GSB# 2002-0167, 2002-0545, 2002-1218, 2002-2430, 2002-2916, 2003-0647

UNION# 02B311, 02B432, 02F019, 2002-0202-0013, 2003-0202-0004, 2003-0202-0006

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

Ontario Public Service Employees Union (Watson)

Grievor

• and -

The Crown in Right of Ontario (Ministry of Finance)

Employer

BEFORE

Owen V. Gray

Vice-Chair

FOR THE UNION

Gavin Leeb Barrister and Solicitor

FOR THE EMPLOYER

Fateh Salim Counsel Management Board Secretariat

HEARING

June 23 and December 2, 2003.

Decision

1The grievor is a Retail Sales Tax auditor working out of the ministry’s Hamilton office. These grievances all concern the employer’s response to claims that the grievor submitted for reimbursement of lunch costs incurred between February 2002 and May 2003, while performing audits in locations more than 24 kilometres from the Hamilton office.

2The grievor spends a substantial portion of his work time performing audits at taxpayers’ locations in the geographic area for which the Hamilton office is responsible. He periodically submits a “Statement of Travelling Expenses” form (“expense form”), setting out his claims for reimbursement of expenses incurred over a number of days. Although the evidence before me also includes information about expense forms that the grievor numbered 44 and 64, the grievances before me relate to claims for reimbursement of lunch costs that appear in expense forms that the grievor numbered 45, 46, 47, 50, 54, 59, 61, 62 and 63. The items in dispute are claims for approximately 35 lunches in amounts between $9.35 and $15.94, each lunch consisting of between one and three separate purchases for which receipts accompanied the claims. In each case the employer has reimbursed or agreed to reimburse $9.25, but refuses to reimburse the balance of the amount claimed. The total amount remaining in dispute appears to be less than $80.00, but from the parties’ perspectives there are matters of principle at stake. The parties agreed that notwithstanding the subject matter and individual nature of the grievances, my decision on these issues will have “precedential value” within the meaning of Article 22.16.7 of the collective agreement.

3The pertinent provisions of the collective agreement appear in Article 12 of the Unified Bargaining Unit collective agreement:

UN 12.2.1 Cost of meals may be allowed only:

UN 12.2.2 If during a normal meal period the employee is travelling on government business other than:

(a) on patrol duties, except as provided under UN 12.2.3 or

(b) within twenty-four (24) kilometres [sic] of his or her assigned headquarters, or

(c) within the metropolitan area in which he or she is normally working;

UN 12.3 Gratuities and taxes are to be included in the actual cost of meals claimed.

UN 12.4 The total cost of meals for each day is to be shown.

UN 12.5 Before approving claims for meals, the branch head should be satisfied that the charges are reasonable for the locality.

4The matter of Meal Expense was addressed in a Minute of Understanding between the union and the Ministry of Finance dated April 18, 1997:

5.1 Within the frame work of Article 12 of the Individual Bargaining Units’ Agreements, meal allowances may not exceed $32.25 per day without receipts.

Based on actual out-of-pocket expenditures, including gratuities, incurred in the performance of work duties, employees may claim up to the following amounts without receipts:

Breakfast $ 7.00

Lunch $ 8.35

Dinner $16.90

$32.25

Where it is suspected that there may be an abuse of the meal allowances, management may require an employee to submit receipts for amounts less than those listed.

5.2 Nothing in Article 5.1 in any way limits management’s right to determine the reasonableness of all claims.

By its terms, this Minute remains in effect from year to year until a new Minute is entered into.

