GSB#2020-2176
IN THE MATTER OF AN ARBITRATION
Under
THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT
Before
THE GRIEVANCE SETTLEMENT BOARD
BETWEEN
Professional Engineers Government of Ontario (Grozelle)
Union
- and -
The Crown in Right of Ontario (Ministry of Government and Consumer Services)
Employer
BEFORE
Ian Anderson
Arbitrator
FOR THE UNION
Marisa Pollock Goldblatt Partners LLP Counsel
FOR THE EMPLOYER
Andrew Lynes Treasury Board Secretariat Legal Services Branch Counsel
HEARING
January 17, 2022
Decision
1Employees in the PEGO bargaining unit are entitled to a 3% “merit increase” (up to and not exceeding the maximum for his/her salary range) for “the previous twelve (12) month cycle coinciding with … April 1”. Commencing on March 18, 2019 the Grievor was in an acting manager’s position, outside of the bargaining unit. She returned to her bargaining unit position on February 10, 2020. The Employer calculated the Grievor’s April 1, 2020 merit increase on a pro-rated basis, crediting her only for the two months she was back in her bargaining unit position in the preceding 12 months. The grievance before me alleges the Grievor’s merit increase should have been based on the full 12 months and not pro-rated.
2The parties’ principal arguments relate to the proper interpretation of the following provisions of the collective agreement:
APPENDIX C: MERIT INCREASES
EMPLOYEES WHO ARE NOT AT THE MAXIMUM OF THEIR SALARY RANGE
1.1. A merit increase for the previous twelve (12) month work cycle coinciding with the employee’s fixed anniversary date of April 1st shall be processed in an amount of 3% of his/her salary up to and not exceeding the maximum of his/her salary range.
1.2. Notwithstanding the provisions of paragraph 1.1, where an employee has not worked in his/her current position for at least one year, such an employee will be entitled to a pro-rated merit increase based on the ratio of that employee’s time in his/her current position as compared to a full year.
APPENDIX F: HOME POSITION
1.1. Employees from outside the bargaining unit temporarily assigned to a PEGO represented position for a period of more than thirty (30) days will on the thirty-first (31st) day commence paying dues and be governed by the terms of the PEGO Collective Agreement except that pensions and insured benefits, as well as job security entitlements, will continue to be governed by the rules applicable to the employee’s home position.
1.2. When a PEGO bargaining unit member is temporarily assigned to a position in another bargaining unit for a period of more than thirty (30) days, he / she will on the thirty-first (31st) day commence paying dues and be governed by the terms of the Collective Agreement of the position to which he / she has been assigned except that pensions and insured benefits entitlements, and entitlements under Article 14, will continue to be governed by the rules applicable to the employee’s home position.
1.3. When a PEGO bargaining unit member is temporarily assigned to a non-bargaining unit position, he / she shall continue to pay dues to PEGO and continue to be covered by the PEGO Collective Agreement for the entire term of the temporary assignment, except that salary and hours of work provisions shall be determined in accordance with the terms and conditions for the non-bargaining group the employee is temporarily assigned to.
1.4. When an employee who has been in a temporary assignment returns to his or her home position, his or her salary will be readjusted to that which would have been in effect if he or she had continuously occupied that position including the merit increases that the employee would have received, if any.
3PEGO argues Appendix C, 1.1 confers entitlement to a 3% merit increase on April 1 for the previous 12 month work cycle. Appendix C, 1.2 applies to employees who have changed positions within the bargaining unit. It does not apply, PEGO argues, when one of the positions was outside of the bargaining unit, such as was the case here. Rather, PEGO argues, Appendix F specifically applies to that situation. In particular, Appendix F, 1.3 and 1.4 taken together provide that an employee returning from a temporary assignment outside the bargaining unit is to be put in the position he or she would have been in had he or she continuously occupied his or her own position. This specifically includes the merit increases the employee would have received. Accordingly, the Grievor is entitled to receive a full 3% merit increase as of April 1, 2020 in order to ensure that she is in the same position she would have been in had she not accepted the temporary assignment.
4The Employer argues that Appendix C and Appendix F are concerned with two different points in time. Appendix F applies at the point of time “when” an employee returns to his or her home position. At that point in time, the employee is entitled to all salary adjustments, including merit increases, which they would have received had they been in their home position continuously for the period of time that they were in the temporary position. The Employer argues the Grievor received these adjustments. By contrast, Appendix C relates to a fixed date: April 1. Appendix C 1.1 provides for a “merit increase” of 3% of an employee’s salary. However, Appendix C 1.2 pro-rates that increase where the employee has not worked in his/her position for the entire 12 month period prior to April 1. Accordingly, the Grievor was only entitled to receive a pro-rated merit increase as of April 1, 2020.
