Ontario Labour Relations Board
[1991] OLRB Rep. November 1306
2412-91-G Ontario Provincial Conference of the International Union of Bricklayers and Allied Craftsmen, Applicant v. Novo Mundo Construction Ltd., Respondent
BEFORE: R. O. MacDowell, Alternate Chair, and Board Members J. A. Rundle and J. Redshaw.
APPEARANCES: Bernard Fishbein, John Zanussi, John Robbins and Ian Beard for the applicant; John Baker for the respondent.
DECISION OF THE BOARD; November 18, 1991
This is an application under section 124 of the Labour Relations Act. The applicant ("the trade union") contends that the respondent (sometimes referred to herein as "the company") has failed to comply with the terms of a collective agreement by which it is bound. The claim has two components. The union contends that the company has failed to remit many thousands of dollars to the vacation pay, pension, welfare, training, and benefit funds established by the agreement. This claim includes both the amounts of unpaid contributions (based upon the number of hours that the employees worked), and certain amounts by way of liquidated damages calculated in accordance with the formula prescribed in the agreement. The other aspect of the case involves the "lay-off" of A. Larsen. The union claims that Mr. Larsen did not receive his final pay cheque and employment records in the manner required by the agreement.
The company was advised of these various claims by letter from counsel for the union dated August 10, 1991. This application was filed on October 22, 1991.
Pursuant to section 124 of the Act, the Board is obliged to schedule a hearing expeditiously, however, in accordance with its usual practice, the Board appointed a Labour Relations Officer to meet with the parties and endeavour to effect a settlement. A meeting was scheduled for November 1, 1991. The company did not attend. Nor did the company file its Reply until the morning of the hearing. Accordingly, as late as the morning of the hearing, there was no payment of any amounts owing, nor any formal admission of liability, in respect of all or any part of the union's claim. On the morning of the hearing, the company did acknowledge liability for a significant sum, but certain elements remained in dispute, and were addressed at the hearing. After closing argument, the company raised a further disagreement about the method of calculating the amounts owing.
We will return later to the significance of this course of events.
The company does not dispute that it is bound by 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 Masonry Industry Employers Council of Ontario.
Our findings of fact are based on our assessment of the relative credibility of the three witnesses who gave evidence: Mr. Larsen, Mr. John Zanussi, an official of the union, and John Baker, an official of the company. We have given no weight at all to certain (hearsay) comments attributed to a Mr. Fernandes, a supervisor for the company who was not called as a witness. We have also attributed no weight to assertions in the company's Reply that were not supported by the evidence led before us.
It will be convenient to deal with the matters in dispute one by one.
The Lay-Off of A. Larsen
Mr. Larsen is a former employee of the respondent. He was scheduled to work on Friday, October 4, 1991. At about 6:30 a.m., foreman Fernandes called him at home, and told him not to come in to work. Mr. Fernandes did not offer alternative work, nor did anyone from the company question Mr. Larsen's absence on Friday, or the following Monday. Contrary to the company's assertion, the evidence does not establish that Mr. Larsen was being "demoted" or transferred to another job. His employment was being terminated.
On Tuesday, October 8, Mr. Larsen came to the company's premises to pick up certain money that he was owed, together with the documents relating to his termination. This meeting was not initiated by the company. It was arranged by Mr. Larsen himself, because the company had previously given him a pay cheque that was dishonoured "NSF", and Mr. Larsen was anxious to secure a replacement. The company indicated that it would be prepared to re-employ Mr. Larsen in another position, but Mr. Larsen declined. He was given a "separation slip" prepared pursuant to the Federal Unemployment Insurance legislation. That document indicated that he had been "laid off... [because of a]... shortage of work".
In the construction industry, employment is transitory, with workers regularly moving from contractor to contractor, and job to job. In that context, it is not unusual for construction collective agreements to carefully prescribe the way in which employees are hired or released. This collective agreement is no exception. Article 13 reads as follows:
ARTICLE 13
Lay Off and Quittance
(a) One hour's advance notice shall be given and paid for whenever employees are laid off or dismissed. Lay off shall only take place at the end of the regular working day/or designated shift except for incompetency. Employees shall receive their pay and record of employment at the time of lay off and be permitted to leave the job after notice is given.
On Refractory shift work as outlined in Article 22, should job completion on a designated shift be less than eight (8) hours, then the Employee(s) shall receive a minimum of eight (8) hours pay at the designated shift rate. If job completion on a designated shift exceeds eight (8) hours then the Employee(s) shall receive a minimum pay of the designated shift rate as if the entire shift were worked.
(b) Any Employee who voluntarily leaves his employment shall have his wages and record of employment by the next regular pay day.
