0905-00-ES Econome Inc., Applicant v. Alex Lamontagne and Ministry of Labour, Responding Parties.
Employment Standards File No. 23000949
BEFORE: Patrick Kelly, Vice-Chair.
APPEARANCES: Victor Grostern appeared on behalf of the applicant; Alex Lamontagne appeared on his own behalf; Darcy Watson appeared on behalf of the Ministry of Labour.
DECISION OF THE BOARD; April 26, 2001
- This is an employer appeal filed pursuant to section 68 of the Employment Standards Act, R.S.O. 1990, c. E.14, as amended (“the Act”) against Order to Pay No. 49718 issued by an Employment Standards Officer on May 9, 2000.
Background
The Employment Standards Officer (“the Officer”) determined that the applicant, Econome Inc. (also referred to as “Econome” or “the company”) was liable under the Act to the claimant, Alex Lamontagne, (“the claimant” or “Mr. Lamontagne”) for overtime, holiday premium pay, unauthorized deductions from wages, and vacation pay on the outstanding liability. The Officer further determined that the claimant was not entitled to termination pay.
The company claimed that the Officer was in error in determining the hourly pay rate, in failing to take into account other overpayments made to the employee, in failing to take into account the company’s overtime practices, and with respect to employee responsibility for damage of the company’s property or that of its customers.
The workplace parties were not represented by legal counsel. Consequently, I informed them that, though they were welcome and entitled to participate without counsel, this was a legal proceeding that would have some bearing on their legal rights and obligations.
The Evidence
Econome is in the business of the supply and maintenance of portable sanitation services for industry and the general public. It has been in business since 1988. Victor Grostern is Econome’s president and sole shareholder. He is also the managing director, with ultimate responsibility for the company’s administrative functions, including payroll preparation. He reviews prepared summaries of all hours worked by the staff of Econome for the purposes of completing the bi-weekly pay cheques. He has sole signing authority on all payroll cheques.
The business of Econome is highly seasonal in nature, its busiest period being the summer months. Econome’s work force is supplemented in that period with summer students, of which the claimant was one in both 1998 and 1999. This dispute relates to his 1999 employment as a “Seasonal Delivery Driver/Serviceman”.
Mr. Grostern testified that the terms and conditions of the claimant’s employment in 1999 was governed by a “Seasonal Employment Agreement” (“the contract”), an unsigned and undated copy of which was provided to the Board. That copy contains Mr. Lamontagne’s and Econome’s name and address typewritten at the commencement of the contract. It sets out the duties of the driver’s position. It sets out an hourly wage of $8.00, and states that the employee is eligible to receive “a performance-based increase to $9.00 per hour as of July 15, 1999, and a performance-based bonus at the end of his seasonal employment, the amount of which shall be determined by the Employer.” The contract also contains the following clause:
RESPONSIBILITY:
The employee is responsible for all the tools and equipment, uniforms and other materials provided and hereby agrees to replace any such tools or equipment lost by him or damaged through misuse. The employee also agrees to the terms and conditions as outlined on the appended Waiver & Acceptance of Responsibility Agreement. [sic] and in the Employer’s Service & Performance Standards document, a copy of which the employee hereby acknowledges having received.
- The “Waiver and Acceptance of Responsibility Agreement” (referred to hereinafter as “the waiver”) referred to in the contract was also not signed or dated. It provides as follows:
WAIVER & ACCEPTANCE OF RESPONSIBILITY AGREEMENT
DATE:
TO Econome Inc. &/or 802710 Ontario Inc.
4117 Belgreen Drive
Gloucester, Ontario
K1G 3N2
As a condition of employment with Econome Inc. &/or 802710 Ontario Inc. (the Employer), I hereby accept full responsibility for the safe-keeping of any and all materials, tools, brushes, or other goods required for the execution of my duties. In particular, I hereby accept to pay to the Employer the cost of replacement of any such materials, tools, brushes, etc. lost by me, or damaged beyond repair through misuse; and
After I have had vehicular accidents which have caused the Employer to give me written warning about my driving record, I hereby agree to compensate the Employer for the amount of any insurance deductible which the Employer shall be required to pay on repair of its vehicles in the case of vehicular accidents which are deemed by the insurer to be my fault; and
After I have received written warning from the Employer about my incidences of towing required, I hereby agree to compensate the Employer for the amount of any towing which the Employer shall be required to pay and which the Employer’s supervisory personnel deem to have been preventable; and
I further agree that in the case that my employment with the Employer ceases during a period in which I have been overpaid by the Employer for the hours which I have actually worked, as for example under the pay-leveling formula, I will repay to the Employer any such amounts of overpayment which may be owing to it; and
I further agree that in the case that my employment with the Employer ceases during a period in which I am insured under an employer-sponsored health insurance, or any other insurance plan, that I shall pay the entire amount of the coverage (both employer & employee portions) for me and my dependents to the end of the then-current benefit period from the date of cessation of employment.
