Township of Notre Dame of St. Agatha v. Cheryll Tucker, 2001 CanLII 28099 (ON PEHT)

Pay Equity Hearings Tribunal

0713-00 Township of Notre Dame of St. Agatha v. Cheryll Tucker

Before: Mary Ellen Cummings, Chair, and Members Catherine Bickley and Margaret Kvetan

Appearances: Keith Hempel for the Applicant, Cheryll Tucker on her own behalf.

Cite as: Notre Dame of St. Agatha (February 26th, 2001), 0713-00 (P.E.H.T)

Decision of the Tribunal, February 26th, 2001.

1This is an application by Notre Dame of St. Agatha Inc. (the Employer) with respect to an Order of a Review Officer dated July 28, 2000. The Officer concluded that the Employer had to make pay equity adjustments to its former employee Cheryll Tucker. The Employer’s position is that at the time Ms. Tucker left her employment, the parties entered into Minutes of Settlement and Release which prevent Ms. Tucker from seeking payment of the pay equity adjustments.

2With the help of a Pre-Hearing Vice Chair, the parties agreed on the relevant facts:

1. The Respondent, Cheryll Tucker (“Tucker”) was employed by the Applicant (”the Employer”) as a full-time Support Services Supervisor from July 10, 1989 until the Employer terminated her full-time employment effective May 1, 1998.

2. Attached to this Memorandum as Appendix “A” is a copy of the release executed by Tucker and the Employer in respect of the termination of her full-time employment.

3. Tucker continued to be employed as a Support Services Supervisor on a part-time basis from May 4, 1998 until she resigned effective September 17, 1998. During this time she received a full-time salary.

4. Support Services Supervisor is a non-bargaining unit position. All of the job classes in the Employer’s non-bargaining unit workforce were female-dominated.

5. When the proxy provisions of the Act were repealed in June, 1995, the Employer had not yet posted a proxy plan. Those provisions were restored pursuant to the decision of the Ontario Court (General Division) dated September 5, 1997.

6. The Employer posted a proxy plan on August 12, 1998 (“the Plan”). A copy of the Plan is attached as Appendix “B”.

7. The Employer made partial payments in respect of pay equity adjustments to non-bargaining unit personnel prior to August 12, 1998. One such payment was made on May 14, 1998 and was accompanied by a memo dated May 13, 1998. The Employer will lead evidence with respect to the timing and the amounts of earlier payments.

8. Pursuant to s.21.22(1) of the Act, the Employer was obliged to calculate proxy adjustments for all job classed so entitled as of January 1, 1994.

9. The Plan identified that adjustments would be made to the salary of the Support Services Supervisor in four stages, as follows:

January 1, 1995 $541

January 1, 1996 $395

January 1, 1997 $624

January 1, 1998 $624

The salary adjustment identified as payable as of January 1, 1998 encompassed entitlements accruing for the entire 1998 calendar year.

10. Upon her execution of the release referred to in Paragraph 2 above, Tucker received $6030, the equivalent of two months salary, which the parties characterized as “severance pay”.

11. The employer states that it had no generic or universally applicable policy respecting when “severance pay” is paid, or how it is calculated.

3The Memorandum of Settlement and Release provide as follows:

WHEREAS the Employee’s full-time employment with the Employer will terminate effective May 4, 1998;

AND WHEREAS the Employer and the Employee wish to resolve all issues related to the Employee’s termination of full-time employment;

THE PARTIES AGREE as follows:

1. Effective May 4, 1998 the Employee’s position will become half-time (20 hours/week) Support Services Supervisor with her regular full-time wage rate continuing until the earlier of the Employee’s resignation, her termination for just cause, or December 31, 1998.

In the event that the Employee resigns from employment prior to December 31, 1998 with (2) two weeks prior written notice, the Employer will pay to the Employee a lump sum payment in the amount of two (2) months regular wages, less appropriate deductions, if any, with any eligible amounts to be paid as a retiring allowance into the Employee’s RRSP upon being provided with duly executed TD2 Form.

2. The Employee will be paid four (4) weeks of her unused earned vacation to April 30, 1998, less statutory deductions, as at May 4, 1998 leaving a balance of 16.5 unused earned vacation. For the balance of the period to December 31, 1998, the Employee will accumulate vacation on a 8/12 prorated basis (i.e. 4.5 weeks to December 31, 1998) which shall be taken and paid for in the same manner as if she were a full-time employee (i.e. If the Employee were scheduled to work two(2) days in a week and the week is taken as vacation she will not work that week, she will receive one (1) weeks pay, and she will be treated as having taken one (1) week’s vacation). It is further agreed that the Employee will take at least 16.5 days vacation prior to the end of the notice period unless the Employer agrees otherwise.

3. The Employer agreed to provide a letter of reference to the Employee setting out the following:

(a) Date of hire;

(b) Title or position held;

(c) Basic duties and responsibilities, if any;

(d) An indication of the positive attributes and qualities which she showed in this position.

