FPSLREB Decisions

Heard at Ottawa, Ontario,
August 9, 2013.
(Supplementary written submissions filed
August 22 and September 10 and 19, 2013.)

I. Policy grievance referred to adjudication

1 On October 27, 2011, the Association of Justice Counsel (AJC or "the Association") filed a policy grievance against the Treasury Board ("the employer"), alleging a violation of Appendix "B" of the collective agreement concluded between the Association, on behalf of the Law Group (LA) bargaining unit, and the employer, which expired on May 9, 2011 ("the collective agreement").

2 The details of the policy grievance were set out in an appendix to the grievance form, which, for purposes of clarity, I will reproduce in full, as follows:

BACKGROUND

1. On September 20, 2011, the AJC was notified by management at the Department of Justice (DOJ) that members who were promoted within the 2010/2011 fiscal year were to be "pro-rated" from the date of promotion for the purposes of calculating performance pay. DOJ has an INFOPERSONNEL-BULLETIN No. 545 – July 2011, which AJC became aware of on or about September 20, 2011. DOJ management informs us that this infopersonnel bulletin followed advice DOJ received from Treasury Board.
2. This infopersonnel is inconsistent with the collective agreement, and more specifically with appendix "B" Part 2 sections 8 and 9 which only allow the employer to pro-rate performance pay for periods that lawyers are on leave without pay or in receipt of acting pay. There are no provisions in the collective agreement that allow for the pro-rating of performance pay for lawyers in receipt of promotions from the effective date of their promotion.

NATURE OF GRIEVANCE

1. The Association grieves the interpretation and application of appendix "B" of the collective agreement by prorating performances pay for the full fiscal year when a member is promoted; and limiting performance pay to the period worked following the promotion and disregarding all previous work performed in the fiscal year that precedes the date of promotion. The infopersonnel violates the terms of the collective agreement.
2. The Association further maintains that the employer has also violated section 5.02 by virtue of its interpretation and application of appendix "B" of the collective agreement.

REMEDIES SOUGHT

1. Declaration that the infopersonnel is inconsistent with the collective agreement and therefore a violation;
2. Direction that the infopersonnel be amended to ensure compliance with the collective agreement;
3. Direction that performance pay for LAs that were promoted in the fiscal 2010-2011 year be reviewed and corrected in a manner that would result in the elimination of prorating;
4. Direction that the Treasury Board advise all departments and agencies who employ LAs to correct any misapplication of appendix "B" and to ensure that LAs performance pay are accurately reconciled for the entire 2010-2011 fiscal year based on the LA position and salary held as at March 31, 2011;
5. Such other remedy considered appropriate.

[Sic throughout]

3 In its reply to the grievance, the employer stated that since the performance management program is administered in relation to employees' substantive positions on March 31, employees promoted to a higher level before that date are no longer eligible for an in-range increase or performance bonus for their former positions since they vacated them before the eligibility date of March 31.

4 The employer also stated that as the collective agreement is silent on the methodology to be applied when defining or calculating the value of an employee's performance pay, it is left to the deputy head to determine how to compensate an employee for his or her performance in the eligible position. The employer considered that prorating performance pay following reclassification is not inconsistent with the performance management program.

5 The grievance was referred to adjudication on June 12, 2012.

6 At the hearing of this matter, no witnesses were heard. Both parties agreed to make oral submissions and subsequently filed supplementary written submissions. The employer's Book of Documents ("Book of Documents") was entered into evidence by consent.

7 On November 1, 2014, the Public Service Labour Relations and Employment Board Act (S.C. 2013, c. 40, s. 365) was proclaimed into force (SI/2014-84), creating the Public Service Labour Relations and Employment Board ("the new Board") to replace the former Public Service Labour Relations Board ("the former Board") as well as the former Public Service Staffing Tribunal. On the same day, the consequential and transitional amendments contained in sections 366 to 466 of the Economic Action Plan 2013 Act, No. 2 (S.C. 2013, c. 40) also came into force (SI/2014-84). Pursuant to section 396 of the Economic Action Plan 2013 Act, No. 2, an adjudicator seized of a grievance before November 1, 2014, continues to exercise the powers set out in the Public Service Labour Relations Act (S.C. 2003, c. 22, s. 2) as that Act read immediately before that day.

II. Summary of the arguments and submissions

A. For the Association

8 The AJC submitted that its members were deprived of performance pay during the 2010-2011 fiscal year if they were promoted. It stated that there was no dispute that the grievance arose from the employer prorating the performance pay of LAs who were promoted from a performance-pay-eligible position to a different, but still performance-pay-eligible position, such that they received performance pay only for the period following the promotion. There was no dispute that the affected LAs had received a sufficient rating to earn performance pay.

9 The AJC submitted that the collective agreement requires two elements for performance pay: first, that it is paid for all months that an LA holds a performance-pay-eligible position, including when the LA is promoted from a performance-pay-eligible position to another performance-pay-eligible position, and second, that the rate of pay applied to the formula is that for which the LA is eligible on March 31.

10 The AJC referred to Association of Justice Counsel v. Treasury Board, 2012 PSLRB 32 ("AJC 2012"), decided under the same collective agreement as this matter, and stated that the following paragraphs from it provide an overview of the performance pay program:

…

8 Part of the LAs' pay is related to performance. For example, effective May 10, 2010, the LA-2A pay scale is from $82 917 to $118 995. That scale does not include pay increments every six months or every year, as for most occupational groups in the public service. In-range movement is instead governed by the performance pay plan described in Appendix "B" of the collective agreement. Each year, an LA's performance is evaluated and, depending on the rating, the LA becomes eligible for performance pay. The amount of that pay varies according to the rating.

9 Before the LAs reach the maximum range of their pay scale, a performance increase can be awarded and this award allows the LAs to progress within the scale. In-range increases are integrated into an LA's salary until the maximum of the pay scale is reached. After that point, performance pay becomes a non-permanent bonus that needs to be earned every year. For example, if an LA-2A averages performance pay of $5 000 a year, he or she would take approximately 7 years to go from the minimum ($82 917) to the maximum ($118 995) of the pay scale. After attaining the maximum, the performance pay is no longer integrated into the salary but rather is paid as a bonus added to the maximum range value.

10 Once a year, the employer evaluates the LAs' performance. Employees whose performance is evaluated as "satisfactory", "unsatisfactory" or "unable to assess", do not receive a performance pay increase. Employees whose performance is assessed as "fully satisfactory" may be granted an increase of up to 5%. That increase may be up to 7% for employees with superior performance and up to 10% for an outstanding performance. A department's performance pay budget is limited to 5% of the departmental group payroll.

…

11 The AJC stated that the parties agree on the relevant performance pay formula, as follows: [rate of pay] x [performance award percentage] x [total time (in eligible positions)].

12 The AJC did not dispute the employer's ability to prorate the performance of an LA who works a portion of a year in a position ineligible for performance pay. An example would be an articling student promoted to LA-1, who would receive performance pay for those months worked in the LA-1 position. The dispute between the parties resides in the rates of pay to apply.

13 The AJC presented the following examples. In the first example, an LA-1 is promoted to LA-2A effective December 1 and is in that position on March 31. In this example, the AJC stated that there was no dispute that the positions occupied by the LA, namely, LA-1 and LA-2A, were both eligible for performance pay. Thus, 12 months of eligibility would be input into the formula.

14 The performance award percentage is derived from the LA's performance review and employee appraisal report ("PREA"; Book of Documents, Tab 8). While LAs' performance is appraised annually, those occupying an LA-1 position may potentially have their performance appraised semi-annually (see section 6.1.1 of Part 2 of Appendix "B" of the collective agreement).

15 In the AJC's submission, the employer did not properly apply the rates based on sections 4.0 (In-range increases) and 5.0 (Performance awards) of Part 2 of Appendix "B". The AJC referred to the following sections of Part 2 of Appendix "B":

…

4.1 As a general guide, in-range increases up to the job rate, as a percentage of the employee's salary, may be granted annually for assessed performance as follows:

• Outstanding - up to 10%
• Superior - up to 7%
• Fully Satisfactory - up to 5%
• Satisfactory - 0%
• Unsatisfactory - 0%
• Unable to assess - 0%

…

4.4 The Departmental performance pay budget is limited to five per cent (5%) of the departmental group payroll as at March 31. Only members of the group on strength March 31 and on April 1 in a position listed in paragraph 3.1 of this policy are eligible for the purposes of this exercise. Members of the group on leave without pay or on a maternity leave / paternal leave who would not normally be considered to be on strength, are, for purposes of this policy, deemed to be eligible.

