Pay Equity Hearings Tribunal
0746-03 Evelyn McKinley, Applicant v Bucyrus Blades of Canada Limited, Respondent
Before: Mary Ellen Cummings, Chair; Diane Rose and Catherine Bickley, Members
Appearances: John Woon and Les Osborne for the Applicant, Evelyn McKinley on her own behalf
Cite as: Bucyrus Blades of Canada Limited (August 25, 2003) (P.E.H.T.)
Decision of the Tribunal, August 25, 2003
This is an employer application with respect to a Review Officer’s Order dated December 3, 2002. Although we will detail the relevant facts below, the question at issue can be simply stated. Can Evelyn McKinley maintain a complaint to the Pay Equity Office, and benefit from the Review Officer’s Order, after having made a settlement with the employer arising out of her termination of employment, and having signed a release? The parties were able to present the Tribunal with an Agreed Statement of Facts, which we reproduce in its entirety.
The Applicant is a manufacturer of cutting edges, including snowplow blades, and is based in Bucyrus, Ohio. It has only one facility in Ontario. The employee complement at the Applicant’s Lindsay, Ontario facility fluctuates from less than ten employees to more than ten employees depending on market conditions during the year. The Applicant has a seasonal business with fluctuations during the year in the number of plant employees, who are represented by the United Steelworkers of America. The Applicant has undertaken a process of downsizing its operations over the past years because the industry is extremely competitive. It has undergone a cost reduction process with a business plan to operate satellite facilities with a minimum of overhead and administration staff. All accounting and production control operations are managed centrally from Bucyrus, Ohio. These consolidations have been made possible by improvements in its business operating systems. The Respondent’s job, in particular, was targeted for downsizing because the Applicant has a small number of employees in Lindsay and her duties could be more efficiently and effectively performed elsewhere.
The Respondent was hired on April 5, 1993 as a part-time office clerk working four hours per day in the office of the Applicant’s facility in Lindsay. Effective August 21, 1995, she started working eight hours per day and some overtime. In October 1999, her overtime opportunities were eliminated after the initial restructuring of the Lindsay office operations took place. She was employed by the Applicant in this non-managerial clerical position for just over seven years. Her position no longer exists and no new employee has been hired to replace her since other employees absorbed her duties.
Since at least 1999, the Respondent was the only female employee of the Applicant working in Ontario. Periodically, there was a casual data entry clerk, who assisted the Respondent in the Lindsay office until 1998 and this job was performed by a female. Currently, the Applicant has no female employees in Ontario. The female job classes referred to in the Order were completely redundant by 1998, in the case of the data entry clerk, and by 2000, in the case of the general office clerk.
The Respondent’s employment was terminated effective May 16, 2000, due to further restructuring of the Applicant’s Lindsay office operations. At that time, the Respondent was terminated by letter dated May 16, 2000 and she entered into a termination agreement dated May 19, 2000. A true copy of said letter and agreement is attached hereto and marked Appendix A (the “Termination Letter”). She executed a release as part of the said agreement. The Applicant has fulfilled all its obligations to the Respondent under said agreement.
The Respondent, Evelyn McKinley, executed a Release and Acknowledgement on May 19, 2000 in favour of the Applicant and others, a true copy of which is attached hereto and marked Appendix B (the “Release and Acknowledgement”). However, thereafter, the Respondent continued to complain to the Pay Equity Office seeking retroactive wage adjustments and wrote the Pay Equity Office on May 19, 2000, a true copy of which is attached and marked Appendix C. She had made a formal complaint to the Pay Equity Office by fax in October 1999 alleging that the Applicant contravened subsections 7(1) and 9(2) of the Pay Equity Act. A true copy of her completed form “Application for Review Services, Pay Equity Commission” dated received October 15, 1999 is attached hereto and marked Appendix D (the “Application for Review Services”). The Respondent says that she started complaining to the Applicant about her pay rate and pay equity beginning in or about 1997. She again contacted the Pay Equity office about her complaint on May 16, 2000.
