International Union of Bricklayers and Allied Craftsmen v. Calligaro Tile Company Limited, 1989 CanLII 3003

[1989] OLRB Rep. October 1014

3179-88-G International Union of Bricklayers and Allied Craftsmen and The Ontario Provincial Conference of The International Union of Bricklayers and Allied Craftsmen, Applicant v. Calligaro Tile Company Limited, Respondent

BEFORE: R. A. Furness, Vice-Chair, and Board Members W. Gibson and J. Redshaw.

APPEARANCES: Elizabeth Mitchell and Bill Hanza for the applicant; R. M. Parry and Armando Pompeo for the respondent.

DECISION OF THE BOARD; October 10, 1989

1. The applicant has referred a grievance concerning the interpretation, application, administration or alleged violation of a collective agreement to the Board for final and binding determination.

2. The applicant has grieved, on its own behalf and on behalf of all past and present employees of the respondent, that the respondent has violated a collective agreement and, in par­ticular, without limiting the generality of the foregoing, articles 22 and 29(a) thereof, in that the respondent has failed to pay its employees proper wages. It is the position of the applicant that the respondent has made unauthorized set-offs as against its employees' wages on account of income tax liabilities incurred by the respondent. It is also the position of the applicant that unauthorized set-offs were made as against the following employees during the months of December, 1988, Jan­uary, 1989, and February 1989:

Unauthorized Name of Employee Set-off Deducted

G. Cester $271.20 B. DiVincenzo $614.72 R. Dupont $280.80 S. Fiegelson $355.73 S. Gironda $553.52 B. Gould $155.84 J. Lucchese $473.65 J. Lynch $208.40 0. Manicone $722.82 Q. Massaro $425.99 R. Melis $451.52 R. Pivato $363.05 N. Pivato $460.23 R. Reynolds $557.22 V. Scandifflo $591.40 E. Santarossa $167.42 G. Wood $204.02 B. Masut $113.62

3. At the commencement of the hearing, counsel for the applicant advised the Board that some of the employees no longer work for the respondent and it was dropping the grievances with respect to these six former employees, namely, R. Dupont, S. Gironda, B. Gould, N. Pivato, E. Santarossa and G. Wood. Accordingly, this referral is dismissed with respect to these six former employees of the respondent.

4. Counsel for the respondent informed the Board that deductions were not made from S. Fiegelson and J. Lynch because they actually paid the respondent directly. However, counsel for the applicant informed the Board that the applicant was still grieving with respect to Messrs. Fiegelson and Lynch. During the course of the hearing, counsel for the applicant discovered that Messrs. Fiegelson and Lynch were no longer employees of the respondent. Counsel for the appli­cant stated that the applicant no longer grieved on behalf of these two former employees. In these circumstances, the referral with respect to Messrs. Fiegelson and Lynch is dismissed.

5. This grievance was therefore entertained by the Board with respect to the following ten persons: G. Cester, B. DiVincenzo,J. Lucchese, O. Manicone, Q. Massaro, R. Melis, R. Pivato, R. Reynolds, V. Scandifflo and B. Masut.

6. The parties placed before the Board a written statement of agreed facts. In addition, the Board heard evidence from the following persons: Renato Pivato, a terrazzo mechanic; Bill Hanza, the business representative of the International Union of Bricklayers and Allied Crafts­men, Marble, Tile & Terrazzo Union, Local 31; and Luciano Calligaro, the president of the respondent.

7. The agreed facts, which were placed before the Board, read as follows:

OLRB File #3179-88-G

Agreed Facts

1. In October 1988, the Respondent was audited by Revenue Canada. The auditor was Mr. Howard Balboolall ("Balboolall").

2. As a result of the audit, Mr. Balboolall informed the Respondent that it had failed to make proper remittances under the Income Tax Act. Among other things, the Respondent had failed to include travel allowances paid to its employees in 1986 and 1987 as part of their taxable income in those taxation years. Balboolall prepared amended T4 forms for each employee reflecting the additional 1986 and 1987 income. (T4 Supplementary Forms - attached as Exhibit 1 hereto.)

3. Balboolall suggested as settlement either:

(i) the Respondent could pay a penalty and Revenue Canada would proceed against the individual employees;

or (ii) the Respondent could pay estimated taxes on the income shown in the T4 Supplementary forms and hope to collect these amounts from the individ­ual employees.