4.5 Performance awards are limited to a maximum of ten per cent (10%) of an individual's salary (including a combination of in-range salary increase and lump sum payments). Performance must be at least fully satisfactory to be eligible for any lump sum award.

4.6 Performance awards for those paid below the job rate are to be applied as base salary increases within the current salary ranges. When the calculation of a performance award results in a salary that would exceed the current job rate, the difference is to be paid as a one-time lump sum.

…

16 The AJC submitted that section 4.1 determines the rate of pay and that the term "salary" should be given its plain meaning of current salary calculated using the current pay rate. As section 4.4 provides that March 31 is the date of calculation, therefore, an LA's pay rate must be based on that in effect at the end of the fiscal year. According to the AJC, section 4.5 refers to only one salary, not a plurality of rates of pay, and "salary" must be interpreted within the context of section 4.4. The AJC also pointed to the phrase "current salary ranges" in section 4.6.

17 The AJC submitted that in section 5.0 of Part 2 of Appendix "B" (Performance awards), section 5.1 sets out the eligibility requirements. It emphasized that section 5.2 sets out the increases as percentages "of salary." In the AJC's submission, "salary" must be given its plain meaning, as at the date of calculation. It stated that the language of Part 2 of Appendix "B" requires that performance pay be fully paid at an LA's rate of pay as at March 31, including if the LA has held more than one eligible position as a result of a promotion, provided that the eligibility criteria are satisfied.

18 The AJC stated that clear language is required to reduce an entitlement under the collective agreement. Had the parties intended that the rate of pay used to calculate performance pay be proportioned according to time spent in each eligible position during a fiscal year, thus limiting the performance pay entitlement, they would have included such language. The employer's interpretation would have the effect of requiring an amendment to the collective agreement.

19 The AJC pointed out that the information bulletin, number 545, issued by the Department of Justice in July 2011 (Tab 2 of the employer's Book of Documents; "Bulletin 545") does not refer to any authority for proportioning performance payments.

20 The AJC stated that some exceptions are provided for in the collective agreement. In Part 2 of Appendix "B" to the collective agreement, section 8.0 deals with performance pay for employees on leave without pay. Section 8.2 provides that such employees may be eligible for performance pay if they were on strength long enough to permit a meaningful performance evaluation and that performance pay should be prorated for the time they have been back on payroll.

21 Another exception is found in section 9.0, concerning LAs receiving acting pay. Section 9.2 provides that prorating performance pay based on the length of time spent in an acting position is an option. While the employer turned its mind to certain exceptions, there is no indication that it did so in the case of promotions. Thus, the plain meaning of the collective agreement must determine the matter.

22 The AJC submitted that section 5.3 of Part 2 of Appendix "B" provides that when determining the amount to be paid to an LA, the employer has to view the individual in his or her role as at March 31.

23 In support of its arguments, the AJC cited the following authorities: Brown & Beatty, Canadian Labour Arbitration, 4th edition, at paragraphs 4:2100, 4:2110, 4:2150 and 4:2151; Public Service Alliance of Canada v. Communications Security Establishment, 2009 PSLRB 121; Foote v. Treasury Board (Department of Public Works and Government Services), 2009 PSLRB 142; Calgary Regional Health Authority (Rockyview Site) v. United Nurses of Alberta, Local 121-R (2000), 93 L.A.C. (4th) 427; Klock v. Canada Revenue Agency, 2009 PSLRB 99; and Julien v. Treasury Board (Canada Border Services Agency), 2008 PSLRB 67.

B. For the employer

24 The employer put the issue as follows. When an LA-1 is promoted to LA-2A or from LA-2A to LA-2B, must performance pay be calculated based only on the higher salary of the position to which he or she was promoted? The employer stated that this question was prompted by Bulletin 545. It referred to the following provisions of Bulletin 545: section 4.6, which sets out the following non-exhaustive situations in which performance pay would be prorated, which are new hire, leave without pay, acting pay, promotion and retirement; section 6.2, which, among other things, provides that in-range increases will be calculated using the salary in effect on March 31, 2011; and section 6.3, which deals with exceptional situations.

25 The employer submitted that while section 4.4 of Part 2 of Appendix "B" of the collective agreement stipulates that LAs on strength on March 31 and April 1 are eligible for performance pay, it does not mean that the salary dates back 12 months. Referring to the first example in Exhibit 2, in which an LA-1 on strength on April 1 is promoted to LA-2A effective December 1, the employer stated that in 2010-2011, it had applied its policy so that the individual promoted would receive performance pay based only on the time spent in the LA-2A position. The employer then conceded that such an individual should be awarded performance pay for the full 12 months of the fiscal year. It said that the remaining issue between it and the AJC is the rate at which the performance pay should be paid.

26 In terms of interpreting the collective agreement, the employer cited Cardinal Transportation B.C. Inc. v. Canadian Union of Public Employees, Local 561 (1997), 62 L.A.C. (4th) 230, at 236, in which the arbitrator stated the following: "Where a monetary benefit is asserted, it normally falls to the Union to show in clear, specific and unequivocal terms that the monetary benefit is part of the employee's compensation package." The employer also referred to Wamboldt v. Canada Revenue Agency, 2013 PSLRB 55, at paragraphs 9 and 25 to 28.

27 The employer advanced five main points to argue that the AJC's position was untenable. First, the AJC's position ignores the intent of performance pay, namely, being paid for work performed at level. For support, the employer referred to paragraph 55 of AJC 2012, which reads as follows:

55 During the first few years of their careers, the LAs progress within their pay scales on the basis of performance pay. When they reach the pay scale maximum, they receive performance pay as a performance bonus. There is no doubt that performance pay is a compensatory and work-driven benefit. It provides pay increases to the LAs in accordance with their work performance. Because they are not working while on maternity or parental leave, they must be compared to other employees who do not work, in other words, to employees on leave without pay. Performance pay must be earned while at work. It cannot be considered as a form of compensation linked to years of service.

28 The employer emphasized that performance pay is linked to the idea that it is a work-driven and compensatory benefit and that it should be calculated proportionately. Thus, for a period during which LA-2A work is performed and assessed, performance pay would be calculated based on the applicable LA-2A salary. If the LA-2A is promoted to LA-2B, any performance pay for work performed at the LA-2B level should be calculated based on the salary of that level. The employer referred to the policy objective of the performance pay plan set out at section 1.1 of Part 1 of Appendix "B" of the collective agreement, which provides as follows:

1.1 To ensure the accurate and consistent administration of performance pay for certain non-Management Category senior excluded employees, including incentives to recognize and reward individuals in relation to their peers and subordinates.

29 The employer stressed the importance of the phrase "in relation to their peers," and to this end, compared the client service results section of the LA-1 work description (Book of Documents, Tab 6) to that of the LA-2A (Book of Documents, Tab 7). The employer submitted that the duties of the two positions were clearly different and that an LA-1 should not receive performance pay for an LA-2A job when he or she had not performed the duties of the higher position.

30 In support of its position that performance pay is awarded for having performed duties, the employer referred to a document dated June 6, 2011, and titled, "Maternity and Parental Leave and Performance Pay," issued by the Treasury Board Secretariat's Office of the Chief Human Resources Officer (Book of Documents, Tab 10). That document contains the following paragraph:

…

When determining appropriate compensation under the relevant authority for employees who have been on periods of leave without pay, Departments are reminded that any performance pay should be prorated based on the time employees have been performing duties. This assumes that employees meet the minimum period to qualify for performance pay, as established by respective Departments.

…

31 The employer submitted that this conforms to section 8.2 of Part 2 of Appendix "B", which states that for employees who have been on leave without pay, "… performance pay should be prorated for the time they have been back on payroll."

32 The employer's second main point was that performance pay is based on performance and is not to be considered a windfall. The employer referred to the Treasury Board's Directive on Terms and Conditions of Employment, effective April 1, 2009 (Book of Documents, Tab 9). In Part 2, "Remuneration," section 1, titled "Entitlement," provides as follows:

… a person appointed to the core public administration is entitled to be paid, for services rendered, the appropriate rate of pay in the relevant collective agreement or the rate approved … for the group and level of the person's classification.

33 The employer also referred to section 2.2.4 of the same document, dealing with promotion, which reads as follows:

2.2.4 Subject to subsections 2.2.2, 2.3.1 and 2.3.2, the rate of pay on promotion is to be the rate of pay nearest that to which the person was entitled in his or her substantive level immediately before the appointment that gives the person an increase in pay as specified in Subsection 2.2.3 above or an amount equal to at least 4 per cent of the maximum rate of pay for the position to which he or she is appointed when the salary for the position to which the appointment is made is governed by performance pay.

