GSB# 2002-2235

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

The 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

Felicity D. Briggs

Vice-Chair

FOR THE UNION

Marisa Pollock Sack Goldblatt Mitchell Barristers and Solicitors

FOR THE EMPLOYER

David Strang Acting Associate Director Management Board Secretariat

HEARING

January 9, June 26, July 15, September 23, November 20, 2003.

Decision

On June 27, 2002, the Association filed a dispute encompassing three specific allegations. The first was that various salary increases and retroactive monies owing as the result of the last Memorandum of Settlement dated February 19, 2002, were not paid in a timely fashion. By way of remedy, interest on those monies was requested in addition to an order for prompt payment. The second allegation was that the Employer had not yet implemented the Merit Pay increases. Again, prompt payment and interest on monies owing was requested. Finally, the Association alleged that the Employer failed to implement the Pay for Performance bonuses.

On, January 9, 2003, the first day of hearing, the parties agreed to attempt to resolve the dispute through mediation. Unfortunately, at the conclusion of that day the matters were not yet resolved. Accordingly, further hearing dates were scheduled. However, in the meantime, the parties continued in their efforts to resolve the outstanding matters. To that end a number of scheduled hearing days were adjourned but the Board was asked to reconvene on June 26, 2003. At that time it became evident that the dispute between the parties was significantly narrower but still somewhat complicated. Indeed, the parties had arrived at a Memorandum of Settlement resolving all but one of the outstanding matters. However, in addition to that remaining outstanding issue there was a further allegation from the Association that the Employer had breached the recently negotiated Memorandum of Settlement.

In the Memorandum of Settlement signed May 28, 2003, the parties specifically addressed the unresolved issue. It was stated at paragraph 2, in part:

The parties agree that employees will be eligible to receive pay for performance payments under Article 45.2 for such proportion of the days in the previous year that they received salary at the maximum of their salary range.

For clarity, this is deemed to include eligibility for any part of the year in which an employee was on approved leave of absence of not greater than three (3) months including STSP and WSIB.

The parties disagree over how to treat employees in receipt of EI top up for pregnancy or parental leave. It is the Association’s position that employees should be eligible to receive pay for performance payments under Article 45.2 for any period of the year in which an employee is in receipt of EI top-up for pregnancy or parental leave. It is the Employer’s position, that this should be cut off once an employee is in receipt of EI top-up for pregnancy or parental leave for a period of three (3) months. Should the parties fail to resolve this issue, the parties agree that Felicity Briggs, who is seized with the above named dispute, scheduled to be heard on June 26, 2003 will determine the matter. The parties agree that this issue will be argued on one of the four dates currently scheduled.

As can be seen from the above, the first dispute concerned the application of Pay for Performance for employees who were absent due to pregnancy and parental leave. To further complicate the matter, at the hearing it became apparent that the parties disagreed upon the process to be undertaken in order to resolve that dispute. It was the Association’s view that the parties had agreed to give me the jurisdiction of an interest arbitrator to determine this dispute while the Employer asserted that I continued to exercise only the authority of a rights arbitrator. In this regard it was the Association’s position that the wording of the Memorandum of Settlement was ambiguous and extrinsic evidence of various discussions and draft proposals during the negotiations process would need consideration in order to decide the matter of my jurisdiction. The Employer took the opposite view. It suggested that it was impossible for this statutory tribunal established to hear and determine grievance arbitrations can find itself with the jurisdiction of an interest board of arbitration.

The second area of dispute was regarding the interpretation of the “clarity note” in the middle paragraph set out above. The Employer took the position that the wording of the Memorandum of Settlement is clear and unambiguous and provides that when an employee is on a leave of three months or less, the Pay for Performance is unreduced. However, if the leave of absence continues beyond three months, the Pay for Performance bonus is prorated. The Association’s view was that the language of the Memorandum is ambiguous. Evidence regarding the negotiations was necessary to assist in interpreting the language and would lead this Board to find that for employees on a leave other than pregnancy or parental, only the period of the leave in excess of three months would be discounted in determining the Pay for Performance bonus.

This second dispute comes before me as the result of paragraph 9 of the May 28, 2003 Memorandum of Settlement wherein it was stated:

The parties agree that these minutes of settlement are enforceable as if they formed part of the collective agreement, and Felicity Briggs will remained seized to deal with any issues arising from the interpretation, application, implementation, administration or alleged violation of these minutes of settlement. This includes any dispute over the size of the pay for performance envelope for each of the years under the collective agreement, and determining the quantum of the remedy for any non-compliance with paragraphs 6 and 7. If Felicity Briggs is unavailable, the parties will select an alternative arbitrator in accordance with their normal practice.

It would be helpful at this point to set out the relevant provisions of the collective agreement. In the most recent round of negotiations the parties agreed to include Articles 45.2 and 45.3 as follows:

For employees in AMAPCEO classifications who are at the maximum of their salary range:

45.2.1 Effective April 1, 2002, for employees who are at the salary maximum on March 31, pay for performance bonuses will be processed on April 1^st each year based on performance for the previous year.

