Ontario Labour Relations Board
Before: Jules B. Bloch, Vice-Chair.
Appearances: A. M. Minsky, Darrell Brown and Jerry Boyle for the applicants; Richard J. Charney, J. Timothy Lawson and Stephen S. Coleman for the responding parties.
DECISION OF THE BOARD
Background and Facts
1These are grievances filed by the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 800 ("Plumbers") pursuant to section 126 of the Act.
2The grievances allege that the responding Parties breached the collective agreement between the Mechanical Contractors Association Ontario ("the M.C.A.O.") and Ontario Pipe Trades Council ("Pipe Trades") (the Provincial Collective Agreement), in that the named companies failed to remit the proper contribution amounts. More specifically these matters involve the impact of the Retail Sales Tax Act, R.S.O. 1990, C.R. 31 ("R.S.T.A.") on the Provincial Agreement.
3The responding parties submit that the Ontario Labour Relations Board is without jurisdiction to adjudicate on this matter. In the alternative they submit that they have paid the full amount of the contribution and the tax to the trustees of the various plans, since the employer contribution includes the tax component.
4The Board issued a bottom line decision on May 15, 1995. The following are the full reasons in these matters.
5The parties referred to the following section of the Labour Relations Act ("the Act"):
45.-...
(8) An arbitrator or arbitration board shall make a final and conclusive settlement of the differences between the parties and, for that purpose, has the following powers:
- To interpret and apply the requirements of human rights and other employment-related statutes, despite any conflict between those requirements and the terms of the collective agreement.
6The parties referred to the following sections of the Retail Sales Tax Act ("R.S.T.A."):
Sec. 1 Definitions — In this Act,
"funded benefits plan" means a plan, including a multi-employer benefits plan, which gives protection against risk to an individual that could otherwise be obtained by taking out a contract of insurance, whether the benefits are partly insured or not, and which comes into existence when the premiums paid into a fund out of which benefits will be paid exceed amounts required for payment of benefits foreseeable and payable within thirty days after payment of the premium.
"multi-employer benefits plan" means a trust established to provide employees of two or more unrelated employers protection against risk to an individual under a single funded benefits plan.
"planholder" means the person who provides a benefits plan, including an employer under a multi-employer benefits plan.
"premium" means,
(e) in respect of a funded benefits plan,
(i) any amounts paid into the plan by the planholder less any amounts paid to the planholder by members in order to receive benefits under the plan, and
(ii) any amount paid by members in order to receive benefits under the plan,
and includes dues, assessments, or administrative costs and fees paid for the administration or servicing of the plan to the vendor.
"vendor" means a person who, in the ordinary course of his business,
(f) is the planholder of a benefits plan or the person to whom the planholder or planholders of a benefits play pay premiums.
2(9) Determination of fair value. - Where the Minister considers it necessary or advisable, he or she may determine the amount of any price of admission or of any premium, or the fair value of any tangible personal property or taxable service, for the purpose of taxation under this Act, and thereupon the price of admission, the premium or the fair value of the tangible personal property or taxable service, for such purpose shall be so determined by the Minister unless, in proceedings instituted by an appeal under section 25, it is established that the determination is unreasonable.
2.1 (1) Tax on insurance etc. - Every person who is resident in Ontario, or who carries on business in Ontario, and who,
(c) is a planholder or member of a benefits plan; or
shall pay to Her Majesty in right of Ontario a tax at the rate of 8 per cent of the premium payable.
(11) When tax payable. — With respect to a premium referred to in clause (a), (b) or (c) of the definition of "premium" in subsection 1(1), the tax payable under this section shall be collected by the vendor when the premium is paid to the vendor.
(13) Same. — With respect to a premium referred to in clause (e) of the definition of "premium" in subsection 1(1),
(a) the tax under this section shall be collected by the vendor at the time the planholder paid the premium referred to in subclause (e)(i) of the definition to the vendor, or at the time the member paid the premium referred to in subclause (e)(ii) of the definition to the vendor; or
(b) where the planholder also administers the plan, the tax shall be collected at the time the planholder received form the member the premium referred to in subclause (e)(ii) of the definition, and the planholder shall pay the tax on the premium referred to in subclause (e)(i) of the definition at the time and in the manner prescribed in the regulations.
(15) Person deemed purchaser. — Every person who is liable to pay tax under this section shall be deemed to be a purchaser for the purposes of assessment, collection and enforcement of this Act.
(19) Penalty assessment. — (1) The Minister may assess any penalty payable by a vendor under subsection 32(1) or (2) or by a person under subsection 15.1(3) or any amounts owing by a person dealing with a non-resident contractor who fails to comply with subsection 39(4).
(22) Tax money is trust money. — (1) Every vendor who collects any tax under this Act shall be deemed to hold it in trust for Her Majesty in right of Ontario and is responsible for the payment over of it in the manner and time provided under this Act and the regulations.
7The parties referred to the following Regulations made pursuant to the Retail Sales Tax Act:
ONTARIO REGULATION 201/95
made under the
RETAIL SALES TAX ACT
Made: March 29, 1995
Filed: April 4, 1995
Amending Reg. 1013 of R.R.O. 1990
(General)
Note: Since January 1, 1994, Regulation 1013 has been amended by Ontario Regulations 62/94 and 375/94. For prior amendments, see the Table of Regulations in the Statutes of Ontario, 1993.
Section 3 of the Regulation is amended by adding the following subsection:
(5) If a person enters into a contract of insurance or a planholder provides a benefits plan and does not supply the vendor with a purchase exemption certificate as required by subsection (1) or a certification as required by section 3.1, 3.2 or 3.3, the vendor shall collect the tax imposed under section 2.1 of the Act.
