P/0051/93, P/0047/93, P/0048/93, P/0049/93, P/0050/93, P/0017/94, P/0018/94

IN THE MATTER OF AN ARBITRATION

Under

THE PUBLIC SERVICE ACT

Before

THE PUBLIC SERVICE GRIEVANCE BOARD

BETWEEN

McConnell et al

Grievor

• and -

The Crown in Right of Ontario (Ministry of Transportation)

Employer

BEFORE

D.J.D. Leighton

Vice-Chair

FOR THE GRIEVOR

B. Greenstein Counsel Green & Chercover

FOR THE EMPLOYER

L. Marvy Counsel Legal Services Branch Management Board Secretariat

HEARING

October 3, 4, 1996, December 13, 1996, March 7, 1997

FINAL SUBMISSION

Received May 26, 1997

Introduction

Mr. McConnell was employed as a professional engineer by the Employer during the period of 1990 and was classified as a PEN-21. He was reclassified to the Senior Management Group as of January 1, 1991. The Grievor was never part of the Association of Professional Engineers of the Government of Ontario (PEGO), which was formed in 1989 and represents approximately 700 professional engineers. When salary negotiations between PEGO and the government reached an impasse in 1990, an arbitrator was appointed and subsequently an arbitration award was released on August 26, 1991. This award resulted in substantial increases to the professional engineers within PEGO. The salary increases were retroactive to January 1, 1990. The result of the retroactive award was that the engineers in the lower classifications, PEN- 19 and PEN-20, made a greater salary than those in the PEN-21 classification.

The Grievor complains that by not paying the PEN-21 engineers retroactively all the way back to January 1, 1990, the Employer has acted arbitrarily and breached its own policy which provides that higher classifications are paid a certain percentage more than the one below it. The Grievor argued that in the past this policy had been consistently applied, and that it forms part of the working conditions and terms of employment of the Grievor.

At the first hearing into this matter the Employer asked the Board to dismiss the grievance for lack of jurisdiction. In the first decision the Board addressed the issue of whether an employee lost the right to grieve an alleged breach of a term or condition of work which occurred before an individual was promoted to the Senior Management Group, which cannot bring grievances regarding working conditions to this Board. The first interim decision denied the Employer's motion to dismiss the grievance for lack of jurisdiction, holding that the Grievor did not lose his right to grieve an alleged breach, arising before a promotion to the Senior Management Group.

At the second hearing day set for this case, the Employer presented another motion to dismiss the grievance, this time on the grounds the this Board has no jurisdiction to hear salary compression grievances. The Employer also argued that the Board has no power to set salary levels or salary rates for a particular classification, which is exclusively a right of the Civil Service Commission with Cabinet's approval, as provided in the Public Service Act, R.S.O. 1990, c.P47. Counsel for the Grievor objects to this preliminary motion, arguing that this Board does have jurisdiction to hear salary grievances and that the second motion to dismiss for lack of jurisdiction amounts to an abuse of process. Counsel argued that the second motion should have been brought at the time the first motion was argued, and by not bringing it then the Employer should be found to have accepted the Board's jurisdiction.

The parties agreed that certain other grievors, with the same grievance in substance as to Mr. McConnell's, would be bound by this interim decision. Their names and grievance numbers appear on the cover sheet of this decision.

The Employer's Submission

In support of his submission that this Board has no jurisdiction to rectify salary inversion or compression between supervisors and subordinates, Mr. Marvy cited previous decisions of this Board: Davies (P/0921/83); Heater (P/0922/84); Smalley (P/0013/85); Coons et al. (P0013/87); Marrison et al. (P/0004/88); Herbrand (P/0014/94); and Kanga (P/0003/85). All of these cases with the exception of Kanga dealt with salary erosion or compression issues. The Board consistently held that they had no jurisdiction to address compression issues. In Davies, the Board held:

It was explained to the grievor that the Civil Service Commission, under Section 30(1) of the Public Service Act, established the salaries to be paid for the various levels within the management compensation plan. On the other hand, the wages to be paid for the different categories within the bargaining unit were negotiated and incorporated into the collective agreement between the Management Board of Cabinet and the Ontario Public Service Employees Union. The Public Service Grievance Board had no authority to increase or decrease the wages thus established for a particular group in either the management compensation plan or the bargaining unit.

