P-2003-1670

IN THE MATTER OF AN ARBITRATION

Under

THE PUBLIC SERVICE ACT

Before

THE PUBLIC SERVICE GRIEVANCE BOARD

BETWEEN

Garratt et al.

Grievor

• and -

The Crown in Right of Ontario (Ministry of Health and Long-Term Care)

Employer

BEFORE

Kathleen O’Neil

Vice-Chair

FOR THE GRIEVORS

Tim Garratt, William Cote, Rick Dusome

FOR THE EMPLOYER

Yasmeena Mohamed Senionr counsel Management Board Secretariat

HEARING

February 7, 2005

Decision

This decision deals with the employer’s preliminary objection to the jurisdiction of the Public Service Grievance Board (referred to below as the PSGB or “the Board”) to hear the merits of a grievance filed by a group of nurse managers from the Oak Ridge Forensic Division of the Penetanguishene Mental Health Centre. The grievance complains of salary and benefit disparities that have developed between their PM 14 classification and the Registered Nurses (R.N.’s) who report to them, as well as the lack of a promised salary review of their occupational category.

The written statement of Grievance, dated March 14, 2003, reads as follows:

We the undersigned, grieve the salary and benefit disparities that have developed between the Oak Ridge PM14 Program/Shift Nurse Managers, and the Registered Nurses at Oak Ridge. The facts, as presented, clearly reflect that we have seen a significant change in the compression ratio and benefit package between bargaining unit Registered Nurses and the PM14 Classification at Oak Ridge:

There have been several factors, which contributed to this:

1. Bargaining unit R.N.’s were awarded an additional 10% wage increase effective January 1, 2002.

2. In the previous OPSEU contract settlement of 1999, R.N.’s at Oak Ridge were awarded a Salary Note (G24) in recognition of the risk factors related to their job. This increased their merit levels from 7 to 9 categories and resulted in a rate increase in their salaries of approximately 6%.

3. The enhanced benefit package negotiated by OPSEU in 2002, which provides greater benefits.

4. The fact that the pension plans are not of equal value to individual members. The OPTrust pension plan has a significantly greater dollar value, reduction in pension contributions, and continuation of the Pension Factor 80.

We have not come forth with our concerns previously because we had been assured our issues would be addressed once a thorough review of our category had been completed. We believe no MBS group has examined our concerns. When we addressed these issues with our HR representative, he informed us there must be a compression ratio of less than 5% in order to have a valid grievance. We drop well below this figure at varying intervals throughout the term of the contract.

Therefore, we the PM14 Managers at Oak Ridge seek the following settlement:

1. A review of our wages with consideration to reducing the impact of items 1 and 2 above. This would address the compression issue that resulted on January 1, 2002 which saw a pre-contract compression ratio of 15.71% reduced to 3.07%. Full retroactivity to this date should be applied with interest.

2. Implementation of benefits that are fair and equitable to all managers, and in line with the benefits that are currently being subsidized by this employer for members of the OPS.

3. Reintroduction of Factor 80 for all managers.

4. A reduction of penalties and enhancement of pension benefits equal to OPTrust.

5. The development of a mechanism which provides for a fair and equitable means to assess and communicate manager wages and benefits.

In a subsequent statement dated Oct. 7, 2003, addressed to the Board’s registrar, the grievors maintained that the manner of setting their wages violates the employer’s salary policies, and is a breach of an implied contract with them when they accepted the role of manager.

The group grieved because their attempts to have their compensation issues addressed by less formal means have not been successful. They believe their position has been devalued at the same time as there has been an enormous increase in responsibility for the nurse managers. The grievors also have many questions as to how their terms and conditions of employment are arrived at, and why certain options for benefits, which were made available to other groups, such as the OPP, were not made available to the nurse managers. Further, they want information as to who is responsible for options under the pension plan.

The employer objects to the hearing of this matter on the basis that the grievance is basically a classification grievance, over which the PSGB has no jurisdiction, as set out in s. 31(4) of Regulation 977, as follows:

31. (4) No grievance shall include a complaint in respect of the following matters:

32. A complaint that a position should be classified.

33. A complaint that a position is in the wrong classification.

34. A complaint relating to a release from employment under subsection 22 (4.1) of the Act.

35. A complaint regarding the method of evaluating an employee’s performance.

36. A complaint regarding the evaluation of an employee’s performance.

37. A complaint regarding the compensation provided or denied to an employee as a result of an evaluation of his or her performance.

