to collect the benefit under
Article 11.07(h), the SUB plan must be approved so
that the payment is not regarded as earnings
thereby affecting the Unemployment Insurance
benefits. If the payment were earnings, then
there would be a reduction in benefits to the
nurses, and the purpose of Article 11.07(h) would
be thwarted. Therefore, the addition of the SUB
benefit cannot change the nature of the leave from
unpaid to paid without jeopardizing the SUB
provisions the parties agreed to.
The effect of the SUB benefit is simply to
ensure that the nurses are paid more while they
are on maternity leave, rather than to change the
nature and character of the leave. As counsel for
the Hospitals pointed out, the parties chose to"
provide for the payment of a benefit during
maternity leave rather than to provide for the
continuation of earnings or salary during the
leave as would be the case with paid leave.
(page 29 - 30)
This analysis led to the conclusion that maternity leave was
not "paid" for the purpose of pro-rating vacation pay--or
for the other purposes considered.
As counsel for the Association concedes, before the
advent of the top-up payment, pregnancy and parental leave
were treated as unpaid notwithstanding the existence of
9
unemployment insurance benefits. Did the introduction of
the SUB plan, whereby the employer pays a small percentage
of regular earnings, change the status of this leave to
paid?
An affirmative answer would have ramifications not only
for vacation pay but also for other forms of compensation,
such as health and welfare benefits. While s.42 of the
Emnlovment Standards Act now requires an employer to
continue making benefit contributions for an employee on
leave, when the SUB plan was added to the collective
agreement there was no such statutory requirement. If the
association is right in characterizing such leave as paid,
then the collective agreement would have required the
employer to make such contributions, regardless of what the
statute said. The entitlement of employees on paid leave to
health and welfare benefits can be inferred from article
21.01(b) which states those on leave without pay for more
than 30 days are not entitled to these benefits at the
employer's cost. If employees absent due to pregnancy or
parenting were on paid leave, by virtue of the SUB plan, the
employer would have been contractually obliged to make
benefit contributions on their behalf, even before the Act
was amended. (No evidence was adduced as to what practice
was followed in this regard.) The combined value of the
employer's contribution to benefits and holiday pay flowing
from the treatment of pregnancy and parental leave as paid
10
would have approached, if not exceeded, the value of the SUB
payment to an employee on leave.
When negotiating the introduction of the SUB plan, did
the parties intend it to generate spin-off benefits of this
magnitude? I believe the answer is no. If this was their
intention, one would have expected them to designate
pregnancy and parental leave as paid in clear language. I
note bereavement leave (article 21.03), special leave
(article 21.06), and juror and witness leave (article 22.10)
all are described as leave with payor without loss of pay,
formulations not adopted in article 21.05(e) and (f) with
respect to pregnancy and parental leave.
While ONA's nominee on the Brent board dissented, his
remarks indicate he had significant doubts about ONA's claim
that a SUB payment triggered the benefits associated with
paid leave. Mr. Mayne wrote:
If this supplemental benefit is intended to
trigger all of the other benefits under the
collective agreement, I would prefer to see it in
clearer language. By triggering benefits to
continue with such a small supplemental payment,
the by-product of such a trigger would be worth
almost as much as the supplemental payment. If
such was the intention of the parties, it should
have been made clearer in the language. (page 8)
I conclude pregnancy and parental leave are not "paid"
within the meaning of article 18.03(f).
I also note that both the top-up and pro-rating
provisions pre-date the Kwavnick award. The significance of
this observation is that the Kwavnick board declined the
association's invitation to award in article 21.05(g) what
11
the association now contends employees already enjoyed under
these other provisions of the collective agreement. The
association's proposal at interest arbitration expressly
said part-time employees were entitled to vacation pay
during leave, and the more general language proposed for
full-time employees was intended to achieve the same result
for them. This proposal was not awarded. The association
now argues that vacation pay is not reduced by pregnancy or
parental leave, because article 18.03(f) allows a reduction
only for unpaid leave, and leave associated with child
rearing is paid by virtue of articles 21.05(e) and (f). The
position taken before the Kwavnick board suggests the
association recognizes there is at least some doubt about
the cogency of the argument now being advanced.