34 The employer submitted that as an LA's salary is governed by performance pay, upon promotion, he or she receives a percentage salary increase. Thus, when an LA-1 is promoted to LA-2A, the employer submitted that the AJC's position is that that person should receive the promotion percentage and performance pay at the LA-2A level for the entire period subsequent to the promotion.

35 The employer's third main point was that the AJC's requests are unworkable. It pointed to section 6.1.1 of Part 2 of Appendix "B" of the collective agreement, which provides that the performance of LA-1s may be assessed twice per year. Referring to the AJC's first example, the employer submitted that an LA-1 would receive performance pay at the LA-2A rate for the entire period following promotion plus potentially performance pay for two assessments while in the LA-1 position.

36 The employer referred to section 4.5 of Part 2 of Appendix "B", which limits performance awards to 10% of an individual's salary. The employer stated that "salary" refers to the salary scales set out in Appendix "A" of the collective agreement. Thus, if an LA-1 at a salary of $59 845 is assessed as outstanding, then that individual would be entitled to 10% of his or her salary, namely, $5900 (rounded). If an LA-1 is promoted to LA-2 at a salary of $82 917 and is awarded 10% performance pay, under the AJC's position, then that individual would receive more than the LA-1 salary for the time worked in that position.

37 The employer submitted that there is no explicit provision in the collective agreement to exclude performance pay from being based on the salaries set out in Appendix "A". The collective agreement does not stipulate that when LAs are promoted, they will receive performance pay based on the higher level.

38 The employer stated that the AJC's proposal that the different salaries set out in Appendix "A" of the collective agreement become obsolete when applying in-range increases through awarding performance pay is not suggested in the collective agreement. When reading the collective agreement as a whole, the distinctions between LA salary levels are maintained.

39 The employer pointed to sections 9.1 to 9.3 of Part 2 of Appendix "B" of the collective agreement, concerning performance pay while receiving acting pay, as an exception explicitly provided for in Appendix "B". When an LA acting at a higher level is eligible for performance pay, it is paid at the higher level, subject to certain conditions. In the employer's submission, had the parties intended to include a similar exception stating that an LA who has been promoted is paid performance pay at the higher level, they would have used similar wording as that found in sections 9.1 to 9.3. The employer submitted that the collective agreement does not include an explicit exception that would allow for the remedy sought by the AJC.

40 The employer's fourth main point was that applying the AJC's interpretation would negate the employer's discretion over performance pay and the determination of its day-to-day affairs. It referred to sections 2.1.1 and 2.1.2 of Part 1 of Appendix "B" of the collective agreement, which it submitted contain discretionary language. It also pointed to section 1.1 of Part 2 of Appendix "B", which states that the appendix presents guidelines for the consistent application of the performance pay plan. In addition, section 3.2 provides that expenditures on in-range increases and performance awards be controlled by a departmental budget. Furthermore, section 4.1 states that in-range increases may be granted annually.

41 The employer referred to the Financial Administration Act, R.S.C. 1985, c. F-11 (FAA), at paragraph 12(1)(b), which provides that performance awards paid to public servants are in relation to their duties. The employer also referred to subparagraph 34(1)(a)(i), which provides that, among other things, payment for performing work is made only when the work has been performed.

42 The employer's fifth main point was that the AJC's interpretation is contrary to the collective agreement, which must be considered as a whole and according to its ordinary and plain meaning. It submitted that the AJC did not challenge the collective agreement provisions that govern the frequency of performance appraisals and by whom they are made. The employer specified clauses 23.01(a) and (b), which state respectively that the assessment of a lawyer's performance is based on the lawyer's assigned tasks during a specified period in the past and that the assessor must have observed or been aware of the performance for at least half the period being evaluated.

43 The employer submitted that the AJC's position ignores the context provided by reading those two clauses of the collective agreement together with the policy objective stated in Appendix "B", which includes that performance pay be applied in a consistent manner. In the employer's submission, applying performance pay proportionately would carry out the objective of consistency. It suggested that the AJC acknowledged that applying performance pay based only on the salary received on March 31 would not result in a consistent application of the plan. The employer referred to LA-1s who may receive a performance pay increase twice in a fiscal year and stated that in such cases, the rule proposed by the AJC would be unworkable.

44 The employer submitted that clause 15.02(a) of the collective agreement states that a lawyer is entitled to be paid for services rendered at the rate of pay for the position to which the lawyer was appointed. The employer submitted that lawyers must be assessed for the work they perform and referred to the definition of "In-range increase" at section 2.2 of Part 2 of Appendix "B". It also referred to the definition of "performance award" at section 2.5, which mentions the LA's assessed level of performance.

45 In referring to sections 9.0 to 9.3 of Part 2 of Appendix "B "of the collective agreement, which concern performance pay while receiving acting pay, the employer stated that the appendix contains no similar wording for performance pay at promotion. It submitted that the language of sections 12.1 and 12.2 of Part 2 of Appendix "B", concerning salary-related benefits, expresses the intent to keep promotion and performance pay awards separate. While section 13 authorizes the deputy minister to determine salary increases and to make performance awards within the guidelines of the performance pay plan unless otherwise directed by the Treasury Board Secretariat, the employer pointed out that the Treasury Board Secretariat has not issued directives along the lines suggested by the AJC.

46 The employer referred to the arbitral award between the parties dated October 23, 2009 (PSLRB File No. 585-02-25), which it stated adopted the Treasury Board Policy on Performance Pay Administration, 2008 (Book of Documents, Tab 13).

47 The employer submitted that the AJC's method of calculating performance pay as simply applying the salary of the level to which an LA was promoted across the board retroactively to the first day of the fiscal year, when the LA had not yet been promoted, is contrary to the objective of, and meaning behind, the performance pay plan.

C. Employer's additional submissions

48 The employer submitted that the AJC's position that performance pay be based on the last day of the fiscal year, March 31, would mean that if an LA-2A were promoted to LA-2B on March 30, any performance pay for the LA-2A work performed during the fiscal year would be calculated on the basis of an LA-2B's salary. The employer suggested that the AJC's approach was not feasible for LA-1s, as they may receive two performance pay increases based on their assessments on April 1 and October 1. The employer submitted that the remedy requested by the AJC is inconsistent.

49 The employer's position is that since performance pay is a work-driven and compensatory benefit, it should be calculated proportionately, based on the individual's applicable salary. In support of its argument, the employer cited the following decisions: Air Canada v. Air Canada Pilots Association, 2012 CanLII 92037 (ON LA), and Professional Institute of the Public Service of Canada v. National Research Council of Canada, 2013 PSLRB 88 ("NRCC").

50 The employer submitted that in Air Canada, the arbitrator acknowledged that if benefit coverage is not specified in a health plan or a collective agreement, changes to the administration of those benefits do not violate the collective agreement if the changes are based on what is "reasonable and customary." The employer argued that it has the ability to set reasonable limitations on benefits coverage when none is explicitly provided for in an agreement. Thus, in the present matter, in the employer's submission, it is reasonable to calculate performance pay on the basis of the LA position for which the work was performed, not on the basis of another position for which the work was not performed. The employer stated that it would be unreasonable to allow such wholesale benefit coverage as sought by the AJC for the work-driven benefit of performance pay.

51 Concerning NRCC, the employer submitted that that decision held that exceptions to a collective agreement must be explicitly stated and must be supported by an ordinary and plain meaning when reading the agreement as a whole, in context and in both official languages.

52 In applying NRCC to this matter, the employer submitted that the AJC did not challenge the provisions governing the frequency of performance appraisals and by whom they are to be made. The employer stressed that clause 23.01(a) of the collective agreement defines a formal assessment or appraisal of a lawyer's performance as how well the lawyer has performed his or her assigned tasks during a specified period in the past, while clause 23.02(b) stipulates that the assessor of a lawyer's performance must have observed or been aware of the performance for at least half the period being evaluated.

53 The employer also pointed to the policy objective of the performance pay plan as set out in section 1.1 of Part 1 of Appendix "B" of the collective agreement, namely, that performance pay is to be applied consistently and as a means of providing incentives to recognize and reward individuals in relation to their peers and subordinates.