- Section 10 of the Regulation is revoked and the following substituted:
(5) If any person liable to pay tax under section 2.1 of the Act, other than under subsection 2.1(5) or (6) of the Act, pays a premium to the vendor that is less than the premium and the tax indicated by the vendor to be payable, the vendor shall calculate the tax collectable and payable by multiplying the amount paid by 8/108 and shall remit the product as tax under section 5.
ONTARIO REGULATION 162/95
made under the
RETAIL SALES TAX ACT
Made: March 28, 1995
Filed: March 29, 1995
Amending Reg. 1012 of R.R.O. 1990
(Definitions by Minister, Exemptions, Forms and Rebates)
Note: Since January 1, 1994, Regulation 1012 has been amended by Ontario Regulations 8/94 and 348/94. For prior amendments, see the Table of Regulations in the Statutes of Ontario, 1993.
- Section 6 of the Regulation is revoked and the following substituted:
6.(1) A purchase exemption certificate required by clause 3(1)(a), (b) or (c) of Regulation 1013 of the Revised Regulations of Ontario, 1990 may be either a single or blanket purchase exemption certificate and a purchase exemption certificate required by clause 3(1)(d) of Regulation 1013 shall be a blank purchase exemption certificate.
(10) If a person does not supply a vendor with a properly executed single or blanket purchase exemption certificate as required by subsection (1), the sale shall be deemed to be a retail sale and the premium shall be deemed to be a taxable premium.
(13) If a sale is deemed to be a retail sale under subsection (1) of (12), the vendor shall collect tax on the tangible personal property or taxable service unless the tangible personal property or taxable service is otherwise exempt under the Act.
(14) If a premium is deemed to be a taxable premium under subsection (1), the vendor shall collect tax on the premium unless the premium is otherwise exempt under the Act.
8The parties referred to the following sections of the Excise Tax Act, R.S.C. 1985, Chap. E-14:
Part 9 Goods and Services Tax
Section 182: Forfeiture.
(1) For the purposes of this Part, where at any time, as a consequence of the breach, modification or termination after 1990 of an agreement for the making of a taxable supply (other than a zero-rated supply) of property or a service in Canada by a registrant, an amount is paid or forfeited by a person to the registrant otherwise than as consideration for the supply,
(a) the registrant shall be deemed to have made to the person, and the person shall be deemed to have received from the registrant, a taxable supply of the property or service for consideration equal to the consideration fraction of the amount paid or forfeited, as the case may be; and
(2) Extinguishing debt, etc. For the purposes of this Part, where at any time, as a consequence of the breach, modification or termination after 1990 of an agreement for the making of a taxable supply (other than a zero-rated supply) of property or a service in Canada by or to a registrant, a debt or other obligation (other than consideration for the supply) of the registrant to a person is reduced or extinguished without payment on account of the debt or obligation,
(a) the registrant shall be deemed to have made to the person, and the person shall be deemed to have received from the registrant, a taxable supply of the property or service for consideration equal to the consideration fraction of the amount extinguished or by which the debt or obligation was reduced, as the case may be; and
9The parties referred to the following sections of the Workers' Compensation Act, R.S.O., 1990, C.W. 11:
7 (8) Multi-employer benefit plans.— Subsection (1) does not apply to an employer who participates in a multi-employer benefit plan in respect of a worker if, throughout the first year after the work is injured whenever the work is absent from work because of the injury,
(a) the plan continues to provide the worker with the benefits to which the worker would otherwise be or become entitled under the plan; and
(b) the plan does not require contributions from the employer during the absence and does not require the worker to draw on the worker's benefit credits, if any, under the plan during the absence, 1989, c.47, s.3, part.
(9) Amendment of multi-employer benefit plans.— On and after the 2nd day of January, 1992, a multi-employer benefit plan shall contain and, if it does not do so, shall be deemed to contain provisions sufficient,
(a) to enable all employers who participate in the plan to be exempted under subsection (8) from the requirement to make contributions; and
(b) to provide each worker with the benefits described in subsection (8) in the circumstances described in that subsection. 1989, c.47, s.3, part, revised.
10The parties referred to the following paragraphs and appendices of the Provincial Collective Agreement:
Article 19 - Government Legislation
19.1 Any Federal, Provincial or Municipal Legislation in effect, or hereinafter enacted, will supersede any relevant clause in this Agreement without nullifying the remainder of this Agreement.
Article 30 - Continuation of Benefit Coverage
Effective May 13, 1992 the Contractor will contribute $.03 per hour earned to the Local Union employee benefits plans of this collective agreement to assure continuation of benefit coverage as provided for in the Workers Compensation Act.
Appendix 1 (Thunder Bay Local 628)
C Welfare Fund
- Each employer shall contribute to the Unions Health and Welfare Fund for each hour's pay earned by each of his employees, the sum of $1.15. Refer to Article 30 for additional contribution related to continuation of benefits.
D Pension Fund
Each employer shall, contribute to the Union's Pension Fund a sum equal to two dollars and fifty-one cents ($2.51) for each hours pay earned by each of his employees effective May 14, 1992.
The Pension Fund is administered by a Board of Trustees appointed by the Union under a Trust Agreement.
Appendix 3 (Sudbury Local 800)
C & D Health, Welfare and Pension
- The Contractor shall contribute to Local 800 Health, Welfare and Pension Trust Fund, for every hour worked by each of his Employees, the following:
For Health & Welfare:
Effective May 14, 1992 - $1.63 per hour. Refer to Article 30 for additional contribution related to continuation of benefits.
For Pension:
Effective May 14, 1992 - $3.00 per hour, $3.10 effective May 1, 1993; $3.65 effective May 1, 1994.