45.2.2 The pay for performance bonus shall be a re-earnable lump sum payment and will not increase the employee’s base salary beyond the maximum of the salary range for any purpose.

45.2.3 The number of employees who receive pay for performance bonuses above a satisfactory performance rating shall not exceed twenty percent (20%) of eligible employees.

45.2.4 The amounts of bonuses available under article 45.2 shall be fixed at three and a half percent (3.5%) for satisfactory performance and six percent (6%) for above satisfactory performance.

45.2.5 There shall be no pay for performance bonus for employees whose performance is rated below satisfactory. The number of employees in this category shall not exceed fifteen percent (15%) of eligible employees.

45.2.6 An employee must have earned the maximum salary for his or her classification for at least twelve (12) months in order to be eligible for a full pay for performance bonus. For clarity, an employee who is at the maximum salary for his or her classification on March 31 will remain eligible for a pay for performance bonus in spite of the application of the increases to the maximum of the salary range under Articles 44.1(b), 44.2(b) and 44.3(b). The performance bonus for an employee who has been earning the maximum salary for less than twelve (12) months will be pro-rated.

45.3 Administration of Pay for Performance

45.3.1 Effective April 1, 2002 and on April 1^st each following year, a fixed envelope for pay for performance will be established. The envelope will vary from year to year and will be calculated by:

45 taking twenty percent (20%) of the salaries of the percentage of employees in AMAPCEO classifications (classified and unclassified), calculated as of April 1^st of that year, who were earning salaries at the maximum of their salary ranges on March 31^st of that year, and multiplying by six percent (6%) [example: if 32% of employees are earning maximum salaries, take 20% of their salaries and multiply by 6%];

46 taking sixty-five percent (65%) of the salaries of the percentage of employees in AMAPCEO classifications (classified and unclassified), calculated as of April 1^st of that year, who were earning salaries at the maximum of their salary ranges on March 31^st of that year, and multiplying by three and a half percent (3.5%) [example: if 32% of employees are earning maximum salaries, take 65% of their salaries and multiply by 3.5%];

(c) adding together paragraphs 1(a) and 1(b) above.

45.3.2 The administration of the pay for performance bonus plan under 45.2 is totally within the discretion of the Employer. Individual employees’ disputes over their ratings and pay for performance bonuses will not be arbitrable. An arbitrator’s jurisdiction is limited to deciding whether or not the pay for performance envelope, as described in article 45.3.1, has been spent.

At the hearing I ruled that I would hear the extrinsic evidence and reserve my ruling regarding whether to admit and consider the extrinsic evidence regarding the negotiations leading to the Memorandum of Agreement. I made clear that I would make a determination after the conclusion of the evidence and submissions as to whether there is a latent or patent ambiguity in the language that would necessitate admission and consideration of the extrinsic evidence to assist in interpreting the provisions of the Memorandum of Settlement.

Initially turning turn to the second dispute regarding the interpretation of the clarity note found at paragraph 2 of the May 28, 2003 Memorandum of Settlement. As set out earlier, it was the Employer’s view that the clear language of the Memorandum states that when an employee is on a leave of not greater than three months the Pay for Performance is unreduced. However, when a leave extends even one day beyond three months the Pay for Performance is prorated for the full period of the leave. The Association, on the other hand, asserted that the language is ambiguous and extrinsic evidence should be admitted and considered. Once the negotiating history in this regard was taken into account, this Board would find that only the period of any leave in excess of three months would be discounted in the determination of Pay for Performance.

In this regard I heard evidence from Mr. Stephen Barrett, counsel for the Association and Ms. Deborah Anne Long, Corporate Staff Relations Officer, both of whom were involved in the negotiation of the Memorandum of Settlement.

Ms. Pollak, for the Association contended that the clarity note must be considered in context. The parties agreed in the first paragraph to take a proportional approach to the time for which the Pay for Performance is to be applied. The paragraph at issue deems certain employees eligible for the prorating exercise. However, the ambiguity is caused because it is not clear whether it is time or compensation that is to be prorated. That ambiguity leads this Board to admit and consider the extrinsic evidence of Mr. Barrett and Ms. Long regarding the history of the negotiations leading to the signing of the May 28, 2003 Memorandum of Agreement.

It was the Employer’s view that the parties agreed in the Memorandum of Settlement that employees on short leaves of absence ought not to be disadvantaged for the purposes of the Pay for Performance bonus. A balance was struck during negotiations and the clarity note is the resulting compromise. In the overall scheme the parties agreed to ignore short term absences but eventually leaves of absence become long enough to affect the ability to achieve performance goals. Obviously, the parties agreed that in the administration of the program it would be unfair to rate one employee who had superior performance for six months the same as an employee who had a superior performance for twelve months.

Clearly, it was asserted by the Employer, the parties decided that some cut off period was appropriate and three months was the agreed time. The language is clear and there can be no purposive reason for stretching the ordinary and clear words found in the Memorandum of Settlement. The Employer submitted that the Association is asking this Board to read into the agreement that the first three months of any leave, irrespective of its length, is protected. Simply, there is nothing in the Memorandum of Settlement that can be interpreted as suggested by the Association. Mr. Strang said that while, as the Association suggested, the cut off of three months might seem an arbitrary number, there would be a cut off date in any event with people falling on either side of that date line. That alleged unfairness is merely a necessary delineation between acceptable periods of absence and those absences which are too long to allow for proper assessment of the Pay for Performance bonus.

