CAW LAW REPORT

The following facts gave rise to an important and interesting hearing recently before an adjudicator (formerly called a Referee) under the Employment Standards Act of Ontario.

A worker employed by Hayes Dana Inc. in St. Catharines, Ontario was laid off in the middle of November, 1989. He, as well as twenty other similarly affected workers, was given proper notice of his layoff/termination according to the applicable collective agreement and the Employment Standards Act of Ontario, respectively.

The worker was laid off for well over thirty-five weeks when he received a letter from his employer inviting him to a meeting at the workplace to discuss his options regarding severance pay or recall. The worker neglected and/or failed to respond to the company's invitation. The worker's unemployment insurance benefits expired at the end of October, 1990. He decided, at the beginning of October, 1990, to take early retirement effective November 1, 1990, all in accordance with his collective agreement and pension plan.

The company processed his application for early retirement and accepted it without question. The administrator of the pension plan fund, a trust company, began to pay the newly retired worker his monthly pension benefits. However, it is important to note that the worker's monthly pension benefits were reduced by a few dollars each payment. The pension benefits were reduced because when the worker retired, he was four complete months short of his sixty-second birthday and thus, by virtue of the provisions of the pension plan, his monthly benefit was reduced by 2%, or one-half of one percent for each full month he was shy of his sixty-second birthday. This reduction was known under the Hayes Dana Inc. pension plan as an early retirement factor and is also well known in the pension community as an "actuarial reduction".

Following the worker's early retirement, the Employment Standards Branch of the Ministry of Labour of Ontario was contacted because the company refused to pay the worker severance pay. An Employment Standards Officer made an investigation with respect to the complaint and an order to pay severance pay was issued by that officer against the company. The Employment Standards Officer considered the following provisions of Section 40a of the Employment Standards Act which reads as follows: (severance pay is payable to)

"s. 40(a) 2(g) an employee who, upon having his employment terminated, retires and is entitled to receive a reduced pension benefit."

The employer contested the order to pay which amounted to approximately $15,000. The employer consequently, two months after the workers retirement, embarked upon a strategy which the CAW-Canada later argued constituted an illegal and improper appropriation of pension funds and an illegal scheme to defeat the Employment Standards Act, all contrary to section 51 of the Act. The employer contacted the trustee of the pension fund and directed the trustee to "top up" the worker's reduced pension benefit. The trustee did so, and took approximately $60.00 out of the pension fund to increase the worker's benefit for every month until his sixty-second birthday when the actuarial reduction would run out. The company then submitted to the Ministry of Labour, Employment Standards Branch, that the worker was no longer entitled to severance pay because his pension benefit was no longer reduced. The company submitted to the Employment Standards Branch that the provisions of Section 40a(3)(d) which are stated below applied to the situation at hand: (severance pay is not payable to)

"an employee who, upon having his employment terminated, retires and receives an actuarially unreduced pension benefit;"

The Employment Standards Branch rescinded the order to pay against Hayes Dana because the Branch decided that the worker's pension benefit was no longer reduced. The CAW-Canada protested this latter decision and demanded that the Branch withdraw its ruling that the order to pay be rescinded. An appeal was launched with the Director of the Employment Standards Branch. A new Employment Standards Officer was appointed to re-examine the matter. Ultimately, the new Employment Standards Officer decided that an inquiry should be held and conducted before an adjudicator pursuant to the Employment Standards Act. When the matter went before an adjudicator recently, the CAW-Canada made the following arguments. First, the worker was entitled to severance pay because after the expiry of his thirty-fifth week of layoff the worker was deemed to be terminated by the provisions of the Employment Standards Act, and since his employer undisputedly had a payroll of $2.5 million dollars or more at the time the worker was deemed to be terminated, the worker was entitled to severance pay. The CAW-Canada argued that the specific date at which entitlement arose was July, 1990, after the expiry of his thirty-fifth week of layoff. Secondly, the CAW-Canada argued that when the worker took his early retirement he, in fact, did receive a reduced pension benefit for several months until a retroactive "top-up" payment was received by the worker. The CAW-Canada submitted that the retroactive "top-up" payment should not disqualify the worker from his severance pay entitlement because according to section 40a(2), strictly speaking, the worker was not entitled to the supplementary payment. Simply put, the terms of the worker's pension plan did not direct that such a "top-up" payment be made. Further, we submitted that the so-called "supplementary" payment made from the pension trust fund to the worker was, in essence, a misappropriation of pension monies by the employer in order to complete its scheme to avoid the provisions of the Employment Standards Act. We argued that the company misappropriated $60.00 out of the pension trust fund in order to avoid paying approximately $15,000 of severance compensation. The union relied on the particular terms of the Hayes Dana Inc. pension plan which specified that the company had paid over irrevocably its contributions to the pension trust fund, and that it no longer had any interest or title to the money in the fund. We pointed out that the Pension Benefits Act obliged an administrator of a plan to administer the plan according to its terms. We argued that Hayes Dana Inc. had not administered the plan according to its terms when it directed the Trustee to release more money from the fund to "top-up" the worker's monthly pension benefit. This unusual and improper direction was, in our view, a breach of the company's fiduciary duty as administrator of the pension plan and clearly illustrated how Hayes Dana had improperly permitted itself to be caught it a blatant conflict of interest.