5One prior Board decision with respect to meal cost reimbursement was cited during argument: Bradley/Lowe, 169/89, (Verity), dated November 2, 1989. The language of Article 17.5 of the collective agreement then in effect was substantially the same as that of Article UN 12 quoted above. A local agreement between the union and the affected ministry in that case contained a provision that, apart from the dollar amounts, appears to have been to the same effect as the provision of the 1997 Minute of Understanding quoted in paragraph [4] above. At pages 8 and 9 of the Bradley/Lowe decision, the Board observed that

Under Article 17.5 of the Collective Agreement, management has the discretion to approve or deny meal expense claims. The sole criteria [sic] for approval is that the disbursements “are reasonable for the locality”. This appears to be a recognition by the parties that the price of an average meal will vary according to locality.

Clearly, Article 17.5 of the Collective Agreement gives the employer broad discretionary powers to approve meal claims - a fact that is recognized by the Union in Article 5.2 of the local agreement. However, it cannot be said that the discretion is unfettered. The Grievance Settlement Board has the power to review the exercise of management’s discretion under Article 17.5 to ensure that the employer did not act in a manner that is arbitrary, discriminatory or in bad faith.

In this case the employer does not dispute that in assessing whether meal claims “are reasonable for the locality” it must not act in a manner that is arbitrary, discriminatory or in bad faith. There is no allegation of discrimination or bad faith here.

6Management Board’s “Travel Management and General Expenses” policy dated October 1997 addresses the matter of reimbursement for cost of meals in section 11:

11.0 Meals

When travelling on behalf of the government, employees are expected to exercise judgement and restraint at all times when buying meals.

MANDATORY REQUIREMENTS

• Employees shall be reimbursed for meal costs when, during a normal meal period

• an employee is on travel status (or as defined under the Collective Agreement).

• Employees shall be reimbursed for actual meal costs not exceeding the meal rates² approved by Management Board of Cabinet:

Breakfast: $6.75

Lunch: $9.25

Dinner : $18.00

• Total daily maximum meal rate reimbursement: $34.00, including gratuities and taxes.

• Employees shall charge all meals on the corporate card whenever possible.

• Employees must retain meal receipts to support expense claims in accordance with ministry procedures.

No reimbursement for meal costs shall be made for meals at home prior to departure or on return; meals included in the cost of transportation, accommodation, seminars or conferences.

Costs incurred for alcoholic beverages will not be reimbursed.

²Meal rates:

The approved meal rates represent reasonable meal costs. They are guidelines for maximum meal reimbursements, and are not to be considered meal allowances.

If meal rates are exceeded, persons authorized to approve claims must ensure that expenses are supported by receipts and are reasonable for the locations where incurred.

The same policy addresses the responsibilities of employees with respect to expense claims generally in section 14.3:

14.3 Responsibilities of Employees

When submitting an expense claim, employees must:

Provide explanations (or proof of prior approval from an immediate supervisor/spending authority) for unusual expenses, and when claiming for another employee.

7A memorandum dated December 12, 1997 sent to members of this ministry’s management by the ministry’s Corporate Services Division recites that “Management has met with OPSEU, which has agreed to rescind per diem travel and expense rates in the local agreement in favour of the new corporate rates.” The “new corporate rates” referred to are those set out in paragraph 11 of the October 1997 MBS policy. While the assertion in the memo about the union’s agreement is not admitted by the union in this proceeding, it seems to be common ground that the $9.25 amount specified in the October 1997 MBS policy superseded the lesser amount in the earlier Minute of Understanding as the maximum lunch expense claim that will be allowed without a supporting receipt.

8The underlying dispute began when Mr. Brown sent the grievor this memo of February 13, 2002:

Dear Terry:

Your expense report dated Feb 7, 2002, indicates days on which your meal cost at lunch was in excess of the published maximum of $9.25.

Costs for lunch greater than $9.25 are allowed with receipts only in extenuating circumstances. Your expense report has been approved.

In the future, however, any expenditures for meals beyond the published maximums will require explanation of the extenuating circumstances and approval in advance of the expenditure. In a situation where I am not available to confirm extenuating circumstances, one of the other managers should be contacted. Failure to do so may result in the disallowance of the claim.