5Both PEGO’s interpretation and the Employer’s interpretation are possible. The question is which is to be preferred as correct.
6The hearing was conducted on the basis of the following Agreed Statement of Facts:
INTRODUCTION
PEGO and the employer are bound by a collective agreement effective January 1, 2019 to December 31, 2022 (Tab 1). This is the collective agreement under which the current grievance, dated October 19, 2020 (Tab 2), arises.
The grievor occupied her home position of Assistant Examiner of Surveys (“Assistant Examiner” or “AES”) since December 13, 2010. The duties and responsibilities of the Assistant Examiner are outlined in the Job Specification at Tab 3.
The grievance relates to Nancy’s home position salary and in particular to the effect on her salary of having worked in an acting capacity in her manager’s position for 11 months.
FACTS GIVING RISE TO GRIEVANCE
Nancy reported to Ken Wilkinson, Manager – Survey Services (the “Manager” or “Wilkinson”) at all times relevant to this grievance. An organizational chart that illustrates the reporting structure of Nancy’s Branch is at Tab 4.
The Director of the Regulatory Services Branch left her position in or around March 2019. Wilkinson filled this position in an acting capacity for about 11 months, from March 18, 2019 to February 10, 2020.
The grievor in turn filled Wilkinson’s position in an acting capacity from March 18, 2019 to February 10, 2020. Wilkinson was unable to tell the grievor how long she would remain in the acting Manager role. He guessed it would be until the fall or early winter of 2019.
This was not the first time that the grievor acted in the Manager position. She previously acted as Manager from August 28, 2017 to November 6, 2017. Both in 2017 and 2019 when she assumed the acting Manager position, Nancy’s home position was not backfilled. Rather, during these periods, Nancy performed the duties of her home position while also serving as acting Manager.
Both in 2017 and 2019, Nancy received a 3 percent “promotional” increase for as long as she was in the acting role. Before assuming the acting manager role in March 2019, Nancy’s salary was $123,206 per annum. While acting in the Manager position, Nancy earned $126,902, the result of the application of the 3 percent promotional increase.
The salary rates for Nancy’s home position are set out in the salary schedule found at Appendix D of the collective agreement (Tab 5). The salary range for her classification when she started as acting manager in March 2019 was $88,958 -$127,542. By the time she returned to her home position in February 2020, the salary range for her classification was $89,848-$130,106. The change in the range was the result of a collective agreement increase to the bottom and top of the salary ranges effective January 1, 2020.
This grievance centres on what Nancy’s salary should have been effective April 1, 2020, the date referenced in Appendix C of the collective agreement as the effective date for merit increases. The employer paid her $128,812 effective April 1, 2020. PEGO says that the grievor’s salary should have been increased to $130,106, the salary maximum, effective April 1, 2020.
If the grievor had not worked in the acting manager position from March 2019 to February 2020, her salary would have been increased to $130,106 effective April 1, 2020.
SALARY PROGRESSION: THE SIGNIFICANCE OF APRIL 1
Under Appendix C of the collective agreement (Tab 6), employees receive a “merit increase” of 3 percent of their salary every April 1st, provided they have not yet reached the top of the salary range for their classification, and provided the 3 percent does not take them over the maximum of their salary range, in which case the salary increase will be capped at the maximum of the salary range.
The difference between the parties arises because the employer “pro-rated” the merit figure of 3 percent and gave the grievor a 0.5 percent increase instead, because of the time she spent as an acting Manager. PEGO’s position is that the grievor should have received the full, un-prorated amount of 3 percent effective April 1,2020.
SALARY CALCULATIONS
As noted above, the grievor’s annual salary in her home position of Assistant Examiner was $123,206 before she started acting as Manager. Once she began in her acting role, she received $126,902, i.e. $123,206 plus a 3% “promotional increase” x $123,206 = $126,902.
The grievor did not receive the 3 percent merit increase in April 2019. Her salary remained at $126,902.
Nor did the grievor receive the one percent across the Board salary increase that her colleagues received effective January 1, 2020 as provided for in article 48.2 of the collective agreement. Her salary remained $126,902.
When, on February 10, 2020, Nancy returned to her home position, her 3 percent “acting” increase ceased, as the increase was only relevant to her acting assignment, not her home position. The employer made further adjustments by granting the grievor, effective February 10, 2020, the 3 percent merit increase she did not get effective April 1, 2019 and the 1 percent increase she did not get effective January 1, 2020. The grievor’s salary was thus adjusted as follows:
(i) Merit increase: $123,206 + 3% increase = $126,902
(ii) the Board increase: $126,902 + 1% increase = $128,171
For purposes of this grievance, PEGO does not dispute the steps taken by the employer thus far.
