Canadian Union of Public Employees, Local 2175 v. Her Majesty the Queen in Right of Ontario, 1992 CanLII 4693

0087-90 CanadianUnionofPublic Employees,Local2175, Applicant v. HerMajestythe QueeninRight of Ontario (Ministry of Community and Social Services), Children's Aid Society of the City of Kingston and the County of Frontenac, Respondents; 0094-90 Her Majesty the Queen in Right of Ontario (Ministry of Community and Social Services), Applicant v. Children'sAid Societyofthe CityofKingstonand the CountyofFrontenac,CanadianUnion of Public Employees, Local 2175, Respondents

Before : Beth Symes, Chair; Bruce Budd and Donald Dudar, Members

Appearances:CathyLace, MargaretLeightonand Ed Scott forthe CanadianUnionofPublicEmployees; Stephen Patterson and Peter Burbidge for the Ministry of Community and Social Services; Deborah Leighton and Susan Abell for the Children's Aid Society of the City of Kingston and the County of Frontenac.

Cite As: Kingston-Frontenac Children’s Aid Society (No.2) (1992), 3 P.E.R. 117

Employer

The Tribunal found that the Province exercised fundamental control over the provision of services to children and that the Province's involvement was so intrusive as to constitute direct and substantial control over the nature of services provided by the Children's Aid Society. The Province was found to exercise directandsubstantialcontrol over all significant financial matters. The province also exercisedultimateor extraordinary control over compensation practices while the Children's Aid Society exercised routine or regularcontrolinthisareaoftherelationship. Further, the Tribunal determined that the Province's decisions about allocation of finances and provision of services had a direct and substantial effectoncompensation practices. The Tribunal therefore concluded that the Province exercises fundamental control over the employees of the CAS and was their employer for the purposes of pay equity.

Employeur

Le Tribunal a conclu que la province exerçait un contrôle fondamental dans le cas de la prestation des services aux enfants et que son ingérence était telle qu'elle constituait un contrôle direct et substantiel sur la nature des services fournis par la Société d'aide à l'enfance. La province exerçait un contrôle direct et substantiel sur toutes les questions financières d'importance. Aussi, en dernier ressort ou dans les circonstances extraordinaires, les pratiques de rétribution étaient régies par la province, tandis que la Société d'aide à l'enfance exerçait son autorité dans l'administration régulière et quotidienne dans ce secteur. Par ailleurs, les décisions de la province concernant l'affectation des ressources financières et la prestation des services ont des répercussions directes substantielles sur les pratiques de rétribution. Le Tribunal a donc conclu que la province exerce un contrôle fondamental sur les employés de la Société d' aide à l'enfance et, aux fins de l'équité salariale, est considérée comme étant l'employeur.

DECISION OF BETH SYMES, CHAIR, AND TRIBUNAL MEMBER BRUCE BUDD, SEPTEMBER 14, 1992

Issue

Her Majesty The Queen in Right of Ontario (Ministry of Community and Social Services) (the "Ministry") has requested a hearing withrespect to an order of a Review Officer dated March 12, 1990. The order named the Ministry as the employer forpayequitypurposes of those persons employed at the Children'sAidSocietyoftheCityofKingston,andtheCountyofFrontenac(the"KCAS"). The Canadian UnionofPublicEmployees,Local2175("CUPE")isthebargainingagentoftheemployeesindispute. The Ministryand the KCAS maintained that the KCAS is the employer of the employees in question. CUPE said that the Ministry is the employer.

The KCAS was established in 1883 and was incorporated as a not-for-profit organization in 1933 to carry out the functions of a Children's Aid Society. The Minister of Community and Social Services ("theMinister")hasdesignatedtheKCAS asanapprovedagencyto deliver specified servicesforchildren and families in the County of Frontenac [Child and Family Services Act, R. S. O. 1990, c. C.11, s.15, the “CFSA”]. The parties have placed in issue the relationships between the Province, the KCAS and CUPE.

The Law

3. The term "employer" has not been defined in the Pay Equity Act, R.S.O. 1990, c. P.7 (the “Act”). Inthe firstcase dealing with this issue the Tribunalusedfour criteria todetermine the questionofwho isthe employer:

1Who has overall financial responsibility?

2Who has responsibility for compensation practices?

3What is the nature of the business, the service or the enterprise?

4What is most consistent with achieving the purpose of Pay Equity Act? [Haldimand-Norfolk (No. 3) (1990), 1 P.E.R. 17]

1 This decision was upheld on judicial review by the Divisional Court and affirmed by the Court of Appeals. [Re Haldimand-Norfolk Regional Board of Commissioners of Police and the Regional Municipality of Haldimand-Norfolk v. Ontario Nurses' Association (1990), 1 P.E.R. 188 (Div. Ct.); Regional Municipality of Haldimand-Norfolk v. Ontario Nurses' Association unreported decision of the Ontario Court of Appeal dated September 27, 1990] In that decision, the Tribunal said that these criteria were not intended to be all encompassing and that future cases might well add to the tests. [Haldimand-Norfolk, supra, at p.36]

5. The four criteria were revisited by the Tribunal in Middlesex-London Health Unit [(1990), 1 P.E.R. 89] and Metropolitan Toronto Library Board [(1990), 1 P.E.R. 112] and were refined, developed and

appliedtothe factsofthose cases to determine, for the purposes of pay equity, who was the employerof the employees in dispute.

2 The issue of who is the employer of persons who worked at the Barrie Library came to the Tribunal. In that case, the Tribunal said that pay equity is to be implemented within the framework of the existing bargaining and employment relationships. [Barrie Public Library Board (1991), 2 P.E.R. 93, at pp.97 ­98] As the purpose of the Act is to establish and maintain compensation practices that provide for pay equity, the Tribunal centred or focused its enquiry on identifying the entity that had control over and was responsible for the existing compensation practices and the valuing of work. The Tribunalsaid that in the vastmajorityofcases,thatentitywill be the partythatnegotiateswagesand benefitswiththe unionand will betheentitynamed in the collective agreement as employer. The Tribunalwentontorecognizethatthere may be cases in which it is necessary to look beyond those existing structures in order to determine who is the employer. The Tribunal said that a full examination of the reality of the employment relationship may be required to determine who really sets compensation policy and attaches value to the work performed.

3 TheBarrie approachto determiningthe questionofwho isthe employerwasfollowedbythe Tribunal in Porcupine Health Unit (No.2) (1991), 2 P.E.R. 198.

4 The parties in this case have asked the Tribunal to re-examine the criteria used to determine who is the employer.

5In the vast majority of pay equity plans there is no issue as to who is the employer and who is responsible for the obligations under the Pay Equity Act. There has been no question as to the identity ofthe employerand the appropriatepartieshave proceededto negotiatepayequityasrequiredbythe Act. In fact, the Tribunal has been asked to adjudicate very few of these disputes.

6Where there is adispute,theTribunalmustenquireintotherealitiesof the employment relationship. To answerthe question, forthe purposes of pay equity, who has fundamentalcontroloverthe employees, the Tribunal will consider who has overall financial responsibility; who has responsibility for the existing compensation practices and the valuing of work; and who determines the nature of the services provided or the work performed.

7Although for ease oforganizationwewilllook at these criteria separately, in reality they are linked: without funds, services cannot be provided and the availability of funds affects compensation practices. Similarly, decisions about the delivery of services and the work performed affects compensation. The purpose of the Pay Equity Act is to redress gender discrimination in compensation for work performed by employees in female job classes [ss.4(1)]. The statute specifies that systemic discrimination in compensation is to be identified by undertaking comparisons between female job classes and male job classesintermsofcompensationandintermsofthevalueofthe work performed[ss.4(2)]. Therefore, the determination of what services the KCAS must provide is an integral component of determining who has control over and is responsible for the existing compensation practices and the valuing of the work performed.

8The relationship of the KCAS to the Ministry is defined formally by statute and regulations and by Ministry policies. However, thepracticalrealitiesoftherelationshipmaybeverydifferent. In determining who hascontrolovercompensationpracticesand the valuing of work,as wellas servicesand finances,the Tribunal will examine both aspects of the relationship. Where they differ, the Tribunal will rely on the realities of this relationship for the past 15 years.