On May 16, 2000 the Respondent faxed copies of the Termination Letter and the Release and Acknowledgement to an Ontario lawyer and requested independent legal advice about these documents. She obtained independent legal advice from this lawyer respecting said termination agreement, including the Release and Acknowledgement, before she executed the Termination Letter and the Release and Acknowledgement on May 19, 2000.
The Order was made by the Review Officer despite the said termination agreement, including the Release and Acknowledgement, between the Applicant and the Respondent and the requests made under subsection 23(3) of the Pay Equity Act that the Review Officer not deal with the complaint because it is vexatious and is made in bad faith. The Respondent withdrew allegations of contraventions under subsection 9(2) of the Pay Equity Act by the Applicant in our about 2001. Attached and marked Appendix E is various correspondence between the Pay Equity Office and the Applicant or its counsel from July 24, 2000 to July 30, 2001.
Ms. McKinley disagrees with the assertion at paragraph 6, concerning the manner of delivery of her termination letter to her counsel. But Ms. McKinley agrees that it makes no difference to this dispute. The parties clarified that the last sentence in paragraph 4 means only that the terms of the termination agreement were met.
The parties filed a number of documents with the Tribunal, but the only one we need to reproduce in its entirety is the Release and Acknowledgement Ms. McKinley signed in return for receiving the settlement monies.
IN CONSIDERATION of the terms and conditions set out in the termination agreement attached hereto, I, Evelyn McKinley (hereinafter referred to as the “Releasor,” which term includes heirs, executors, administrators, successors and assigns) hereby release and forever discharge Bucyrus Blades of Canada Limited, (Hereinafter referred to as the “Releasee” which term includes officers, directors, agents, employees, successors and assigns and all releated [sic] and affiliated corporations and their officers, directors, agents, employees, successors and assigns) of and from all manner of action, claims or demands which the Releasor had against the Releasee, now has or hereafter may have including without limiting the generality of the foregoing any claims arising out of the Releasor’s employment or the termination of that employment with the Releasee.
EXCEPT FOR MATTERS arising out of the termination agreement, the Releasor hereby specifically covenants, represents and warrants to the Releasee that she has no further claim against the Releasee for or arising out of her employment with the Releasee or the termination of such employment including without limiting the generality of the foregoing, any claims for pay, overtime pay, interest, benefits and/or vacation pay and specifically including any claim under the Employment Standards Act of Ontario, the Human Rights Code of Ontario, or any other similar legislation governing or related to the employment of the Releasor. The Releasor also hereby acknowledges that upon payment in accordance with the termination agreement she will be paid all amounts owing to her under the foregoing statutes. In the event that the Releasor should hereafter make any claim or demand or commence or threaten to commence any action, claim or proceeding or make any complaint against the Releasee or anyone connected with the Releasee for or by reason of any cause, matter or thing, this document may be raised as an estoppel and complete bar to any such claim, demand, action, proceeding or complaint.
AND FOR THE CONSIDERATION the Releasor agrees not to make any claim or take any proceeding in connection with any of the claims released by virtue of the preceding paragraphs against any other person or corporation who might claim contribution or indemnity from the Releasee by virtue of the said claim or proceeding.
THE RELEASOR acknowledges and agrees that she has read this Release and has had the opportunity to obtain independent legal advice with respect thereto and understands that it contains a full and final release of all claims that she has, or may have, against the Releasee relating to her employment or the termination of such employment and that there is no admission of liability on the part of the Releasee and that any such liability is denied.
IT IS FURTHER UNDERSTOOD AND AGREED that the Releasor shall not disclose to anyone any confidential information acquired by her in the course of her employment with the Releasee and that the terms of the said termination agreement and this Release shall remain confidential between the parties and shall not be disclosed by the Releasor except as required by law.
