GSB# 2882/02

UNION# 22-02

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

Canadian Union of Public Employees Local 1750

(Johnston)

Grievor

• and -

The Crown in Right of Ontario

(Workplace Safety & Insurance Board)

Employer

BEFORE

Randi H. Abramsky

Vice-Chair

FOR THE UNION

Ian Thompson

National Staff Representative

Canadian Union of Public Employees

FOR THE EMPLOYER

Elizabeth Kosmidis

Solicitor

Workplace Safety & Insurance Board

HEARING

March 3, 2003.

AWARD

The grievor, Marilyn Johnston, was discharged by the Employer, the Workplace Safety and Insurance Board (WSIB) for innocent absenteeism. At issue is whether the Employer was precluded from doing so under the collective agreement because the loss of her employment status results in the loss of certain benefits, such as vacation and attendance credits and life insurance.

Facts

The parties submitted an Agreed Statement of Facts which provides, without the attached appendices, as follows:

1. The Grievor, Marilyn Johnston, was employed by the Workplace Safety and Insurance Board from July 26, 1988 to March 13, 1998.

2. Schedule “A” lists the grievor’s absences from 1990. The Grievor has been substantially off work since May of 1995.

3. After 90 days of continuous absence from work, the Grievor became entitled to apply for long term disability benefits with the Employer’s disability carrier, Sun Life of Canada. The Grievor’s claim was rejected by the disability insurer and the Grievor commenced a civil action against Sun Life of Canada in 1996. This action was settled in August 2001. Attached as Schedule “B” is a copy of the Minutes of Settlement.

4. Under the terms of the Minutes of Settlement, Sun Life of Canada has acknowledged that, as of May 17, 1995, the Grivor has been totally disabled. The Grievor’s benefit entitlement has been reinstated and she has been paid monthly benefits retroactive from August 17, 1995. The payment of these benefits is continuing and is not affected by the termination of her employment.

5. The Grievor is also in receipt of a disability pension under the Canada Pension Plan.

6. The Grievor also continues to pursue her entitlement under the Workplace Safety and Insurance Act and her rights under this Act are not affected by the termination of her employment.

7. The medical information available through the Employer’s Corporate Health Centre confirms that the Grievor will never return to work.

8. By letter dated March 10, 1998, the Employer wrote to the Grievor and advised her that her employment had been terminated due to the frustration of the employment contract. A copy of the letter is attached as Schedule “C”.

The parties further agreed that prior to 1993, employees off work due to a compensable injury under the Workplace Safety and Insurance Act, or otherwise, did not accrue attendance and vacation credits. In the 1993 collective agreement, the parties agreed as follows, in Article 21.02, Workers’ Compensation Coverage, subsection (c) Vacation: “During the period of absence resulting from a compensable accident, attendance and vacation credits will continue to accrue.” Almost identical language is contained in the 1996 and 2002 collective agreements.

Although the situation of employees off on long-term disability (LTD) was not addressed in the 1993 collective agreement, the Employer’s practice was to allow employees on LTD to accrue vacation and attendance credits. That practice was modified, to some extent, in the 2002 collective agreement. In Appendix 3, Section 3(c), Long Term Disability Insurance (LTD), the following sentence was added:

Effective May 1, 2002 any employee who has been on LTD for two (2) years and enters into the “any occupation” category will not accumulate attendance and vacation credits.

The parties agreed that this provision does not apply to employees already on LTD, such as the grievor. For those employees, the Employer’s past practice of allowing employees on LTD to accrue vacation and attendance credits continues.

Also relevant is language contained in the 1996 collective agreement, which remains in the 2002 collective agreement, in Appendix 3 (c), Long Term Disabilty Insurance (LTD), which provides, in part, as follows:

Payments will continue up to twenty-four (24) months, if the employee is disabled from performing regular work and up to age sixty-five (65) if totally disabled.

