GSB # 1203/00, 1531/00
UNION # 00B379, 01B052
IN THE MATTER OF AN ARBITRATION
Under
THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT
Before
THE GRIEVANCE SETTLEMENT BOARD
Between: Ontario Public Service Employees Union
(Schoular) Union
- and -
The Crown In Right of Ontario
(Ministry of Education) Employer
Before: Owen V. Gray Vice-Chair
For the Union: George Richards Grievance Officer Ontario Public Service Employees Union
For the Employer: Kelly Burke Counsel
Legal Services Branch
Management Board Secretariat
Hearing: March 22, June 25 and 28, October 10 and 11,
and November 28 and 29, 2001
and February 6, 2002
Decision
1In the fall of 2000, David Schoular decided to seek re-election as a Trustee of the Upper Canada District School Board (hereafter, “UCDSB”). He was then employed in the Ottawa District Office of the Ministry of Education as a Finance Officer in the branch of the Ministry that deals with applications by school boards for funding. He informed the Deputy Minister of his decision to run again. The Deputy Minister responded that Mr. Schoular’s holding the office of school board Trustee would interfere with the performance of the duties of his employment and conflict with the interests of the Crown within the meaning of sections 28.4 and 28.7 of the Public Service Act, R.S.O. 1990, c. P. 47, as amended (“the PSA”). The Deputy Minister told Mr. Schoular that he could seek election as Trustee only if he took a leave of absence without pay pursuant to subsection 28.4(3) of the PSA and that, if elected, he would have to resign his employment in accordance with subsection 28.7(2) of the PSA.
2Mr. Schoular had twice before been elected and served as a school board Trustee while employed by the Ministry, without objection by the then Deputy Ministers. He had been elected in 1997 as Trustee of the UCDSB, and in 1994 as Trustee of one of its predecessor school boards. Before he ran again in 1997, he had been advised by then Assistant Deputy Minister that it would not be a conflict for him to accept another term as Trustee as long as he met certain conditions. Mr. Schoular felt that he that had met those conditions, and that nothing had happened since 1997 to give rise to a conflict between his serving as Trustee and his employment with the Ministry. It appeared to him that the change in the Ministry’s position was due to a complaint made by another UCDSB Trustee whom he regarded as a political adversary.
3The grievor applied for and took a leave of absence without pay under protest, and grieved the imposition on him of that requirement. He was re-elected as Trustee on November 13, 2000, but did not then resign his employment. On November 16, 2000 the Ministry deemed him to have resigned, and treated his employment as at an end. He then filed the second of the two grievances before me, alleging dismissal without just cause.
The Grievor’s Employment Duties
4When his employment was terminated, the grievor was one of several Finance Officers employed in the Transfer Payments and Financial Reporting Branch of the Ministry of Education. He and the other Finance Officers in that Branch reported to the Manager, Transfer Payments Unit, who in turn reported to the Director of the Branch.
5The Transfer Payments and Financial Reporting Branch administers and enforces the rules under which the Ministry provides funding to elementary and secondary schools. Other branches of the Ministry concerned with the funding of public schools are the Education Finance Branch and the Business Services Branch. The Business Services Branch deals with the capital funding of education facilities. The Education Finance Branch develops policy with respect to funding and funding rules, engages in forecasting of funding requirements and provides information services.
6Prior to 1998, school boards had two sources of funding: property tax revenue and funding from the Ministry. The level of Ministry funding varied from school board to school board. Some large school boards in metropolitan areas received no Ministry funding at all. Ministry funding formed a substantial portion of the total funding for other school boards, perhaps as much as 90 per cent for some smaller, rural school boards. This dual source funding changed with the enactment of the Education Quality Improvement Act, 1997, S.O. 1997, c.31 (“the EQIA”) .
7As a result of the EQIA, school boards could no longer raise any portion of their operating funds through municipal property taxes. School boards’ only funding was to come from the Ministry, in accordance with a funding model prescribed by regulation. The initial funding model was announced in March 1998, and was applied for the first time to the 1998-99 school year. Changes and refinements were made to the funding model from time to time thereafter.
8Under the new funding regulations, the Ministry allocates funding on the basis of formulae that take into account student enrolment, class sizes, the numbers of teachers and where they are on the compensation grid, and other factors. Various “envelope” conditions are attached to the funding provided. The portion of the funding that is allocated to classroom instruction, for example, must be spent only on classroom instruction – it cannot be spent on administrative or other non-classroom expenditures. There are similar envelopes for special education and capital expenditures. A school board cannot spend more on administration and governance than has been allocated to that item, although monies in that envelope can be spent in other areas.
9Finance Officers in the Transfer Payments and Financial Reporting Branch have several major responsibilities. Each Finance Officer is assigned a group of school boards as a client group. A Finance Officer is responsible for advising the school boards in his or her client group concerning the funding rules and the school boards’ preparation of the financial estimates and financial statements that they must submit in support of their applications for initial and final funding. A Finance Officer also reviews, analyses and verifies filings received from each school board in his/her client group, and recommends to the Branch the initial and final amounts to which in each case s/he determines that a client school board is entitled under the funding model.
10One of the important duties of Finance Officers is to gather “field intelligence” with respect to the operation and outcomes of the funding formulae — to report on what school boards are doing and saying with respect to matters of funding.
11The Ministry may audit one or more of the several aspects of a school board’s operations that are relevant to its funding entitlements. Senior management determines which school boards will be audited, and in what respects. Finance Officers conduct the audits. The school boards to be audited by a Finance Officer may be outside his/her own client group. All of the Finance Officers will know which school boards are to be audited before the school boards themselves do. When school board filings or audits reveal non-compliance with the regulations, senior management determines what consequences will be imposed. Senior management also determines a level of tolerance for non-compliance — that is, the extent of non-compliance for which adverse consequences will not be imposed. Finance officers are told what the tolerance levels are. School boards are not.
