COURT FILE NO.: Divisional Court 111/04
DATE: 20050406
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: National Automobile, Aerospace, Transportation and General Workers Union of Canada, (CAW-Canada) And its Local 222 Applicant
-and-
Johnson Controls Inc. and Wesley B. Rayner Respondents
HEARD: April 4, 2005
BEFORE: Lane, Jennings and Swinton JJ.
COUNSEL: Anthony F. Dale, for the Applicant Robert J. Atkinson, for the Respondents
R E A S O N S F O R D E C I S I O N
LANE J.:
[1] National Automobile, Aerospace, Transportation and General Workers of Canada (CAW Canada) and its Local 222 (“Union”) applies for judicial review of the decision of arbitrator W. B. Rayner dated September 30, 2003 dismissing the Union’s policy grievance against Johnson Controls Inc. (“Employer”).
[2] The Union and the Employer are parties to a Collective Bargaining Agreement (“CBA”). The Union filed a policy grievance complaining that the Employer was mis-interpreting Article 17 of the CBA in relation to the Employment Standards Act, 2000[^1] (“ESA”).
[3] Article 17 of the CBA provides for a sliding scale of vacation entitlements to employees depending upon seniority. An employee with one year, but less than three years, of seniority is entitled to receive: “Ten days off with pay at applicable hourly rate.” The ESA provides in section 33(1) that employees with one or more years of service are entitled to a vacation of two weeks per year and in section 35.2 that employees entitled to a vacation are to receive vacation pay of at least 4% of wages, excluding vacation pay, earned during the period for which the vacation is given.
[4] The Union’s concern was that, for those employees whose earnings included overtime pay, or were for any reason larger on average than “the applicable hourly rate” for a 40 hour week, the vacation pay would be less than 4% of actual annual earnings. The Union presented the case that such employees were entitled to vacation pay at the greater of ten days ‘normal’ pay or 4% of actual annual earnings, whichever was the greater. The Employer presented the case that the ESA permitted the parties to a CBA to contract for greater benefits than the minimums set out in the ESA and that the CBA vacation benefits, viewed as a package, were overall greater than the ESA standard, even though it was possible that some affected employees could receive less than 4%.
[5] The Employer’s position was based on section 5(2) of the ESA:
5(2) Greater contractual or statutory right.—If one or more provisions in an employment contract or in another Act that directly relate to the same subject matter as an employment standard provide a greater benefit to an employee than the employment standard, the provision or provisions in the contract or Act apply and the employment standard does not apply.
[6] The arbitrator found that the CBA vacation provisions in Article 17 were better than the ESA. He said that the vacation entitlement under Article 17:
changes over the life of the collective agreement in that as the employee accumulates more years of service his or her vacation entitlement grows such as under the present agreement where the entitlement grows to 12 days pay after 3 years, 15 days pay after 5 years and 20 days pay after 10 years. To simply pull out one section of the vacation article, that dealing with employees having between 1 and 3 years’ service, and to ignore the future increased entitlements that will accrue in the future would in my opinion ignore the caveat expressed by the Divisional Court[^2] to weigh the totality of the benefits given by the agreement.
Thus whether one looks at the vacation benefit in terms of the totality of the employees …. or in terms of individual employees … the result is the same. The vacation package in its totality is better under the agreement than under the statute.
Mr. Atkinson suggested that there are other ways in which the agreement is potentially better than the statute for any individual employee. For example the vacation pay under the [ESA] is expressed as a percentage of earnings and if earnings are low because of lay-offs or illness, vacation pay is reduced correspondingly. Under the agreement, 10 days pay are given regardless of earnings. Thus even if one adopts the individual employee approach, potentially the individual may benefit under the agreement and indeed does benefit under the agreement as he or she knows going in that 10 days vacation is guaranteed under the agreement while there is no such guarantee under the statute[^3].
Thus, for these reasons, I am satisfied that even if one looks at the individual employee, under the agreement the vacation benefit is better than the 4% of earnings given by the statute. The grievance is dismissed.
[7] The parties have filed a memorandum agreeing that, in the light of the decision of this court in Elementary Teachers Federation of Ontario v. Toronto District School Board[^4] the appropriate standard of review of this decision of the arbitrator is reasonableness. We accept this submission.
[8] The Union submitted that the decision was unreasonable because the arbitrator compared the employment standard of 4% vacation pay, with provisions of the CBA that do not affect those employees with 1 to 3 years of seniority, but apply to other employees with greater seniority who gain enhanced vacation entitlements. It was wrong to suggest that section 5(2) meant that employees of low seniority might be paid less than the employment standard now, because in a few years their enhanced seniority would entitle them to more than the standard.
[9] The Employer defended the arbitrator’s decision and referred us to the decision of this court in Queen’s University v. Fraser[^5] where it was held that the correct approach to a predecessor “greater benefit” section was to compare the entire package of CBA benefits with the ESA standard to determine which was the better. Queen’s was a case concerning statutory holidays where the university closed between Christmas and New Years and so the CBA provided that there would be no substitute days given when Christmas or Boxing Day fell on a Saturday or Sunday even though the ESA called for such added days. The court found that the whole week off was better than the one or two extra days and so upheld the CBA benefits as the better package of benefits. In so finding, the court held that the “totality of rights or benefits” as to holiday days needed to be compared with the employment standard to see which was the better.
[10] One factor missing in Queen’s, but present here, is that not all employees in the present case are treated equally. This raises the question of whether, in examining the “totality of the benefits for vacation” in the present case, those benefits not available to the employees who are grieving should be considered. The arbitrator decided that the prospect of future benefits at a level much enhanced over the employment standard was a legitimate consideration in the comparison.
[11] The Union submitted that this reasoning was faulty. It assumed that the employee would eventually benefit from the enhanced benefits, but there is no guarantee that any individual employee will ever reach the promised land. Vacations are annual events and the benefits should be assessed on the basis of what is to be received in the year compared to what the employment standard is for that year. It is unreasonable to justify providing one employee with a below-standard benefit because another employee gets an above-standard benefit. After all, the whole point is that these are minimum standards.
[12] If the prospect of possible future advantage was the only benefit on the table, I would be strongly inclined to favour the Union position, but there is another important factor: the guarantee of at least ten days of paid holiday regardless of whether the 4% of actual earnings reaches the normal weekly pay. This is a present benefit and one of some importance. Any employee may find him or herself in such a position due to lay-off or illness without warning. When this benefit is added to the metaphorical scales, it seems to me to alter the balance considerably. I am unable to say that the decision of the arbitrator was unreasonable, unless it is ipso facto unreasonable to contemplate that any package of benefits could contain any element which was less than the equivalent element of the employment standard.
[13] But the very existence of the need to balance the CBA package versus the ESA benefit presupposes that there is some element in the former that does not meet the ESA standard. If that were not the case, there would be no balancing required.
[14] I would dismiss the application for judicial review with costs to the respondent fixed, as agreed, at $2,750.
Lane J.
I agree: ________________________ Jennings J.
I agree: ________________________ Swinton J.
DATE: April 6, 2005
[^1]: S.O 2000, c. 41 [^2]: In Fraser, footnote 5 infra. [^3]: This must be a reference to paid vacation as the two weeks of time is guaranteed by the ESA, s. 33(1). [^4]: (2004) 2004 1652 (ON SCDC), 188 O.A.C. 302. [^5]: (1985) 1985 2260 (ON SC), 51 O.R. (2nd) 140 (Div. Ct.)