4. Some days later the Respondent contacted Balboolall and the Respondent and Bal­boolall had a further meeting. At that time, the Respondent advised Balboolatt that it had decided to pay the estimated taxes owing on behalf of its employees. The Respondent submitted a cheque for $14,860.38 to Balboolall of which $6,971.15 was attributable to taxes owing on the T4 Supplementary Forms. (Cheque is attached as Exhibit 2A. Covering letter to Balboolall is attached as Exhibit 2).

5. The estimated taxes for each employee were calculated as 30% of the additional income shown in the T4 Supplementary Forms, a rate agreed between the Respon­dent and Balboolall.

6. The employees received a letter dated November 28, 1988, in their pay envelopes indicating the payment made to Revenue Canada and showing the calculation of the estimated tax. (Letter of Nov. 28, 1988, is attached as Exhibit 3 hereto).

7. Two employees submitted cheques for the full amount they had been assessed. Begin­ning in January, 1989, deductions were made from the pay cheques of the employees who continued in the respondent's employ, as shown in "Re: Tax Paid on Behalf of Employees" (Exhibit 4, attached).

8. At no time were there any discussions between the Respondent and the Union regarding the fact of the payment to Revenue Canada nor regarding the repayment of the amounts assessed.

9. The Union filed a grievance on March 7, 1989. Subsequently, the Respondent deliv­ered a letter dated April 4, 1989, explaining the transaction to the Union. (Letter of April 4, 1989, attached as Exhibit 5).

10. The Provincial collective agreement between The International Union of Bricklayers and Allied Craftsmen and The Ontario Provincial Conference of The International Union of Bricklayers and Allied Craftsmen and The Terrazzo, Tile and Marble Guild of Ontario Inc., made on May 1, 1988, and expiring on April 30, 1990, provides in articles 22, as follows:

ARTICLE 22

Payment of Wages

(a) Payment of Wages shall be made not later than Thursday of each week on the jobsite during working hours, by cash or cheque, or other negotiable instrument. Time books to be closed weekly and the Thursday Pay Day must be within four (4) working days of the closing time of the books.

(b) Accompanying the Pay, the Employer shall provide a Statement for each Employee showing the Company Name, the Employee's Name, the Date of the Pay Period, the number of hours worked, the rate per hour, the Gross Pay, Travelling Expenses, Vacation Pay, Board Allowance, Income Tax Deductions, Unemployment Deductions, Canada Pension Plan Deduc­tions, and any other miscellaneous Deductions or Contributions and Net Pay.

Article 29(a) which is entitled "Wages, Deductions, Contributions" refers to various local trade unions. With respect to Local 31, a table provides for hourly wage rate, ten per cent vacation pay, international union dues, local dues, industry promotion, Ontario Provincial Council deduction, local pension, welfare, dental, total wage package and employer contribution effective on May 9, 1988 and May 1, 1989, for marble mason, terrazzo tile mechanic, base machine operator, terrazzo helper and marble tile helper.

9. In the course of argument counsel referred to sections 1(p), 7(1) and 8 of the Employment Standards Act R.S.O. c. 137 as amended, and to R.R.O. 1980, Reg. 285, s.15 and R.R.O. 1980, Reg. 286, s.13, being regulations under that Act. These provisions provide as fol­lows:

10. 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 therefore 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 any employer to a fund, plan or arrangement to which Part X of this Act applies.

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.

8. Except as permitted by the regulations, 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.

Regulations

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 31 of the Act.

13.-(1) For the purposes of subsections 40(6) and (7) of the Act and of section 12 of this Regula­tion, the employer shall not make any deduction from the amounts to be paid thereunder except a deduction,

(a) required to be made pursuant to a statute;

(b) subject to subsection (2), expressly authorized in writing by the person or his agent; or

(c) pursuant to an order or judgment of a court.

(2) An authoriation in writing which permits a deduction from the said amounts for,

(a) cash shortages where two or more persons have access to the cash;

(b) losses due to faulty workmanship; or

(c) the value of property stolen from the person, is null and void.

10. The letter sent by the respondent to Renato Pivato dated November 28, 1988, is similar in form, with differences only with respect to the calculation of the amounts owing, to the letters sent to other employees who owed money with respect to income tax and provides as follows:

Dear Renato:

We recently underwent a Payroll Audit and unfortunately they picked up the travel allowances you were paid in 1986 and 1987.

