PAY EQUITY HEARINGS TRIBUNAL
1592-07-PE Pay Equity Office, Applicant v. Comfort Inn Motel, Respondent.
2118-07-PE Comfort Inn Motel, Applicant v. Group of Employees, Respondent.
BEFORE: Patricia E. DeGuire, Vice‑Chair, Margaret Kvetan and Catherine Bickley, Members.
CITE AS: Comfort Inn Motel (14 December, 2007), 1592-07 and 2118-07 (P.E.H.T.)
DECISION OF MEMBERS Margaret Kvetan and catherine bickley, DECEMBer 14, 2007
BACKGROUND
Two applications concerning a Review Officer’s Order dated February 14, 2007 [the “Order”] are before the Tribunal. The Order found that Comfort Inn [the “Employer”] had not taken the necessary steps to achieve pay equity and ordered the Employer to make pay equity adjustments calculated by the Review Officer.
In its August 10, 2007 application, the Pay Equity Office [the “PEO”], alleges that the Employer has failed to comply with the Order. The PEO seeks enforcement of the Order pursuant to section 24(5) of the Pay Equity Act, R.S.O. 1990, c. S.7 as amended [the “Act”].
In its August 27, 2007 response to the PEO’s application and in its own section 24(6) application, received by the Tribunal on October 1, 2007, the Employer seeks to have the Order “set aside in its entirety”.
The Tribunal has also received correspondence that appears to be from employees or former employees of the Employer, stating that the Employer has not made any pay equity adjustments and asking that the Order be upheld.
ISSUES
How should the Tribunal deal with the PEO’s s.24(5) application in light of the Employer’s subsequent s.24(6) application?
What, if any, notice is required to the former employer and/or to former employees?
Is there a group of anonymous employees as contemplated by s.32(4) of the Act?
DECISION
The Tribunal stays the PEO’s s.24(5) application pending the outcome of a hearing of the Employer’s s.24(6) application.
The Tribunal directs the Employer to give notice of its application to current and former employees and to the former Employer by January 11, 2008.
The Tribunal directs the PEO to advise the Tribunal by January 11, 2008 whether the group of employees for the purposes of the s.24(6) application wish to remain anonymous, and, if so, who will be acting as their agent.
ANALYSIS
Disposition of s.24(5) Application
- When a party subject to a review officer’s order neither complies with the order nor brings an application to the Tribunal challenging the order, the PEO may refer the matter to the Tribunal pursuant to s.24(5) of the Act. The Tribunal’s inquiry is then limited to determining whether there has been compliance with the order. If there has not been compliance, an enforcement order follows. Under s.24(5), the Tribunal is precluded from dealing with the merits of the original order:
s.24(5.2) On a reference under subsection (5), the Hearings Tribunal shall not consider the merits of the order that is the subject of the reference.
Where a s.24(6) application follows on the heels of a s.24(5) referral, the Tribunal has typically proceeded to hear the s.24(6) application: Port Hope Hydro (1998-99) 9 P.E.R. 81; Gian Daycare Limited (24 October 2005) (P.E.H.T). It has done so even where the PEO has not withdrawn its enforcement application. In G.L. & V. Process Equipment (No.1) (1998-99) 9 P.E.R. 1, the respondent employer indicated, in its response to an enforcement application, “some dissatisfaction with the merits of the Orders”. The Tribunal ordered the employer, if it wished to take issue with the Order, to file its own application with a defined time period. The employer filed one application within the specified time period and another some months later. The PEO did not withdraw its enforcement application and sought dismissal of the employer’s applications. The Tribunal proceeded to hear and decide the employer’s applications. G.L. & V. Process Equipment (No.2) (1998-99) 9 P.E.R. 10 and G.L. & V. Process Equipment (No.3) (1999-2000) 10 P.E.R. 50.
In this case, the Employer has filed its own application on the merits, challenging the Order on a number of grounds. Proceeding to hear and decide the Employer’s s.24(6) application, consistent with the Tribunal’s jurisprudence, will allow for a full exploration of the substantive issues between the parties. Accordingly, the PEO’s s.24(5) application is stayed.
Notice
The threshold question for determining whether notice should be given is whether the Tribunal’s decision on the merits may affect the interest of the individual or entity to whom notice is contemplated.
On December 30, 2004, the Employer purchased the business, a motel in Welland. The Order concludes that a sale of a business, within the meaning of s.13.1(1), had occurred. The Employer disputes this finding. The Tribunal is not, in advance of hearing evidence from the parties, in a position to determine whether s.13.1(1) applies to this case. Nonetheless, the applicability of s.13.1(1) is clearly at issue in this case. A finding that it applies could potentially have serious consequences for the former owner of Comfort Inn since, in some circumstances, a seller and a purchaser may have joint and several liability for pay equity adjustments: Child’s Place (No.2) (2002-02) 13 P.E.R. 32. Therefore, we conclude that it is appropriate for the former owner of Comfort Inn to be given notice of this proceeding.
