PSGB#P-2012-4297, P-2013-2964

IN THE MATTER OF AN ARBITRATION

Under

THE PUBLIC SERVICE ACT

Before

THE PUBLIC SERVICE GRIEVANCE BOARD

BETWEEN

Janet Ryan and Jane Collins et al

Complainants

• and -

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

Employer

BEFORE

Kathleen G. O’Neil

Chair

FOR THE COMPLAINANTS

Janet Ryan

FOR THE EMPLOYER

Peter Dailleboust Treasury Board Secretariat Legal Services Branch Counsel

WRITTEN SUBMISSIONS COMPLETED

October 10, 2014

Decision

1This decision deals with two group complaints from managers in the Ministry of Community and Social Services in which they complain of unequal and unfair administration of compensation for managers in the Ontario Public Service for the fiscal years 2011/12 and 2012/13. This is based mainly on the fact that managers at the top of their pay grade received compensation in the form of a lump sum which managers not yet at the top of their pay grade did not receive. The complainants submit that this treatment is in direct contradiction to the fundamental premise of performance-based compensation, as the lump sum awards were not related to performance in the preceding year. Citing provisions of the employer’s Pay for Performance Operating Policy, the complainants claim that the lump sum payments are not fair or consistent. Acknowledging that the policy provides that performance awards may or may not be approved for any performance cycle, they suggest that awarding some managers and not others does not align with the applicable policy principles of fairness, equity, consistency and transparency.

2Further, the complainants submit that the decision to pay lump sum compensation to staff at the top of their pay scale, but not others, contradicts principles established with respect to compensation negotiated with bargaining agents such as OPSEU (Ontario Public Service Employees Union) and AMAPCEO (Association of Management, Administrative and Professional Crown Employees of Ontario) and teachers’ unions.

3By contrast, the employer asks that the matter be dismissed without a further hearing on the basis of a lack of remedial jurisdiction.

The Background Context

4The complainants are among many who have filed complaints with this Board contesting certain aspects of their compensation, and/or that of others of their colleagues, flowing from decisions by the employer related to pay for performance in years subsequent to 2011. In those years, pay for performance has been set at 0%. In explaining the background of this widespread issue, the Board wrote the following concerning similarly situated complainants in its recent decision Smith et. al and the Crown in Right of

Ontario (Ministry of Community Safety and Correctional Services,, PSGB # P-2012-4155, 2014 (O’Neil), CanLII 48098 (ON PSGB), dated July 9, 2014 :

As employees excluded from collective bargaining, they are covered by the Management Compensation Plan (MCP), which is set by a combination of directives issued by Management Board of Cabinet and government-wide compensation policies consistent with them, rather than by collective negotiations as is the case for members of bargaining units. For several years prior to 2012, employees such as the complainants have been able to increase their compensation by only one route: a favourable pay for performance rating from their superiors. Those ratings were translated, according to annually set policy, into a range of percentage increases. A zero percentage rating was reserved for those with problematic performance ratings, and a person covered by the MCP who met or exceeded performance expectations received an increase in each of the years leading up to this complaint. That changed in 2011/2012 because of fiscal restraint, when the range of performance awards was set at 0%, basically freezing wages, regardless of whether performance was worrisome or wonderful. In the policy dated September 28, 2012 which describes this, one reads that performance pay for the 2011-12 year is set at zero percent for non-bargaining unit Ontario Public Service employees, and that “the earnings of non-bargaining unit employees, who were eligible for performance pay, are to remain at 2011 levels.”

5As with the Smith complaint, the focus of this complaint is what appeared to some as an exception to the general wage freeze. This was explained in the Smith decision as follows:

Despite the general lack of increases, some members of the Management Compensation Plan received lump sum payments in the end of 2012, while others did not, and it is this difference that the complainants are seeking to remedy. The employer sees the lump sum payments as a way to ensure that the managers who received them did not experience a decline in their basic annual earnings, while the complainants see them as an arbitrary favouring of the group of employees already at the maximum in 2011, by giving them a payment which was unavailable to others. The payments were provided on December 20, 2012 and were equal to the amount of lump sum performance awards paid in 2011.