12The current job description for Finance Officers states that they may “Conduct special assignments such as participating on committees, provide training (professional development) and direction to client groups, carry out …financial investigations and analysis, and make recommendations for improvement to financial management systems and procedures.” Finance Officers also assist in maintaining a computer database of school board financial data, by entering data received from their client school boards.
13The Transfer Payments and Financial Reporting Branch provides information that the Education Finance Branch uses to inform and validate the budget process, to identify variances between actual and forecast budget requirements and to identify compliance issues and needs for technical amendments in the funding regulations. All three branches become involved in the formulation of policy at some point in that process, and they all advise the Deputy Minister with respect to the proposals of those who lobby the Ministry.
14Finance Officers contribute to the policy formulation process by identifying to senior management the issues of interpretation, application, consistency and compliance that they encounter in reviewing budgets and administering the Ministry’s funding policies and regulations. Finance Officers may be consulted about a variance between projected and actual outcomes, in an effort to find an explanation for it. Finance Officers have been briefed, and occasionally consulted, on changes to policies and regulations that are under consideration, and they have been informed of decided-upon changes before those changes are announced.
15A good deal of the information to which Finance Officers have access concerning the funding model is public information. It is part of their job to provide that information to school boards. Finance Officers also have access to information that is not public, however. In some cases it is information that will become public at a later date, as in the case of decided-upon changes to regulations and policies, or decisions about which school boards will be audited. In some cases the information to which they have access will never be revealed to school boards, such as the tolerance levels for non-compliance.
16The grievor worked out of the Ottawa office. He was the only Finance Officer in that office. His client group consisted of a number of Eastern Ontario public and separate school boards. The area served by the UCDSB is the south-east corner of the province. The grievor’s client group would ordinarily have included the UCDSB, but it was assigned to a Finance Officer in Toronto because the grievor was one of its trustees. His client group included the public and separate school boards in the areas adjoining the UCDSB’s, as well as the separate school board that served the same geographic area.
The Conflict of Interest Alleged
17The Ministry’s evidence about the duties of Finance Officers and the context in which they are performed was given by four witnesses: Nancy Naylor, Peggy McCormick, Paul Babin and Ross Peebles. Ms. Naylor served as Director of the Education Finance Branch from May 1998 until January 2001, when she was seconded to another position. Ms. McCormick began serving as Project Manager of Financial Accountability in June 2000, reporting to Mr. Babin. She had previously served as Acting Manager in the Business Service Branch for about a year. From July 1996 to mid-1999 she was the Acting Manager of what was then called the Accountability and Field Services Unit. During that time she was the grievor’s immediate supervisor. Prior to that she was a Finance Officer herself. Mr. Babin was the Manager of Transfer Payments Unit to whom the grievor and other Financial Officers reported from June 2000 on. Mr. Peebles was Assistant Deputy Minister from 1998 to the spring of 2001. The human resources and legal functions of the Ministry reported to him. He was responsible for formulating the Deputy Minister’s response to the grievor’s situation.
18Ministry witnesses were concerned that if a school board trustee has access to the confidential information available to Financial Officers it gives that trustee and the trustee’s school board an advantage, real or perceived, over other trustees and school boards. They were also concerned that a Finance Officer’s serving as a school board trustee would interfere with the performance of his job functions because it would cause those with whom he must interact, both within the Ministry and at client school boards, to be reticent in their dealings with him.
19Nancy Naylor testified that Finance Officers would be aware of the variance between actual and forecast funding requirements. That information is important to assessing the likelihood that the government will enhance funding in mid-year. Finance Officers also have advance knowledge of funding announcements. The evidence of the Ministry witnesses was that these are matters about which school boards seek out and appear to value having information.
20With reference to the gathering of field intelligence, Ms. Naylor testified that school boards sometimes complain that although they are in compliance, their neighbouring school boards are not. The implication was that a Finance Officer would be less able to gather such intelligence if he or she is a trustee of a neighbouring school board about which such a complaint might be made. Ms. Naylor also spoke about the level of conflict between school boards and the government. She noted that the Ontario School Board Trustees’ Association was or had been engaged in litigation with the government over the constitutionality of the government’s funding scheme. She observed that the trustees of individual school boards regularly lobby for changes in the funding model that Finance Officers are obliged to work within. She and other management witnesses expressed concern about and discomfort with the prospect of a Finance Officer/trustee’s lobbying Ministry officials in that or other respects.
21Peggy McCormick testified that Finance Officers would know whether the Ministry has decided not to make adjustments for non-compliance in certain areas because of vagueness in the policy in those areas. She said that school boards want to know what changes are under consideration, what has been put to cabinet but not adopted, and what the Ministry is focused on in terms of compliance. She had difficulty providing an example of how a school board could gain a financial advantage by knowing these things in advance of public announcements. One she offered was that a school board’s knowing that the Ministry planned to increase funding to cover increases in fuel costs might have influenced how it would contract with suppliers of school bus services. Ms. McCormick also expressed concern that a parent calling the Ministry’s Ottawa District Office to speak to the Ministry about the actions of the UCDSB — concerning the closing of a school, for example — could find herself speaking with a UCDSB Trustee.
22Mr. Babin testified that if a school board knew whether, when and in what respects it would be audited, that could influence the school board’s planning. A school board that knew in advance what aspect of its operations would be audited might allocate resources to the targeted area at the possible expense of non-compliance in areas the school board knows will not be audited. He also testified if a school board were aware of the tolerance levels for non-compliance, as Finance Officers are, it could plan to satisfy the tolerance levels rather than the prescribed limits. He identified classroom size as one area in which a school board might do this — increasing average class size up to but not beyond the tolerance level.