4. In consideration of the undertakings in paragraphs 1, and 2, the Employee hereby releases and forever discharges the Employer, its subsidiaries and affiliates and each of its respective officer, directors, employee and agents from any and all actions, causes of action, suits, contracts, covenants, debts, claims and demands of whatsoever nature and kind for damages, indemnity, costs, compensation or any other remedy which she or her successors, heirs, administrators or assigns have had, may now have, or may have in the future in any way arising out of the Employee’s full-time employment with the Employer or the termination of that employment whether arising under statute or otherwise. The Employee further agrees that this Agreement satisfies all obligations arising under the Employment Standards Act for termination notice or severance in relation to the years of service up to and including December 31, 1998.

5. The Employee agrees that this settlement is not an admission of liability by the Employer and in fact such liability is denied.

6. The Employee agrees that she will not disclose the terms of this settlement to members of the general public, including to employees or former employees of the Employer, without the written consent of the Employer.

7. The Employee agrees to indemnify and save the Employer harmless with respect to any claims, charges or demands properly exigible which might be made upon it in respect of the Employee’s obligations pursuant to the Income Tax Act (Canada) or the Employment Insurance Act.

8. The Employee acknowledges by her signature herein that [sic] he understands the terms of this settlement, that he has had a reasonable opportunity to [sic] independent advice with respect to the settlement, that the undertakings in paragraphs 1, 2 and 3 are the sole consideration for the release, and that she voluntarily accepts the fulfilment of such undertakings for the purpose of making full and final compromise, adjustment and settlement of all claims as aforesaid.

4The Memorandum of Settlement and Release were signed on May 14, 1998.

5The parties also agree that at the time of Ms. Tucker’s termination from full-time employment, the only issues the parties discussed were the amount of severance pay, the outstanding vacation entitlement and the proposed job description for the new part-time position. There was no discussion of any pay equity entitlements. Ms. Tucker was represented by counsel in the negotiation of the Memorandum of Settlement and Release.

6It is also agreed that although an e-mail was sent to employees on April 24, 1998 advising of the planned pay equity adjustment within 3 weeks, Ms. Tucker did not receive it due to internal e-mail delivery problems.

7The Employer submitted that this complaint has been brought by Ms. Tucker in bad faith because she knew when she signed the release that she could not bring further actions against the Employer. Further, Ms. Tucker would have known, in at least a general way, that there were still outstanding pay equity adjustments to be paid because she had already received a partial payment. The memo accompanying the partial payment indicated that more would be coming when the Employer's funding sources provided the means.

8The Employer’s representative, Mr. Hempel, also submitted that Ms. Tucker was under no obligation to resign before December 31, 1998, and if she had stayed, the Employer would have paid her the pay equity adjustment. Mr. Hempel also suggested that the severance package provided was in excess of the Employment Standards Act’s (R.S.O. 1990. C.E. 14, as amended) requirements because there is no obligation to pay anything to a person who resigns. The Panel pointed out that it appeared from the terms of the Memorandum of Settlement that the severance amount was on account of the Employer’ s decision to end Ms. Tucker’s full-time position after nearly eight years of service, and that the amount was slightly more than the Employment Standards Act’s minimum of seven weeks notice in writing, or pay in lieu of [see section 57(1)(g) the Employment Standards Act] for employees with more than seven but less than eight years of service. Mr. Hempel indicated that he did not disagree.

9However, the Employer relied heavily on the terms of the Release, prepared by Ms. Tucker’s counsel, and signed by her:

In consideration of the undertakings in paragraphs 1, and 2, the Employee hereby releases and forever discharges the Employer, its subsidiaries and affiliates and each of its respective officers, directors, employee and agents from any and all actions, causes of action, suits, contracts, covenants, debts, claims and demands of whatsoever nature and kind for damages, indemnity, costs, compensation or any other remedy which she or her successors, heirs, administrators or assigns have had, may now have, or may have in the future in any way arising out of the Employee’s full-time employment with the Employer or the termination of that employment whether arising under statute or otherwise. The Employee further agrees that this Agreement satisfies all obligations arising under the Employment Standards Act for termination notice or severance in relation to the years of service up to and including December 31, 1998. [emphasis added]

10Mr. Hempel submitted that Ms. Tucker signed a complete release, and should not be permitted to advance this complaint.

11Mr. Hempel agreed that in the event the Tribunal decided to uphold the Order the amount of the Order was correct.

12Ms. Tucker submitted that the parties never discussed the pay equity issues, and never intended that the Memorandum of Settlement would prevent her from exercising her right to a pay equity adjustment. At the time the Release was drafted she had received no notice about a pending pay equity payment. All of the discussions and all of the terms of the Settlement relate to her termination from full-time employment and the payments that would be paid to compensate for the loss of that employment and the recognition of her years of service. Ms. Tucker said that the Memorandum was only about paying her for the failure to give proper notice of the end of her full-time job. The Memorandum, Ms. Tucker said, was negotiated to protect her right to notice under the Employment Standards Act.

