FPSLREB Decisions

I. Policy grievance referred to adjudication

1 The Professional Association of Foreign Service Officers (PAFSO) (“the bargaining agent”) filed a policy grievance against the Treasury Board on May 16, 2008. The grievance alleged the following:

When the new FS classification standard was introduced July 2005 FS employees who were at level 2 were to be converted to the new FS-03 level in accordance with the pay rules (referred to at Article 46 of the FS Collective Agreement). These rules require that the employees [sic]new rate of pay on the FS-03 pay line should place the employee in a position that recognizes both the employees [sic] salary and placement in the range of rates to be not less than the salary and placement before the conversion took place.

2 The corrective measure requested was the following:

PAFSO requests that all of the FS-02 level employees whose rate of pay was affected by the TBS interpretation be adjusted to reflect the PAFSO interpretation effective July 2005.

3 The Treasury Board responded to the grievance on July 7, 2008, stating that it had correctly interpreted the collective agreement, and it denied the grievance. The grievance was referred for adjudication to the Public Service Labour Relations Board on July 22, 2008. The relevant collective agreement expired on June 30, 2007 and is between the Professional Association of Foreign Service Officers and the Treasury Board (“the collective agreement”).

II. Summary of the evidence

4 The parties tabled the following Agreed Statement of Facts:

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[1] The Professional Association of Foreign Service Officers is the certified bargaining agent for the FS group and the collective agreement referred to in this policy grievance is the one expiring June 30th 2007.

[2] The round of bargaining between the Employer and the Bargaining Agent that resulted in a Collective Agreement being signed on June 7, 2005, included negotiations with respect to a new FS classification system that would become effective July 1, 2005. The old classification system had 3 levels:

1. FSDP This was an entry level/development level;

2. FS-01 This level was supposed to be discontinued in 1998 as a working level, and very few FS’s were still in this level;

3. FS-02 This was the working level where almost all of the working FS’s were classified in.

The new Classification system has four (4) levels (to become effective July 1, 2005):

1. FS-01 Entry level/training level

2. FS-02 Analyst/full working level

3. FS-03 Deputy Director/Specialist

4. FS-04 Senior Advisor /Expert

The introduction of this new classification system resulted in a “conversion” exercise that saw all employees classified at the existing FS-02 group and level “converted” to the new FS-03 group and level (effective July 1, 2005).

[3] The Employer and the Bargaining Agent entered into a Memorandum of Agreement, dated April 7, 2005, in respect of the Foreign Service Bargaining Unit Collective Agreement (Appendix 1) that included a clause that states:

“Matters agreed upon and signed off up to and including April 7, 2005, shall be incorporated into the new collective agreement.

The rates of pay were included as ‘“Appendix A” of this Memorandum of Agreement

[4] The Employer and the Bargaining Agent signed a Collective Agreement on June 7, 2005 (Appendix 2).

[5] On July 26, 2006, the Bargaining Agent filed a complaint pursuant to section 190 of the Public Service Labour Relations Act (PSLRA) bearing Board File No.: 561-02-118. One of the issues raised in this complaint was that the manner in which the rates of pay are presented in the Memorandum of Agreement, dated April 7, 2005 and the Collective Agreement signed on June 7, 2005 are different.

[6] The parties entered into a Memorandum of Settlement, dated April 14, 2008, to effectively settle most of the issues in the above-mentioned complaint. As part of this settlement, the Employer agreed to waive any objection to timeliness should the Bargaining Agent choose to bring a policy grievance with respect to the issue of the presentation of the rates of pay in the Collective Agreement. The Employer further agreed that the rates of pay set out as Appendix “A” of the Memorandum of Agreement, dated April 7, 2005, shall form part of the collective agreement (expiry date: June 30, 2007).

[7] The Bargaining Agent submitted a policy grievance to the Employer on May 16, 2008, bearing File No.: 2008-54 (Appendix 3). Other than the grievance itself, the Bargaining Agent did not present any argument, either written or oral, to the decision maker on the policy grievance.

[8] The Employer issued a response to the policy grievance on July 7, 2008 (Appendix 4).

[9] The Bargaining Agent referred the policy grievance to adjudication on July 22, 2009 (Appendix 5).

[10] Section 220 (1) of the PSLRA provides that “If the employer and a bargaining agent are bound by an arbitral award or have entered into a collective agreement, either of them may present a policy grievance to the other in respect of the interpretation or application of the collective agreement or arbitral award as it relates to either of them or to the bargaining unit generally.”