23Mr. Babin felt that the sharing of information at meetings of Finance Officers and other Ministry employees and officials might be inhibited if one of the participants is also a school board trustee. He observed that the information shared with Finance Officers in meetings and via documents on the Ministry’s computer network includes policy directions under study, regulations being drafted, policy gaps, and loopholes or inadequacies that had been discovered in the guidelines. He thought that the fact that a trustee of a particular school board has access to this information could lead to perception of disadvantage by other school boards. He also referred to the possibility of awkwardness if a Finance Officer were involved in lobbying on behalf of a school board in meetings with senior management.
24Mr. Babin observed that school boards have described themselves as being in competition with one another for students, and also that school boards are encouraged to enter into partnerships with one another in areas in which they have common interests. He thought there was potential for conflict and concern if, as Finance Officer, Mr. Schoular were auditing one of UCDSB’s neighbouring school boards. He said that there was as least one school board in the grievor’s client group that had preferred to deal with the Toronto office rather than the grievor, and that he had heard indirectly that this was because of Mr. Schoular’s being a trustee of the UCDSB.
25Ms. Naylor acknowledged that some of the points of conflict that she felt existed between the Finance Office and Trustee roles after the enactment of the EQIA were perhaps present before it was enacted in the case of school boards that were getting a large percentage of their funding from Ministry. She felt that the conflict in those respects had been heightened following enactment of the EQIA as a result of changes to school board’s business practices, changes to the funding model, the greater degree of public debate and the increased responsibility of both Finance Officers and Trustees.
26In addition to the four witnesses from the civil service, the Ministry introduced the testimony of two trustees of the UCDSB.
27Art Buckland was Chair of the UCDSB during the 1997-2000 term, when Mr. Schoular was Vice-Chair of the Board. He testified that he could not take Mr. Schoular with him to meetings with the Ministry to “hammer” them concerning areas they felt were unfair because Mr. Schoular had, in Mr. Buckland’s words, “a professional responsibility to his employer.” Mr. Buckland said there was a perception of double loyalty on Mr. Schoular’s part. When a lawyer retained by the school board made a disparaging remark about the Ministry at a meeting of the board, Mr. Schoular said, “If you don’t criticize the Ministry, I won’t criticize Toronto lawyers.” The lawyer had been retained to advise the board about payment of employees for overtime in circumstances in which such payment might have put the school board in contravention of Ministry guidelines. Mr. Buckland testified that when Mr. Schoular was not present, the lawyer expressed concern about how he was to deal with Mr. Schoular, given the nature of his employment with the Ministry.
28Maria Thompson was a UCDSB Trustee during the 1997-2000 term who was re-elected in 2000. She had previously served as trustee in a predecessor board other than the one on which the grievor had served in the 1994-97 period. She wrote to the Minister of Education in January 2000 to complain about what she described as Mr. Schoular’s “moral conflict of interest.”
29In her letter, Ms. Thompson expressed three concerns. One was that as a result of Mr. Schoular’s election as its Vice-Chair, the school board had a Ministry employee in an “executive” position. Another was that Mr. Schoular had participated in reviewing a position paper provided in confidence by the Ontario Public School Boards Association concerning strategies that school boards could or should take collectively with other parties, including the Ministry, concerning collective bargaining issues. Her concern was that there was an expectation that the contents of the document would be kept confidential from the Ministry, that this would have faced Mr. Schoular with a dilemma and that she was not sure to which group his allegiance would ultimately be owed in that regard. Her third concern was with Mr. Schoular’s participation in the hiring of the board’s Superintendent of Business, a concern apparently based in part on the belief that the board’s Superintendent of Business would have been dealing with Mr. Schoular on behalf of the Ministry but for the Regional Office’s having “found a way for our administration to do an end run around Mr. Schoular.”
30Mr. Peebles testified that the specific issues raised in Ms. Thompson’s letter were matters of concern for the school board rather than for the Ministry. He referred Ms. Thompson’s letter to the audit branch for investigation, and recalls that their preliminary view was that “there was a conflict.” When he left the Ministry for another position in the civil service in the spring of 2001 he had not yet seen a final report from them on the matter. It is not apparent whether the audit branch expressed its preliminary view before or after Mr. Schoular’s employment was treated as at an end, what conflict it identified or what rationale it offered for its preliminary view.
The Historical Context
31Given the union’s position that nothing had happened to warrant a change in the Ministry’s earlier position on whether Mr. Schoular could serve as a school board trustee while remaining employed as a Finance Officer, a good deal of the parties’ evidence focused on changes said to have taken place in the Finance Officer’s role over the years, Mr. Schoular’s employment history while serving as Trustee and the evolution of the Ministry’s attitude toward his doing so.
32There is no evidence before me about the approval of the grievor’s running for and serving his first term as Trustee for the predecessor school board for the 1994 – 1997 term.
33In July 1997 Garth Jackson, Mr. Peebles’ predecessor as Assistant Deputy Minister with responsibility for such matters, responded in writing to a letter from Mr. Schoular concerning his desire to seek re-election as Trustee for the amalgamated school board, the UCDSB, for the 1997-2000 term. Mr. Jackson wrote that after weighing the advice of audit and legal services staff:
… I have concluded that it would not be a conflict for you to accept another term as a Public School Board Trustee as long as you meet the following conditions.
You cannot participate in any direct assignment affecting the Board that you serve on.
You must specify in any agreement between yourself and the Board you serve on that you are not providing your services within the scope of your employment with the Ontario government.
You are under a continuing obligation to disclose should there be a change in the circumstances that you have set out i.e. any change in job duties and/or responsibilities.
