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HomeMy WebLinkAbout2000-0888.Sud.01-03-01 Decision ONTARIO EMPLOYÉS DE LA COURONNE CROWN EMPLOYEES DE L’ONTARIO GRIEVANCE COMMISSION DE SETTLEMENT RÈGLEMENT BOARD DES GRIEFS 180 DUNDAS STREET WEST, SUITE 600, TORONTO ON M5G 1Z8 TELEPHONE/TÉLEPHONE, (416) 326-1388 180, RUE DUNDAS OUEST BUREAU 600, TORONTO (ON) M5G IZ8 FACSIMILE/TELECOPIE: (416) 326-1396 GSB #0888/00 OPSEU#00U148 IN THE MATTER OF AN ARBITRATION Under THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT Before THE GRIEVANCE SETTLEMENT BOARD BETWEEN AMAPCEO (Shiv Sud) Grievor - and - The Crown in Right of Ontario (Ministry of the Environment) Employer BEFORE Randi Hammer Abramsky Vice Chair FOR THE Steve Barrett, Counsel GRIEVOR Sack Goldblatt Mitchell Barristers and Solicitors FOR THE Lucy McSweeney, Counsel EMPLOYER Legal Services Branch Management Board Secretariat HEARING December 15, 2000. 2 AWARD This grievance concerns the proper interpretation of Article 24.13, the parental leave section, of the collective agreement. Specifically, at issue is whether Employment Insurance (EI) benefits received by the employee, which are “clawed back” under the Employment Insurance Act due to the employee’s “higher income”, must be paid to the employee by the Employer under this provision so as to maintain the employee’s salary at 93%. Facts The facts are not in dispute. The grievor, Mr. Shiv Sud, went on a twelve week parental leave beginning September 8, 1998 and ending on November 27, 1998. Pursuant to Article 24.14 of the collective agreement, Mr. Sud received 93% of his salary from the Employer during the first two weeks of the leave. Then, during the next ten weeks, he received a combination of EI benefits and salary totaling 93% of his regular weekly pay. In all, during his leave, Mr. Sud received EI benefits of $4130, less income tax, for a net EI benefit of $3450.00. There is no question that during the period of the parental leave, Mr. Sud received EI benefits and salary equal to 93% of his regular weekly pay. When Mr. Sud filed his income tax statement for 1998, he was reassessed by Revenue Canada for a portion of the EI benefits that he had received during his parental leave because he was a “higher income” earner, with a net income of more than $48,750.00. His annual salary for 1998 was $56,924.92. Because his net income exceeded $48,750.00, that triggered what is referred to as the “claw back” provision 3 whereby a portion of the EI benefits received (30%) must be repaid under the Employment Insurance Act. Although Revenue Canada collects the money, the repayment is not a tax. It is a repayment of a portion of the benefit. In Mr. Sud’s case, he was required to pay back $1239.00 of the EI benefits that he received during his parental leave. Article 24, in pertinent part, provides as follows: Article 24 - PREGNANCY LEAVE, PARENTAL LEAVE AND EMPLOYMENT INSURANCE TOP-UP. 24.13 In respect of the period of parental leave, payments made according to the Supplementary Employment Benefit Plan will consist of the following: (a) for the first two (2) weeks, payments equivalent to ninety-three percent (93%) of the actual weekly rate of pay for his/her classification, and shall also include any increases in salary that he/she would have attained had he/she been at work during the leave of absence as they are, or would have been, implemented; and (b) for each week up to a maximum of ten (10) additional weeks, payments equivalent to the difference between the sum of the weekly Employment Insurance benefits the employee receives for the week and any other salary earned by the employee during the week, and ninety-three percent (93%) of the actual weekly rate of pay for his/her classification, and shall also include any increases in salary that he/she would have attained had he/she been at work during the leave of absence as they are, or would have been implemented… Arguments of the Parties The Association asserts that because Mr. Sud’s EI benefits were reduced pursuant to the Employment Insurance Act’s “claw back” provisions, he did not receive the full benefit of Article 24.13. It asserts that an additional payment by the Employer must be made so that he receives 93% of his salary during his parental leave, as required by 4 Article 24.13. In the Association’s view, the purpose of Article 24.13 is to ensure that an employee who takes parental leave receives payments equivalent to 93% of their actual weekly rate of pay for their classification, through a combination of EI benefits, any other salary earned, and a payment by the Employer. In its view, to the extent that the employee’s EI benefits are reduced, the Employer is required to recalculate its payment to make up the shortfall and ensure that the employee receives 93% payment. It submits that the Employer’s obligation under Article 24.13 can only be determined after the repayment obligation under the Employment Insurance Act has been assessed. It argues that it is only after that point that it can be determined what EI benefits the employee actually received. In support of its contentions, the Union cites to Adrienne Duff and Treasury Board, Public Service Staff Relations Board, File No. 166-2-17330 and Kathleen O’Neill-Cole and Treasury Board, Public Service Staff Relations Board, File No. 166-2- 17880(1988), application for review dismissed [1989]F.C.J. No. 802. In those cases, the Public Service Staff Relations Board determined that “[t]he amount of the U.I. benefits which the employee is eligible to receive is the amount which remains after the repayment calculation