13In Ms. Tucker’s final submission, she asked the Tribunal to order the Employer to pay interest on the amounts ordered by the Review Officer.

Decision

14The Tribunal has decided that it is unnecessary in this case, which is one of first impression, to determine if parties can ever “contract out” or “settle out” of pay equity obligations. The Panel considers it more appropriate to focus on whether these parties, in these circumstances, have made an agreement which successfully bars Ms. Tucker from pursuing payment of a pay equity adjustment.

15We have decided that they have not. There are a number of factors which lead to that conclusion. First, the pay equity adjustment in issue covers the period 1996 to 1998 (with a bit of “leftover payment” from 1994/1995). Ms. Tucker worked throughout that period. It is at least arguable that had the Employer made the payments in a timely way, this issue would not have arisen. The Tribunal should not lightly deprive employees of a pay equity adjustment, and particularly not in circumstances where, through no fault of the employee, it is the lateness of the payment that causes or contributes to the dispute.

16Second, the negotiations and the terms of the Settlement revolved around Ms. Tucker’s termination from full-time employment and how that loss of job would be compensated. The only other items contained in the Memorandum of Settlement concerned the vacation entitlement and the terms of the part-time job. That reflects the parties’ agreement that those were the only three issues discussed. We note that the preamble to the Memorandum, which set out its purpose, reads:

WHEREAS the Employee’s full-time employment with the Employer will terminate effective May 4, 1998;

AND WHEREAS the Employer and the Employee wish to resolve all issues related to the Employees’ termination of full-time employment; [emphasis added]

17The parties negotiated a Memorandum to resolve the termination and issues that flowed from it, but nothing else. We are also influenced in our decision by the amount of the payment made to Ms. Tucker. The severance amount paid was equal to two months wages, only at most, two weeks more than the minimum Ms. Tucker was entitled to, under the Employment Standards Act as compensation for the Employer’s failure to give timely notice of the termination of her full-time employment. The outstanding pay equity adjustment is $4,300.27, a significant sum of money. This is not a situation in which an employee received a large sum of money, well in excess of her statutory entitlements, in return for signing a release. If the amounts paid to Ms. Tucker had more closely approximated her combined entitlements under the Employment Standards Act and the Pay Equity Act we may have viewed the circumstances differently. In other words, it is significant that the money received by Ms. Tucker does not meet the minimum statutory entitlements of both the Employment Standards Act plus the Pay Equity Act.

18In D’Arcy Masius Benton and Bowles Canada Inc. (Harris July 27, 1993 ES 93-151, affirmed by the Divisional Court, unreported April 11, 1994), it was held that an employer’s agreement to provide 24 months notice of termination did not prevent the employee from bringing a claim for severance pay under the Employment Standards Act. The Referee wrote:

The agreement between the parties only refers to notice of termination of employment. It does not refer at all to severance pay entitlements and does not recite that the acceptance of termination is in lieu of all entitlements under statute and common law.

19The Referee acknowledged that the amounts paid to the employee exceeded the statutory minimums for termination pay, but he concluded that the agreement failed to address the employee’s statutory minimum rights to severance pay. While the Employment Standards Act contains a specific provision prohibiting “contracting out” of the statute, the D’Arcy Masius reasoning is applicable in the pay equity context to some extent. It suggests that when reviewing a release, regard should be had to whether it specifically addresses the statutory entitlement that forms the basis of the subsequent claim or action.

20With that context, we turn to examine the release. It is true that the Release broadly discharges the Employer “…from any and all actions”. But, the Release, although making specific mention that the Settlement “…satisfies all obligations arising under the Employment Standards Act for termination notice or severance” makes no mention of that it also satisfies obligations under the Pay Equity Act. Looking only, then, at the form of release itself, we are not satisfied that the broad discharge is sufficient to bar Ms. Tucker from bringing this complaint.

21Further, as we have already noted, the circumstances surrounding the Memorandum of Settlement and Release lead us to the conclusion that the parties did not intend the release to prevent Ms. Tucker from claiming her pay equity adjustment.

22The Tribunal confirms the Order of the Officer. The decision of the Tribunal in Peterborough (Clow)(No.3) (1996), 7 P.E.R 33 established the jurisdiction to award interest in appropriate circumstances. The Employer is directed to pay $4,300.27 to Ms. Tucker, with interest, calculated in accordance with the provisions of the Courts of Justice Act R.S.O. 1990, C.C – 43, as amended. Interest is to be calculated from May 14, 1998, the date that the other employees received their pay equity adjustment, to the date the Employer pays the total amount to Ms. Tucker.

23The panel remains seized in the unlikely event that issues arise with respect to the implementation of this decision.