If, at some point in the future, you are required to take on assignments affecting the Board that you serve on, we would have to reassess the situation. It is important for you to recognize now that should such circumstances arise, you may have to make a decision between your role with the ministry and your role with the Board.
34Ross Peebles became Assistant Deputy Minister in the Ministry in 1998. The legal and human resources staff reported to him. Matters of conflict of interest fell within the scope of his responsibility. He recalls that in early 1999 someone on the legal staff brought Mr. Schoular’s situation to his attention, and suggested that the EQIA had “changed things” since the earlier approval.
35In May 1999, the Ministry learned that Mr. Schoular had participated in a radio interview in which he had commented on the platform of a provincial party in matters relating to education funding. Mr. Peebles approved a letter that was sent to Mr. Schoular over the Deputy Minister’s signature. The letter warned Mr. Schoular that his making those comments was contrary to the PSA (under which such comments could be made by a civil servant only while on leave of absence for political activity purposes) and that further conduct of that sort could lead to discipline. Of interest for purposes of these grievances is the way Mr. Schoular was introduced by the interviewer:
David Schoular wears two hats in the education world. One is as a trustee for the Upper Canada Board. The other is as an employee of the Ministry of Education. Schoular says this isn’t a conflict of interest. The former NDP government made it legal for civil servants to run for public office.
This was followed by the two questions of and answers by the grievor that led to the disciplinary letter. It is unclear how the fact of the grievor’s two hats or the question whether that was a conflict of interest had arisen between the interviewer and the grievor, but Mr. Schoular does not dispute that it did.
36Mr. Peebles testified that when he dealt with the May 1999 incident he concluded that Mr. Schoular was in a conflict of interest serving as a school board trustee while employed by the Ministry as a Financial Officer. He was not sure that the conclusion expressed in his predecessor’s letter of July 1997 was correct even in the circumstances as they then existed. In any event, he felt that the relationship between the Ministry and school boards had changed dramatically following the enactment of the EQIA, and that that change made the grievor’s conflict clear. He recognized that there would be a disruption for Mr. Schoular if he were required to resign one or other of his positions at that point in time. He says he believed that Mr. Schoular would recognize the conflict himself and choose not to run again at the end of his term, and that the Ministry could live with the situation in the meantime, relying on Mr. Schoular’s good judgment to avoid or remove himself from any situation in which an actual conflict of interest might arise.
37The warning letter that was sent to the grievor concerning the radio interview did not include any suggestion that the grievor had a conflict of interest, however, nor was Mr. Peebles’ conclusion to that effect communicated to Mr. Schoular by any other means prior to October 2000.
38The Ministry’s position was that there had been real changes in the Finance Officer’s job since 1997, as well as changes in the roles of school boards and in their relationship and interaction with the Ministry.
39Until 1996 each district office had a Superintendent who checked the work of the Finance Officers in that office before the results were passed on to head office in Toronto. The Superintendent position was eliminated in 1996. The Finance Officer position was at the FO 4 level at that time. Prior to 1996, the Finance Officers’ audit function had been largely focused on the verification of enrolment levels. The audit function was suspended entirely in 1996, and the Ministry did not resume auditing until 2000. During that period Finance Officers were focused on informing and advising school boards and on gathering field intelligence. They were also encouraged to take on special project work.
40The Finance Officer function was reclassified to the FO5 level at the end of December 1999. The reclassification was effective as of April 1, 1999, when a Ministry restructuring had resulted in the creation of the Transfer Payments and Financial Reporting Branch. Ms. McCormick understood that the reclassification was due to the Finance Officer job’s increased responsibility and access to sensitive information following the legislative changes described earlier. The Branch “geared up again” for auditing starting in 1999, but did not perform any audits until 2000.
41Addressing the issue of change over time, Ms. McCormick said that there had been a lot more checks and balances on the Finance Officer’s work in the past, and that there were now more points of conflict with the public and arguments over responsibility as between the Ministry and school boards. Ms. Naylor acknowledged that in the case of school boards that received a large percentage of funding from Ministry, there might have been some of the foundation for an appearance of conflict between the Finance Office and trustee roles even before the enactment of the EQIA, but felt this had been heightened following that enactment by changes to school boards’ business practices, changes to the funding model, the degree of public debate about funding of education and the increased responsibility of both Finance Officers and school board trustees.
42For two to three days a week between June 1998 and March 1999, Mr. Schoular was involved in a special project concerning the funding of school books for the new curriculum. In about January of 1999 he also participated in a special project involving the funding of expenses incurred by school boards in Eastern Ontario as a result of the ice storm that occurred in January 1998. He testified that this involved assisting school boards to maximize the funds they obtained from the federal government’s disaster relief program. He said that from March 1999 to June 2000 he participated full-time in a project concerned with the funding of expenditures arising out of the “Y2K” computer issue. In each case he was administering the provisions of a funding plan that he testified had been formulated before he became involved. Ms. McCormick testified that it would have been difficult for him to extend preferential treatment to his own or any other school board in those assignments.
43The grievor was not limited to his client group in these special assignments, and the UCDSB was one of the boards whose applications for funding he processed in the course of them. He did not seek or obtain the Deputy Minister’s approval of his participating in those assignments. In answer to the suggestion that this was a violation of the express conditions of the Jackson letter, the grievor said that his immediate superiors were aware of the Jackson letter and did not raise any issue with him when they approved his participation in those assignments.
44The thrust of the grievor’s case was that in the two terms during which he was permitted to serve as Trustee while employed with the Ministry, the Trustee role and his employment duties involved many of the same elements now relied upon by the Ministry as giving rise to a conflict of interest, and if those matters did not create a conflict then, they did not do so (or cannot be relied upon by the employer as having done so) in the fall of 2000.
