PAY EQUITY HEARINGS TRIBUNAL

0730-01 The Child’s Place, Applicant v. Pat Fitzpatrick, Kamal Haffar, The Crown in Right of Ontario (Ministry of Community and Social Services), Respondents, The Infant and Family Program, Affected Party

Before: Mary Ellen Cummings, Chair; Pauline R. Seville and Margaret Kvetan, Members

Cite as: The Child’s Place (No. 2)(October 7, 2002) 0730-01 (P.E.H.T.)

DECISION OF THE TRIBUNAL, OCTOBER 7, 2002

1This Application is brought by The Child’s Place with respect to an Order of a Review Officer dated August 27, 2001.

2By decision dated February 28, 2002 a panel of the Tribunal (differently constituted in part) identified a number of procedural issues that needed to be canvassed, and perhaps determined, prior to considering the scheduling of an oral hearing. The parties have made their submissions.

3The February 28, 2002 decision sets out the background in some detail, which we will not repeat here. However, the specific questions the Tribunal asked the parties to address are as follows:

a) Should this proceeding be adjourned pending the Tribunal proceedings in Community Living Oakville and the action in the Ontario Superior Court?

b) Is the Crown a proper party to the proceeding and does the Tribunal have the jurisdiction to issue the remedy sought against it?

c) Are all of the remedies sought by The Child’s Place prima facie appropriate, given the issues in dispute?

d) Are the issues surrounding the alleged sale of business from The Child’s Place to Infant and Family Program necessarily part of this proceeding?

e) If the answer to (d) is “yes”, is the issue of the alleged sale of business from The Child’s Place to Infant and Family Program an issue over which the Tribunal can take jurisdiction at this time?

4The Child’s Place, the Crown in Right of Ontario (“the Crown”), and Kamal Haffar and Patricia Fitzpatrick, Agents for the Groups of Anonymous Employees (“the Employees”), filed further submissions. The Infant and Family Program did not, but its position on many of the issues is set out in its response filed on January 21, 2002. We will set out the parties’ submissions and our analysis and decision in respect of each issue.

Should this proceeding be adjourned pending the Tribunal proceedings in Community Living Oakville and the action in the Ontario Superior Court?

5Both the Crown and The Child’s Place submit that these proceedings should be adjourned on the basis that since the central issue in Community Living Oakville is the same, the parties are likely to be persuaded or at least enlightened, by the result in that case. Both the Crown and The Child’s Place seek to have this matter adjourned until the Tribunal renders a decision in Community Living Oakville and judicial review opportunities are exhausted. However, The Child’s Place does not agree to be bound by the result in Community Living Oakville. The Employees oppose an adjournment request because they do not characterize the central issue as whether or not the Crown should be liable to fund the pay equity adjustments. They submit that the central issue is that The Child’s Place is obliged to make pay equity adjustments in accordance with its plan, and the Tribunal has already determined that inability to pay is not a basis on which a party can be relieved of its obligations.

6Typically, the Tribunal does not adjourn matters unless all parties agree. In this case there is no agreement. Moreover, the length of the adjournment sought by The Child’s Place could be very long. The argument of the preliminary issues in Community Living Oakville case is now scheduled for March 2003. It will take the Tribunal some time to render a decision after which, of course, all parties have the right to consider bringing a judicial review. Adjourning this matter until all those steps have been taken might well result in this case not even starting in 2003. We conclude that, absent agreement of all parties, that delay is simply too long. This matter will not be adjourned.

Is the Crown a proper party to the proceeding and does the Tribunal have the jurisdiction to issue the remedy sought against it?

7All parties, except the Employees, agree that this issue should be determined first, by way of an oral hearing. The Employees submit that whether or not the Crown should have provided appropriate funding to The Child’s Place is not relevant and to engage in a determination of that issue will only delay the payments to the employees under the pay equity plan. The Employees submit that if The Child’s Place wants to pursue a separate action against the Crown, it is free to do so, but that should not delay the implementation of the pay equity plan. In the panel’s view, the submissions of the Employees go to the merits of the substantive issue and are precisely the sort of arguments that will be relevant to our consideration at that time. But we want to hear all of the parties' submissions on the role of the Crown, if any, in respect of the pay equity obligations of The Child’s Place. We conclude that it would be best to hear those submissions in an oral hearing where the panel will have an opportunity to ask questions and seek clarifications from all the parties. We will schedule a hearing to entertain those submissions.

Are all of the remedies sought by The Child’s Place prima facie appropriate, given the issues in dispute?