Contribution forms shall be supplied by Local 800. These forms will be completed and forwarded with cheques for the contributions to the trustees designated by Local 800 before the 15th of every month following that in which the contributions were due.
- The Contractor shall pay the following as liquidated damages and not as a penalty for late contributions:
One week late 5% Two weeks late 10% Three weeks late 15% Four Weeks late 20%
On one month's notice, the Contractor shall check off increased amounts of employee's wages for the Health, Welfare and Pension Fund when authorized by the Union, but in no case shall the total gross wage package change; including all fringes.
On one month's notice, the Contractor shall reduce Health, welfare and Pension Fund contributions when authorized by the Union. The full amount of reductions shall be passed on to Employees in the form of wages, but in no case shall the total gross wage package change; including all fringes.
Appendix 4 (Windsor Local 552)
C Welfare Plan
- Effective May 14, 1992, $1.80 for each hour earned by each employer; $1.95 effective August 1, i992; $2.05 effective May 1, 1993; $2.20 effective May 1, 1994 shall be forwarded to the Administrator for the Welfare Plan. Refer to Article 30 for additional contribution related to continuation of benefits.
D Pension Fund
- Effective May 14, 1992, $2.65; effective August 1, 1992, $3.14: effective May 1, 1993, $3.29; effective May 1, 1994, $3.69 for each hour earned by each employee shall be forwarded to the Administrator for the Pension Plan.
K Mechanical Contractors Association of Windsor
Trades Benefits Plan
Employer contributions to all funds shall be in accordance with Schedule A - Wage Schedules. Contributions shall be paid monthly by all employers to the Trustees of the Mechanical Contractors Association Trades Benefit Plans for the following funds:
The Mechanical Contractors Association of Windsor Industry Fund.
The Plumbers Local 552 Welfare Benefit Fund.
The Plumbers Local 552 Pension Plan.
The Plumbers Local 552 Vacation Pay Trust Fund.
The Plumbers Local 552 Training Fund.
Each Employer shall send the required payments and reports to the Administrator of the Mechanical Contractors Association of Windsor Trades Benefit Plans by the tsth day of the Month next following the month for which they are due. Any employer who has not made payments to the Administrator as required by this Agreement on or before the 15th day of the next month, following the month for which they are due, shall have all employees subject to this Agreement withdrawn from the job or shop.
Should any Contractor be found to be in default of remitting payments required to be made pursuant to the terms of this Agreement, and if such default continues for 15 days thereafter, he shall pay to the Trustees, to be distributed to the various funds, interest at the rate of 2% per month (24% per year compounded monthly), or part of, on any unpaid arrears.
- WELFARE, PENSION AND VACATION PAY
EMPLOYER CONTRIBUTIONS:
Welfare Plan - $1.80 effective Aug. 1, 1992; $2.05 effective May 1, 1993; $2.20 effective May 1, 1994
Pension Plan - $2.65; $3.14 effective Aug. 1, 1992; $3.29 effective May 1, 1993; $3.69 effective May 1, 1994
Vacation Pay Plan - 10% of basic wage rate
The Welfare, Pension and Vacation Pay Plans shall be administered by the Board of Trustees, in accordance with the terms of the Trust Agreement covering these plans. The Board shall be made up of representatives from the Employers and the Union, with three persons being designated by the Employers and three persons being designated by the Union.
Employers shall make contributions to provide Group Life Insurance, Weekly Indemnity Insurance for lost time due to illness, medical, hospital, pension benefits and any other such benefits, as may be provided by the Trust Agreement together with Vacation Pay.
Welfare and Pension Contributions and Vacation Pay shall be made monthly to the Trustees of the Funds and remitted to the Administrator. A report showing the names of the employees for whom payments are made and the amount of such payment shall be prepared in quadruplicate and distributed by the employer as follows: The original and two copies to be sent with the remittance to the Administrator. The first copy to be retained by the employer. Although an employer has not employed any person or persons covered by this Agreement and, therefore, not required to make payments hereunder, he shall nevertheless submit a report marked "NIL". See article 6.4 for payment method for Vacation pay.
An eligible employer shall be defined as:
a) A member in good standing of an Employers Association.
b) A Federal, Provincial or Municipal Group.
c) Any independent contractor or employer engaged in the Plumbing and Pipefitting Industry who has signed a current Agreement.
The agreed upon payments shall be directed to the various funds as may be provided by the Trust Agreement.
- Welfare and Pension Contributions and Vacation Pay are required for all employees employed under the conditions and Jurisdiction of Local 552 of the United Association.
Welfare and Pension payments shall be made only to provide benefits in accordance with the terms of the Welfare and Pension Plans.
During the term of this Agreement, any increase in wage rates or portion thereof shall be applied to benefits or wages as may be decided by the Union.
In the event an increase or decrease is required to the contributions to the Welfare and Pension Plans, the basic wage rate shall be adjusted in accordance with such increase and/or decrease.
- "If the contribution PAID BY THE EMPLOYER for any employee benefit be reduced as a result of any legislative or other action, the amount of the saving shall be used to increase other benefits, available to the employee or shall be passed on to the employees in the form of increased wages or salary rates."
Appendix 13 (Ottawa Local 71)
C HEALTH AND WELFARE TRUST FUND
- Shall be: $1.32 per hour effective May 14, 1992; $1.45 effective May 1, 1993; $1.62 effective May 1, 1994.
Each employer will contribute to the Local Union 71 Health and Welfare Trust Fund the sum above per hour on a regular and overtime hours by each employee covered by the Collective Agreement and will remit said sum to the local 71 Administrator as established under a Declaration of Trust entered on December 10, 1965. Contributions to be made monthly by cheque as per Schedule K.
