GSB# 1197/02

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

Association of Management, Administrative and Professional Crown Employees of Ontario (Union Grievance)

Grievor

• and -

The Crown in Right of Ontario (Management Board Secretariat)

Employer

BEFORE

Richard Brown

Vice-Chair

FOR THE UNION

Steven Barrett Sack Goldblatt Mitchell Barristers and Solicitors

FOR THE EMPLOYER

David Strang Counsel Management Board Secretariat

HEARING

February 13 & 17, 2003.

DECISION

This union grievance concerns the entitlement of a surplus employee to retire, with an actuarially unreduced pension, when he or she reaches “Factor 80”—i.e. the sum of his or her age and years of pensionable service is 80. The contested scenario involves a person who receives notice of layoff by March 31, 2004 but who does not reach Factor 80 until some later date. The issue is whether such an employee is entitled to “bridge” to Factor 80 by using unpaid leave.

I

Pension entitlements for members of the AMAPCEO bargaining unit arise from either the Public Service Pension Plan or the collective agreement. In the event of a conflict between these two documents, the collective agreement prevails. The union relies upon the provisions dealing with Surplus Factor 80 and pension bridging which appear at pages 60 to 64 of the current collective agreement expiring on March 31, 2004:

TRANSITION LETTER

The Government is aware that its restructuring initiatives could have a significant effect on employees, some of whom have served for a lengthy period. Accordingly, the Employer shall, until March 31, 2004, make the following entitlements available to eligible employees who are declared surplus on or before March 31, 2004.

1. Surplus Factor 80

An employee who receives a Notice of Lay Off on or before March 31, 2004, may apply to retire on unreduced pension provided all of the following conditions are met:

(a) The employee's age plus pension credit totals 80 years on or before employment ceases; and,

(b) The employee's age plus pension credit totals at least 80 years on or before March 31, 2004; and,

(c) The employee ceases employment upon the date of lay off specified in his or her Notice of Lay Off. All or part of the employee's Termination Payments under Article 38 may be converted to and received as paid leave, in order to extend service beyond the employee's lay off date. In such case the employee must cease employment at the end of the paid leave period: and,

(d) The employee must make his or her written election to retire under this paragraph within five (5) days of receiving his or her Notice of Lay Off and the Employer must receive that election within the same five (5) days; and,

(e) The employee must forfeit all other surplus entitlement including but not limited to pay-in-lieu of notice, bumping, redeployment, direct assignment, recall and enhanced severance pay.

2. Enhanced Severance

In addition to the severance entitlements set out in Article 27.15 of the Agreement, an additional one week of salary for every completed year of continuous service, with no maximum, shall be paid as enhanced severance to all employees declared surplus on or before March 31, 2004.

If an employee who is paid enhanced severance pursuant to this section subsequently, as a recall employee, accepts a direct assignment in accordance with Article 27.11, the employee shall be required to repay an amount equal to: the total number of weeks of enhanced severance paid less the number of weeks spent on recall prior to return to work (e.g. an employee who receives twenty (20) weeks enhanced severance and is recalled fifteen (15) weeks after their date of layoff shall repay the equivalent of five (5) weeks of enhanced severance).

3. Pension bridging option

A surplus employee is entitled to take a pension bridging option as a leave of absence without pay but with the continued accrual of pension credits, if the sum of:

(a) the six month notice period;

(b) the number of weeks of paid leave of absence that the employee's legislated severance can be converted into under the current provisions of the Public Service Act Regulation 977 Sec. 87; plus

(c) a maximum of two (2) years leave of absence without pay, but with continued accrual of pension credits

would bring the employee to the next earliest date on which he or she could exercise an actuarially unreduced pension option under the Public Service Pension Plan. Attachment “1” to this letter provides details on the pension bridging option.

Surplus employees who choose this option shall waive all rights to bumping, direct assignment, pay-in-lieu and recall.

The Employer agrees to make any necessary changes to the pension plan and/or the Public Service Act, Regulation 977 in as expeditious a manner as is possible.