8In its February 28, 2002 decision, the Tribunal raised the concern that some of the remedies requested by The Child’s Place did not appear to relate to the issues in dispute. In its submissions, The Child’s Place has agreed that the remedies requested in b), c) and d) of its Schedule B are not relevant to the issues in dispute. Consequently, on agreement of the Applicant, they will be struck.

9We think that f) is an appropriate remedy to seek, given the pleadings of The Child’s Place. Given our decision on the adjournment request and the withdrawal of the requests in paragraphs b) to d), the only question remaining concerns the request at paragraph e) for “an Order dismissing the Review Officer’s Order dated August 27, 2001”.

10The Child’s Place submits that remedy remains relevant if the Tribunal concludes that the Review Officer failed to consider whether there had been a sale of business to the Infant and Family Program or failed to make a determination on that issue. Since we will look at the sale of business issue below, we will address this aspect at the same time.

Are the issues surrounding the alleged sale of business from The Child’s Place to Infant and Family Program necessarily part of this proceeding?

11Since this is the most contentious issue, at least at this point, it is useful to set out in full the Tribunal’s preliminary view, as set out in the February 28, 2002 decision:

20. Although we have reviewed the pleadings carefully, it is not immediately apparent to the panel that the alleged sale of business is an issue that must necessarily be resolved as part of this proceeding. As we understand the case, The Child’s Place is complaining about an Order that requires it to make pay equity adjustments that it cannot afford, and the reason it cannot afford them is the Crown’s alleged failure to fund. The adjustments in issue cover the years 1998 to present. As we understand the facts, the alleged sale of business occurred in September 2001. Even if the Tribunal were to one day conclude that there had been a sale of business, the pay equity obligations of the Infant and Family Program whatever they might be would only take effect from the time of the sale. Section 13. 1 provides as follows:

13.1 (1) If an employer who is bound by a pay equity plan sells a business, the purchaser shall make any compensation adjustments that were to be made under the plan in respect of those positions in the business that are maintained by the purchaser and shall do so on the date on which the adjustments were to be made under the plan.

(2) If, because of the sale, the seller's plan or the purchaser's plan is no longer appropriate, the seller or the purchaser, as the case may be, shall,

(a) in the case of employees represented by a bargaining agent, enter into negotiations with a view to agreeing on a new plan; and

(b) in the case of employees not represented by a bargaining agent, prepare a new plan.

(3) Clause 14 (2) (a), subsections 14.1 (1) to (6) and 14.2 (1) and (2) apply, with necessary modifications, to the negotiation or preparation of a new plan.

(4) Repealed

(4.1) This section applies with respect to an occurrence described in sections 3 to 10 of the Public Sector Labour Relations Transition Act, 1997. For the purposes of this section, the occurrence shall be deemed to be the sale of a business, each of the predecessor employers shall be deemed to be a seller and the successor employer shall be deemed to be the purchaser.

(5) In this section,

"business" includes a part or parts thereof;

"sells" includes leases, transfers and any other manner of disposition.

21. A plain reading of section 13.1 places the obligation to pay future pay equity adjustments, not surprisingly, on the purchaser. Further if the sale of business renders either the purchaser or the seller’s plan no longer appropriate then each is required to prepare a new plan. No doubt the need for new plans is more likely in a sale of part of a business where the seller’s business contracts and the purchaser’s expands, with the attendant loss or gain of employees. But in any event, a consideration of whether a new plan is required only occurs after the sale of business when the consequences of that transaction are apparent to both the vendor and purchaser.

22. As both the Agents and the Infant and Family Program pleaded, the potential liability of Infant and Family Program to pay ongoing adjustments in accordance with section 13.1 does not give Infant and Family Program an interest in, nor liability for, the initial plan prepared by The Child’s Place. Moreover, if there has been a sale of part of a business, the requirement of the purchaser is to determine whether it needs to change its own plan governing the employees who came as a consequence of the sale. To put it simply, Infant and Family Program is not affected by the pay equity plan posted by The Child’s Place except to the extent that if it found there has been a sale of business, then Infant and Family Program must make any compensation adjustment required by that plan.

23. Is that interest enough to give Infant and Family Program standing to participate in this proceeding? Infant and Family Program does not think so, nor do the Group of Employees. Initially, we are inclined to agree, but because this issue has not yet been determined by the Tribunal we seek the parties’ submissions before making our determination.

24. If the Infant and Family Program does not have an interest in The Child’s Place’s initial plan, then it is our view that it is not necessary to deal with the alleged sale of business in this proceeding. It would be premature. First, it is not clear that Infant and Family Program had turned its mind to whether or not there has been a sale of business and if so, whether it affects any plan it might have. Section 13. 1 contemplates such an opportunity.