With a couple of exceptions, the grievor did not thereafter seek prior approval for his eating lunch at locations where expenses could exceed $9.25. More importantly, when he subsequently filed claims for lunches costing in excess of $9.25, he did not include or provide any explanation.

9Some issues about management’s response to the grievor’s claims were resolved by agreement in mediation in January 2003, or during the subsequent hearings. For example, it was agreed that where management concludes that a lunch claim supported by a receipt or receipts for more than $9.25 is not reasonable for the locality, it should normally approve and reimburse the employee $9.25 (unless there would have been some reason to deny a claim for that amount unsupported by receipts), without requiring that the employee submit a revised expense claim limiting his/her claim for that meal to $9.25. It was also agreed that when an employee’s lunch meal consists of two or more purchases for which receipts totalling in excess of $9.25 are submitted, the claim for reimbursement should receive the same treatment as if the food purchased had been acquired in a single transaction for an amount equal to the total of the receipts submitted. While prior approval would assure reimbursement, the employer acknowledged that the absence of prior approval would not preclude reimbursement of a reasonable claim.

10What remains in issue is whether the employer acted arbitrarily in deciding that lunch claims in issue – that is, claims for more than $9.25 ­– ­ were not reasonable for the localities in question. Some of those decisions were made by the grievor’s manager, Jim Brown. While Mr. Brown was absent for health related reasons, the grievor’s claims were reviewed by Martin Miksza, the District Manager at the Hamilton office. Mr. Mikska also performed the reconsideration that was undertaken as a result of the mediation.

11For each of lunches in issue, management’s evidence established one or more of the following points:

• management knew of restaurants in the locality at which lunches could have been obtained for $9.25 or less;

• the claims of other auditors from the Hamilton office for lunch expenses in that locality had been for $9.25 or less;

• other claims by the grievor for lunch expenses in that locality had been for $9.25 or less.

12With respect to the claims of other auditors, Mr. Watson testified that several had told him that they have spent more than the $9.25 they claimed. This is hearsay, of course. Even if true, it is not particularly helpful. There is no way to know from Mr. Watson’s evidence how often this supposed under claiming occurred. There is no way to know whether it occurred (if it did) because auditors could not find reasonable meals for $9.25 or less, or because there were special circumstances that the auditors could not be bothered to explain that had led them to eat in more expensive restaurants, or because they had made a choice to treat themselves to something more than they could fairly expect the employer to pay for in full. A challenge to the apparent significance of the employer’s having received no claims above $9.25 from other auditors in similar circumstances would have to be supported by more direct and detailed evidence about the other auditors’ claims. I have given no weight to the grievor’s evidence about what other auditors told him concerning their meal claim habits.

13Although the grievor was repeatedly told that he should provide an explanation when submitting a lunch claim for an amount in excess of $9.25, he did not do so with respect to any of the claims in question. His testimony in these proceedings included some explanation of the choices he made when incurring those lunch expenses. I will not recite those here. The issue at hand is whether the employer acted arbitrarily in any of its decisions that his lunch claims in excess of $9.25 were unreasonable to the extent of the excess. The grievor had the opportunity to provide any pertinent explanation before those decisions were made. He was urged to do so. He did not. Without suggesting that I think that the explanations he gave in his testimony would have warranted a different response if they had been provided at the time, I simply note that management’s decisions cannot be faulted for having failed to take into account information that the grievor chose not to provide.

14Union counsel argued that the receipts themselves reflect an effort to achieve variety and nutrition in food choices, and that those considerations should therefore have been taken into account. I agree that the content of the receipts can be taken into account in assessing the decisions made with respect to them. I am not persuaded that there is anything about the content of any of the receipts that overcomes the inference to be drawn from the facts recited in the paragraph [11] of this decision – namely, that a reasonable lunch meal could be obtained in the locality in issue for $9.25 or less.

15The union’s main attack on management’s decisions was on the way the deciders described what they had to decide.