All amounts paid by the Employer to the Health and Welfare Trust Fund shall be in addition to the hourly wage rates established in this Agreement and in no case shall the Employer deduct any such amounts from the employees' wages.
Refer to Standard Article 30 for additional contribution related to continuation of benefits.
D PENSION TRUST FUND
- Effective May 14, 1992, $2.70 per hour; effective May 1, 1993, $3.00 per hour, effective May 1, 1994, $3.45 per hour.
Again commencing on a date to be established by the Trustees appointed by the Union as hereinafter provided, and in addition to the wages, vacation pay and other benefits, set out in this Collective Agreement, each employer will contribute to the Local Union Pension Trust Fund the sum above for all regular and overtime hours worked by each employee covered by the Collective Agreement to a Trust Fund to be known as "Local Union 71 Pension Trust Fund" which Trust Fund has been established by a Trust Agreement.
Without limiting the terms of the said Trust Agreement, the purpose and intent of such Agreement shall be to purchase Pension and Supplementary Benefits and such other benefits as the said Trustees shall deem advisable. Provided, however, that all such benefits shall be for the exclusive advantage and benefit of the employees covered by this Collective Agreement.
The "Committee of Trustees" to administer the said Local Union 71 Pension Trust Fund shall consist of not less than three Trustees all of whom shall be members in good standing of the Union.
The Trust Agreement above referred to shall establish, among other things, the rules of eligibility for the employees covered by this Collective Agreement and shall further set out and define the duties and responsibilities of the Trustees.
S. Payments to the said Local Union 71 Pension Trust Fund shall be made by the employers prior to the 15th day of the month immediately following the month in which the said wages were earned and at no time shall the payments be made to any individual employee.
Payments to the Local Union 71 Pension Trust Fund shall be accompanied by a completed monthly report on a form to be supplied by the said Trustees to administer the said Trust Fund.
- All amounts paid by the Employer to the Pension Trust Fund shall be in addition to the hourly wage rates established in this Agreement and in no case shall the Employer deduct any such amounts from the employee's wages.
11The parties agreed on the following statement of facts:
AGREED STATEMENT OF FACTS
The applicants are U.A. Local Unions which are affiliated bargaining agents of the Ontario Pipe Trades Council of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada ("the OPTC"). The OPTC is the designated employee bargaining agency for its affiliated bargaining agents in collective bargaining for a provincial agreement in the industrial, commercial and institutional sector of the construction industry in Ontario with the Mechanical Contractors' Association Ontario ("the MCAO") which is the designated employer bargaining agency:
The responding parties are employers residing and carrying on business in Ontario who are represented by the MCAO in provincial bargaining and are bound by the current provincial agreement between the OPTC and the MCAO which is effective from May 14th, 1992 until April 30th, 1995 ("the Provincial Agreement"). The Provincial Agreement shall be marked as an exhibit in these proceedings;
These proceedings arise as a result of the enactment of Bill 138, the Retail Sales Tax Amendment Act, on June 23rd, 1994 ("the Act") which is retroactively effective on July 1st, 1993. The Act effected certain changes to the Retail Sales Tax Act and imposed the provincial retail sales tax of 8% ("the RST") on "premiums", as defined by the said Act, paid into multi-employer benefits plans which purchase or provide group insurance benefits. The parties agree that the applicants' welfare funds which are referred to in the applicable appendices to the Provincial Agreement are multi-employer benefits plans for the purposes of the said Act. The grievances filed by the applicants in these proceedings shall be marked as exhibits;
The Provincial Agreement includes appendices referable to the various geographic zones of each of the OPTC's affiliated U.A. Local Unions, including the applicants. Within each zone, local appendix issues are dealt with under the umbrella of provincial bargaining between the appropriate U.A. Local Union and the local mechanical contractors' association and are subject to the approval of the designated bargaining agencies;
Each of the appendices to the Provincial Agreement, including the appendices pertaining to the applicants, sets out, inter alia, the applicable wage rates, vacation pay and the nature and amounts of employer contributions to be paid to the various employee benefits plans therein referred to;
Of particular relevance to these proceedings are the provisions requiring employers, including the responding parties, to make contributions to each U.A. Local Union's welfare fund on behalf of their respective employees covered by the Provincial Agreement and to remit such contributions to the Fund's administrator in the hourly monetary amounts, manner and timing as required by such appendices. Each of the said welfare funds constitute funded multi-employer benefits plans to which contributions are made by employers in order for the Fund's trustees to purchase or provide group benefits such as group life insurance, accidental death and dismemberment insurance, etc.;
During provincial bargaining, the designated bargaining agencies negotiate a total wage package but the employer bargaining agency accepts the allocations of the contributions to the various benefits plans, including, but not limited to the welfare funds of each U.A. Local Union as set forth in the appendices, as directed by the trade union side. This consistent practice extends back, without exception, to the commencement of provincial bargaining in 1978 [subject to relevance];
When a Provincial Agreement is in force, including the current Provincial Agreement, it is not uncommon for a U.A. Local Union to contact the local mechanical contractors' association with a view to changing the contribution rates of particular benefits plans, including, but not limited to welfare funds. It is a long-standing and established practice that the local associations, with the consent of the MCAO, accept such adjustments in contribution rates without further collective bargaining or are required to accept such adjustments by virtue of provisions to that effect in the applicable appendices. Thus, for example, should a U.A. Local Union contact a local contractors' association to request a reduction or increase in the contributions to a particular benefits plan by increasing or decreasing the contribution to another of the benefits plans or the base wage rates, the local association will, as a matter of contractual obligation or practice, make such adjustments and do so with the consent of the MCAO, if necessary, provided that the overall wage package remains unchanged [subject to relevance];
These grievances are designed by the applicants to enforce the provisions of the Provincial Agreement and of the Act on the responding parties by seeking to collect the 8% RST on the contributions remitted by them to the applicants' welfare funds. The responding parties have paid the hourly amounts of the contributions as set forth in the appendices to the Provincial Agreement. Without any admission as to the amounts of the damages, the responding parties admit that they have not paid the aforesaid 8% in addition to such contributions, as alleged in the grievances. In addition to challenging the arbitrability of the grievances, the responding parties take the position that their payments of the set amounts of contributions to the welfare funds referred to in the appendices include and satisfy their obligations, if any, to pay RST in respect of such contributions. By way of example, if an appendix in the Provincial Agreement requires a contribution of $2 per hour to a particular welfare fund, the responding parties submit that, by paying the $2, $1.85 is being paid by them in contributions and 15 in tax ($2 x 8/108) while the applicants submit that $2.16 per hour must be paid, that is, $2 in contributions and an additional 16 for RST.