Because of this, you were re-assessed. (Copies of the amended T-4 is attached). 30% of this amount was owing to the Government of Canada.

We have paid this amount on your behalf. (Copy of letter to Revenue Canada attached). We now have to recover this amount from you - as shown below.

1986 1987

$883.10 X 30% $264.93 $327.08 X 30% = $98.12 Total

$363.05

Would you be kind enough to contact the office regarding reimbursement as soon as possible. Yours truly,

CALLIGARO TILE CO. LTD.

"A. Pompeo"

A. Pompeo

Vice President.

11. There were discrepancies in the evidence of Renato Pivato and Luciano Calligaro. The latter impressed the Board as being clear in his recollection of the relevant events. Mr. Pivato, on the other hand, was not always responsive to the questions put to him and appeared to have a less clear recollection for the relevant events. Mr. Pivato appeared to agree with the impugned conduct of the respondent when he stated: "I agreed with the deductions in a way - when you have to pay you have to pay." Where there is conflict in the evidence between these two witnesses, the Board accepts the evidence of Mr. Calligaro in preference to the evidence of Mr. Pivato.

12. Mr. Calligaro explained the agreement reached with Revenue Canada in a series of ad hoc meetings with the employees on the list affected by the agreement. He explained to the best of his ability what had happened. It was unlikely that Mr. Calligaro missed any of the employees. However, in the event that his happened, his secretary spoke to any such employees. There was general agreement in principle to deduct the money owing by deductions from the payroll. No one disputed the liability and the employees understood why they were liable to pay the income tax although Mr. Calligaro had difficulty in explaining why money earned two to three years ago was taxable. He asked the current employees either to pay at once or over a period of time and told them that if they failed to pay he would sue and claim interest and costs. He explained that such a method would also cause them to lose working time. The response of the employees Mr. Calligaro spoke to was that it was close to Christmas and they offered to work extra hours. Eventually, as was stated earlier, there was general agreement in principle to deduct the money owing by deduc­tions from the payroll. He informed his secretary of the agreement and left it to her with the pro­viso that the deductions should be made over a period of time and that if there was contact with employees she was to accommodate employees as best she could. In fact, the deductions from the payroll commenced in January of 1989 (with one exception) for those employees who had not reimbursed the respondent by a lump sum payment in either December of 1988 or January of 1989.

13. The deductions from payroll were completed with the pay for the week ending February 18, 1989. From an inspection of the staggering of the time and amount of deductions, it appears that the secretary may have accommodated the employees. None of the employees have disputed the amount of or the liability to pay income tax. None of the employees were asked by the respon­dent to sign a form authorizing the deductions from their pay cheques and none of them signed such a form. Between October of 1988 and January of 1989 the respondent did not discuss this grievance with the applicant.

14. It was the position of the applicant that the conduct of the respondent in making the deductions from payroll had violated articles 22 and 29(a) of the collective agreement. It was also the position of the applicant that under the Employment Standards Act the respondent was not, in the circumstances, authorized to make a set off against the wages of the ten persons referred to in paragraph five. It was the position of the respondent that it had not violated the collective agree­ment and was not, in the circumstances, required to have a written authorization in order to make the deductions from payroll. The Board will consider the conduct of the parties under the collec­tive agreement and will then examine the effect of the Employment Standards Act on the deduc­tions from payroll.

15. It was not argued that the respondent had specifically violated article 22(a) of the collec­tive agreement. It appears that the respondent paid wages by cheque each week and there was no suggestion that the respondent was late in the payment of wages. With respect to article 22(b), there was no suggestion that the required statements with the cheques did not contain the informa­tion required therein. Article 22(b) contemplates the indication, inter alia, of "income tax deduc­tions" and other deductions which are payable to the Federal government. There is clearly no time limitation with respect to "income tax deductions". The only requirement is the provision for the indication of such a deduction. It was suggested by counsel for the applicant that a delay of two or three weeks in the deduction of the correct amount of income tax was permissible as opposed to the two to three years in the facts of this referral. There is nothing in the language of article 22 which even remotely suggests an inference of such an interpretation. Article 29(a) with respect to all named local trade unions, including the applicant, merely provides a table for hourly wage rate, ten per cent vacation pay, international union dues, local dues, industry promotion, Ontario Pro­vincial Council deduction, local pension, welfare, dental, total wage package and employer contri­bution effective on May 9, 1988 and May 1, 1989, for marble mason, terrazzo tile mechanic, base machine operator, terrazzo helper and marble tile helper. There is no allegation that the respon­dent failed to pay the stipulated hourly wage rate and the vacation pay of ten per cent together with agreed contributions and deductions.