IV
On my interpretation of the collective agreement, pregnancy
and parental leave does not interrupt an employee's
progression on the vacation grid. However, the vacation pay
to which an employee is entitled for the year in which leave
is taken may be reduced as a result of her absence from
work.
Does the collective agreement construed in this way
comply with the Emplovment Standards Act? section 42(4)
states:
Seniority shall continue to accrue during
pregnancy leave or parental leave.
12
In deciding whether the agreement complies with this
section, the first issue to consider is the meaning of
seniority. Under this collective agreement, such matters as
promotions, layoff and recall are governed to a greater or
lesser extent by "seniority", whereas placement on the
vacation grid is a function of "service". Seniority is
defined as length of service since last date of hire.
Similar provisions are found in many, if not most,
collective agreements. In some of the cases put before me,
the employer argued s.42(4) did not speak to service and,
therefore, did not protect an employee's vacation
entitlement. If this argument were correct, s.42(4) would
not have any application to vacation pay because it is a
function of service and not seniority. It would follow that
the manner in which the agreement governs the vacation of
employees taking leave could not offend this section of the
statute.
This argument was rejected by Mr. Kwavnick in the
interest arbitration award cited above. It was also
rejected in two other cases: Canadian Red Cross Societv and
ontario Public Service Emnlovees Union, (1994) 38 L.A.C.
(4th) 78 (Samuels); and cornoration of the citv of Barrv and
Canadian Union of Public Emplovees (1994), 40 L.A.C. 4th 168
(M. Picher). In the latter case, Mr. picher wrote:
In the arbitrator's view the concept of
"seniority" reflected in the above provision must
be broadly construed. It is important to
appreciate, I think, that the provisions of
s.42(4) are intended to apply in both unionized
and non-unionized work settings. While in a
13
unionized work place governed by the terms of a
collective agreement the concept of seniority may
generally be well-defined, more often than not
there will be little or no clear definition of
seniority or seniority-related rights in a non-
union employment setting. In a unionized work
place the concept of seniority can be highly
refined concept. As provided in collective
agreements, seniority lists can vary by plant or
department, by geographic location or by trade.
In some work places, depending on the length of
the probationary period for newly hired employees,
an employee who has worked beyond the 13-week
period provided in s.35(1) of the Emplovment
Standards Act as the minimum entitlement for
pregnancy leave, may not yet have achieved
seniority standing. In another work place an
employee may have seniority rights simultaneously
under more than one collective agreement.
Employees under some collective agreements may
preserve such rights for definite or indefinite
periods while working in a non-bargaining unit
position, and others may lose their seniority
rights altogether. In a unionized setting,
seniority is a many-faceted concept which defies
simple definition and which can govern a myriad of
rights and entitlements, including promotion, lay-
offs, recall, shift schedules and vacation
scheduling, to name a few.
In a non-unionized work place the concept of
seniority common to collective agreements may be
virtually unknown. Under individual contracts of
employment some rights or advantages are sometimes
tied to the length of an employee's service. Such
factors as progress through a wage grid, the
pecking order in respect of the time and length of
vacations and days off, and the calculation of
pensionable service may, whether by express
contract or convention, depend upon the length of
the employee's service calculated from his or her
initial date of hire. Generally speaking,
however, elaborate or extensive applications of
the concept of seniority rights are unknown in a
non-union work place, even though a relatively
limited, albeit important, set of privileges may
depend on an employee's "service".
It is against that reality that s.42(4) of
the Emplovment Standards Act must be understood
and applied. The legislature must be taken to
have intended "seniority" within that section of
the Act to be liberally interpreted, so as to
protect the rights and privileges which attach to
the years of service of female employees in both
unionized and non-unionized work settings. In
14
other words, for the purposes of s.42(4) of the
Act, seniority must be taken to mean service and
service-related rights, as well as seniority and
seniority-related rights. It would be meaningless
to enact a statutory protection for the accrual of
seniority if that protection did not extend to
protect the rights and privileges which flow from
seniority or from service. The object of the
section must be to ensure that any rights or
privileges enjoyed by employees by virtue of their
service are not to be diminished by reason of
exercising their right to pregnancy leave. If,
for example, an employee who has been absent for
three months on pregnancy leave returns to work
and is told that she is now considered three
months junior to another employee originally hired
on the same day, whether for the purposes of a job
competition, lay-off or any other right that
relates to seniority or service, s.42(4) of the
Act would clearly be violated. The intention of
the section is clear: the employee returning from
pregnancy leave is to resume her employment with
full entitlement of all rights and privileges
which would flow from uninterrupted seniority or
service. (pages 184 to 186)
I agree with the conclusion reached in these cases.