45The grievor testified that the school board on which he served prior to the 1997 elections had received a very substantial portion of its funding from the Ministry — about 90 percent, he believed — prior to enactment of the EQIA. The former ability to tax was not a cash cow, he said, because there was significant local pressure to minimize its use. He testified that he and other Finance Officers had conducted audits — enrolment audits, transportation audits and special education audits — prior to enactment of the EQIA. Gathering field intelligence had always been part of the Finance Officer’s job. School boards had lobbied the Ministry throughout his time there, and the Ontario Public School Boards Association had always lobbied on behalf of school boards. The grievor emphasised that he had not been personally involved in lobbying the Ministry on behalf of the UCDSB. He regarded that and other interactions with the Ministry as the function of the school board’s staff. He said that he had not met with trustees of other school boards in his capacity as Field Officer — he had dealt with school board staff.
46In particulars delivered on his behalf in advance of the hearing, the grievor acknowledged that in 2000 his branch of the Ministry had begun sharing with Finance Officers information that had previously been discussed only at more senior levels in advance of its release to the public, but noted that he was mindful of the oath of secrecy he had taken under section 10 of the PSA. In his testimony he rejected the notion that a trustee would act on information about changes the Ministry or Cabinet was considering or might make in advance of their actually committing to and announcing such changes, because until then the position might change. A school board would not take advantage of tolerance levels by increasing average class size, he said, because parents would complain. He testified that he could not imagine how he could favour his own board in the course of his duties as Finance Officer, and noted that Finance Officers are required to be even-handed.
47As for the 1999 reclassification of the Finance Officer position, Mr. Schoular noted that he was seconded to the Y2K project full-time from March 1999 to June 2000, so his experience of any effect of the reclassification on the regular duties of his position was limited to the period between June 2000 and October 12, 2000. He said it did not seem to him during that period that there had been any difference in the job’s decision making role.
Analysis
48Part III of the PSA is entitled “Political Activity Rights.” That Part includes the following:
28.4 (1) A Crown employee who does not belong to the restricted category described in subsection 28.3(3) is entitled to engage in political activity without restriction, subject only to section 28.1 and to the following exceptions:
A Crown employee may be a candidate, seek to be nominated as a candidate or campaign on behalf of a candidate in a municipal election without taking leave of absence and may hold municipal office, but only if the activity or office would not interfere with the performance of the employee’s duties and would not conflict with the interests of the Crown.
A civil servant may comment publicly and outside the scope of the duties of his or her position on matters that are directly related to those duties and that are dealt with in the positions or policies of a federal or provincial political party or in the positions publicly expressed by a candidate in a federal or provincial election only while on leave of absence granted under subsection (4).
28.7 …
(2) A Crown employee who is elected in a municipal election to an office that would interfere with the performance of the employee’s duties or would conflict with the interests of the Crown shall immediately resign his or her position as a Crown employee.
28.8 A Crown employee who contravenes section 28.1, subsection 28.3(2) or 28.4(1) is subject to the full range of available disciplinary penalties, including suspension and dismissal.
28.9 (1) A Crown employee has the grievance rights set out in subsection (2) if he or she,
(a) is disciplined for a contravention of section 28.1, subsection 28.3(2) or 28.4(1);
(b) suffers adverse consequences in the context of his or her employment as a result of engaging in or declining to engage in political activity that this Act permits; or
(c) is threatened with an action described in clause (a) or (b).
(2) A Crown employee to whom subsection (1) applies,
(a) is entitled to have the matter dealt with by final and binding arbitration under a collective agreement, if any;
49The parties disagree about how the termination of the grievor’s employment should be characterized. The employer describes it as a deemed resignation. The union says it was a dismissal.
50Subsection 28.7(2) of the PSA requires that a civil servant resign his or her employment under certain circumstances. The PSA restricts certain limited re-employment rights to those who resign in accordance with section 28.7, but does not otherwise prescribe an employment consequence for failure to resign. In particular, it does not give the employer authority to deem an employee to have resigned from employment if the employee has not actually resigned. In circumstances in which section 28.7 requires resignation, however, a civil servant who fails to resign as the section requires would thereafter be in breach of subsection 28.4(1). The employer is entitled under section 28.8 to take disciplinary action in response to a breach of subsection 28.4(1). It is clear from section 28.7 that the disciplinary response to a breach of that provision can and should be such as to bring the conflict to an end.
51The grievor did not resign. He cannot be deemed to have resigned. The employer’s having treated his employment as at an end therefore constituted dismissal from employment.
52Having regard to subsections 28.4(1) and 28.7(2) and section 28.8 of the PSA, the central issue in both of the grievances before me is whether the employer was correct in concluding that the grievor’s serving as Trustee of the Upper Canada District School Board following the 2000 elections “would interfere with the performance of the employee’s duties or would conflict with the interests of the Crown.”
53Several decision involving alleged “conflict of interest” were referred to in argument: Re Regional Municipality of Hamilton-Wentworth and Canadian Union of Public Employees, Local 167 (1978), 1978 CanLII 3420 (ON LA), 18 L.A.C. (2d) 46 (Kennedy), Hallborg and Ministry of Revenue, GSB 79/21 (June 7, 1979, Weatherill), Van der Linden and Ministry of Industry and Tourism (February 4, 1981, Swinton), Re Windsor Star and Windsor Newspaper Guild (1992), 1992 CanLII 14597 (ON LA), 26 L.A.C. (4th) 129 (McLaren), OPSEU (Edwards) and Ministry of Health, GSB 2216/94, (January 9, 1996, Finley), E. Degreitis and Ministry of the Environment and Energy, PSGB P/0007/94 (May 28, 1998, Lynk), and OPSEU (Hannan) and Ministry of Economic Development, Trade and Tourism, GSB 0008/96 (January 7, 1998, Gray). The Hallborg decision is the only one that deals with conflict between employment in the civil service and holding municipal office.