9Counsel for the KCAS asked the Tribunal to adopt the criteria used by the Supreme Court of Canada to determine whether the KCAS forms part of government. The issue of "what is government" arose in a series of cases where the mandatory retirement provisions at several universities a community college, and a public hospital were challenged under the Charter. [McKinney v. University of Guelph, 1990 CanLII 60 (SCC), [1990] 3 S.C.R. 229; Harrison v. University of British Columbia, 1990 CanLII 61 (SCC), [1990] 3 S.C.R. 451; Douglas College v. Douglas/Kwantlen Faculty Association, 1990 CanLII 63 (SCC), [1990] 3 S.C.R. 570; Stoffman v. Vancouver General Hospital, 1990 CanLII 62 (SCC), [1990] 3 S.C.R. 483] In each case, the Court had to deal with the issue of whether or not the entity in question was a government body under section 32 of the Charter.

10In considering the relationship each entity had with government, the Court considered who appointed the Board of Governors, the sources of funding, the budget approval process, the degree and significance of the supervision and control exercised by the Minister, and the degree of autonomy the entity has to manage its own affairs. The Court differentiated between routine or regular control over an entity which would sweep it into government, and ultimate or extraordinary control which would not. The Court said the factthatanentityperformedimportant public functions would notbe sufficient tocharacterize the entity as part of government. Nor was it sufficient to say that the entity was providing an important part of the legislated mandate of government.

11In the mandatory retirement cases the Supreme Court was determining the applicability of the Charter to the activities of an entity. That is, the Court considered whether to extend the reach of the Charter fromthe legislatureand the administrative branchesofgovernment toincludethe activitiesofmore arms length entities, such as universities, community colleges and public hospitals. The Court asked whether the entity was part of government, that is, a subordinate body that is created, supported or supervised by government such that the entity is part of the administrative branch of government.

12Although the distinctions madeinthesecasesarenotparticularlyhelpfultotheTribunal because we arenotaskingwhether an agency is part of government, the Supreme Court of Canada's approachtothe question of control is helpful.

13In the retirement cases, the Supreme Court of Canada considered a number of aspects of control. First, does the government have ultimate or extraordinary control over the entity? The Court determined however,that this test was not sufficient to render the government responsible for the entity. Second, the Court considered whether the government had routine or regular control over the entity. That degree of control is certainly sufficient to determine the question, but it is not necessary in order that the government be found to be responsible for an entity. Finally, the Court asked who has direct or substantial control over the entity? For pay equity purposes, we have formulated this test as: does the Ministry have fundamental control over the agency?

14The relationship between the Ministry and the KCAS is an intricate web of rights, obligations and responsibilities which must be untangled to determine the question of fundamental control. The Tribunal will examine the relationship inthreeareas:financialcontrol, responsibilityforcompensation practices, and the determination of the services provided by or the work performed by the KCAS. To put order and understanding to the evidence, we will begin the enquiry with who is responsible for determining the services provided by or the work done by the KCAS.

I. WHO DETERMINES THE NATURE OF THE SERVICES PROVIDED BY OR THE WORK PERFORMED BY THE KCAS?

19. The Ministry is responsible for providing a wide range of services in the province, in areas such as the protection and well-being of children, the licencing and inspections of day cares, responsibility for the developmentally delayed, services for young offenders, the provision of welfare, and services for the elderly. Its field operations are decentralized into four regions. The province is further subdivided into thirteen area offices. The program supervisor assigned to the KCAS is located in the Kingston Area Office. He has statutory responsibility for maintaining the relationship between the KCAS and the Ministry [CFSA, ss.5(2)].

1 Prior to 1874, the only source of protection for children in the province was the criminal law system. Institutions for the poor, the neglected and the physically and mentally ill were almost exclusively financed from private donations. Beginning in 1874, An Act to Regulate Public Aid to Charitable Institutions established cost-sharing between charitable organizations and the government. In 1888, An Act for the ProtectionandReformationof NeglectedChildren allowed courts to make childrenwards ofinstitutions and charitable organizations. Local governments assumed the maintenance costs of these children. In 1893, An Act for the Prevention of Cruelty to, and Better Protection of Children was passed. Children's Aid Societies ("CAS") became semi-public agencies with the legal power to remove children from their homes, tosuperviseand manage children, and to collectreasonable sums frommunicipalitiesfor the maintenance of their wards. By 1912 there were sixty societies; today there are fifty-four Children's Aid Societies in the province.

2 The current legislation, the CFSA, cameintoeffectin1984. The CFSA provides that the Ministry is responsible for the delivery of child welfare services in Ontario. The Ministry may choose to provide servicesdirectly, ormaycontractwithagencies to deliverchild welfareservices[CFSA s.7]. The Minister must approve an agency to provide these services [CFSA ss.8(1)]. Once an agency is approved, the Ministry enters into an agreement with the agency for the establishment of the service [CFSA s.8(2)].

3 In contrast to the Ontario system of delivery of child care services, in British Columbia, Manitoba, and Quebec children's services are delivered directly by the government.

23. If the Ministry contracts with a society for the delivery of child welfare services in an area, theCFSA sets out the services that the CAS must provide. These are called "mandated" services and include:

investigationofallegations thatchildrenmaybe inneedofprotection; protection of children in the society's care or supervision; guidance, counselling, and other services to families for protecting children; and the placement of children for adoption [ CFSA ss.15(3)]. In addition, the Ministrydelegates to the CAS the government's responsibility for children who are made wards of the Crown [CFSA s.59].

4 The CFSA sets out the guiding principles for the provision of services to children: to promote the best interests of the child,toprotect the well-beingofchildren; to support the autonomy of the family unit; to usethe least restrictive or disruptive course ofaction; to provideserviceswhichrespectthe child'sneed for continuity of care and for stable family relationships; to accommodate the child's physical and mental development;to respectcultural, religious and regionaldifferences[CFSA s.1]. Thesestatutoryprinciples determine the delivery of child welfare services in the province.

5 The Ministry advises Children's Aid Societies and supervises how they provide these services. The Ministry inspects the operation of the CAS to ensure thatthe societyisprovidingthe standard of services required by the Ministry and is following the procedures and practices of the Ministry [CFSA ss.17(1)]. A CAS cannot transfer or assign any of its responsibilities without the approval of the Ministry [CFSA ss.10(4)].

6 Corporate by-laws of a society must be approved by the Minister [CFSA ss.15(5)]. The most recent corporate by-laws for the KCAS were approved by the Minister on April 2, 1991. Membership in the corporation is on payment of an annual fee. The membership elects sixteenmembers to the Board of Directors; the City of Kingston and the County of Frontenac appoint four members to the Board; the Ministry makes no appointments. The Board has hired an Executive Director who is responsible for the day to day management of the KCAS and who is directly accountable to the Board.

7 The KCAS provides all the children's services which are mandated in the CFSA. In addition, the societyprovidessome non-mandatedserviceswhichincludea parent aid program, a communitychild care worker program, and a Creative Enterprises for Teens Program (CETP). Not all CAS offer these particular programs. Other CAS provide different non-mandated services such as mental health services, services to developmentally handicapped, and nursery schools where these services are not otherwise available in the community. Some agencies fund raisetocoverthecostsofthese non-mandated services. Over the years, the non-mandated services provided by the KCAS have become funded by the Ministry and now form part of KCAS annual funding base. Although these services are not mandatory, if a CAS chooses to provide them and if the Ministry funds the program, then these services are subject to the full range of supervision and inspection by the Ministry.

8 The Ministry establishes Standards and Guidelines for all societies in the province. Ministry manuals set out standards for the provision of those services and guidelines as to how to deliver the services. The agenciesmustmeetthe standardsofserviceprescribedbytheMinistryand mustfollowthe proceduresand practicesestablishedbythe Ministry[CFSA ss.15(4)]. The Ministry's stated purpose is to standardize and regulate the services provided. Ministry manuals cover all aspects of services provided: adoption, apprehension, children in care, crown wards, and so on. There are seven such manuals each of which details the who, what, when, where, and why of services to children.

9 For example, the "Children in Care" manual sets out that a CAS must commence investigation of child abuse within one hour of receipt of the complaint. The CAS must document its findings and actions within 24 hours of receipt of the complaint. If the CAS believes on reasonable and probable grounds that a child is in need of protection and there is substantial risk to the child's health and safety, the child protection worker must apprehend the child and take the child to a place of safety. The CAS must take the child before the Court within five days. The CAS must have the child examined by a medical doctor within 24 hours. The CASmustadvisethepolicewhotheymustinterview. The CAS must keep records ofitsactivitiesincompliancewiththedetailedstandardsspecifiedinthemanual. A child protection worker testified that KCAS requires that he must meet the Standards and Guidelines set out by the Ministry. Similar detail exists in the manuals for children in care, for crown wards, and for adoptions.