It is also appropriate for former employees to receive notice of this proceeding, as the Order at issue requires payment of pay equity adjustments to former as well as current employees.
Anonymous Employees
- The Tribunal received correspondence from the PEO, dated August 10, 2007, advising that the group of employees for the purposes of the s.24(6) application wish to remain anonymous. However, the Tribunal subsequently received correspondence that appears to be from employees or former employees. This correspondence included a number of names. It is unclear whether the group of employees who made the original complaint have waived their anonymity. It is also not clear whether there is a second group of employees seeking to participate.
ORDER
a) Application 1592-07-PE is stayed. The Tribunal will proceed to hear Application 2118-07-PE.
b) The Employer is directed to provide this Decision and a copy of its s.24(6) Application; a copy of the PEO’s s.24(5) Application, including the Order, to the previous owner of the Comfort Inn by January 11, 2008.
c) The Employer is directed to provide a copy of this Decision to all current employees by January 11, 2008.
d) The Employer is directed to deliver to all former employees, by hand or by mail at their last known address, this Decision and a copy of its s.24(6) Application; a copy of the PEO’s s.24(5) Application, including the Order by January 25, 2008.
e) The Employer is directed to file with the Tribunal “Form 6 – Statement of Posting” immediately upon delivering to current and former employees and the former owner the material required by this order.
f) Any employee or former employee wishing to file a response to the Employer’s Application should do so by February 8, 2008 using the Tribunal’s “Form 2 – Response”.
g) The PEO is directed to provide, to the individual or individuals who initiated the original complaint, a copy of this Decision, a copy of the Employer’s s.24(6) Application and a copy of its own s.24(5) Application by January 11, 2008.
h) The PEO is directed to advise the Tribunal, in writing, by January 11, 2008 whether the group or groups of employees for the purposes of the s.24(6) application wish to remain anonymous, and, if so, who will be acting as their agent, pursuant to s.32(3) of the Act.
Dated at Toronto, Ontario this 14th day of December, 2007.
Margaret Kvetan, Member
Catherine Bickley, Member
DEGUIRE, VICE-CHAIR (dissenting in part) :
I. INTRODUCTION
I have had the benefit of reviewing my colleagues’ Reasons for decision. While I have appreciation and respect for their expertise, I dissent in part. For the sake of clarity, I have written a full Decision and Reasons. Based on my conclusion, it is premature to take a position on the interpretation and application of subsection 25(1.1) or whether to stay the subsection 24(5) Application and proceed to hear the subsection 24(6) Application.
I agree with my colleagues that the former Employer and the former and current employees should be given notice of this proceeding. Also, I agree that the Tribunal should be advised whether there still exists a group of anonymous employees according to subsection 32(4) of the Act because now it is not clear. Thus, in summary, I concur with paragraphs 14 to 17 of their Reasons.
Unlike my colleagues, I believe, at the very least, the Tribunal ought to request submissions from all interested persons in this case before it decides whether to stay the subsection 24(5) Application and proceed to hold a hearing on the merits on the subsection 24(6) Application. A failure to give the opportunity to make submissions is contrary to the fundamental principles of natural justice and fairness. Further, having given the Employer a timeframe to comply with the Order, and having filed and served an enforcement application before that time had elapsed, the Pay Equity Office should be given the opportunity to make submissions on the validity of its subsection 24(5) Application. I will expand upon those conclusions below.
II. BACKGROUND
The Pay Equity Hearings Tribunal (the “Tribunal”) has Applications before it concerning a Review Officer’s order issued under date of February 14, 2007 (the “Order”).
The first Application was filed by the Pay Equity Office under subsection 24(5) of the Pay Equity Act, R.S.O. 1990, c. S.7, as amended, (the “Act”), the Pay Equity Act, R.S.O. 1990, c. S.7, as amended, (the “Act”) (the “Enforcement Application”). The Pay Equity Office seeks to have the Order confirmed on the ground that the Employer has not complied with the Order. The second Application was filed by Comfort Inn Motel (the “Employer”) under subsection 24(6) of the Act. The Employer asks that the Order be “set aside in its entirety”.
In the Order, a Review Officer found that the Employer had failed to take the steps required under the Pay Equity Act, R.S.O. 1990, c. S.7, as amended, (the “Act”), to establish compensation practices, which provide for pay equity.