54In McKendry and the Treasury Board (May 31, 1973, E. B. Jolliffe, unreported, quoted in Re Regional Municipality of Hamilton-Wentworth and Canadian Union of Public Employee, Local 167 (1978), 1978 CanLII 3420 (ON LA), 18 L.A.C. (2d) 46 (Kennedy) at 54 and 55) the arbitrator made these observations about conflict of interest in the federal public service:
Public servants must not seek, for private gain, to make use of information not available to the general public to which they have access by reason of their official duties.
A conflict of interest occurs when the public interest in proper administration of a government office and a government official’s interest in his private economic affairs clash or appear to clash; and a finding of conflict of interest does not depend on wilful wrongdoing by the official or on the issue of whether the official’s judgment has in fact been affected.
A government official should not put himself in a position where his judgment could, even unconsciously, be affected by friendship.
This is not a matter of yielding to public suspicion or malicious criticism. The essential requirements are that the public servant should serve only one master and should never place himself in a position where he could be even tempted to prefer his own interests or the interests of another over the interests of public he is employed to serve. Those requirements constitute the rationale of the doctrine that he should avoid a position of apparent bias as well as actual bias, and that he should never place himself in a position where … as Dean Manning puts it … “two interests clash, or appear to clash.”
55Likewise, in Edwards, 2216/94 (Finley), at pages 25 and 26 this Board (differently constituted) observed that
The nature of conflict of interest legislation and policy respecting public servants in the Province of Ontario is preventive in direction and is very broad in concept. It puts the onus on the employee to make known to the Deputy Minister an actual, perceived, or potentially actual or perceived conflict in order that the Deputy Minister may provide “advice” on the matter and see that the matter is promptly resolved. The penalty for failure to notify can be severe; it can go so far as dismissal. The Deputy Minister has wide discretion in providing that advice and resolving the issue or in removing the conflict. Some situations which may attract the conflict of interest label are the receipt of honoraria, the holding of political office, outside employment activities, outside business activities, the derivation of personal benefit when being in a position to influence, the ownership of property, the accepting of favours, ant the receipt of personal benefit by the immediate gamily of a public servant. It is not necessary for any financial advantage to come to a public servant for a conflict of interest to exist. The public servant whose situation attracts the conflict of interest label, may have taken no action whatsoever, and further may have no intention of taking any action which would be contrary to the Employer’s interest. A public servant who finds him or herself so labelled may feel that his or her honesty is being impugned. This, however, does not follow. A public servant with a conflict of interest label is not being accused of a lack of integrity or honesty. For such an accusation there would need to be some specific action on the part of the employee which would attract such a designation. It is sufficient in conflict of interest situations that there is the suggestion of the possibility of a conflict of interest and no action need ever have taken place and no benefit, present or future, need be derived.
56The cases frequently refer to a conflict between the employer’s interest and the employee’s financial interest, but the conflicting employee interest need not be economic in order for a conflict of interest to arise. It may arise from a matrimonial or other personal relationship, as in Edwards and Hannan, or from the holding of municipal office, as in Hallborg.
57In Hallborg the grievor had been employed by the Ministry of Revenue as a Neighbourhood Assessor. He had decided to seek election as a member of municipal council of a municipality in the assessment region in which he was employed. He had informed his superiors of that intention, and the Deputy Minister had advised him that if elected he would have a conflict of interest. He was elected, did not resign and was dismissed. He grieved, and the central issue was whether there was a conflict of interest between the grievor’s employment and his holding municipal office. Although the grievor’s assessment work was primarily in another municipality in the assessment region, he had access to information concerning properties throughout the assessment region and would be involved in discussions about them with other assessors in the region with a view to ensuring that similar properties were similarly assessed. The board found that some of the information to which assessors had access was information that they were obliged to keep confidential from others, information that might give a municipal counsellor an advantage, real or perceived, in some circumstances. In that context the board made these observations at pages 6 to 9 of its award:
There is, as the employer acknowledges and as we are convinced, no question of the grievor’s personal honesty and integrity. There is no suggestion that the grievor would take advantage of his special knowledge for his own benefit or even for the benefit of his constitutents [sic] or his municipality. It is nevertheless the case that the proper interests of an Assessor conflict with the proper interests of a municipal counsellor in the same Region. Not only is the same person undertaking to “serve two masters” whose interests are not the same and are sometimes opposed but he may be seen, and reasonably so, as being in a position where it is open to him to take advantage in one position (even if not for his own benefit) of the special knowledge he has gained in the other. The constituent, ward, municipality or province on the other side of some matter in which the council member with special knowledge is involved might well feel, whatever the real case may be, that the situation is an unfair one. There is, in fact, a conflict of interest.
The situation in the instant case is of course very different from those which were dealt with by the Public Service Staff Relations Board in the McKendry (166‑2‑674) Atkins (166‑2‑889) or Garrett (166‑2‑3040) cases. In those cases the grievors either accepted benefits from those whose cases they were to deal with, traded on knowledge or position, or entered into transactions with the employer for their own benefit. There was what some of the witnesses for the grievor referred to as an “actual conflict of interest” in those cases in the sense that the employee concerned had behaved wrongly and had in fact taken improper advantage of his position. That is, a conflict of interest had occurred, and the employee had promoted his own interests over those of his employer. There is, of course, nothing like that here, but there is an “actual” conflict of interests nevertheless, in that the grievor has — honestly and from the best of motives — taken on obligations which are, in part, contradictory, and which involve interests which will, at times, be in conflict, and be seen to be in conflict.