[11] Article 46 Pay Administration, Clause 46.03 (b) only has applicability for those rates of pay set forth in Appendix ‘A’ of the Collective Agreement (see Appendix 2) that have an effective date prior to the date of signing of the Agreement (June 7, 2005).

[12] The pay notes with respect to ‘conversion’ are found on page 83 of the Collective Agreement (see Appendix 2).

[13] The parties agree that the precipitating event that forms the basis of this policy grievance is the conversion of FS-02 employees to the new FS-03 level that took place on July 1, 2005.

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III. Summary of the arguments

A. For the bargaining agent

5 The bargaining agent’s representative explained that a new classification system for the Foreign Services Officers Group was negotiated and agreed to on June 7, 2005, with an effective date of July 1, 2005. The system went from three levels to four levels. All FS-02 positions in the old system were to be converted to FS-03 positions in the new system as of July 1, 2005. What is at issue is how to do that in terms of pay rates.

6 Appendix “A” of the collective agreement reads as follows:

APPENDIX “A”

FOREIGN SERVICE GROUP
PAY RANGES
(In dollars)

(A) Effective July 1, 2003

(B) Effective July 1, 2004

Developmental Pay Structure

From:        $      44026       47260       53309        55495

To:            A     45127       48442       54642        56882

                 B      46142       49532       55871        58162

FS-01

From         $      55495

                 A     56882

                 B      58162

FS-02

From      $   60229    62880    65646    68535    71550    74699    77958    81418 85000

              A  61735    64452    67287    70248    73339    76566    79935    83453 87125

              B   63124    65902    68801    71829    74989    78289    81734    85331 89085

(X) Effective July 1, 2005 (Conversion)
(C) Effective July 1, 2005
(D) Effective July 1, 2006

FS-1/FSDP

X                51706    53774  55926
C                52947    55065  57268
D                54271    56442  58700

FS-2

X 58162    60469    62908    65424    68041    70763    73594
C 59558    61941    64418    66994    69674    72461    75360
D 61047    63490    66028    68669    71416    74273    77244

FS-3

X 67698    70406    73222    76150    79197    82364    85659    89085    92649
C 69323    72096    74979    77978    81098    84341    87715    91223    94873
D 71056    73898    76853    79927    83125    86450    89908    93504    97245

FS-4

X 85659    89085    92649    96355    100208
C 87715    91223    94873    98668    102613
D 89908    93504    97245   101135   105178

7 The bargaining agent’s representative used as an example an individual who was classified FS-02 in the old system and who would have had a salary of $74,989 (fifth step of line B) as of July 1, 2004. According to the employer’s interpretation of the conversion on July 1, 2005, that employee’s salary would have gone from the fifth step of the FS-02 B range at $74,989 to the fourth step of the new FS-03 X range at $76,150. Then the economic increase of July 1, 2005, would have applied and the employees would have remained at the fourth step of the C range at $77,978. Finally, in accordance with Pay Note 5 a) of the collective agreement, the salary would have risen to $81,098 on July 1, 2005, in the C range for the new FS-03 level. That means that, if one accepts the employer’s calculations, it would take that employee four years to attain the maximum salary level for the FS-03 group and level.

8 The bargaining agent’s representative then submitted that the concept of “line down,” provided for in clause 46.03(b)(iv) of the collective agreement on Pay Administration, should apply to Pay Note 2 when mentioning “closest to, not less than.” Clause 46.03(b)(iv) reads as follows:

 (b) Where the rates of pay set forth in Appendix "A" have an effective date prior to the date of signing of this Agreement, the following shall apply:

…

(iv) for promotions, demotions, deployments, transfers or acting situations effective during the retroactive period, the rate of pay shall be recalculated, in accordance with the Public Service Terms and Conditions of Employment Regulations, using the revised rates of pay. If the recalculated rate of pay is less than the rate of pay the employee was previously receiving, the revised rate of pay shall be the rate, which is nearest to, but not less than the rate of pay being received prior to the revision. However, where the recalculated rate is at a lower step in the range, the new rate shall be the rate of pay shown immediately below the rate of pay being received prior to the revision;

9 Pay Note 2, which applies to conversions, reads as follows:

…

PAY NOTES

2.       Conversion

(a) Effective July 1, 2005, prior to any revision which occurs on that date, an employee shall be paid in the “X” line at the rates of pay which is closest to, not less than the employee’s rate of pay on June 30, 2005.

…

10 Each employee should have remained at the same step in the salary range as he or she was before the conversion. Using the bargaining agent’s example, an employee would move from the fifth step of the B range of the former FS-02 rates of pay to the fifth step of the X range of the new FS-03 levels at $79,197 on conversion on July 1, 2005; then again to the fifth step of the C range at $81,098 with the economic increase of July 1, 2005; and finally to the sixth step of the C range at $84,341 on July 1, 2005 with the increment. It would have taken him or her only three years to attain the maximum.

