P/0040/92

IN THE MATTER OF AN ARBITRATION

Under

THE PUBLIC SERVICE ACT

Before

THE PUBLIC SERVICE GRIEVANCE BOARD

BETWEEN

J. Gleason

Grievor

• and -

The Crown in Right of Ontario (Ministry of Transportation)

Employer

BEFORE

D.J.D. Leighton

Vice-Chair

FOR THE GRIEVOR

D. Wright Counsel Ryder, Wright, Blair & Doyle

FOR THE EMPLOYER

L. Marvy Counsel Legal Services Branch Management Board Secretariat

HEARING

December 6, 1996.

FINAL SUBMISSION

Received July 15, 1997.

In 1990, Mr. Gleason held the position of Manager, Aviation Services, and he supervised a person classified as a PEN-20. Mr. Gleason worked for the government for approximately 35 years; for 33 years he was in supervisory or management positions. Mr. Gleason is a professional engineer and until 1985 had a PEN classification. In 1985, he was reclassified to PEC-21. His classification was higher than the person he supervised at the PEN-20 classification, in 1990.

The person who Mr. Gleason supervised was a member of the Association of Professional Engineers of the Government of Ontario (PEGO), the exclusive bargaining agent for the Professional Engineers. Since PEGO and the government were unable to agree on rates of compensation in their first collective agreement, the issue was referred to interest arbitration. Arbitrator Dissanayake made an award in June 1991 establishing the salaries for the Professional Engineers which resulted in significant retroactive pay increases to those within the bargaining unit. Thus the person Mr. Gleason supervised ended up making a higher salary than the Grievor in 1990 and 1991. On January 1, 1991 all employees classified at level 21, which included Mr. Gleason, were transferred to a new compensation plan under the Senior Management Group (SMG).

Before retiring on December 31, 1992, Mr. Gleason filed this grievance to the Board alleging that the Employer had breached its longstanding policy that managers or supervisors should not make less than the people they supervise. Mr. Gleason thus grieved that his salary “inversion” for the years 1990 and 1991 was a violation of his working conditions and terms of employment.

The above facts were agreed to by the parties. The parties, however, disagree as to

whether or not there was a longstanding policy that supervisors and managers be paid

approximately five percent more than the people they supervise. The Grievor put the MCP Compression policy, dated June 5, 1991, before the Board and argued that this was a codification of prior practice. The Employer disputes the existence of a prior policy on salary compression.

Having put the above agreed upon facts before the Board, the Employer then presented a motion to dismiss the grievance for lack of jurisdiction. Mr. Marvy arguing for the Employer stated that this Board had no jurisdiction to rectify salary inversion between supervisors and subordinates. He argued further that there was no jurisdiction to award a remedy to Mr. Gleason for the period in 1991 since he was, by this time, a member of the Senior Management Group. Finally, Mr. Marvy argued that the Board had no jurisdiction because the policies dated June 5, 1991 had been followed, and because the PEGO award came out in August 1991.

On behalf of the Grievor, Mr. Wright conceded that the Grievor had no right to claim a remedy for the period of 1991, since Mr. Gleason was by that time a member of the Senior Management Group. However, he noted that any remedy received for 1990 would “spill over” to 1991.

The Employer’s Submission on the Preliminary Motion

In support of his submission that this Board has no jurisdiction to rectify salary inversion or compression between supervisors and subordinates, Mr. Marvy cited Smalley (P/0013/85); the grievor in this case was classified as OCR-14 at the first level of management in the Management Compensation Plan. Mr. Smalley grieved that he was being paid less than the OM-14s that he supervised. The Board held in this case that it was apparent on the face of the grievance that the grievor made no allegation that there was a misapplication of the compensation plan to his classification as an OCR-14. The Board noted further that there was no

allegation of arbitrary, discriminatory conduct, or conduct in bad faith on the part

of the employer in respect to the wages paid to the grievor for the three months in

question. The grievor admitted that the essence of his complaint was the adequacy

of his rate of compensation in relation to bargaining unit personnel . . .

The Board held as the grievance was presented it was inarbitrable.