Totally Disabled, under this Plan, means a continuous state of incapacity due to illness which – while it continues – throughout the Elimination Period and during the following 24 months of incapacity, prevents him from performing each and every duty of his normal occupation; -while it continues thereafter, prevents him from engaging in any occupation for which he is or becomes reasonably qualified by education, training or experience.

Total Disability – is the condition of being totally disabled.

Employees benefits coverage for Group Life Insurance, Dependent Life Insurance, and LTD will continue at no cost to the employee while the employee receives or is qualified to receive LTD benefits under this plan.

Under Article 21 of the collective agreement, eligible employees in the bargaining unit receive extended health care coverage, semi-private hospitalization coverage, long term disability insurance, group life insurance, accidental death and dismemberment insurance, group travel insurance, dental coverage, and vision care. Under Appendix 3, coverage ceases with termination of employment, or, in certain cases, the last day of the month in which employment terminates.

The parties could not agree as to whether any other employee on LTD has been terminated, but did agree that the instant case is the first case where the Employer had medical evidence that the employee will never be able to return to work. It is the first case where the Employer has terminated an employee’s employment on the basis of frustration of the employment contract.

Positions of the Parties

The Employer

WSIB submits that the case law is clear that an employer may terminate an employee for innocent absenteeism where two preconditions are met:

1. The employee’s absences have been excessive over a period of time.

2. There is no reasonable prospect of the employee returning to work.

WSIB submits that both factors are present here, and that it had the right, due to frustration of the employment contract, to terminate the grievor for innocent absenteeism.

WSIB further contends that there is nothing in the collective agreement, including the receipt of other benefits, which precludes a termination based on innocent absenteeism. In support of this contention, it cites to Re Canada Safeway Ltd. and Saskatchewan Joint Board, Retail, Wholesale and Department Store Union, Locals 454 and 480 (2001), 2001 CanLII 37846 (SK LA), 96 L.A.C. (4th) 209 (Pelton); Re City of Edmonton and Canadian Union of Public Employees, Local 30 (1987), 1987 CanLII 8876 (AB GAA), 31 L.A.C. (3d) 353 (Wakeling); Re Oxford County Board of Health and Canadian Union of Public Employees, Local 1146 (1999), 1999 CanLII 35844 (ON LA), 81 L.A.C. (4th) 268 (Howe); Re Welland County Hospital and Service Employees International Union, Local 204 (1996), 1996 CanLII 20452 (ON LA), 57 L.A.C. (4th) 324 (Thorne); Re Atomic Energy of Canada Ltd. and Communications, Energy and Paperworkers Union of Canada, Local 896 (2000), 2000 CanLII 50252 (CA LA), 89 L.A.C. (4th) 296 (R. Brown); Re Pasteur Merieux Connaught Canada and Communications, Energy and Paperworkers Union of Canada, Local 1701 (1998), 1998 CanLII 19087 (ON LA), 75 L.A.C. (4th) 235 (Knopf) and Re DeHavilland Aircraft of Canada Ltd. and United Automobile Workers, Local 112 (1983), 1982 CanLII 5043 (ON LA), 9 L.A.C. (3d) 271 (Rayner).

In its view, the case law only prohibits the termination of an employee where the termination will frustrate the employee’s claim to sick pay or long term disability benefits to which the employee is entitled under the collective agreement. Here, it submits, the grievor’s right to LTD, which vested at the time she became disabled, continues irrespective of her termination of employment as does her right to pursue her claim under the Workers Safety and Insurance Act.

The Union

The Union does not contest an employer’s right, generally, to terminate an employee for innocent absenteeism where the required preconditions are met. It further agrees that the required preconditions are met in this case. The Union does, however, contest the Employer’s right to terminate the grievor for innocent absenteeism under the specific provisions of this collective agreement.

In the Union’s submission, Appendix 3, requires an employee on LTD to remain an “employee” in order to receive the benefit of the parties’ LTD bargain. It cites to the following language:

Employees benefits coverage for Group Life insurance, Dependent Life Insurance and LTD will continue at no cost to the employee while the employee receives or is qualified to receive LTD benefits under this plan.

