Ontario Labour Relations Board
File Nos.: 1906-98-ES, 30006225 Date: October 27, 2000
Between: National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada) and its Local 396 on behalf of the employees named in Schedule “B”, Tabs 1, 2 and 3, Applicants v. Zettel Metalcraft Ltd., Zettel Manufacturing Limited, 506165 Ontario Limited cob Trillium Metal Stamping, and Ministry of Labour, Responding Parties.
Before: Patrick Kelly, Vice-Chair.
DECISION OF THE BOARD
1In its decision of August 10, 2000 the Board found the responding party companies to be related within the meaning of section 12 of the Employment Standards Act, R.S.O. 1990, c. E.14, as amended (“the Act”). This resulted in a further finding of joint and several liability on the part of Zettel Manufacturing Limited (“Manufacturing”) and 506165 Ontario Limited cob Trillium Metal Stamping (“Trillium”) for the outstanding debt of the bankrupt Zettel Metalcraft Ltd. (“Metalcraft”), which debt was found by an arbitrator to be payable to the former union employees of Metalcraft.
2At the conclusion of its August 10, 2000 decision, the Board directed the parties to file written submissions concerning the quantum of the amounts payable to the former union employees of Metalcraft, and concerning the Board’s jurisdiction to include the former non-union employees of Metalcraft in any order to pay arising out of a reference from an arbitrator appointed pursuant to a collective agreement.
3This decision deals with the written submissions of the parties with respect to the issues identified in paragraph 2 above.
The former non-union employees
4Counsel for the Ministry of Labour (“the Ministry”) contends that I can and should include the former non-union employees of Metalcraft in the order to pay, notwithstanding that they have not filed claims with the Ministry. Some of these former non-union employees apparently received payments under the since discontinued Employee Wage Protection Program (“EWPP”), pursuant to the Act. The Ministry provided the Board with a schedule of thirteen names and the amounts of EWPP payments made to those individuals.
5Before finally dealing with this issue, the Board is interested to know all the circumstances under which these non-union employees received EWPP payments. Did they file claims? Under what section of the Act, as it then was, were the EWPP payments made? To what extent did Metalcraft or the trustee in bankruptcy have knowledge of the circumstances of the EWPP payments made to the non-union individuals? The Ministry is directed to provide any information it has with respect to these queries to the Board and the other parties in this matter on or before November 3, 2000. To the extent the other parties wish to make submissions in reply to the information provided by the Ministry, they may do so on or before November 10, 2000. The Board will then consider the issue further.
The quantum of monies owing to union employees
6The amount found by the arbitrator to be owing by Metalcraft to its former union employees was $2,033,517.60 in respect of wages, vacation pay, termination pay and severance pay under the Act.
7Counsel for the responding party does not dispute the arbitrator’s finding on quantum, but submits that the amount should be net of payments already made out of the EWPP.
8The Board does not agree with this conclusion, nor with the related submission that the hearing in this matter proceeded on the basis as suggested by that conclusion. The responding party companies cannot be the beneficiaries of a windfall as a result of fortuitous payments made under a tax-supported fund such as the EWPP. The Board’s decision of August 10, 2000 suggested only that the employees who benefited from EWPP payments would, if the applicant (“the union”) was successful in this application, receive ultimately an amount net of those payments. It did not imply that the liability of the responding party companies would therefore be reduced.
Payment to the Union
9Both the Ministry and the union contend that the Board should order Manufacturing and Trillium to pay the amount of $2,033,517.60 to the union in trust, and both acknowledge that the Ministry may assert a subrogated claim with respect to that amount on account of monies already paid to some union employees under the EWPP.
10Counsel for the responding party companies, on the other hand, submits that there is no authority under the Act to provide for payment to the union in trust. He contends that that there are only two entities to whom payment can be ordered: the Director of Employment Standards in trust (section 65(1.2)); or directly to the claiming employees (section 65(3)). All parties agree that section 65(1.2) is not applicable in this case. Counsel for the responding party companies argues, therefore, that the Board must order the payment of the funds directly to the employees.
11I prefer the submissions of counsel for the union. He refers to section 64.5 of the Act, which deals with the enforcement of the Act within the context of a collective agreement. The union in this case sought the enforcement of the Act through its collective agreement, and concomitantly, through the arbitration process under that collective agreement. As noted above, the arbitrator made a finding of liability against the responding party Metalcraft, but did not order payment in light of the section 12 relatedness issue which he referred to the Director. Had an order to pay been made by the arbitrator, section 64.5(10) forbids that the payment be made to the Director in trust. I accept counsel for the applicant’s submission that the purpose behind section 64.5(10) is to preclude the Director from becoming the collection agent when there is a bargaining agent available to undertake that role. Counsel goes on to argue, and I agree, that section 64.6 of the Act (dealing with the question of section 12 relatedness issues raised in an arbitration), and particularly subsection 64.6(7), which provides that subsections 64.5(6) through (13) apply with necessary modifications, provide the authority to modify subsection 64.5(10) such that an order to pay the union in trust is appropriate. Subsection 64.5(10) is not intended to frustrate the collection process by requiring individual employees to act on their own when their claims have been successfully asserted as a whole on their behalf by their collective bargaining agent.