In all of the above cases, I agree that the Employer can deduct any such amount payable by me from any amounts of final pay or of vacation pay due to me upon termination of employment.
Dated at Gloucester this day of 19
Signed:
Witness:
Mr. Grostern claimed that the contract and the waiver, which were routinely provided to all summer students, constituted the agreement of the workplace parties. He testified further that the contract was “elaborated upon” throughout the claimant’s employment. The contract is silent on the issue of overtime, but Mr. Grostern testified that the arrangement he had with summer students, including the claimant, was that they could work unlimited hours, thus accumulating the necessary income to see them through the ensuing school year. There would be no overtime paid for those hours in excess of 44 hours in a week, as required by the Act. Instead, the performance-based bonus paid at the end of the season was considered, in part at least, as payment in lieu of overtime. Mr. Grostern testified that the bonus was entirely discretionary, and admitted that Econome has on at least one occasion dismissed an employee for poor performance in mid-season and declined to give to that employee any bonus whatsoever. Mr. Lamontagne acknowledged the existence of Mr. Grostern’s approach to overtime; that is, the claimant knew that Econome would not pay overtime pay as it was earned. He testified that he never agreed to forego overtime pay. The claimant disputed that the performance-based bonus was compensation for overtime worked. Mr. Lamontagne said that such a characterization was simply a convenient explanation dreamed up by Mr. Grostern to defend Mr. Lamontagne’s claim under the Act.
Mr. Grostern testified that, as part of the terms and conditions of employment of the students, Econome deducted $1.00 per pay from each of the students in respect of a damage fund. He explained this as “insurance” for damage caused to Econome’s property or the property of its customers at the hands of Econome employees. Mr. Lamontagne acknowledges the practice of deduction by Econome in this regard, but disputes that he expressly agreed to it. There was no documented evidence that he had ever given his signed written consent to this deduction, just as there was no such evidence that he gave his signed written consent to any other form of deduction from wages.
Mr. Lamontagne testified that, though he was presented with the contract for execution, he did not agree with certain aspects of the contract, and did not sign it nor feel bound by its terms. He did not dispute that the contract accurately reflects the duties of his position. He did not dispute that he was paid $8.00 per hour from the commencement of his employment on May 4, 1999 until July 15, 1999 at which point he received $9.00 per hour until the end of his employment on August 30, 1999. He disputed that the hourly rates set out in the contract reflected the actual agreed hourly rate between him and Mr. Grostern. The claimant’s evidence is that, during his first week of employment, he and Mr. Grostern agreed that, ultimately, the claimant would be compensated on the basis of a $9.00 hourly rate from May 4 to July 15, 1999, and a $10.00 hourly rate thereafter.
The discrepancy between the workplace parties with respect to the hourly rate lies in the application of a government subsidy program, known as “Youth Employment Services” (“the subsidy program”), funded by the Province of Ontario’s Ministry of Training, Colleges and Universities. The thrust of the program is to provide employers in Ontario with incentive to hire young employees, including students. The program provides a wage subsidy for all such hires.
Mr. Grostern acknowledged that Econome participated in the subsidy program on an ongoing basis. He agreed that in 1999 Econome received $2.00 per hour for each of two students, for 700 hours of work, for a total subsidy of $1,400.00. He testified he did not know with any certainty whether the claimant was one of those two students enrolled in the subsidy program. The claimant, on the other hand, gave evidence showing that he was quite clearly a participant in that program. He produced documentation, the authenticity of which was not challenged, demonstrating that Econome, on June 3, 1999, applied for the subsidy for two unnamed employees of Econome, for a period of 15 weeks from June 1, 1999 until August 30, 1999, at a rate of $9.00 per hour (inclusive of subsidy) for 44 hours per week. He also produced a copy of a document from Youth Employment Services addressed to Mr. Rick Barbe, Econome’s dispatcher and the claimant’s supervisor at the time, indicating that Econome would receive a subsidy in respect of Mr. Lamontagne for a period of 10 weeks. The subsidy in respect of the claimant applied to 35 hours per week. The total subsidy received by Econome in respect of the claimant was $700.00 in 1999. Econome received the subsidy in two lump sums, one sometime after July 15, 1999, and another at the end of the claimant’s employment in late August 1999.