6The Smith complaint was dismissed in part as beyond the Board’s jurisdiction, and in part because it did not disclose a factual basis for a viable complaint, known as a prima facie case, as it would have required the Board to set new terms and conditions of employment in order to award the complainants the remedies requested. Given the similarity of these group complaints to that dealt with in the Smith decision, the Board

wrote to the complainants, pursuant to the Board’s Rule 11, indicating its intention to dismiss the complaints as ones related to pay for performance, providing them with a copy of the Smith decision, and giving the complainants an opportunity to make submissions before it did so. Rule 11 reads as follows:

Where the Board considers that a complaint does not make out a case for the orders or remedies requested, even if all the facts stated in the complaint are assumed to be true, the Board may dismiss the complaint without a hearing or consultation. In its decision the Board will set out its reasons.

Considerations and Conclusions

7The complainants took the opportunity to make submissions, in which they argued that their complaint was not related to “compensation provided or denied to a public servant as a result of the evaluation of his or her performance.” These are the words used by s. 4 (2) of Regulation. 378/07 under the Public Service of Ontario Act to exclude complaints related to pay for performance from the Board’s jurisdiction, part of the foundation of the dismissal of the Smith complaints. The complainants state that their complaint is, instead, “about the employer’s discriminatory pay practices, that are independent of a manager’s performance.” The complainants’ submissions go on to observe that collective agreements across the Ontario Public Service have provisions enabling staff to move through their salary grid during a pay freeze. Thus, the complainants submit that the employer has decided to discriminate against and single out managers that are not at the top of their pay scale. As well, the complainants ask that the Board review the policy explaining the lump sum payments before concluding that their complaints do not fall within its mandate.

8Further, the complainants submit that the employer has given mixed messages about whether the lump sums paid in 2012 and later relate to pay for performance or not, as the payments were in the same amounts as the lump sums paid to those managers in 2011 as part of their pay for performance. The complainants submit that they were told that the payments were made for political reasons to make sure the amount of compensation on the T-4 slips of the managers who had received the lump sums matched that of the year before, and that such reasons fly in the face of the principles of transparency and accountability applicable to the Ontario Public Service.

9The complainants also state that some managers who received the lump sum were asked not to say anything about it, and that there was no communication provided to managers as to the purpose of the lump sum payments. The complainants ask: why the secrecy? Where is the transparency?

10On the basis of unequal pay for equal work and unfair pay practices, the complainants urge the Board to take jurisdiction and hear their complaints.

11Employer counsel responded to these submissions, in most relevant part, as follows:

The complainants have now confirmed that this complaint is not to seek pay for performance for 2011/12 or 2012/13. On that basis the Board can ignore the parts of the Smith et.al. decision which refer to that line of argument. We wish to clarify one point however. The complainants have asserted that the Employer has changed their position by calling the lump sum payment pay for performance. The complainants, with respect, are mistaken. The Employer is not and never has characterized the lump sum payment made to some employees and not others as pay for performance. What the Employer has always said is that all employees’ pay for performance was set at 0% for the years at issue.

With respect to the remainder of the complaint, the Board in Smith et.al dealt precisely with the policy that provided for the lump sum payments made in 2011/12 to those employees that were at the top of their range in 2010/2011. As the Board is aware, the policy was produced for the hearing in Smith et.al and then commencing at paragraph 6, the board sets out the relevant parts of the policy word for word.

It appears that the complaint here is the very same as those that were advanced in Smith et.al and Kaine et. al.: that the lump sum payments are arbitrary and unfair. It is the employer’s view that those arguments were dealt with thoroughly by the Board in both Smith et.al and Kaine et. al. and we therefore respectfully request that this complaint be dismissed without a hearing as the Board has already determined it lacks the remedial jurisdiction to render a decision on the merits.

12The Board has carefully reviewed these complaints, in light of the submissions referred to above, and the applicable policy, which reads in relevant part as follows:

For employees who were at the maximum of their salary range on April 1, 2011, the application of the 0% performance pay may result in a reduction of their earnings in 2012 from the 2011 level.

A reduction in earnings occurs when an employee’s earnings (comprised of annualized base salary and variable re-earnable incentive payment) for the fiscal year starting April 1, 2012 are less than their annualized salary for the fiscal year starting April 1, 2011.

In these instances, the employees may be eligible to receive a payment to maintain their earnings at their previous year’s level.

The amount of the payment is an amount up to the variable re-earnable incentive payment in respect of the 2010-2011 performance cycle.

The payment does not alter the employee‘s annual base salary or salary-based benefits and is not included in pensionable earnings calculations.