In the Union’s view, this language, particularly the use of the word “employee”, contemplates a continued employment relationship with someone who is totally disabled and receiving benefits under the LTD plan. Likewise, the Union submits that the parties’ “bargain” for LTD employees includes the continuation of vacation and attendance credits, as provided in the Employer’s undisputed past practice. Accordingly, the Union contends that the Employer is precluded from terminating the employment relationship of an employee on LTD because entitlement to these benefits depends on “employee” status.

The Union submits that these benefits – group life insurance, dependent life insurance, and LTD, as well as vacation and attendance credit accrual, are “deferred” benefits and cannot be negated by the termination of an employee on LTD. All of them, it asserts, are part of the compensation package negotiated for employees on LTD. In its view, the agreement contemplates more than the payment of a premium for benefits and provides specific benefits to employees on LTD, which the Employer cannot take away by terminating the employee’s employment status. It asserts that both the vacation credits and attendance credits have monetary value to an employee on LTD.

In support of its contentions, the Union cites to Re Dr. F.W. Green Memorial Home Society and Hospital Employees’ Union (1995), 1995 CanLII 18316 (BC LA), 49 L.A.C. (4th) 385 (Larson); Re Government of Provincne of Alberta and Alberta Union of Provincial Employees (1997), 1987 CanLII 8733 (AB GAA), 29 L.A.C. (3d) 218 (Tadman); Re Port Colborne & District Ambulance Service (677700 Ontario Inc.) and Ontario Public Service Employees’ Union, Local 214 (1988), 1988 CanLII 9253 (ON LA), 33 L.A.C. (3d) 30 (O’Shea); Maple Leaf Meats Inc. v. United Food and Commercial Workers International Union, Local 175 (Alkin Grievance) (2000), 2000 CanLII 50118 (ON LA), 89 L.A.C. (4th) 18 (Tims).

Employer Reply

In reply, the Employer submits that the “bargain” regarding LTD benefits does not preclude it from terminating an employee where there is no reasonable prognosis that the employee will ever return to work. It submits that vacation and attendance credit accrual has value to an employee who may return to work, but do not preclude the employer from terminating an employee who can never return to work.

The Employer contends that under the Union’s approach it could never terminate an employee who is receiving LTD, even though it is clear that they will never return to work. It contends that for management’s right to terminate for innocent absenteeism to be so restricted clear language in the collective agreement would be required – language which, in its view, does not exist in the collective agreement.

Decision

This case raises a very significant issue of contract interpretation. Both parties recognize that the Employer has the right, subject to the Human Rights Code and the collective agreement, to terminate an employee for innocent absenteeism. The question presented in this case is whether the collective agreement fetters that right. Specifically at issue is whether the language contained in Appendix 3 (c) that “[e]mployees benefits coverage for Group Life Insurance, Dependent Life Insurance and LTD will continue at no cost to the employee while the employee receives or is qualified to receive LTD benefits under this plan”, plus the past practice of providing employees on LTD with vacation and attendance credit accrual, precludes the Employer from terminating the employment status of an employee on LTD after it becomes clear that the employee will never be able to return to work.

The mere existence of a benefit under the collective agreement does not limit the right of management to terminate an employee for innocent absenteeism. Re Canada Safeway Ltd. and Saskatchewan Joint Board, Retail, Wholesale and Department Store Union, Locals 454 and 480, supra; Re City of Edmonton and Canadian Union of Public Employees, Local 30, supra. As Arbitrator Smenchuck stated in Re Ipsco Inc. and U.S.W.A., (Richardson), unreported December 20, 1993, reported in Re Canada Safeway Ltd, supra at p. 220:

If the loss of any benefit (as distinct from the loss of disability benefits) meant that an employer could not terminate for innocent absenteeism, then that right would be non-existent because there is always some benefit lost as a result of termination.