Mr. Marvy also cited Marrison (P/004/88) wherein the grievors’ claimed that the employer had engaged in arbitrary and discriminatory conduct, and had acted in bad faith. The grievors argued that given the “perennial nature of the problem” the Employer had acted in bad faith by failing to address the problem of salary compression between themselves and their subordinates. Because of salary increases awarded to the bargaining unit, by 1988 the grievors were being paid less than the bargaining unit employees that they supervised. In Marrison the Board decided that it had no jurisdiction to address their complaint and noted that the grievors had not met the onus upon them to establish discriminatory or arbitrary conduct on the part of the employer or conduct in bad faith. The Board also noted:

that this sort of problem, which involves rectification of salary relationships

between supervisory employees and their subordinates governed by a collective

bargaining regime, is not a matter over which this Board can exercise jurisdiction.

It is a matter that is better addressed through the appropriate channels to the Civil

Service Commission.

Mr. Marvy also cited Herbrand (P0014/94), a case which also addressed the Board’s jurisdiction to adjudicate salary compression or conversion complaints. The Board also considered whether it had jurisdiction to grant a remedy of any kind as it relates to salary inversions. Mr. Herbrand’s salary inversion occurred when the PEGO award gave subordinates an increase in salary that left him being paid less than the subordinates. The Board in Herbrand held that it did not have jurisdiction to hear the case because the Public Service Act and regulations passed pursuant to it do not specifically authorize the Board to deal with supervisory salary compression or conversion disputes.

In summary, it was the Employer’s argument that because Section 4 of the Public Service Act provides power to Cabinet on the recommendation of the Civil Service Commission to set salary ranges for each classification (except for classifications within the bargaining unit), then the Board has no power to change a salary range for a classification.

The second argument advanced by Mr. Marvy was that even if the Grievor was able to show a policy that supervisors and managers be paid approximately five percent more than their subordinates, before the policy dated June 5, 1991, the “MCP Compression Policy,” it is of no matter since it is this written policy which governs the compression issue. This policy was made effective retroactively to January 1991. Thus, in Counsel’s submission even if I require the government to apply this policy, it has already done so.

The Grievor’s Submission on the Preliminary Motion

Mr. Wright addressed the argument on policy first in his submission. He argued that Mr. Marvy’s argument on policy went to the merits of the case and had nothing to do with whether or not this Board has jurisdiction to hear the matter. He argued that the evidence will show that there was a policy before June 5, 1991, and further that this document was not prepared in response to the effect of the PEGO award, which was dated August 1991. Therefore, Mr. Wright argued in conclusion that the preliminary motion can not be resolved by a finding that the policy has been applied.

Mr. Wright argued that the real issue for me to consider was whether or not this Board has the jurisdiction to hear the Grievor’s complaint, alleging that there was a breach of his working conditions and terms of employment when subordinates ended up being paid more money than the Grievor in 1990, in violation of the policy which provides that supervisors make more than their subordinates. Mr. Wright acknowledged the three cases presented by the Employer’s counsel, and argued that the issue that the Employer has violated an existing policy, to ensure that salary compression or inversion did not occur, has never been argued before this Board. Mr. Wright noted that none of the grievors in the cases cited by the Employer raised the argument that a policy had been violated. He also pointed out that they were representing themselves at their hearings.

Mr. Wright argued that this Board has the jurisdiction to decide whether or not a grievor has been treated improperly with regard to working conditions and terms of employment. He submitted that salary is a fundamental working condition of most people. He cited Kanga P/0003/85 which held

In viewing the term “working conditions or terms of employment” liberally, we are of the opinion that we possess the requisite jurisdiction to enquire into a complaint that the employer has failed to perform its stated obligations set out in the Ontario Manual of Administration.

The issue before the panel in Kanga was whether or not an employer may exercise its discretion toward merit increases without adhering to established guidelines. In this case, the grievor was alleging that the Employer had failed to follow the requirements in the Manual of Administration. The Board in Kanga held that working conditions or terms of employment must be broadly interpreted and includes review of a salary issues such as merit pay, and whether the Manual of Administration had been followed, in giving merit pay.

Mr. Wright argued that there is no distinction between the Manual of Administration and a policy such as the Management Compression Policy. He argued that this policy is as much a part of the Grievor’s contract of employment as the terms in the Manual of Administration were found to be in Kanga.