The reference to seniority in section 42(4) includes both
seniority and service under this collective agreement.
Accordingly, I must proceed to determine whether the way the
agreement governs the vacation pay of employees taking leave
does comply with this section of the statute.
v
Does s.42(4) of the Emplovment Standards Act allow vacation
pay for the year in which an employee takes pregnancy or
parental leave to be reduced because of that leave?
In the
interest arbitration award cited above, Mr. Kwavnick
answered this question in the affirmative. Three other
decisions dealing with this matter were placed before me.
,
15
The first isparticinatino Hosnitals and Ontario
Nurses' Association, an unreported award of a arbitration
board chaired by Gail Brent, dated October 30, 1992. Under
both the full-time agreement and its part-time counterpart,
vacation pay was pro-rated for any employee who "works or
receives paid leave for less than 1,525 hours". In
interpreting this provision, Arbitrator Brent ruled time on
pregnancy or parental leave did not count for the purpose of
determining whether a nurse had crossed the l,525-hour
threshold. Turning to the statute, she wrote:
The provisions [of the agreements] do not speak of
seniority at all, and we can see nothing in them
which violates either the letter or the spirit of
s.42(4) of the Emplovment Standards Act. The
parties have differentiated between seniority,
which does continue to accrue during pregnancy and
parental leaves, and vacation pay entitlement in a
particular year when the actual hours worked or
hours on paid leave during the year fall below the
minimum set out in the agreements. (pages 28 and
29)
In Corporation of citv of Etobicoke, an unreported
decision dated September 9, 1994, pro-rating vacation pay
was again held to comply with s.42(4). (The decision does
not quote the language of the pro-rating provision in the
collective agreement.) This is what Referee Shari Novick
said:
section 42 of the Act primarily deals with the
treatment of benefit plans during pregnancy and
parental leaves. Subsection (1) ensures that
employees continue to participate in certain
employment-related benefits while on leave, unless
they choose not to do so. Subsection (2)
specifies the benefit plans which are to be
continued, and subsection (3) requires employers
to continue to make contributions, unless the
employee chooses not to. The Employer in this
16
case argued that since neither sick leave nor
vacation pay appears in subsection (2), I must
conclude that they were intended to be excluded.
Ministry counsel disagreed, stating that these two
entitlements are more properly characterized as
rights than benefits, and it would therefore not
be appropriate to include them on this list.
I agree with Ministry counsel on this point.
The benefit plans set out in subsection 42(4) are
pension plans, life insurance, accidental death,
extended health and dental plans. These benefits
are all akin to Insurance, in that they all
provide some type of protective "coverage" to
employees. Sick leave and vacation pay, on the
other hand, are entitlements which are based on
the performance of work, and in that sense are
distinct from the benefits set out above. It
would be incorrect to characterize either vacation
payor sick leave as a benefit plan, the term that
is used in subsection 42(1) and (2).
Subsection 42(4) then requires that an
employee's seniority continue to accrue during a
leave. The parties disagreed on the
Interpretation to be given to the term
"seniority". In my view, both the words and
sentence structure used in the subsection suggest
that whatever "seniority" is, it must continue to
accumulate during the period in question. I do
not see how the phrase, as it stands, can be read
as granting any entitlements. When the term
"seniority" appears in other places in the Act,
its context suggests a formal seniority system
within a workplace, as opposed to length of
service, as was suggested by the Ministry and the
Union. Given the above, I find that subsection
42(4) does not guarantee the accrual of benefits -
which are dependent on the amount of active work
performed by an employee - during pregnancy and
parental leaves.