54 The employer argued that the AJC's position that performance pay be based solely on a lawyer's salary on March 31 ignores the context provided by reading together the policy objective of Appendix "B" and clauses 23.01(a) and 23.02(b) of the collective agreement. Referring to the example of a promotion from LA-2A to LA-2B on March 30, the employer stated that such an individual would not have worked as an LA-2B for more than one day, which would be contrary to the minimum one-half observation period under clause 23.02(b). Thus, it would be contrary to the collective agreement to award performance pay based on the salary of a higher level for work that was not assigned, performed or observed.

55 The employer also submitted that when Part 2 of Appendix "B" of the collective agreement is read as a whole, it becomes apparent that the AJC's position that performance pay must be paid solely and fully at the LA's rate of pay on March 31 is contrary to the ordinary and plain meaning of Part 2. The employer stated that as provided in section 4.4 of Part 2, the ordinary and plain meaning is that an LA is required to be on strength on March 31 to be eligible for performance pay.

56 The employer submitted that Part 2 of Appendix "B" must be read in the context of the collective agreement as a whole, including Appendix "A", which sets out the annual rates of pay for the LA Group. The employer argued that contrary to the AJC's proposal, the collective agreement does not suggest that the different salary levels in Appendix "A" are rendered obsolete when applying salary increases via awarding performance pay. The salary distinctions are maintained.

57 The employer pointed to the phrase "an individual's salary" in section 4.5 of Appendix "B", Part 2. It stated that an individual's salary is that set out in Appendix "A" and that any increases are calculated based on that salary. As provided in section 4.5, performance awards are limited to a maximum of 10% of an individual's salary. In the employer's submission, to read in another meaning would contravene the presumption that parties to an agreement are assumed to have intended what they have said.

58 The employer further submitted that in this matter, the collective agreement does not contain an explicit provision excluding performance pay from being based on the salary rates agreed to and set out in Appendix "A". There is no explicit provision stating that upon promotion, LAs are to receive performance pay based on a higher level.

59 The employer pointed out that when the parties to the collective agreement provided for an exception, they so stated explicitly. It referred to section 9.0 of Part 2 of Appendix "B", which provides for performance pay while receiving acting pay. Section 9.1 provides that, for example, an LA-2A acting as an LA-2B may receive performance pay at the higher level if the conditions set out in sections 9.1.1 to 9.1.3 are met.

60 In the employer's submission, the AJC's position concerning performance pay would render meaningless the negotiated salary rates, which are based on the nature of the work performed. It submitted that the AJC's interpretation is inconsistent with the collective agreement and contrary to its ordinary and plain meaning. The employer further submitted that the AJC seeks an exception where none is expressly stated.

D. The Association's reply

61 Concerning section 4.4 of Part 2 of Appendix "B" of the collective agreement, the AJC seeks the current salary of an employee on March 31 and not future salary.

62 The AJC's position concerning the assessor set out in clause 23.02(b) of the collective agreement is that the lawyer whose performance is being assessed need not directly report to the assessor. As the language of the clause states that the assessor "must have observed or been aware of" the lawyer's performance, the reporting relationship may also be indirect. When this clause is read with clause 23.01(a), it suggests that perhaps more than one supervisor would be involved in the assessment.

63 Concerning the policy objective of the performance pay plan, which is to reward individuals in relation to their peers, the AJC's position is that "peers" refers to all those in the LA groups, whether in LA-1, LA-2A or LA-2B, which is the true class for comparison.

64 The AJC did not dispute that performance pay is work driven. It stated that the rate of pay is that set out in the rate schedule in Appendix "A" of the collective agreement.

65 The AJC stated that performance pay is clearly a benefit and that this matter concerns the payment of, not the entitlement to, the benefit.

66 Concerning the employer's argument about a windfall in which an LA would receive performance pay in addition to promotion pay (4%), the AJC stated that the rate of 4% is separate from performance pay and should not be considered. As stipulated in section 12 of Part 2 of Appendix "B" of the collective agreement, performance pay is part of salary. Salary is linked to the work of a specified position and is tied to the nature of the work being performed. Performance pay is not compensation, but an award based on how well an LA has performed in comparison to his or her LA peers.

67 The AJC referred to section 6.1.1 of Part 2 of Appendix "B" of the collective agreement, which provides that the performance of LA-1s may be assessed semi-annually, which it stated had to be read together with sections 4 and 5 of the Appendix, and presented the following example. An LA-1 on strength on April 1 of a given year is assessed on October 1 and promoted to LA-2A, effective December 1. The AJC's position is that on March 31 of the following year, performance pay for this individual at the LA-2A rate would be retroactive to October 1 of the previous year.

68 In the AJC's submission, section 6.1.1 of Part 2 of Appendix "B" applies only to in-range increases. It stated that an LA would not receive a semi-annual performance award on a lump-sum basis. If the LA were ineligible for an in-range increase because of having attained the maximum rate, he or she would have to wait until March 31 for a performance award, which would be paid according to his or her salary as at that date. If the LA were not at maximum rate, he or she would receive an increase at midyear, on October 1, namely, 50% for the 6-month period. Thus, if the increase were worth 4.6%, the LA would receive 2.3%, retroactive to October 1.

69 Dealing with the employer's argument that the application of Appendix "B" of the collective agreement is discretionary, the AJC said that if the employer chose not to award performance pay, then that would be discretionary. In this matter, there is a collective agreement and a performance plan. However, it questioned the benefit of Appendix "B" if the employer chose not to apply it. The AJC stated that performance pay was a benefit conferred on bargaining unit members and that it was not at the employer's option. The discretion the employer can exercise is determining the performance rating of an individual LA. The AJC also asserted that its position was not inconsistent with the FAA.

70 The AJC submitted that article 15 of the collective agreement, dealing with pay administration, is determinant of rates of pay and irrelevant to determining performance pay.

E. The Association's additional reply submissions

71 The AJC submitted that Air Canada is distinguishable from the present matter. In that case, the arbitrator was called upon to interpret the phrase "reasonable charges necessarily incurred," contained within a benefits plan that was incorporated into the collective agreement. The AJC stated that that phrase has a precise meaning in benefits plans and the insurance industry and that it did not provide the employer additional discretion to limit the benefit granted under the collective agreement. The AJC pointed out that in Air Canada, the dispute concerned the proper interpretation of the phrase, not that a limit applied to the benefits in question.

72 The arbitrator in Air Canada found that the entitlement had to be determined on the basis of insurance industry norms for coverage, with reference to the claims experience in the industry and a market review of costs. For example, the employer could not provide reimbursement for benefits at a level below the "reasonable and customary" standard for the particular category of benefit.

73 The AJC submitted that in this matter, the employer seeks to establish a limit on paying performance pay through proportioning the amount paid according to the time spent in each performance-pay eligible position. In the AJC's submission, no language in the collective agreement would permit the employer to reduce the rate of performance pay awarded to an eligible LA-1. An employer cannot establish limits on benefits provided in the collective agreement absent express language permitting such a reduction. Thus, Air Canada is of no assistance in interpreting Part 2 of Appendix "B" of the collective agreement.

74 The AJC submitted that the employer mischaracterized its position concerning LA-1s whose performance may be assessed semi-annually under section 6.1.1 of Part 2 of Appendix "B".

75 The AJC reiterated that the dispute in this matter is limited to the rate-of-pay variable of the performance pay formula. It argued that its interpretation permits that when an LA-1 is promoted following a mid-year review and has received a semi-annual in-range increase for the first half of the fiscal year, then that LA-1 is entitled to a performance award for the balance of the fiscal year, calculated on the individual's rate of pay as at March 31. According to the AJC, while its interpretation requires that the rate of pay for the performance pay calculation be based on the position held on March 31, it does not allow payment for months for which a performance award was already assessed.

76 The AJC explained that when an LA-1 has received a semi-annual in-range increase, the individual has already received performance pay for the first half of the fiscal year. Thus, the time variable in the performance pay formula must be reduced by six months for the March 31 calculation to account for the in-range increase that has already been provided.

77 The AJC submitted that if an LA-1 has received a semi-annual in-range increase based on the LA-1 rate of pay, the collective agreement requires that the LA's rate of pay on March 31 be applied for the final performance pay calculation that relates to the second half of the fiscal year. Section 6.1.1 of Part 2 of Appendix "B" does not alter the rate of pay that applies to the formula. Rather, it provides only an explicit exception to the timing of performance pay calculation for LAs. Thus, the AJC argued that its interpretation is consistent with the policy objective of ensuring the accurate and consistent application of performance pay and the consistent application of the collective agreement.

78 The AJC submitted that even if I accepted the employer's position that the AJC's interpretation would create inconsistencies, they would not be sufficient to override the plain meaning of the collective agreement requiring that the LA's rate of pay on March 31 applies to the calculation of performance pay.