The Board consequently, was powerless to provide a remedy for Mr. Davies’ grievance. In Heater, the Board followed Davies in holding that it had no jurisdiction to give a remedy for a salary compression.

In Smalley, the Board noted that on the face of the grievance and given the submissions of the parties that there was no misapplication of the compensation plan to the classification of the grievor there was no jurisdiction to hear the grievance. The Board also held:

nor is there any 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 ...”

In Smalley the grievor admitted that the essence of his complaint was the adequacy of his compensation in relation to bargaining unit personnel which he supervised.

In Coons, in denying jurisdiction to address salary compression issues, the

Board held:

The effect of the settlement of the bargaining unit grievance is not to set or change the salary rate for any management classification; it is simply to resolve an outstanding grievance. The discrepancy in the payments arose not because it was determined that there should be two rates of pay for the same work, but because a dispute arose concerning the interpretation of the collective agreement governing bargaining unit personnel. In view of this it cannot be concluded that the grievors have any legal right to claim any other salary than that which was set out for their classification by the Commission.

In Marrison, the Board decided that it had no jurisdiction to address a salary compression 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. In Marrison the grievors had claimed that the employer had engaged in arbitrary and discriminatory conduct given the “perennial nature of the problem’’ - the problem being salary compression between themselves and their subordinates.

Finally, the more recent case of Herbrand held that the Board had no jurisdiction given the previous case law to adjudicate salary compression or conversion complaints. The Board in Herbrand held further that unless there was specific authority given in the Public Service Act or Regulation, there was no jurisdiction for this Board to hear such complaints.

The Grievors’ Submission

Ms. Greenstein argued that this Board does have jurisdiction to consider whether or not a rule or policy, in the past consistently applied, in this case, that supervisors make five percent more than their subordinates, has not been consistently applied to the Grievor. Counsel argued that it was arbitrary for the Employer to apply it retroactively to January 1992. The policy forms part of the working conditions and terms of employment of the Grievors and, therefore, is squarely within the Board’s jurisdiction. She cited Kanga as authority for the Board's jurisdiction to consider salary issues as part of the terms and conditions of employment. In Kanga the Board held:

The Board must continue to give a liberal interpretation of the term 'working conditions or terms of employment' until we are directed to do otherwise.

Ms. Greenstein also cited Amirault (P/0028/94), which she argued is right on point because it dealt with a complaint of an individual who did not receive an increase in salary on promotion. Counsel argued that this was no different than the application of a compression policy, because the grievor was complaining that the policy with regard to promotions was breached. Ms. Amirault had received a five percent increase when she was promoted from her R02 rate, but eventually she became aware of the fact that she was earning less as a supervisory OM-14 than the top pay level for C02 employees who were her subordinates. Ms. Greenstein pointed out that a witness for the employer in the Amirault case testified:

The employer applies the general rule that a supervisor should earn more than the employees that she or he supervises. This is determined by comparing the maximum levels of the positions under review.

Ms. Greenstein cited Bertolo and particularly the last part of that decision which dealt with a restructuring and "delayering" of management which resulted in salary changes for the grievors, where the Board held:

Thus it is appropriate for the Board to hear the grievance. However, absent evidence of bad faith, discrimination or arbitrariness, there must be evidences of some breach of the Public Service Act, the Regulation, the management policy directive, or past practice, or some evidence that the grievors have been treated inequitably before a Board can find that the grievance should be allowed.

Ms. Greenstein also cited the Supreme Court Case of Bell Canada v. Commission de la Santé (1988) 1988 CanLII 81 (SCC), 51 D.L.R. (4th) 161 where the court considered the definition of the phrase "working conditions.'' The court decided to define working conditions generally:

Working conditions are conditions under which a worker or workers, individually or collectively, provide their services, in accordance with the rights and obligations included in the contract of employment by the consent of the parties or by operation of law, and under which the employer receives those services.