Management counsel maintains that the essence of the grievance is the idea that the salary currently paid to these nurse managers does not reflect their level of responsibility. Since evaluating and classifying positions is the role of the Civil Service Commission, rather than the PSGB, the Board is urged to decline jurisdiction. Counsel refers to s. 4 (a) of The Public Service Act, which provides the duties of the Civil Service Commission as follows:

4. The Commission shall,

(a) evaluate and classify each position in the classifed service and determine the qualifications threfor;

b) recommend to the Lieutenant Governor in Council the salary range for each classification, except a previously established classification for which a salary range is determined through collecive bagaining.

Further, employer counsel underlines that, in the absence of an allegation of a breach of any of their terms or conditions of employment, the grievors’ desire for information about how their salaries and benefits are set is no reason to assume jurisdiction. Since the Board has no power to sit as an interest arbitrator, i.e. to set the terms and conditions of employment, the grievance should be dismissed, in the employer’s submission.

The grievors believe that the grievance should not be dismissed, underlining that they are not seeking a reclassification, or the same increases as the bargaining unit. Rather, they maintain that the current practice of setting their wages violates the employer’s own established principles, citing a Ministry Directive dated January 1991, entitled Salary Rates/Ranges Directive, a document filed by the employer. The grievors cite the following portions of that document as having been breached:

• Pay administration will be consistent with approved compensation practices and recognize the manager’s responsibility to manage.

• Pay administration will contribute to the attraction and retention of competent employees.

Further, the grievors maintain that there is a mandatory cyclical review of positions that did not take place for their positions, which is referred to under the heading “Mandatory Requirements” in the same document.

The grievors presented a comparison of the maxima of the PM14 and R.N. wage scales since 1983, to demonstrate that the past practice has been to maintain a compression ratio (the percentage difference between the maximum pay level for the PM 14 managerial classification and that of the bargaining unit R.N.’s) that did not drop below 11% at anytime during the past 18 years. Although the managers are not asking for a matching settlement to that of the bargaining unit, they are asking for a maintenance of the practice of ensuring a significant percentage differential between PM 14’s and those they manage, which most recently ceased in March, 2004. They contend that the practice in setting managerial wages, benefits and pension has been well established, and is based on the principles laid out above. They wish the compression issues to be resolved as they have been in the past. They argue that when they assumed the additional responsibility and leadership roles as managers, they were entering into an implied contract that had certain defined differences as to pay, benefit and pension entitlements commensurate with the increased level of responsibility. Noting that there have already been instances of people returning to the bargaining unit because of the situation with the compensation package for managers, the grievors express the fear that highly qualified people will not take on, or continue to accept, the challenge of management positions in the difficult milieu of an institution serving the criminally insane.

Further, in response to a document filed by the employer “Management Compensation: an Overview”, the grievors note that they are not privy to any of the exercises outlined in that document, and they have no way to know if the process is applied in a reasonable manner. They believe that their compensation has been set in an arbitrary way, and is indicative of bad faith in that their position has not been looked at individually, to see what working with the criminally insane really involves. They see their treatment as an abuse of power by their employer.

The grievors also submitted that that the grievance can be addressed under section 29(1)(b), (f) and (g) of the Public Service Act which provides as follows:

29 (1) The Commission, subject to the approval of the Lieutenant Governor in Council, may make regulations,

(b) prescribing classifications for positions, including qualifications, duties and salaries, except salaries for previously established classifications for which salaries are determined through collective bargaining;

(f) determining employee benefits;

(g) providing for the establishment of plans for group life insurance, medical-surgical insurance or long-term income protection insurance;

(i) defining overtime work and providing for compensation therefor;

(j) Providing for and prescribing payments on death;

29.2The Lieutenant Governor in Council may make regulations,

(a) defining “gross mismanagement”, “gross waste of money”, “abuse of authority”, “imminent grave health or safety hazard” and “imminent grave environmental hazard” for the purposes of Part IV;

(b) providing for the establishment and administration of the public file under Part IV;

(c) respecting access of the public to records placed in the public file;

(d) prescribing the circumstances under which the Counsel is required to or may provide copies of records placed in the public file;

(e) authorizing the Counsel to charge fees for copies of records placed in the public file and prescribing those fees. 1993, c. 38, s. 63 (11).

