P-2010-1258, P-2010-2168

IN THE MATTER OF AN ARBITRATION

Under

THE PUBLIC SERVICE ACT

Before

THE PUBLIC SERVICE GRIEVANCE BOARD

BETWEEN

Karen McDonald

Complainant

• and -

The Crown in Right of Ontario (Ministry of Community Safety and Correctional Services)

Employer

BEFORE

Kathleen G. O’Neil

Vice-Chair

FOR THE COMPLAINANT

Karen McDonald

FOR THE EMPLOYER

Jamie Kneen Ministry of Government Services Labour Practice Group Counsel

WRITTEN SUBMISSIONS

May 24, 2011.

Decision

1This decision deals with an issue raised by the applicant Karen McDonald regarding a settlement of a grievance that she entered into on February 4, 2011. She disputes the manner in which the settlement has been implemented by the employer, as amounts were deducted from a portion of the settlement which was characterized as an amount of wages. The employer takes the position that it was required by law to make statutory deductions from the wages agreed to in the settlement.

Factual/procedural background

2Ms. McDonald filed two complaints with the Board in 2010, alleging a breach of various terms and conditions of her employment as an Operational Manager. During a mediation session concerning those matters on February 4, 2011, she and the employer decided to settle the issues between them. A detailed Memorandum of Settlement was signed, which included a confidentiality clause. These reasons attempt to preserve the agreed confidentiality to the extent possible.

3The issue raised by Ms. McDonald concerns a term of the agreement which provided that an amount would be paid to her, specified as wages. When the applicant received a payment from the employer pursuant to the settlement, it was not the figure listed in the settlement, but a lesser amount, net after statutory deductions.

4The applicant’s basic submission is that the minutes of settlement did not indicate that the monetary amount would be subject to deductions, so that she should receive the full amount. She now believes that the wording of the settlement was drafted by the Employer in an attempt to fool her into believing that she would get the whole amount stated and that the employer took advantage of her willingness to cooperate in coming to a settlement. She indicates she had experience with other settlements in which no deductions were made, and therefore had no reason to assume this would not be the same.

5The employer’s submissions were to the effect that when the parties agreed to characterize the amount in question as wages, it became subject to all the regular deductions with which the applicant would be familiar from her regular pay cheque. These included required deductions in respect of income tax, the Canada Pension Plan and Employment Insurance. On behalf of the employer, counsel denies any wrong-doing or elusiveness in respect of its conduct leading up to the settlement.

6For the purposes of this decision, which is aimed at determining whether there should be direction to the employer or a hearing on the issue raised, I have treated Ms. McDonald’s statements of fact as true, and her beliefs about the employer’s intentions as inferences she wishes the Board to draw from facts such as that the employer did not explicitly advise that wages required deductions.

7Settlements are a form of contract, a set of mutual promises. The Board is legally required to interpret them according to the plain meaning of the words used, in light of the generally applicable law. Having carefully considered the material before me, I find that the employer was required by law to make the deductions it made, according to the various statutes applicable to employers, whether or not it was explicitly stated in the settlement. Ms. McDonald did not actually dispute that the employer was required to make deductions from wages, basing her submission more on the idea that the employer should have explicitly advised her of the requirement or written it into the settlement.

8Turning to the allegations about the employer’s conduct, I do not find that the facts alleged are enough to make out a case of improper conduct, or that they provide sufficient basis to proceed further with this matter. Basically, it is not a proper inference from the fact that Ms. McDonald was not explicitly advised or reminded by the employer that wages required statutory deductions, that the employer was intending to trick her into settling. Further, there is nothing about the deduction of the amounts required by statute that is exclusively in the knowledge of the employer, or otherwise generally unknown to employees such as the applicant. In these circumstances I do not find that the failure to disclose raised any issue of lack of good faith or misrepresentation. And there is no suggestion that the employer representatives stated that deductions would not be made, or that there was any form of duress.

9The applicant’s allegations are in essence a statement of disappointment that the employer did not explicitly advise or insert in the settlement a statement that the word “wages” carried with it the obligation to make the same type of deductions as any pay cheque. Nonetheless, Ms. McDonald does not argue that the word “wages” was not understood by her, or that she was a stranger to statutory deductions, although she does indicate her view that an average person such as herself would not have known that such substantial deductions would be taken. Unfortunately for the success of her request, this does not change the legal requirement to make deductions. If it turns out that the applicant does not owe all the tax deducted, because of the specifics of her situation, she could of course be entitled to a refund after her tax return is filed for the year.

10As to Ms. McDonald’s experience with any other settlement in which statutory deductions were not made, it may have been that payments in those cases were in respect of general damages, rather than wages, which are treated differently for purposes of deductions. The parties did not characterize the monetary payments as general damages, or some other category such as repayment of expenses, which do not require the deductions that wages do. I am bound to interpret the settlement reached on February 4, 2011 on its own terms, which clearly express an intention that the amount paid was intended to be treated as wages. Although it would have been clearer if the requirement to make deductions from wages had been explicitly referenced in the settlement wording, the Board and the parties are nonetheless bound by the statutes that require an employer to make certain deductions from wages.

11I note that one of the themes in the applicant’s submissions was that she assumed that if there was anything she needed to know, the employer or their legal counsel would advise her. She indicates that she has lost faith in the employer as a result, as she no longer feels that the employer was trying to remedy the serious things that went wrong, or that she was treated with the appropriate respect. The applicant was unrepresented by counsel, a frequent occurrence before the Board. It is important for all applicants to understand that although the choice is their own as to whether they engage counsel, some other representative or appear on their own behalf, the choice to appear unrepresented does not convert employer counsel or representatives into their advisors. Counsel for the employer and the employer representatives may, in the course of a mediation or litigation before the Board, make statements and have conversations with an applicant or grievor which contain advice, or suggestions. Nonetheless, the role of counsel and the employer representatives in a mediation or arbitration before the Board is essentially to represent the employer’s view of the matter, which will be different from, and opposed to, the applicant’s view of the disputed questions, rather than to “help” or advise the applicant in the negotiations. In any event, the applicant was free at all times to seek whatever advice from any advisors of her own that she chose, or indeed to seek further clarification or information from the employer concerning any term prior to signing the document, or to decline to do so.

12In sum, there is nothing in the material alleged before me which is sufficient to make the settlement unenforceable in its current form, or require the employer to pay the full amount of wages listed in the settlement directly to Ms. McDonald without statutory deductions. The facts raised are not sufficient to lead the Board to find that the settlement has not been complied with, or that the employer conducted itself in a manner that requires the Board’s intervention. In the result, the Board does not have a sufficient basis on which to order the employer to do anything further about the implementation of the settlement.

13The Board however continues to remain seized in the event of any further dispute as to the interpretation or implementation of the settlement, which the parties are unable to resolve themselves