ATTACHMENT # 1 -- Details on Pension Bridging Option

1. For any specific individual, the maximum amount of leave that can be taken for the pension bridging option shall be calculated as follows:

(a) determine the total amount of time from the date on which the employee receives the surplus notice that is needed for the individual to reach the next earliest of his or her actuarially unreduced pension options and, from that amount, subtract:

i) the employee's six-month notice period; and

ii) the number of weeks of paid leave of absence that the employee's legislated severance can be converted into under the existing provisions of the Public Service Act Regulation 977 Sec. 87

(b) the remainder, to the extent that it is no more than two (2) years, shall be available as a leave of absence without pay but with continued accrual of pension credits. During the leave without pay, employees may choose to purchase all benefit coverage with the exception of STSP and LTIP.

2. The leaves of absence shall commence before the conclusion of the employee's six-month notice period and shall be taken as follows:

(a) the unpaid leave of absence, the maximum length of which is determined in accordance with 1(b) above, shall be taken first. During this leave of absence, in lieu of the employee's pension contributions being made directly by the employee, the employee's right to enhanced severance under the Transition Letter shall be reduced by an equivalent amount, which the Employer shall pay into the pension plan and the Employer contributions shall also be paid into the pension plan;

(b) the leave of absence with pay equal to the employee's number of weeks of legislated severance shall be taken after the leave without pay in paragraph 2(a). During this leave of absence the employee’s pension contributions shall be deducted from the employee's biweekly payments;

(c) at the conclusion of the leave of absence with pay the employee shall return to complete whatever portion of the six-month notice period remains. At the end of this period the employee:

i) shall retire;

ii) shall receive the enhanced severance, reduced by an amount equivalent to his or her pension contributions for the unpaid leave of absence; and

iii) shall be entitled to exercise his or her right to an unreduced pension.

Letter of Understanding re: Surplus Factor 80

February 12, 2002.

Mr. Bob Stambula, Vice President

Chair, AMAPCEO Negotiating Team

If the employer decides not to extend the Surplus Factor 80 program past the scheduled March 31, 2004 termination date, the employer agrees to the following:

to amend the Public Service Pension Plan text to ensure that an AMAPCEO member who receives a Notice Of Lay Off prior to March 31, 2004, and whose age plus pension credit totals at least 80 years on or before employment ceases will be eligible to retire under the program.

The employer agrees to forgo the requirement that an employee would have to meet the condition that the employee's age plus pension credit totals at least 80 years on or before March 31, 2004. However, all other terms and conditions of the Surplus Factor 80 program will continue to apply

The employer also confirms that the application and intent of the Pension Bridging Option remains consistent with previous intent and application.

Yours truly,

Deborah-Anne Long

Lead Negotiator Corporate Labour Relations / Negotiations Secretariat

II

Like the current collective agreement, the previous one contained a transition letter and an attachment; there was no counterpart to the letter of understanding in the earlier contract. The opening paragraph of the previous transition letter stated the entitlements listed therein were available “until March 31, 2001”, the end date of that agreement. The attachment was carried over from one collective agreement to the next without alteration. The sections of the transition letter entitled “Enhance Severance” and “Pension bridging option” also were carried over in unaltered form, but the section of the current letter entitled “Surplus Factor 80” is new.

The transition letter in the previous agreement had a different section dealing with Factor 80. It was negotiated against the backdrop of a pension plan then allowing employees to retire, with an actuarially unreduced pension, upon reaching Factor 80, regardless of whether they had received notice of layoff, an arrangement known as Voluntary Factor 80. Under the plan’s original version of this option, the right to retire on full pension was lost if not exercised within a three-month “window”. The transition letter in the previous collective agreement dealt exclusively with employees who had reached Factor 80 before March 20, 1996 and had not elected to retire when their window was open. The letter reopened the election window for Voluntary Factor 80 in the event such an employee was declared surplus after March 20, 1996.

There is much common ground between the parties about the use of unpaid leave as a pension bridge under the current contract and the previous one. Pension bridging applies to any actuarially unreduced pension option under the Public Service Pension Plan. The plan allows an employee to retire on full pension upon reaching Factor 90 (i.e. age and years of service total 90) or 60/20 (i.e. age 60 with 20 years or service).

Under the collective agreement expiring on March 31, 2001, the pension bridging option allowed employees, receiving notice of layoff by that date, to use unpaid leave to reach Voluntary Factor 80, Factor 90 or 60/20, even if these points were reached after March 31, 2001. Unpaid leave could not be used to reach Factor 80 after March 31, 2002, because that is when Voluntary Factor 80 ended.