In this regard the Employer relied upon Re University of Manitoba and Canadian Educational Workers, Local 9 (1990), 1990 CanLII 12770 (MB LA), 11 L.A.C. (4^th) 353 (Freedman); and Re Strait Crossing Joint Venture and International Union of Operating Engineers/Iron Workers (1997), 1997 CanLII 24946 (NS LA), 64 L.A.C. (4^th) 229 (Christie).

As was asserted by both parties, the issue of ambiguity and the resulting use of extrinsic evidence has been considered by many boards of arbitration. It is trite but true that each case is fact dependent. However, a review of the jurisprudence is helpful. Arbitrator Freedman conducted such a review in Re University of Manitoba (supra). In that case the Union was seeking a declaration regarding the interpretation of an article in the collective agreement concerning limitations on the hours of work. The article at issue was lengthy and it was the Union’s assertion that there was a latent or patent ambiguity so as to require the admission of extrinsic evidence to assist with its interpretation. In considering the matter Arbitrator Freedman stated, at page 357:

The arbitral authorities make clear that it is appropriate to distinguish between “ambiguity” in the legal sense and the possibility of different constructions of a document: (see Re Int’l Nickel Co. of Canada Ltd. and U.S.W. (1974), 1974 CanLII 2400 (ON LA), 5 L.A.C. (2d) 331 (Weatherill). I have no difficulty in understanding the language used in cl. 14.9.3 and there are no references therein which render comprehension difficult. I agree with the view of the board in the Int’l Nickel case (pp.333-4) where it was said:

It may be that the provisions of the collective agreement here in issue pose a problem of construction, so that they may be said to be “of doubtful meaning” in that very general sense. In our view, however the interpretation of the notion of “latent ambiguity” to include generally all cases of doubtful meaning or application” … should not be, and was not intended to be taken so far as to open the door to admission of extrinsic evidence wherever a disagreement as to the construction of a document arises. If that were allowed, the strength of a document such as a collective agreement would be greatly reduced, and the well-established rules respecting the admission of extrinsic evidence would be meaningless.

In my judgment the question before me is one of construction or contract interpretation in the normal sense, and is neither more nor less than that. I do not find the provisions in cl. 14.9.3 ambiguous in the sense of either latent ambiguity or patent ambiguity as those terms are used in the authorities and it is not necessary for me to resort to extrinsic evidence to interpret the Agreement.

….The prescribed task for me is to construe and interpret the Agreement according to the intention of the parties, which intention is derived from the words they have used, unless there is an ambiguity of the nature and to the extent that would warrant the admissibility of extrinsic evidence to aid in the interpretation of the Agreement. As indicated, I have found no such ambiguity.

Arbitrator Freedman also discussed the “cardinal presumption” that the parties are assumed to have intended what they have said. He also considered an occasionally held arbitral view that collective agreements are, for a variety of reasons, imprecise documents that might well require extrinsic evidence to properly interpret. In this regard Arbitrator Freedman said at page 360:

With respect, I take a different view of the degree of integrity that should be accorded to collective agreements. To hold that collective agreement language will be inevitably imprecise would be to permit arbitrators at any time and in any case to read into language actually used by the parties, language that was not used. It would permit arbitrators at any time and in any case effectively to rewrite or amend collective agreements (a practice that virtually every collective agreement proscribes). In my experience, collective agreement language is not generally imprecise.

…..That is not to say that in an appropriate case, where patent or latent ambiguity exists in the language used, extrinsic evidence ought not to be admitted, because in such a case it is proper to admit and consider such evidence. The arbitrator’s task is to determine the real substance of the matter in dispute and the arbitrator ought to fulfill that role, where he can, by reading and construing the language which the parties themselves have negotiated. In the case before me I am able properly to construe the Agreement without reference to extraneous evidence.

I agree with that view and have found it useful in my consideration of ambiguity. The dispute between these parties is whether employees who are absent on approved leaves of absence for longer than three months have the first three months of their leave taken into account for the purposes of Pay for Performance. It is somewhat ironic that the very sentence that gives rise to this dispute begins with the phrase “for clarity”. In any event, the provision states that eligibility includes “any part of the year in which an employee was on approved leave of absence of not greater than three (3) months including STSP and WSIB”. After considering the submissions of the parties, the jurisprudence and the very language of the Memorandum of Settlement I am led to the inevitable conclusion that there is neither a latent nor patent ambiguity. As stated by Arbitrator Freedman in Re University of Manitoba, “I have no difficulty in understanding the language used” and “there are no references therein which render comprehension difficult”. The language is clear on face and supports the Employer’s view of this matter. Indeed, to have the meaning proffered by the Association, the parties would have had to expressly state that when leaves of absence are greater than three months, only that time in excess of the first three months is not included for the purposes of entitlement to pay for performance compensation.

