[1993] OLRB REP. OCTOBER 970
3256-91-G International Union of Operating Engineers and it's Local 793, Applicant v. E. S. Fox Limited, Responding Party
BEFORE: Louisa M. Davie, Vice-Chair, and Board Members F. B. Reaume and B. L. Armstrong.
APPEARANCES: Larry Steinberg and James Anderson for the applicant; W. J. McNaughton and H. Miron for the responding party.
DECISION OF LOUISA M. DAVIE, VICE-CHAIR AND BOARD MEMBER B. L. ARMSTRONG; October 19, 1993
1In the Board's decision dated April 21, 1993 [now reported at [1993] OLRB Rep. Apr. 321], the majority of the Board (Board Member F. Reaume dissenting in part) found that the responding employer ("E. S. Fox" or "the employer") had violated the terms of the Operating Engineers province-wide collective agreement to which it is bound when it failed to employ members of the applicant trade union ("the union" or "Local 793"). The Board remained seized of the issue of damages.
2The parties were unable to resolve the issue of damages. As a result the matter was relisted and came on for hearing before the Board on August 10, 1993. At the time the Board heard the submissions and representations of the parties. As there was substantial agreement between the parties regarding the quantum of damages, it was not necessary to hear any viva voce evidence.
3The parties agreed that the total amount of damages owing as a result of the violation of the collective agreement was $126,879.82. In arriving at this figure the parties agreed that the appropriate formula for the calculation of damage was that found in Blouin Drywall, 1973 CanLII 2044 (ON LA), 1973 4 L.A.C. (2d) 254 (O'Shea) rev'd 1974 CanLII 751 (ON HCJDC), 1973 4 O.R. (2d) 423 (HCJ) rev'd 1975 CanLII 707 (ON CA), 8 O.R. (2d) 103 (C.A.) leave to appeal to S.C.C. refused i.e., the number of hours worked by persons who were not members of the union multiplied by the applicable rates (wages and benefits) which would have been paid to union members employed on the site had the collective agreement been applied properly.
4Counsel for E. S. Fox asserted that the amount of $33,170.40 ought to be deducted from the total agreed upon. This figure represents the total amount which the parties agree would have been paid to an "apprentice, oiler or oiler driver" if the collective agreement had been applied and a person in that classification had been engaged. Article 26 of the collective agreement states:
26.1(a) The parties agree that the following formula will be used for the purpose of manning certain equipment set out in the Classification I and 2 of the attached Schedules, save and except Schedule "C".
(b) It is further agreed that this formula shall apply to each Employer on any one job.
(c) The following shall be manned by one (1) operator and one (1) apprentice, oiler or oiler driver.
(ii) All crawler cranes with a manufactures rating of 70 tons capacity and over.
Counsel for E. S. Fox submits that as no apprentice, oiler or oiler driver was actually employed on the job site damages should not be awarded.
5There is no dispute that a crawler crane with a manufacturer's rating of over 70 tons capacity was used on the job. The terms of the collective agreement are clear and unambiguous. If such a piece of equipment is used an apprentice, oiler or oiler driver must be employed. Had the collective agreement been properly applied by the employer an apprentice, oiler or oiler driver would have been working at the site. Under the terms of the collective agreement that apprentice, oiler or oiler driver was required to be a member of Local 793. The employer is not relieved of its obligations to compensate for damages arising out of its violation of the collective agreement merely because it elected to use fewer employees on the job than it was required to do pursuant to the terms of the collective agreement. Accordingly we reject the employer's submissions that $33,170.40 ought to be deducted from the total amount and find the damages to be $126,879.82.
6The parties also disagreed as to whether the total amount agreed upon should be reduced by income tax or unemployment insurance benefits, and to whom the payment should be made.
7Counsel for E. S. Fox argued that pursuant to section 153(1) of the Income Tax Act, income tax must be withheld at the source of payment and remitted to the Receiver General. Section 38 of the Unemployment Insurance Act also provides that deductions at the source of payment must be made and remitted to the Receiver General as repayment of an over payment of benefits.
8Counsel for the employer argues that the rationale underlying the calculation of damages in Blouin Drywall, supra, is to compensate those individual union members who have suffered the damage. The Blouin Drywall policy is designed to put the individuals who would have been hired to do the work in the same position as they would have been in had the employer properly applied the collective agreement and had they actually performed the work. The employer argues that therefore it is not appropriate to merely direct the payment of $126,879.82 to the trade union. It is not the trade union which suffered the damages. The union members who would have been employed at the project suffered the damages. In the result the money owed should be paid directly to those members or alternatively paid to the union in trust on behalf of those specific members. Appropriate statutory deductions must be made by the employer before the money is paid out.
9Counsel for E. S. Fox asserted that in a hiring hall situation there is no speculation about which individuals would have performed the work. The trade union can easily ascertain which of its members would have been dispatched to the job. Counsel for the employer argues that it is therefore more appropriate for the trade union to advise the employer which members would have performed to work so that the employer can then make the payments to those members less the statutorily required deductions.
10Counsel for E. S. Fox states that this is the correct and more appropriate method to pay damages because of the statutory obligations imposed on an employer under section 153(1)(c) of the Income Tax Act and section 38 of the Unemployment Insurance Act. Counsel submits that these statutory provisions impose a obligation on the employer (a) to withhold and remit to the Receiver General income tax on monies paid out, and (b) to withhold and remit to the Receiver General the required amounts if the individuals ultimately receiving the damages obtained unemployment insurance benefits for any period of time covered by the damage award. The employer submits that if this method of paying the award of damages is not used the employer may be statutorily liable for taxes or unemployment insurance benefit overpayments in the event the individuals who ultimately receive the funds do not of their own accord make the remittances required of them under the legislation.