The Review Officer directed the Employer to do the following:
Adopt the job evaluation results set out in Appendix 2 of this Order and the formula for identifying the job to job and proportional value adjusted job rates for female job classes, as set out in Appendix 3 of this Order;
Within 45 days of this Order being issued, adjust the current rates paid to incumbents in female job classes for which pay equity adjustments are required, in accordance with the formula referenced in the “Identifying Job Rates” portion, and Appendix 3, of this Order;
Within 60 days of this Order being issued, calculate and pay out all adjustments owed for the period December 31, 2004 to the date that the current rates were adjusted pursuant to Item #1 of this Order. I order that the calculations be based on the formula referenced in the “Identifying Job Rates” portion, and Appendix 3 of this Order;
Within 3 months of the Order being issued, track the rates paid to former and current incumbents in all job classes which form the basis of comparisons since 1994, and identify the pay equity adjusted job rates, and required pay equity adjustments for each of the job classes in accordance with the methods referenced in the “Identifying Job Rates” portion, and Appendix 3 of this Order;
Within 6 months of the Order being issued, to pay all outstanding adjustments calculated as per item 4 of this Order in accordance with the methods and calculations set out in the “Identifying Job Rates” portion, and Appendix 3 of this Order;
I order that the job rate for the job class of Maintenance Person be deemed to be no less than $10.00 per hour from May 28, 2005 to October 21, 2006, and no less than $10.25 [per hour] since October 22, 2006 (when all employees were provided with a $0.25 hourly increased);
I order the Employer to provide me with the calculations required by items 2, 3, and 4 of this Order no later than 15 days after the calculations are to be made;
I order the Employer to pay interest on the outstanding adjustments. Interest is to be calculated as simple interest on an annual basis and paid as of each year’s end for which it was owed. The rate of interest payable shall be the average Bank of Canada interest rate in effect during the year for which adjustments are owing. The intention of ordering interest payments is not punitive; it is in keeping with the “make whole” principle and is to ensure employees and former employees are paid the current value of retroactive adjustments.
III. ISSUES
- In this Decision, administrative and procedural issues about the two Applications are dealt with: (a) How should the Tribunal proceed in light of the two Applications? (b) Who ought to be given notice of this proceeding Applications? (c) Does the group of employees, who initiated the initial complaint, still maintain its status as anonymity according to subsection 32(4) of the Act?
IV. DECISION
According to the principles of natural justice, the Pay Equity Office, the Employer, the former employees, the former Employer and current employees ought to be given the opportunity to make submissions on the how the Tribunal ought to deal with the two Applications.
Based on the principles of natural justice, the Employer must give notice of its Application to the former Employer, all former employees, and current employees. The Pay Equity Office must advise whether the status of “group of anonymous employees” is still relevant in this proceeding.
V. THE APPLICATIONS
On August 10, 2007, The Pay Equity Office filed and served the Enforcement Application under subsection 24(5) of the Act. The Pay Equity Office seeks to have the Order confirmed on the ground that the Employer has not complied with its Order. On August 28, 2007, the Employer filed and served its Response. It asks that the Order be “set aside in its entirety”. The Tribunal’s file for that case is 1592-07-PE.
On August 23, 2007, the Tribunal received an unsigned letter dated August 16, 2007. The letter states that none of the persons named in the letter had received any payment from the Employer according to the Order. Copies of the letter were sent to Mr. Danny Bawa, on behalf of the Employer, and to the Pay Equity Office. On August 20, 2007, the Tribunal received a letter from Ms. Hazel F. Scott stating that she had not received any money from the Employer according to the Order.
On September 10, 2007, the Employer filed and served an Application under subsection 24(6) of the Act. The Employer seeks to have the Order “set aside in its entirety”. The Employer names the Pay Equity Office as the Respondent. The contents of the Employer’s Application and its subsection 24(5) Response are the same. That is the Tribunal’s file No. 2118-07-PE.
Two key issues dealt within the Enforcement Application and the Employer’s Application are: (i) whether there had been a “sale of business” to engage subsection 13.1(1) of the Act; and (ii) the extent of the present Employer’s liability under the Pay Equity Act to make pay equity adjustments, if any.
The record shows that in a December 2004 transaction, the current Employer acquired Comfort Inn Motel, Welland from the former Employer. In the Order, the Review Officer concluded that the transaction was a “sale of business” within the meaning of subsection 13.1(1) and that the former and current Employers might be jointly liable for outstanding pay equity adjustments, if any. The Employer disagrees. The Employer contends that there had been “an asset purchase and sale” of the business and that the Review Officer has erred in concluding that the Employer took over the business “as a going concern”, therefore, subsection 13.1(1) does not apply. Further, the Employer contends that the Review Officer erred in applying subsection 13.1(1) because the former Employer was “never bound by a Pay Equity Plan”.