Mr. Wright argued that what Smalley really stands for is that this Board can not simply substitute a salary decision for the Civil Service Commission’s recommendation to Cabinet. But in Smalley the arbitrator stated clearly that there was no allegation that there was a misapplication of any policy or of the MCP. In Marrison again the grievors did not allege that a policy had not been followed. They were not represented and their allegation of arbitrary discriminatory treatment was based on the argument that the compression had gone on for some time and had not been rectified. The arbitrator here found that the onus to prove bad faith discrimination or arbitrariness had not been proven. Regarding Herbrand, Mr. Wright submitted that the Board cites Smalley, Marrison and a Classification Ratings Committee Decision, Shaw, which is not applicable since the fact situation was entirely different to the fact situation before me. He concludes that Herbrand is, therefore, of no assistance in deciding the jurisdiction of this Board.

To the extent that the cases cited by the Employer seem to suggest that the Board has no jurisdiction over salary administration, they are wrong. Given Kanga, the Board clearly has jurisdiction.

Mr. Wright also cited Amirault (P/0028/94), a case which took a liberal approach to the issue of whether or not a grievance was timely. Mr. Wright notes that the grievance regarded a salary increase and that there appeared to be no jurisdictional argument made.

In summary, Mr. Wright argued on behalf of the Grievor that this Board has the

jurisdiction to deal with salary issues where there has been an allegation such as a violation of a policy as the Grievor’s alleged in this case. He argued further that there was nothing in the regulations that supports the Employer’s argument that we do not have jurisdiction.

The Employer’ s Reply

Mr. Marvy argued in reply that Ministry conceded that the Board has jurisdiction to adjudicate salary issues. However, Mr. Marvy argued further that salary issues on compression and inversion are clearly not within the Board’s jurisdiction given the previous decisions of the Board. A compression or inversion problem with salary is not within the working conditions and terms of employment jurisdiction of the Board. As to the policy argument, Mr. Marvy argued that if the best evidence is that there was a policy in 1990 that was breached, it is of no significance because the government changed the policy in June 1991. Mr. Marvy argued that there was no breach of the June 1991 policy.

Written Submissions of the Parties

After the hearing into this matter, and before the interim decision was issued, Scott et al. (P/0001/96) was released on March 17, 1997. Since one of the issues dealt with in Scott considered the Board’s jurisdiction to adjudicate salary compression cases, I invited the parties, if they wished to do so, to make submissions on the case. The Board received the final submission from the Grievor’s Counsel, Mr. Wright, dated June 19, 1997 on July 15, 1997.

The Employer’s Submission on “Scott”

In his written submission, Mr. Marvy argued for the Employer that it framed the

jurisdictional issue in a different manner than was submitted to the Scott panel. Mr. Marvy argued that the question raised by the Employer in the case before me is not whether the Board has the jurisdiction to adjudicate a grievance “that raises a salary component as the core of its complaint,’’ but rather whether the Board has the jurisdiction to alter/increase the salary range maximum of a classification of employees. Counsel acknowledged that it was clear from the Kanga decision that this Board does have the jurisdiction to review grievances that have a salary component as the core of its complaint. However, Counsel submitted that it is the Employer’s view that because Section 4 of the Act specifically grants the power to Cabinet on the recommendation of the Civil Service Commission to set salary ranges, the Act therefore specifically limits the jurisdiction of the Board

to salary issues dealing with salary components other than the setting of salary

ranges and other than the payment of salaries beyond those ranges. The

grievances do not have salary as a component, but rather the complaints require

the retroactive setting of new salary range maximums as a resolution.

Counsel argued further that the complaint in essence is that subordinates were awarded

retroactive pay increases through an interest arbitration and thus it is unfair not to raise

management’s salaries retroactively as well. Counsel concluded this part of the argument by stating that if this Board takes jurisdiction, which implies that it has the capacity to remedy the complaint, it would be “tantamount to making an interest arbitration award for which the Board clearly has no powers.”

Counsel also argued that if the Grievor were able to prove a compression policy existed and formed part of the contract of employment, then the Board would have the jurisdiction and could only remedy the salary dispute by ordering the Employer to raise the supervisor’s salary to the extent that the salary remains within the set range. If the remedy requires the Board to order a salary above the range set by Cabinet, then there is no jurisdiction. Counsel emphasized that the Employer denies existence of any such policy. Mr. Marvy submitted:

more importantly, in the employer’s view, even if the grievors could produce a

policy (which existed at the relevant time in question; which the employer denies

exists) to the Board that stated supervisors should be paid more than those they

are supervising, the PSGB would only have jurisdiction to adjudicate and provide a remedy within the limited sphere of the supervisor’s salary ranges existing at the

relevant time period. For example, if such a policy existed and the policy had “the

legal force of being part of the employment relationship” [Scott, p.21], then the

Board would have the jurisdiction and could remedy the salary dispute by ordering the employer to raise a supervisor’s salary to the extent that the salary remained within the set range (at least, according to Scott). However, if the remedy requires the PSGB to order a salary above the range set by Cabinet, there is no jurisdiction.