(c) Employees who do not receive their pay and record of employment at the time of lay off shall receive two (2) hours pay at the regular hourly rate for each working day or designated shift until such time as the Employer mails the Employee's pay by registered or certified mail. The days for which the allowance of two (2) hours is paid shall not include the day on which the Employee's pay was mailed. In the case of work carried out under the refractory conditions (Article 21) employers must issue layoff pay and necessary forms within 48 hours, except weekends and holidays.
The terms of Article 13 are unambiguous.
Mr. Larsen was not laid off "at the end of the regular working day" as required by Article 13; moreover, the evidence put before us does not establish that he was laid off for incompetence. Mr. Baker was not on the job site and therefore was not in a position to give evidence of his own knowledge about Mr. Larsen's work performance. Mr. Fernandes, the job supervisor, did not give evidence at all. Mr. Larsen was not told that he was being laid off for poor work performance. The Unemployment Insurance document prepared by the company specified that he was being laid off for lack of work. The alleged incompetence issue arose only after the filing of this grievance, and is simply not supported by the evidence.
Mr. Larsen was not laid off "at the end of the regular working day" as required by the agreement. He did not receive his final pay or records of employment at the time of his lay-off on Friday, October 4, and the company did not mail those documents to him. It is unclear when (or whether) he would have received them had he not come to the office on his own initiative to seek a replacement; but clearly, he did not receive them in accordance with Article 13(a) and (c) of the agreement.
We find therefore that Mr. Larsen is entitled to one day's pay for Friday, October 4, and two hours' pay for two days pending receipt of his employment records. That amount is $356.52. The company is directed to remit this sum to Mr. Larsen forthwith.
Hours Worked and Paid on September 26
On September 26 it rained. Some company employees went home. Others continued to work, depending upon whether their work area was sheltered, or they could find work to do inside the building they were constructing. Mr. Larsen recorded the times of those who completed their shift and those who went home early. Those time sheets were forwarded to the company. The company appears to have disregarded them. For nine employees the company unilaterally deducted one hour's wages, even though those employees actually continued to work despite the rain.
There is no evidentiary basis for this deduction. On the contrary. The credible and uncontradicted evidence of Mr. Larsen is that the nine employees worked the hour in question, and the company simply disregarded the time sheets, and refused to pay them.
There is no claim in this grievance for the lost wages; however, this nine hours must be included in the total of hours worked and earnings for the purpose of benefits calculations. The benefits are linked to the employees' hourly earnings, because the payment formula allocates "so many cents per hour" to each of the benefit funds.
Delinquent Remittances and Collection Costs
As we have already mentioned, employment in the construction industry is transitory, with tradesmen moving regularly from job to job and employer to employer; and the provincial collective agreement covers literally hundreds of employers for whom unionized tradesmen may work from time to time. An individual tradesman may not have any long-term attachment with any one company, but will move from one to another in accordance with local construction conditions and the vagaries of the market-place. That is why employee benefit funds are established on an industry basis, with each employer making contributions in accordance with the earnings of the tradesmen which they have in their employment from time to time.
Unfortunately, not all companies comply with these contractual obligations, however clearly they may be spelled out in the collective agreement. The fact is, that small companies regularly "cheat" or "short change" their workers (especially in lean times), with the result that each year unions are required to file with the Board hundreds of section 124 applications in order to collect amounts claimed to be owing. Sometimes these amounts are quite small so that the union must balance whether the costs of the legal proceeding outweigh the benefits accruing to individual employees - bearing in mind that tolerance of delinquency deprives union members of money to which they are entitled, gives an unfair competitive advantage to contractors who "cheat", and may feed estoppel arguments if non-compliance is condoned. Despite the relative informality and expedition of section 124 proceedings, there are litigation costs necessarily associated with collecting amounts which may be owing.
We might note, parenthetically, that it was not always that way. Prior to what is now section 124 of the Act, and lacking any expedited arbitration procedure, trade unions typically compelled adherence to the terms of the collective agreement by simply striking or picketing employers who did not comply. Such actions were illegal, of course, but they provided employers with a real incentive to comply and unions with a highly-effective remedy if they did not. Section 124 is now the statutory alternative, substituting litigation for industrial action, but also escalating the costs of collection. Article 20 of the collective agreement addresses this problem:
ARTICLE 20
Delinquent Remittances - Penalties
When remittances in accordance with Articles 17 and 19 are over ten (10) days in arrears, the Employer shall pay to the Trustees, as liquidated damages and not as a penalty, an amount equal to two (2) percent per month, or portion thereof up to twenty-four (24) percent per annum of such delinquent contributions, unless the Employer has corrected such delinquency within five (5) days of being given written notice.
In addition, the delinquent employer shall be required to pay all costs of collection of such liquidated damages and may be required, upon request of the Trustees, to deposit with the Trustees a Cash Deposit, Irrevocable Letter of Credit or Equivalent Acceptable Security to a maximum of Ten Thousand ($10,000.00) Dollars.