16Mr. Brown’s “will say” statement was accepted as his evidence-in-chief, and the union did not seek to cross-examine on it. This is Mr. Brown’s evidence with respect to the context in which he wrote the memo of February 13, 2002:

I was appointed Group Manager Audit - Retail Sales Tax in Mississauga in the fall of 1998. Prior to that I was a Senior Auditor - Retail Sales Tax - the same position which Terry Watson holds. In August of 2000, I transferred to the Hamilton office in the same position.

While working as a Senior Auditor I submitted claims for meals subject to the same policies that Terry now faces and I continue to submit expense claims subject to the same meal policies. Other auditors in this group have not filed lunch claims over $9.25 with one exception when the auditor was required to take the Go Train to Toronto and was faced with an expensive area to find food and limited mobility.

For the period from August 2000, when I first became manager of the audit group in Hamilton which Terry is a member of, to November of 2002 [sic], there were some expense claims filed by Terry which contained lunch claims over $9.25. There were 3 or 4 claims in that period with one lunch each over $9.25. Of those claims, I found one to be reasonable (Terry was given the name of a restaurant by the vendor which turned out to be expensive and he went somewhere else after that). I approved these claims. Although I had problems with the claims approved, I was aware that there had been a previous grievance (by Terry Watson relating to meal Claims) and as long as the claims were infrequent, I was not prepared to force the issue. Considering the amount of time spent on the current grievances, I think that was a reasonable decision.

Terry’s claims for late November and early December contained several days where lunch was claimed for over $9.25. I approved this claim as well but when the claim for January and early February continued this trend, I felt forced to take a stand on the amount of lunch claims because this was now becoming a regular occurrence. It is not fair to other auditors who are abiding by the maximum to be continually approving claims for a particular auditor over that amount. As well, there is potential for a large number of claims of this nature from other auditors if this is allowed to go on.

The requirement for prior approval seems to be a major problem in this grievance. The reason for this requirement was that in speaking to Terry about the claims in Guelph, he indicated that he had asked the vendor about restaurants in the area and had been directed to The Portly Penguine [sic] and was not aware of any other restaurants. If prior approval is given, then the auditor is aware that reasonably priced restaurants are nearby and whether a claim will be approved. This requirement could be dropped, but it would be necessary for Terry to understand that it is his responsibility to check for restaurants in the area (the internet is a good source) and that the excuse that he does not know of other reasonably priced restaurants in the area is not acceptable.

17After reciting portions of Article UN 12 of the collective agreement, the Minute of Understanding and Management Board’s Travel Management and General Expenses Policy of October 1997, Mr. Brown states that he concluded from those sources that he should consider the following in assessing whether lunch claims in excess of $9.25 were reasonable:

1. The lunch amount of $9.25 is meant to be the maximum amount claimed in most circumstances. This is a negotiated amount for a reasonable lunch.

2. It is a manager’s responsibility to determine if a lunch claim in excess of $9.25 is reasonable for the locality.

3. As long as there are reasonably priced restaurants in the locality, the maximum of $ 9.25 for lunch should apply.

4. Questions of the nutritional value of a restaurant’s menu or the amount that a particular auditor eats, or whether he might be making lunch his main meal of the day should not be taken into consideration by a manager in approving the claim. These are items which should be considered at time of negotiating the maximum allowances not revisited each time an expense claim is approved.

18Mr. Miksza described his approach in a memo he wrote to the grievor in May 2003:

First of all, the $9.25 allowed for lunch is an agreed upon amount by OPSEU and Management Board, being the upper limit that can be submitted without a receipt. The amount is a reimbursement of the lunch claim and is not an allowance. If actual costs expended are less than this, then the lesser amount should be claimed. Management however has the right to request a receipt in certain circumstances that are below the $9.25 limit.