Employees who received a base salary adjustment, but not a variable re-earnable incentive payment in respect of the 2010-11 performance cycle are not eligible for a payment.

A Variable Re-earnable Incentive Payment is defined in the same policy as follows:

Performance related payment, paid as a lump sum, to employees at the maximum of their salary range. The payment of a variable re-earnable incentive does not alter the employee’s annual base salary or salary based benefits and is not included in pensionable earnings calculations.

This is the policy basis for the employer’s position that the lump sum payments paid for the fiscal year 2011/12, rather than representing an increase in compensation denied to others, was a payment to prevent a decrease as compared to the year before for those who were eligible to receive it. The complainants’ view is that these lump sum payments were unfair because they were not paid to everyone, but they have not established that their payment was not pursuant to the above policy, or that the payments of the lump sums to others breached any existing term or condition of the complainants’ employment.

13The complainants’ view that the lump sum payments were unfair, and not introduced or supported in a transparent way, is common among the complainants in the Smith group and many other complainants who filed complaints with the Board on the same or similar grounds. Given the similarity in the complaints, and the applicability of the same principles, the Board finds that the result must be the same as in the Smith decision. See

also the recently released decision in Sanders et.al and the Crown in Right of Ontario (Ministry of the Attorney General) #P-2014-1876 (O’Neil), dated January 22, 2014. The

Board is of the view, for the reasons sent out more extensively in the Smith decision, that these complaints are, in substance, all about the denial of pay for performance in the fiscal years from 2011/12 and onwards, and therefore beyond the Board’s jurisdiction. As the Board wrote in Smith,

The nub of the complaint is the failure of the employer to pay those not at the maximum of the pay grid in 2011 a lump sum payment in 2012. The basic fact that those not at the maximum of the pay grid in 2011 stayed there, and had no way to increase their basic annual earnings is because they were denied pay commensurate with their performance in that fiscal year. …

The undisputed fact is that failure to pay any such lump sum payments flows from the decision to set the performance pay awards at 0% for 2011/2012, and to freeze the basic annual earnings of MCP employees at the level they had reached in 2011. Further, and despite the complainants’ characterization of the lump sum payments as arbitrary, it is also undisputed that the lump sum payments maintained the annual earnings of those who were at the maximum of the pay grid in 2011 at the level they had achieved as a result of the application of pay for performance levels for the fiscal year 2010/2011. Thus, the uncontested facts establish that the compensation policy for 2011/2012 treats both sets of employees the same in terms of leaving them all at the level of basic annual earnings they had achieved in 2011. For those who were at the maximum of the pay grid in 2011, the 2012 payment served to maintain their level of basic annual earnings, rather than limiting them to the maximum of the pay grid, with no additional remuneration, which the policy defines as a decrease in annual earnings.

14In this complaint, the request for relief is very explicit in requesting compensation for managers who received no lump sum to be based on the complainants’ individual performance ratings, and at the rates paid for similar ratings for the 2010/2011 performance cycle, allowing movement on the pay grid. This is very clearly a request for pay for performance, and a complaint about the denial of pay for performance. Complaints about “compensation provided or denied to a public servant as a result of his or her performance” are specifically removed from the Board’s jurisdiction by s. 4(2) of Regulation 378/07 which provides that such complaints cannot be the subject of a complaint to this Board. The Board is a creature of statute, with only the powers permitted by statute. Thus, the Board lacks the power to remedy failure to pay the requested performance-based compensation.

15As noted, the complainants also argue that the lump sum payments amount to unequal pay for equal work and unfair pay practices. These arguments were also made by the

complainants and dealt with by the Board in the Smith et.al decision. As to the equal pay argument, the Board wrote as follows:

There is also the claim for equal pay for equal work, including the statement that the arbitrary bonus payments violate the spirit of the Pay Equity Act. This aspect of the complaint has the ring of an allegation of an illegal compensation provision. And if there were anything in the alleged facts that established a viable basis for such a claim, the Board would have the jurisdiction to let the claim proceed. However, there is nothing in the material before me that constitutes a viable case of a violation of any policy or legislative provision as to equal pay for equal work. It can be seen from the provincial legislation providing for equal pay for equal work, and equal pay for work of equal value, that the kind of unequal pay that is illegal is that based on gender or sex discrimination. See, in particular, s. 42 (1) of The Employment Standards Act and section 8 of the Pay Equity Act where it is made clear that differences in compensation which are the result of compensation policies which do not discriminate on the basis of sex or gender do not constitute failures to pay equal pay in the sense prescribed by Ontario law. More generally, there is no suggestion of any gender-based disparity here, or of discrimination in wages on the basis of any other ground prohibited under the Ontario Human Rights Code. The only discrimination alleged is between those at the maximum of the pay grid in 2011, and those who were not. There is nothing in the material before me that persuades me that this is a viable claim of a breach of the complainants’ terms and conditions of employment, as there is no statute, policy or other term and condition of employment in evidence which arguably prohibits that kind of difference.