11 The bargaining agent’s representative then argued that the employer’s interpretation leads to an absurd result, and therefore, according to the rules of interpretation, I should favour the bargaining agent’s interpretation and allow the grievance. He cited Lajoiev. Treasury Board (Revenue Canada — Taxation), PSSRB File Nos. 166-02-20731 and 20732 (19910813); Canada (Attorney General) v. Lajoie, [1992] F.C.J. No. 1019 (C.A.) (QL);andBuchmann v. Canada Customs and Revenue Agency, 2002 PSSRB 14.

B. For the employer

12 The employer’s representative indicated that this is an important case because of the costs involved. The FS-02 group and level was the working level, and it included about 780 employees.

13 Furthermore, the employer’s representative argued that this case raises the important interpretative principle that collective agreements must be read as a whole and that individual provisions cannot be read in isolation from the rest of the collective agreement. He reviewed some basic principles outlined in Snyder, Collective Agreement Arbitration in Canada, 4th edition, as follows:

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2.1.    The objective of an arbitration board in the interpretation of a collective agreement is to discover the intention of the parties to the agreement on the matter in dispute. Arbitrators have generally approached this task in a pragmatic way rather than articulating theories about the nature of the exercise. When they have felt the need to enunciate the underlying principles on which they proceed, they have usually adopted the following statement:

It is stated in Halsbury’s Laws of England, Second Edition, Volume 10, page 252: “The object of all interpretation of a written instrument is to discover the intention of the author, the written declaration of whose mind it is always considered to be. Consequently, the construction must be as near to the minds and apparent intention of the parties as is possible, and as the law will permit.” It is also stated on the same page: “But the intention must be gathered from the written instrument. The function of the Court is to ascertain what the parties meant by the words they have used; to declare the meaning of what is written in the instrument, not of what was intended to have been written; to give effect to the intention as expressed, the expressed meaning being for the purpose of interpretation equivalent to the intention.”

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2.7.    It follows, therefore, that there is value in setting out some of the rubrics and conventions which have been used in arbitration to assist in the interpretation of various provisions of collective agreements. Once again, however, the caveat must be posited that these are merely guides and the primary focus must always be on the language the parties have used. The application of these rules in a specific set of circumstances is the essence of the art of arbitration.

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2.14.  It is widely accepted by arbitrators that the collective agreement is to be construed as a whole. Therefore, words and provisions must be interpreted in light of the entire agreement. As a result:

It is elementary that all the terms of the agreement must be read together and that any board of arbitration should be highly skeptical of an interpretation of one article which would nullify or render absurd the effect of another article.

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2.22.  As a corollary to the foregoing, if different phrases or words are used in different places in the collective agreement, they should not be given the same meaning.

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14 The employer’s representative did not dispute the facts and agreed with the bargaining agent that the exercise was a conversion and that that is the basis of the policy grievance. The question is the following: How should the conversion be effected in terms of pay rates?

15 The employer’s representativetook the position that the proper rate of pay is the rate of pay closest to but not less than the employee’s rate of pay on June 30, 2005, i.e., a numeric consideration. That is opposed to the bargaining agent’s position that the proper rate of pay is the line down from the B range to the X range in the rates identified in Appendix “A” of the collective agreement, i.e., a proximity consideration.

16 The employer’s representative challenged the bargaining agent’s argument that article 46 of the collective agreement applies. It does not, for the following two reasons:

• The “retroactive period” runs from the expiry of the previous collective agreement to the signing of the collective agreement at issue, i.e., June 30, 2003 until June 7, 2005. Clauses 46.03(b)(ii) to (iv) apply only to the retroactive period. The conversion at issue took place on July 1, 2005, outside the retroactive period.
• Clause 46.03(b)(iv) applies to “promotions,” “demotions,” “deployments,” “transfers” or “acting situations.” However, the exercise at issue was a conversion, and the provisions for conversion are specifically provided for in Pay Note 2 as follows:

PAY NOTES

2.       Conversion

(a) Effective July 1, 2005, prior to any revision which occurs on that date, an employee shall be paid in the “X” line at the rates of pay which is closest to, not less than the employee’s rate of pay on June 30, 2005.

(b) Should there be no such rate, the employee’s salary shall be protected at the rate of pay received on June 30, 2005. Such rate shall be revised effective July 1, 2005 by two decimal four percent (2.4%).