Our alternative argument relied on the Goodyear of Canada Ltd decision of Referee Ken Swan which has been approved by the Divisional Court as a correct statement of law with respect to circumstances in which one can say that a worker's entitlement to pension benefits has been reduced, at the time of his/her termination from employment. You may recall that the Goodyear case involved the closure of the Goodyear tire manufacturing facility on the Lakeshore Blvd., in Toronto, Ontario. Referee Ken Swan found, under the 1986 Employment Standards Act, that when a worker is terminated because of a closure of a workplace he/she loses, amongst other things, the opportunity to accumulate additional pension credits, if he/she has not yet attained the maximum number of pension credits allowed under the applicable pension plan. Accordingly, Referee Swan held that the Goodyear workers who were terminated as a consequence of their workplace closure would be entitled to severance pay under section 40a(2)(g) which states as follows:

"an employee who, upon having his employment terminated, retires and is entitled to receive a reduced pension benefit." (is entitled to severance pay)

This entitlement to severance compensation arises because the worker, upon electing retirement at the time of termination of employment would receive a reduced pension benefit compared to what he/she would have received if the worker had never been terminated due to the workplace closure.

This ruling was adopted by the CAW-Canada in argument and applied to the specific circumstances of the Hayes Dana Inc. case. The CAW-Canada argued that the 1987 amendments to the Employment Standards Act of Ontario which provide for severance pay, when simply, in most circumstances, a five year employee is laid off in excess of thirty-five weeks, whether or not his/her workplace closes mean that Referee Swan's decision could apply to the benefit of our claimant. In other words, our claimant at Hayes Dana Inc. is, in fact, receiving a reduced pension because he was terminated after his thirty-fifth week of layoff, and was therefore unable to continue to accumulate pension credit benefits. According to the Hayes Dana Inc. plan, had the worker not been terminated, that is, had the worker not been laid off in excess of thirty-five weeks, he would have continued to accumulate pension credits. This loss of opportunity to accumulate pension credits is recognized and compensated for in the form of severance pay.

A ruling is expected shortly from the adjudicator, Robert Blair, who heard our case.

Many collective agreements require that employers allow a union representative to accompany a worker at a disciplinary meeting or at the time discipline is imposed. Arbitrators have generally held that where an employer is obliged to allow for union representation and does not do so, the discipline that follows the disciplinary meeting is invalid and must be overturned, even if the worker him/herself did not ask for representation. However, the next question to consider is very crucial; can the employer try again and interview and/or discipline the worker for the same infraction, this time with a union representative present? It appears that the answer to this key question turns on the specific circumstances of three kinds of cases.

Most arbitrators have found that probationary employees can take advantage of union representation clauses. If they have access to the grievance procedure, they can complain that they did not have proper representation and have the original discipline overturned. The practical result, though, is that when an employee is reinstated, he/she is still on probation. Many collective agreements allow termination of a probationer for any reason, as long as the decision is not arbitrary, discriminatory, or in bad faith. As a result, it is likely that an employer would be successful in trying to re-discharge a reinstated probation employee.