VI. ANALYSIS AND DISPOSITION
(a) How should the Tribunal deal with the two Applications before it?
The filing of the Enforcement Application and subsequently a subsection 24(6) Application from the Employer raises the question of how the Tribunal ought to deal with these two Applicants? A sub-issue is whether the Tribunal has jurisdiction to stay the subsection 24(5) and, if so, whether it is advisable to proceed to hold a hearing on the merits of the Employer’s Application under subsection 24(6).
The Pay Equity Office filed and served the Enforcement Application on August 10, 2007. The Employer filed and served its subsection 24(6) Application on September 10, 2007. The Pay Equity Office is aware of the Employer’s subsection 24(6) Application. There is no information before the Tribunal from the Pay Equity Office about its position on how the Tribunal should deal with either Application.
As the proper Applicant on the Enforcement Application, (see subsection 24(5.1), the Pay Equity Office ought to be given the opportunity to make submissions on how the Tribunal should proceed in light of the Employer’s Application. It should make submissions on whether the Tribunal has jurisdiction to stay the Enforcement Application; and whether it is appropriate for the Tribunal to stay the Enforcement Application and proceed to hold a hearing on the merits on the Employer’s Application. That is consistent with the principles of natural justice and fairness. Those principles are integral to the Tribunal’s power under subsection 30(1) of the Act.
Notably, the Pay Equity Office’s filed and served the Enforcement Application four days short of the outer period in Item 5, it had imposed for compliance. The Order is dated February 14, 2007. The outermost timeframe given under Item 5 is “[w]ithin 6 months of the Order being issued . . . .”
The issues whether there was a sale of business according to subsection 13.1(1) of the Act and who is liable to make pay equity adjustments, if any, are central to the Item 5 directive. They are genuine contested questions of mixed fact and law, which are properly determined following a hearing. The Pay Equity Office ought to make submissions on the validity of the Enforcement Application given that, at the time of filing and serving the Enforcement Application, the outermost timeframe of six months had not expired.
(b) Should the former employees, the current employees, and the former Employer be given Notice of these Applications?
The threshold to be met in deciding whether notice ought to be given is, whether the Tribunal’s decision on the merits may affect their interest.
Should the Tribunal conclude that subsection 13.1(1) applies, the former Employer, former employees, and the current employees might be affected. That is because a seller and the purchaser may be jointly and severally liable to make pay equity adjustments, and the Order requires that pay equity adjustments, if any, must be made to former and current employees.
Therefore, based on the principles of natural justice and fairness, the former Employer, all former employees whose employment was terminated between January 1, 1994 to the present, and present employees ought to be given notice of this proceeding. By giving them notice, they can decide whether they wish to participate in the proceeding, as well as how the Tribunal should deal with the two Applications.
(c) Whether there still is a group of anonymous employees in this proceeding according to subsection 32(4) of the Act?
The Tribunal received communication from the Pay Equity Office dated August 10, 2007 advising that the group of employees, who initiated the complaint at its office, is an anonymous group. The Pay Equity Office had advised that because the initial complainants are a group of anonymous employees, the Pay Equity Office would undertake to serve any Response made by the Employer, if necessary.
On August 20, 2007, the Tribunal received a letter from Ms. Hazel F. Scott stating that she had not received any money from the Employer according to the Order. On August 23, 2007, the Tribunal received an unsigned letter dated August 16, 2007. The letter states that none of the 11 persons named in the letter had received any payment from the Employer according to the Order. There is a concern that one may conclude those 12 persons named comprise the group of anonymous employees, or that the “group” has waived its anonymity. Therefore, the Tribunal asks that the Pay Equity Office advise whether there still exists a group of anonymous employees according to subsection 32(4) of the Act for the purpose of this case.
VII. ORDER
- Based on the foregoing, I would adopt all but items (a) and (f) of the majority’s directives, and in addition would have made the following Order:
(a) The Tribunal directs the Pay Equity Office, the Employer, the group of anonymous employees, and any other affected person, to make submissions on how to proceed in light of the two Applications before it. The submissions must include whether the Tribunal has jurisdiction to stay the Enforcement Application, and if so, whether it is advisable then to proceed to hold a hearing on the Employer’s subsection 24(6) Application.
- The foregoing submissions must be brought before this Panel.
Dated at Toronto, Ontario this 14th day of December, 2007.
Patricia E. DeGuire, Vice-Chair