The Review Officer’s Order from which the employer is appealing found that the employer had failed to provide for and maintain pay equity in accordance with section 7(1) of the Pay Equity Act, R.S.O. 1990, c. P.7 as amended (“the Act”). The Officer concluded that the settlement and release signed by Ms. McKinley was no bar to maintaining her complaint or to receiving pay equity adjustments. The Officer ordered the employer to perform a job-to-job comparison of male and female job classes and if no comparison were found, to use the proportional value method to determine if pay equity adjustments are required. The employer was ordered to send the results of its comparisons to Ms. McKinley and the Officer. The employer was further ordered to pay any retroactive adjustments required within 30 days and to pay interest.
The parties were content to make argument to the Tribunal on the basis of the Agreed Statement of Facts and documents.
The Employer’s submissions
The employer argued that because all of Ms. McKinley’s claims arising out of her employment had been settled and the possibility of bringing a complaint had been barred by the release, the Review Officer should not have made the Order. The employer asks the Tribunal to revoke the Order. The employer pointed out that Ms. McKinley wrote to the Pay Equity Office on May 19, 2000, the very day that she settled and signed the release, asking the Office to proceed with the complaint she had made earlier. Counsel submitted that such conduct was vexatious, an abuse of process and should be discouraged.
Counsel asked the Tribunal to remember that this is a small employer, with barely more than the 10 employees that makes the Act applicable to the enterprise. At the time of her termination, Ms. McKinley was the only female employee and therefore, the only one who could benefit from the Review Officer’s Order. Moreover, this is not a complaint that is in any way related to the manner of her termination; Ms. McKinley’s complaint is that her job was not properly valued. The only remedy to come out of such a complaint is further wages and Ms. McKinley has reached a settlement with her employer in which she agreed to accept a severance package, which exceeded the minimum obligations under the Employment Standards Act 2000, S.O. 2000, c. 41 as amended, providing a further 9 weeks of wages. Further, Ms. McKinley has signed a broad release which takes in statutory obligations, employment obligations and pay generally. It is important to remember, counsel urged, that at the time the release was signed, the employer was unaware that Ms. McKinley had made a pay equity complaint.
The Agreed Statement of Facts outlines that Ms. McKinley was not required to agree to the employer’s terms the same day they were offered. Indeed, Ms. McKinley sought legal advice and three days later, accepted the employer’s terms. This is not a situation, counsel argued, where the employer has acted in a bullying manner that would invite the Tribunal to set aside the release.
Counsel argued that the Release and Acknowledgement is broad and general, releasing the employer from “…all manner of action, claims or demands which [Ms. McKinley] had against [the employer], now has or hereafter may have including without limiting the generality of the foregoing any claims arising out of …employment or the termination of that employment”. Ms. McKinley warranted that she had no further claims against the employer arising out of her employment “…including without limiting the generality of the foregoing, any claims for pay, overtime pay, interest, benefits and/or vacation pay and specifically including any claim under the Employment Standards Act of Ontario, the Human Rights Code of Ontario, or any other similar legislation….”
Counsel emphasized that Ms. McKinley’s complaint to the Pay Equity Office is essentially, a “claim for pay”, and therefore, is clearly contrary to the release. In addition, counsel argued, while the Pay Equity Act is not specifically mentioned, it is legislation that has been held in prior cases to be similar to the Human Rights Code, further reinforcing that the release contemplated Ms. McKinley could not proceed with a complaint under the Act. Finally, Ms. McKinley acknowledged that she received a payment in return for signing the release and consequently, has been paid all amounts owing to her under the “…foregoing statutes”. Ms McKinley is further warned that if she does commence an action “…this document may be raised as an estoppel and complete bar to any such claim”.
The goal of the employer in bringing this application and in enforcing the Release and Acknowledgement, counsel argued, is seeking the enforcement of the termination agreement. The employer paid a sum to Ms. McKinley in return for bringing an end to all issues arising out of her employment. The Order should be revoked to give the employer the benefit of its bargain.