Mr. Lamontagne testified that he had an agreement with Mr. Grostern that the $2.00 per hour subsidy would be split, that is, that Econome would keep half the subsidy and pay the other half to the claimant. The payment was to be made at the end of the claimant's employment, thus ensuring his service throughout the season. Mr. Grostern had no such recollection of such an arrangement. The workplace parties both agreed that at the end of the season and Mr. Lamontagne’s employment in 1999, he received a lump sum of $1,378.00. Mr. Grostern said this money was the performance-based bonus referred to in the contract. He could not explain how it was calculated, but he testified that it was in recognition of overtime and performance. The claimant suggested to Mr. Grostern in cross-examination that the $1,378.00 was in respect of their verbal agreement to split the subsidy. Mr. Grostern did not think that was the case, but in any event, he pointed out that if there had been an agreement to split the subsidy in respect of the claimant, the claimant could only have expected $350.00, because, as I have pointed out above, the total subsidy was $700.00.
The final piece of evidence concerns statutory holidays. Mr. Lamontagne was employed during a period in which two statutory holidays covered by the Act occur, Victoria Day and Canada Day. He worked for four hours on each day, but was paid no premium holiday pay. The Officer determined that the claimant was entitled to that premium, and included it in the Order to Pay. The Officer further determined that Econome was not entitled to deduct the dollar per pay “insurance” from the claimant’s wages, and also included that amount ($9.00) in the Order to Pay.
Decision
The applicant failed to persuade me that the Officer’s determinations and conclusions in this matter were anything but correct with two small exceptions. In arriving at this finding, I prefer the evidence of Mr. Lamontagne where there was a conflict with the evidence of Mr. Grostern. The claimant testified with relative certainty as to the material events concerning his employment. Mr. Grostern’s evidence was less convincing. Despite his status as general manager, including his responsibility for the payroll, he could not explain how the applicant’s performance-based bonus was calculated. He claimed that the performance-based bonus included compensation for overtime worked, but in light of his evidence that the bonus was totally within Econome’s discretion to pay, I find that claim to be contradictory and without merit. He produced an unsigned, undated contract which he said applied to the claimant’s terms and conditions of employment, and was quite certain that a fully executed original had been entered into, although he could not produce such a document, and had no explanation as to why he was unable to do so. He was unable to shed any light as to why Econome’s application for subsidy for two students in 1999 indicated an hourly rate of $9.00, inclusive of subsidy. If the claimant’s hourly rate really was initially $8.00, then the application for subsidy should have indicated an hourly rate of $10.00 inclusive of the $2.00 per hour subsidy. Presumably, the person who completed the application must have made an error, and I find that the most reasonable inference to be drawn is that the $9.00 per hour in the application for subsidy referred to the claimant’s agreed hourly rate.
I find there was no executed written contract setting out the claimant’s terms and conditions of employment. The employment agreement was based on verbal representations and the conduct of the parties. The contract produced by the applicant at the hearing happened to reflect some but not all the terms and conditions of employment. The claimant and Mr. Grostern agreed that the claimant’s true hourly rate would be $9.00 from May 4 until July 15, 1999, and that it would be $10.00 thereafter, thus reflecting both Econome’s policy of providing a mid-season performance raise, as well as the impact of the subsidy which Mr. Grostern and the claimant agreed to split. The performance-based bonus of $1,378.00 included Mr. Lamontagne’s split of the subsidy, plus a much larger amount for his satisfactory performance. It was not compensation for overtime worked.
There is no discrepancy of any significance between the hours of work of the claimant as calculated by the Officer and those set out in the pay period summaries put in evidence by Econome. The Officer’s calculations of overtime worked beyond 44 hours in a week, based upon the correct determination that the claimant initially earned $9.00, and later $10.00, per hour are accurate, except that the Officer mistakenly - and contrary to subsection 26(2) of the Act - took into account in that determination four hours worked by the claimant on each of two public holidays.
Section 26(2) provides as follows:
- (2) Where an employee works on a public holiday, the hours the employee works on the public holiday shall not be taken into consideration in calculating any overtime pay to which the employee is entitled for the work week in which the public holiday occurs.
In addition, the Officer based her overtime calculations on an assumption that the claimant’s hourly rate increased on July 5, 1999. The evidence given by the claimant at the hearing, which evidence I accept, was that his hourly rate changed on July 15, 1999.