I also agree with Arbitrator Freedman that an arbitrator’s role is to “determine the real substance of the matter”. That role is, when possible, to be carried out by considering and interpreting the language agreed upon by the parties. In my view, in this instance I am able to fulfill that role without considering extrinsic evidence. The language has neither a latent nor a patent ambiguity.

Moreover, I am of the view that the language of the parties does “clarify” the first paragraph of section 2 of the Memorandum of Settlement. The first paragraph refers to when “employees will be eligible”. The next paragraph does clarify that employees who are on leaves of absence of “not greater than three months including STSP and WSIB” are “deemed” to be eligible.

I will return now to the first dispute. As set out above, the parties disagree as to how the Pay for Performance bonus is affected when employees are on pregnancy and parental leave. It is appropriate to first consider the issue of my jurisdiction in this regard.

The Association took the position that the parties have agreed to bestow upon me the jurisdiction of an interest arbitrator while the Employer asserted that no such agreement ever existed and, in the absence of such accord, I continue to hold only the authority of a rights arbitrator.

Ms. Pollak suggested that the parties have been creative and somewhat non traditional in the area of dispute resolution as can be seen by a review of the collective agreement. For example, Article 18.6 contemplates unfair competition complaints; Article 15.9.2 provides for classification disputes; and Article 32 considers the handling and resolution of disputes involving denial of benefits. Obviously, she suggested, these parties are flexible and creative with respect to dispute resolution mechanisms. Therefore it is not surprising that the parties would include in one Memorandum of Agreement two separate methods of dispute resolution, that is, interest arbitration for the determination of the matter of parental and pregnancy leave and grievance arbitration for the issue of interpreting the clarity note regarding what three months means for employees on leaves other than parental and pregnancy leave.

Further, the Association asserted that the parties recognized there were two very distinctive tasks being asked of the Board. Regarding the matter of the leaves of not greater than three months, I can only interpret the agreement of the parties. However, for the issue of the parental leave, the parties agreed that I would determine that matter. That phrase, “determine the matter” is classic interest arbitration phraseology. There were no constraints added such as “in accordance with the collective agreement”. However, in the event that there is any ambiguity regarding this phrase, the Association’s evidence, including that of the discussion about “final offer selection”, supports its view. The parties wanted something other than a construction of the language found in the Collective Agreement. Rather, they wanted this Board to render a decision based upon the relative merits of the issue.

The Employer’s contention was, simply put, that there is nothing on the face of the Memorandum of Settlement that grants this Board the jurisdiction to act as an interest Board of Arbitration. The parties entered into a Memorandum of Agreement leading to the instant collective agreement. After the parties ratified the Memorandum of Agreement, grievances were filed concerning, amongst other things, the payment of pay for performance bonuses. As set out above, those matters were resolved but for one issue. The outstanding matter is now before this Board for determination in accordance with the normal path of rights arbitration and there has been no agreement to alter that course.

Mr. Strang took issue with the Association’s contention that the phrase “determine the matter” is code for, or more appropriate to, interest arbitration. Indeed, Section 49(4) of the Labour Relations Act provides that a rights Board of Arbitration shall “hear and determine the matters” in dispute between the parties.

After considering the submissions of the parties, I must find there is no ambiguity in the Memorandum of Settlement regarding my jurisdiction. I agree with the Employer that I have jurisdiction of a rights arbitrator to hear and determine the dispute between the parties.

At paragraph 2 of the Memorandum of Settlement it was stated that, “should the parties fail to resolve this issue, the parties agree that Felicity Briggs, who is seized with the above named dispute, scheduled to be heard on June 26 will determine the matter”. I find nothing unusual about the use of the phrase “determine the matter” in the context of grievance arbitration.” Indeed, at Article 15.11.3 of the collective agreement between these parties provides that “all complaints arising under Article 15 that are referred to arbitration shall be determined by the Chair or a Vice-Chair of the GSB sitting alone.” (emphasis mine). There is nothing to have me find that “determine the matter” is a phrase peculiar to interest arbitration.

Further, there is no language in the Memorandum of Settlement that persuades me that I have something other than the jurisdiction I was given by the parties at the beginning of this dispute, that is, the jurisdiction of a rights arbitrator flowing from a complaint filed under the collective agreement. In my view, for me to decide that I have the jurisdiction of an interest arbitrator clear and unequivocal language would be necessary. Such a provision is not present in the instant matter. To the contrary, I am of the view that the Memorandum of Settlement clearly provides that I have the jurisdiction of a rights Board of Arbitration. Indeed, the very language of the Memorandum of Settlement is strikingly similar to that provided in the arbitration provision set out at Article 15 of the collective agreement.

It is true, as asserted by the Association, that these parties have been relatively creative in the various dispute resolution mechanisms considered in their collective agreement. However, I cannot find that because these parties are prepared to agree in their collective agreement to various methods of resolving disputes it is more likely in this Memorandum of Settlement that, in the absence of clear language so providing, the parties gave me the jurisdiction of an interest arbitrator.