Counsel for the employer relied on a number of cases in other areas of law that highlight the need to enforce and uphold the bargain that parties freely make or else others will be discouraged from entering into agreements. He referred to Miglin v. Miglin, 2003 SCC 24, a decision of the Supreme Court of Canada which held that separation agreements between former spouses should be upheld absent evidence of vulnerability of one party at the time of execution, and where on an examination of the substance of the agreement there has been an equitable sharing of the economic consequences of the marriage, having regard to the principles of the Divorce Act, and where the enforcement of the agreement continues to reflect the mutual intention of the parties, in spite of the passage of time and a change in circumstances. Counsel relied on the case for the strong statement in paragraph 91 that “parties must take responsibility for the contract they execute as well as for their own lives”.
Counsel also pointed to Sinclair-Cockburn Insurance Brokers Limited v. Richards, (2002) 2002 CanLII 45031 (ON CA), 61 O.R. (3d) 105, (C.A.). An employee of Sinclair-Cockburn named Linda Richards committed fraud, which benefited “Wiggins”. In litigation in the fall-out of the fraud, Sinclair-Cockburn received money from Wiggins and signed a release in which it agreed not to make a claim against any party who might, in turn, seek to defend itself by claiming against Wiggins. Sinclair-Cockburn brought a second action against Richards, the cause of the fraud. In her defence, Richards made a claim against Wiggins, the beneficiary of the fraud. Wiggins asked the court to dismiss the second action, arguing that Sinclair-Cockburn was in breach of its settlement with Wiggins. The Court dismissed the second action, in words which counsel to the employer in the case before us, argues are equally appropriate to this case. At paragraph 14, the Court wrote:
As Mr. Cadsby, counsel for Wiggins, said during oral argument, his client paid a substantial sum of money to buy peace, not just peace from potential liability for a judgment, but peace from even having to respond to a claim from Richards. Sinclair-Cockburn signed an unqualified release. Wiggins is entitled to all the benefits that flow from that release, which include its reputational interest and its interest in not being dragged into a lawsuit. Wiggins was entitled to expect the party who signed the release to live up to its bargain. It is not obliged to accept something almost as good.
In this case, counsel argued, it paid money to buy peace from Ms. McKinley and should receive all of the benefits of that bargain.
Counsel argued that the facts in this case could be distinguished from those in the case before another panel of this Tribunal in Notre Dame of St. Agatha (2000-01), 11 P.E.R. 28. That decision also concerned whether an employer was required to make pay equity adjustments to an employee in circumstances where the employee had received a payment arising out of the elimination of her full-time position and had signed a release. In that case, the Tribunal determined on the facts that the settlement agreement and release did not bar the employee from pursuing payment of a pay equity adjustment that was paid out by the employer to other employees. That case is distinguishable, counsel for the employer argued, because the release was not as broad; the amount of the settlement did not approach the amount of the pay equity adjustment and the Tribunal was not satisfied from the surrounding circumstances that the parties intended the release to preclude the right to claim a pay equity adjustment.
That result, counsel argued, does not take away from the overriding public policy principle, supported by the courts, that parties should be held to the bargains they make. In this case, the employer and Ms. McKinley made a bargain, about which Ms. McKinley consulted counsel before agreeing. If the Tribunal permits the Review Officer’s Order to stand, it will discourage other parties from making settlements, since they can have no confidence that their settlements will be upheld.
Ms. McKinley’s submissions
- Ms. McKinley argued that the Tribunal should focus on whether the employer complied with the Act. While it is true at the time she left, she was the only female employee, from 1994 to 1998, there was another woman in the workplace, classified as “casual” but working more than 20 hours a week. For that reason, she submitted, the employer is wrong in saying that upon her departure, whether the employer complied with the Act is moot. It is not a moot point for at least the period 1994 to 1998. The Act, she argued, applies to all employers with more than 10 employees. For this employer, that means that it had to have complied by January 1, 1994. If the employer had complied at that time, there would have been no need for her 1999 complaint. She pointed out that section 7(1) places an obligation on employers to comply. It is not up to an employee to notify the employer of its responsibility. Further, Ms. McKinley argued that the employer has admitted it has not complied with the Act. She relied on an October 30, 2000 letter from counsel for the employer to the Pay Equity Commission, which says in part:
Between April 5, 1993 and May 16, 2000, the Employer had one employee working in a female job class. Specifically Ms. Evelyn McKinley worked in the position of General Office-Clerk. Her job class was not comparable to any of the male dominated job classes. Accordingly, the Employer is of the view that pay equity was not required. No comparison was undertaken and no pay equity adjustments were made.