Instead, the employer’s right to terminate an employee for innocent absenteeism depends on whether the dismissal deprives the employee of continued access to a negotiated benefit specifically tied to the illness or disability. In this regard, the decision of Arbitrator Tadman in Re Government of the Province of Alberta and Alberta Union of Provincial Employees, supra at pp. 228-29 is helpful:

…it can be seen then that arbitrators, notwithstanding the general proposition that the serious medical incapacity of an employee which prevents him from satisfactorily performing his duties, will amount to “just cause” for dismissal, will not permit the termination of a disabled employee where his status as an “employee” is a requirement of eligibility for long-term disability and other benefits. To hold otherwise would be to permit the employer by unilateral action to destroy the interest vested in the employee under the collective agreement.

Whether or not an employee may be dismissed in the face of the existence of these benefits depends on the requirements for entitlement to the benefits. If it is necessary to remain an “employee” to take advantage of the benefits, then discharge for medical disability is precluded. Each case, however, must be determined in light of the specific terms of the collective agreement being interpreted.

The wording of Appendix 3 (c) is clear: “Employees benefits coverage for Group Life Insurance, Dependent Life Insurance and LTD will continue at no cost to the employee while the employee receives or is qualified to receive LTD benefits under this plan.” By its terms, the Employer has agreed to pay for these benefits “while the employee receives or is qualified to receive LTD benefits…” By agreeing to this provision, the parties clearly intended that employees receiving LTD would continue to be eligible for such benefits, and that the Employer would not take any action which would disentitle the employee to the benefits for which the Employer agreed to pay.

There is no question in this case that the grievor’s right to LTD is vested and is not dependent on her continued status as an employee. But that is not the only benefit to which the grievor is entitled under Appendix 3(c). She is also entitled to Group Life Insurance and Dependent Life Insurance while she receives or is qualified to receive LTD benefits. The issue becomes, therefore, whether the grievor’s receipt of Group Life Insurance and Dependent Life Insurance is dependent on her remaining an “employee.” If so, the Employer cannot terminate the grievor’s employment and thereby deprive her of the negotiated benefits which are directly tied to her disability. Whether or not being an “employee” is required to receive those benefits depends on the specific terms of the benefits.

The same analysis applies to the Employer’s practice as it relates to vacation and attendance credit accrual for employees on LTD. The Employer, through its practice, has agreed that employees on LTD continue to accrue vacation and attendance credits. If “employee” status is required to obtain such benefits, then the Employer cannot terminate the grievor’s employment and thereby deprive her of the benefit of the LTD bargain. Again, whether or not being an “employee” is required to receive those benefits depends on the terms of the benefits.

Under Appendix C, Group Life Insurance Plan, both Life Insurance coverage and Dependent Life Insurance coverage cease on the date the employee terminates his employment. Under Article 15, attendance credits apply to “[a]ll probation and permanent staff employees.” Upon termination of employment, employees with three or more years of service receive a cash payment based on fifty per cent of the unused attendance credits. Under Article 11, vacation leave and pay is “based on the employee’s continuance service from his most recent date of hire….” Upon termination, an employee receives pay for unused vacation entitlement.

Based on these provisions, I conclude that entitlement to Group Life Insurance, Dependent Life Insurance, vacation and attendance credits depend on being an “employee”. Under the collective agreement, one cannot receive these benefits without having “employee” status. Consequently, terminating an employee who is receiving LTD would result in depriving the employee of these benefits which constitute a significant part of the LTD bargain. It also violates Appendix 3 (c).

The case of Re British Columbia Teachers’ Federation and Union of Teachers’ Federation Employees (1997), 1997 CanLII 25020 (BC LA), 62 L.A.C. (4th) 209 (Laing), cited in Re Oxford County Board of Health and Canadian Union of Public Employees, Local 1146, supra, is quite analogous. The pertinent collective agreement language in that decision was Article 20.5, which read:

The employer’s share of the costs of the benefit package, Article 11 – Health and Welfare Benefits and Plans, shall be paid by the employer during the period of time a person is collecting unemployment insurance sick leave benefits and long term disability benefits.