11Counsel for Local 793 argues that section 153(1)(c) of the Income Tax Act and section 38 of the Unemployment Insurance Act have no application. Counsel for Local 793 submits that the grievance was filed by the trade union on behalf of its members. Any damages payable are therefore payable to the union in trust on behalf of its members. As the trade union is not a claimant under the Unemployment Insurance Act (nor a recipient of unemployment insurance benefits), and is also not a recipient of "income from unemployment", which is taxable under the Income Tax Act, there is no issue with respect to the employer's liability for failure to withhold and remit any statutorily required amounts to the Receiver General. He notes also that in any event these statutory obligations are dual obligations imposed on employers and employees alike. They can therefore be met by the union member recipients who will ultimately receive the funds.
12In the result the trade union argues the Board should simply direct the money to be paid to the trade union in trust. Counsel urged the Board to "let the trade union worry about the distribution" of the damages and the individual union members "worry about their statutory obligations".
13The parties also disagreed about the calculation of interest. The parties dispute with respect to the appropriate calculation of interest is related directly to their dispute about the method of payment and the distribution of the damages owed.
14Counsel for the employer asserts that the Board's policy in awarding interest as set out in Hallowell House Limited, [1980] OLRB Rep. Jan. 35 is based on the desire to compensate. As a result interest should only be awarded on the amount of money actually received by the individual union members, i.e., interests should be paid only on the amount remaining after the statutory deductions and remittances have been made. Counsel asserts that interest should not be paid on amounts that the employee would not have received in any event such as the amount ultimately deducted for income tax purposes, nor should interest be paid on those monies which the employer must deduct and remit to the Receiver General because an employee received unemployment insurance benefits during a period of time covered by the damage award. The employee has not lost the use of these monies.
15The trade union asserts that the Hallowell calculation of interest is a sort of "rough justice" which already takes into account that deductions are made from the damages awarded. It is therefore appropriate and contemplated by Hallowell that interest is calculated on the total amount awarded and not on the total amount of damages less statutorily required deductions.
16The parties did not provide the Board with either copies of the relevant statutory provisions or any caselaw, arbitral jurisprudence, legal text or other authority to support their respective positions.
17The Board has reviewed the relevant statutory provisions. We have also considered Trelford Automobile Limited, (1991] OLRB Rep. Oct. 1225 and the decisions referred to in paragraph 27 therein. We have also considered the discussion of this topic as found in Brown & Beatty, Canadian Labour Arbitration, 3rd edition at Topic 2:1416.
18The issues raised by the parties with respect to the proper procedure to be followed by the Board in awarding damages are far from clear. The issues are largely dependent on the correct interpretation and application of such statutory terms as income from employment" in the Income Tax Act, and "earnings" in the Unemployment Insurance Act. In our view those issues cannot, and should not, be determined by this Board. Whatever may be the requirements of the employer, the trade union or its individual members as to the payment obligations of any of them is a matter between the government agencies responsible for administering those statutes and the employer, trade union and individual trade union members who may receive monies as a result of this award. From a labour relations and collective agreement administration perspective the payment can best be characterized as damages payable to the union which filed the grievance in trust on behalf of its members.
19Accordingly we direct E. S. Fox to pay to the union in trust on behalf of its members the sum of $126,879.82. We further direct E. S. Fox to notify the local Unemployment Insurance Commission and local Revenue Canada taxation office of this payment to the union.
20With respect to the issue of interest we direct that interest on the amount of money relating to damages as a result of the employer's failure to remit contributions, deductions or remittances for the health plan, the pension plan, dues, fees or assessments pursuant to Article 3 of the collective agreement, I.U.O.E. Local 793 trades training fund pursuant to Article 14 of the collective agreement, working dues check-off or employer labour relations fund shall be paid in accordance with Article 24.4 of the province-wide collective agreement. Interest on the remainder of the funds shall be paid in accordance with the formula set out in Hallowell.
DECISION OF BOARD MEMBER FRED B. REAUME; October 19, 1993
Subject to my dissent on the grievance decision in the first instance, I cannot disagree that the $33,170.40 should be included in the calculation of damages which the parties agreed to in the amount of $126,879.82 and that the calculation of interest should be as per paragraph 20 of the majority decision.
However, I do not agree that the payment is properly directed to the union rather than directly to those union members said to have been injured by the alleged violation.
The employer quite properly submits that it may be statutorily liable for taxes or unemployment insurance benefit overpayments if the persons who ultimately may receive these funds do not properly declare same. This serious social disutility can be readily avoided by both parties simply by having payment go directly to the individual members in whose hands the appropriate monies would be immediately taxable and who would be required to reimburse the public purse for any unemployment insurance benefits received at that time. In addition these members would be credited with the appropriate welfare and pension contributions where applicable.
As a result, I would have directed that the union provide E.S. Fox with a list of the members who would have performed the work together with their allocated hours up to the total hours, such hours to be paid by E.S. Fox as per the normal payroll procedure including deductions and contributions as required under the applicable collective agreement and statutory requirements. At the very least, this majority award should have included a further requirement that the union advise E.S. Fox, Revenue Canada and UIC in writing of the distribution of the funds within 30 days of receipt of the funds.