The above remarks are equally applicable to this complaint.

16As to the issues about transparency and general fairness of the disputed compensation terms, the Board wrote in response to similar themes in the Smith et.al. complaint:

Although it may be that specific communication earlier on might have given the complainants better understanding of the lump sum payments, and allayed concerns expressed in this complaint, there is nothing in the material before me that establishes a viable complaint of a violation of a specific term or condition of employment as to transparency, or specific amount of notice. As to the fact that the employer set the performance percentage at 0% after the performance year, the facts do not establish a viable case of a breach of the policy in this respect. The complainants had notice, in the longer standing pay for performance policy of the employer’s practice of setting the level of the performance award, if any, after the performance cycle, even if their attention was not specifically drawn to it before the compensation freeze at issue in this decision. More generally, as in the Garratt decision, …[Garratt et al and the Crown in

Right of Ontario (Ministry of Health and Long-term Care) P-2003-1670, (O’Neil), 2005 CanLII 53194 (ON PSGB)], the allegations concerning transparency and fair and equitable treatment concerning wages are inseparable from the elements of the complaint which essentially ask the Board to set different terms and conditions of employment. I am not

persuaded that they make out a viable allegation that is within the Board’s remedial authority.

To similar effect is the Board’s July 11, 2014 decision in Kaine v Ontario (Children and Youth Services), 2014 CanLII 48097 (ON PSGB), PSGB # P-2013-1036.

17There are also the arguments about provisions negotiated with bargaining units. The Board has consistently dismissed claims based on comparisons with what was negotiated with bargaining agents for the basic reason that the terms and conditions of managers are different. As noted in earlier decisions of this Board, in order for the Board to be able to award a remedy to a complainant, there must first be an existing term or condition of employment related to the facts complained of, something that is part of the complainant’s contract of employment. This is something more than a belief that something is unfair, no matter how deeply held. Secondly, there must be a breach of that term or condition of employment, and thirdly, there must be a link between that breach and a remedy that the Board is empowered to give. See, in this respect: Antle v. Ontario (Ministry of Community Safety and Correctional Services), 2006 CanLII 30741 (ON PSGB) and Allen v. Ontario (Community Safety and Correctional Services), 2009 CanLII 43639 (ON PSGB).

18In the Garratt case, cited above, the Board was faced with complaints filed by a group of managers who grieved salary compression between themselves and the OPSEU bargaining unit employees who reported to them. The Board dismissed the complaints in respect of compression with bargaining unit compensation on the basis that it had no authority to set terms and conditions of employment or to give binding opinions as to whether the contractual terms complained of are fair in some absolute sense or in comparison to bargaining unit employees. The same applies to the complaints in issue here as to the comparison with the bargaining unit employees. The bargaining unit employees quite simply have different terms and conditions of employment related to pay than do the managers. As the Board noted in the Garratt decision, 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, bargaining unit

employees would amount to setting terms and conditions of employment for the managers, which is not the function of the Board. The PSGB can and does enforce

existing terms and conditions of managers’ contracts, but has no authority to set wages or compensation.

19As the Board stated in Ransome and the Crown in Right of Ontario (Ministry of Health and Long-Term Care) PSGB Nos. P-2005-2314, P-2005-2786 (December 5, 2006) (O’Neil), 2006 CanLII 42782 (ON PSGB).: "Especially in the managerial setting, where contracts of employment are not collective, but individual, it is not enough to say that it is fair or would be more fair if a grievor was paid more, or not less, than some other employee. In order to succeed, a grievance must show that the difference is improper, either because it offends a specific term or condition of employment, or some more general principle of law."

20For all of the above reasons, the Board finds that the complaints must be dismissed as beyond its jurisdiction as it relates to the denial of pay for performance and in respect of the claims that would require the setting of new terms and conditions of employment, and as failing to make out a viable case of a breach of any existing term or condition of employment.