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HomeMy WebLinkAbout1989-1803.Miller.91-06-24~'~ ONT.4RtO EMPL O YES DE LA COURONNE CROWN EMPLOYEES OE L'ONTARIO GRIEVANCE C,OMMISSION DE SEiTLEMENT REGLEMENT BOARD DES GRIEFS 180 DUNDAS STREET WEST, SUITE 2100, TORONTO, ONTA~!iO, M5G ;Z8 TELEPHONE/T~-L~-PHO~vE: 1~0, RUE OUNDA~ OUEST, 9UREAU 2.100, TORONTO (ONTARfO), MSG 1~'8 FAC$1MILE/TE£~COPIE : (~176~, 325-1396 1803/89 IN THE MATTER OF AN ~%RBITRATION Under ' THE CROWN F~MPLOYEE8 COLLECTIVE BARGAINING ~CT Before THE GRIEVANCE SETTLEMENT BO]tieD. BETWEEN OPSEU (Miller) Grievor The Crown in Right of Ontario '(Ministry of Correctional'Services) Employer BEFORE: E.- Ratushny Vice-Chairperson W. Rannachan Member A. Stapleton Member FOR THE D. Wright. GRIEVOR Counsel Ryder, Whitaker, Wright & Chapman Barrister & Solicitors 'FOR THE J. Benedict EMPLOYER Manager, Staff Relations and Compensation Ministry of Correctional Services HEARIN~ May 28, 1991 DECISION The Grievor alleges that the Employer made excessive deductions from his pay-cheques as withheld income tax. The allegation relates to pay which is verified by statements of earnings and deductions dated October 12, October 26, November 9, November 23 and December 7 (three separate cheques and pay stubs on December 7). All of these dates were in 1989. The Grievor's position is that the Employer is strictly bound to pay to each employee, every cent to which that employee is entitled by virtue of the collective agreement and relevant wage schedule. This obligation is subject only to any deductions which the Employer is bound to make by virtue of the collective agreement or by virtue of any .legal obligation imposed outside of the collective agreement. The Employer is in general agreement with this proposition but argues that the standard by which the Employer is to be judged is one of "reasonableness". The Grievor disagrees and says that the standard is one of "correctness". In other words, the Grievor's position is that because the Employer has made incorrect deductions, the Grievor is entitled to. relief. In this respect, we are in agreement with the Grievor. If the Employer makes deductions erroneously, is made aware of the error and does not rectify it, the Grievor is entitled to.redress in this forum. Nevertheless, in the context of income tax deductions from pay, the standard of "correctness" is not infallibility. The Employer need not be in the position of calculating the income tax deductions so precisely that, on any given day of the year, the Employer would be in the position of filing a return without ever being entitled to any refund from Revenue Canada. Rather the standard of correctness in this context is for the Employer scrupulously to comply with the requirements of the collective agreement and the Income Tax Act. The Grievor's October 12 pay stub indicates a gross payment of $779.58 with a deduction for income tax of $318.22 which represents a deduction of 40.8% of gross pay. The Grievor testified that he obtained a copy of the Revenue Canada guidelines for deductions by employers and calculated that the correct deduction would have been $138.10 or 17.7% of his gross income. The result was an overpayment of $180.12 which deprived the Grievor of the benefit of this money until a refund was finally received from Revenue Canada approximately one year or mo~re later. The Grievor claimed financial loss in not being able to apply this money, which rightfully was his, to down-paying his mortgage and loans or in being deprived of purchasing power. The Grievor had been employed at the Toronto East Detention Centre since March 15, 1982. He is~currently the President of~ OPSEU Local 582 and has held other positions in the Union. He has received some formal education and practical experience in accounting and his calculation of the proper deductions for the pay ~cheques in question was not challenged. He presented similar testimony indicating excessive income tax deductions for subsequent pay cheques in October, November and December. The Grievor testified that when he received the pay stub dated October 12, he sent a memorandum to the office Manager, Mr. .D. Peck, dated October 13, in which he said: My gross pay, ~or the period September 01 - 16/89 was $779.58. Income Taxes deducted were $318.22. I was taxed at 40.8 per cent. That is definitely not my tax rate. Please review and take appropriate actions to prevent a reoccurrence. Thanking you in anticipation. Derek A. Miller. - 3 - The Grievor did not receive a written or oral response from the Employer. After receiving his pay stub dated October 26, the Grievor calculated that there had been another