Pay Equity Hearings Tribunal

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

Before: Mary Ellen Cummings Chair, Pauline R. Seville, and Yvonne Blaszczyk, Members.

Cite as: The Child’s Place (February 28, 2002) 0730-01 (P.E.H.T.)

DECISION OF THE TRIBUNAL, FEBRUARY 28, 2002

[1]. This Application is brought by The Child’s Place with respect to an Order of a Review Officer dated August 27, 2001. The Order concluded that The Child’s Place was required to make the pay equity adjustments set out in the pay equity plan it had posted on October 3, 1994. The Order determined that the Pay Equity Act, R.S.O. 1990, c.P 7, as amended (“the Act”) did not permit an employer to fail to pay adjustments on the basis that it lacked the funds to do so.

[2]. The Application and subsequent pleadings raise a number of procedural issues that must be addressed or at least canvassed before we go on to consider scheduling an oral hearing.

Background

[3]. The Child’s Place has brought an Application alleging that it is not able to make the payments required in its pay equity plan because it has not received necessary funding from the Crown in Right of Ontario (Ministry of Community and Social Services) (“the Crown”) which it has named as a Respondent. The Child’s Place asserts that the Crown is responsible to fund proxy pay equity adjustments and that The Child’s Place prepared its pay equity plan on the basis of assurances by the Crown that the funding would be forthcoming. The Child’s Place alleges that such funding was provided for adjustments owing to the end of 1997 only.

[4]. In its Application, The Child’s Place advises that a similar issue is already before the Tribunal. The Child’s Place also refers to a proceeding in the Ontario Superior Court of Justice in which it understands that a claim is being made that the Crown has violated the Charter of Rights and Freedoms in failing to continue to provide funding to make these pay equity adjustments. The Child’s Place seeks an adjournment of this proceeding pending the outcome of the other Tribunal and court proceedings.

[5]. As remedies, The Child’s Place seeks the following:

a) an Interim Order to stay these proceedings pending the outcome of the cases before the Pay Equity Hearings Tribunal as listed at part 7 of the Application-Form 1 (page 4 of 4) and the Ontario Superior Court of Justice application between CUPE et. al and the Attorney General of Ontario et al:

b) a declaration that the pay equity plan negotiated between the Applicant and the Respondent complies with the provisions of the Pay Equity Act and is binding upon the parties;

c) a declaration that the Applicant has not violated subsection 21.22(2) of the Act;

d) a declaration that the Applicant has not violated subsection 13(4) or (5) of the Act;

e) an Order dismissing the Review Officer’s Order dated August 27, 2001;

f) a declaration and Order stating that the Crown in Right of Ontario (Ministry of Community and Social Services) is obligated to provide pay equity funding to the Applicant for the amounts claimed by the Group of Employees;

g) such further and other relief as the Applicant may request and the Tribunal may see fit to grant.

[6]. The Crown has filed a complete Response. Among the issues raised is a request that the application be dismissed against it on the basis that the Crown has no substantial interest in the proceedings or alternatively, on the basis that the Tribunal has no jurisdiction to award the remedies sought by The Child’s Place against the Crown.

[7]. By letter dated December 17, 2001, The Child’s Place advised the Tribunal that it had been notified “…that the delivery of the Outreach Developmental Services was being transferred to the Infant and Family Program. Accordingly, a group of employees (approximately 21) covered by the Pay Equity Order were transferred to another employer, effective September 21, 2001.”

[8]. The Child’s Place characterizes the transfer of the program and employees as a sale of business within the meaning of section 13.1 of the Act. Further, it asserts that the Order affects the employees in the transferred program and may affect their new employer. Notice of these proceedings has been provided to the Infant and Family Program, which then filed a Response.

[9]. Infant and Family Program raised a number of issues. First, it asserts that it ought not to be a party to this proceeding because the substantive issue is whether The Child’s Place is required to make the adjustments called for in its plan, to which Infant and Family Program is not a party. Counsel for Infant and Family Program suggests that The Child’s Place has confused initial liability to meet pay equity obligations with ongoing responsibility to make adjustments and maintain pay equity. Further, Infant and Family Program notes that the Applicant has not sought any remedial relief against Infant and Family Program.