The second situation is one in which there has been a technical failure to allow a union representative to attend a disciplinary meeting, but there is no other reason to stop discipline. Some arbitrators have found that, where the lack of representation caused no prejudice to the employee, the employer can take a second try at discipline. The clearest case is one in which there is no formal discipline meeting, but the employee is simply given a disciplinary notice without a union representative being present. In those cases where the employee is not asked questions and does not say anything harmful to his/her case, some arbitrators have allowed the employer to call a proper meeting and reimpose discipline.

The final situation is one where the grievor is truly prejudiced by a lack of representation at a disciplinary meeting. Where the decision to discipline or discharge is influenced, even in part, by a meeting in the absence of a representative, the employer cannot rely on the same facts and hold a disciplinary meeting and then discharge the employee. One very recent decision, Re: Valdi Foods and United Food and Commercial Workers, Local 175 (1991), 19 L.A.C. (4th) 114, found that since the first discharge was null and void, a second discharge that relies on the same facts is also null and void. The Valdi case dealt with an employee who was accused of stealing from the cash. Her manager called her into the office and had two discussions with her with no union representative present, prior to the third meeting where the union steward was present. At the third meeting, the manager suspended the employee. The worker brought a grievance against the company for failure to have the union steward present at the first two disciplinary meeting. The discharge of the employee was set aside and the employee was reinstated. The arbitrator who reinstated the worker to employment found that the company had contravened the collective agreement and, further, stated as follows:

"I am of the view that the discharge must also be null and void. I am satisfied that the conclusion to discharge the grievor flowed, in part at least, from the meeting held on the morning of June 2. The evidence does not indicate that there was any further investigation into the matter following the meetings in question. To all intents and purposes the grievor was discharged on that day."

Immediately following the employee's reinstatement she was again discharged. A second grievance was laid against the company. The second arbitrator ruled as follows:

"Therefore I find that not only did the two cases involve the same parties, the same collective agreement, the same grievor, but the factual basis upon which the two cases rest and the claims in both, that the grievor was discharged for cash manipulation on May 31, 1990 were the same, and therefore, res judicata is applicable with the effect that the matter has already been adjudicated. As the first discharge was null and void and the defect was not curable, the second discharge which rests upon the same facts is also null and void... Counsel for the company suggested that the case before me was different than the case before Arbitrator Brent because the merits of the discharge had not been dealt with. I find however, that Arbitrator Brent did deal with the merits of the discharge, although not with the incidents that gave rise to the discharge."

By finding that the right to union representation at the initial meetings was a substantive and mandatory right, the arbitrator found that the failure to provide that right struck down the discharge from its beginning. Therefore, the merits of the discharge were dealt with, because the discharge was fatally flawed from the start.

The Ontario Court of Appeal has recently upheld part of a decision of the Ontario Court, General Division that ruled that the Canadian Human Rights Act was unconstitutional in its failure to include "sexual orientation" as a prohibited ground of discrimination. The Court of Appeal noted that several courts have now accepted that sexual orientation was included by analogy in the equality provisions of the Canadian Charter of Rights and Freedoms and ruled that the failure to extend the benefit of the Canadian Human Rights Act to gays and lesbians violated the Charter. While the lower court had ruled that the Act was unconstitutional because of the omission, the Court of Appeal then varied the remedy of the lower court by ordering that "sexual orientation" be read into the prohibited grounds of discrimination in the Act. Thus, the protection of the Act is now available to gays and lesbians facing discrimination in the federal sphere.

Minister of Justice Kim Campbell recently hinted at amendments to the Act, however, while proposing that sexual orientation be protected, she said that extensive limitations to its application would be included in the amendments. Such limitations included defining "spouse" for the purposes of employment benefits to mean opposite-sex partners. It is yet not known whether the government will appeal the decision of the Court of Appeal to the Supreme Court of Canada, nor what affect the decision will have on its intended amendments of the Act.

With respect to bargaining, this landmark decision will have a significant impact on all federally regulated sectors. While the CAW-Canada already has "sexual orientation" included in its model agreement's anti-discrimination clause, National Representatives should ensure that the term is included and protected in each collective agreement. Additionally, and just as importantly, each agreement should be scrutinized to ensure that the union has not agreed in the contract to a discriminatory definition of "spouse" in any context as including only opposite sex partners. If so, every effort should be made to change the definition, otherwise the union is potentially open to be named as a respondent in a human rights complaint if a worker is subject to such discrimination.