A consideration of section 42 as a whole
reveals the rights and benefits that the
Legislature intended to enshrine during pregnancy
or parental leave. It provides for the
continuation of those benefit plans which provide
insurance-type coverage for employees, and also
ensures the accrual of seniority during the leave
period. The factor that neither vacation pay nor
sick leave nor any other service-driven benefits
are mentioned as continuing to accrue in the same
manner as if the employee had not stopped working,
leads me to conclude that these entitlements were
not meant to be granted. (page 10-12)
17
The only decision to hold that pro-rating vacation pay
violates the Emplovment Standards Act is citv of Barrv,
sunra. with respect to s.42(4), Arbitrator picher wrote:
In light of the provisions of that section, it is
not open to the employer to say to an employee
returning from pregnancy leave: "Your seniority
and service have continued to accrue during your
absence, however, your vacation entitlement for
this year, based on accrued seniority and service
has been reduced. If the protection of the
accrual of seniority and service under s.42(4) is
to have any meaning such an outcome is untenable.
If the employee returns to work with fully accrued
seniority or service, she must do so with
undiminished access to all rights and privileges
which attach to such seniority or service. (page
186)
In summary, there are three decisions holding pro-
ration of vacation pay to be legal and one coming to the
opposite conclusion. None of these decisions mention the
preceding cases. The issue has so far been treated as one
of first impression.
Section 42(4) ensures the accrual of seniority and
service is not interrupted by pregnancy or parental leave,
but says nothing about what benefits go with service. The
determination of what benefits attach to seniority is left
in private hands. As a result, the impact of this section
on vacation entitlement depends upon the criteria by which
vacations are governed in a particular workplace. In a
setting where vacation entitlement is exclusively a function
of seniority, section 42(4) renders pregnancy and parental
leave irrelevant in the computation of service and, thereby,
ensures such leave does not reduce vacation entitlement in
any way. Conversely, where length of service has no bearing
18
on the amount of paid vacation to which employees are
entitled, this section would not protect vacation
entitlement.
In this sense, the regulation of vacation pay under
s.42(1) is different in nature than the regulation of
benefit plans under s.42(1) to (3):
42(1) During pregnancy or parental leave, an
employee continues to participate in each type of
benefit plan described in subsection (2) that is
related to his or her employment unless he or she
elects not to do so in writing.
(2) For the purpose of subsection (1), the types
of plans are pension plans, life insurance plans,
accidental death plans, extended health plans,
dental plans and any other type of benefit plans
that are prescribed.
(3) During an employee's pregnancy leave or
parental leave, the employer shall continue to
make the employer's contributions for any plan
described in subsection (2) unless the employee
gives the employer written notice that the
employee does not intend to pay the employee's
contributions, if any.
Under these subsections, an employee on leave is entitled to
participate in the same benefit plans as other employees do,
on the same basis as every-one else. While the statute does
not require an employer to provide benefit plans, there is
an absolute prohibition against treating an employee on
leave less favourably than others. The statutory approach
to vacation entitlement arising from s.42(4) is different.
There is not an absolute requirement that employees on leave
be treated the same as everyone else. Where seniority is
not a criterion in the determination of holiday entitlement,
vacation pay may be reduced as a result of an employee
19
taking leave, so long as that employee receives the minimum
amount of vacation pay required by s.28.
Bearing these general observations in mind, it is
obvious how s.42(4) applies to the placement of employees on
the vacation grid created by article 18.03(a) to (e).
Seniority is the only criterion utilized to determine an
employee's placement on the grid. Accordingly, s.42(4)
ensures that an employee's place on the grid is not affected
by taking pregnancy or parental leave.
In this case, as in the others reviewed in this
section, actual vacation pay in a particular year is a
function not only of placement on the grid--as determined
by length of service--but also of hours of work or paid
leave in the year in question. By virtue of article
18.03(f), employees who fall below the l,500-hour threshold
receive only part of the vacation pay to which their service
would otherwise entitle them. While time on pregnancy or
parental leave is counted in placing an employee on the
grid, she gets less than the full amount of vacation pay
otherwise associated with that placement if her hours of
work (and paid leave) fall below 1,500. This is not a
violation of s.42(4). The reduction of vacation pay is a
result of hours of work (and paid leave) and does not flow
from a denial of seniority accrual during leave.