10 The Standards specify theproceduresthattheMinistryexpectstheCAStofollow. The Standards are the criteria against which the performance of persons, agencies, or programs are measured [Ministry of Community and Social Services,"StandardsandGuidelines:ChildAbuse",atpp.9-10]. The services provided by the KCAS are controlled by the Standards. The Executive Director testified that the manuals set out the minimum standards for delivery of services to children. Counsel for the Ministry said that the manuals represent the Ministry at its most intrusive.

11 The Guidelines set out what are the practices preferred by the Ministry, or what is the behaviour expectedoftheCAS. The Guidelines are different than the Standards in that they allow an agency greater flexibilityand discretioninthe provisionof services. The Executive Director testified that the KCAS aims for compliance with the Ministry Guidelines.

12 The CFSA sets out the services the KCAS must provide to children in the County of Frontenac. How the KCAS responds in a particular case is the Society's decision. The Society's response will be measured using the CFSA, the Regulations, the Standards and the Guidelines.

13 The Board of Directors has recently completed a stategic planning initiative which examined why the agency exists, what services it must or should provide, and how to best deliver those services to children in the County of Frontenac. The Board changed the organizational structure of the KCAS and divided childcareworkersintothreeteamswhichservicetheCity,theCountyandthenorthernpart oftheCounty. Within each team, work is divided by function: intake, children in care, families, and adoption. An exceptionistheNorthFrontenac worker who provides all of these services. The Ministry playednorole in these decisions.

14 The KCAShaschosentooperateaReceivingHome and a Group Home for children in their care. KCAS could have chosen to contract with private operators for these services or to purchase them from a private institution. The Ministry played no role in this decision.

15Having made this decision, the KCAS is subject to the provisions of the CFSA, the Regulations, the Standards and the Guidelines issued by the Ministry for residential facilities [CFSA Part IX.; O. Reg. 550/85 as amended by O. Reg. 219/88; O. Reg. 551/85; Ministry of Community and Social Services, "Licencing Review"]. The KCAS's licence to operate these homes is reviewed annually by a licencing

officerfromtheMinistry,whoensuresthattheKCAS isoperatingthesehomesincompliancewithMinistry Standards. The officer looks at case files in the homes and interviews staff and children to verify that the policies are in place and are being followed.

Determining Compliance

1 How does the Ministry ensure that the services provided by a CAS meet the Standards and Guidelines? The Minister appoints a Director to ensure that a society provides the services to the Ministry's Standards and Guidelines and follows the procedures and practices set by the Ministry [CFSA ss.17(1)]. This responsibility has been delegated by the Director to the Area Managers and to the Program Supervisors.

2 If problems arise, the Minister has the right to impose terms and conditions before granting approval to a CAS to provide these services [CFSA s.10]. The Minister also has the power to vary, revoke or amend the terms and conditions or to impose new terms and conditions on a CAS, to remove the board of directors or to appoint other directors, or to operate and manage the society in place of the Board of Directors [CFSA s.10; s.22]. The Tribunal heard evidence that on at least one occasion the Minister has exercised these powers: the Ministry stepped in and operated the Kenora Children's Aid Society.

Review and Monitoring of KCAS

1 There are numerousmechanismsusedbytheMinistrytoreviewandmonitorthe services provided bythe KCAS. The first method is the Service Plan, a document required by the Ministry [O.Reg. 550/85 as amended by O.Reg. 219/88; O. Reg. 551/85, ss.2(1)]. Each year, using guidelines supplied by the Ministry, the KCAS sets out how it will provide the mandated services and what non-mandated services it will provide in the coming year. The KCAS includes a list of priorities, pressure points, or grey areas whichthe KCAS would like to address. The Service Plan includes the projected costsforthemandated programs, for other programs already in the funding base, and for requests to fund new programs.

2 Each year the ProgramSupervisorreviewstheServicePlanto ensure that the KCAS is complying with the principles in the CFSA. The Service Plan sets out the programs the KCAS plans to provide for the current year plus detailed data on the actual services provided in the prior year. The finances of the KCAS must be audited each year and copies of the audit given to the Ministry [CFSA s.4; s.5]. The Program Supervisor accepts the data he receives from the KCAS and analyzes the costings of the proposed plan. He meets with the Executive Director and the Board to question the KCAS about their plan and to give them feedback. He may request further and more detailed information. The Program Supervisor then issues a letter of budget approval or a letter of variance which sets out the level at which the Ministry will fund the KCAS.

3 The Service Plan is an agreement between the Ministry and the KCAS for services and the Ministry holdsthe Board ofDirectorsresponsible fordeliveringthe servicespromisedinthe plan. The Ministry then flows funds to the KCAS based on that commitment.

4 How much leeway does the KCAS have in deciding what services to provide? A CAS has no discretion whether to deliver services mandated by the CFSA. Once a CAS is approved by the Ministry, itmust provide the full range of services which are mandatedbythestatute. Mandated services represent most of the services the KCAS provides.

5 There is no obligation on a CAS to provide non-mandated services. But once a CAS agrees to provide a service and is fundedbythe Ministryforthat service, the CAS must get the Ministry's approval to delete or significantly change that particular service. Of course in preparing the next Service Plan, the CAS might choose to delete a non-mandated service. As that has never happened at this CAS, the effect on its funding is unknown.

6 The Program Supervisor interprets Ministry policies and procedures to the Board and Executive Director of the CAS. The Ministryrequirestimelyanddetailedinformationfromthe CAS. For example, the CAS must report to the Ministry "serious occurrences" such as the death of a child in care [Ministry ofCommunityandSocialServices,"Guidelinesand Procedures forthe Reportingand Follow-upofSerious Occurences"October 1989]. The Standards require the CAS to notify the Ministry within 24 hoursofa criticalincident. The Program Supervisor is the information link between the CAS and the Minister's office, and this systemofreportingenablestheMinistertoanswerquestions about suchincidentsinthe Legislature.

7 Throughout the year, the Program Supervisor monitors the services provided by the KCAS. He receivesreportsfromthe KCAS, reviewsthem, and discussesthemwithExecutiveDirectorandtheBoard. ThisflowofinformationenablestheMinistrytokeepclosetabsontheKCAS andtotakecorrectiveaction when appropriate.

8 It was the Ministry's position that the Program Supervisor does not monitor the quality of the service provided by the KCAS. The Ministrysaid that it expects that the society will have in place a mechanism to review the quality of the work. Yet the Program Supervisor did a very detailed review of the 1986 Service Plan and asked the Executive Director why the KCAS had dropped its specialized foster care network program [Ministry of Community and Social Services, "Letter from Program Supervisor to Executive Director" May 6, 1986]. In 1988 the Program Director asked whether the current level of staffing for the Receiving Home was appropriate. The Program Supervisor testified that the Service Plan documents are far too intrusive. He said that the Ministry is looking for an alternative to simplify the way of doing the job. That does not exist now. We conclude that the Ministry does monitor the quality of services provided and that the KCAS must justify to the Ministry changes in their Service Plans from one year to another.

Crown Ward Reviews

46. The government's responsibility forchildrenwhoarewardsoftheCrownhasbeendelegatedto the CAS. The Ministry reviews the care provided to each crown ward every second year; that is, fifty percent of the crown wards are reviewed each year. A Ministry team does on site reviews of the case files and interviews the children. TheMinistryislookingtoseethattheRegulations,StandardsandGuidelineshave been complied with to ensure that the crown wards are receiving the appropriate care. The team makes recommendations if the CAS has not met its mandate. The KCAS has thirty crown wards. In a recent review of its crown wards,the Ministryteamfound two non-complianceissuesoneachcase:forexample, missing medical reports and failure to visit the family within the time prescribed in the Standards. The KCAS mustcomplywiththerecommendationsofthe Ministry's team [CFSA s.62]; it has no option. The Program Supervisor follows up to ensure that the KCAS has followed the recommendations and has brought each case into compliance.

Operational Reviews and Comprehensive Operational Audits

1 The Ministry has the statutory power to supervise, inspect and direct the operations of the KCAS [CFSA s.7; s.17]. The Comprehensive Audit and Review Branch was created to ensure that the societies deliver the services to the Standards established by Ministry. This Branch sent out an Audit Team to reviewtheoperationsofthe KCAS in 1980 and1988. Its 1988 report states that the purpose of the audit was to examine operational, financial and program management systems and to review and evaluate the adequacy and effectiveness of these systems. The Ministry has described these reviews as value-for­money audits.

2 The reviews are a detailed examination of every aspect of the CAS operation. The Audit Team conductsextensive interviewsofthe Board, the Executive Directorand the staff and examinesrecordsand documents. The Audit Team makes recommendations to the CAS. In 1988 it made 127 recommendations which covered a wide range of areas including detailed recommendations with respect to financial and program administration, budget, service planning, bylaws, Board committees, personnel and case management.