The Association referred to the fact that the issue regarding the affect of parental leaves is set out at paragraph 2 while paragraph 9 considers my jurisdiction to resolve the dispute regarding the clarity note. It was suggested that having those two provisions in separate paragraphs must lead me to find either that the parties intended differing jurisdictions or, in the alternative, that an ambiguity resulted. Of course, such an ambiguity would cause me to admit and consider extrinsic evidence in this regard,

There is no ambiguity created by different disputes being considered in separate paragraphs. Paragraph 2 considered the dispute that the parties knew was at issue at the time they signed the Memorandum of Settlement. At the same time, at paragraph 9, they provided for my jurisdiction in the event there were future disputes flowing from the implementation of the Memorandum. Such a provision is not uncommon and makes good labour relations sense. In my view, the parties provided for different types of disputes, not different types of jurisdiction.

The Association relied upon Re Dominion Citrus Ltd. and Teamsters, Local 419 (2001) 98 L.A.C. (4^th) 11 (E. Newman). In that case, the arbitrator agreed over the objections of the Employer that she had the jurisdiction of an interest Board of Arbitration. However, the matter was substantially different as is evident at page 18 wherein it was said:

Shifts, start times and the definition of the workweek are negotiated elements of this contract, and the parties have expressly preserved the character of these elements in the contemplation of change. They have, in effect, agreed to reopen this article of the collective agreement during the currency of the contract, in order to negotiate changes.

I am of the view that the matter before me is distinguishable. Here, the parties negotiated a new provision to be included in the collective agreement regarding Pay for Performance bonuses. An Association dispute was filed on February 11, 2003 alleging various breaches that the collective agreement. The dispute came before the Grievance Settlement Board for determination in accordance with the procedure found at Article 15.6 of the collective agreement. Much of the dispute was resolved between the parties and a Memorandum of Settlement was entered into on May 28, 2003. The first paragraph of the Memorandum sets out its purpose. It states, “This memorandum of settlement is in relation to an Association policy dispute dated February 11, 2003 respecting merit pay and pay for performance (p4p) bonus, and an Association dispute dated June 27, 2003 respecting failure to implement salary increases, merit pay adjustments and pay for performance bonuses in a timely manner”. In the third paragraph of the Memorandum of Settlement it was agreed, “should the parties fail to resolve this issue, the parties agreed that Felicity Briggs, who is seized with the above-named dispute, scheduled to be heard on June 26, 2003, will determine the matter” (emphasis mine). In my view, that sentence clearly states that I, who am seized of the original Association dispute regarding, amongst other things the Pay for Performance bonus, will continue to act in my capacity as rights arbitrator and determine the matter. To broaden the scope of the dispute from a rights dispute to an interest dispute would require much more specific language. There is nothing in the Memorandum of Settlement that would have me find my jurisdiction to determine the matter was altered by agreement of the parties.

For those reasons, I find I am acting as a rights arbitrator in determining the issue of how to “treat employees in receipt of EI top up for pregnancy or parental leave”.

Accordingly, the final area of dispute is “how to treat employees in receipt of EI top up for pregnancy or parental leave”. As stated in the Memorandum of Settlement, it was the Association’s position that “employees should be eligible to receive pay for performance payments under Article 45.2 for any period of the year in which an employee is in receipt of EI top-up for pregnancy or parental leave”. It was asserted by Ms. Pollak that a review of the collective agreement reveals the parties’ intention that employees on pregnancy or parental leave would not be disadvantaged in any way as the result of their leave.

Articles in the collective agreement referred to in this regard were:

Article 2 – No Discrimination/Harassment

2.1 There shall be no discrimination or harassment practiced by reason of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, marital status, family status, same sex partnership status, or handicap, as defined in section 10(1) of the Ontario Human Rights Code (OHRC).

Article 16 – Seniority/Continuous Service

16.2.1 An employee’s seniority/continuous service shall accumulate from the date determined in Article 16.1 and shall include the period of service during which an employee:

(a) is in receipt of LTIP or WCB benefits; or

(b) is absent on pregnancy or parental leave; or

( c) is absent on any authorized leave without pay of thirty (30) calendar days or less.

Article 24 – Pregnancy Leave, Parental Leave and Employment Insurance Top-Up

24.1 In this Article,

“weekly pay”, in respect of an employee on a leave of absence referred to in Article 24 means weekly pay at the rate actually received by the employee on the last day of work and also includes any salary increase that is granted after the last day of work to take effect retroactively on or before the last day of work.

24.12 In respect of the period of pregnancy leave, payments made according to the Supplementary Employment Benefit Plan will consist of the following:

(a) for the first two (2) weeks, payments equivalent to ninety-three (93)% of the actual weekly rate of pay for her classification and shall also include any increases in salary that she would have attained had she been at work during the leave of absence as they are, or would have been implemented; and

(b) for each week, up to a maximum of fifteen (15) additional weeks, payments equivalent to the difference between the sum of the weekly Employment Insurance benefits the employee receives for the week and any other salary earned by the employee during the week, and ninety-three percent (93%) of the actual weekly rate of pay for her classification and shall also include any increases in salary that she would have attained had she been at work during the leave of absence as they are, or would have been implemented; and,

( c) for each week up to a maximum of fifteen (15) additional weeks, where the employee elects to take Parental Leave in accordance with Article 24.7 payments equivalent to the difference between the sum of the weekly Employment Insurance benefits the employee receives for the week and any other salary earned by the employee during the week and ninety-three (93%) percent of the actual weekly rate of pay for her classification, and shall also include any increases in salary that she would have attained had she been at work during the leave of absence as they are, or would have been, implemented.