Despite the fact that six provincial jurisdictions in Canada protect sexual orientation in human rights legislation, there are still many hurdles facing gay and lesbian workers in their efforts to achieve equality, as other significant statutes have not kept pace with these changes. For example, the federal Income Tax Act defines "spouse" as being of the opposite sex. Provincial legislation dealing with pension benefits, such as the Ontario Pension Benefits Act, must similarly define spouse for the pension plans to be registered under the Income Tax Act. Consequently, workers with same-sex partners are denied surviving spouse pension benefits available to workers with opposite sex partners, in spite of protection found in the Ontario Human Rights Code for sexual orientation.

While the Ontario Court of Appeal decision is a positive step, there is much work to be done in bargaining and in lobbying the various levels of government to make the necessary legislative changes to achieve equality for gays and lesbian workers.

Reference: Haig v. Canada (Minister of Justice) Ontario Court of Appeal, August 6, 1992.

Service representatives and Local union leadership who argue arbitration matters are frequently faced with the issue of employer opposition to the admissibility of certain medical evidence. For example, suppose an employee is disciplined for failing to return from vacation at the appropriate time. The employee has been on vacation out of the country and returns sometime after she was scheduled to be back at work, but advises the employer that she had been ill and provides a note from a doctor from another country. The employer fires the employee for failing to report to work for her scheduled shift and for failing to notify the employer. At the subsequent arbitration hearing into the disciplinary action taken, the employer argues that the medical note is not admissible as it doesn't comply with the requirements of the Evidence Act. What arguments can be made to have the note admitted?

Each province has legislation governing the rules of evidence for court proceedings in that jurisdiction although not all jurisdictions have provisions that pertain specifically to the use of medical notes or records. Generally, labour arbitrations are governed by the rules of evidence of that jurisdiction. Technically, a medical note is hearsay evidence as it is entered into evidence in the absence of the doctor who wrote the note.

In Ontario, s.52 of the Evidence Act sets out the specific situations where exceptions to the hearsay rules are allowed in the case of medical notes. In Ontario, the note must be written by a "practitioner" who is licensed to practice in Canada. If a party intends to introduce such a note into evidence, 10 days notice and, if requested, a copy of the report at the time of notice must be provided to the other parties.

In the fact scenario above, the note would not be admissible through the exceptions in section 52 as the doctor who wrote the note was not licensed to practice in Canada. However, this is not the only argument to be made as most jurisdictions in Canada have legislation that gives arbitrators a discretion as to what evidence to admit, despite what the rules of evidence of that province state. For example, pursuant to section 45(8) of the Ontario Labour Relations Act, an arbitrator has a discretion as to the admission of certain evidence whether or not the evidence is admissible in a court of law. Thus, while the medical note may not fit the requirements of the Evidence Act, the arbitrator may still admit the note and then rule as to the weight to be attached to it.

Every effort should be made to provide the employer with a copy of the note before the hearing. However, if the employer argues that it did not have sufficient notice of the note and seeks to have the note excluded, then it should be argued that an adjournment to allow the employer the opportunity to review the note would avoid any potential prejudice to the employer upon the note's admission.

Employers have always held that they have the right to dismiss probationary employees at their discretion. However, a recent arbitration decision has suggested that there are situations in which a probationary employee can grieve a dismissal.

CAW-Canada v.Brampton Hydro Electric Commission, heard by arbitrator Susan Kaufman, dealt with a preliminary objection by the employer: that the dismissal of a probationary employee was not arbitrable. The employer argued that the collective agreement specifically excluded probationary employees from the protection of the unjust dismissal clause and that, therefore, a probationary employee could not grieve a dismissal for any reason. The collective agreement did, indeed, contain a provision that excluded probationary employees from the unjust dismissal clause. The employer also had the power to dismiss probationary employees at their "sole discretion".

The CAW argued, however, that the union was not grieving on a "just cause" basis. Instead, we argued that by dismissing the employee, the Commission had not met its obligation to cooperate in good faith under the general purpose clause of the agreement.

Kaufman agreed with this position. She stated that "sole discretion" does not give the employer the discretion to dismiss in any manner whatsoever. It must be done in a fair, lawful, proper manner and in good faith. Only clear language can remove such an implied right to grieve from probationary employees.

