[1985] OLRB Rep. June 896
1666-84-M The United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada on its own behalf and on behalf of Local Union 527, Applicant, v. The Electrical Power Systems Construction Association and Ontario Hydro, Respondent
BEFORE: R. O. MacDowell, Vice-Chairman, and Board Members W H. Wightman and S. O'Flvnn.
APPEARANCES: Malcolm Boyle, Alexander Ahee and Jack Porter for the applicant; Paul S. Jarvis and John Tomlinson for the respondent.
DECISION OF THE BOARD; June 27, 1985
This is an arbitration proceeding under section 124 of the Labour Relations Act. It is brought on behalf of Walter MacDonald ("the grievor"), a former employee of the respondent employer who quit his employment on June 1, 1984. The union claims that in the pay period immediately preceding his termination, the grievor earned, and should have been paid, wages in the sum of $756.96. The union asserts that these wages were wrongfully withheld, and seeks an order directing payment to the aggrieved employee. The respondent employer argues that, in the circumstances of this case, it was entitled to withhold payment.
A hearing in this matter was held in Toronto on February 19, 1985. At the hearing, the parties filed the following agreed statement of fact:
AGREED STATEMENT OF FACTS
The Grievor, Walter Mac Donald, quit his employment as an instrument welder with Ontario Hydro on June 1, 1984.
At that time, the sum of $7,060.00 was owing to Ontario Hydro from Walter Mac Donald. This money was paid mistakenly to MacDonald for Room and Board allowance as a result of the incorrect fact represented to Ontario Hydro by MacDonald that he had a regular residence in Nova Scotia.
On or about June 7, 1984, Walter MacDonald did not receive:
(i) for the period ending June 6, 1984;
$102.77, being wages of $105.54 less statutory deductions and holiday and vacation pay of $10.55 less statutory deductions,
(ii) for the period ending May 30, 1984;
$654.19, being wages of $367.63 less statutory deductions and holiday and vacation pay of $378. 19 less statutory deductions.
The admissions in paragraphs 2 and 3 above shall not be to the prejudice of either party in any civil proceedings and are made solely for the purposes of the proceedings before the Ontario Labour Relations Board in Board File No. 1666-84-M.
The parties agree that in the event the grievance is successful, the maximum liability of the Respondent shall be $756.96 plus interest. The award of interest shall be the subject of argument between the parties.
In addition, the Board was advised that the respondent has commenced an action against the grievor, in the Province of Nova Scotia (where he now resides), for the recovery of the "overpayment" mentioned in paragraph 2 of the agreed statement of fact. The parties did not clarify whether the misrepresentation of fact referred to in paragraph 2, was innocent or negligent or fraudulent. The meaning of "regular residence" is defined in the collective agreement and is quite complex (see article 29).
The collective agreement provides, quite clearly, that an employee who voluntarily terminates his employment will be provided his final pay on the next regular pay day (see section 15). The final pay must include, inter alia. "vacation and recognized holiday pay". This latter term is defined in article 18, which fixes the rate at 10% of vacationable gross earnings. It is not disputed that the "wages" in issue here, were "earned" by the grievor, in the sense that he performed work for which he would ordinarily be entitled to be paid, were it not for the overpayment of room and board allowance. The question is whether the employer could properly withhold payment because of its much greater claim against him.
The union argues that the collective agreement spells out the terms of the "wage - work" bargain, and that, having performed certain work, the grievor is entitled to be paid for it. In the union's submission, the company cannot unilaterally "set off" against, or deduct from the employee's wages some amount which the employer claims is owed to it - even if that claim is a valid one, which could be sustained in a court of law. The union points to the following provisions of the Employment Standards Act and the regulations made thereunder:
7(1) An employer shall pay to an employee all wages to which an employee is entitled under,
(a) an employment standard; or
(b) a right, benefit, term or condition of employment under a contract of employment, oral or written, express or implied, that prevails over an employment standard,
in cash or by cheque.
(2) All wages shall be paid at the work place of the employee, or at a place agreed upon by the employer and the employee.
(3) All wages due and owing to an employee shall be paid by an employer on the regular pay day of the employee as established by the practice of the employer.
(4) Any payment to which an employee is entitled upon termination of employment shall be paid by the employer to the employee not later than seven days after termination of employment.
- Except as permitted by the regulation, no employer shall claim a set-off against wages, make a claim against wages for liquidated or unliquidated damages or retain~ cause to be returned to himself, or accept, directly or indirectly, any wages payable to an employee.
DEDUCTIONS, ETCETERA, FROM WAGES
15.-(l) Notwithstanding section 8 of the Act, an employer may set off against, deduct from, claim or make a claim against or retain or accept the wages of an employee where,
(a) a statute so provides;
(b) an order or judgment of a court so requires; or
(c) subject to subsection (2), a written authorization of the employee so permits or directs.
(2) No written authorization of an employee shall entitle an employer to set off against, deduct from, retain, claim or accept wages for faulty workmanship, or for cash shortages or loss of property of the employer where a person other than the employee has access to the cash or property.