The starting point for the determination of jurisdiction is s. 34(1) and (4) which set out the basic provisions for the grievances over which the PSGB has jurisdiction as follows:

34. (1) A person described in subsection (2) who is aggrieved about a working condition or term of his or her employment may file a grievance with his or her deputy within 14 days after becoming aware of the working condition or term of employment giving rise to the grievance. O. Reg. 168/96, s. 6 (1).

(4) The grievance must set out the reasons for the person’s complaint about the working condition or term of employment. O. Reg. 168/96, s. 6 (1).

Although the words “working conditions or term of employment “ are to be given a broad and liberal interpretation (Kanga P/0003/85), that does not give the PSGB the authority to set the terms and conditions of managers’ employment, or to give opinions as to whether they are fair, either in some absolute sense, or as compared to bargaining unit employees. Cases involving salary complaints that have been heard on the merits have had aspects beyond requests to remedy compression or classification, which are seen as requests that the PSGB, rather than the Civil Service Commission, set the terms and conditions of employment as to compensation. In this respect, the Board’s jurisdiction clearly extends to allegations that calculation of compensation is incorrect (Amirault P/0028/94) and to issues of misapplication of the established terms of employment in relation to salary and other forms of compensation. Although the PSGB has no authority to set pay or compensation, it can and does decide disputes over what these conditions are, and determine whether or not they have been correctly applied.

Employer counsel filed a brief of decisions of the PSGB over the years related to the recurring problem of compression between managerial and bargaining unit compensation and related issues. For their part, the grievors claim that their grievance is unique, and that none of the case law covers the situation. Although there is no grievance identical to the one under consideration in the material filed by the employer, the Board’s case law has dealt with similar problems, and the cases collected there deal with several well-established themes, as discussed below.

Despite sympathy for the plight of managers dealing with frustration over their level of pay and eroded pay differentials, the PSGB has consistently declined to entertain grievances where the Board is being asked to review the level of compensation or classification, as it is the exclusive function of the Civil Service Commission to set levels of compensation. The grounds for declining to hear such grievances have been articulated as: “no authority to increase or decrease the wages” (Davies P921/83 (Black)), a lack of jurisdiction over the adequacy of the management compensation plan, or a lack of authority to “rectify salary relationships that may have gone awry with the passage of time,” or to enforce the maintenance of a certain differential between management and bargaining unit pay (Smalley P/0013/85 (Emrich)), no legal right to claim any other salary than that which was set for their classification by the [Civil Service] commission (Coons, et. al. P0013/87 (Brent), “no jurisdiction to deal with supervisory salary compression disputes.” Herbrand P/0014/94 (Walter). In Marrison et. al. P/0004/88 Emrich) the fact that the grievors framed their claim by saying that a failure to correct the perennial problem of salary compression constituted arbitrary, discriminatory, bad faith conduct, did not lead the Board to take jurisdiction over the rectification of a salary relationship. Rather, in a remark that has the air of a finding of lack of a prima facie case, the Board said that the grievors had not met the onus upon them to establish discriminatory, bad faith or arbitrary conduct on the part of the employer.

By contrast, the Board assumed jurisdiction in Bertolo and Tighe P/0008/95 and P/0009/95 (Leighton) addressing a claim that as a result of a reorganization, the grievors’ terms and conditions of employment were not being properly applied to them, in that they were being required to work more hours for less money, and should have been red-circled when they were reclassified. The Board heard the grievance on the basis of an agreed statement of fact, but dismissed it, finding there was no evidence of a breach of the Public Service Act, the regulations, a management policy directive, past practice or any evidence that the grievors had been treated inequitably, nor evidence of bad faith, discrimination or arbitrariness.