The court went on to hold:

Whatever definition is accepted of "working conditions, " it seems inconceivable to me that it should not include a worker's obligation to provide his or her services and the employer's obligation to pay his or her wages.

Ms. Greenstein reviewed the cases submitted by the Employer and argued that in none of the cases did the grievors argue that there had been a breach in policy or other breach of terms and conditions of work. Counsel also pointed out that in none of these cases were the grievors represented.

Counsel argued that in the Davies and Heater cases there was no reasoning, just a conclusion that the Board had no jurisdiction. In Smalley the grievors did not claim a breach of policy or that a decision was arbitrary as the Grievor does in the case before this Board. Counsel argued Coons is wrongly decided, but again notes there is no argument that a policy has been violated, not addressing the salary compression issue. In Marrison although there was an allegation that because of the "perennial problem" of the compression issue there was arbitrariness or unfairness on the face of the complaint, the Board found that there was no evidence to support bad faith, an reiterated that the onus is on the grievors to prove such allegations. In Herbrand, Ms. Greenstein argued that as it relied on Shaw, which is a Classification Rating Commission case, and two earlier cases, Davies and Marrison, which indicate little rationale or reasoning, it is not helpful to this Board.

In summary, Ms. Greenstein argued that this Board does have jurisdiction where the Grievor alleges that there has been a breach of working conditions or terms of employment. In this case the Board has jurisdiction to review whether there has been a breach or arbitrary application of a policy which relates to the salary of the Grievor. To Mr. Marvy’s argument that this Board cannot raise the salary for an entire class, and that it is up to the Cabinet to set salaries for classifications on the advice of the Civil Service Commission, Ms. Greenstein argued that the Grievor was not asking for this. The Grievor is asking this Board to adjudicate whether or not a policy which forms part of their working conditions was breached.

Written Submissions of the Parties

After the hearing into this matter, and before the interim decision was issued, Scott et al. (P/001/96) was released on March 17, 1997. Since one of the issues dealt with in Scott was whether or not this Board had jurisdiction to hear salary grievances which involve a compression or erosion problem, I invited the parties if they wished to do so, to make submissions on the case. The Board received final submissions in late May of 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 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 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 illegal and 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 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. Mr. Marvy noted that none of these cases required the raising of the salary beyond the maximum range set by the Civil Service 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. Marvey, 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. Marvey 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 Grievors’ Submission on Scott

In Ms. Greenstein‘s written submission on Scott she argued that the analysis in the decision of the issue of jurisdiction to adjudicate a working condition and terms of employment grievance is correct. She noted that the Board in Scott followed established jurisprudence such as Kanga and Tyynela (P/0016/93) in holding that a broad and liberal interpretation of the phrase working condition or terms of employment is appropriate. She agreed with the reasoning of the Board in Scott in holding that the Shaw case was of little assistance to the Board in deciding the issue since it was a Classification Rating Committee decision. She agreed with the analysis that Marrison et al. was not particularly clear in its reasoning for denying jurisdiction. Ms. Greenstein noted that she had urged me not to follow Herbrand for the same sort of reasons that were addressed in Scott. She had noted in oral argument that Mr. Herbrand was not represented by counsel and the full jurisprudence of the Board was not put before that panel. It was her submission, as it was in oral argument, that Bertolo and Amirault were cases where the Board had taken jurisdiction over salary related matters. She argued that it was clear from these cases that the Board would take jurisdiction where grievances challenged an employer on a salary related matter:

if the decision was made on discriminatory or arbitrary conduct or in bad faith, or 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.

It was Counsel’s position for the Grievors that there was a policy, guideline or practice which dictated that salary compression was to be avoided by increasing the effected employees’ salary. She concluded by urging me to follow the reasoning in Scott and allow the grievance to proceed.

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. (p13)

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. McConnell’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.

Since I have decided that the Board does have jurisdiction to proceed to hear the case on the merits, I shall not address Ms. Greenstein's substantial argument on abuse of process.

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 20 day of February 1998.