3 What is the status of these recommendations? The Ministry said that the CAS must report to the Ministry,throughtheProgramSupervisor,whetherithasimplementedtherecommendations. The Ministry characterized the Audit Team as a management consultant, that is, the Team gives advice to the CAS, which the CAS is not obliged to follow.

4 In reality, the Program Supervisor works with the KCAS to ensure that the issues raised in the Operational Review are addressed to the satisfaction of the Ministry. Although it is not clear whether failure to comply would have long term repercussions for the agency, the KCAS has acted as if it would. For example, 121 of the 127 recommendations made in the 1988 Audit have been implemented by the KCAS to the satisfaction of the Program Supervisor; five are under discussion; only one is outstanding.

5 The Ontario Association of Children's Aid Societies (OACAS) is developing a system of accreditationwhichwouldassessthequalityofcareprovidedbysocieties in the province. Although there have been ongoing discussions and consultations,the Ministryhas given no commitment that it will accept a system of peer evaluation for societies instead of the current system of Ministry Standards, Guidelines, reporting and review.

6 The Tribunal concludes that there is a clear expectation by the Ministry that the KCAS will address the recommendations of the Audit Team in a manner which is satisfactory to the Ministry.

Summary

1 Who determines the nature of the services provided by or the work performed by the KCAS? The provision of child welfare services by the KCAS is an integral part of the Ministry's responsibility for the care of children in the Province. The statute and the Regulations are clear that the ultimate control over those services rests with the Ministry. The day to day control over how those services are provided rests with the KCAS. The question is then: who has fundamental control?

2 The Ministry determines what services and programs are to be undertaken by the KCAS and the standards,guidelinesandpoliciesfordeliveryofthoseservices. The Ministry's budget and service planning process determines the money allocated to these programs and services. The Ministry uses a variety of mechanisms to monitor how these services are provided and to ensure that the KCAS complies with those standards,guidelinesand policies. Finally,theMinistryholdstheKCASanditsBoardaccountableforthe provision of these services. If the KCAS and its Board refuse to comply, the Minister can and has removed the Board and the Ministry has taken over the operation of the agency.

3 The Tribunal concludes that the Ministry exercises fundamental control over the provision of services to children by the KCAS. We also conclude that the degree of Ministry involvement over who, when, where, and why these services are provided is so intrusive that the CAS does not have autonomy over the nature of the services provided nor the work it performs. We conclude that the Ministry has direct and substantial control over the nature of the services provided by the KCAS and therefore determines the work performed by the members of the KCAS bargaining unit [McKechnie Ambulance Services OPSLRT file No. T/58/84 (P.Picher)].

II. WHO HAS FINANCIAL CONTROL OF THE KCAS?

1 An inquiry into the financial control of an entitywouldnormallybeginbyreviewingwho has control over and responsibility for the budget. But in this case, the financial relationship between the KCAS and theMinistryis driven by the Ministry'sfundingprocessratherthantheagency'sneedsorplans. Therefore, we will first examine how the Ministry funds the society and then look at how the KCAS budgets for its programs and services in light of that funding mechanism.

2 For many years the Ministry funded Children's Aid Societies by reviewing each agency's annual budgetonaline-by-linebasis. In 1978 the Ministry's administration and decision making was decentralized to the area offices. A Children's Division was created within the Ministry. The Ministry was concerned about its global budget for children's services, the quality of the services provided, and about receiving value for its money. The Ministry also wished to respect the role of the boards of directors and the autonomy of the agencies.

3 The Ministry commissioned a review of the funding process. The resulting report, "Funding of Children's Services in the 1980's", advocated major changes to the funding process. The report said that the success of the reorganization would depend on the Ministry'sabilityto determine the amount of funds

needed for children's services, the recipients of those funds, and the purpose and conditions for spending those funds. The report recommended that the Ministry move from a line-by-line review of annual budgets to service planning and to auditing the agencies. The Ministry adopted these recommendations and implemented service planning for all Children's Aid Societies in 1981.

Sources of Funds

1 The CFSA sets out the mechanism by which the Ministry, the City of Kingston and the County of FrontenacflowfundstotheKCAS [CFSA s.19]. Each year the Ministry establishes the annual allocation for the KCAS. The Regulations provide that the Ministry funds80%oftheannualallocation and that the City and the County share the remaining 20% [O. Reg. 550/85 ss.22(1) and (3)].

2 In addition to these sources of funds, a CAS may choose to fundraise from other sources. The KCAS does very little fundraising and has limited access to private funds. The KCAS has sought other governmentfunding tied to specific projects. For example,theagencyreceivedgovernmentfundstotrain its staff for computerization and it acquired special funds to create a program for teens. But for the past fifteen years, the annual allocation set by the Ministry has been the amount of money available to the KCAS. The agency must operate within these monies or run a deficit.

Process For Funding Annual Allocation

1 Each year the Ministry prepares its request to Management Board of Cabinet for the Ministry's allocation. This request includes the monies for all Children's Aid Societies in the province. Management Board advises the Ministry of its annual allocation early (hopefully) in the year.

2 The Ministry then determinestheannualallocationforeachChildren's Aid Society and for its other transfer agencies. All CAS are treated the same. So, for example, in 1991 the allocation for each CAS across the province was 6%. This meant that in 1991, the KCAS and every other CAS received 106% of their 1990 base funding. The annual allocation established by the Ministry is the principal source of funds for the KCAS.

Exceptional Circumstances Review (ECR)

63. If the volume of cases increases in a year, or if there are exceptional circumstances, a CAS may apply for an Exceptional Circumstances Review ("ECR"). In discussions with Management Board of Cabinet, the Ministry has directed which items are eligible for an Exceptional Circumstances Review. These directions state that the ECR process is meant to address the cost of volume increases related to childrenincareanddoesnot cover the salary increases negotiated with a bargaining agent. Forexample, in 1990 the KCAS applied for ECR funds because it was responsible for a very complex sexual abuse investigation. The KCAS had assigned that investigation to a senior social worker. It requested and receivedadditionalECRfundingtoenablethe agencytohirecontractstafftomanage the existingcaseload.

In a second example, the KCAS had to place a difficult-to-serve child in an expensive treatment facility. The Ministry flowed additional ECR funds to cover this cost.

2 TheKCASsetsoutinwritingthebasisforitsECRrequestwithparticularreferencetothedirections established by the Ministry. A review team of Ministry staff makes on site visits, reviews client files, conducts interviews ofCASstaff,andpreparesareport. The KCAS request and the report of the review team are then reviewed by Ministry staff at the local area office and then at the regional office. Although theProgramSupervisorattendstheregionalECRmeeting,theKCASdoesnotattend. The request is then forwarded to Ministry officials at head office who decide how much of the ECR request to fund.

3 ECR decisions are usually made in December ofthefiscalyearandmoney is flowed to the KCAS in the next fiscal year. ECR monies may be given on a one time basis or may form part of the ongoing funding base. In the past, the KCAS has received 75% to 80% of its ECR request. The reason for such ahighlevelofsuccessisbecause the ECRprocess isnon-discretionaryforboththe CAS and the Ministry. That is, the CAS must provide the mandated services and therefore, the Ministry must pay.

4 Sometimes the Ministry tells the CAS in advance that certain expenditures will be covered by the ECR process. For example, in 1989 the Kingston CAS and the Ottawa CAS were faced with a very difficult child protection case which required extraordinary expenditures. The Ministry convened a high level meeting in Ottawa between the Ottawa CAS, the Kingston CAS, and the responsible Ministry officials,atwhichtheMinistrycommittedtocoveringtheexpenses. Based on that commitment, the KCAS hired additional staff and incurred out-of-pocket expenses. Later, the Ministry flowed these funds to the KCAS via the ECR process.

5 When the KCAS makes a request for an additional staff position, it budgets at the maximum salary in the range. The KCAS then hires anywhere within the pay range. Money is flowed to the KCAS with no review by the Ministry of the appropriateness ofthe salaryratesproposedforthe positions requested.

6 It was the Ministry's position that the ECR process does not review the quality of the CAS decisions, simply whether the money was or will be spent. But, in the 1984 ECR process, the Ministry team read the KCAS client files to see why there had been a twentypercentincreaseinthenumberofdaysthatchildren spent in care. The team reported that all of the apprehensions were warranted and that the children currently in care were appropriately placed. The Tribunal concludes that through the ECR process, the Ministry has reviewed the quality of the care provided by the KCAS.