79 The AJC argued that the employer's interpretation requires that it calculate performance pay based on multiple, varying rates of pay. Thus, an LA who is promoted twice or more during a fiscal year would require the assessment of multiple periods of employment, commensurate with the applicable rates of pay. Such an approach is unworkable and would threaten the consistent and accurate administration of performance pay.

80 The AJC further argued that the employer's interpretation would require an exception that is not provided for in the collective agreement. It submitted that the language of the collective agreement requires that an LA's current salary, namely, at the end of the fiscal year, be used as the rate of pay for calculating performance pay.

81 In support of its position, the AJC referred to the following provisions of Part 2 of Appendix "B": section 4.1, which provides for in-range increases up to the job rate, as a percentage of the employee's salary for assessed performance; section 4.4, concerning the departmental performance pay budget, refers to the departmental group payroll as at March 31; section 4.5, which states that performance awards are limited to 10% of an individual's salary; and section 4.6, which provides that performance awards for those paid below the job rate are to be applied as base salary increases within the current salary ranges.

82 The AJC submitted that when read together, the provisions of the performance pay plan clearly refer to rates of pay, payroll and the employee's salary as at March 31. Had the parties intended that an LA's rate of pay be proportioned across multiple positions or that a rolling average would apply, they would have so stated in the collective agreement. The AJC stated that therefore it is reasonable to apply the LA's rate of pay applicable as of the time of the performance pay calculation.

83 The AJC argued that its interpretation does not extend performance awards beyond the maximum of 10% of an LA's salary. That limitation applies to an LA's current salary in his or her promoted position. Thus, the employer's submission that the AJC's interpretation would render obsolete the salary ranges set out in Appendix "A" of the collective agreement is inaccurate. In the AJC's submission, its interpretation seeks to apply the plain meaning of the performance pay plan, while the employer seeks to apply an exception that is not supported by the language of the collective agreement.

84 The AJC submitted that Appendix "B" of the collective agreement provides for exceptions to administering the performance pay plan, including for employees on leave without pay and those receiving acting pay. Sections 8.2, 9.1 and 9.2 of Part 2 of Appendix "B" permit altering the performance pay calculation under certain conditions.

85 The AJC further submitted that just as NRCC determined that explicit language was required to exclude a one-time vacation leave entitlement from a vacation cap and carry-over provisions, in this matter, an explicit exclusion in the collective agreement is required to alter the rate of pay applicable for calculating performance pay, namely, the current rate of pay as at March 31. The application of two or more proportioned rates of pay, as suggested by the employer, would require the parties to negotiate explicit language.

86 The AJC submitted that the plain meaning of the collective agreement requires that performance pay be calculated using an LA's current rate of pay as at March 31, thus ensuring that the LA is compensated proportionately to the individual's peers or subordinates, in relation to the individual's current position.

III. Reasons

87 To begin, it is convenient to set out certain principles of collective agreement interpretation. In Foote at paragraph 26, the adjudicator cited the following extract from the judgment of the New Brunswick Court of Appeal in Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp & Paper Ltd., 2002 NBCA 30:

…

It is accepted that the task of interpreting a collective agreement is no different than that faced by other adjudicators in construing statutes or private contracts: see D.J.M. Brown & D.M. Beatty, Canadian Labour Arbitration (3rd Ed.), looseleaf (Aurora, Ont.: Canada Law Book, Inc., 2001) at 4-35. In the contractual context, you begin with the proposition that the fundamental object of the interpretative exercise is to ascertain the intention of the parties. In turn the presumption is that the parties are assumed to have intended what they have said and that the meaning of a provision of a collective agreement is to be first sought in the express provisions. In searching for the parties' intention, text writers indicate that arbitrators have generally assumed that the provision in question should be construed in its normal or ordinary sense unless the interpretation would lead to an absurdity or inconsistency with other provisions of the collective agreement: see Canadian Labour Arbitration at 4-38. In short, the words of a collective agreement are to be given their ordinary and plain meaning unless there is a valid reason for adopting another. At the same time, words must be read in their immediate context and in the context of the agreement as a whole. Otherwise, the plain meaning interpretation may conflict with another provision.

…

88 At paragraph 28 of Foote, the adjudicator stated as follows:

28 In determining the plain and ordinary meaning, the starting point is that the parties are presumed to have intended what they have said. Occasionally, an arbitrator or adjudicator may be required to imply a term. However, that occurs only when it is necessary to give the collective agreement "business or collective agreement efficacy" and only if it is determined that the parties would have agreed to the implied term without hesitation had they been apprised of the deficiency (see Brown and Beatty, at 4:2100).

89 In NRCC at paragraph 62, the following extract was cited from DHL Express (Canada) Ltd. v. Canadian Auto Workers, Locals 4215, 144 and 4278 (2004), 124 L.A.C. (4th) 271, at 295 and 296:

… The predominant reference point for an arbitrator must be the language in the Agreement … because it is primarily from the written word that the common intention of the parties is to be ascertained. Language is to be construed in accordance with its ordinary and plain meaning, unless adopting this approach would lead to an absurdity or repugnancy, but in these latter situations, arbitrators will interpret the words used in a manner so as to avoid such results. However, it must be remembered that these particular principles of interpretation are to be used in the context of the written Agreement itself. It is also well recognized that a counterbalancing principle is that anomalies or ill-considered results are not sufficient to cause the alteration of the plain meaning of words. Neither is the fact that one interpretation of the Agreement may result in a (perceived) hardship to one party… .

…

It is well accepted that "arguability as to [different] construction[s]", standing alone, does not create an ambiguity, allowing the introduction of extrinsic evidence (in Re Canadian National Railway Co. and Canadian Telecommunications Union (1975), 8 L.A.C. (2d) 256 (H.D. Brown) at p. 259). When ascertaining the common intention of the parties objective tests must be used and "not to what the parties, post contractu, may wish to say was their intent, albeit with honesty and sincerity" (Re Puretex Knitting Co. and C.T.C.U., Loc. 560 (1975), 8 L.A.C. (2d) 371 (Dunn) at p. 373).

The foregoing principles are reinforced by the prescription in Article 4.05 of the Agreement under which I cannot "change, modify or alter any of the terms of this Agreement".

It is also a well-accepted principle that the provisions of the Agreement are to be construed as a whole and that words and provisions are to be interpreted in context… .

[Emphasis in original]

90 Furthermore, section 229 of the Public Service Labour Relations Act (S.C. 2003, c. 22, s. 2) provides as follows:

229. An adjudicator's or the Board's decision may not have the effect of requiring the amendment of a collective agreement or an arbitral award.

91 The relevant provisions of the collective agreement are set out in an annex to this decision.

92 The parties agree that the relevant performance pay formula is the following: [rate of pay] x [performance award percentage] x [total time (in eligible positions)]. They also agree that the dispute in this matter is limited to the rate-of-pay variable of the performance pay formula.

93 The AJC submitted that the collective agreement requires two elements for performance pay: first, that it is paid for all months that an LA holds a performance-pay-eligible position, including when the LA is promoted from a performance-pay-eligible position to another performance-pay-eligible position, and second, that the rate of pay applied to the performance pay formula is that for which the LA is eligible on March 31.

94 Concerning the first element, the employer stated that in 2010-2011, it had applied its policy so that a lawyer who had been promoted would receive performance pay based only on the time spent in the position to which he or she had been promoted. The employer then conceded that in such case, the lawyer should be awarded performance pay for the full 12 months of the fiscal year. Thus, the only remaining issue between the parties is the rate at which performance pay should be paid.

95 A performance award is defined in section 2.5 of Part 2 of Appendix "B" of the collective agreement as follows:

2.5 "performance award" (prime de rendement) means a bonus payable to an employee whose salary has reached the job rate of the applicable salary range and whose assessed level of performance is fully satisfactory, superior or outstanding. It is payable in a lump sum and must be re-earned each year.

96 The phrase "applicable salary range" refers to Appendix "A" of the collective agreement, titled in part "Annual Rates of Pay," which sets out the annual rates of pay for the LA group. As stated in Appendix "A", effective November 1, 2009, the former lock-step pay increment structure was converted to a pay-range structure governed by the relevant performance pay regime.

97 Appendix "A" contains separate pay ranges for each classification within the LA group. Clause 15.02(a) of the collective agreement provides that a lawyer is entitled to be paid "… for services rendered at the pay specified in Appendix 'A' for the classification of the position to which he is appointed … ."