(3) Where an employee has been given or paid a vacation with pay or payment for vacation in excess of the requirements of Part VIII of the Act, no employer shall set off or deduct such excess against or from any vacation with pay, pay for vacation, or payment under section 3 1 of the Act.
[emphasis added]
- The respondent employer argues in reply, that, in fact, there are no wages owing to the grievor, and, therefore, no wages which the employer is required to pay. The employer notes that under section 1(1)(p) of the Employment Standards Act wages are defined as follows:
l.-(l) In this Act,
(p) 'wages" means any monetary remuneration payable by an employer to an employee under the terms of a contract of employment, oral or written, express or implied, any payment to be made by an employer to an employee under this Act, and any allowances for room or board as prescribed in the regulations or under an agreement or arrangement therefor but does not include,
(i) tips and other gratuities,
(ii) any sums paid as gifts or bonuses that are dependent on the discretion of the employer and are not related to hours, production or efficiency,
(iii) travelling allowances or expenses,
(iv) contributions made by an employer to a fund, plan or arrangement to which Part X of this Act applies.
The admitted overpayment is an overpayment of wages. The employer asserts that the grievor has already received sums (albeit by mistake) in respect of "wages" far greater than the wage payment which he now claims. The employer contends that under both the collective agreement and the Employment Standards Act, there are no "wages owing", because, in effect, the grievor has already been paid, in advance, and by mistake, an amount much greater than the sum which he now demands. If anything, he owes the employer a substantial sum in respect of wages mistakenly paid. The employer argues that the Employment Standards Act can have no application where, as here, its counter claim is itself in respect of "wages", and the overpayment is admitted. How can the grievor demand a wage payment when he has already been substantially overpaid?
We have considered the submissions which were so thoroughly, thoughtfully, and persuasively made by counsel for the respondent employer; however, upon reflection, we do not think that the respondent's position can be accepted. The respondent's assertion (and defence to this wage claim) is expressly prohibited by section 8 of the Employment Standards Act.
In our view, section 8 is a piece of remedial legislation with a clear and specific purpose: employees who work for wages are entitled to be paid for the work they perform, and in the absence of statutory authority or written authorization, any claim whatsoever by their employer to all or part of that money must be asserted in a court of law. It is difficult to conceive of a clearer, more explicit or more comprehensive prohibition than the one found in section 8, which is clearly intended to prevent any unilateral deduction from, or retention of, wages, directly or indirectly, based upon an employer claim against his employee. There is no special status for employer claims in respect of past wage payments, nor could there be without opening the door to the very mischief which section 8 was designed to avoid: shifting the onus to the employee - usually the weaker party in the relationship - to initiate action in order to recover what his labour has earned but his employer refuses to pay. Section 8 reverses the common law position, and shifts the onus to the employer to establish to the satisfaction of a court, not only that it is entitled to the payment, but also the terms on which such payment should be made. For example; even if an employee's debt were acknowledged in court, it is doubtful whether the court would permit a creditor to confiscate that employee's entire income for one or more pay periods. The Wages Act R.S.O., 1980 c. 526 limits the amount of a debtor's wages which may be subject to seizure or attachment without express Court authorization. Here the respondent asserts the amount it may seize and retain is 100%. Indeed, if the respondent's submissions are correct (and the employment relationship were maintained), the respondent could withhold payment of any wages to the grievor for several months until he had "worked off" what the respondent claims is owed to it. It could pay the employee 70% of his wages, 30% of his wages or nothing at all. And, of course, all of this is based upon the fiction that certain sums paid by mistake should be notionally treated as a "prepayment" of wages to be earned later, in different circumstances, for different services rendered, and over a different (and uncertain) time period, from which the respondent is entitled to deduct amounts which it determines are appropriate.
The thrust of section 8 is that a creditor should not be in a privileged position because he is the debtor's employer. His practical control over the payment of employee wages does not permit him to make unilateral deductions from those wages. While we have some sympathy for the employer's dilemma, it is precisely what the Legislature envisaged: the employer cannot unilaterally retain wages, but must seek its remedies in court, as it is apparently now doing. Nor do we think that we can simply take it for granted that the employer's claim against the grievor will be successful. As counsel correctly pointed out, there may be a legal distinction between payments made pursuant to a mistake of fact or a mistake of law, and it might be significant whether the overpayments resulted from an innocent misrepresentation or misunderstanding on the employee's part, or from real fraud. In any event, in accordance with the scheme envisaged by the Employment Standards Act, those are matters best left to a court to determine.
We find (and it is not disputed) that the grievor has performed certain work for which he is entitled to claim wages. We find further that the respondent employer has no right to withhold payment of those wages in the sum of $756.96. The collective agreement provides for payment and this amount must therefore be paid. Accordingly, the respondent employer is directed to remit this sum to the grievor forthwith, together with interest from June 7, 1984 to the date hereof. The Board calculates that the amount to be paid to the grievor as of the date hereof, is $855.36.