An analogy may be helpful in understanding why this
arrangement does not contravene the statute. In this
collective agreement, like many others, there is a wage grid
20
whereby an employee's hourly rate of pay increases with
length of service. By virtue of s.42(4), progression on the
wage grid is not impeded by pregnancy or parental leave. In
this context, the annual salary of an employee is a function
not only of placement on the wage grid--as determined by
length of service--and but also of hours of work (or paid
leave.) Does s.42(4) prohibit an employer from reducing an
employee's annual salary for a year when she takes pregnancy
or parental leave? I believe the answer is no. Under
s.42(4), there is no reason for treating vacation pay
differently than wages.
section 42(4) ensures the accrual of seniority and
service is not interrupted by child-rearing. If pregnancy
and parental leave did not count towards seniority and
service, the detrimental effect on an employee's terms and
conditions of employment would be long lasting. As a result
of a single leave, an employee would be delayed in
progressing to each higher level of vacation and wage
entitlement and might always be less favourably placed in
matters of promotion, layoff and recall. section 42(4)
safeguards an employee against such long-term harm.
However, this section protects only seniority. To the
extent some factor other than seniority determines vacation
pay in the year leave is taken, this section does not over-
ride a collective agreement.
21
VI
Does s.44 of the Emplovment Standards Act entitle an
employee to vacation pay while on leave? This section
states:
An employer shall not intimidate, discipline,
suspend, layoff, dismiss or impose a penalty on an
employee because the employee is or will become
eligible to take, intends to take or takes
pregnancy leave or parental leave.
section 44 was considered in only two of the four cases
canvassed in the preceding section of this award. In Citv
of Etobicoke, sunra, Referee Novick held this section does
not create an entitlement to any form of compensation for
time on leave:
The Employer's actions must then be considered
against the provisions in section 44. An initial
reading of that section suggests that it ensures
that employees taking either pregnancy or parental
leaves will not be discriminated against or
disadvantaged in any way. The Ministry suggests
that this forbids any differential treatment
whatsoever between employees who are actively at
work and those who are on leave, and that if a
difference can be identified, the section has been
violated. I decline to follow that approach, as I
find it too simplistic and a denial of some basic
realities. To begin with, an employee on
pregnancy or parental leave does not receive wages
under the Act. Ministry counsel claimed that the
reason for this is because employees become
eligible to collect UI benefits during the period
of their leave. Leaving aside that in many cases
the amounts received are significantly lower that
the employee's regular salary, the suspension of
the employer's obligation to pay wages during the
leave period represents a fundamental change in
the employment relationship between the parties.
It is my view that it is consistent with that
change that the obligation to pay vacation pay and
other entitlements which are tied to the payment
of wages be similarly suspended.
Having said all of this, I should state that
I agree with the comments of Referee Alter in the
Uniglobe, supra, case. If one employee is given a
22
pay increase which is denied to another employee
solely because she or he is on leave or has taken
a leave in the past, that employee suffers a
penalty. Once the taking of a leave causes the
employee to suffer a penalty, a violation of the
Act has occurred. However, the fact that an
employee does not receive the same amount of wages
or entitlements as he or she would have if they
had been working, as happened in this case, is not
the same thing. (page 12)
The opposite conclusion was reached in citv of Barrv,
sunra. In the circumstances, Arbitrator picher held that
withholding vacation for a period of pregnancy leave
amounted to the imposition a penalty in violation of s.44:
Given that there has been little or no
authoritative interpretation of s.44 of the Act to
date, it is important, I think, to limit my
interpretation of what constitutes a penalty to
the facts of the case at hand. As a first
principle, I take it as self-evident that the mere
fact of incidental disadvantage or hardship is
not, of itself, a penalty for the purposes of s.44
of the Emnlovment Standards Act. For example, if
an employer in good faith sets up a training
course for employees which happens to be scheduled
during an individual's pregnancy leave, the
disadvantage which that individual may suffer in a
subsequent job competition, because she missed the
training program, could not, I think, fairly be
characterized as a "penalty" as that concept is
intended under s.44 of the Act. In that
circumstance, while the employee might be
disadvantaged, just as she might have been had the
training course been given during an extended
period of sick leave or a leave to hold a full-
time union office, she cannot be said to have
suffered the loss of a pre-existing right,
privilege or benefit or the removal of an accrued
advantage which could be fairly described as a
penalty. In a work setting a penalty is generally
the taking away of some right or perquisite which
an employee would otherwise normally have. For
the purposes of s.44 of the Emplovment Standards
Act, therefore "penalty" can be minimally defined
as the removal from an employee of a right,
privilege or benefit which she would otherwise
enjoy.