Child Welfare Review

69. Regulations under the CFSA provide that the City of Kingston, the County of Frontenac, or the KCAS may apply for a Child Welfare Review of the funding allocated by the Ministry to the KCAS [O.Reg 550/85; as amended to O.Reg 219/88; O.Reg 551/85 s.20, s.21]. Normally the Municipalities seek a review to decrease the funding, and the KCAS seeks a review for an increase. The matter is heard by a tripartite committee with representatives of the Ministry, the Municipalities, and the Ontario Association of Children's Aid Societies. At the hearing the KCAS mustestablishthebasisfor its request

and the Municipalities set out their objections to the proposed funding. The Ministry is represented by the ProgramSupervisor at thehearingandmakessubmissionstosupportitsoriginalfundingallocation. Based on the submissions, the Child Welfare Committee makes recommendations to the Minister. The Minister may accept all, part, or none of the Committee's recommendations.

2 In the past, Child Welfare Reviews have offered the KCAS a mechanism for redressing problems with their funding base. In1988 the City of Kingston and the County of Frontenac jointly sought a Child Welfare Review. The KCAS took the opportunity to request funding for nine additional staff positions. The Child Welfare Review Committee recommended funding five of these positions. The Minister acceptedthisrecommendationandtheMinistryflowedadditionalfunds for the five positions. TheKCAS did not fill the remaining four positions.

3 In its review, the Committee did a detailed qualitative and financial analysis of the KCAS request. Forexample,in1988,theKCAS askedforadditionalfundingtohirehouseparentsforthegrouphomeand receiving home. The Committee decided that the additional staff were justified. The Committee determined that the KCAS would be providing better care for children if they were kept in the City of Kingstonratherthansendingthemthroughout the province, and that the KCAS could provide the care at a lower cost. The Committee did a similar qualitative assessment when it approved funding of a social worker to service North Frontenac.

4 In 1989 the municipalities requested a Child Welfare Review of the KCAS proposed budget. At the review the KCAS sought a funding increase. The review committee supported some of the requests of the KCAS and recommended that some initiatives be funded. The Minister refused to flow any additional funds. In fact, beginning in 1989, the Minister has refused to act on any of the Committee's recommendations. As a result, this process is not being used by Children's Aid Societies and is becoming an endangered species.

New Initiatives

73. From time to time, the Ministry has initiated new programs. For example, in 1987 the CFSA was amended to increase disclosure about adoptions. The Ministry made funds available to the Children's Aid Societies to carry out this new endeavour. The KCAS could have met this new obligation in a variety of waysbutchosetohireasocialworkerandreceivedfundingfromtheMinistryforapart-timeposition. This position has become part of the funding base.

One Time or Special Project Money

1 Towards the end of a fiscal year, the Ministry may identify unused monies from its allocation and may make part of that money available to Children's Aid Societies. For example, in 1990 such funds became available. The six CAS in the Kingston area met and agreed on a formula to distribute their share of the money, which was approved by the Ministry. The money was used to develop a joint training programme for the six societies.

2 In 1986 the Ministry expressed its concern to the Board of Directors of the KCAS about the performance of the previous Executive Director. With the encouragement of the Ministry, the Executive Directorleft and the Ministryfundedasubstantialportionofhisseverancepackage[MinistryofCommunity and Social Services, "Memorandum" dated January 23, 1989].

Deficit/Line of Credit

1 Funds flow from the Ministry and Municipalities to the KCAS on a monthly basis. Because of the systemic delays in establishing the annual allocation, the monies flowed for the firstfewmonths ofthe year are based on the previous year's allocation. As a result, the monies received do not match the cash outflow required to run the agency. In part, this is a question oftiming. Whereas the fiscal year for the KCAS is the calendar year, the fiscal year for the MinistryisApril1. Decisions made by the Ministry are made on the Ministry's timetable and then paid to the KCAS retroactive to January 1. On occasion, the Ministry has advanced funds to cover the cash flow problem. Recently, the KCAS has managed its cash flow problems by a bank loan.

2 Beginning in 1985, the KCAS ran a deficit: the annual expenses exceeded its revenue from all sources. That year the KCAS funded this shortfall by using demand notes. This was expensive. In December1988,theKCAS negotiatedalineofcreditwith abankof$200,000atprimeplusonepercent. Itsbook debts and receivables are collateral. Recently the lineofcredithasbeenincreasedto$250,000. Interest charges are paid out of the operating budget. The KCAS's deficit has remained fairly steady at approximately $30,000 and the only way the KCAS has been able to address it is through special funds made available from the Ministry.

3 The Tribunal heard evidence that for many years the KCAS ran a surplus, which was returned to the Ministry. The Ministry's Manual of Administration and the service planning documents specify that surplus money must go back to the Ministry. Ministry practice is to allow an agency to submit a plan for the surplus for Ministry approval. In reality, the KCAS has not had a surplus since 1985.

Capital funding

79. The KCAS receives funds for capital projects from the Ministry. The parties agreed that money flowedforcapitalprojectscannotbe used for operating expenses. Hence, capital funds are not available to fund new positions nor to increase compensation. Therefore it is not helpfultotracetheflowofcapital funds in this enquiry.

The Budget Process

1 The annual Service Plan prepared by senior staff of the KCAS sets out for the coming year how the KCAS willprovideitsservicesandincludestheprojectedcostsformandatedservices,forotherprograms already in the funding base, and for new or proposed programs.

2 The budget is prepared by the senior staff at the agency and is reviewed by the Executive Committee. The budget is the dollar value or cost of the Service Plan. The Service Plan and the budget are presented to the Board of Directors for approval.

3 The Service Plan and the budget are forwarded to the Ministry in late February or early March. Both are reviewed by the Program Supervisor who meets with the Executive Director to ask questions about the plan. If the costs of the ServicePlanfall within the annual allocation, the Service Plan is approved by the Ministry. If the costs exceed the annual allocation, the Ministry issues a letter of variance for a lesser sum. The Ministry then flows money on the basis of the allocation, not on the basis of the request. The CityofKingstonand the County of Frontenac are advised oftheir shareofthe allocationas establishedby the Ministry. The KCAS must fund new programs and pressure points out of the Exceptional Circumstances Review, the Child Welfare Review, by ad hoc funding, or by fundraising.

Who determines the priorities in the budget?

1 The Board of Directors of the KCAS must face economic reality: the agency must live within its annual allocation. The agency may move funds from one budget line item to another. In tight times, the KCASmay choose to cutbackonnon-mandatedservicesoritmayexploreeconomiesofoperation. For example, the KCAS changed benefit carrier to save money; it explored bulk buying for its group homes. Finally, the KCAS may choose to run a deficit.

2 The Manual of Administration provides that:

The agency is free at any time during the year to transfer Ministry funding between services, functions, and line items. Any transfers, however,involvingthesalaryandwage line, significant transfers between services, or significant changes in the services to be provided require prior Ministry approval. The intention is to allow the agency adequate flexibility in its service delivery administration while ensuring that Ministry approval commitments are fulfilled. [Ministry of Community and Social Services, "Manual of Administration", at 0105-02 at p.3].

TheKCASmustoperatetheagencyincompliancewiththisManual. Therefore, the KCAS cannot transfer monies to or from the salary and wage line without the prior consent of the Ministry.

85. Just how much flexibility does the KCAS really have? The administration of budget, that is the managingofmoney,theaccountspayable,andpayrollaretheresponsibilityofKCAS. But in administering thebudget,theKCAS issubjecttotheMinistry'sfinancialpoliciesandprocedures.TheKCAS mustmake quarterly financial reports to the Ministry. The KCAS must submit audited financial statements to the Ministry. The Ministry's financial officer reviews these reports and analyzes the variances from the Service Plan. The Program Supervisor testified that the Ministry is accountable to ensure that the services it has contracted for are delivered. In order to monitor its performance, he gets reports from the KCAS, reviews them, and discusses them with the Executive Director and the Board. Ultimately, if the Minister is not satisfied with an agency's performance, the Minister may remove the Board of Directors or operate the agency directly [CFSA s.22, s.23, s.24].