17 The employer’s representative also challenged the bargaining agent’s argument that Pay Note 2 of the collective agreement on conversion provides for the concept of “line down.” That is not what it argued in the original grievance, and more importantly, the language of Pay Note 2 does not support the “line down” concept. Coming closest to but being not less than a rate of pay is clearly a numeric exercise. Had proximity been a factor, there would have been language similar to that of clause 46.03(b)(iv).

IV. Reasons

18 My task as the adjudicator in this case is to determine the correct application of the provisions in the collective agreement that deal with the rates of pay found in Appendix A with respect to the conversion to a new classification standard.

19 In this case, during negotiations for a new collective agreement, the employer and the bargaining agent addressed the issue of a new classification standard, which the employer introduced for FS employees. The former three-level classification standard was expanded to four levels, and all employees classified at the existing FS-02 group and level were to be converted to the new FS-03 group and level. The collective agreement was signed in June 2005. It contained the four new classification levels as well as the negotiated pay rates for each one. The new classification system became effective the following month, on July 1, 2005.

20 The issue between the parties centres on how to apply the pay rules to the conversion. The bargaining agent has the onus of proof and must convince me that, on a balance of probabilities, the employer misapplied the provisions in the collective agreement. For the reasons set out later in this decision, I find that the bargaining agent has not met its burden.

21 The bargaining agent argued that the employer’s interpretation leads to an absurd result and that, therefore, according to the rules of interpretation, I should favour its position. However, no absurdity was put into evidence before me, and from the documents put into evidence as well as the arguments of the parties, I am unable to find anything that would lead me to believe that an absurdity was created.

22 The bargaining agent argued that, as outlined in paragraph 7, the new system meant that employees would take four years to attain the maximum salary level for the FS-03 group and level, whereas under the former system that maximum was reached after three years. If that fact is the focus of the bargaining agent’s allegation of absurdity, I do not share its conclusion that any absurdity has been created by that fact alone. The fact that it may take an employee more or less time to attain the maximum-level pay rate is not, in and of itself, an absurdity.

23 Next, the bargaining agent argued that the “line down” concept provided for in clause 46.03(b)(iv) of the collective agreement should apply to Pay Note 2 when it refers to “closest to, not less than.” Article 46 is entitled “Pay Administration,” and clause 46.03 is entitled “Pay Ranges.” Clause 46.03(b)(iv) states as follows:

(b) Where the rates of pay set forth in Appendix “A” have an effective date prior to the signing of this Agreement, the following shall apply:

(iv) for promotions, demotions, deployments, transfers or acting situations effective during the retroactive period, the rate of pay shall be recalculated in accordance with the PSTCE Regulations, using the revised rates of pay. If the recalculated rate of pay is less than the rate of pay the employee was previously receiving, the revised rate of pay shall be the rate, which is nearest to, but not less than the rate of pay being received prior to the revision. However, where the recalculated rate is at a lower step in the range, the new rate shall be the rate of pay shown immediately below the rate of pay being received prior to the revision.

[Emphasis added]

24 The employer argued that article 46 of the collective agreement did not apply to this case for two reasons. The first was that clause 46.03(b)(iv) applied only to the retroactive period of the collective agreement, which ended on June 7, 2005. According to paragraph 11 of the Agreed Statement of Facts, clause 46.03(b) applies only to “… those rates of pay set forth in Appendix A of the Collective Agreement… that have an effective date prior to the date of signing of the Agreement … .” Although some of the rates of pay in Appendix A do have an effective date before June 7, 2005, the pay rates applicable to the conversion do not and only have an effective date of July 1, 2005, which is clearly after June 7, 2005.

25 The employer’s second argument on the applicability of clause 46.03(b) of the collective agreement was that it applied only to the specific events outlined in the article (promotions, demotions, deployments, transfers and acting situations) and not to conversions. Conversions, the employer argued, were specifically dealt with in Pay Note 2. I accept the employer’s argument on this point.

26 While the bargaining agent did not point to any specific event listed in clause 46.03(b) of the collective agreement as applying to this case, the only one that could possibly be argued as applying is promotions. However, I find that a conversion arising from the implementation of a new classification standard is not a promotion. Clause 2.02 sets out how to define the terms used in the collective agreement and states that one must look (in order) to the collective agreement, the Public Service Labour Relations Act, the Interpretation Act and, finally, the Public Service Terms and Conditions of Employment Regulations. Although the term “promotion” is not defined in the collective agreement, the Public Service Labour Relations Act or the Interpretation Act, section 24 of the Public Service Terms and Conditions of Employment Regulations does refer to promotions as follows:

24. (1) The appointment of an employee described in Section 23 constitutes a promotion where the maximum rate of pay applicable to the position to which that person is appointed exceeds the maximum rate of pay applicable to the employee's substantive level immediately before that appointment by:

a. an amount equal to at least the lowest pay increment for the position to which he or she is appointed, where that position has more than one rate of pay; or

b. an amount equal to at least four per cent of the maximum rate of pay for the position held by the employee immediately prior to that appointment, where the position to which he or she is appointed has only one rate of pay.