Mr. Marvy also argued that even if such a policy existed, if it required an increase of an individual’s salary above the salary range set by Cabinet, then the policy itself would be illegal and of no force or effect. Such a policy, in his view, would be a fetter of the discretion of the Civil Service Commission to make recommendations to Cabinet pursuant to Section 4 of the Act. Mr. Marvy was of the view that in order to provide a remedy to the Grievor, the Board would have to order Cabinet to issue an Order-in-Council, raising the effected salary ranges, and he argued that this was clearly beyond the Board’s jurisdiction.

Mr. Marvy commented on several cases referred to in the Scott decision, cited to me at the hearing. He noted that Kanga, Amirault and Bertolo et al. (P/0008/95) were all cases which dealt with an individual’s salary issue and are, therefore, distinguishable from the case before this Board. None of these cases required the raising of the salary beyond the maximum range set by the Commission.

Mr. Marvy stated that the decision in Scott was correct when the Board held that “it does not have a general power to review all aspects of salary related decisions by the employer.” He did not take issue with the test that the Scott Board outlined in the decision except to argue that at least one component of the test was missing, The Board in Scott held that:

An employee within the coverage of the Act may only challenge the decision of the employer on salary related matters if she or he is able to anchor the complaint on at least one of the following two grounds: i) the salary related decision of the

employer is premised on discriminatory or arbitrary conduct, or is in bad faith; or

ii) the salary related decision of the employer is in violation of the governing

legislation, or a policy, guideline, practice etc. that would have the legal force of

being part of the employment relationship.

The missing component, according to Mr. Marvy, is:

Where the remedy requested requires the raising of a salary beyond that set by

Cabinet on the recommendation of the Civil Service Commission the board does

not have the jurisdiction to adjudicate over this decision.

In summation, Mr. Marvy argued that the jurisdiction to set salary ranges rests with the Cabinet on recommendation of the Civil Service Commission. Where a salary compression occurs for a management employee, as a result of an interest arbitration award to a bargaining unit:

The necessity and timing of adjustments to those superiors directly affected by

such increases is a matter for recommendation by the Civil Service Commission

and the decision whether to make such a change rests with Cabinet, not with the

Public Service Grievance Board.

The Grievor’s Submission on “Scott”

In Mr. Wright’s written submission he argued that the Scott decision at p.p.13-21 is dispositive of the issue of whether the Board has jurisdiction to hear cases involving salary matters. He pointed out that the Board in Scott had the benefit of all of the case law on this issue. The Board did a full analysis, and in Mr. Wright’s submission, it is correct and should be followed.

Mr. Wright argued further that the Employer’s Counsel raised a new argument, not raised at the hearing, which is that because s.4 of the Act gives Cabinet the power, on recommendation of the Civil Service Commission, to set salary ranges for classifications, the Board cannot take jurisdiction and any such order of the Board would be illegal. Mr. Wright argued that Mr. Gleason is not seeking a change to the salary range for his classification. He concedes that the Board does not have the general power to adjudicate whether a position is appropriately compensated.

That is, the P.S.G.B. would not have jurisdiction if Mr. Gleason or any other

employee were to simply come before it with a submission that his position

deserved a greater rate of pay because of the responsibility of the position or the

qualifications required to perform that position.

What the Grievor asserts is that a policy of the government, which is part of the terms and

conditions of his employment that he be paid 5% more than his subordinates has not been

followed by the Employer. Mr. Wright argued that it is not important how the Employer

complies with its own policy, but it must comply. In summary, he argued, that the Board has jurisdiction to hear cases involving salary issues if the decision in question is “discriminatory, arbitrary or in bad faith, or is in violation of governing legislation, policy, guideline, practice, etc.”