The position of the Ministry of Finance, which administers the Act, on the payment of RST on contributions to multi-employer benefits plans is set forth in its memorandum to administrators/trustees/employers/union s dated March 24th, 1995. The said letter shall be marked as an exhibit in these proceedings subject to its relevance or appropriateness;
The O.L.R.B. shall remain seized as to the quantum of damages including penalties and interest and the parties reserve their rights to call evidence relating thereto;
This statement shall constitute a complete summary of the facts necessary to adjudicate the grievances in these matters and, subject to para. 11, supra, no further evidence will be called or filed by either of the parties without the consent of the other party or by leave of the Board. This statement is prepared solely for the purposes of these proceedings and will not be referred to in any other proceedings.
Submissions
12The parties relied on the following cases:
Re Denison Mines Ltd. and United Steelworkers, (1982), 5. L.A.C. (3d) 19 (Adams)
The City of Thunder Bay, unreported arbitration award dated September 29th, 1989 (Burkett)
Halton Forming Ltd., [1990] OLRB Rep. May 553
Hamilton Harbour Commissioners, et al and International Longshoremen's Association Locals 1654 and 1879, unreported decision of arbitrator W.B. Rayner dated 20th August, 1990
Ontario Nurses' Association v. Etobicoke General Hospital, (1993) 94 CLLC ¶17,017
Spencer Construction Company Ltd., [1994] OLRB Rep. Feb. 181
BEM and Howden & Parsons (Canada) Ltd. (1970), 1970 CanLII 1648 (ON LA), 21 LAC. 177 (Weiler)
Labourers' International Union of North America, Local 183 v. Bairrada Masonry Inc., [1994] OLRB Rep. March 204
Fieguth v. Acklands Ltd., (1989) 1989 CanLII 2744 (BC CA), 59 D.L.R. (4th) 114 (McEachern)
Canterra Energy Ltd. v. Her Majesty The Queen, (1985) DTC 5245 (Reed)
Canterra Energy Ltd. (formerly Aquitaine Company of Canada Ltd.) v. Her Majesty The Queen, (1987) DTC 5019
Gene A. Nowegijick v. Her Majesty The Queen, 1983 CanLII 18 (SCC), [1983] 1 S.C.R. 29 (Dickson)
Hartland v. Diggines, (1926) AC. 289 (Atkinson)
Submissions in Respect of Jurisdiction
13As earlier noted, the responding parties assert that the Board is without jurisdiction to entertain this grievance. They take the position that the Board in hearing this matter and granting the remedy sought would be enforcing a tax statute. A tax statute is not, in their view, a statute to which section 45(8)(3) of the Act would apply. A tax statute is not an employment related statute like the Human Rights Code, R.S.O. 1990, c.h. 19. In any event, the responding parties submitted, even if the Board were to find that the R.S.T.A. was an employment related statute, this grievance is based on the Board stepping into the shoes of an adjudicator under the R.S.T.A. and consequently the Board would be enforcing the statute rather then interpreting and applying it. (See: Spencer Construction Company Ltd., supra; Re Toronto Electric Commissioners and Canadian Union of Public Employees, supra; Re Dupont Canada Inc. and Nylon Workers Union, supra, and other cases in this regard.)
14Further, the responding parties argue that since, in their view, section 45(8)(3) of the Act does not apply to this type of statute, the arbitrator can only apply and interpret the statute in question within the confines of the McLeod v. Egan test. It is the view of the responding parties that the arbitrator can only impose the statutory tax scheme in situations where there is specific collective agreement language allowing the arbitrator to do so or where there is a conflict between the collective agreement and the statute. In counsel's view, there is neither a conflict between the collective agreement and the statutory language of the R.S.T.A., nor specific language in the collective agreement that would allow enforcement. In counsel's view the scheme of the R.S.T.A. does not properly deem a specific amount to be collected pursuant to the Provincial Collective Agreement, and consequently any monies tendered pursuant to the Provincial Collective Agreement could not include an exact amount (sum certain) that must be remitted to the tax authorities.
15In the fact situation before the Board, (see: paragraph 11 above at page 18 of the agreed statement of facts) a hypothetical amount of $2.00 per hour is tendered as a contribution from the employer to one of the various funds. The responding parties assert that since the statute does not characterize a specific sum to be remitted to the tax authorities the arbitrator is in fact enforcing the statute rather then examining and reconciling the collective agreement with the statute. (see: Corporation of the Town of Arnprior and International Union of Operating Engineers Local 793, supra) For the arbitrator to interpret and apply this type of statute, the statute in question must have a deeming provision (see: section 182 of the Excise Tax Act, supra). An arbitrator cannot enforce the tax collection scheme found in this type of statute through the collective agreement. In counsel's view, only where a statute specifically deems an amount to be deducted, and that amount is in conflict with provisions of the collective agreement, can an arbitrator direct a party to pay that amount within the collective agreement framework.