As stated above, the issue is how the employer calculated Nancy’s April 1, 2020 merit increase: Instead of adding 3 percent to her salary of $128,171, the employer added 0.5 percent to her salary of $128,171, yielding $128,812 ($128,171 plus 0.5% x $128,171 = $128,812). PEGO says that the proper calculation is $128,171 plus 3% x $128,171 = $132,016.13. Since $132,016.13 exceeds the salary maximum of $130,106, Nancy’s salary effective April 1, 2020 must be the salary maximum of $130,106.
The employer’s Pay on Assignment Operating Policy (Tab 7) deals with Acting Assignments on p. 8 and states, among other things, that “[o]n reassignment to his or her home position, an employee must receive the rate of pay he or she would have attained if the acting assignment had not taken place.”
Appendix F of the collective agreement (Tab 8) deals with temporary assignments, and states, “When an employee who has been in a temporary assignment returns to his or her home position, his or her salary will be readjusted to that which would have been in effect if he or she had continuously occupied that position including the merit increases that the employee would have received, if any.”
Nancy received a pay-for-performance award of $1,090 for the 2019-20 performance year in accordance with section 8.1 of the Pay-for-Performance Program for executive and management classes of positions (Tab 9):
An employee who is appointed to an eligible assignment (permanent or acting) for twelve (12) or more consecutive weeks but less than a full performance cycle will have their pay-for-performance award prorated to reflect the period of time in the applicable eligible assignment. (p. 7)
- If she had continued in her temporary assignment, she would have been eligible for an additional merit increase in accordance with the In-Range Movement Policy (Tab 10). It is PEGO’s position that the In-Range Movement Policy is irrelevant to the determination of this grievance.
NANCY’s 2017 ACTING STINT
- Before acting in the managerial position in 2017, Nancy’s salary was $110,630. She received a 3 percent promotional increase when she assumed the acting role on August 28, 2017, such that her salary was $113,949. When she returned to the bargaining unit on November 6, 2017, Nancy’s salary was put back to $110,630. A merit increase on April 1, 2018 changed Nancy’s salary to $116,798, reflecting a pro-rated merit increase of 2.5 percent. The 2015-2018 version of the collective agreement is at Tab 11. Nancy did not complain to the employer or PEGO about the pro-rated merit increase of 2.5 percent because it had been a short-term assignment and she did not feel that the financial setback was large enough to raise the issue.
BARGAINING HISTORY
The proration language of Appendix C was introduced in the 2015-2018 version of the collective agreement. The 2015-2018 version of the collective agreement is at Tab 11.
The parties exchanged correspondence on this issue during bargaining. An email from then-President of PEGO Scott Grant with an attached Word document is at Tab 12. The Employer’s reply is at Tab 13. Mr. Grant also made a blog post to PEGO members on the issue which included the aforementioned Word document, at Tab 14. It is PEGO’s position that the referenced correspondence is irrelevant to the determination of this grievance.
[Tabs omitted.]
7There is no assertion of ambiguity or estoppel. The Employer points to the fact that the Grievor’s merit increase was pro-rated in 2017 as evidence of past practice. I am not persuaded by this argument. The Grievor did not complain to PEGO and there is no evidence that PEGO was aware.
8There is no dispute between the parties as to the principles of collective agreement interpretation which otherwise apply, and thus they may be simply stated. The intention of the parties is to be discerned from the words they used. The words are to be given their grammatical and ordinary meaning, read harmoniously within context. The collective agreement as a whole is part of the context within which words are to be interpreted. Meaning should be given to all words if possible. Specific provisions override general provisions. Significant obligations are like to be clearly and unequivocally expressed. The reasonableness of different interpretations should be considered in determining which most plausibly reflects the intentions of the parties.
9The surrounding circumstances at the time the collective agreement was negotiated also forms part of the context which may be considered. Evidence of surrounding circumstances “should consist only of objective evidence of the background facts at the time of the execution of the contract …, that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting.” It may be used as an interpretative aid in understanding the meaning which the parties ascribed to the words which they used, but it can never overwhelm the words themselves: see Sattva Capital v. Creston Molly, 2014 SCC 53 at paras. 57 to 61.
10The Employer argues the concept of “merit pay” is tied to performance. It argues this interpretation is supported both by context and specific case law. The Employer argues on PEGO’s interpretation, an employee would be entitled to receive merit pay for a position in relation to the portion of the year that the employee did not work in the position. This, the Employer argues, is inconsistent with merit pay being performance based. By contrast, the Employer argues its interpretation of Appendix C and Appendix F gives meaning to both, is harmonious and is consistent with the concept that merit pay is tied to performance.