Should a delinquent Employer refuse to pay the penalty herein provided, it is agreed the Employees of such delinquent Employer may refuse to work for such Employer until the Employer has complied with all obligations regarding remittances and/or penalties.
Refusal to work by Employees shall not be a violation of this agreement or an unlawful stoppage of work within the provisions of the Ontario Labour Relations Act, and the Employer shall not institute or commence any applications, actions or proceedings of any nature whatsoever under the Ontario Labour Relations Act, this Agreement or otherwise against the Union or any of its Officers, Officials, Servants, Employees, Agents or Members in connection with any such refusal to work.
In our opinion, the provisions respecting Benefits (particularly Articles 17, 19, 28, 29 and 20) must be read together since the terms are interrelated and refer to each other. In our opinion, the remittances referred to in Articles 20, 17 and 19 are as defined in those provisions, together with the details included in Article 29. Article 29 sets out in table form, a precise schedule of deductions and contributions. Article 17 specifically references, among other things, the schedule contained in Article 29 which, in turn, includes contributions to the vacation pay trust fund defined in Article 28. Likewise, Article 28 governing the Vacation Pay Trust Fund refers specifically to the schedule contained in Article 29. It is evident, therefore, that for the purposes of Article 20, the benefit package is to be considered as a whole. The "remittances in accordance with Articles 17 and 19", include those defined in Articles 28 and 29.
We do not accept the company's assertion that delinquency payments have no application to the company's failure to make Vacation Pay contributions. On the contrary, it is our view that if an employer is delinquent in any amount, in respect of any of the benefits' contributions spelled out in Articles 17 and 19 (and by reference Articles 28 and 29), liquidated damages are payable in the amount stipulated in Article 20. And if the union is obliged to incur collection costs, it is entitled to recover them - even if the unpaid amounts are relatively small. An employer who refuses or neglects to pay amounts owing under the collective agreement runs the risk that if its position is not sustained, it may be obliged to pay the costs of collecting amounts found to be owing.
How does Article 20 apply here?
The company did not acknowledge, pay, or agree to pay, amounts owing as of October 10 when the trade union grieved the alleged violation of the agreement, and warned of its intention to take proceedings under section 124 of the Act. In the weeks following the grievance, the company did not pay any of the amounts which it now agrees to be owing; and lest there be any misunderstanding, we do not think that the union was obliged to accept anything less. In particular, the union was not obliged to forego legal action because of a mere promise to pay, or because the company tendered an explanation of why it had not paid. An explanation or promise to pay is not payment, and, meanwhile, the benefit funds are deficient in the amount owing, to the potential prejudice of an employee who may be forced to make a claim against those funds. An employer is not entitled to finance its cash flow shortages or business operations out of the pocket of its employees or the trust funds established for their benefit.
We have some doubt about whether there would have been any acknowledgement of any amounts owing had the trade union not filed this application, pressed the matter to a hearing, and served Mr. Baker with a subpoena requiring him to produce the company's business records. We note, for example, that the company did not attend the settlement meeting of November 1, 1990. If it had intended to settle prior to a hearing, it had ample opportunity to do so. It was not until the morning of the hearing that Mr. Baker tendered cheques in respect of certain amounts owing, and there was still a dispute as to the total amounts owing, which, in turn, necessitated a hearing. There was neither full payment nor an agreement to pay the full amount of the claim; and it was not unreasonable for the union to demand either full payment by certified cheque, or a clear and complete acknowledgement which could be embodied in an enforceable Board order.
We find in this case that, in order to ensure compliance with the terms of the collective agreement, the trade union has been required to retain and brief counsel, launch this proceeding, subpoena the company's records, interview and ensure the attendance of witnesses, attend at the Board for a hearing, and proceed to a hearing. The costs of this exercise are significant; but to avoid quibbling about quantum, the union is content to restrict its claim under this heading to $1,000.00. In our opinion, that amount is both reasonable and authorized by Article 20. The Board therefore directs that the respondent forthwith pay to the union the sum of $1,000.00 in respect of the costs of collecting the liquidated damages defined in Article 20.
Counsel for the union and the representative of the employer tendered a document setting out the amounts agreed to be owing, together with alternative calculations depending upon whether one or other of the company's disputes is accepted. Since we sustain none of them, we find that the entire amount is owing and should be paid, together with the "costs item" mentioned above, and the wages owing to Mr. Larsen in respect of the company's failure to comply with Article 13 of the agreement.
On the basis of the parties' evidence and representations, the Board therefore directs:
(1) that the respondent pay to the union in respect of unpaid benefits' contributions and related delinquency payments the amount of $52,916.15;
(2) that the respondent pay to the union in respect of its collection costs, the sum of $1,000.00;
(3) that the company pay to Mr. Larsen the sum of $356.52 in respect of wages and related payments owing pursuant to Article 13 of the agreement.
- These amounts must be paid forthwith.