16Counsel for the applicant submits that the R.S.T.A. creates an obligation on the employer as a planholder to pay the tax. In counsel's view the issue is one of interpreting the collective agreement. The adjudicator must find, on the collective agreement language, whether or not the employers contributions to the multi-employer funds are inclusive or exclusive of the 8% tax. In counsel's view, any reliance on the statute by the adjudicator is squarely within the McLeod v. Egan test. Counsel took the position that the legislature has deemed the specific amount payable through the regulation making power. Specifically, in counsel's view, Ontario Regulation 201\95 and Ontario Regulation 165\95 create a deeming provision which advises the vendors, the trustees of the various multi-employer insurance funds, (see: definition of vendor in section 1 of the R.S.T.A.) to collect from the employers, who are the planholders and consequently the purchasers, (see: section 2.1 (15); 2.1 (13)(a), the definition of planholder and the definition of premium in clause (e) of section 1 of the R.S.T.A.) an amount which is calculated by multiplying the contribution paid by 8/108. The amount collected would be a specific amount which would then be viewed as either included or excluded in the employer contribution depending on the language of the collective agreement. In applicant counsel's view the issue is one which is squarely within the ambit of the adjudicator's role pursuant to the collective agreement. Counsel submits that the employer has an obligation to pay or remit the tax and that obligation falls squarely within the collective agreement.
17In the alternative, counsel for the applicant asserts that the R.S.T.A. is an employment related statute, like the Human Rights Code, and therefore, pursuant to section 45(8)(3) of the Act, the Board has jurisdiction to apply and interpret the R.S.T.A. when it is construing the collective agreement. Counsel submits that the Human Rights Code only deals in part with employment issues. The Human Rights Code deals with discrimination issues relating to many areas of societal interaction outside the employment relationship. Counsel asserts that, like the Human Rights Code, the R.S.T.A. deals with the employment relationship as part of its mandate and consequently, for the purposes of section 45(8)(3) the Board should find the R.S.T.A. to be an employment related statute.
Submissions on the Merits of the Grievances
18Counsel for the applicant argues that this situation is no different then the impact of the Employer Health Tax ("E.H.T.") on the collective agreement bargaining structure. (See: Halton Forming Ltd., supra; Hamilton Harbour Commissioners., supra; and Re Beer Precast Concrete Ltd., supra). In counsel's view the change of the statute and its impact on the parties is a risk of the collective bargaining process.
19Counsel for the applicant asserts that the statute is a tax on contributions. There is a set amount for the cost of the contribution in the Provincial Collective Agreement. At the same time the contribution is payable by the employer to the fund, the tax becomes payable. (See section 11 of the R.S.T.A.) The statute imposes an obligation on the trustees of the funds to collect the tax from the employers at the time the premium (in this case contribution) is remitted by the employer to the trust funds. (See: section 11, 13 and 15 of the R.S.T.A.). Consequently, in counsel's submission, the breach of the Provincial Collective Agreement is occasioned when the employer remits an amount exclusive of the tax. The employer, in taking the position that the amount tendered is inclusive of the tax, is in effect saying that the contributions made pursuant to the Provincial Collective Agreement are to be applied to more then benefits and the administration of the various funds. They are in effect being applied to statutory obligations that fall squarely on the employers.
20Counsel for the applicant asserts that the statutory scheme places the trust funds in the position of collecting and then remitting the tax to the tax authorities. (see: sections 19 and 22 of the R.S.T.A.) This obligation creates a short fall in the amount tendered by the employers in that they tender the hypothetical $2.00 rather then an amount of $2.16.
21Counsel for the responding parties assert that the amount tendered pursuant to the Provincial Collective Agreement is tax inclusive. This Provincial Collective Agreement does not require employers to provide a specific level of benefit. In counsel's view the Provincial Collective Agreement establishes an amount to be paid for all costs associated with providing benefits to the employees. Counsel asserts that it would be unfair to encumber the employer with an amount of money that was not contemplated by the Provincial Collective Agreement.
22This collective bargaining regime has, submits responding parties counsel, allowed the union to apply part of the total wage package to the under funding of any benefits contemplated by the various plans. In effect when a benefit has cost more then expected, for example, because of a bad rating experience, the union has been able to, either by practice or by an elevator clause in the various appendices, redistribute part of the overall wage package to the benefit contributions. The union has flexibility to apply portions of the wage or pension remittances to the benefit plan unilaterally. Counsel for the responding party argues that this tax is part of the overall cost of providing benefits and consequently the unions should fund the tax through the overall wage package. This would be consistent with the way risk allocation has been treated in respect of the rising cost of any of the various benefits within the context of the funds administration.
23This Provincial Collective Agreement, in responding parties' counsel's view, supports the concept of risk allocation. Article 30 of the Provincial Collective Agreement is a specific article which deals with the increased cost to multi-employer funds in respect of continuing to provide injured workers with benefits, under the multi-employer plan, for a period of one year. The Workers Compensation Act allocated a financial risk to the multi-employer plans, by assuring the continuation of benefit coverage to injured workers, and the Provincial Collective Agreement, through article 30, redistributed that risk. Counsel asserts that absent a provision like article 30, the employer is not responsible for any part of the tax. For the employer to be responsible, the collective agreement would have to contain language like that found in article 30. Absent specific language in the collective agreement allocating the risk to the employer, in respect of the tax, the amounts remitted to the union are inclusive of the tax.