There, as in the instant case, the employer agreed to pay the costs of certain benefits during the period of time the individual was receiving LTD.

The arbitrator interpreted this provision as limiting the employer’s right to terminate an employee while in receipt of LTD benefits. He concluded at p. 227:

By agreeing that the employer’s share of the costs of the Article 11 benefits and plans would be paid by the employer, I must conclude that the parties intended that such employees would continue to be eligible to participate in those benefits and plans. In light of this agreement, one must conclude that the parties intended that the employer would not itself take any action to disentitle such an employee to the very benefits for which the employer had agreed to pay. In other words, if being an employee is a condition precedent to receiving the benefits of the plans and benefits of Article 11, the parties must have intended that as long as an employee is collecting unemployment insurance sick leave benefits and long-term disability benefits, the employee cannot be disenfranchised by being terminated by the employer for innocent absenteeism…

In that case, the contract between the provider of the Article 11 benefits and the employer stated that coverage for extended health and dental benefits would terminate automatically on “the last day of the month in which the member’s employment is terminated”. Based on this language, the arbitrator concluded at p. 228 that “terminating an employee who is collecting unemployment insurance sick leave benefits and long term disability benefits would result in depriving the employee of access to a negotiated benefit the parties intended such an employee would receive.” Accordingly, the employer could not terminate an employee in receipt of such benefits for innocent absenteeism for to do so would violate Article 20.5.

As noted, it is not the receipt of any benefit which precludes termination of an employee for innocent absenteeism. Instead, the benefit must be directly tied to the disability and form part of the “LTD benefit” or bargain. In this case, the parties specifically created the required nexus between Group Life Insurance and Dependent Life Insurance and the receipt of LTD in Appendix 3 (c). They also did so by the past practice of continuing vacation and attendance credit accrual for employees on LTD. Because “employee” status is required to receive such benefits, the Employer cannot terminate the grievor for innocent absenteeism. To allow the termination would allow the Employer to deprive the employee of the negotiated LTD bargain.

In so ruling, I cannot accept the Employer’s contention that employee’s receiving LTD are only entitled to Group Life Insurance and Dependent Life Insurance, as well as vacation and attendance credit accrual, until it is determined that they cannot return to work in the future. That is not how Appendix 3(c) reads. It is not so limited.

In addition, in the 2002 collective agreement, the parties did limit, for employees new to LTD that “[e]ffective May 1, 2002 any employee who has been on LTD for two (2) years and enters into the ‘any occupation’ category will not accumulate attendance and vacation credits.” This provision did not apply to employees already on LTD, including the grievor. Thus, the parties’ could have, but did not, limit the grievor’s LTD bargain.

Finally, I am sympathetic to the Employer’s contention that under this interpretation it cannot terminate an employee for innocent absenteeism as long as they are receiving LTD, even though there is no reasonable likelihood that the employee will ever return to work. I would note, however, that this is a limitation based on the specific wording of its collective bargaining. I would also note that I make no ruling as to the grievor’s entitlement to any other benefits under the collective agreement. All this ruling encompasses is a conclusion that the Employer violated Appendix 3(c) when it discharged the grievor because termination deprived her of the negotiated benefits of the LTD bargain, which includes Group Life Insurance, Dependent Life Insurance, vacation and attendance credit accrual.

Conclusion

For all of the reasons set forth above, I conclude as follows:

1. The grievance is allowed.

2. The Employer’s right to terminate the grievor is fettered by Appendix 3(c) and its practice of allowing employees receiving LTD to accrue vacation and attendance credits.

3. The Employer violated Appendix 3(c) when it discharged the grievor because termination deprived her of the negotiated benefits of the full LTD bargain, which includes Group Life Insurance, Dependent Life Insurance, vacation and attendance credit accrual.

4. The discharge is hereby rescinded. The grievor’s LTD benefits regarding Group Life Insurance, Dependent Life Insurance, vacation and attendance credit accrual are to be reinstated from the date of her termination.

5. I shall remain seized.

Issued at Toronto this 4th day of April, 2003.