[10]. Moreover, Infant and Family Program had no involvement in the Review Services process or opportunity to participate in any discussion about the alleged sale of business issue, with the result, it argues, that the Tribunal does not have the jurisdiction to consider the issue. Further, Infant and Family Program asserts that there has been no sale of business but in the event that the Tribunal takes jurisdiction over this issue, Infant and Family Program reserves the right to make more detailed pleadings.

[11]. Finally, Infant and Family Program pleads that in the event the Tribunal determines that it is a proper party and decides to determine the successor employer issues, then Infant and Family Program joins with The Child’s Place in seeking a declaration that the Crown is obliged to provide pay equity funding to meet pay equity obligations.

[12]. Agents Pat Fitzpatick and Hamal Kaffar (“the Agents”) filed a Response on behalf of a Group of Anonymous Employees. The Agents filed a response to The Child’s Place December 17, 2001 letter. They point out that since the employees were advised of the transfer in June 2001, The Child’s Place certainly knew about this issues before the Order was issued and before it made its Application, and the Agents ask us to conclude that raising the subject now is intended only to confuse the problem. In any event, the Agents submit that The Child’s Place is responsible for any pay equity plan compliance and any pay equity adjustments owing to the employees to the point they were transferred to Infant and Family Program.

[13]. In Reply, The Child’s Place indicated that the Review Officer was made aware of the transfer but did not address it. Because it was not the principal issue in dispute, The Child’s Place wrote that it also did not raise it initially in its Application but on further reflection concluded that it needed to be addressed and that Infant and Family Program needed to have notice of the proceedings. The Child’s Place asks that in the event the Tribunal decides that the sale of business issue requires a prior determination by the Review Officer, that the Tribunal refer the matter to the Review Officer for a decision so that the sale issue can be determined as part of this proceeding.

Issues raised by the pleadings

[14]. a) Should this proceeding be adjourned pending the Tribunal proceedings in Community Living Oakville et al. 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?

[15]. In the paragraphs that follow, the panel will set out its initial views about these issues and direct the parties to set out their positions on each for the panel and for one another.

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

[16]. The Child’s Place has asked for a an interim order to stay these proceedings. That is not an order we would typically give, but we will consider requests to adjourn our proceedings. The Tribunal’s general practice is to adjourn matters if all parties agree that it is an appropriate course of action, although the Tribunal always retains the discretion to refuse an adjournment, even one agreed to by all parties. Conversely, the Tribunal’s general practice is to refuse to adjourn proceedings unless all parties agree. At this point, only The Child’s Place has submitted that an adjournment is appropriate. It would be helpful for both the panel, and presumably, the other parties to know what event would bring the adjournment to an end. Would it be the final decision of the Tribunal in Community Living Oakville et al. or the end of any available judicial review? Similarly, with regard to the application in the Ontario Superior Court, does the trial decision bring the adjournment to an end? It would also be helpful to know if The Child’s Place is a party to the court action or whether it agrees to be bound by the result either of that proceeding or the proceeding before this Tribunal in Community Living Oakville et al. The Child’s Place is directed to respond to those questions. The remaining parties are directed to indicate whether or not they consent to the adjournment request, with reasons, and to respond to any other submissions made by the Applicant on this topic.

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

[17]. Although this is cast by the Crown as a preliminary issue, it is in reality, the substance of the Application of The Child’s Place. Unless The Child’s Place can convince the Tribunal that the Crown is in some way responsible for The Child’s Place failure to make the pay equity adjustments required in its plan, or responsible to fund those adjustments, there would be no basis on which to change the Review Officer’s Order. The Child’s Place does not dispute that it has a pay equity plan, that it is binding upon it and which requires it to make adjustments. Rather, it asserts that the Crown’s failure to make funds available to enable the adjustment to be paid either relieves The Child’s Place of its obligations to make the adjustments, or requires a direction from the Tribunal to the Crown to provide the necessary funding. It is our initial view, then, that the Crown’s preliminary issue is more properly addressed in an oral hearing, after the issues which follow, have been resolved.

