Pay Equity Office v. Children’s Corner Day Nursery Inc., 2006 CanLII 61263

PAY EQUITY HEARINGS TRIBUNAL

1703-05-PE Pay Equity Office, Applicant v. Children’s Corner Day Nursery Inc., Respondent

Before: Patricia E. DeGuire, Vice-Chair, Catherine Bickley and Diane Rose, Members

Appearances: Senka Dukovich for the Pay Equity Office, and Julian Emmanuel, C.A., for Children’s Corner Day Nursery Inc.

Cite as: Children’s Corner Day Nursery Inc. (15 February, 2006), 1703-05 (P.E.H.T.)

DECISION OF THE TRIBUNAL, FEBRUARY 15, 2006

INTRODUCTION

1. The Pay Equity Office (the “Applicant”) referred this matter to the Pay Equity Hearings Tribunal (the “Tribunal”) under subsection 24(5) of the Pay Equity Act, R.S.O. 1990, c. P.7 (the “Act”). The Employer has not made application to the Tribunal in respect of the Order.

2. Subsection 24(5) states: “Where an employer or a bargaining agent fails to comply with an order under this section, a review officer may refer the matter to the Hearings Tribunal”.

3. The Respondent, Children’s Corner Day Nursery Inc. (the “Employer”) operates three day-care centres located at 2259 Jane Street, 1577 Royal York Road, and 2757 Kipling Avenue in Toronto, Ontario.

4. A review officer issued an order dated February 21, 1994, and pursuant to the authority granted under subsection 32(1) of the Act, directed the Employer to post the order and a copy of the certificate (which was attached to the order) in the workplace.

5. In the February 21, 1994 order, the review officer identified Children’s Corner Day Nursery Inc. as a public sector employer and declared it to be a seeking employer. That required the Employer to use the “proxy method” of comparison for the purposes of implementing pay equity, according to the requirements of Part III.2 of the Act.

6. By order dated November 1, 2004, a review officer issued the following order under subsection 24(1) of the Act (the “Order”) directing the Employer to:

7. Post and implement the attached “draft” pay equity plan prepared by Kanish & Partners, Chartered Accountants as the final pay equity plan. The plan to be effective January 1, 1994. The plan must utilize the job rates that were in effect as of January 1, 1994 and must be posted within 10 days of the date of this Order.

8. Pay all pay equity adjustments required, if any, to current and former employees, for all hours worked by the incumbents in the female job classes from January 1, 1994 within 30 days of the plan being deemed approved pursuant to subsection 21.21(2) of the Act.

9. 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.

10. Forward a copy of the plan to each former employee, by registered letter to his/her last known address, within 10 days of this Order.

11. Forward a copy of the pay equity plan to the attention of the Review Officer within 10 days of this Order.

12. Complete and return a certificate of posting (attached) to the attention of the Review Officer within 10 days of this Order. [Review Officer’s address excluded].

13. The review officer stated that if any part of the Order was not implemented within the specified time, the Order could become the subject of a subsection 24(5) referral to the Tribunal for enforcement.

THE EVIDENCE

8. Ms Tiziana Isgro, a review officer with the Pay Equity Office, gives evidence on behalf of the Applicant. The owner of Children’s Corner Day Nursery Inc., Mr. Bobby Bhar, gives evidence on behalf of the Employer.

9. Ms Isgro’s evidence is that she inherited the file on the retirement of the review officer who had issued the Order. Ms Isgro states that she has reviewed the file for correctness and is satisfied that the information contained therein is correct.

10. She states that since the previous review officer issued the Order, the Employer has not taken any action to demonstrate that it has complied with the Order. Ms Isgro asserts that she had discussions with Mr. Bhar on July 4, 21 and 27, 2005, about complying with the Order. More recently, she had urged the Employer to comply with the non-financial aspects of the Order first, that is, to post the plan that the review officer had attached to the Order, and then, sign and return the Certificate of Posting.

11. In addition, Ms Isgro states that she had informed Mr. Bhar that the Employer must make pay equity adjustments from 1994 onward, and that the 1% of payroll required is cumulative.

12. Ms Isgro’s evidence is that Mr. Bhar had cited lack of funding as a reason for non-compliance and directed her to contact Mr. Julian Emmanuel, the business’ current accountant, regarding further information. According to Ms Isgro, Mr. Emmanuel indicated that there had been some funding received from the City of Toronto and some salaries were increased as a result, but he did not provide her with any further information or details. In summary, Ms Isgro states that the Employer has failed to comply with the Order, citing lack of funds.