over-deduction in the sum of $205.62. His next memorandum, on November 3, was addressed to Mr. Peck's superior, Mr. P. Mulhern, who was the Acting Deputy Superintendent: On October 26/89 I received a cheque. The Income Tax Rate was 40.8 per cent. I encountered this problem before and outlined it in a memo to Mr. Peck. A copy is attached. Please review and take appropriate actions. Thanking you in anticipation. Respectfully submitted. Derek A. Miller. Mr. Mulhern responded with a memorandum dated November 7, which advised the Grievor that the matter had been referred to Mr. Peck. Mr. Peck, in turn, asked the Grievor to complete a Revenue Canada "1989 Personal Tax Credit Return". This was done and returned by the Grievor on November 11. Nothing further was heard from the Employer. This grievance was filed on November 16. The problem continued. The only witness for the Employer was Ms. Elaine Fear- Thompson, who is the Office Manager at the Toronto East Detention centre. She introduced a copy of the computer print-out which demonstrated the steps which were taken in the income tax calculation for the Grievor's supplementary pay. These calculations are done by the Ministry of Government Services, province-wide, for over 90,000 government employees including both management and bargaining Unit employees. The system employed is based on formulae which are provided to the Ministry each year by Revenue Canada. The system is such that sudden, significant changes in the amount of supplementary pay earned may result in abberations in'the percentage of pay withheld from certain cheques. The euidence which was presented to the Board was unsatisfactory in many respects. The Grievor did not present evidence as to the actual amount of the excess of deductions for the year in question (1989). He could only say. that he received a refund from Revenue Canada in the Fall of 1990.' He received a further refund for the 1989 taxation year in March of 1991 in excess of $600, which included interest. However, since he claimed 1989 income from sources other than the Ministry of Correctional Services, he could not indicate the actual amount of the alleged excessive deductions for that year by the Ministry. The only actual figures before us with respect to the alleged excessive deductions were adduced on cross-examination of the Grievor. He stated that his corrected T-4 slip for 1989 indicates income from the Employer of $28,916.25 and income tax deductions of $7,578.39. On the basis of 'these figures, the Grievor calculated the over-all rate of tax deducted to be 26.2%. He then gave his estimate that this "would be 3 to 4% higher than the Revenue Canada requirements at the'end of the year". If the alleged excessive deduction is calculated on this basis (at 3.5%), the amount would be $1,012.07. Ordinarily, the Grievor's failure to provide specific evidence as to the amount of the excessive deduction which he' is alleging would be fatal. The rather casual estimate which was provided is not strong evidence. However, it was not disputed by the Employer. Nor did the Employer adduce any evidence as to the correctness of the amount Which was deducted for the entire year. Therefore, the only evidence which is before us on this issue, is that approximately $1,000. was withheld from the~Grievor in excess of what was required for income tax purposes. The response of the Employer is simply that the requirements of the Income Tax Act and Revenue Canada were met. Counsel for the Grievor attempted to demonstrate from the computer print-out that the formulae operated unfairly. It would require a more detailed analysis of these formulae and their application to specific situations to demonstrate that proposition. However, we are of the view that more is required of the Employer than merely to point to the Revenue Canada formulae. When an employee brings a specific problem of this nature to the attention of an employer, there is an obligation on the employer to address it by determining whether an erroneous calculation is, in fact, being made. The Employer did not do so. On the contrary, the evidence indicates that the Employer reacted to the problem in a rather cavalier manner. In these circumstances, the grievance is allowed. The Employer is required to calculate the actual excessive deductions which were made in relation to the Griev0r in 1989 and to compensate him by way of interest on the excess. Interest paid by Revenue Canada on these over-payments will be off-set. We will remain seized in the event of any difficulty in implementing this award. DATED at Ottawa, this 24th day of Ju.% 1991. E. RATUSHNY .Q~.C~ , Vic~.-Chairperson W. ~A~, M~r-* ~TON, Me~er