11In support of the proposition that merit pay is tied to performance, the Employer cites A.M.A.P.C.E.O. v. Ontario (Management Board Secretariat), 2004 CarswellOnt 7352, [2004] O.G.S.B.A. No. 27, 76 C.L.A.S. 125, 2004 CanLII 55363 (ON GSB) (Briggs):
60 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.
61 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.
12In that case, the link in the collective agreement between the bonus and performance was explicit and clear. At issue was the interpretation of what was then Article 45.2 and 45.3 of the AMAPCEO collective agreement, which are reproduced at para. 7 of the decision. Those provisions provided for “pay for performance bonuses” for employees who were at the maximum of their salary range. The rating of performance was entirely within the discretion of the employer. A rating of “satisfactory performance” resulted in an employee receiving a bonus of 3.5%. A rating of “above satisfactory performance” resulted in an employee receiving a bonus of 6%. The bonuses were described as “re-earnable”.
13By contrast, there is nothing about Appendix C of the collective agreement before me which links the “merit increase” to performance. This is made even clearer when consideration is given to the language of Appendix C in the prior collective agreement, which had a term of 2015-2018:
APPENDIX C: PAY FOR PERFORMANCE AND MERIT INCREASES
EMPLOYEES WHO ARE NOT AT THE MAXIMUM OF THEIR SALARY RANGE:
1.1 Effective on April 1, 2015 and until April 1, 2016, a merit increase for the previous twelve (12) month work cycle coinciding with the employee’s fixed anniversary date of April 1st shall be processed in an amount of 0-5% of his / her salary at the discretion of the Employer. An employee’s merit increase for satisfactory performance shall be three percent (3%) of his / her salary.
1.2. Following April 1, 2016, a merit increase shall be processed in an amount of 3% of his/her salary up to and not exceeding the maximum of his/her salary range.
1.3. Notwithstanding the provisions of paragraph 1.2, where an employee has not worked in his/her current position for at least one year, such an employee will be entitled to a pro-rated merit increase based on the ratio of that employee’s time in his/her current position as compared to a full year.
[My emphasis.]
14Union counsel asserted, without challenge, that this language in the 2015-2018 collective agreement constituted a transition from the language of its predecessor collective agreement to the language of the current, successor collective agreement. Paragraph 1.1 of Appendix C to the 2015-2018 collective agreement reflected the approach under the predecessor collective agreement, which was phased out after the first year of the 2015-2018 collective agreement. Paragraphs 1.2 and 1.3 of Appendix C of the 2015-2018 collective agreement were carried forward to become in essence paragraphs 1.1 and 1.2 of the current collective agreement. PEGO notes that while the term “merit increase” continues to be used, in fact the amount is fixed at 3% and everyone in the bargaining unit gets it without regard to performance. In that respect, it notes that the word performance has been struck from the 2019-2022 version of Appendix C.
15I agree. The words “merit increase” as used in Appendix C to the 2019-2022 collective agreement are no longer linked to “performance”.
16The Employer points to an exchange of emails between the parties in 2016 as establishing a mutual intention that pro-ration should apply to the merit increase established by Appendix C of the 2015-2018 collective agreement. I am not persuaded by this argument for two reasons.
17First, the exchange of emails does not establish a common understanding of the meaning of the pro-ration language in Appendix C. On the contrary, if anything it shows the parties had a different understanding of that language when it was negotiated. The exchange of emails took place during the process of ratifying the 2015-2018 collective agreement. That is to say, it took place after the parties had tentatively agreed to the terms of the 2015-18 collective agreement, and in particular the language of Appendix C. While not entirely clear on the evidence, the unchallenged assumption in the Employer’s argument is that the language of Appendix C to which the parties had tentatively agreed is the language which was ratified and appeared in the 2015-2018 collective agreement. In the email exchange, PEGO indicated that it has received a number of questions from its membership with respect to several matters, including the pro-ration concept as applied to the increase provided for in Appendix C, and requested a meeting to discuss them with the Employer. I note that PEGO referred to the Appendix C increase as the “3% automatic increase”: that is, PEGO did not use the terms “merit” or “performance”. In advance of that meeting, PEGO provided the Employer with some written scenarios to illustrate the application of the pro-ration concept to an employee who had occupied more than one position in the course of the year. In the scenarios, PEGO pro-rated the 3% increase based on the salary of a given position and the amount of time the employee had occupied that position in the year. All of the scenarios provided by PEGO involved movement within the bargaining unit. The Employer provided a response in writing as follows:
Interpretation of Automatic Merit Increases – These increases will be based on the pay rate of a PEGO-represented employee as of the date of the merit increase (i.e. April 1st commencing in 2017). The amount of the increase will be 3% for all PEGO-represented employees unless the employee was in the PEGO bargaining group for less than one year. In that case, the amount of the increase will be pro-rated based on the amount of time spent in the PEGO bargaining group. Since the amount of the merit increase does not vary if the employee moved between PEGO-represented positions and/or had different salary rates during the previous year, the scenarios that you provided were not relevant to the interpretation and we have not responded to them.