Decision

Employer’s Counsel acknowledged that Kanga established that salary grievances are within the Board’s jurisdiction to review complaints alleging a breach of working conditions or terms of employment. The panel in Kanga said that the issue before it

really boils down to whether or not the employer may exercise its discretion of

awarding merit increases in an unfettered fashion when it has failed to adhere to

the established guidelines. (p 13)

In holding that the term “working conditions or terms of employment” should be viewed liberally it went on to hold:

that we possess the requisite jurisdiction to inquire into a complaint that the employer has failed to perform its stated obligations set out in the Ontario Manual of Administration. (p. 13)

The panel in Kanga took a broad view of the Board’s jurisdiction: it held that employees ought to be able to bring a grievance to the Board where an individual alleges inequitable treatment has resulted in a breach of working conditions or terms of employment. Scott held that the Board has jurisdiction to adjudicate grievances, which raise “a salary component as the core of its complaint.” The issue for me to address is whether grievances complaining of salary inversion or compression are within the Board’s general jurisdiction on working conditions or terms of employment.

The Board has taken jurisdiction since Kanga to adjudicate salary complaints – Amirault and Bertolo. However, Mr. Marvy argued that these cases involved individuals who grieved a salary matter. This was true in Kanga and in Amirault, but not in Bertolo. In Bertolo the individual grievors complained to the Board that after management had been reorganized and “delayered,” they were making less per hour in their new classifications. This was a change that effected anyone reclassified under the reorganization as they were. Although in their new positions their salary range actually increased, the hours of work also increased and, therefore, their “hourly” rate decreased. In a nutshell, they argued in their new classifications they were required to work more hours for less money. The grievors also argued that they lost a benefit which they enjoyed under the old classification under the Management Compensation Option which permitted overtime to be taken as holiday. The Board here took jurisdiction, but held that

the grievors had not shown

evidence of bad faith, discrimination or arbitrariness or a breach of the Act, a

Regulation, policy or past practice.

The Board’s approach in Bertolo is consistent with Kanga and Amirault. I am not persuaded the Board will only adjudicate if an allegation of bad faith etc. or breach of policy etc. applies to an individual employee.

The Board’s previous cases on salary compression are not of much assistance to me given the Grievor’s allegations here. The cases such as Smalley which seem to suggest there is absolutely no jurisdiction for the Board to look at salary compression issues were not dealing with an allegation that a policy, which formed part of an employees working conditions and terms of employment, had been breached. The Grievor’s Counsel acknowledged, and it is clear from the earlier cases that salary compression alone is not something that this Board can review. That is, the Employer is right that this Board has no jurisdiction simply to review the salary range for a classification, to assess whether given the responsibility and requirements of the job it is being paid adequately. This is a true classification grievance for which the Board has no jurisdiction. Section 4 of the Act gives the Civil Service Commission the authority to recommend classifications and salary ranges to Cabinet.

However, where there has been an allegation that there has been a breach of a working condition or term of employment - in this case, that a policy which formed a working condition or term of employment has been breached, the Board must adjudicate. This is consistent with prior decisions of the Board which held that salary compression grievances without further allegation of a breach of working conditions either by bad faith etc. or violation of a policy etc. are not arbitrable. Salary compression itself - no matter how it occurs - would not be arbitrable if there was no allegation of bad faith, discrimination, arbitrariness, breach of the Act, the regulations, a policy or past practice.

Although at first blush it might appear that Mr. Gleason’s complaint is a “classification” grievance, it is not. The Grievor is not simply asking for the Board to review the Employer’s decision to set appropriate pay levels according to qualifications and job responsibility. Counsel argued that evidence would be presented that showed a policy in place in 1990, which is part of the Grievor’s working conditions, and that the Employer had breached it. Whether or not the Grievor here is able to prove that there was such a policy in effect in 1990 and that it was breached is a question of the merits of the case, which can only be decided after hearing the evidence. Thus, I have concluded that the Board must take jurisdiction to hear this case.

Further, I am of the view that it is premature for me to consider the Employer’s argument that such a policy would amount to a fetter of the discretion of the Civil Service Commission. Although this point was not fully argued before me, I do not believe the Grievor here is suggesting that the Employer could never change a policy, such as compression, rather the argument is that when the policy is in existence it ought to be consistently and fairly applied. So too, it is premature to address the argument that this Board can not make an appropriate order to compensate the Grievor, should I find that there has been a breach of working conditions. It is clear that the Grievor is not asking for this Board to retroactively increase the salary range for his classification in 1990.

ORDER

Having carefully considered the arguments, written submissions and the cases presented, and for the reasons given above, I have decided this Board does have jurisdiction to proceed to hear the grievance on the merits and, therefore, the Employer's motion is denied.

Dated at Toronto this 20th day of February 1998.