24.14 Payments under the Supplementary Employment Benefit Plan will not apply to leave that continues after fifty (52) weeks following the day the child is born or comes into the custody, care and control of the parent for the first time, where Employment Insurance benefits do not apply. Notwithstanding any other article in this agreement, vacation credits and seniority continue to accrue during pregnancy leave (Article 24.2) parental leave (Article 24.7) and extended leaves (Article 24.17 and 24.19). Continuous service for severance accrues during pregnancy and parental leave for a biological father and adoptive parent.

24.20 An employee returning to work after pregnancy leave, parental leave or extended leave referred to in Articles 24.19 or 24.22 shall be reinstated to the position the employee most recently held with the Employer on a regular and not a temporary basis, if the position still exists, or to a comparable position, if it does not.

24.21 The Employer shall pay a reinstated person salary that is at least equal to the greater of:

(a) the salary the employee was most recently paid by the Employer; or

(b) the salary that the employee would be earning had the person worked throughout the leaves of absence referred to in Article 24.2, 24.7, 24.19 or 24.22.

Article 31 – Benefit Plans for Full Time Employees

31.3 During leaves of absence with pay, full benefit coverage will continue. The Employer and employee will continue to pay the applicable premiums.

31.4 During pregnancy and parental leave, an employee who participates in any Benefit Plan may continue to do so unless he or she elects in writing not to do so. Unless an employee gives the Employer this written notice, the Employer and the employee shall continue to pay the applicable premiums.

Article 45 – Merit Pay and Pay for Performance Bonus

45.1 Merit Pay

For employees in AMAPCEO classifications who are not at the maximum of their salary range:

45.1.1 A merit increase for a twelve (12) month work cycle coinciding with the employee’s anniversary date shall be processed in any amount of 0 – 5% of his or her salary at the discretion of the Employer. An employee’s merit increase for satisfactory performance shall be three and a half percent (3.5%) of his or her salary.

45.1.2 Where an employee’s performance rating results in a merit increase that will cause his or her salary to exceed the maximum salary for his or her classification, the amount of the merit increase in excess of the maximum salary will be paid out as a lump sum bonus. Such lump sum bonus will not increase the employee’s base salary for any purpose.

The provisions for Pay for Performance found at Articles 45.2 and 45.3 are reproduced earlier in this decision.

As stated earlier, the Association submitted that the collective agreement provides that those absent on pregnancy and parental leave would not suffer losses as the result of their absence. Those employees return to the same salary or the salary they would have been earning if they had worked throughout the leave. Their seniority and service continues to accumulate and they continue to earn vacation. Article 23, entitled “Leaves of Absence”, contemplates various types of leaves, both paid and unpaid. Included in those leaves are jury or witness duty leave, military leave, special & compassionate leave and bereavement leave. The Association stated that it is worthy of note that pregnancy and parental leaves are not found in Article 23. There is a separate provision in the collective agreement found at Article 24 that considers the terms and conditions for those employees on pregnancy and parental leaves. Clearly, the parties intended that these employees would be treated differently from employees on other leaves, that special treatment includes the proviso that they would not be financially disadvantaged because of their absence.

It was argued by the Association that the collective agreement must be construed so as to find that “salary” includes the Pay for Performance bonuses. There are specifically defined terms in article 24 for employees on pregnancy and parental leaves, such as weekly pay which refers to the rate actually received on the employees last day prior to their leave, including any salary increase that is granted after their last day with retroactive application. Obviously, this underscores the concept of earning salary in absentia. That definition, read in conjunction with Article 24.12 regarding Supplementary Employment Benefit Plan, signals the agreement between the parties that weekly pay and salary are different and further, that salary includes the Pay for Performance bonus. Further, it is to be remembered that both Merit Pay and Pay for Performance are added to employee’s earnings.

The Association argued that the fact that the Pay for Performance bonus is based on an appraisal does not change the characterization of “salary”. As part of salary, the bonus cannot be reduced because of absence on pregnancy and parental leave.

Additionally, the Association took the position that the treatment of Association dues buttresses its view that the Pay for Performance bonus is salary. According to Article 10.01 the Employer is obliged to deduct dues from “the salary/wages” of every employee. There was no dispute that Association dues are deducted from the Pay for Performance bonuses and therefore that levy is an Employer acknowledgement that the Pay for Performance bonus is part of salary.

Ms. Pollak referred to Article 45.2.2 which provides that the lump sum payments resulting from Pay for Performance bonus “will not increase the employee’s base salary”. “Base salary” is used for the calculation of pensionable earnings. “Salary” unqualified by the term “base” must include allowances and bonuses. As such, the Employer cannot withhold any part of the Pay for Performance bonuses to any employee absent due to pregnancy or parental leave.