How is that definition to be applied in the
case at hand? When regard is had to the general
~
23
terms of the collective agreement, a clear sense
emerges as to the rights which are normally
protected for an employee who has taken a leave of
absence. In so far as vacation entitlements are
concerned, the general rule under the collective
agreement is that, with very few exceptions, they
remain undiminished for employees who take a leave
of absence. Employees temporarily absent for
certain union business, for jury duty or as
subpoenaed witnesses, for parental leave, for sick
leave or for long-term absences, under the LTD
plan or for workers' compensation benefits do not
suffer any reduction of their vacation
entitlement. Vacation entitlement, under the
terms of art. 16:01 of the collective agreement,
is solely a function of the length of an
employee's service.
with the exception of the pregnancy leave,
only two circumstances apply to reduce an
employee's vacation credit: absence to assume a
full-time salaried union office and absence for a
personal leave of absence in excess of 20 working
days. The rationale for reducing vacation
entitlement in the case of an employee who moves
to another salaried position as a full-time union
representative or, alternatively, elects to take a
long-term leave of absence for personal reasons,
is readily understandable. Such absences can
extend over months, even years, and it is
difficult to see why an employee returning from
such a leave of absence should expect to be
treated as having uninterrupted service for the
purpose of his or her vacation entitlement.
However, the rationale for reducing an employee's
service~related vacation entitlement on the basis
of pregnancy leave is more difficult to
understand, unless it is understood as the
arbitrary withdrawal of what would otherwise be
the employee's collective agreement right flowing
from the length of her service. Firstly, the
period of pregnancy leave is not indefinite, being
limited to 17 weeks. Secondly, and more
importantly, it is difficult to distinguish it, on
any purposive basis, from leaves of absence for
such reasons as illness, injury, jury duty, or
temporary union business. On a relative basis,
when compared with other types of leave, the loss
of vacation entitlement for pregnancy leave does
appear arbitrary, if not punitive. (page 187-188)
In short, Mr. Picher found pro-rating of vacation pay for
employees on pregnancy leave to be unlawful because
,
24
employees on other types of leaves--including parental leave
and sick leave--received more favourable treatment.
As citv of Barrv dealt only with a denial of vacation
pay to women on pregnancy leave, much the same result could
have been reached by applying the prohibition against
discrimination on the basis of sex found in s. 5(1) and s.9
of the Human Riohts Code. Section 10(2) equates pregnancy
with sex for this purpose. In Brooks v. Canada Safewav
Ltd., [1989] 1 S.C.R. 1219, 89 C.L.L.C. 17,012, the employer
denied to women unable to work by reason of pregnancy the
sick pay generally available to ill and injured employees.
The Supreme Court of Canada held this disparate treatment of
disabled men and pregnant women to be unlawful
discrimination. The Citv of Barrv award found no violation
of the Code, but makes no mention of the earlier decision in
Canada Safeway. The Court's ruling in that case offered a
ground for upholding the grievance. As ill and injured
employees were granted vacation pay for the period of their
disability, the denial of such pay to women unable to work
due to pregnancy is illegal discrimination on the basis of
sex. This is the clear implication of the Court's ruling.
Just as pregnant women are entitled to the same sick pay as
disabled men, they have a right to the same vacation pay.
Some comment on two human rights cases cited by the
employer is warranted. In Glen Haven Homes and Canadian
Union of Public Emplovees (1991), 19 L.A.C. 61 (Darby), the
arbitrator held pro-rating of vacation pay for women on
25
unpaid maternity leave to be lawful because such pay was
also pro-rated for employees on all other types of unpaid
leave. The award does not indicate whether sick leave was
paid and, if it was, whether vacation pay for an employee on
paid sick leave was pro-rated. If sick leave was unpaid,
vacation pay would have been pro-rated, and this award would
be consistant with the ruling in Canada Safewav, because
pregnant women would be treated no differently than disabled
men. However, if sick leave was paid and did not entail a
pro-rating of vacation pay, the supreme Court's decision
indicates it would be unlawful to pro-rate the vacation pay
of women unable to work due to pregnancy. In this setting,
the appropriate group for the purpose of comparison would
not be employees on unpaid leave for reason other than
pregnancy, but rather employees on paid sick leave, the
comparator utilized in Canada Safewav.
