P/0127/96

IN THE MATTER OF AN ARBITRATION

Under

THE PUBLIC SERVICE ACT

Before

THE PUBLIC SERVICE GRIEVANCE BOARD

BETWEEN

K. Gottwald

Grievor

• and -

The Crown in Right of Ontario (Ministry of the Attorney General)

Employer

BEFORE

D.J.D. Leighton

Vice-Chair

FOR THE GRIEVOR

K. Gottwald

FOR THE EMPLOYER

L. Marvy Counsel Legal Services Branch Management Board Secretariat

HEARING

January 28, 1998

Mr. Karl Gottwald filed a grievance regarding certain matters pertaining to his employment and the termination of his employment with the Public Service Grievance Board (the Board) in 1996. Before any hearing into the matter the parties agreed to settle the grievance. The settlement agreement, dated March 27, 1997, was made in writing, dated and signed by the parties (See Appendix 1). It provided that the Ministry pay Mr. Gottwald $8,000, less statutory deductions.” Mr. Gottwald agreed to withdraw the grievance pending before the Board and another complaint under the AMAPCEO Interim Agreement, dated October 8, 1996. A standard release clause was included in the agreement. Mr. Gottwald was permitted to designate a portion of the $8,000 payment for legal fees.

On July 4, 1997, Mr. Gottwald filed a grievance alleging non-performance of the settlement agreement (see Appendix 2). The Grievor complained that: 1. statutory deductions had wrongly been taken from the portion of the $8,000, designated for legal fees, and 2. the payment ought to be treated as “service time related” which would increase pensionable service time. The Grievor also asked for costs for his time and disbursements in enforcing the agreement. The parties agreed on the facts as summarized below, and that the issue for the Board was the interpretation of the March 27, 1997 settlement agreement.

The Employer’s Counsel submitted that there were some administrative errors made in making the payments to Mr. Gottwald. Mr. Marvy conceded that there should not have been statutory or pension deductions from the payment, designated by request of the Grievor, for legal fees. The deductions amounted to $327.33. Further, the payment for legal fees appeared in the payment statement as income, which was an error. Mr. Marvy also took the position that the Employer erred by deducting a pension contribution--a sum of $330.90-- from the balance of the settlement payment. Thus, Mr. Marvy said the Employer owed the Grievor $658.23 for these deductions.

It was the Employer’s position that I should not go beyond the clear language of the agreement which states that a lump sum of $8,000 was to be paid less statutory deductions. Nothing in the agreement suggests that it was payment for ‘‘service time.”

Initially, Mr. Gottwald, who is now retired, took the position that the pension deduction should not have been made, but he changed his view. At the hearing he argued that since the payment of $8,000 was in settlement for his grievances which alleged inter alia harassment, loss of MCO credits and sick leave, then the money should be treated as salary. This would extend the Grievor’s service time and, therefore, effect the calculation of his pension. He estimated the effect on his pension would amount to $150.00 per year. He submitted that the Government provided no retirement planning and that this should be taken into consideration in making my decision.

Mr. Marvy indicated at the hearing that he was unaware of any Board decisions on the enforcement or interpretation of settlement agreements. However, at my request for some case law he provided me later with OPSEU (Union Grievance) v. the Crown (Ministry of Health), 0443/95 (Kaplan), a decision of the Grievance Settlement Board and a short written submission arguing that I must look to the language of the agreement for what the parties intended. Mr. Marvy argued that the settlement agreement was clear and unambiguous in its face. It provides for a payment of $8,000 minus statutory deductions (subject to clause 2 which provided that a portion of the $8,000 could be allocated for legal fees). Deductions for pension benefits are not statutory. There is nothing in the agreement which requires the Employer to make pension deductions.

Mr. Gottwald responded to Mr. Marvy’s written submission, noting that he has always intended to honour the settlement. In his submission a fair implementation should include the “usual deductions and the usual benefits.” Mr. Gottwald argued that OPSEU (Union Grievance) was not relevant, since the memorandum of settlement in that case had been finalized and applied for some time, before the Employer tried to change its terms.

Mr. Gottwald also argued that in the GSB case both sides were represented by able counsel, which was likely a factor in the arbitrator’s decision to enforce the memorandum of settlement. In contrast, Mr. Gottwald submits he was represented by an articling student.

In response to Mr. Marvy’s argument that the words of the settlement agreement are clear, Mr. Gottwald points out that Ministry staff interpreted the document differently to Counsel and therefore it was not unreasonable for him to have yet another interpretation. In summary, Mr. Gottwald argues that he ought to be able to pursue his interpretation of the agreement before the settlement is fully implemented. In his view this settlement was made to compensate for unused vacation and sick leave, and since pensionable service time normally continues to accumulate during these times, the payment of $8000.00 should be included as pensionable earnings.

Decision

Having carefully considered the submissions of the parties I have decided to dismiss the matter. The parties are bound by the clear language of the settlement agreement signed March 27,1997. Nothing in the agreement requires the Employer to deduct pension contributions or to treat the payment of $8,000.00 as "service related time". That the Ministry employees implementing the agreement made an error in deducting pension contributions does not persuade me that the agreement is ambiguous.