24The E.H.T., asserts the employer, is different then the R.S.T.A.. The E.H.T. was a tax of general application. The R.S.T.A. is directed only at employers who pay premiums in respect of insurance. Specifically, in respect of multi-employer plans, employers who pay contributions to the union's trust funds. The employers response to the EHT was to attempt to reduce the amount of contribution to the various funds because the funds no longer had the responsibility of paying for OHIP. In respect of the R.S.T.A., the employers are not attempting to reduce the amount of the contribution under the collective agreement but rather are paying the full amount of contribution negotiated in the collective agreement which they view as tax inclusive.
25Counsel for the responding parties distinguishes the case Re Kitchener-Waterloo Ambulance, supra, from the case before us. In Re Kitchener-Waterloo Ambulance, supra, an employer deducted the cost of the retail sales tax from individual members of the bargaining unit. The arbitration board held that the retail sales tax does not alter the employer's obligation to pay the full cost of the premiums. Counsel for the responding parties argues that in his view the collective agreement in the above noted case included a specific obligation on the employer to pay the full cost of the premiums. This obligation does not, in his view, exist in the case before us. Further, the case does not deal with the impact of the R.S.T.A. on multi-employer plans. In respect of this collective agreement, the contribution tendered is the total amount that the employer is supposed to tender. In counsel's view this amount includes the tax.
Decision
26The Board finds that it has jurisdiction to decide this matter, since the Board's decision is based upon an interpretation of the Provincial Collective Agreement. In our view the issue is whether the amounts remitted by the employer as contributions to the various trust funds are amounts which comply with the requirements of the Provincial Collective Agreement.
27The responding parties are employers residing and carrying on business in Ontario and are represented by the M.C.A.O., the designated employer bargaining agency. In that capacity, the M.C.A.O. represents the responding parties in provincial bargaining. The responding parties are bound to the current provincial agreement between the Pipe Trades and the M.C.A.O. which is effective from May 14, 1992 to April 30, 1995. The R.S.T.A. was amended by Bill 138, and was given Royal Assent on June 23, 1994. The change to the legislation was effected after the parties had entered into their present collective agreement.
28The parties agree, for the purpose of the adjudication before this Board, that the legislation places a tax obligation on the employer. The trustees of the benefit plan are the "vendors" as defined by the R.S.T.A.. This statutorily enforced transaction, is completed at the exact moment that contributions are remitted to the multi-employer funds.
29Each local union has negotiated, within the context of the Provincial Collective Agreement, local appendices. Each local appendix contains articles which pertain to a geographic area that is within the administrative jurisdiction of a local union. These grievances pertain specifically to the local appendices of Local 800 (Sudbury), Local 71 (Ottawa), Local 552 (Windsor) and Local 628 (Thunder Bay). Each Local Union and local Contractors Association has negotiated slightly different language, relating to clauses, in respect of local issues. These clauses include language in respect of benefits and the administration of the overall wage package.
30Each of the local appendices has different wording to deal with the issue of benefits. At a minimum, each of the local appendices places an obligation on the employer to contribute to the union's benefit plan on the basis of hours worked by the employee. (See: Appendix 1 (c); Appendix 3 (C & D); Appendix 4 (C) & (K)(2); Appendix 13 (C)) These payments are to be made to the Fund and the Fund is to administer the money for the purpose of providing benefits to the members of the Local unions. (See: paragraph 6 of the agreed statement of facts)
31The parties have agreed, in paragraph 7 and 8 of the agreed statement of facts, that as long as the total wages package remains the same, the union may request a change to the contribution rates for specific benefits, and both the local associations and the M.C.A.O. accepts these changes to the amounts of the contributions. Should the costs of a certain benefit, (for example, dental insurance) increase, the local union may use some of the wage or pension contribution to make up the shortfall in the cost of the dental benefit, and it does so by requesting that the employers reallocate funds within the total wage package to allow for increased contributions to the dental plan. In this fashion, the trustees of the various plans have through the local unions the ability to be flexible, and to ensure that an adequate level of benefits are maintained.
32The practice and the language of the Provincial Collective Agreement allow the union to reallocate funds within the total wage package as a means to make up a shortfall in the trust funds administration, where, for example, the negotiated contribution rate is not sufficient to meet the financial requirements necessary to continue to properly fund negotiated benefits.
33The R.S.T.A. creates an obligation on the employer to pay an 8% tax at the same time~ that employer makes a contribution to the fund. (See section 11 of the R.S.T.A.) By operation of law, part of any remittance or payment to the fund is deemed to include the tax owed. For example, if the employer remits only $2.00, this amount is tax inclusive. Again, because of the effect of the R.S.T.A., only $1.85 of this $2.00 would be a contribution towards benefits and administration of the funds and $0.15 would by statute be the retail sales tax owed. (See paragraph 8 of the Agreed Statement of Facts) The amounts remitted are in the complete control of the employer. Thus, if the Provincial Collective Agreement calls for a payment of $2.00 towards or for benefits, and the employer remits only the $2.00, then (since the effective date of the R.S.T.A. amendments) only $1.85 will in fact be contributed to the funds, even though $2.00 is being remitted. On this example, there will be a shortfall in the amount to be contributed of $.15.
34The employer submits that the fund itself assumes the obligation of this $0.15 shortfall. This can be remedied, on the employer's analysis, by redistributing a portion of the overall wage package to the fund. In effect, if the employer is correct, its obligation is discharged by passing the tax obligation through to the fund and the employees. However, there is nothing in the Provincial Collective Agreement permitting such a "pass through".