has been made.” It therefore ordered the Employer to adjust the payment made to the grievor to ensure that the combination of unemployment insurance benefits (after repayment calculation) which she received and the maternity leave allowance payments which were paid to her by the employer when added together total 93% of the weekly rate of pay. In so ruling in O’Neill-Cole, the board disagreed with the GSB’s decision in OPSEU (Dotzenroth) and Ministry of Correctional Services, GSB 5 No.1167/85 (Forbes-Roberts), preferring instead, the reasoning of its own earlier decision in Adrienne Duff. The Association also relies on Re LaBatt Brewing Co. Ltd. And Brewery Workers Union, Local 300 (1982), 5 L.A.C. (3d) 164 (Larson), in which the Board of Arbitration determined that a repayment of unemployment benefits led to a corresponding increase in the Employer’s obligations. Counsel for the Association also contends that Dotzenroth, upon which the Employer relies, is distinguishable based on the differences in language in the two collective agreements. It notes that whereas in Dotzenroth, the agreement refers to the benefits that an employee is “eligible to receive” the AMAPCEO agreement refers to the benefits that the employee “receives.” Counsel also submits that Dotzenroth was wrongly decided because the Board clearly misperceived the nature of the “claw back”, treating it as if it were a tax obligation. In the Association’s submission, the Board plainly erred in concluding that the repayment was an income tax matter. Accordingly, it submits that the decision should not be followed. The Association further relies on the purpose of the provision – to maintain an employee’s income at the 93% level through a combination of EI benefits and payments by the Employer. It submits that to the extent that the EI benefits are reduced by operation of the Employment Insurance Act, the purpose of the provision to maintain income is subverted should the Employer’s obligation not be correspondingly increased. 6 The Association also contends that a liberal interpretation should be afforded to this benefit provision and that doubts should be resolved in favour of a claimant, citing Re Abrahams and Attorney-General of Canada [1993] 142 D.L.R. (3d) 1 (S.C.C.) and Hills et al. v. Attorney-General of Canada [1988] 48 D.L.R.(4th 193 (S.C.C.) The Employer contends Dotzenroth is binding as a decision of the Grievance Settlement Board under E. Blake et al. and Amalgamated Transit Union, GSB No. 1276/87 et al. It argues that that the issue of “when” the calculation of benefits is made was decided in Dotzenroth and controls the instant dispute. It submits that the language difference between the two agreements is immaterial and that the rationale of the Board’s decision applies equally to the words “eligible to receive” and “receives for the week.” It further argues that the decision was properly decided since the repayment obligation is triggered by the employee’s personal tax situation over which the Employer has no control. It submits that the Board correctly determined that the Employer is not responsible for an employee’s statutory obligations. In terms of the federal cases decided by the Public Service Staff Relations Board, the Employer contends that the language is different and does not refer to “for each week” as in the AMAPCEO agreement. It also submits that in the LaBatt case, the agreement referred to the “actual benefit, if any for which such employee is eligible under the Unemployment Insurance Act …”, language which does not appear in the parties’ agreement. 7 In terms of the cases cited by the Union that determinations should be made in favour of benefits, the Employer contends that the issue here is one of contract interpretation, not interpretation of a statutory benefit scheme, and thus has no relevance to the instant dispute. Finally, the Employer submits that it fully met its obligation under Article 24 and requests that the grievance be dismissed. Decision In E. Blake et al. and Amalgamated Transit Union, GSB No. 1276/87 et al. (Shime, Chair), the Board determined that an earlier decision of the GSB was “directly on point” and, as a decision of the Board, could not be reviewed unless there were “exceptional circumstances.” It noted that in the private sector, ad hoc boards of arbitration have a separate and distinct capacity to decide each case on its own merits and that a standard of “manifest error” had been adopted to balance the interest of individual decisionmaking with predictability. It then stated at p. 8: “But the Grievance Settlement Board is one entity – it is not a series of separately constituted boards of arbitration” and a decision of a panel is “the decision” of the GSB. It continued at p. 8: Thus each decision by a panel becomes a decision of the Board and in our opinion the standard of manifest error which is appropriate for the private sector is not appropriate for the Grievance Settlement Board. The Act does not give one panel the right to overrule another panel or to sit on appeal on the decisions of the earlier panel. Also, given the volume of cases that are currently administered by this board, the continuous attempts to persuade one panel that another panel was in error only 8 encourages a multiplicity of proceedings and arbitrator shopping which in turn creates undue administrative difficulties in handling the case load. The Board concluded that the “manifest error” standard “is too lax a standard” but recognized “that there may be exceptional circumstances where an earlier decision of this board might be reviewed.” It