The Employer and the Grievor could have agreed that pension contributions should be deducted or that this payment would extend Mr. Gottwald's last day of employment with the government, but it does not.

Mr. Gottwald and his representative did not, it seems, turn their minds to pension deductions at the time the agreement was negotiated. It is too late now to argue that it should be included. Although there have been administrative problems with the implementation of the agreement -- the Employer has conceded making errors in the deductions -- the settlement agreement is final and was formalized when the parties put their agreement in writing, signed and dated it. I am not persuaded by the Grievor's argument that until the settlement is fully implemented he can argue for more than what was included in the settlement agreement.

The policy considerations behind giving effect to settlement agreements reached by parties to a grievance were noted in OPSEU (Policy Grievance) when Arbitrator Kaplan reviewed several key decisions of the GSB. Arbitrator Kaplan cited Landry- King 1593/84 (Knopf) where the Board held:

The Board wishes to do everything possible to foster and honor settlements reached by the parties. Once settlements are achieved parties must feel confident that they can rely upon them. Otherwise, there would be no incentive for the parties to even attempt to settle matters. Unless there is a compelling reason why settlement once obtained, cannot be honored by the parties, this Board should not even attempt to interfere with the settlement (at 8-9).

Arbitrator Kaplan also cited Edgett 2476/90 (Dissanayake) where the Board held that:

Those policy considerations supporting the need to uphold the final and binding nature of grievance settlements recognized by private arbitrator's and the Ontario Labour Relations Board., apply with equal vigor and force in proceedings before this board. The purpose of the pre-arbitration grievance procedure under the collective agreement is to provide the parties opportunity to resolve disputes informally, promptly and without the expense and delay of arbitration. Besides, it is generally accepted that a settlement reached between the parties is a far preferable way of resolving a dispute than an award handed down by a third party. If the efficacy of the settlement so reached is to be maintained, the parties must be held to their agreement..(at 10 -- 11).

Parties before the Public Service Grievance Board are likewise entitled to have settlement agreements enforced and upheld. The same policies reasons -- to encourage settlements and avoid the costs of arbitration -- apply equally to proceedings before the Board. There is no compelling reason for the Board to interfere with this settlement agreement. There is no ambiguity in the agreement, which clearly provides for payment of $8,000.00 less statutory deductions. And it is to this, which the Grievor is entitled. Mr. Gottwalds request for an order to treat the $8,000.00 payment as pensionable earnings is hereby denied. The Employer has acknowledged that it owes Mr. Gottwald the sum of $658.23, which should be paid forthwith.

Dated at Toronto, this 13th day of March, 1998.

APPENDIX 1

In the Matter of an Arbitration

between

Association of Management, Administrative and Professional Employees

and

Karl Gottwald

AND

The Crown in Right of Ontario (Ministry of the Attorney General)

Whereas the parties wish to enter into a full and final settlement of all matters pertaining to the employment and termination of employment of Mr. Karl Gottwald, the parties hereto agree to the following:

1. The Ministry agrees to pay Mr. Gottwald the sum of $8,000 (eight thousand dollars), less statutory deductions.

2. Mr. Gottwald may direct the Ministry to pay a part of the sum in clause #1 to cover his legal costs and shall provide such direction within 30 days of the signing of this settlement.

3. Mr. Gottwald agrees to withdraw his complaint under the Public Service Act dated October 8, 1996 and his complaint pursuant to the AMAPCEO Interim Agreement dated October 8, 1996.

4. This settlement is without precedent or prejudice to any other matter between the parties.

5. In consideration of the above, Mr. Gottwald hereby releases the Ministry and each of its respective employees and agents from any and all actions, suits, contracts, covenants, debts, claims and demands of whatever nature and kind, statutory or otherwise, for damages, indemnity, costs, compensation or any other remedy Mr. Gottwald or his successors, heirs, administrators or assigns have had, may now have, or may have in the future, in any way arising out of or during the course of Mr. Gottwald's term of employment and the termination of such employment.

APPENDIX 2

By Facsimile and Ordinary Mail

July 4, 1997

Mr. Larry Taman Deputy Attorney General 720 Bay Street 11th Floor Toronto, Ontario M5G 2K1 Fax: 416-326-4018

D. Karl Gottwald 23 Ivan Road, West Hill, Ontario M1C 1V1 Phone: 416-284-7095 Fax: 416-284-2355

Dear Mr. Taman:

RE: Grievance under the Public Service Act

I am grieving non-performance by the Ministry of our grievance settlement agreement PSGB P/0127/96 dated March 27, 1997.

Without prejudice, I allege that:

6. The Ministry is in breach of the intent of the agreement by refusing to reimburse me in full for my legal costs without deductions of any kind;

7. As the arbitration award is service time related, the Ministry is not taken proper action to reflect the service time changes implied in the agreement and relating to:

a) pensionable service time;

b) termination payments; and

c) vacation payments.

As remedy, I am seeking a make whole remedy to the points above and full reimbursement of my time and disbursement costs relating to this matter.

I am looking forward to meeting with you or your designate within 30 days pursuant to s. 35(1) of Reg. 977.

Yours very truly,

“Signed by Karl Gottwald”

Karl Gottwald