35In Halton Forming Ltd., supra, the Board found that employers could not reduce payments made pursuant to the collective agreement to the health trust fund because of the enactment of the E.H.T.. The employers were found to have an obligation to pay the amount negotiated to provide benefits under the collective agreement. The amount negotiated in the collective agreement could not be reduced because the statute had reduced the fund's cost in respect of buying a particular benefit. At paragraph 10 the Board said the following:
"10. When bargaining a collective agreement, an employer takes into account its current and expected costs of doing business and a trade union takes into account the current and expected costs of living and working of the employees it represents. Once agreement is reached, ensuing economic and social changes may create differences between expected and actual costs of doing business and costs of living and working. Changes in income taxes and other taxes may and often do have that effect, as may changes in government economic and social programs. The bargain the parties make must nevertheless stand for a period of time before either party can require the other to renegotiate it. The parties to collective agreements generally do not agree that an arbitrator or arbitration board can adjust their agreement in mid-term to redress externally induced changes in the parties' economic circumstances."
36In the Board's view, the case at hand is similar in nature to the E.H.T. case. The parties negotiated an amount to be tendered as a contribution to the trust fund. Reference to the provisions of Appendix I of the Provincial Collective Agreement demonstrate this. The parties agreed that the employer (or contractor) was to "contribute" specified amounts (subject, as noted above, to reallocation within the total wage package). The requirement in the agreement is not merely to remit a certain sum, but to contribute a certain sum. The intention is clearly to ensure that the specified sum is actually utilized for the funds.
37This interpretation reflects the words used in the Provincial Collective Agreement (the agreement refers to "contributes" or "contributions"). As well, the Board is satisfied that the intention of the parties was that the amounts remitted be utilized for the plans or funds. Looking at all the relevant remittance provisions demonstrates this intention quite apart from the use of the specific word "contribute". The amounts in question were to go for the benefit of the employees. The nature of benefit plans, and the requirement that they be properly funded to enable them to continue to provide benefits, the language used to describe the payments, and the practice of allowing reallocations to ensure the plans remain fully funded, all reflect the intention that the remitted amounts were to go to the plans, for the continuation of benefits under the various funds.
38During the currency of the Provincial Collective Agreement the legislature enacted a statute which places an obligation on employers to pay a certain amount in tax. The employers, by tendering a tax inclusive amount, have attempted to shift the tax obligation from themselves to the funds by remitting (for example) $1.85 for benefits and $0.15 for the tax, and in so doing have not met their obligations under the Provincial Collective Agreement. The contribution rate was supposed to be (for example) $2.00 for benefits. The statute does not override the Provincial Collective Agreement obligation to contribute certain amounts; rather, it makes the employer responsible and liable for paying the tax. In the absence of a statutory override, the employer must continue to pay to the funds as required by the Provincial Collective Agreement.
39Article 30 of the Provincial Collective Agreement is an example of how the parties have, through the collective bargaining regime, dealt with a statutory financial obligation on a trust fund. The Workers Compensation Act created an obligation on multi-employer plans to keep injured workers in benefits for a period of one year. In response to this legislative initiative, the parties negotiated a $0.03 an hour employer contribution (Article 30). This article helps the trust funds to discharge their obligations under the statute. The legislation is clear that the multi-employer plan would be responsible for maintaining the coverage of the injured worker if this Article did not exist.
40In the Board's view, the employer must honour its collective agreement obligations absent statutory language to the contrary. Here, the Provincial Collective Agreement requires contributions in certain amounts, and the effect of the R.S.T.A. is to treat part of the amount forwarded to the funds as tax, thus reducing the amount of the remittance that is a contribution to the fund. This is in breach of the Provincial Collective Agreement. The employer cannot re-characterize the meaning of "contribution" by maintaining that the amount of money remitted is the same as the amount "contributed", where the R.S.T.A. has placed a statutory financial obligation upon the employer. Re-characterizing the meaning of "contribution" to include the tax would in effect rewrite the collective agreement, in the absence of any consent to do so or any statutory enactment to that effect.
41In Kitchener-Waterloo Ambulance, supra, the collective agreement placed an obligation on the employer to pay all premium increases that occur during the collective agreement. As well the statute created an obligation on the plan holder to pay the retail sales tax. The arbitrator ruled that the employer was responsible for all premium increases and for the full amount of the tax. Here the employer makes contributions to a multi-employer plan. The amount of the contribution is negotiated by the parties and represents an amount which the trustees of the plan will use to discharge their obligations pursuant to the trust. In short they are required to provide benefits for members of the plan. Like in the fact scenario in Kitchener-Waterloo Ambulance, supra, the employer here is obligated to pay the tax pursuant to the statute. The contributions to the benefit funds required under the collective agreement are part of the employees' overall wage package. These contributions do not include funding obligations that the employer is statutorily responsible for. Like the employer in Kitchener-Waterloo Ambulance, supra, these employers are responsible for the R.S.T.A., and cannot rely on monies tendered to the benefit fund to fulfil their statutory obligation. The statutory obligations pursuant to R.S.T.A. is an obligation which is outside the Provincial Collective Agreement, in the sense that the Provincial Collective Agreement does not provide a right to or mechanism for set off of the tax, or reallocation of it to the detriment of the employees, nor does the R.S.T.A. render the union or employees liable for the tax.
42In conclusion, the Board declares that the responding parties have violated the Provincial Collective Agreement in that they failed to contribute the appropriate amounts to the various Benefit Funds in that the amounts set out in the Provincial Collective Agreement are amounts to be contributed to the funds, and are therefore amounts exclusive of retail sales tax.
43The Board remains seized of any matter that arises in respect of this decision.