Summary

86. Who has financial controloftheKCAS? The Tribunal concludes that the Ministry has fundamental control over the finances of the KCAS. The degree of control exercised by the Ministry is far beyond that ofmerepaymaster[WaterlooCountyRomanCatholicSchool Board, [1977] O.L.R.B.Rep.Dec.8656; Province of Ontario Board of Internal Economy, [1980] O.L.R.B. Rep. Jan. 88]. The Ministry retains direct and substantial control over all significant aspects of the KCAS finances. The Ministry determines the annual allocation and is the major source of revenue for the agency. The Minister may revoke the approval of the agency, remove the Board of Directors, or run the agency directly in extraordinary circumstances. All major financial decisions are referred to the Ministry for approval. In operating the agency, the KCAS has routine or regular control over its finances; however, it must comply with the Ministry's Manual of Administration. The Ministry then monitors the performance of the agency through aclosereportingrelationship betweenthe Executive Director,the Board ofDirectors,and theAreaOffice. The 1988 OperationalReviewcompletedbythe Audit and ReviewBranchofthe Ministrymadethirty-five detailed recommendations aboutthefinancialoperationoftheKCAS. The agency has implemented those recommendationstothesatisfaction of the Ministry. AlthoughtheMinistrypayslipservicetotheagency's autonomy, inreality, the Ministryretains fundamentalcontroloverall aspects of the financesofthe KCAS.

III. WHO HAS RESPONSIBILITY FOR COMPENSATION PRACTICES?

1 In pay equity, compensation includes both salaries and benefits [Act ss.1(1)]. Compensation for members of the KCAS bargaining unit is determined in collective bargaining with the bargaining agent, CUPE. Compensation for employees excluded from the bargaining unit is determined unilaterally by the Board of Directors of the KCAS.

2 CUPE was certified as the bargaining agent for the employees of the KCAS on April 26, 1978. In its application for certification, CUPE named the KCAS as the employer. Since 1978, CUPE has given notice to bargain to the KCAS.

3 In negotiations for a collective agreement, the KCAS has been represented by the Executive Director, the President ofthe Board and a negotiating advisor. The Ministry has never sent a representative to these negotiations. The successive collective agreements have established the compensation package for the bargaining unit. CUPE acknowledged that the Board President and the Executive Director play key roles in shaping the compensation practices. Ed Scott, the CUPE representative said that the overall compensation policy for the KCAS changed substantially with the new Executive Director. However, CUPE alleged that the Ministry has controlled these negotiations both directly and indirectly.

90. During the first round of collective bargaining the parties reached an impasse. CUPE was seeking an improvement in salaries and benefits. The agency told CUPE that the Ministry would not allow the KCAS to bargain salary increases beyond the 4% allocated by the Ministry, that the Ministry had laid

down guidelines for benefits, and that the KCAS was not prepared to break those guidelines. CUPE appealed to the Minister for assistance. The Minister sent a series of letters which told the parties that the Ministry would fund a 4% salary increase at the KCAS. The Ministry had instructed all societies that the fundingofemployeebenefitsin1979 wasto be basedonthe same ratio ofbenefitsto salaryasthe Ministry allowed in 1978. No additional funds were available for enrichment of benefits. The Ministry agreed to provide funds for mileage using the same rates as the province paid to its civil servants. The Minister advisedthepartiesthatoncethefundinglevelhadbeendetermined,theKCAS wasfreetoreallocatefunds between line items provided there was no deficit.

4 The KCAS and CUPE sought ameetingwiththeMinister. The Minister met with management and the union in July 1979. The Minister said that salary increases were firm at 4%. The Ministry would provide a 5% increase in mileage allocation. The KCAS could improve benefits by moving money from other budget line items to fringe benefits. However, the KCAS must observe the Ministry's budget guidelines and such movements could not create a deficit. Based on these instructions, the parties were able to reach an agreement on September 11, 1979. The agreement provided for a 4% salary increase annualized; an increase in benefits; and the same mileage rates as for civil servants.

5 The Tribunal concludes thattheMinisterandtheMinistryplayedasignificantroleinthenegotiations for a first collective agreement. Thereafter, the KCAS and CUPE negotiated successive collective agreements with no direct involvement of the Ministry.

6 CUPE alleged that the annual allocation set by the Ministry indirectly controlled collective bargaining. A review of the past fourteen years of collective agreements reveals that the KCAS and CUPE have negotiated collective agreement increases which are different from the annual allocation.

Year 1980 1981 1982 1983 1984 1985 1986 Allocation 8.0% 9.0% 10.0% 5.0% 5.0% 3.0% 4.0% Salary 6.0% 8.0% 9.0% 5.0% 4.0% 6.0% 3.25

Year 1987 1988 1989 1990 1991 1992 Allocation 4.0% 4.5% 4.0% 5.5% 6.0% 1.0% Salary 3.5% 4.5% 4.5% 6.0% 5.5% 5.5%

The salary increases have beenbothaboveand below the annual allocation. The parties have negotiated multi-year collective agreements withno knowledge ofthe Ministryallocation for the second or third year of the agreement. For example, on August 24, 1990 the parties signed a three year collective agreement, without any information as to what the Ministry allocation would be in 1991 or 1992.

94. The KCAS must also finance other improvements to the salaries of its employees. For example, the collective agreement provides that employees will move through the salarygrid based ontheir experience. During the life ofa collective agreement some employeeswill receive salary increases on their anniversary dates based ontheiryearsofservice with the agency; other employees will already be at the maximum of the grid and will receive no salary increase for service; still other senior employees will leave and be

replaced by more junior employees with a salary saving to the KCAS. However, the Tribunal received no evidence of the net cost of this provision. Obviously it will vary from year to year depending on the employee profile at the agency.

2 Throughout the years, the parties have negotiated creatively to give substantial pay increases to certainpositions. For example, in 1988 the parties added a step to the topofthegridforasocialworker with a bachelor's degree. The first step on the grid was deleted the following year. As a result, the three senior employees in that job class received a 10.5% salary increase. The Ministry played no role in this decision.

3 The parties have agreed to non-standard salary increases within the bargaining unit. For example, in 1981 the parties negotiated a 9% salary increase. The stenographer received 37.6%; the social work assistantreceived23%;thereceivinghome assistant received13.5%;and the group home parentsreceived 30%. The Ministry played no role in these decisions.

4 From 1979 to the present, CUPE and the KCAS have negotiated significant changes to the benefits package. When CUPE was certified in 1978, the only benefits were 50% of OHIP, OMERS pension, and timeofffor standby. Thepresentcollectiveagreementprovidesamuchbroaderarrayofbenefitsincluding 100% dental plan, extended health, long term disability at 75% of earnings, group life of two time salary, greatly improved standby pay, salary banking, and a mileage plan which is unique to the KCAS. In 1988 the agency chose to change benefit carriers in order to improve benefits and reduce the cost. The annual salary and benefit survey done by the OACAS shows a wide range of benefit packages offered by Children's Aid Societies across the province. The TribunalconcludesthatthebenefitsattheKCAS have been established as a result of collective bargaining and that the Ministry has played no role in their determination.

5 Although all Children's Aid Societies receive the same increase in their funding base from the Ministry, the salaries and benefits paid to staff vary widely across the province. In the early 1980's, CUPE asked the Ministry to participate in regional or central bargaining for the societies. The Ministry refused.

Low Wage Initiative or "Bump" Dollars

1 Workers in transfer agencies, such as Children's Aid Societies, are paid significantly less than the sameworkersinagenciesrundirectly by the Ministry. Sam Goodwin, Manager ofManagementSupport for the Ministry, testified that the Ministry has been aware of this problem for the past tento fifteenyears.

2 In October 1987, Bass, Campbell Associates Ltd., in a report commissioned by the Ministry, verified that there were serious problems in compensation and set out the nature and extent of the wage discrepancies between transfer agencies and the Ministry. Direct care workers in the transfer agencies were being paid 36% less than the same workers in agencies run directly by Ministry and the earning gap for supervisors was 29%.

3 In April 1988, the Ministry released a report "Managing Ontario's Social Services: Agency Relations and Accountability" which said that the Ministry should "... develop a province wide approach to a compensation process to promote stability and continuity of staffing in community funded organizations." [Ministry of Community and Social Services, Managing Ontario's Social Services: Agency Relations and Accountability (Queen's Printer) April 1988, at p.85]

4 The 1990 corporate plan for the Ministry: "Achieving Our Potential Together" states that the Ministry should give assistance to implement a wage compensation system that addresses some of the salary/staff turnover problems caused by past practices. [Ministry of Community and Social Services, "Achieving Our Potential Together", January 1990, at p.20]

5 The Ministry has been lobbied by theOntarioAssociationofChildren'sAidSocietieson this issue and ina report, "Child Welfare...The FundingCrisis"the OACAS notedthat"...halfofthe CAS operating budget is salaries and benefits. The current funding mechanisms are inadequate. They encourage serious labour disruptions or strikes. They promote poor labour relations." [The Ontario Association of Children’s Aid Societies, "Child Welfare... The Funding Crisis", June 29, 1990 at p.25-27]

6 On May 1, 1990, the Minister announced that the government would begin to address the problem by allocating $19 million dollars to increase the wage levels of direct care workers in children's service agencies. This program has been called a Low Wage Initiative and the money is referred to as "BUMP" dollars. A Steering Committee of transfer agencies was created to advise the Ministry how to allocate these monies. The Ministry assumptions included: agencies retained all their management responsibilities including for staff compensation; the Steering Committee gave the Ministry advice on the distribution of money; the Ministryretainedcontroloverthe finalapprovalofbudgets,allocations,andmonitoringoffunds. Anagencycould electnot to participate but would receive no monies:notsurprisingly, no agencytook this option.