16. The Board was referred to cases which considered the circumstances of a deductions from wages and deductions for income tax from wages under the provisions of the Employment Standards Act. In All-Way Transportation Services Ltd. ,June 6, 1979 (Brent) E.S.C. 627, the ref­eree in considering the effect of section 8 of that Act and section 15(1) of the Regulations stated, in granting the application for review:

17. If this were simply a case where the applicant was claiming a set-off against wages owed for its claim on account of gasoline used by the employee in the course of using the van for his personal use, then I would have to dismiss the application for review in the absence of a court order or written authorization made by the respondent. In the instant case, though, I am satisfied that there was an overpayment of wages to the respondent and that this overpayment exceeds the amount deducted from the respondent's cheque. The respondent was accordingly never entitled to the amount which the applicant deducted from his final cheque and the amount cannot be regarded as wages payable to the respondent within section 8 of the Act.

In that decision the referee accepted the concept that an employee was never entitled to the amount which the employer deducted from his final cheque and that the amount could not be regarded as wages payable to the employee within the meaning of section 8 of that Act. Also in Re Toronto Western Hospital, August 19, 1980 (Adamson) E.S.C. 841, the referee made a distinction between recovery of wage overpayments and "a set-off against wages" and determined that section 8 has no application in respect of recovery of wage overpayments. At page 6 the referee stated:

The Act is concerned with ensuring that employees receive "any wages payable" to them and clearly not concerned with preventing the recovery of monies which have inadvertently been paid to the employee in error. The exceptions under Section 803, Section 14 simply provide for statutory deductions, those authorized by court order and by the individual personally. I find the application of Section 8 to refer to an employer's attempt to recover through payroll, amounts unrelated to wages. Recovery of wage overpayments can hardly be classed as "a set-off against wages" if the employee's earnings after the recovery are those wages which had been agreed upon. Therefore I find that Section 8 has no application in respect of recovery of wage overpay­ments.

Similarly in Re Joshua Parker, c.o.b. as Top Brass, March 16, 1983 (Swan) E.S.C. 1539, the ref­eree stated at page 9 as follows:

The question therefore arises as to the status of the deductions found owing to Revenue Canada and actually paid by the Employer. These sums have been paid by the Employer in respect of the complainant's income tax liability, and it therefore seems to me to be equitable that the Employer should be entitled to set-off the sums paid against any sum of money which may now be owing to the complainant. Section 8 of the Act provides that no set-off may be claimed against wages except as permitted by the regulations, and section 15(1)(a) of Regulation 285 provides that a set-off may be claimed where a statute so provides. This, in my view, is a case of a set-off which can properly be claimed against wages owing, and I therefore determine that the Employer is entitled to set-off against any amounts for which he may be found liable all sums paid on behalf of the complainant to Revenue Canada.

17. Section 15(1) of the Regulations also provides that, notwithstanding section 8 of the Employment Standards 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 statute so provides. There was no dis­pute that the Income Tax Act S.C. 1970-71-72, c. 63, as amended, and regulations thereunder pro­vide for and require the deduction of the income of these employees at source by the respondent. The applicant argued that the respondent had violated certain sections of the federal statute. Such arguments are more appropriately raised before another forum. Section 13 of the Regulations which was referred to by the applicant has no application to the facts of the referral because we are not dealing with a termination of employment.

18. In our view, there is no doubt that the respondent, by not deducting the required amount of income tax initially from the employees, caused those employees to receive a portion of their wages to which they were not entitled. Such a portion of their wages cannot be regarded as wages within the meaning of sections 1(p)' 7(1) and 8 of the Employment Standards Act and sec­tion 15(1) of the Regulations. The Board finds that the respondent has not contravened either the provisions of section 8 of the Act or the provisions of section 15 of the Regulations. A written authorization by the affected employees was not required. The Board also notes that in any event even if the conduct of the respondent could be construed as a set-off against wages~ the set-off would have been where a statute so provides. See the Income Tax Act.

19. In the result, the Board finds that the respondent has neither violated the collective agreement (particularly articles 22 and 29(a) thereof) nor contravened the Employment Standards Act. This grievance is accordingly dismissed.