The Association reminded the Board that the Employer had conceded that Pay for Performance is “wages” as that term is found in the Employment Standards Act, S.O 2000, c.41. The Act provides, at Section 53, that employees returning to work after such leaves must be reinstated at a rate that is equal to the greater of the rate in affect at the beginning of the leave or the rate that the employee would have earned had she worked throughout the leave. Clearly the Act provides that an employee is to receive what they would have received but for their absence due to pregnancy leave. Therefore, employees returning from pregnancy or parental leave must get the full amount of the Pay for Performance bonus.

Not surprisingly, the Employer took a much different view. Mr. Strang described the newly negotiated Pay for Performance bonus as an amount of money it agreed to put “into a pot” to distribute to a relatively wide number of members of the bargaining unit. It views this bonus as a program that will serve as an incentive to enhance the performance of the most senior members of staff. The Pay for Performance bonus is a backward looking benefit, that is to say that it is a lump sum bonus granted at the end of a period of work already completed. Therefore, it would be surprising if employees absent on pregnancy or parental leave had access to the bonus because they were not performing work.

The Employer submitted that according to article 45.3.2, the administration of the Pay for Performance bonus is “totally within the discretion” of the Employer. It was conceded that there are certain restrictions put upon that discretion. For example, a specified percentage of those employees at the maximum of the salary range will receive a six per cent bonus. However, none of the express restrictions assist the Association in its quest to have employees on pregnancy and parental leave paid the same performance bonus as those employees who remain in the workplace.

It was asserted by the Employer that it is in its interest to compensate employees for positive work performance. Surely it is obvious that the assessment of performance is dependent on work actually being done. That evaluation can only be undertaken when employees are performing in the workplace and not absent on any type of leave including pregnancy or parental leave. In order for the Pay for Performance program to be successful there has to be an orderly process for setting and assessing performance goals. Again, it is easily apparent that the actual process of evaluating employees is a complex exercise. Indeed, the parties recognized that fact when they agreed to give the Employer total discretion to run the program.

It is explicitly stated at Article 45.2.6 that an employee “must have earned” the maximum salary range for at least twelve months to be eligible. Further, if the employee has “been earning the maximum salary for less than twelve months” the Pay for Performance bonus is to be prorated. While it was the Association’s view that this provision means that an employee merely has to have reached the maximum range in the salary grid to get the full Pay for Performance bonus, the Employer suggested that it means precisely and clearly what it says; that is, that an employee must “have earned” the salary. The parties can and did use clear language when they wanted to consider employees at the top of the salary range. Article 44.1(e) states:

Any employee who, on or after April 1, 2001 and prior to ratification, received no merit increase solely because he or she was at the maximum salary rate of his or her classification, shall have his or her salary adjusted based on satisfactory performance up to the revised maximum salary rate of his or her classification, effective as of his or her anniversary date.

The Employer argued that the failure to utilize those words in the Pay for Performance bonus provisions is telling and should lead this Board to find for the Employer.

Employees on leaves of absence are not “earning” a salary. They might be on paid leaves of absence for a variety of reasons. However, they are not “earning” salary. Therefore, the Employer is entitled to prorate the Pay for Performance by taking into account the employee’s failure to earn salary for the period of the leave.

Mr. Strang contended that the Association did not press strongly any suggestions of discrimination because it knew that any such assertion is groundless. Employees returning from pregnancy or parental leaves are not the subject of discrimination because they do not receive the full Pay for Performance bonus. The prorating of the Pay for Performance bonus does not reduce any benefit they had prior to or after their leave. Indeed, they are not prejudiced in any way regarding their performance before or after their leave. In this regard the Employer relied upon Re Regional Municipality of Halton and Ontario Nurses’ Association (1995), 1995 CanLII 18404 (ON LA), 48 L.A.C. (4^th) 301 (Burkett) and; Re Regional Municipality of Durham and Canadian Union of Public Employees, Local 132 (1995), 1995 CanLII 18352 (ON LA), 48 L.A.C. (4^th) 135 (Craven).

In reply the Association stated that nothing in the collective agreement makes the actual receipt of wages dependent upon the concept of “earning”.

As stated above, my jurisdiction to determine this matter arises from the collective agreement and the Memorandum of Settlement the parties signed on May 28, 2003. After considering the submissions of the parties, I am of the view that the Employer’s view of this final issue must prevail.

The Association would have me find that the Pay for Performance bonus is part of salary. As such, those on pregnancy and parental leave shall not have the bonus prorated. I disagree. In my view, the parties specifically addressed this issue and agreed otherwise. Article 45.2.2 states that the bonus “shall be a re-earnable lump sum payment and will not increase the employee’s base salary beyond the maximum of the salary range for any purpose”. This provision makes two important elements of the Pay for Performance bonus clear. First, the bonus is earned and “re-earnable”. In the context of a performance bonus such earning would be achieved through work performance. I cannot find that it would be earned while absent from work on pregnancy or parental leave. The second aspect of this article is that the parties agreed the bonus does not increase the employee’s base salary. If the bonus does not increase the salary, it is not part of the salary. The reference in Article 45.2.2 to “base salary” does not elevate the Pay for Performance bonus to the status of salary.