Under the current contract ending March 31, 2004, the pension bridging option still allows employees receiving notice of layoff by that date to use unpaid leave to reach Factor 90 or 60/20, even if these points are not reached until after March 31, 2004. The pension bridging option also allows employees, receiving notice of layoff by March 31, 2004, to use unpaid leave to reach Surplus Factor 80 by that date. The dispute is as to whether unpaid leave may be used to reach Surplus Factor 80 after March 31, 2004.

III

If the transition letter stood alone, surplus employees would not be entitled to bridge to Factor 80 after March 31, 2004. Under paragraph 1(b) of that letter, one condition for entitlement to Surplus Factor 80 is that “age plus pension credits totals 80 years on or before March 31, 2004.” The letter of understanding explicitly waives this condition. This much is agreed.

The parties disagree as to the effect of this waiver. The employer contends it merely allows a surplus employee to use the notice period and paid leave to extend employment so as to reach Factor 80 after March 31, 2004. According to AMAPCEO, the waiver also allows a surplus employee to use unpaid leave to bridge to Factor 80 after this date.

The pension bridging section of the transition letter makes no mention of March 31, 2004 as an end point. The opening paragraph of the letter does state the employer will make “available” the entitlements listed “until” this date. Counsel for AMAPCEO suggests these words merely reflect the fact that the agreement expires on the date specified. Whatever the meaning of this temporal reference, the employer concedes it does not deny the contractual pension bridging option to employees, receiving notice of layoff by March 31, 2004, who wish to bridge to Factor 90 or 60/20 after that date. Surplus employees seeking to bridge to Factor 80 should be treated in the same way as those seeking to bridge to Factor 90 or 60/20, unless something in the collective ageement indicates the parties did not intend the pension bridging option to apply to these two groups in the same fashion.

Counsel for the employer contends pension bridging applies differently to Factor 90 and 60/20 because each of them is a “permanent feature” of the pension plan, unlike Surplus Factor 80. In assessing this argument, I begin by noting the pension bridging option allows an employee to use unpaid leave to reach “the next earliest date on which he or she could exercise an actuarially unreduced pension option under the Public Service Pension Plan” (emphasis added). Surplus Factor 80 is “an actuarially unreduced pension option” in the plan. The plan’s version of this option is found in section 41.2 which makes Surplus Factor 80 available to an employee terminated before April 1, 2004 whose age and pension credits total 80 on the date of termination. In short, the plan’s current version of Surplus Factor 80 ends on April 1, 2004. If the pension plan is not amended, it would not be possible to bridge to the plan’s version of Surplus Factor 80 after this date, because this pension option would no longer exist. The letter of understanding obliges the employer to amend the plan to ensure an employee, receiving notice of layoff by March 31, 2004, is eligible to retire with full pension, so long as his or her “age and pension credits total 80 years on or before employment ceases” (emphasis added). When the plan is amended as required by the collective agreement, Surplus Factor 80 would continue to exist after March 31, 2004. The fact this pension option is not a permanent feature of the plan would not prevent such an employee from bridging to it after this date.

Employer counsel argues the letter of understanding was intended to modify Surplus Factor 80 but not pension bridging. This argument overlooks the logical connection between these two entitlements: bridging with unpaid leave is one way to reach Surplus Factor 80. The letter of understanding extends the timeframe for surplus employees to attain Factor 80 and imposes no explicit restriction on the ways by which they may reach it during the extension. In the absence of any such restriction, the most reasonable assumption is that any route by which surplus employees may reach Factor 80 before March 31, 2004, including bridging with unpaid leave, is open to those wishing to reach it after that date.

Employer counsel also relies upon the last sentence of the letter of understanding stating “the application and intent of the Pension Bridging Option remains consistent with previous intent and application” (emphasis added). In my view, this provision does not assist the employer. Under the previous collective agreement, employees were allowed to use unpaid leave to bridge to Factor 90, 60/20 and Voluntary Factor 80, even if these points were reached after the end date of that agreement. This past practice is consistent with allowing them to use unpaid leave to bridge to Surplus Factor 80 after the end date of the current collective agreement.

This analysis leads me to conclude there is nothing in the collective agreement to indicate surplus employees seeking to bridge to Factor 80 should be treated differently from those seeking to bridge to Factor 90 or 60/20. Accordingly, an employee who receives notice of layoff by March 31, 2004 is entitled to use the pension bridging option to reach Surplus Factor 80 after that date. The grievance is allowed.

Dated at Toronto this 24th day of February 2003.