Ms. McKinley argued that the employer cannot have properly concluded that her position is comparable to no other if no comparison was made. Consequently, the Tribunal can conclude that the employer has not complied with section 7(1) of the Act.
She agrees that most settlements should be found binding, but not unless there has been an open and honest discussion. Her employer, she submitted, never accepted nor responded to the pay equity concerns she raised in the workplace and so it should not now be able to say that the settlement they reached prevented her from proceeding with her pay equity complaint.
Decision and Analysis
We conclude that the Order should not be revoked. The settlement and release entered into by Ms. McKinley do not operate as a bar to a Review Officer directing the employer to comply with the Act nor should they prevent Ms. McKinley from receiving a pay equity adjustment, should one be required.
Although the employer readily acknowledged that the Review Officer had the jurisdiction to issue the Order, the employer argued that she ought not to have, in the face of the settlement and release entered into between Ms. McKinley and the employer. In our view, though, it is important to remember that the Order was not specifically about Ms. McKinley. True, she had brought the complaint, but the Order required the employer to comply with the Act and establish that as of January 1, 1994, it had established and maintained pay equity. The Officer told the employer that to prove it had met section 7(1), it was required to undertake job to job comparisons and if that did not produce comparators, to apply the proportional value methodology. Although Ms. McKinley, who occupied a female job class, may have benefited from the employer’s compliance with the Act, the Order was not personal to her. When the panel asked counsel for the employer to address this concern, he responded that because Ms. McKinley was the only female employee at the time she left in May 2000, she is the only person who would have benefited. Or put another way, at the time the Review Officer’s Order was made, there were no female employees, so pay equity was a moot point. Requiring the employer to comply with the Order, in those circumstances, and in light of its settlement with the only person who could benefit, was inappropriate.
However, it is at least arguable that there was another female job class, that of Data Entry Clerk from 1994 to 1999, based on information provided by counsel to the employer in an attachment to his July 30, 2001 letter to the Pay Equity Office. It may be that position was “casual” within the meaning of section 8(3) and ultimately, to be excluded from consideration. The panel does not have enough evidence to make such a determination. But in any event, with respect, it is not accurate to say that compliance with the Act is synonymous with providing a benefit to Ms. McKinley if there was potentially one more female job class. We make this point to highlight that the Order the employer seeks to have revoked was not “about” Ms. McKinley but about the employer’s failure to comply with the statutory obligation to establish and maintain pay equity.
In our view, the analysis about whether a settlement and release precludes the maintenance of a pay equity complaint is quite different where the Order concerns more than the rights of, or benefits going to, an individual. Put another way, the Tribunal is unlikely to conclude that a release and settlement reached with an individual, even if the release expressly addressed claims under the Act, would relieve the employer from complying with an Order that required it to meet broader pay equity obligations in an establishment. Assuming without deciding that an employee can enter into an agreement with an employer that compromises his or her entitlements under the Act, such an agreement cannot compromise the entitlements of others. Because the Order that the employer seeks to have revoked in this case requires it to establish that it has met its pay equity obligations generally, we would not find that a settlement with Ms. McKinley concerning her pay equity entitlements would relieve the employer of its obligations to establish it complied with section 7(1) of the Act.
But in any event, we do not find that Ms. McKinley entered into a termination agreement and signed a release that settled her possible pay equity entitlement. We agree with the proposition that parties should generally be held to their agreements. The Tribunal has an institutional interest, itself, in seeing agreements complied with. Section 25.1 permits parties to an application before the Tribunal to settle it in writing, after which it becomes binding on the parties, and enforceable at the Tribunal.