This upper limit that has been agreed, is not necessarily the upper limit for a lunch claim, but is the limit for a claim without a receipt. An amount submitted in excess of $9.25 requires a receipt to be submitted in support of the claim, however the receipt by itself is not adequate to warrant acceptance and approval. Claims in excess of the $9.25 are expected to be the exception and not the rule. For a claim to be accepted for approval, if over $9.25, must include a receipt, plus an explanation supporting the amount for reasonableness for the locality.

Examples of such reasons can include and are not limited to, but are not necessarily definitive in and by themselves:

• working in a locality where no lower priced meals readily available eg. parts of Toronto

• only one eating establishment available in the area

• vendor provides luncheon menu and auditor remains there for lunch

• new or unfamiliar with an area / first day in area / not able to evaluate area (drive around or plan) for time commitments first day.

Other considerations used in determining reasonableness by the manager will include, but are not limited to, items such as:

• the extent of applicability of the above items

• available, reasonable choices at an eating establishment eg. Lunch menu vs dinner menu

• extent of other establishments in the locality

• extent of reasonable choices within the locality

• past experience of auditor in relation to familiarity with area / submitted claims of other days for both amount and location

• extent of meal / or multiple meals consumed

• alcohol strictly not allowed

The above parameters should provide a basis for making a decision to the extent of reasonableness for a locality for both the auditor and the manager. This in no way indicates where an employee should eat or what he/she should eat, however choices as to where and what to eat may be impacted by the limits of the reimbursement and vice versa.

19Union counsel disputed the notion that $9.25 represents a “maximum” or “negotiated amount” for reasonable lunch costs. He noted that the only amounts to which the union had agreed were amounts for which receipts did not have to be provided. He challenged the characterization of claims for more than $9.25 as “unusual,” and of the circumstances in which such claims would be approved as having to be “extenuating” or “exceptional.” He submitted that it was not a genuine exercise of the discretion afforded by Article UN 12 to require an accompanying explanation for any lunch claim in excess of $9.25, even one for $9.26. He argued further that “floodgates” concerns of the sort expressed by Mr. Brown were not a proper consideration in the exercise of that discretion, citing Re Young and The Crown In Right of Ontario (Ministry of Community and Social Services) 1979 CanLII 3955 (ON LA), 1979, 24 L.A.C. (2d) 145 (Swinton) at p.147.

20The decision called for in Article UN 12 must inevitably involve line drawing: if one amount will be reasonable, while a higher amount is unreasonable, then there is a line somewhere between the two. The language of the Article explicitly recognizes that that line may be different in different localities.

21Factors other than locality that are specific to the occasion may also affect what is reasonable. For example, while restaurants within walking distance of the work site may be more expensive than others that could be reached by car, the additional parking and other costs of travelling by car to a less expensive restaurant may exceed the anticipated savings in food costs. It is not unreasonable for management to ask the affected employee to supply any information peculiar to the particular occasion and circumstances that might affect what was reasonable on that occasion and in those circumstances. When no such information is supplied, it is not unreasonable for management to act on what it knows from its own experience and from the claims of others about the prices of food in the locality in question.

22The Minute of Understanding between the Ministry and the Union did not purport to define the line between reasonable and unreasonable expenditures for purposes of Article UN 12. The line it drew was between claims for which the employer would require receipts and claims for which it would not require receipts (absent suspected abuse). There is no evidence before me about how the amounts in that Minute, or in the subsequent MBS policy, were arrived at. Did they reflect an average or upper quartile or maximum reasonable cost of those meals in the “cheapest” locality, or in the most expensive locality, or something in between? Was there a cushion built in for future inflation? Was there a cushion built in to reflect the fact that management time spent reviewing receipted claims is also an expense, and that the savings of that management time that could be achieved by an upward adjustment in the unreceipted amount might exceed the consequent costs? There is nothing about that before me.