Interest
12Counsel for the union contends that the Board should order interest on the amount owing to the former union employees. Counsel for the responding party companies states that, since the Act was amended in 1998 with the inclusion of section 61.1, the Board has no jurisdiction to make such an order. In the alternative, if the Board has jurisdiction to order interest, counsel for the responding party companies submits that it should not do so because the responding party companies have acted reasonably and not caused undue delay.
13The Board has jurisdiction to award interest under the Act. The Board’s jurisdiction to award interest is found in section 68(24) of the Act, which states:
68(24) If the Board issues, amends or affirms an order requiring the payment of money, the Board may order the person against whom the order was issued to pay interest at the rate and calculated in the manner determined by the Director under section 61.1.
14Section 61.1, which confers a discretion upon the Director of Employment Standards to determine the rate and manner of calculating interest with the approval of the Minister of Labour, does not deprive the Board of the power to order interest merely because the Director of Employment Standards has not exercised that discretion.
15Turning to the alternative argument of the responding party companies, it would appear that the point being made is that, in the absence of culpable conduct on the part of his clients, it is not appropriate to order interest. This presumes that interest is levied as a penalty for the misconduct or inappropriate behaviour of a party. That is not the purpose behind an order of interest. The Board in Hallowell House Limited [1980] OLRB Rep. Jan. 35 made observations concerning the purpose behind the awarding of interest in a Labour Relations Act matter. I am of the view that those observations are equally valid in the context of a violation of the Act. At paragraph 28 of the decision, the Board stated:
- …An employee who has been deprived of employment contrary to The Labour Relations Act suffers not only a loss of wages, but also a loss of the opportunity to use the money and have interest accrue on it. As this loss of interest is directly attributable to the employer’s violation of the Act, it is appropriate that in its effort to make an employee whole, the Board direct the payment of interest on the wage loss. Compensation for loss of interest is also provided by the courts in Ontario. Section 38(3) of The Judicature Act, R.S.O. 1970, c. 228, as amended, S.O. 1977, c. 51 stipulates that “… a person who is entitled to a judgement for the payment of money is entitled to claim and have included in the judgement an award of interest thereon…”. An award of interest ordered either by the courts or the Board is not compensation for general wrong doing. Instead, in the words of Lord Denning, it is specific compensation “…for being kept out of money which ought to have been paid…” (Jeffrey v. Gee, [1970] 1 All E.R. 1202 at 1207).
16The responding party companies were not found by the Board in its August 10, 2000 to be blameworthy. However, the Board has effectively found that, because the responding party companies were related within the meaning of the Act, the former union employees of Metalcraft should have been paid wages, including termination and severance pay at the time of their termination resulting from the bankruptcy of Metalcraft in February 1997. Through no fault of their own, those former employees have been without the benefit of those monies for an extended period of time. Manufacturing and Trillium, on the other hand, have had the opportunity, theoretically at least, to invest those funds which rightfully belong to the Metalcraft former union employees, and, potentially, to reap the benefits of such investment. An order of interest is therefore appropriate in this case in order to make those individuals whole.
DISPOSITION
17The Board makes the following orders and directions:
(i) Having found Manufacturing and Trillium to be jointly and severally liable for the amount of Metalcraft’s indebtedness to its former union employees, as determined by the arbitrator, I hereby order Manufacturing and Trillium to pay forthwith to the union in trust the amount of $2,033,517.77, plus interest in accordance with the Courts of Justice Act. Interest is to be calculated from August 10, 1998, the date on which the Employment Standards Officer determined not to issue an order to pay. The sum of $2,033,517.77 is in respect of the following headings of claim as set out in the arbitrator’s award (the arbitration award contains a minor calculation error when adding the headings of claim, resulting in the incorrect total of $2,033,517.60):
Wages for service rendered $ 84,945.09 Vacation pay: 200,437.10 Termination pay: 656,304.19 Severance pay 1,091,831.39 Total: $2,033,517.77
(ii) The Ministry is directed to notify the union of the assertion of any subrogated claim with respect to the amount payable in paragraph 1 above, on account of payments previously made to former union employees of Metalcraft pursuant to the EWPP. Such notification shall be delivered on or before November 6, 2000, following which the union is entitled to distribute the monies in trust.
18The Board remains seized to deal with the issue of the former non-union employees. The Board also remains seized to deal with any other issues related to implementation of this decision, including any related to enforcement or the subrogation claims of the Ministry.
“Patrick Kelly”
for the Board