The conflict of interest in this case is a significant and substantial one, and arises out of the very nature of the two obligations which the grievor has undertaken. It is not the sort of “interest”, arising out of some particular matter or transaction, to which The Municipal Conflict of Interest Act, 1972, applies, and which can be dealt with by declaration and abstention. It involves rather a fundamental divergence of obligations.
The rights of Crown employees to participate in political activities are governed by The Public Service Act and the Regulations thereunder. A candidate in provincial or federal elections must take a leave of absence to campaign, and on being elected must resign his position as a Crown employee. Crown employees may, however, (with certain exceptions noted in the Act or Regulations, and which do not cover the grievor) be candidates for municipal office and if elected may serve in such office, provided, as is set out in section 11 of the Act:
a) the candidacy, service or activity does not interfere with the performance of his duties as a Crown employee;
b) the candidacy, service or activity does not conflict with the interests of the Crown; and
c) the candidacy, service or activity is not in affiliation with or sponsored by a provincial or federal political party. R.S.O. 1970, c 386, s.11.
In the instant case, while there is no evidence touching on condition (c), and while we do not consider that condition (a) applies in any very substantial way, it is our view that there is, for the reasons we have given, a conflict with the interests of the Crown, so that condition (b) is not met, and the grievor is not entitled to serve in the municipal office in question. His serving in such office constituted a violation of Section 11 and must, under section 16, be deemed to be sufficient cause for dismissal.
There was adduced, on behalf of the grievor, considerable evidence as to other cases in which Crown employees have been elected to and serve in Municipal office and yet remain in employment. In many of these cases we are not convinced that there is in fact any significant conflict of interest. There are some ‑ we think particularly of the case of a Manager in the Niagara Assessment Region who is said to sit as a member of the Niagara Peninsula Conservation Authority ‑ where (although we make no determination of the matter), a conflict of interest does appear. That such cases may have escaped notice or consideration, however, does not absolve others from meeting the requirements of The Public Service Act. In any event, it is clear to us that there has been no attempt to discriminate unjustly against the grievor himself. The requirements of the law are, we think, clear, and they must be met in the circumstances of this case.
It should be repeated that in reaching the conclusion which we do, we do not reflect at all adversely on the grievor’s honesty or integrity. It is simply that, within a given Assessment Region, the positions of municipal council member and Neighbourhood Assessor are not ones which can properly be held by the same person at the same time, as they necessarily involve that person in conflicting allegiances.
58The union argues that whatever the conclusion might have been had the grievor been seeking office for the first time in 2000, the employer was obliged to approach the matter in a manner consistent with the 1997 opinion of the then Assistant Deputy Minister unless some change in either or both of the roles in question had given rise to a conflict where none previously existed. In effect, the argument is that no feature of the situation as it existed in 2000 should be weighed in favour of a conclusion that there was a conflict of interest if that feature was present in July 1997. It also argues that in interpreting the Political Rights portion of the PSA, “conflict of interest” should be interpreted narrowly when it is being weighed against the right to seek and hold public office, and in that regard relies on Re Windsor Star, supra, for the proposition that a conflict should be actual and not merely potential in order to qualify as a conflict of interest in this context.
59There was some discussion about whether the grievor had failed to comply with the conditions in the 1997 letter, by seeking out, accepting and participating in special assignments that affected the UCDSB. Whether or not his participation in them involved a conflict of interest, the terms of the letter required the grievor to first clear his participation in those projects with the Deputy Minister or his/her delegate directly, and he failed to do so. It is not an answer that his immediate superiors knew of his dual role and even of the 1997 letter when they approved the assignments. It was not their role to assess the conflict of interest question. That was a matter on which the grievor, and indeed any civil servant, was bound to deal directly with the Deputy Minister (or his/her delegate for that purpose). The grievor’s immediate superiors were entitled to expect that he would do that before accepting the assignments.
60These failures to inform and consult the Deputy Minister were not offered as cause for termination of his employment in October 2000 but, rather, to diminish the weight that might otherwise have been assigned to the letter and to illustrate, in conjunction with the evidence about the radio interview, the difficulty of keeping the two roles from coming into obvious conflict.
61In any event, I do not think it matters whether his failures in that regard somehow diminished the effect of the Jackson letter. Even if there had been no failure to meet the conditions set out in the letter, I would not agree with the union that the opinion expressed in it controlled or controls the conflict of interest determination in the manner the union suggests. I should certainly take it into account in assessing the credibility and bona fides of the employer’s contentions. I am not obliged to treat the opinion as having been correct at the time, however, nor was the employer in 2000. If the employer had required that the grievor resign one or other of his roles by reason of his holding office as trustee during the 1997-2000 term, I might have had to grapple with the question whether the Crown could be estopped from exercising its rights under the statute by reason of the 1997 opinion, or if some other doctrine with respect to expectation interests would have that effect. The 1997 letter only spoke to his seeking election and serving “another term as a Public School Board Trustee”, however. It did not purport to bind whoever might have to deal with a request from the grievor to seek election and serve as trustee for the 2000-2003 term.
62In his particulars, the grievor said
The grievor disputes the implication that School Boards and the Ministry are in an adversarial relationship. They are different components in a large system with one goal, to provide quality education to the people of Ontario. Since these components are not in competition with each other, the basis for a conflict of interest is minimal.