Employers can still dismiss probationary employee far more easily than other employees. However, Kaufman's ruling enables a probationary employee to have some grounds upon which to grieve an unjust dismissal.

No-Fault Insurance legislation is directly connected to the sickness and accident benefit programs negotiated by the CAW in some collective agreements in Ontario. The rules governing what is commonly referred to as No-Fault Insurance are found under sections 265 to 289 of the Insurance Act and in Regulation 273/90.

Section 9 of Regulation 273/90 of the Insurance Act states that any benefits received under any other insurance plan will be deducted from the medical, rehabilitative and care benefits received under No-Fault Insurance.

Section 12(4) of the Regulations govern the weekly income benefit available through No-Fault. It will be the lesser of $600 plus some optional benefits; or 80% of gross weekly income less any other benefits received through any other insurance plan.

That is, the most that will be received by a worker in Ontario under the No-Fault provision in the Insurance Act is $600.00.

However, it must be noted that sickness and accident benefits found within a collective agreement will be paid first to a worker. That same worker will only have access to the funds provided under the No-Fault plan if the worker's weekly S&A benefits do not amount to $600. a week.

No-Fault insurance applies only to automobile accidents.

We are awaiting the decision of an Umpire under the Unemployment Insurance Act dealing with the receipt of vacation pay while collecting unemployment insurance benefits.

The Umpire must decide if a person who receives vacation pay while receiving U.I. benefits can have the vacation pay applied to a vacation scheduled and to be enjoyed later in the year.

In the case presented to the Umpire, a worker arranged in February for his vacation to be taken during the July plant shutdown and during the month of October. He received vacation pay in July for both vacation periods. The U.I. Commission argued that the vacation pay could be applied or allocated to vacations taken prior to receipt of vacation pay, but not to vacations to be taken after receipt of vacation pay. In our case, the U.I. Commission argued that the full vacation pay could only be allocated to the July vacation. No portion of the vacation pay could be allocated to the scheduled vacation in October.

We argued that, regardless when vacation pay was paid, it should be allocated to the vacation periods already taken or previously scheduled and to be enjoyed in the future.

Should our argument be accepted, this "forward allocation" of vacation pay permits workers who receive vacation pay while collecting U.I. benefits a chance to defer the dollar for dollar deduction which the U.I. Commission is presently applying. In our case, the forward allocation would mean that the vacation pay received for the October vacation would only reduce the worker's U.I. benefits if he were still collecting U.I. in October.

While Provincial Labour Relations Boards have the lawful authority to designate their entire provincial jurisdiction as a geographic area appropriate for a bargaining unit description normally the Ontario Labour Relations Board designates the particular municipality, or township in which the employer's workplace is located as the geographic area appropriate for a bargaining unit description.

In choosing the municipality or township, as a geographic criteria, the Board seeks to find a balance between an individual's right to join a trade union of his or her choice with the need for stability in the pattern of bargaining rights held by unions across the province.

The Board has long recognized that limiting bargaining rights to a particular or specific street address will jeopardize bargaining rights. Needless to say if the employer moves from that specific street address the union's bargaining rights are gone.

Therefore, when one prepares an application for certification for delivery to the OLRB, there should never be reference to the street address of the employer as being the geographic description of the unit.

Further, the CAW-Canada, should not, as a general rule, agree to modify an existing municipality based bargaining unit to a street addressed based bargaining unit.

If you accept a street address bargaining unit description in bargaining or before the OLRB it will be very difficult to get rid of it.

The OLRB has held that negotiations aimed at amending a bargaining unit description can not be taken to an impasse. In other words no party can strike or lockout over the issue of bargaining unit description.

A very important doctrine in the area of arbitration, and a much misunderstood one, is the doctrine of estoppel. Estoppel is a doctrine of fairness that affects the application of the collective agreement. Even where the meaning of a collective agreement provisions is clear, a separate question may arise as to whether considerations of fairness would preclude a party from relying on its strict rights under the collective agreement.

It is not necessary to establish that the collective agreement is ambiguous in order to introduce evidence of past practice intended to prove an estoppel. In order to establish an estoppel, certain basic elements must be proved. Evidence that the parties have always behaved in a certain way is not by itself enough to establish an estoppel.