25. If, however, the Tribunal is convinced that Infant and Family Program, as a purchaser, has an interest in The Child’s Place initial plan, then the panel would have to determine whether there has been a sale of business as part of this proceeding.

12The Crown takes no position on this issue. The Employees agree with the preliminary view of the panel, as set out above. The Infant and Family Program takes the position that the transaction identified does not constitute a sale of a business within the meaning of section 13.1 of the Act. The Child’s Place respectfully disagrees with the preliminary view of the Tribunal. Its position is summarized in its submissions as follows:

The Applicant maintains its position that the purchaser is responsible for the future payments under the original plan until such time as the purchaser prepares a new plan pursuant to section 13.1(2) of the Act in addition to any outstanding pay equity obligations of the seller prior to the sale.

13The Child’s Place submits that the wording of subsection 13.1 anticipates that a purchaser could be liable for payments under a pay equity plan that the seller failed to make in a timely way. The Child’s Place relies on a Fact Sheet published by the Pay Equity Commission with respect to the consequences of a sale of business. The Tribunal recognizes the helpful role which the educational materials prepared by the Pay Equity Office play in assisting employer and employees in understanding the Act. Those materials may be of assistance to the Tribunal in reaching its determinations. However, it must be remembered that the Pay Equity Office and the Tribunal are independent of one another and the Office’s views do not bind the Tribunal.

14In the Tribunal’s view, it is possible to read section 13.1 as placing an obligation on a purchaser to make payments under pay equity plans that the seller failed to make in a timely way. But it is difficult to read section 13.1 as absolving a seller of liability for outstanding adjustments at the point a sale is made. Indeed, it is possible to read section 13.1 in a manner that places joint and severable liability on both the seller and the purchaser. However, the Tribunal does not think it necessary to come to any firm conclusion about the interpretation of section 13.1 in this case at this time.

15All that we need to determine is whether the Infant and Family Program has sufficient interest in the matter before us that it is a necessary party. We have concluded that the answer is no. The central issue in this proceeding is the failure of The Child’s Place to make pay equity adjustments required under its plan in the period after 1997, and the Crown’s responsibility, if any. The alleged sale to the Infant and Family Program did not occur until 2001. Although the Tribunal is considering the problem in 2002, we are looking at facts and events as they existed before the alleged sale took place, when the Infant and Family Program had no relationship with these workplace parties nor with their pay equity plan. Regardless, then, whether there has been a sale of business in 2001, the Tribunal must determine the liability of The Child’s Place for the preceding years and Infant and Family Program has no interest in that determination. It may be that section 13.1 can be interpreted in a manner that places joint liability on purchasers and sellers, but as we have said above, it is difficult to read it in a manner that would absolve The Child’s Place of liability for unpaid adjustments, particularly in circumstances such as this where we are reviewing what ought to have happened in 1998, 1999 and 2000, before the Infant and Family Program was a factor.

16Having concluded that the central issue is The Child’s Place’s failure to make payments under its plan and why, it is also not necessary to deal with the sale of business issue in this proceeding. This frees the Tribunal to focus on the fundamental issue raised by The Child’s Place and permits the parties and the Infant and Family Program to proceed to Review Services on the sale of business issue, if they wish.

17More particularly, it is not necessary to determine whether or not there has been a sale of business from The Child’s Place to the Infant and Family Program as part of these proceedings. Consequently, the Infant and Family Program is not an interested party to this proceeding. There is, therefore, no basis on which the Tribunal could or would dismiss the Review Officer’s Order of August 27, 2001. The Child’s Place admits that it has not complied with the Order of the Officer to pay out the adjustments required under its plan because it does not have the funds to do so. Instead, by this Application it seeks a determination that the Crown is obligated to provide it with funding.

18In light of our answers to question d) posed in our February 28, 2002 decision, it is not necessary to answer question e).

Summary and Disposition

19This matter will not be adjourned pending the determination of Community Living Oakville. The Deputy Registrar will contact the parties to discuss whether it would be useful to schedule a Pre-hearing Conference in this matter and if not, how many days will likely be required to hear and determine the issues surrounding the role of the Crown with respect to The Child’s Place’s obligations under the Act. That issue is the only one remaining before the Tribunal; The Child’s Place admits that it has failed to comply with the Order of August 27, 2001.

20The remedial requests set out at paragraph b) to e) of Schedule B to the Application are struck. The Infant and Family Program is not an interested party to these proceedings.