13. Mr. Bhar’s testimony, for the most part, is consistent with Ms Isgro’s evidence. He admits that the Employer did not post the pay equity plan, and explains that, “It made no sense to post the pay equity plan if [he] could not comply with it.” Mr. Bhar states that the Employer accepts, “the spirit of the posting”, but lacks the ability to pay the adjustments retroactive to 1994.

14. Mr. Bhar asserts that the Employer is unable to pay the adjustments because the business is 90% funded by the City of Toronto and those funds are not sufficient to meet the financial obligations of the business. Mr. Bhar’s evidence is that nonetheless, the Employer has made pay equity adjustments on a “going forward basis”, by contributing an amount greater than the 1% required by the Act in 2000/2001 and again in 2005. Not all staff received increases, and not all received the same adjustment.

15. Mr. Bhar asserts that in 2000/2001 and again in 2005, Children’s Corner Day Nursery Inc. received funding increases from the City of Toronto. The City of Toronto did not direct the Employer to use the funds for any specific purpose. The increases were “per diem funding” for the nurseries’ programs. He states that the Employer used all of the monies towards “salary increases”. Mr. Bhar asserts that the Employer had decided to use the funding to increase salaries because of his discussions with the review officer, and because the employees had complained they had not received any raises for a long time.

16. Mr. Bhar entered into evidence an undated document titled, Pay Rate Summary for the Staff in the Current Payroll from the Date They Started. This document, Exhibit 1, shows a summary of employees’ pay rates from the date they commenced employment to the present.

17. Mr. Bhar’s evidence is that an accountant (not Mr. Emmanuel) had managed the business during the period leading up to the year 2000, when

Mr. Bhar began to administer the business. That accountant left shortly after

Mr. Bhar took over the management of the business. Mr. Bhar asserts that at the time that he assumed the management of the business, he did not know whether there was a pay equity plan in any of the day-care centres, whether any adjustments had been paid to the employees, or that there was a pay equity Order concerning the business. He states that the accountant could have “ear-marked” the funding from the City of Toronto for pay equity, but he is not certain because there is nothing in writing in the Employer’s records.

18. Mr. Bhar asserts that the Employer reviewed the pay equity plan, which was drafted in July 2004, by Kanish and Partners, and understood that it was required to pay 1% of payroll. In comparing its salary grid to the City of Toronto’s, which is this Employer’s proxy employer, the decision was made to bridge the salary gap. Mr. Bhar states that the Employer’s “intention was not only to give 1%, but to give more than 1%”.

19. Mr. Bhar states that the Employer had not done any calculations to determine how long it might take to achieve pay equity. He emphasised that the Employer intended to achieve pay equity as best it could. Mr. Bhar states that he is not sure whether the accountant for the establishment has any documents to show how the increases were allotted amongst the staff.

20. During cross-examination, counsel for the Applicant challenges Mr. Bhar’s evidence in that the “salary increases” as indicated on Exhibit 1 were not pay equity adjustments for the purpose of the implementation of the pay equity plan. She contends that Exhibit 1 does not prove that assertion. In referring to several examples in Exhibit 1, counsel asserts that the amounts of payments vary, and asks why there was a difference in the amount the Employer had paid them.

21. In response, Mr. Bhar asserts that those examples show that the payout to the employees were pay equity increases: they “were 1% or beyond”. He admits that the Employer did not inform the employees that the monies were for pay equity adjustments.

ANALYSIS AND disposition

22. The undisputed fact is that the Employer belongs to the public sector in Ontario. It operates day nurseries, which are licensed under the Day Nurseries Act, R.S.O. 1990, c. D.2. Also, the Employer is a seeking employer for the purpose of the proxy method of comparison under Part III.2 of the Act.

23. The Tribunal finds that the Employer has failed to comply with the Order.

24. In his evidence and submissions, Mr. Bhar admits that the Employer has failed to comply with the Order and gives as a reason that it had no money to do so. Counsel for the Applicant argues that the Employer has not met the onus of proving compliance with the Order. Relying on Kensington Village (2000-01), 11 P.E.R. 1, counsel argues that the Employer’s inability to make pay equity adjustments because it lacks funding, is not a lawful excuse for not complying with a review officer’s order. Counsel asks the Tribunal to follow its reasons in Kensington.