In short, at the time that Appendix C was negotiated PEGO understood that pro-ration related to different salary levels, while the Employer understood it to be related to time in the bargaining unit. That is, they had different subjective understandings as to its meaning.
18Second, as noted, all of the scenarios provided by PEGO related to movement between positions within the bargaining unit. While the Employer asserted pro-ration related to the amount of time in the bargaining unit, there is no evidence that PEGO subsequently accepted the Employer’s interpretation (nor, for that matter, is there any evidence that PEGO relied upon the Employer’s interpretation). Put differently, that exchange of emails does not consider the effect to Appendix F, which PEGO argues is operative in those circumstances.
19The Employer relies upon the pay policies for managerial employees which are applicable to employees who accept acting managerial positions outside of the bargaining unit as part of the context within which Appendices C and F should be interpreted. The Employer notes that both the “Pay for Performance Program” and the “In-Range Movement Policy” provide for the pro-ration of certain amounts an eligible employee may receive (which I will refer to collectively as “management bonuses”) based on the salary of an eligible position and the amount of time the employee occupied that position in the year. Since bargaining unit positions are not eligible positions, it follows that management bonuses are effectively pro-rated so as to exclude time in bargaining unit positions. The Employer argues this concept was mirrored by the parties in Appendices C and F, with the result that “merit increases” must be pro-rated so as to exclude time outside the bargaining unit. Otherwise, the Employer argues, there would be “double dipping” as the employee could receive a management bonus in relation to the time the employee was in an acting management position, and also receive a bargaining unit “merit increase” under Appendix C in relation to that same period of time.
20I am not persuaded by this argument for two reasons. First, there is no evidence that the policies applicable to managerial employees, and in particular the pro-ration of management bonuses in those policies, were known to PEGO when Appendices C and F were negotiated, let alone that the parties sought to mirror those policies in Appendices C and F.
21Second, and in any event, the possibility of “double dipping” arises even on the Employer’s interpretation of the collective agreement. As noted, the Employer argues that Appendix F applies at the point of time “when” an employee returns to his or her home position, while Appendix C relates to a fixed date, April 1. It is common ground between PEGO and the Employer that under Appendix F when an employee returns to the bargaining unit from an acting management position, the employee is entitled to all salary adjustments, including merit increases, which he or she would have received had the employee been in his or her home position continuously for the period of time that he or she was in the acting management position. This means that the employee will receive a merit increase pursuant to Appendix F of the collective agreement in relation to the period of time they were in the acting management position, notwithstanding that they would also be eligible to receive a management bonus in relation to the same period of time.
22This possibility also serves to highlight the unreasonableness of the Employer’s interpretation. Consider two bargaining unit employees, both of whom accept acting management positions of just under a year. Employee One returns to her bargaining unit position on March 31, 2021; Employee Two returns to her bargaining unit position on April 1, 2021. On the Employer’s interpretation, both Employee One and Employee Two are eligible to receive management bonuses for the 12 month period ending March 31, 2021. Both Employee One and Employee Two are also entitled to have their bargaining unit salary increased by 1% to reflect the across the board increase which took place on January 1, 2021, while they were in their acting management positions. However, Employee One is not entitled to receive the 3% merit increase on April 1, 2021, while Employee Two is entitled to receive it. While it is of course open to the parties to have agreed to such an unreasonable result, it is unlikely that they would have done so. In my view, if the parties intended such a significant negative consequence for bargaining unit employees accepting acting managerial positions, they would have said so more clearly.
23By contrast, on PEGO’s interpretation Employee One and Employee Two are treated the same. In my view this is a more reasonable result. For this, and the other reasons stated above, in my view PEGO’s interpretation is to be preferred.
24For all of the foregoing reasons, in my view the interpretation offered by PEGO is the correct one. Given this conclusion, I need not consider alternative arguments advanced by PEGO.
25The grievance is allowed. I remain seized should the parties be unable to agree on the amounts owing to the Grievor as a result of this decision.
Dated at Toronto, Ontario this 2nd day of March 2022.