would not delineate what constituted an “exceptional circumstance” but stated that the onus is on the party seeking review to establish exceptional circumstances. The fact that Dotzenroth was an OPSEU case, while this one is an AMAPCEO case is not determinative. Blake involved the Amalgamated Transit Union, not OPSEU and its holding applies to all parties under the GSB’s jurisdiction. The real question is whether Dotzenroth is “directly on point” or not. If it is, then, under Blake, it must be followed in the absence of “exceptional circumstances.” Dotzenroth involved an almost identical factual situation. The grievor went off on maternity leave and, pursuant to the collective agreement, received a combination of unemployment benefits and payments from the Employer totaling 93% of her weekly rate of pay. It was undisputed that during the period of the leave the grievor received payments in accordance with the collective agreement. Subsequently, the grievor filed her tax return and received a Notice of Reassessment requiring her to pay back a portion of the unemployment benefits she had received. The Union argued that to fulfill its obligations under the collective agreement, the Employer was liable for the unemployment benefits that the grievor was required to return, while the Employer 9 maintained that it had completely discharged its obligations under the collective agreement and was not liable for the grievor’s statutory obligations. The wording of the collective agreement in Dotzenroth was as follows: 49.3.2 In respect of the period of maternity leave, payments made according to the Supplementary Unemployment Benefit Plan will consist of the following: (a) for the first two (2) weeks, payments equivalent to ninety-three percent (93%) of the actual weekly rate of pay for her classification, which she was receiving on the last day worked prior to the commencement of the maternity leave, and (b) up to an a maximum of fifteen (15) additional weeks, payments equivalent to the difference between the sum of the weekly UIC benefits the employee is eligible to receive and any other earnings received by the employee, and ninety-three percent (93%) of the actual weekly rate of pay for her classification, which she was receiving on the last day worked prior to the commencement of the maternity leave. The Board determined as follows at p. 3: The entire debate hinges of the meaning to be ascribed to the phrase in Article 49.4.2(b) the “…U.I.C. benefits the employee is eligible to receive…” (emphasis added). Put shortly, is “eligibility” determined at the time of actual payment, or at the end of the taxation year? The union maintains that the level of eligibility can only be determined after all tax ramifications have been taken into account. We reject this view. On its fact the language is clear. Article 49.3.2 (b) speaks of U.I.C. benefits the employee is eligible to receive, not the benefits she will ultimately prove eligible to have received.[emphasis in original] The Employer is required to supplement an employee’s U.I.C. benefits plus any other source of income to maintain the 93% salary level. Income tax ramifications are not the Employer’s responsibility. Having received 93% salary, how the recipient protects that income is up to her – just as if she had received 100% salary. The Employer cannot be expected to assume the role of tax shelter. 10 Clearly, the Board determined the issue of “when” benefits are to be determined – at the time of actual payment or at the end of the taxation year – and decided that it was the time of actual payment. It disagreed with the Union that the level of eligibility can only be determined after all tax ramifications have been taken into account. The question is whether the differences in language between the two agreements means that the decision is not “directly on point.” The AMAPCEO agreement contains the following language: 24.13 In respect of the period of parental leave, payments made according to the Supplementary Employment Benefit Plan will consist of the following … (b) for each week up to a maximum of ten (10) additional weeks, payments equivalent to the difference between the sum of the weekly Employment Insurance benefits the employee receives for the week, and any other salary earned by the employee during the week, and ninety-three percent (93%) of the actual weekly rate of pay for his/her classification, and shall also include any increases in salary that he/she would have attained had he/she been at work during the leave of absence as they are, or would have been implemented; … Thus, instead of “payments equivalent to the difference between the sum of the weekly UIC benefits the employee is eligible to receive” as found in the OPSEU agreement, the AMAPCEO agreement says “payments equivalent to the difference between the sum of the weekly Employment Insurance benefits the employee receives for the week". While the Board found that the OPSEU language clearly “speaks of the U.I.C. benefits the employee is eligible to receive, not the benefits she will ultimately prove eligible to have received”, I cannot conclude that the language is sufficiently distinct so as to disregard the Board’s decision, particularly in the context of the provision as a whole. 