25. This panel agrees with counsel for the Applicant’s submission. ln Kensington Village, the Tribunal held that an Employer’s inability to fund pay equity is not an excuse for failing to implement pay equity. The requirement to implement pay equity cannot be applied selectively according to the ability of the Employer to make the necessary payments.

26. Based on the evidence of the Applicant and Mr. Bhar, the Tribunal finds that the Employer has failed to post the pay equity plan, and failed to complete and return a Certificate of Posting to the review officer, as directed in paragraphs 1 and 6, respectively of the Order.

27. Concerning the adjustments, Mr. Bhar did not provide any document to show that the Employer had designated funding increases from the City of Toronto specifically for pay equity adjustments. Nor did he provide any proof that the staff had been notified that the increases related to their rights under the Act.

28. However, the Tribunal accepts Mr. Bhar’s evidence that the Employer did make efforts to comply with the Order, and that those efforts were motivated by his discussions with the review officer, and because the employees had complained they had not received a wage increase for a long time. Notably though, those payments were not done in a manner consistent with the Act.

29. Specifically, the Tribunal notes that for the most part, while the increases for 2005 are within and above 1% of the employee’s previous year’s hourly wage, the increases in the same job classes vary. However, the increases are based on the previous year’s hourly rate, not the payroll.

30. As noted by the Tribunal in Royal Crest Lifecare Group (No. 5) (2002), 13 P.E.R. 41, at paragraph 10, “The Act has precise methodologies and precise criteria that are to be applied. It is not open to Employers to devise their own principles and measures.” This Employer has failed to meet the precise criteria required by the Act in the implementation of pay equity.

31. The Act requires that each year an Employer must spend at least 1% of its

total previous year’s payroll on pay equity adjustments, or the full amount, if said

amount, which is required to achieve pay equity, is less than 1% of the previous year’s payroll. An Employer is required to begin to pay these adjustments on January 1, 1994. If an Employer, however, began to make those payments after January 1, 1994, it must make the payments retroactive: that is, from January 1, 1994 to this date.

32. The Act requires that when distributing the 1% of payroll, the female job

classes in the plan with the lowest job rate must receive a greater adjustment

than the other job classes in the same plan until pay equity is achieved, or until

these job classes are paid as much as the next lowest female job class.

33. The Tribunal is heartened by the review officer’s expressed willingness during the hearing to continue to work with Mr. Bhar towards achieving pay equity and compliance with the Order. Counsel for the Pay Equity Office also asserts that, “It is the practice of the [Pay Equity] Office to assist employers with compliance.” Mr. Bhar has expressed a similar commitment: to work with the Pay Equity Office towards that end.

ORDER

35. According to clause 25(2)(g) of the Act, the Tribunal directs the Employer to take the following actions.

(1) The Employer must post and implement the “draft” pay equity plan prepared by Kanish & Partners, Chartered Accountants, which was attached to the Order dated November 1, 2004, as the final pay equity plan. The effective date of the plan must be January 1, 1994. The job rates that must be used in the plan are those, which were in effect as at January 1, 1994.

(2) The Employer must post the said plan within 10 days of the date of this Decision.

(3) The Employer must forward a copy of the plan to each former employee, by registered mail to his or her last known address, within 10 days of this Decision.

(4) The Employer must forward a copy of the pay equity plan to the attention of the review officer, complete and return a certificate of posting, which was attached to the November 1, 2004 Order, within 10 days of this Decision.

(5) The Employer must calculate the amount of the pay equity adjustment, if any, that is owing to each former and current employee and the interest on the said amount, from January 1, 1994, within 30 days of the plan being deemed approved according to subsection 21.21(2) of the Act.

(6) The Employer must provide a copy of said calculation to the Tribunal and the Applicant within 60 days of this Decision.

(7) The Employer must pay interest on all monies owing to employees. The interest should be calculated according to the principles set out at paragraph 67 of Peterborough (Clow) (No. 3) (1996), 7 P.E.R. 33.

Dated at Toronto, Ontario this 15th day of February, 2006.

“Patricia E. DeGuire”

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Patricia E. DeGuire, Vice-Chair

“Catherine Bickley”

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Catherine Bickley, Member

“Diane Rose”

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Diane Rose, Member