98 The positions concerned in this matter are LA-1, LA-2A and LA-2B. Thus, clause 15.02(a) of the collective agreement indicates that the lawyers occupying those positions are to be paid according to the pay range applicable to their positions as set out in Appendix "A". In other words, the lawyers are to be paid for the jobs they perform.

99 Moreover, clause 23.01(a) of the collective agreement provides that a formal assessment or appraisal of a lawyer's performance is one of "… how well the lawyer has performed his assigned tasks during a specified period in the past …" (emphasis added). The LA-1 and LA-2A work descriptions (Book of Documents, Tabs 6 and 7, respectively) show a clear distinction between those two classifications.

100 With respect to the second element of the AJC's submission, it advanced that the wording of Appendix "B" supports its argument that the rate of pay of the performance award is determined by the LA's salary in his or her substantive position on the last day of the fiscal year, namely, March 31. The AJC submitted that the term "salary" should be given its plain meaning of an LA's current salary calculated using the LA's current rate of pay.

101 In support of its argument, the AJC pointed to sections 4.4, 4.5 and 4.6 of Part 2 of Appendix "B". Section 4.4 provides that "[t]he Departmental … pay budget is limited to five per cent (5%) of the departmental group payroll as at March 31." Section 4.5 provides that "[p]erformance awards are limited to a maximum of ten per cent (10%) of an individual's salary … ." Section 4.6 states that "[p]erformance awards for those paid below the job rate are to be applied as base salary increases within the current salary ranges."

102 The AJC argued that the interpretation of those three sections, read together, is that the rate of pay for the purposes of calculating a lawyer's performance pay is that as at March 31. Section 4.5 of Part 2 of Appendix "B", which the AJC stated must be read in the context of section 4.4, i.e., the group payroll as at March 31, refers to only one salary, not a plurality of rates of pay. In addition, section 4.6 refers to current salary ranges.

103 Having reviewed the provisions of the collective agreement and Appendices "A" and "B", I am unable to agree with the AJC's interpretation. There is no wording that expressly supports the proposal that if an LA has occupied more than one classification in a given fiscal year, the rate of pay of the performance award for that entire fiscal year is determined by the LA's salary of his or her substantive position on March 31.

104 Appendix "B" must be read as a whole, together with articles 15 (Pay Administration) and 23 (Lawyer Performance Review and Lawyer Files) of the collective agreement.

105 In Part 1 of Appendix "B", section 2.1.1 provides that "individuals may progress through the salary range … ." Section 2.1.2 states that "performance awards may be awarded to those whose salaries have reached the job rate …" (emphasis added).

106 In Part 2 of Appendix "B", "In-range increase" is defined in section 2.2 as a performance-based salary increase "… that results in an upward positioning in the range …" (emphasis added). As stated earlier in this decision, the phrase "applicable salary range" contained in the definition of "performance award" in section 2.5 of Part 2 refers to the salary ranges set out in Appendix "A" of the collective agreement. Section 4.1 of Part 2 provides as follows: "As a general guide, in-range increases up to the job rate, as a percentage of the employee's salary, may be granted annually for assessed performance as follows …" (emphasis added).

107 All that wording addresses movement within a salary range applicable to a specific LA classification.

108 Concerning the AJC's argument relating to sections 4.4 to 4.6 of Part 2, section 4.4 stipulates that the departmental performance pay budget is limited to 5% of the departmental group payroll as at March 31. "Payroll" is defined in section 2.4 of Part 2 as "… the sum of salaries paid to employees subject to this plan, in a particular department or agency."

109 In my view, section 4.4 of Part 2 is simply a statement of the financial limitation on the portion of a departmental budget dedicated to performance pay, as confirmed by the following provisions. Section 6.1.3 of Part 1 states that one of the plan's performance indicators is that "performance increase expenditure does not exceed the approved target of … 5%", section 3.2 of Part 2 provides that the departmental budget for in-range increases and performance awards may not be exceeded, and section 8.1 of Part 2 provides that employees on leave without pay for a full fiscal year are to be excluded from the budget calculation.

110 In addition, both section 4.4 and section 5.1 of Part 2 stipulate that to be eligible for performance pay, employees must be on strength on March 31 and April 1. Employees on leave without pay, maternity leave or parental leave are deemed eligible.

111 Section 7 of the FAA grants the employer broad authority over general administrative policy in the federal public service. Paragraph 7(1)(e) provides the employer with authority over human resource management in the federal public service, "… including the determination of the terms and conditions of employment of persons employed in it … ." As for performance awards, the FAA provides as follows at paragraph 12(1)(b):

12. (1) Subject to paragraphs 11.1(1)(f) and (g), every deputy head in the core public administration may, with respect to the portion for which he or she is deputy head,

…

(b) provide for the awards that may be made to persons employed in the public service for outstanding performance of their duties, for other meritorious achievement in relation to their duties or for inventions or practical suggestions for improvements … .

[Emphasis added]

112 That statutory provision is echoed in clause 23.01(a) of the collective agreement, which states that an assessment or appraisal of a lawyer's performance is based on how well the lawyer has performed his or her assigned tasks during a specified period in the past.

113 In view of the wording of the collective agreement, its Appendix "B" and the FAA, it appears to me that the purpose of performance pay for a lawyer is that it be awarded based on the nature of the duties actually performed by an individual lawyer.

114 Concerning the assessment of a lawyer's performance, section 2.1 of Part 1 of Appendix "B" of the collective agreement states the following:

It is government policy to pay certain senior excluded non-Management Category employees according to their assessed level of performance. This policy provides the means to achieve this… .

115 Clause 23.02(b) of the collective agreement stipulates that the assessor of a lawyer's performance must have observed or been aware of the lawyer's performance for at least one-half of the evaluation period. While neither the collective agreement nor its Appendix "B" defines the duration of an evaluation period, in the example of the promotion of a lawyer on March 30, it is obvious that in such a circumstance, clause 23.02(b) would be inapplicable.

116 Nothing in the applicable provisions supports the argument that a performance award should be paid based on the salary of a position for which work has not been performed or observed, as would be the case for a lawyer in a higher-level position for a single day.

117 Section 8.2 of Part 2of Appendix "B" specifies that "[e]mployees who have been on leave without pay for a part of the fiscal year may be eligible for a performance increase if they have been on strength long enough to permit a meaningful evaluation of performance."

118 In its argument, the AJC also referred to section 1.1 of Part 1 of Appendix "B" of the collective agreement, which sets out the policy objective of the performance pay plan. It submitted that in the phrase, "… to recognize and reward individuals in relation to their peers and subordinates," the term "peers" refers to lawyers in all LA groups as the true class for comparison. The term "peers" is not defined in the collective agreement or in its appendices. Turning to dictionary definitions, in the context of section 1.1, the plain meaning of "peer," as defined in the Shorter Oxford Dictionary, 1993 edition, is as follows: "a person of the same standing or rank as the person(s) in question; … an equal … ." Black's Law Dictionary, 8th edition, defines "peer" as "[a] person who is of equal status, rank, or character with another."

119 I cannot agree with that part of the AJC's argument. The term "peers" must be read in the context of Appendix "A", which sets out separate salary ranges for each category of LA. Furthermore, as illustrated by the LA-1 and LA-2A work descriptions, the type of work and complexity of duties in those categories are distinct, one from the other.

120 The employer submitted that Air Canada stated that if benefit coverage is not specified in a health plan or a collective agreement, changes to the administration of those benefits do not violate the collective agreement if the changes are based on what is "reasonable and customary." The AJC submitted that that phrase has a precise meaning in benefits plans and the insurance industry, and that it did not provide the employer additional discretion to limit the benefit granted under the collective agreement. The AJC pointed out that in Air Canada, the dispute concerned the proper interpretation of the phrase, not that a limit applied to the benefits in question.

121 Air Canada arose out of a policy grievance that alleged that the employer had violated the provisions of a benefits plan incorporated into the applicable collective agreement by reducing benefit coverage and changing the administration and payment of claims. An investigation had revealed that there had been some fraudulent claims and practices under the benefits plan. As a result, the employer issued a bulletin informing employees that the claims administrator would adjudicate claims more robustly and setting out several initiatives to that effect.