7 The Steering Committee made its recommendations whichwereacceptedbytheMinistry. Of the $19 millionallocatedforthis purpose, the provincialChildren'sAid Societiesreceived$3.64million;$1.34 million for direct care salaries; and $2.3 million for other salaries. The principles for allocation included: the first salary increases were for the direct care/lowest paid staff; the remaining funds were to be applied to the salaries of other positions based on the compensation decisions for direct care staff; there must be fairnessindistributionbothwithand betweenagencies;theremustbe flexibilityto acknowledge localneeds and differences;andtheagencymustremaintheautonomousemployer. In addition, the monies had to go to increase the salary of positions which were approved as of March 31, 1990; the money could not be reallocated; and money could not be used to create new positions.

106. ThisMinistryinitiativemovedthesalaryofeverydirectcareworkerto the "target salary" set by the Ministry. Agencies could not pay direct care providers less than the target salaries, which became province widefloors;andthesalariesweretobeadjustedafurther5%,whichwasthecostoflivingfor90/91. Each agencyhadtoaccounttotheMinistryforthemoniesithadreceivedandhowtheyhadbeenallocated. The Ministry reserved the right to review personnel files and employment records in the agencies. The gap

betweenthe salariespaid todirectchild care workers in transferagenciesand the salariespaid to the same workers in Ministry agencies was reduced to 20%.

8 In 1990, the Ministry funded100%oftheBUMPProgram. In the next year, municipalities picked uptheir20%shareofthisinitiative. The Ministry also undertook to flow additional funds to the Children's Aid Societiesto enable themtopaythe increasedboardingrateschargedbyserviceproviders(the Outside Paid Institutions) which resulted from this initiative.

9 The Ministry's BUMP Program, or wage compensation initiative, intervened mid-term in the collective agreements across the province and changed the salary rates in those agreements. The Ministry insisted that if a society took the BUMP money, it had to use all of it for salary dollars; the agency could enter into an agreement with the union for its distribution, but such agreements were subject to the parameterssetbytheMinistryforthisinitiative. Kevin Morris, the Co-ordinator of Children's Programmes for the Ministry, acknowledged that this initiative played havoc with collective bargaining.

10 The KCAS received 140,000 Bump dollars and CUPE has met with the Executive Director to discuss their allocation. There will have to be amendments to the current collective agreement.

11 The Ministry's BUMP Program establishedminimumsalaries for direct child care workers across the province. In addition, it provided funds to societies to increase the salaries of other positions in the agency. This initiative has begun to address the earning gap between workers in transfer agencies and workers in agencies run by the Ministry. But the initiative was a major intrusion by the Ministry into the compensation practices of the Children's Aid Societies across the province.

Valuing of Work

1 The Board of Directors of the KCAS makes the decision whether to create new positions or to deleteexistingones. Decisions have been based on the agency's need to deliver services to the community, the volume of cases at any given time, and the agency's desire to provide new services.

2 If there has been an increase in the volume of cases, the Board has choosen to approve the hiring of additional staff, knowing that the agency will seek ECR money for that new hire. Until that money is flowed from the Ministry, the salary will be funded through the KCAS line of credit. If the ECR request were to be rejected in whole or in part, the KCAS would be responsible for the additional salaries and benefits and would be forced to add these costs to its deficit or to lay off staff.

3 The CFSA and the Regulations set out the minimum qualifications for child care workers, social workers, and the Executive Director [ CFSA s.16; O. Reg. 550/85, s.28, s.29]. In practice, the KCAS has established much higher qualifications for its staff when it advertises and hires. In fact, the Ministry Standards are so low as to be meaningless.

4 The present practice of compensation is a negotiated pay grid based on educational qualifications and experience. The start rate for new hires is determined by the Executive Director based on their educational qualifications and experience. The Ministry played no role in these decisions.

5 CUPE and the KCAS entered into a Memorandum of Understanding in December 1988 to evaluatethe positionsinthebargainingunit. The parties agreed on the collection of job information, the job comparison system, and on an appeal process. Positions in the bargaining unit were evaluated by a Job EvaluationCommittee consisting of three members of management and three members of CUPE. Based onthatevaluation,thepositions were rank ordered. The parties called the process internal evaluation for the purpose of pay equity. CUPE then saidthatitwishedtocomparefemalejobsinthe bargaining unit to male jobs in the City and County because there were no male comparators in the KCAS. The letter of intent said that "we have ranked the jobs and are awaiting the decision of the Tribunal".

Summary

1 The ultimate or extraordinary control over the existing compensation practices of the KCAS rests with the Ministry. The Ministry sets the annual allocation which then determines the amount of funds available to the KCAS for compensation. The KCAS has routine or regular control over its compensation practices.

2 The Tribunal concludes that the compensation practices for the bargaining unit are established by collectivebargainingbetweentheKCASandCUPE. After the first round of collective bargaining in 1978­79, the KCAShashaddirectandsubstantialcontroloverthesedecisions. Of course, in negotiating these agreements, the KCAS has faced the economic realities of living within its annual allocation or running a deficit. In its hiring practices, the KCAS hasdeterminedtheactualqualificationsneededfortheworkand haschosento value the educationalqualifications and experienceof, the incumbents,ratherthanvaluingthe work performed. The KCAS and CUPE have jointly evaluated the comparative worth of the bargaining unit positions. Beginning in 1990, the Low Wage Initiative, or BUMP dollars, was a significant intrusion by the Ministry into the compensation practices of the KCAS.

CONCLUSION

1 The relationship between the Ministry and the KCAS is a tangled web of rights, obligations, and responsibilities. Although we have separately examined this relationship in the three areas of financial control, responsibility for compensation practices, and the provision of services, in reality the three areas are inextricably linked. Ministry decisions about allocation offinances and the provision of services have a substantial and direct impact on the compensation practices of the KCAS.

2 We find that the nature and extent of the control exercised by the Ministry over these areas is so intrusive that theKCAShasverylittlescopeforindependentactionandthereforeisnot autonomous. The Tribunal concludes that the Ministry has fundamental control over and is responsible for the existing compensation practices and the valuing of work.

3 Therefore, the Tribunal declares that, for the purposes of pay equity, Her Majesty the Queen in Right of Ontario (MinistryofCommunityand SocialServices)isthe employer of those persons employed at the Children's Aid Society of the City of Kingston and the County of Frontenac. The Tribunal directs the Ministryand CUPEto negotiatein good faith and endeavour to agreeona gender-neutralcomparison system and a payequityplanforthebargainingunit. The Tribunal confirms the order of the review officer dated March 12, 1990 and dismisses this Application.

DECISION OF MEMBER DONALD DUDAR, SEPTEMBER 15, 1992

1 I disagree with the decision of the majority in this matter. It is wrong, and an unnecessary intrusion into an otherwise existing employment relationship.

2 To arrive at this conclusion, the majority has once again found it necessary to revisit the "tests" for determining employer, identified another component or test, which can be characterized as "programme control", and has placed wholly undue emphasis on this area. I agree it is necessary to consider the facts of each case individually, and to weigh the importance of any piece of evidence in coming to a conclusion in any given case. I also recall the comments of Member Budd in Barrie Public Library Board (1991),2

P.E.R. 93, in which he wrote in dissent:

A consistent approach to decision-making permits parties to predict the outcome of their disputes. This predictability in turn allows the parties to negotiate in the least costly manner and with the potential for highly consensual results.

3. The Tribunal said, in Barrie Public Library Board,

4. [I]n every case, the focus should be on identifying the entity that controls the compensation practices that the Act seeks to redress. In few cases will that be an entity other than the one responsible for other employment obligations.

5. The Tribunal went on in that decision to say

6. [W]e believe that it is appropriate to give greater consideration to the existing bargaining or employment relationship...

7. After referring to an earlier Tribunal decision with respect to the recognition of existing bargaining relationships, the Tribunal concluded

8. In the vast majority of cases, the existing collective bargaining or employment relationships will be the ones used for implementation of pay equity. Not only does that make sense for the effective achievement of the goals of the Act, it is the approach that best conforms with the scheme of the Act. Furthermore, the employers in those relationships will usually be the entities who will be found by the Tribunal to control the compensation practices and the attaching of value to work.