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

[18]. The panel’s concern, to put it bluntly, is that some of the remedies requested do not appear to have any relation to the issues in dispute. At the risk of repetition, The Child’s Place alleges that it cannot comply with its pay equity plans because the Crown has failed to fund it appropriately. It has sought as a remedy:

A declaration and Order stating that the Crown in Right of Ontario (Ministry of Community and Social Services) is obligated to provide pay equity funding to the Applicant for the amounts claimed by the Group of Employees;

[19]. That remedial request has a logical relation to the substance of the allegation and the panel’s understanding of the issues in dispute. However, the connection of the remedies requested at b) through e) of the Applicant’s Schedule B to the issues in dispute is not evident. Unless The Child’s Place can make submissions to establish that those remedies are prima facie or arguably linked to the issues in dispute, the Tribunal will strike those remedial requests from the application.

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?

[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,

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

ii. 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 Child 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 Child 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 Child 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.

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?

[26]. Even if the sale issue was raised with Review Services, all parties agree that Infant and Family Program did not participate in any discussions, and as The Child’s Place admits, it was not a central issue at that time. The Tribunal has said on a number of occasions that it will take jurisdiction over an issue only where it is satisfied that there has been an opportunity at Review Services to discuss the matter and exhaust settlement possibilities (see for example Scarborough No. (1), (1994) 5 P.E.R. 45 and Villa Colombo (1997), 8 P.E.R. 133). On all the parties’ submissions, it does not appear that there has been such an opportunity. However, the panel invites the parties’ further submissions on that issue.

[27]. In her Reply, counsel for The Child’s Place submitted that in the event the Tribunal determines that the sale of business issue requires a decision of Review Services, then she asks the Tribunal to make a referral to Review Services. The scheme of the Act anticipates that employees, employers and trade unions give notice to, and make complaints and objections to the Pay Equity Commission (see sections 14(6), 15(7), 16, 21.2(5), and 22). There is no mechanism available for the Tribunal to refer a matter to the Commission. As an aside, we also wonder whether The Child’s Place has sufficient interest to make a referral in these circumstances. Put another way, can The Child’s Place assert a basis to cause an inquiry into whether Infant and Family Program has met its pay equity obligations? It appears that The Child’s Place would have no such interest unless someone looks to The Child’s Place to pay out something other than retroactive adjustments to persons it says are no longer in its employ because of a sale of business to someone else. But as we understand these facts so far, no one has asserted that The Child’s Place has to make pay equity adjustments for periods of employment when its former employees were working at the Infant and Family Program.

Summary and direction

[28]. We seek the submissions of the parties on all the issues set out above. But is it fair to say, that at this point, the panel is of the view that the only substantive issue is the role of the Crown in The Child’s Place’s admitted failure to make the adjustments required in its pay equity plan, and the Tribunal’s jurisdiction to make an appropriate remedy if the Applicant is successful in its claim. If that is the only substantive issue, then the remedies requested by the Applicant at b) through e) in Schedule B to the Application are inappropriate; and there is no reason to involve the Infant and Family Program and delve into the sale of business issue. Finally, if the only issue is the role of the Crown in The Child’s Place failure to meet its pay equity obligations, then there may be some merit in adjourning these proceedings pending the other litigation on this issue. But that is only a tentative view; the parties’ submissions may well convince us differently.

[29]. The parties are directed to make submissions on the above-noted issues and any other relevant points on following timetable. All parties who wish to make submissions should serve them on the other parties and file them with the Tribunal by no later than March 15, 2002. Any party who wishes to respond to the submission of others must serve and file them by no later than March 29, 2002.

Dated at Toronto this February 28th, 2002

Mary Ellen Cummings, Chair

Yvonne Blaszczyk, Member

Pauline R. Seville, Member