In Scott et al P/0001/96 (Lynk) a grievance against salary disparities was based on the assertion that the disparities violated the employer policies that employees should be paid commensurate with their skills, competence and experience as well as its policy on credentialism, and past practice. The Board dealt with an employer objection to the effect that the PSGB lacked jurisdiction over salary dispures, reviewing earlier jurisprudence on the extent to which the PSGB has jurisdiction over grievances with a salary element. The Board summarized its views as follows at pp. 20 and 21:

An employee within the coverage of the Act may only challenge the decisions 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 employee 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.

In that case, the Board dealt with several employer objections with a variety of results, but took jurisdiction in a preliminary decision dated May 17, 1997, as the grievance alleged that the employer had breached certain policies as to salary. The grievance was dismissed on its merits, in a decision dated July 7, 1998 as the Board found that the salary discrepancies did not violate the credentialism policy, and that the Cyclical Salary Review Program Policy published in the 1976 Ontario Manual of Administration provided that periodic changes in pay settlements for one particular occupation group would not be automatically granted to other occupational groups to maintain customary relationships between pay.

In Group Managers, Ministry of Finance P/0020/99 (Willes), which involved a situation where the AM20 Group managers had their duties reorganized and some new AM 21 positions were created as a response to a salary compression problem, the Board reserved on the employer’s objection to jurisdiction until after the evidence was heard. The grievors alleged, among other things, that their terms and conditions of employment had been changed to an extent which constituted demotion or constructive dismissal. The grievances were dismissed, and jurisdiction declined, because, although the Board found that the evidence pointed to a poor administrative decision, there was no clear evidence of discrimination, arbitrariness, bad faith or a breach of the Act or the regulations.

In Gleason P/0040/92 (Leighton) the Board dealt with a complaint about an inversion situation, i.e. a manager made less than the person he was supervising. The grievor argued that there was an employer policy against inversion while the employer argued the Board had no jurisdiction to cure inversion. The Board found that in cases where there has been an allegation that there has been a breach of a working condition or term of employment such as the policy against inversion, the Board would adjudicate. Nonetheless, the Board held that 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. (See also McConnell et al P/0051/93 et, al. (Leighton), to similar effect.) As is often the case, one of the factual disputes was whether there was an applicable policy which had the status of a term or condition of employment. The Board found that whether or not the grievor would be successful in establishing either the policy or the breach was a question for the merits, not one to be decided before hearing the evidence.

Grievances claiming “what OPSEU (or any other bargaining agent) got” are not entertained by the Board because they amount to claims for the application of terms and conditions of employment which have been set for a different group. For the Board to apply terms and conditions to managers that have been bargained by, or awarded to, a bargaining unit would amount to setting terms and conditions of employment for the managers, which is not the function of the Board. Cases in this general category include: Johnson and Smith P/0001/99, P/0005/99 (Agarwal) concerning how employees on a compressed work week are to be credited for a regular day off which falls on a statutory holiday, in which the Board found no entitlement to what the bargaining unit had received; Fernandes P/0185/96 (Leighton) a claim that a manager was underclassified which was dismissed as essentially a classification grievance, based on what OPSEU had received; Johnson P/0038/99 (Agarwal) a claim for a revised shift premium as given to bargaining unit employees, which was dismissed because no reasons were put forward to distinguish it from other similar cases; Easto P/0025/99 (Agarwal), a claim for increases in pay, shift premium and an incentive rate as given to bargaining unit employees, which was based on past practice of extending to operational managers increases accruing to bargaining unit members. See also, to similar effect, Group Grievance, Newman et. al. P/0003 to 0010/98 (Leighton), Armstrong (Agarwal) P/0024/99, and Group Grievance P/0006/01 (Leighton).

In summary, the Board’s jurisprudence has generally interpreted its jurisdiction in regards to managerial compensation, in line with applicable statutory provisions, and the structure of the public service, to be limited to remedying breaches of established terms or conditions of employment, or treatment which is arbitrary, discriminatory or in bad faith in regards to the application of those terms and conditions of employment. It has not taken jurisdiction over requests that the Board remedy compression ratios or other compensation disparities, in the absence of an allegation of a breach of an identified policy or term of employment which would prevent such compression.