1 I agree. Furthermore, this case presents a compelling reason for not finding an employer other than the collective agreement employer.

2 To begin, it is important to note that the Canadian Union of Public Employees (" CUPE" or the "Union") does not claim that the Kingston-Frontenac Children's Aid Society (the "KCAS") is a crown agency and therefore, by extension, the employees of the KCAS are Crown employees. The conclusion of the majority is that the KCAS employees are employees of the Crown directly, without regard to the overwhelming evidence that there is a clear employment relationship with a separate institution of long standing and clearly recognized as the employer for all other purposes. Furthermore, there is no evidence ofcompliancewithanyofthe requirementsunderthe Public Service Act R.S.O. 1990 c.P.47; nor is there any evidence that the KCAS was delegated any authority to bind the Crown in any form of employment relationship with those who work at the KCAS.

3 In this case, the majority has chosen to abandon the reasoning set out in Barrie Public Library Board andtointerfereinandreplaceanexistingcollectivebargainingrelationship. This is unnecessary and wrong.

4 First, the entire statutory framework of employment relationships is distorted. This decision transposes the parties into a completely new relationship. To date, CUPE and the KCAS have had a longstanding collective bargaining relationship under the Labour Relations Act, R.S.O. 1990, c.L.2.

5 However, where a union seeks to bargain with respect to employees of the Crown, the Crown Employees Collective Bargaining Act R.S.O. 1990, c.C.50 applies. That is so, whether dealing with those employed directly by the government, or those employed by Crown agencies, as defined in the statute.

6 In this case, since being granted bargaining rights under the Labour Relations Act, and as recently as afterthe commencement of this case, the Union exercised its rights in keeping withtheir Labour Board certificate. Since the Labour Relations Act does not apply to Crown employees and in light of the majority decision, we must now ask what is the status of the bargaining certificate issued by the Ontario Labour Relations Board? What is the status of the collective agreement? What is the status of the bargaining agency? In my view, the decision too blithely ignores the established statutory separation of labour relations activities between the Crown and other genre of employer.

7 I disagree with the majority on a number of factual issues as well.

8 For example, while the majority places much reliance on the service planning and other "control" mechanisms in place, they have ignored the important and distinguishing work performed by the KCAS in managing its own affairs.

9 The KCAS is directed by an autonomous Board of Directors. No members of the Board are appointed by the Crown. The KCAS Board has undertaken a strategic planning exercise to determine what services to offer and how best to meet the child welfare needs of the community. This exercise was not prescribed by nor limited to expectations of the Ministry.

10 On the clear, undisputed and compelling evidence of Ms. Susan Abell, Executive Director of the KCAS,manyofthe recommendations inthe Comprehensive Audit and Revieworiginatedwiththe KCAS staff and executive. Many of the recommendations were included at the request of KCAS staff to provide more impetus for change within the institution itself.

11 In its progress report to the Ministry, the KCAS identified numerous recommendations as "completed", or "in progress". With respect to at least one item, the KCAS adopted its own auditor's alternative recommendation. In the 1984 report on the 1980 audit, the Board advised the Ministry that it had "considered [the recommended point] but decided not necessary." There is no evidence that the Ministryappliedanyfinancialconsequencestothesedecisions. Nor did the Ministry necessarily go behind the responses to ensure that Ministry standards or suggestions were implemented.

12 The KCAS considers the Ministry standards and guidelines as "minimum standards" and has set out to develop their own standards and practices. They have invested heavily in the Ontario Association of Children's Aid Societies' initiative to develop a quality and monitoring process to measure performance of societies. The KCAS is a member of the Child Welfare League, which also prescribes standards of performance as a condition of membership.

13 I note that the Ministry's representative, the Programme Supervisor, has responsibility for almost a dozen agencies, the KCAS being the only CAS. Accordingly, he has a diverse set of activities to support, and, by his own admission, is not specialist in CAS activities.

14 These are hardly the hallmarks of an institution beset by overbearing intrusion by the government funder.

15 Moreover, while there is evidence that the Ministry has the power to take the place of a Board of Directors, it has done so only once in living memory. There is no evidence that the Ministry has ever intimated it might seize control of this CAS.

16The majority relies heavily on two actions of the Ministry to demonstrate interventions in the collective bargaining of the KCAS, and involvement in setting compensation. These are the involvement of the then Minister of Community and Social Services during the first round of collective bargaining. The other is the "BUMP" dollars. I reject the characterizations of both of these events by the majority.

17First, the actions of the Minister took place in 1979. The KCAS and the Union were struggling to negotiate a first collective agreement. The Union approached the Minister, who was also the Member for the riding in which the KCAS is located and many of its employees are resident.

18The Minister responded to the attempts by the Union to involve him in the bargaining process by either explaining Ministry policy or, alternatively, directing the Union to continue in its efforts to. negotiate withthe KCAS. Neither action is inappropriate, nor can they be described as participating in bargaining. Moreover, neither action has been repeated. Nor has the Union again sought to have the Minister intervene.

19As to the BUMP monies, the majority has ignored the events leading up to the Ministry directives by which agencies qualified for the funds. Simply, the government announced its intention to provide more money for transfer agencies. It invited representatives ofa large variety of agency associations (including the Ontario AssociationforChildren's Aid Societies), to prepare a recommendation on how to distribute the funds effectively and equitably.

20After extensive research and consultation, the ad hoc group prepared a recommendationwhichwas adopted by the government. In order to effectively and equitably distribute the funds, the group proposed aseriesof guidelines. These are the guidelineswhichthegovernmentultimatelyputinplace. I note as well that the initiative involved a whole spectrum of children's service providers and was not restricted to CASs only. Finally, we do not know what impact this initiative has on the KCAS, as the Board and the Union have not negotiated with respect to the available monies. These two parties are in agreement that it is up to them to make that determination.

21As set out by the majority, CUPE tried in the early 80's to engage the Ministry in central bargaining formostCASsintheProvince. The initiative was rebuffed by the Ministry on the basis that each CAS was anindependententity. Moreover, the membership of the KCAS, on the urging of Mr. Ed Scott, the CUPE representative, chose not to participate in the general CUPE initiative. Mr. Scott indicated that the membershipoftheKCAS unitbelievedtheycouldbebetterrepresentedbyremaininganautonomousunit.

22Neither the Union nor the CAS has acted as if constrained by the Ministry annual allocation. The annual increases negotiated in collective agreements(different fromthe allocationamounts),the multi-year agreements, and the other provisions for increases to specific benefits and rate ranges are clear evidence that the KCAS was not bound to the Ministry allocation amounts.

23Furthermore, CUPEandtheKCASconducteda"genderneutraljobevaluation"ofpositions within theKCASwithouttheinvolvementof the Ministry. Wehavenoevidenceontheoutcomeofthatexercise. However, we do know that the Ministry played no role inthe valuationexercise.The Union saw no need for participation by the Ministry.

24The fact that the Ministry was not involved, and the Union sought to have job classes in the participating municipalities used for establishing the amount of pay equity increases, gives valuable insight into whom the Union saw as their employer.

30. The majority has, particularly in the area of compensation, allowed programme control to have double impact. Programme control is discussed at length in the section "Who determines the nature of services provided by or the work performed by the KCAS?" ThemajorityadmitsthattheMinistry plays no role in almost all compensation matters. Yet it relies on programme control to conclude

We find thatthe natureand extent ofthe controlexercisedbythe Ministryovertheseareas is so intrusive that the KCAS hasverylittle scope for independent action and is therefore not autonomous. The Tribunal concludes that the Ministry has fundamental control over and is responsible for the existing compensation practices and the valuing of work.

25In my view, the majority has ignored compelling evidence which supports the conclusion that the KCASistheemployerofthe group of employees in question. Inaddition,theyhaveignoredthestatutory regime which is in place to determine who are Crown employees, without attention to the unnecessary havoc that their decision will create.

26The Supreme Court of Canada, in its mandatory retirement decisions, was able to make fine distinctions between, for example, community colleges and universities [McKinney v. University of Guelph, supra; Douglas College v. Douglas/Kwantlen Faculty Association, supra]. The questions raised under these cases arose under the Charter of Rights and Freedoms.

27Clearly, the Charter must be given the widest possible, purposive interpretation. Yet, the Court found that significant control of an enterprise does not bring it within the sweep of government for the purposes of the Charter. A myriad of factors, including the existence of a strong, separate governing structure, must be considered.

28In considering those factors in this case, including the evidence and the entire statutory framework, I would find that the KCAS is the employer of these employees.