The cases that the employer relied on, particularly Miglin v. Miglin, and Sinclair-Cockburn Insurance Brokers Limited in our view, do not assist. In both cases, one party was seeking to open or avoid the operation of the agreement with respect to a matter that was specifically covered by the agreement. In Miglin v. Miglin, one spouse sought to change the provisions in the separation agreement addressing child support, spousal support and custody. In Sinclair-Cockburn Insurance Brokers Limited, a party sought to avoid the application of the agreement that limited who it could sue in subsequent proceedings. In the case before us, the termination agreement and release is silent about any claims or entitlements arising under the Pay Equity Act. It cannot be said that Ms. McKinley is seeking to alter or avoid the operation of a specific term in her agreement.
We disagree with the employer’s characterization of Ms. McKinley’s claim under the Act as a claim for pay. Of course, Ms. McKinley brought her complaint because she did not think that she was being paid as much as others whose jobs she believed were of similar value and if she is correct, then ultimately, she will receive a pay equity adjustment and her wages will be increased. But a complaint that an employer has not complied with section 7(1) of the Act is more than a demand for wages. It is a demand that an employer show how it has met the requirements of the Act. The employer could comply with the Act and no more pay would go to Ms. McKinley if the employer established that after job to job comparison, or applying the proportional value method, or some other method open to Part III employers, that pay equity had been achieved and no adjustments were required.
In our view, the failure of the release to detail that it includes a release of any claim under the Pay Equity Act is fatal to the employer’s case. As the Tribunal set out and adopted in Notre Dame of St. Agatha (above), case law in the context of the Employment Standards Act has held that a release in respect of payments made on termination of employment will not bar a claim for statutory entitlements unless that statute is specifically referred to in the release (see D’Arcy Masius Benton and Bowles Canada Inc. (Harris, July 27, 1993 ES 93-151, affirmed by the Divisional Court, unreported April 11, 1994). We reject the employer’s argument that the Pay Equity Act is indirectly referred to in the part of the release which mentions “...the Human Rights Code of Ontario, or any other similar legislation….” The Pay Equity Act has been referred to in other contexts as akin to human rights legislation, to suggest that the provisions should be interpreted in a manner which encourages measures to counter discriminatory pay practices. We do not think it appropriate to follow such an interpretation where the goal is to defeat a claim under the Pay Equity Act.
There are no circumstances present which suggest that the parties mutually intended to preclude Ms. McKinley from maintaining a complaint under the Act at the time the settlement agreement and release were signed. The employer was not aware of the complaint, and the parties did not discuss it. Consequently, this is not a situation in which one party is seeking to change the terms of an agreement after it has been executed. There was no agreement respecting Ms. McKinley’s entitlements under the Act.
For all of the above reasons, the Tribunal declines to revoke the Order of the Review Officer dated December 28, 2002. The Tribunal confirms the Order and directs the employer to:
(a) evaluate the male and female job classes within the establishment as of 1993, and using a gender neutral job evaluation system, compare the female job class of Data Entry Clerk and the female job class of General Office Clerk to the male job classes in the establishment;
(b) if there are no comparisons found using the job to job method, to use the proportional value method to determine if there are pay equity adjustments required;
(c) provide a copy of the results of the evaluations and comparisons to the Review Officer and Ms. McKinley;
(d) pay all pay equity adjustments required, if any, for all hours worked by the incumbents in the female job classes for the period April 5, 1994 to May 16, 2000 within 30 days of determining that adjustments are required;
(e) pay interest on all monies owing in accordance with the principles set out at paragraph 67 of Peterborough (Clow) (No. 3), (1996), 7 P.E.R. 33.
Dated at Toronto, Ontario this 25th day of August, 2003.
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Mary Ellen Cummings, Chair
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Diane Rose
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Catherine Bickley