The second case is Canadian Airlines International and
Canadian Union of Public Employees (1993), 32 L.A.C. 399
(Springate). The arbitrator found pro-rating of vacation
pay for women on maternity leave to be lawful, because they
were less subject to pro-rating than employees on all other
types of leave, except those serving as witnesses and jurors
whose vacation pay was not pro-rated at all, and because
witnesses and jurors "were required to attend at a
particular place at a particular time and stay until
dismissed" (page 407).
,
26
In the instant case, the association does not rely upon
the Human Riohts Code. The argument based on s.44 of the
Emnlovment Standards Act, if successful, would achieve more
for employees than could be accomplished by applying the
ruling in Canada Safewav to the facts at hand. According to
this argument, a women is entitled to vacation pay for the
duration of both pregnancy and parental leave, not just for
the portion of those leaves during which she is unable to
work by reason of health as in Canada Safewav. In addition,
a man would be entitled to vacation pay for time spent on
parental leave.
If s.44 grants a right to vacation pay in some
circumstances, the same would be true of other forms of
compensation. Adjudicators would perform the value-laden
task of determining what circumstances render a denial of
remuneration a penalty. The approach adopted in the citv of
Barrv case is to ask whether there is adequate justification
for denying to employees on a protected form of leave a
benefit available to employees absent for other reasons.
The following sorts of questions would have to be answered
under this approach. Is it acceptable to continue vacation
pay for employees unable to work due to injury or illness,
but not for those who decide to remain at home on parental
leave? Mayan employer pay regular wages to employees on
sick leave while paying nothing to those on parental leave,
or must the employer top-up parental benefits received by
way of unemployment insurance benefits? Except where a
J
.,'
27
violation of human rights or equal pay legislation is
alleged, or interest arbitration occurs, determinations
about appropriate compensation are not normally made by
labour and employment law adjudicators. In my view, the
single word "penalty" in s.44 does not confer upon me the
jurisdiction to make such decisions.
This conclusion is reinforced when s.44 is considered
in conjunction with s.42. The interpretation of s.44 urged
by the association would confer an entitlement to vacation
pay not found in s.42 which addresses one aspect of
compensation for time on leave. Subsections 42(1) to (3)
require an employer to continue to make normal contributions
to whatever benefit plans exist in a workplace. When s.42
was drafted, the legislature did not explicitly require the
continuation of vacation pay. I believe the absence of an
express requirement indicates vacation pay is not mandated
by the Act. The prohibition against penalties found in s.44
should not be read now as creating an implicit entitlement
to compensation which the legislation refrained from making
explicit when remuneration was considered.
Section 44 does not speak to payment for time on leave.
The purpose of proscribing penalties becomes clearer when
this section is viewed as a whole. The prohibition in s.44
encompasses not only penalties but also intimidation,
discipline, suspension, layoff and dismissal. An employer
is forbidden from imposing any of these measures because an
employee has taken or will take pregnancy or parental leave.
J
" .
28
section 44 is designed to ensure that employees who wish to
enjoy the benefit of the statutory scheme relating to
pregnancy and parental leave do not suffer as a result. In
effect, the statute creates certain primary rights and seeks
to buttress these entitlements by creating a secondary right
not to be victimized for exercising them. The primary
rights are set out in s.42 and in other sections of Part XI
of the Act relating to such things as the duration of leave
and reinstatement when it is over. By creating a right to
be free from victimization, s.44 seeks to ensure employees
are not deterred from realizing their primary rights or
punished for doing so. As Referee Novick suggested in citv
of Etobicoke, while this section does not create an
entitlement to payment while on leave, it does prohibit an
employer from reducing an employeeJs remuneration for time
on the job because she took leave.
In summary, the pro-rating of vacation pay does not
contravene the collective agreement or the Emnlovment
Standards Act. As the association does not rely upon the
Human Riohts Code, the application of the Code to this
collective agreement remains to be determined. The
grievance is dismissed.
~
Richard M. Brown
Deep River, Ontario
December 9, 1994