122 Before the issuance of the bulletin, the claims administrator processed claims for the items in question without many or any limitation on numbers and costs. After the bulletin, claims were processed on the basis of the claim administrator's determination of industry standards. The evidence was that the "reasonable and customary" standard was determined on the basis of claims experience in the industry as well as market reviews of costs. The arbitrator held as follows at page 15 of Air Canada: 

The arbitral authorities recognize that where benefit coverage is not specified in a Plan or a Collective Agreement, changes in administration on the basis of what is "reasonable and customary" coverage or standards do not amount to violations of the Collective Agreement, see Hotel-Dieu Grace Hospital and ONA, and Duke Energy Gas Transmissions and C.E.P.U., supra. The evidence in this case leads to the conclusion that while there has been a change in the application of standards of adjudication, there has not been a change in the provision of benefits promised in the Benefits Plan.

123 I agree with the AJC's submission that the dispute in Air Canada concerned the interpretation of the phrase "reasonable and customary", and not that a limit applied to the benefits in question. I find that Air Canada is of no assistance in this matter. 

124 Both parties relied on NRCC in support of their respective positions. In that matter, a union policy grievance sought a declaration that a one-time 37.5-hour vacation leave entitlement was not subject to the vacation cap and carry-over provisions in the applicable collective agreement. The one-time entitlement was a union collective-bargaining proposal that the 37.5-hour marriage leave in previous collective agreements be converted to a vacation leave. The marriage leave provision had been included in a section of the earlier collective agreements dealing with "Other Leave With or Without Pay," which included bereavement leave, court leave, volunteer leave, personnel selection leave, and maternity and parental leave, among others.

125 In NRCC, the parties had included the converted one-time vacation leave entitlement in the section of the collective agreements dealing with vacation leave. The evidence also showed that while other collective agreements negotiated by the same union included a clause that explicitly excluded the one-time entitlement from the vacation cap and carry-over provisions, in NRCC, such a clause was not included in the applicable collective agreement; nor did the union raise the issue during bargaining.

126 In NRCC, it was found that as the parties had agreed to position the former one-time marriage leave entitlement in a section of the collective agreement that addressed vacation leave and had not expressly excluded that entitlement from the vacation cap and carry-over provisions, the collective agreement language was clear that the one-time leave entitlement was included in the vacation cap and carry-over provisions.

127 I have re-read the NRCC decision and find that it does not assist me here. My decision in that case was based on the particular language of a vacation leave clause, which language I found to be clear and unambiguous. In the present matter, the collective agreement clauses are different and the language is different as well.

128 The AJC submitted that the employer's interpretation requires that performance pay be calculated based on multiple, varying rates of pay, which is not supported by the language of the collective agreement and would require a specific exception for prorating performance pay such as those set out in Part 2 of Appendix "B" of the collective agreement for employees on leave without pay (section 8.2) and those receiving acting pay (section 9.0 and following).

129 The AJC has framed the employer's interpretation as depriving the LAs of a benefit, which would require express language in the collective agreement. I do not agree with this categorization of the employer's position. The difficulty with the AJC's argument is that when the collective agreement and Appendices "A" and "B" are read as a whole, it is apparent that the objective of the performance pay plan is that lawyers be paid for the duties they have performed and that the time spent performing such duties must be sufficient to permit a meaningful assessment. Not to reward an employee for duties that he or she did not perform and was not assessed for does not, in my view, constitute deprivation of a benefit and further, is not supported by the language of the collective agreement. Indeed, if the employer were compelled to reward a lawyer for work not actually performed, it follows that the employer's monetary costs would be increased. As stated as follows at page 236 of Cardinal Transportation B.C. Inc.,and cited with approval in Wamboldt at paragraph 47:

Where a monetary benefit is asserted, it normally falls to the Union to show in clear, specific and unequivocal terms that the monetary benefit is part of the employee's compensation package. Such an intent is not normally imposed by inference or implication… .

130 In my view, the AJC has not met that onus. Nothing in the collective agreement or its appendices expressly provides that when a lawyer has occupied more than one classification in a fiscal year, performance awards must be paid based simply on the lawyer's salary as at March 31.

131 Concerning employees who have been on leave without pay for part of a fiscal year, as stated earlier in this decision, their eligibility for performance pay under section 8.2 of Part 2 of Appendix "B" is conditional on their having been on strength long enough to permit a meaningful evaluation of their performance. It follows that if such an employee returned from leave on March 30, he or she would not be eligible, which supports the view that employees must be assessed on the duties they perform.

132 Section 9.1 of Part 2 of Appendix "B" provides that employees who receive acting pay are eligible for performance pay at the higher level if certain conditions set out in sections 9.1.1, 9.1.2 and 9.1.3 are met. The condition in section 9.1.2 is that the employee must be on strength and in an acting situation on March 31 and in a position listed in section 3.1 of Part 2 on April 1. Thus, an employee assigned to an acting position on April 2 and reverting to his or her substantive position on March 30 would not meet the condition of being in an acting position on March 31. The same would apply to any employee in an acting position for a period in a fiscal year excluding March 31. However, section 9.2 of Part 2 provides that "[p]rorating the performance increase, based on the length of time in the acting assignment, is an option." By including this provision, the parties demonstrated an intention to deal reasonably with a situation that otherwise would have been unfair to an employee in an acting position that did not extend to March 31.

133 Furthermore, section 12.1 of Part 2 of Appendix "B" states that "[a] performance award will be included as part of salary for the period in respect of which it was paid." As stipulated in clause 23.01(a) of the collective agreement, an assessment of a lawyer's performance is to determine how well the lawyer has performed his or her assigned tasks during a specified period in the past. This language supports the interpretation that performance pay may be calculated on more than one rate of pay. Indeed, the AJC's argument concerning LA-1s expressed as follows in paragraph 12 of its supplementary reply submissions appears to acknowledge that interpretation:

12. The AJC's interpretation permits that where an LA-01 is promoted following a mid-year review, and the LA-01 has received a semi-annual range increase for the first half of the fiscal year, the LA01 (promoted during the second half of the year) is entitled to a performance award for the balance of the fiscal year calculated using his or her rate of pay as of March 31.

134 In addition, section 12.2 of Part 2 of Appendix "B" states in part that "[p]erformance awards will also not be considered part of salary … for salary calculations related to promotion or transfer."

135 While the collective agreement does not expressly stipulate that performance awards on promotion may be prorated, in my view, the employer's interpretation reflects the overarching purpose and objective of the performance pay plan, which is to reward eligible lawyers for the work they have performed. In my view, such an interpretation is not inconsistent with the language of the collective agreement and moreover is supportive of the performance pay plan policy objective in section 1.1 of Appendix "B", which is to ensure the accurate and consistent administration of performance pay.

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

IV. Order

137 The grievance is dismissed.

February 4, 2015.

Steven B. Katkin,
adjudicator

---

Annex

Article 15
Pay Administration

15.02 A lawyer is entitled to be paid for services rendered at:

1. the pay specified in Appendix "A" for the classification of the position to which he is appointed, if the classification coincides with that prescribed in his certificate of appointment … .

Article 23

Lawyer Performance Review and Lawyer Files

23.01 For the purpose of this Article:

1. a formal assessment and/or appraisal of a lawyer's performance means any written assessment and/or appraisal by any supervisor of how well the lawyer has performed his assigned tasks during a specified period in the past;
2. formal assessment and/or appraisals of lawyer performance shall be recorded on a form prescribed by the Employer for this purpose.

23. 02

1. When a formal assessment of a lawyer's performance is made, the lawyer concerned must be given an opportunity to sign the assessment form in question upon its completion to indicate that its contents have been read. A lawyer's signature on his assessment form shall be considered to be an indication only that its contents have been read and shall not indicate his concurrence with the statements contained on the form. A copy of the lawyer's assessment form shall be provided to him at the time the assessment is signed by the lawyer.
2. The Employer's representative(s) who assesses a lawyer's performance must have observed or been aware of the lawyer's performance for at least one-half (1/2) of the period for which the lawyer's performance is evaluated.

23.03 When a lawyer disagrees with the assessment and/or appraisal of his work he shall have the right to present written counter arguments to the manager(s) or committee(s) responsible for the assessment and/or appraisal decision.

23.04 When a report pertaining to a lawyer's performance or conduct is placed on that lawyer's personnel file, the lawyer concerned shall be given an opportunity to sign the report in question to indicate that its contents have been read.

Appendix "B"

Performance Pay Plan for Lawyers at the LA-1, LA-2A and LA-2B Levels

The following performance pay plan in effect on May 9, 2006 applies to lawyers at the LA-1, LA-2A and LA-2B levels, for the duration of the Law group arbitral award, as issued on October 23, 2009 (Arbitral award dated October 23, 2009, provision effective November 1, 2009)

Part 1

1.0 Policy objective

1.1 To ensure the accurate and consistent administration of performance pay for certain non-          Management Category senior excluded employees, including incentives to recognize and reward individuals in relation to their peers and subordinates.