Further, Article 45.2.6, which contemplates eligibility for the bonus, provides that an employee must “have been earning” the maximum salary for at least twelve months. Those words are clear and unrestricted. There is nothing in this article or any other article that I could find in the collective agreement that would lead me to find that “earning” in this context does not require attendance at and performance of work. If the parties had intended to say that all employees who had reached the maximum of the salary range for at least twelve months are entitled to the full and un-prorated bonus they could have and should have said so clearly. It is to be noted that Article 44.1(e), dealing with Merit Pay, contemplates a group of employees who are “at the maximum of the salary range”. I cannot find those two differing phrases to have the same meaning as was urged by the Association. To do so would effectively read the words “have been earning” out of the collective agreement.

The Association suggested that pregnancy and parental leave has a separate and distinct status under this collective agreement. While it is true that these leaves are considered in a different article in the collective agreement from other leaves of absence, that separation is not sufficient for me to find that access to Pay for Performance is untouched by the period of the absence.

It was submitted that because vacation pay is earned while an employee is absent from the workplace on pregnancy and parental leave, attendance at work is not a necessary criteria for earning Pay for Performance. I admit this argument has some superficial attraction. However, I am of the view that the Pay for Performance bonus is not akin to vacation pay. Indeed, there are significant differences between vacation entitlement and the Pay for Performance bonus. First, vacation is not a bonus. Second, unlike the Pay for Performance bonus, the Employer does not have “total discretion” regarding the application of vacation entitlement. Third, the parties specifically addressed how vacation is to be accrued. Article 30.2 states that an employee is entitled to vacation credits when they are at work as well as when they are on leaves of absence with pay. This benefit is reinforced at Article 24.12. There are no similar provisions for the payment of the Pay for Performance bonus during pregnancy and parental leave. The fact that vacation entitlement continues to accumulate for employees on pregnancy or parental leave is not determinative.

The issue of whether the prorating of the Pay for Performance bonus for employees absent due to pregnancy or parental leave constitutes discrimination was raised. Again, after consideration I think not. There has been much arbitral consideration of adverse impact discrimination as it relates to pregnancy and parental leave. It is generally accepted that employees on pregnancy and parental leave shall not lose accrued rights and benefits. More specifically, arbitrators have consistently found that seniority continues to accrue during such leaves. In part, this has been determined because failure to accrue seniority during these leaves would lead to employees not receiving contractually provided annual wage increases at the appropriate time. That result would violate the provisions of the Employment Standards Act. The legislation provides that employees returning from pregnancy leave should be reinstated to the “wages that the employee would be earning had the employee worked throughout the leave”. In the instant matter I am not presented with employees who fail to move up the salary grid because of their absence on pregnancy or parental leave. The issue at hand is whether those employees who have earned the maximum salary for at least twelve months receive a full annually applied bonus for performance or whether the bonus should be prorated taking into account the period of pregnancy and parental leave.

In Re Regional Municipality of Halton (supra) it was determined that nurses absent from work on pregnancy leave were not entitled to vacation pay because vacation pay was conditional on time actually worked. It was said to be a “work driven” and not a “service driven” benefit. In this regard Arbitrator Burkett said, at page 10:

…..There is a surface attraction to the notion that because an employee on pregnancy leave suffers a reduction in vacation pay and because only females can become pregnant there has been adverse impact discrimination within the meaning of the above definition. However, if this analysis is correct as it pertains to vacation pay that is earned through attendance at work it would support a claim for wages while absent on pregnancy leave because, for purposes of such a claim a benefit based on hours worked is not different than wages. There is no suggestion in any judgment or award of which we are aware than an employee absent on pregnancy leave suffers discrimination because of not receiving her wages while absent from work. Indeed, if such a withholding of wages constitutes discrimination it would have been an easy matter for the legislature, in putting its mind to the discriminatory impact of pregnancy leave and stipulating the wage rate to be paid upon return from pregnancy leave, to have made continuation of wages a statutory requirement of any pregnancy leave. In the absence of any such requirement, the better view is that loss of a work driven benefit that is available to all employees on the basis or hours worked, by reason of absence from work for whatever reason, pregnancy or parental leave, does not constitute a penalty or restrictive condition within the meaning of adverse impact discrimination.

A bonus that is awarded for performance requires attendance in the workplace. Absent employees cannot be rewarded for a full year’s performance irrespective of whether their absence resulted from a pregnancy leave or due to another type of leave. Pay for Performance is, in the words of Arbitrator Burkett, a “work driven” bonus. Therefore, the prorating of the Pay for Performance is not discriminatory.

Finally, a consideration of this matter based on a purely pragmatic and simple approach buttresses my view. In order to be paid a bonus for performance, ongoing performance of work is necessary. It makes no sense that an employee would be rewarded for twelve months of satisfactory or superior performance if they had actually been at work for only two months of that year. One cannot be rewarded with a bonus for work not performed irrespective of the reasons for the absence from the workplace. I am of the view that the parties agreed to that principle without exceptions at article 45.2.6.

For all these reasons I find that the Employer’s view, as set out in the third paragraph of section 2 of the May 28, 2003 Memorandum of Settlement is correct.

Dated in Toronto this 23^rd day of February, 2004.