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27 It is clear that the word “promotion” means a promotion in the ordinarily understood sense. While the employees in question did indeed attain a group and level with a maximum rate of pay that exceeded that of their former level, no promotion was involved. The definition as set out in paragraph 26 clearly includes an employee who accedes to a position that is different from his or her initial or substantive position, which is not the case. In this case, employees remained in their former positions and only had their classification levels altered to fit within the new classification standard. No appointment to a position was involved.

28 I also find that the language of the Pay Notes of the collective agreement clearly leads to the conclusion that clause 46.03 does not apply to Pay Note 2. While Pay Note 1 refers specifically to clause 46.03 and states that the economic revisions to pay for 2003 and 2004 shall be administered in accordance with that article, it does so only in reference to the usual economic increases of July 2003 and July 2004. Pay Note 2 deals specifically and directly with the conversion itself and is applied only once the economic increases outlined in Pay Note 1 have been applied. Conversion is completely distinct from economic increases. Also, unlike Pay Note 1, Pay Note 2 makes absolutely no reference to article 46.

29 While Pay Note 2 and clause 46.03 of the collective agreement both contain the phrase “closest to, not less than,” the “line down” method referred to by the bargaining agent is actually set out in the final sentence of clause 46.03(b)(iv) and indicates as follows what to do in the event that using a “closest to but not less than” method of calculation places an employee at a lower step on the pay scale:

…However, where the recalculated rate is at a lower step in the range, the new rate shall be the rate of pay shown immediately below the rate of pay being received prior to the revision.

30 The bargaining agent argued in favour of applying the same kind of proximity concept to Pay Note 2 of the collective agreement on conversion. It is important to note that the proximity concept is clearly an exception to the primary calculation method, which is the numeric concept. That exception provision was inserted to provide relief for anomalous results. However, Pay Note 2 refers only to “closest to, not less than” and makes no reference to the exception or “line down” method as set out in clause 46.03. In my opinion, the omission of this exception clause to the “closest to, not less than” method of calculation is determinative.

31 Therefore, I find that the clear wording of clause 46.03(b) of the collective agreement reveals that it does not apply to the factual situation before me. The bargaining agent argued that the line-down “concept” as expressed in clause 46.03(b) applied to Pay Note 2 and its reference to “closest to, not less than.” However, it did not elaborate further on why the concept should apply to an entirely different factual situation. Therefore, I must find that the bargaining agent has not met its burden of proof on this point.

32 The policy grievance states that the conversion was to be performed in accordance with the pay rules referred to in article 46 of the collective agreement and that those rules required that employees be placed in positions that recognized both their salaries and their placements in the range of rates before the conversion. Therefore, the bargaining agent argued that each employee should have remained at the same step in the salary range, meaning that employees who were at the fifth step in the FS-02 range before the conversion would end up at the fifth step of the new FS-03 range. It is unclear on what basis the bargaining agent made that assertion and I see nothing in the collective agreement that guarantees such a result.

33 Finally, the bargaining agent argued that the straight-down method of pay recalculation should apply and cited both the Lajoie and Buchmann decisions. Both decisions deal with retroactive pay increases for employees who had been, during the retroactive period, promoted to a new bargaining unit. The bargaining agent argued that the straight-down approach as applied to retroactive pay revisions applies to this factual situation, but in my view, the two situations are dissimilar.

34 It is important to note that the issue of retroactivity arises in this grievance only because the employer was forced to implement the reclassification retroactively in most, if not all, cases. Although the collective agreement was signed in June 2005 with an implementation date of July 1, 2005 for the new classification system, it was evidently impossible for the employer to convert all FS employees within the month following the signing of the collective agreement. The Agreed Statement of Facts discloses that in fact the conversion took several years. The employer was required to convert and pay FS employees retroactively only because the conversion was done after the signing of the collective agreement and not because the collective agreement provided for the retroactive implementation of new classification levels. Rather, the new classification system was implemented on a going-forward basis. This is a prospective application of a classification conversion and not the retrospective application of a salary revision mixed with an intervening event.

35 For all of the above reasons, I make the following order:

V. Order

36 The policy grievance is denied.

April 8, 2010.

Michel Paquette,
adjudicator