A frequently cited description of the doctrine of estoppel was provided by Lord Denning in the famous English case of Combe v. Combe:

The principle, as I understand it, is that where a party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relations subject to the qualification which he himself has introduced, even though it is not supported in point of law by any consideration, but only his word.

As this statement indicates, the doctrine of estoppel contains four crucial elements:

1. a representation from one party to the collective agreement to the other;

2. the representation or promise must be intended to affect the parties' legal relationship;

3. there must be reliance upon the representation by the party to whom the representation is addressed; and

4. in relying upon the representation, the party must act to its detriment, such that if the strict rights under the collective agreement were held to apply, that party would suffer hardship.

The term "promissory estoppel" is used to describe the situation where the representation made by one party consists of silence or acquiescence in the actions of the other.

The courts in British Columbia, Ontario and Nova Scotia have upheld the jurisdiction of an arbitrator to apply the doctrine of estoppel (see for example Re CN/CP Telecommunications (1981), 4 L.A.C. (3d) 205 (Beatty), upheld on review in Re C.N.R. Co. et al. (1981), 128 D.L.R. (3d) 236 (Ontario Divisional Court); Re Metropolitan Toronto Civic Employees' Union, Local 43, C.U.P.E. and Municipality of Metropolitan Toronto (1985), 18 D.L.R. (4th) 409). The Alberta Court of Appeal has indicated that it would allow an arbitrator to apply equitable principles in carrying out his or her obligations (Re Smoky River Coal Ltd. and United Steelworkers of America (1985), 18 D.L.R. (4th) 742).

Some arbitrators have suggested that estoppel cannot be used to enforce positive obligations but can only be used defensively against an allegation of contractual breach. This idea is sometimes expressed by the saying that estoppel is a "shield" and not a "sword". However, a better way of looking at the question is simply to ask if the four elements of estoppel outlined above have been met. Cases in Ontario indicate that the doctrine of estoppel can be a basis for enforcing a positive obligation if all of the four conditions of estoppel are met.

For example, in the CN/CP case (cited above) the employer had over a long period of time provided sick leave benefits that were better than provided for in the collective agreement. The arbitrator held that the company could not unilaterally end this practice. There was an estoppel found in this case because there was:

1. a representation (that the enhanced benefits would be paid)

2. the representation was intended to affect the parties' legal relations (because it effectively altered a term in the collective agreement) and

3. the union relied on this representation to its detriment (by not trying to negotiate better sick leave provisions in to the agreement during collective bargaining).

This decision was upheld by the Ontario Divisional Court.

Estoppel may be terminated when the party that made the representation giving rise to the estoppel gives notice that in the future it intends to enforce its strict legal rights under the collective agreement. However, arbitrators have generally held that the party adversely affected must first be given the opportunity to negotiate the issue in dispute. For example, if the employer in the CN/CP case told the union in the course of the collective bargaining that it no longer intended to pay the enhanced benefits, the union would not longer be able to establish an estoppel.

Only the union and employer as parties to the collective agreement can be estopped from enforcing their collective agreement rights. Therefore the union will not be bound by any conduct or representation on the part of an employee even where the employer relies on it to its detriment (see: Re Wiresmith Ltd. (1988), 34 L.A.C. (3d) 104); Re B.C. Forest Products Ltd. (1983), 8 L.A.C. (3d) 218 (Munroe)). The union is the exclusive bargaining agent and there can be no enforcement of any private arrangement between the employer and the employee.

Estoppel may not be extinguished when a union succeeds another union nor when a company succeeds another company (see: Canadian National Railway Company v. Beatty (1981) 34 O.R. (2d) 385; Re Canadian Union of Postal Workers and Canada Post Corporation (Unreported) February 9, 1991 (Louie grievance)).

The doctrine of estoppel can be very helpful to unions when they have relied on a company's actions to their detriment. However, it must be remembered that the doctrine can also be used against a union. In the Canada Post case cited above, C.U.P.W. was estopped from relying on the collective agreement provision (forcing complete disclosure in arbitration proceedings) where the predecessor union had not enforced the provision in the past.

Unions must be careful therefore, not to give up hard bargained rights simply by not enforcing them over a period of time.

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