My orders below reflect the Officer’s error, with the result that Econome is entitled to the return of $36.00 in respect of the double holiday pay/overtime calculation, and to $1.50 in respect of the overtime mistakenly calculated on the overtime premium of $5.00 from July 5, 1999 until July 14, 1999. In all other respects the Officer was correct in determining that overtime was payable pursuant to section 24 of the Act.
Mr. Grostern argued that, as a matter of “equity”, the Officer should have deducted from amounts owing to the claimant the property damage claims of Econome said to have been caused by Mr. Lamontagne. Mr. Grostern also suggested that as a matter of equity, the performance-based bonus of $1,378.00 should have been taken into account in reducing, in its entirety, the company’s liability for overtime. I understood Mr. Grostern’s argument concerning equity to be as follows. There was an agreement between the workplace parties that, in exchange for unlimited working hours, there would be no overtime paid, and once Mr. Lamontagne “breached” that agreement by filing his claim, the employer was entitled to consider itself no longer bound to pay the performance-based bonus. Moreover, the claimant’s “breach” also, as a matter of equity, gave rise to the company’s right to claim against his wages in respect of alleged property damage.
An Employment Standards Officer has no equitable jurisdiction. His or her jurisdiction derives from the statute, and the statute alone. That said, Regulation 325 R.R.O. 1990 (“Reg. 325”), as amended, made pursuant to the Act, provides in section 14 the scope of an employer’s right to set off against, deduct from, claim or make a claim against the wages of an employee. In this matter, aside from the $1.00 per pay “insurance” deduction, Econome made no attempt to set off or make deductions from the claimant’s wages in respect of any specific lost or damaged property while he was employed. Its claims against Mr. Lamontagne’s wages in respect of property damage were not made until Mr. Lamontagne filed his claim under the Act. In my view, Econome cannot succeed in circumstances where it has initiated a section 68 review for the purpose of attempting to recover what it did not seek to deduct from the claimant’s wages in the first place. That would be to use the Act as a substitute for civil litigation. The applicant must seek such remedies elsewhere. Even if I am wrong in that conclusion, Econome produced no written authorization from Mr. Lamontagne permitting employer claims against his wages, and even if there had been such authorization, it would have had no effect by virtue of subsection 14(2) of Reg. 325. Moreover, as indicated above, I do not accept that the performance-based bonus was a quid pro quo for overtime worked, but not paid, to the claimant at the time the overtime was worked. The discretionary nature of the bonus militates against that characterization, as do the words “performance-based” which describe the bonus, and which appear in the contract that Econome itself drafted. In any event, even if I accept that the workplace parties agreed that overtime would not be payable in excess of 44 hours in a week, such an agreement to contract out or waive an employment standard is null and void by virtue of section 3 of the Act. There is no basis, therefore, for changing the Officer’s Order to Pay on the basis urged by the applicant.
The Officer’s determination that the claimant was entitled to holiday premium pay for hours worked on Victoria Day and Canada Day was correct. Section 26 of the Act sets out the premium entitlement. Mr. Grostern contended that the Officer should have deducted wages Econome paid to Mr. Lamontagne for his day off on the August 2, 1999 civic holiday, a holiday which is not covered by the Act. Mr. Grostern urged, again, as a matter of equity, that those monies should be returned because there was no legal obligation to have paid them to the claimant. As I understood his argument, Mr. Grostern was of the view that, because Mr. Lamontagne did not feel bound by certain portions of the alleged written contract of employment (which I have found was never executed and did not, in any event, constitute the true or entire agreement between the parties), he is not entitled to benefit from any of its terms. There is no logical or legal basis for that contention. First, the contract does not expressly disentitle the claimant from the benefit of the civic holiday. It is silent on the issue of holidays altogether. I infer from the fact that the claimant was paid wages on the civic holiday that it was an implied term of the claimant’s employment that he be compensated for the civic holiday. Secondly, Econome made no attempt to recover those wages until Mr. Lamontagne filed his claim under the Act. Again, I am of the view that the review application is being used to advance civil law claims stemming from an alleged contract breach, and cannot succeed on that basis.
Disposition
- I hereby order:
(i) that the wages paid to the "Director in trust" in relation to this matter be disbursed as follows:
to be paid to the Employee $714.94
to be paid to the Employer $ 37.50
(ii) that the administration fee as set
out in the Order to Pay be retained
by the Government of Ontario
Consolidated Revenue Fund $100.00
total amount held by the Director $852.44
- The application is dismissed.
“Patrick Kelly”
for the Board