2.0 Policy statement

2.1 It is government policy to pay certain senior excluded non-Management Category employees according to their assessed level of performance. This policy provides the means to achieve this. Its chief provisions are the following:

2.1.1 individuals may progress through the salary range by a series of variable increases related to the employee's assessed level of performance;

2.1.2 performance awards may be awarded to those whose salaries have reached the job rate and whose performance is fully satisfactory, superior or outstanding in a given year;

2.1.3 expenditures on salary administration must be controlled through a departmental performance increase budget.

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4.0 Exclusions

4.1 Employees affected by the Regulations respecting pay on reclassification or conversion whose salary is protected at a group and level not mentioned above are not subject to this plan. The relevant terms and conditions of employment apply to determine their appropriate salaries.

4.2 Employees absent on leave without pay are eligible for in-range performance increases or performance awards under this plan.

5.0 Policy requirements

5.1 Deputy Ministers/Deputy Heads must implement and adhere to the performance pay administration plan in their departments.

5.2 They must:

5.2.1 ensure that performance pay is administered according to the plan, based upon each employee's performance review and appraisal report;

5.2.2 provide all information, training, advice and guidance required to implement and administer the plan.

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Part 2

Performance Pay Administration Plan for Certain Non-Management Category Senior Excluded Levels

1.0 Purpose

1.1 This appendix presents guidelines for the consistent application of the performance pay administration plan throughout the public service.

2.0 Definitions

2.1 "Acting pay" (rémunération d'intérim) means the rate that an employee should be paid for a temporary assignment to a higher classification level position.

2.2 "In-range increase" (augmentation à l'intérieur de l'échelle) means an increase in salary based on assessed level of performance, that results in an upward positioning in the range (not exceeding the job rate).

2.3 "job rate" (taux normal) means the maximum rate of pay available to a qualified employee whose performance in the job is at least fully satisfactory.

2.4 "payroll" (masse salariale) means the sum of salaries paid to employees subject to this plan, in a particular department or agency.

2.5 "performance award" (prime de rendement) means a bonus payable to an employee whose salary has reached the job rate of the applicable salary range and whose assessed level of performance is fully satisfactory, superior or outstanding. It is payable in a lump sum and must be re-earned each year.

2.6 "retroactive period" (période de rétroactivité) means the period commencing on the effective date of the retroactive upward revision in remuneration and ending on the day approval is given.

3.0 Performance Pay Administration

3.1 In-range increases and performance awards are to be administered on April 1 of each year or on a date prescribed by the Treasury Board.

3.2 Expenditures on in-range increases and performance awards are controlled by a departmental budget, which may not be exceeded.

4.0 In-range increases

4.1 As a general guide, in-range increases up to the job rate, as a percentage of the employee's salary, may be granted annually for assessed performance as follows:

• Outstanding - up to 10%
• Superior - up to 7%
• Fully Satisfactory - up to 5%
• Satisfactory - 0%
• Unsatisfactory - 0%
• Unable to assess - 0%

4.2 Under no circumstances should an in-range performance increase be authorised for an employee whose performance has been assessed as "unsatisfactory".

4.3 Global performance ratings should be used to assist in the decision process for the determination of individual awards.

4.4 The Departmental performance pay budget is limited to five per cent (5%) of the departmental group payroll as at March 31. Only members of the group on strength March 31 andon April 1 in a position listed in paragraph 3.1 of this policy are eligible for the purposes of this exercise. Members of the group on leave without pay or on a maternity leave / paternal leave who would not normally be considered to be on strength, are, for purposes of this policy, deemed to be eligible.

4.5 Performance awards are limited to a maximum of ten per cent (10%) of an individual's salary (including a combination of in-range salary increase and lump sum payments). Performance must be at least fully satisfactory to be eligible for any lump sum award.

4.6 Performance awards for those paid below the job rate are to be applied as base salary increases within the current salary ranges. When the calculation of a performance award results in a salary that would exceed the current job rate, the difference is to be paid as a one-time lump sum.

4.7 Employees on full-time language training are deemed to be on strength and are eligible for payment under this plan.

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5.0 Performance awards

5.1 A performance award (bonus) may be granted to an employee whose performance has been assessed as fully satisfactory, superior or outstanding, and whose salary is already at the job rate or has just reached the job rate by the application of an in-range increase, and who is on strength on March 31st and April 1st. These lump sums must be re-earned each year.

5.2 Increases are to be limited to:

Outstanding performance - up to 10% of salary

Superior performance - up to 7% of salary

Fully Satisfactory performance - up to 5% of salary

5.3 The maximum permissible amount for the awards should not be automatically granted. Consideration must be given to factors such as the salary relationship with immediate supervisors or subordinates and, the number of consecutive years of above fully satisfactory performance.

6.0 Exceptions

6.1 Law Group (LA-1)

6.1.1 At the discretion of the Deputy Minister, the performance of legal officers at the LA-1 level may be reviewed on a semi-annual basis and in-range increase for performance granted consistent with the rates set out below. Performance awards (lump sum payments) are only paid out once a year.

7.0 Combined application of in-range increase and performance award

7.1 Some employees assessed as fully satisfactory, superior or outstanding will reach their job rate with in-range increases which are less than the amounts permissible under the guidelines. In these cases, deputy heads may grant a performance award in addition to the in-range increase. The combination of the two (2) amounts may not exceed the amounts permissible under the guidelines ten per cent (10%) of salary for outstanding performance, seven per cent (7%) of salary for superior performance and five per cent (5%) of salary for fully satisfactory performance.

8.0 Performance Pay for Employees on Leave without Pay

8.1 Employees who have been absent on leave without pay for the full fiscal year and have not returned to work by March 31 of that fiscal year are not eligible for any performance increase. They are not to be included in the calculation of the budget.

8.2 Employees who have been on leave without pay for a part of the fiscal year may be eligible for a performance increase if they have been on strength for long enough to permit a meaningful evaluation of performance. Any performance pay should be prorated for the time they have been back on payroll.

9.0 Performance pay while receiving acting pay

9.1 An employee who is receiving acting pay for a temporary assignment to a group and level covered by this plan is eligible for performance pay at the higher level when the following criteria are met:

9.1.1 The substantive rate of pay has reached the range maximum and the employee is no longer eligible for increments or in-range performance increases in the substantive level; or an increment or in-range performance increase in the substantive level does not result in a change to the acting rate of pay and performance of the higher level duties is assessed as fully satisfactory or better;

9.1.2 An employee on strength and in an acting situation on March 31st and in a position listed in paragraph 3.1 of this policy on April 1, is eligible for the purposes of this exercise. Members of the group on leave without pay or on a maternity leave / paternal leave who would not normally be considered to be on strength, are, for purposes of this policy, deemed to be eligible.

9.1.3 There are sufficient funds in the performance budget to award a performance increase.

9.2 The commencement date of the acting assignment will not affect an employee's eligibility for performance pay when these conditions are met. Prorating the performance increase, based on the length of time in the acting assignment, is an option.

9.3 Employees in acting status who are eligible for performance pay are to be included in the calculation of the department's budget.

10.0 Ineligible employees

10.1 If within the review period an increment or an in-range performance increase in the substantive rate of pay results in a salary increase on recalculation of the acting pay, the employee is not eligible for performance pay under this plan, and should not be included in the calculation of the budget.

11.0 Limitations

11.1 Under no circumstances are the in-range increases and performance awards paid under this plan to exceed the maxima available for the evaluated level of performance. Likewise, departments may not exceed their aggregate exceptional performance budget.

12.0 Salary-related benefits

12.1 A performance award will be included as part of salary for the period in respect of which it was paid. Any such award paid in the year of retirement, but related to the year prior to retirement, will be fully counted in the calculation of the five-year average salary for pension purposes. However, it will not be reflected in the level of coverage under salary-related benefits such as Supplementary death benefit and insurances.

12.2 Performance awards will also not be considered part of salary for the purposes of termination benefits such as severance pay and cash-out of vacation leave, or for salary calculations related to promotion or transfer.

13.0 Authorization

13.1 The Deputy Minister / Deputy Head is authorized to determine increases in salary and to make performance awards within the guidelines prescribed in this plan unless otherwise directed by the Treasury Board Secretariat.

13.2 On those occasions when the circumstances of an individual case are so exceptional that a department believes the salary administration plan guidelines should be exceeded, the Deputy Minister must obtain prior written approval from the Treasury Board Secretariat.