Whether the relationship between school boards and the Ministry may properly be described as adversarial, the thrust of the Ministry’s case is that on occasion the interests of the Ministry are in conflict with the interests of school boards and of school board trustees generally or of a particular school board or its trustees. I find that to be so. While I accept as genuine the grievor’s belief that a school board could not and would not make use of the confidential information to which he would have access as a Finance Office, I accept as true the evidence of the Ministry witnesses that school boards behave as though that information is of value to them. It is evident that not all school board trustees share the grievor’s perspective. The question whether a Finance Officer would have a conflict of interest serving as a school board trustee cannot turn on the particular Finance Officer’s political perspective or on how sympathetic he is to the Ministry’s interests.
63Finance Officers have access to information that the Ministry reasonably wishes kept confidential from school boards. That Mr. Schoular would not share the information with his school board colleagues is not a sufficient answer to this. Finance Officer Schoular could not keep the information confidential from Trustee Schoular. There are some respects, at least, in which only he would know whether Trustee Schoular had taken advantage of information acquired by Finance Officer Schoular in determining what position to advance or support on issues arising at or concerning the UCDSB. In any event, as in Hallborg the issue is not whether the grievor has actually taken or would be likely to take improper advantage of his position as Finance Officer for the benefit of his school board or his position as trustee. The issue is whether by assuming office as school board trustee while continuing in employment as a Finance Officer he became subject to “obligations which are, in part, contradictory, and which involve interests which will, at times, be in conflict, and be seen to be in conflict.” If he did, then, as the Hallborg decision says, there is an actual conflict of interest of the sort with which the PSA is concerned.
64I agree with the Ministry that as of October 2000, the grievor’s serving both as Finance Officer and as school board trustee would have created a conflict of interest within the meaning of sections 28.4 and 28.7 of the PSA. Apart altogether from whether it would have been possible for the grievor to have favoured his school board financially in the course of his duties as Finance Officer, I consider it sufficient that as Finance Officer he would necessarily be privy to information that the employer reasonably wishes kept confidential from school boards.
65At least some of the circumstances that have led me to find a conflict of interest were present in a more attenuated form in 1997, when Mr. Jackson opined that there would be no conflict of interest if the conditions he outline were met. I am inclined to Mr. Pebbles’ view that that opinion may not have been entirely correct at the time it was expressed, and that it might have been more accurate for Mr. Jackson to have said that the conflict was sufficiently slight in the circumstances as they then existed that the Ministry was prepared to tolerate it.
66I wish to emphasize that there is no suggestion by the Ministry, and I have made no finding, that Mr. Schoular took improper advantage of his employment as Finance Officer while serving as a trustee of the UCDSB. Moreover, while I have come to the conclusion that his position on the conflict issue must be rejected, it is entirely understandable in the circumstances that he took and pursued that position with the union’s able assistance.
67Although I have come to the same conclusion as the Ministry did in 1999, I am troubled that it did not inform the grievor of that conclusion in May 1999 when Mr. Peebles came to it. The appropriate official of the Ministry had told the grievor in 1997 that there was no conflict. The interview transcript on which the Ministry acted in May 1999 recorded that the grievor had told the radio interviewer there was no conflict. The Ministry reprimanded him for having said other things in the interview, but did not take that opportunity to disabuse him of the notion that there was no conflict. Its inaction in that regard could only have encouraged the grievor in his belief that there was no conflict. Although he left his obtaining approval of a third term as trustee rather late, in the circumstances he might be forgiven for having thought that the outcome was a foregone and favourable conclusion. By the time he learned otherwise he was publicly committed to running, the election was a few weeks away and there was no way any challenge to the Ministry’s changed position could be resolved before he had to choose between dropping out of the election or risk losing his job.
68Having come in May 1999 to the conclusion that there was a conflict, the Ministry was prepared to tolerate the conflict for the balance of the grievor’s term of office as trustee. There is no reason why it could not have told him in May 1999 both of its conclusion that there was a conflict of interest and of its willingness to tolerate the unavoidable aspects of the conflict for the balance of his term. That would have given him an opportunity to have his grievance about that position addressed in the grievance process and at arbitration before having to choose between his two roles. It would have given him the opportunity to seek some other position in the civil service in which it would not be a conflict for him to continue to serve as trustee. It would have given him the opportunity to plan a graceful exit from one or other of the two roles.
69I do not accept the union’s submission that the employer had an obligation to find the grievor a non-conflicting position in the civil service. I do not suggest that the employer’s failure to give the grievor notice of its changed view earlier than it did was a breach of some legal entitlement of the grievor’s in respect of which he is entitled as of right to a particular remedy. It is, however, a consideration that I think should be taken into account in considering the exercise of my statutory jurisdiction to alter the penalty for the grievor’s having put himself in a conflict of interest contrary to the Ministry’s belated direction.
70Accordingly, I direct that if within the sixty day period following the release of this decision the grievor gives the employer his written undertaking to resign his position as trustee effective on the date of his reinstatement, the employer shall reinstate him to his former position as Finance Officer within two weeks after receiving that written undertaking, or such further time as he and the Ministry may agree. In the event that the grievor delivers such an undertaking, the period between his last day of paid employment in October 2000 and the date of his reinstatement is to be treated as a leave without pay pursuant to Article 24.1 of the parties’ collective agreement. Any breach of such an undertaking to resign will be cause for discharge. I retain jurisdiction to resolve any dispute concerning the implementation of these directions. Otherwise, these two grievances are dismissed.
71The parties are free to agree on some outcome other than one provided for in my direction. I have stipulated a sixty day period in order that the parties can have adequate time to consider their interests and options in that regard. Having said that the employer is under no legal obligation to do so, I nevertheless hope that in the sixty day period provided for, and any extension on which the parties may agree, it will explore with the grievor, if he wishes, the possibility of restoring him and his talents to the civil service in a position that would not necessitate his resigning office as school board trustee.
Dated at Toronto this 18th day of July, 2002.