Returning to the grievance before me, the grievors are looking for a remedy from the PSGB concerning their discontent with their compensation package. They are looking for both procedural remedies, i.e. a review of their compensation package, and an ongoing mechanism for assessing and communicating managerial wages and benefits, as well as specific changes to their compensation plan, such as the return of the Factor 80 as part of their pension plan, and improvements to their benefits. As well, the grievors claim that the employer’s behaviour towards the managers in regards to their compensation breaches certain compensation policies and an implied contract with the managers, as well as being arbitrary, abusive and in bad faith.

The grievors were clear that they were not asking to have their jobs reclassified, but the employer nonethless submitted that the grievance should be considered a classification grievance because of the remedies requested, which amounted to assertions that the position was under-valued. To the extent that the grievance is asking that the PSGB set the salary rates or maxima, or determine what pension or other benefits should be available to managers, the Board agrees that is not within the jurisdiction of the PSGB. The PSGB has no authority to set wages or compensation.

However, to the extent that the grievance alleges the breach of already established terms or conditions of employment in regards to compensation, the grievance can go forward. In this regard, the portion of the grievance that claims that the employer has not done a promised review of their category, or applied an established policy as to cyclical reviews to their classification, is something clearly within the jurisdiction of the Board. The Board has the jurisdiction to determine whether there is a policy or promise that has the status of a term or condition of employment to the effect that the grievors should have had their salary reviewed in a certain manner before now, and have not. However, it is fair to underline that even if the Board finds that there is such a policy applicable to the grievors, the Board does not have the jurisdiction to conduct a salary review, or to set salary or other forms of compensation.

As noted, the grievors argued that the employer had breached the policy that the managerial compensation plan should recognize the manager’s responsibility to manage and contribute to the attraction and retention of competent employees. However, the facts referred to in this portion of the argument went back to the idea that the nurse managers were not being paid enough of a differential as compared to the bargaining unit positions. In contrast to the situation in Gleason and McConnell, et al., cited above, this was not linked to an allegation that there was an applicable policy as to a specific ratio between the positions that had been breached or not properly applied to the grievors. Rather, it was said more generally that there was an implied contract that there be certain defined differences as to pay commensurate with the increased level of responsibility. However, the grievors have not identified a specific existing term or condition of employment as to the comparison between their classification and that of the bargaining unit that they say has been breached. In these circumstances, the Board is not persuaded that it is appropriate to entertain this portion of the grievance, as it is essentially an invitation to the Board to determine the appropriate differential between the grievors’ classification and the bargaining unit, which would be beyond the Board’s jurisdiction.

The Board has also considered the grievors’ argument concerning s. 29 of The Public Service Act. The grievors’ case is not advanced by these provisions; they provide discretion to the Public Service Commission and the Lieutenant Governor in Council to provide for certain things, but the grievors did not refer to any provision in this regard that had been breached.

There remain the allegations of arbitrariness, abuse of power and bad faith. From the remarks made at the hearing, the nub of the problem is the perceived lack of transparency and disclosure as to the mechanism and rationale for the establishment of managerial compensation. In the absence of knowledge of what is transpiring about pay and compensation issues, the grievors are left wondering if there has been bad faith or not. These concerns appear inseparable from the portion of the grievance which asks for the development of a mechanism which provides for a fair and equitable means to assess and communicate managerial wages and benefits. Although the Board can readily understand the grievors’ desire to have a more transparent process, this latter element appears to be limited to dissatisfaction with the current method of setting and communicating wages, leading to a request that the Board establish a new process for setting and communicating wages. This portion of the grievance is beyond the jurisdiction of the Board as it is seeking the establishment of new terms and conditions of employment, rather than the enforcement of existing ones. If the allegation were that there already was a term or condition of employment providing a process for setting and communicating wages that had not been applied to the grievors, or had been applied in bad faith, that would be another matter.

For the reasons set out above, the grievance may proceed to a hearing on the merits on the issue of whether the grievors have been denied a salary review to which they are entitled as a term or condition of employment, and whether they have been treated arbitrarily, abusively or in bad faith in this regard. In all other respects, the grievance is beyond the jurisdiction of the Board.

Dated at Toronto this 17th day of May, 2005