23The union’s agreement to an amount below which receipts would not be required was not and is not an agreement that claims above that amount would be “unusual” or “exceptional,” nor that such claims could be reasonable only in “extenuating” circumstances. As Mr. Miksza acknowledged, costs of food have increased since 1997. Whatever the relationship may have been between the agreed-upon amount and a reasonable expenditure for a lunch in 1997, the relationship will change as costs rise. Even if the number was a presumptively reasonable maximum in 1997, there is no reason to suppose that it remained so in 2002 or 2003. I note, however, that there is no quantitative evidence before me about the extent to which the cost of meals has increased since 1997.

24The union’s agreement to an amount below which receipts are not required is not without significance in assessing the arguments the union now makes. That agreement clearly authorizes the employer’s making what might otherwise have been challenged as an artificial or arbitrary distinction between a lunch claim for $9.26 and one for $9.25, in requiring a receipt for the higher amount and not for the lower claim. Because the union has agreed to that bright line distinction, the differential treatment with repect to requiring receipts does not have to be justified by reference to the reasonable cost of a meal in a particular locality, and the employer’s insistence on receipts for claims of $9.26 cannot be attacked merely because it does not require a receipt for a claim of $9.25. It seems obvious that if receipts would not be required for claims below a certain amount, explanations would likewise not be required for the amounts of such claims, absent suspected abuse. Accordingly, the employer’s having invited explanation of all claims above that line cannot fairly be attacked solely on the basis that it did not require explanations for amounts below the agreed-upon line.

25In his memo, Mr. Miksza said that “Claims in excess of the $9.25 are expected to be the exception and not the rule.” The union attacks this as a misconstruction of the combined effect of Article UN12 and the union’s agreement to the unreceipted amount. I agree that such an expectation cannot be justified solely by reference to those provisions, without reference also to the actual cost of food in the locality and time frame in question. I am not sure that that Mr. Miksza based that statement solely on UN12 and the union’s agreement to the unreceipted amounts. The evidence is that claims in excess of $9.25 were, as a matter of fact, very much the exception in the time frame and localities in issue. In those circumstances, Mr. Miksza’s expectation was not at all surprising, and his (and Mr. Brown’s) position that such claims should be accompanied by an explanation was not unreasonable. Without an accompanying explanation, the claim would have to be assessed against the information management already had, which is identified generally in paragraph [11] of this decision, from which it could fairly conclude that it was possible to obtain a lunch for $9.25 or less in each of the localities in question and that any greater expenditure was unreasonable.

26I am unable to find any fault with the decisions of Mr. Miksza that remain in issue.

27Mr. Brown’s statement that “[t]he lunch amount of $9.25 is meant to be the maximum amount claimed in most circumstances” reflects the expectation of management in the 1997 MBS policy, and does not expressly purport to be a statement of the combined effect of UN12 and the union’s agreement to the unreceipted amounts. I take Mr. Brown’s statement about the potential for claims by other auditors as his explanation for his having come to grips with the issue of reasonableness of the grievor’s claims rather than simply continuing to allow the claims in order to avoid his grievances. I do not understand that statement to suggest that his assessment of what constituted a reasonable amount was influenced by the prospect of claims by other auditors.

28I do agree with the union that Mr. Brown misinstructed himself when he concluded that “… $9.25 … is a negotiated amount for a reasonable lunch.” I do not know what effect, if any, that mistaken belief had on his decisions. I do know that for each of the claims that he found unreasonable he noted that one or more of the factors identified in paragraph [11] applied. In those circumstances, and given the amounts involved, I am not prepared to direct that Mr. Brown reconsider the claims he rejected in light of the observations in this decision. It is difficult to imagine that he would come to any different conclusion, bearing in mind the facts recited in paragraph [11] of this decision and the absence of explanation by the grievor.

29For these reasons I conclude that the decisions in issue were not arbitrary.

30Against the possibility that effect has not yet been given to the settlements to which I have referred, or that there is now some dispute in that respect, I direct that the employer make such payments as those settlements may still require, and I remain seised with any issue arising therefrom. Otherwise, these grievances are dismissed.