11 The difference between “is eligible to receive” and “receiving for the week” is not a material difference. It does not on its face indicate, as counsel for the Association urges, that it refers to what an employee receives at the end of the day, after any repayment is made. Although that is one possible interpretation, the one proposed by counsel for the Employer – that it refers to the benefits received by the employee during the week of parental leave – is equally plausible. In addition, there are several phrases in Article 24.13 that indicate that it is the period when benefits are received that matters, rather than the benefits ultimately received at the end of the taxation year. First is the opening phrase “In respect of the period of parental leave…” tying the benefit to a specific period of time – the period of parental leave. Then, under Article 24.13(b), “for each week” for up to ten additional weeks, the Employer must make “payments equivalent to the difference between the sum of the weekly Employment Insurance benefits the employee receives for the week and any other salary earned by the employee during the week, and ninety-three percent (93%) of the actual weekly rate of pay for his/her classification…” [emphasis added]. The language “for the week” and “during the week” appear to tie the calculation to the specific week. If the “other salary” is earned by the employee at a time other than during the week of parental leave, it is irrelevant to the calculation. Only if it is earned “during the week” of parental leave does it factor into the calculation. Similarly, the fact that any increases in salary which the employee would have “attained had he/she been at work during the leave of absence” must be included in determining the employee’s “actual weekly rate of pay” underscores that the calculation is based on what occurs “during the 12 leave of absence.” If the increase occurs after the parental leave, it is not included in the calculation. Consequently, I conclude that the differences in the collective agreement language are not material and that Dotzenroth is “directly on point.” It determined the key issue in dispute – when the calculation is to be made – at the time of the leave or at the end of the taxation year. Accordingly, this is not a straightforward contract interpretation case. Instead, because Dotzenroth is “directly on point”, the issue is whether there are “exceptional circumstances” which warrant a departure from that decision. The Association contends that in addition to the language differences, the reasoning of the Board in Dotzenroth is plainly misguided because the “claw back” provision has nothing to do with income tax ramifications. It asserts that the “claw back” is a return of employment insurance benefits, not an income tax, and that the Board clearly misunderstood the situation when it stated that “income tax ramifications are not the Employer’s responsibility”, and thus rendering the decision invalid. I agree that the language of the Board’s decision seems to confuse the issue, but there is a tax element involved with the “claw back” of E.I. benefits. That is because the “claw back” requirement is based on an employee’s net income – not gross income, and an employee does have some control over their net income. For example, in Mr. Sud’s case, if he had the ability to put $8,200.00 into RRSP contributions, he would have been 13 below the “claw back” net income of $48,750.00. If he had union dues, child care expenses, or attendant care expenses, or a business investment loss or moving expenses or made support payments or had any other permissible deductions, his net income would have been affected. To this extent, the Board’s conclusion that “[h]aving received the 93% salary, how the recipient protects that income is up to her…” makes some sense. Moreover, a fair reading of the Board’s decision in Dotzenroth is that it decided that the grievor’s statutory obligations, i.e., the claw back requirement, was not the Employer’s responsibility. Having paid the 93% during the parental leave, the Employer is not responsible for any further payment due to the employee’s statutory obligations under the Employment Insurance Act, just as it is not responsible for an employee’s obligation to pay income taxes on wages earned. That is the same issue as in the present matter. The primary difficulty that I have with Dotzenroth is that the purpose of the provision – to maintain an employee on leave at 93% of their regular pay through a combination of E.I. benefits and payments by the Employer – is not fulfilled because of the subsequent claw back of E.I. benefits. Overall, I do prefer the reasoning of the federal cases in Duff and O’Neill-Cole as well as the arbitration board in Labatt. But that is precisely the kind of situation Blake seeks to avoid – persuading one panel of the Board that another panel was in error. In this case, given the long-standing GSB jurisprudence under Dotzenroth the requirements of Blake, clearer language is required to achieve the result the Association seeks. 14 As set out in Blake, supra, the onus of establishing “exceptional circumstances” is on the party seeking review, in this case the Association. For the above-stated reasons, I cannot conclude that “exceptional circumstances” were established, particularly since the Board noted that it was a standard stricter than “manifest error.” Although I may well have been persuaded to reach a different result were this an issue of first impression, as a Vice-Chair of the Grievance Settlement Board I must abide by a decision of the Board in the absence of “exceptional circumstances.” The decision of the Board in Dotzenroth is “directly on point” and in the absence of “exceptional circumstances” controls this dispute. Accordingly, for the reasons set forth above, the grievance is dismissed. Dated at Toronto, this 1st day of March, 2001. Randi Hammer Abramsky, Vice-Chair