FPSLREB Decisions

Heard at Winnipeg, Manitoba,
March 11 and 12, 2014.

REASONS FOR DECISION

I. Individual grievances referred to adjudication

1        I am seized with seven grievances presented by employees of the Canada Revenue Agency (“the employer”) that were presented at different points in time in 2009. They all relate to an alleged violation of clause 45.08 of the applicable collective agreement for the Audit, Financial, and Scientific (AFS) Group between the Professional Institute of the Public Service of Canada and the employer (expiry date: December 21, 2014; “the collective agreement”). Clause 45.08 reads as follows:

45.08 Performance Bonus - Management Group

(a) At the discretion of the Employer, employees who perform Management Group (MG) duties during the annual performance review period, shall be eligible, subject to the conditions established by the Employer, to receive a lump-sum performance bonus of up to five percent (5%) of the employee’s salary of his/her substantive position on the last day of the annual performance review period.

(b) The lump-sum performance bonus awarded to employees under this clause shall not form part of salary.

2        Neil Wawrykow, Steve Mate, Jim Weiss, Sandra Campbell, and David Cherrett (“the grievors”) are all members of the employer’s Management Group and are team leaders. The grievances have in common an allegation that the employer applied the performance management process for the 2008-09 fiscal year and determined the salary bonuses contemplated in clause 45.08 arbitrarily, capriciously, and in bad faith, and hence, in violation of that clause.

3        On February 24, 2011, the employer raised an objection to an adjudicator’s jurisdiction to deal with these grievances, as they touch on matters falling within the employer’s exclusive management rights. Specifically, the employer argued that the grievances deal with performance evaluations and employee appraisals. Furthermore, it submitted that the grievors attempted to expand the scope of the grievances by referring to other related articles in their reference to adjudication, which was an attempt to modify the original grounds of the grievances, contrary to the principle established in Burchill v. Attorney General of Canada,[1981] 1 F.C. 109 (C.A.).

4        The bargaining agent responded that the grievances clearly refer to clause 45.08 of the collective agreement as having been violated. It pointed out that in numerous decisions, adjudicators have held that an employer’s use of discretion granted under a collective agreement is subject to arbitral scrutiny.

5        On February 12, 2014, in anticipation of the hearing, counsel for the employer reiterated the employer’s jurisdictional objection and asked that the jurisdiction question be determined ahead of the hearing, on the basis of written submissions.

6        The parties were informed that I had considered the matter and that I had decided to take the employer’s objection under reserve and to proceed with hearing the grievances on their merits, subject to the challenge as to their adjudicability. The grievances were grouped for a common hearing.

7        At the outset of the hearing, I was informed that two of the seven references to adjudication were withdrawn, Files No. 566-34-5081and 5080). Those files are ordered closed.

II. Summary of the facts

8        The grievors’ representative called three witnesses to testify: Ms. Campbell, Mr. Cherrett, and Mr. Mate.

9        At the material times, the grievors were employed as team leaders at the employer’s office in Winnipeg, Manitoba. On February 9, 2009, their supervisor, Mr. Chris Dudek, sent a “call” email that triggered the employee performance evaluation process for the fiscal year 2008-09. Mr. Dudek had been their supervisor for 9 of the 12 months under review.

10        As requested, the grievors prepared and submitted highlights of their accomplishments during the year under review. They had the opportunity to provide input to the assessment report (“the report”), while Mr. Dudek reviewed their statements and provided additional narrative where he felt it was warranted.

11        The three witnesses who testified had received a recommendation from their supervisor that they be eligible for a 3% performance bonus, based on his assessment of their “Effective People Management” (EPM) objectives, which he rated at the “very good” level (exemplary leadership in 2 of the 5 EPM objectives). Those assessments and ratings were essentially the same as in previous years.

12        Upon receiving the final version of the report, the witnesses testified that their performance bonuses had been set at 2%, on the basis of a “good” rating. The ratings were changed as a result of a review by the Review Committee. They were disappointed because they had been led to believe that management had approved a 3% bonus. Generally, senior management had always accepted the manager’s rating. Mr. Mate stated that he felt “annoyed and betrayed”.

13        Ms. Campbell introduced the employer’s “Performance Pay and Leave Guidelines for the Management Group/Gestion and HR/RH Equivalent” as they read in 2007 and 2008 (respectively, the “2007 Guidelines” and the “2008 Guidelines”). She also introduced a PowerPoint file of a presentation that she attended in June 2009 on the EPM assessment criteria for fiscal year 2008-09, which outlined a changed definition of the “leadership” and “exemplary leadership” factors. Mr. Cherrett and Mr. Mate did not attend the presentation.

14        Ms. Campbell stated that she had received 5% performance pay in previous years except for one year, in which she had received 3%. Her actions and management behaviour were no different in 2008-09 than they had been in those previous years. Therefore, she could reasonably have expected to achieve the “exemplary leadership” criterion. In her estimation, the changes to the definition made it a “harder to hit” target.

15        The employer called Paul Vienneau. At the material times, he was the assistant director of audit with the employer’s Winnipeg Tax Services Office. He testified that he was involved in the Review Committee process, which the employer set out as having two levels for 2008-09. The first level was to conduct a sample review of assessments made by managers to evaluate the validity and consistency of narrative to rating. The second-level review was to monitor the “MG and Equivalent HR/RH Performance Pay and Leave” process for consistency, fairness, and quality by making comparisons across the directorates within a branch and across the offices within a region with a view to ensuring consistency of rating to narrative and a reasonable distribution of ratings.

16        A Review Committee had existed in previous years. However, it had focused its review on the “excellent” ratings (the highest mark) for consistency. The review that took place for the assessment of year 2008-09 was more structured and more rigorous. The employer developed the new Review Committee process for 2008-09 further to the recommendation of a national working group convened in October 2008 to look into improving national consistency in the application of ratings.

17        The employer had developed briefing materials on the definition of “exemplary”, to ensure better consistency between assessments of employee performance made by different managers in different employer locations. In that spirit, the employer added a more detailed definition of how “exemplary leadership” should be translated into the narrative assessments prepared by managers.

18        Mr. Vienneau pointed out that the five EPM objectives for 2008-09 were the same as in previous years, although they were collapsed into three generic goals and objectives in the “2009 Performance Pay and Leave Guidelines for Management/Gestion and HR/RH Equivalent” (“the 2009 Guidelines”).

III. Summary of the arguments

A. For the grievors

19        The grievors’ representative first submitted that the employer improperly exercised their discretion in this matter by changing the performance evaluation process and by applying those changes retroactively.

20        The evidence establishes that the ratings definitions changed in spring 2009 and that the employer applied a new two-tier review system. The guidelines that should have been used to assess the grievors’ performance for the fiscal year 2008-09 were the 2008 Guidelines, which were in effect during the evaluation period. Those guidelines were similar to those of the previous year and those were used when employees met with their supervisors to establish the current year’s work objectives. Those guidelines were in effect when Mr. Dudek met with the grievors to review their performances for 2008-09. In March 2009, they were told that they would receive a 3% performance bonus, and no changes to the performance review process were identified.

21        In April 2009, the employer changed the definition of “exemplary leadership”, which is one of the assessment criteria applicable to the grievors’ performance. The bargaining agent representative submitted that that substantial change applied retroactively. In fairness, the change should have been made at the beginning of the review period, so that adjustments could have been made over the course of the year, as required. Clause 40.02 of the collective agreement is clear that employees must be provided with appropriate information before a review period. The policy in effect at that time was the one set out in the 2008 Guidelines.

22        The result was that the grievors’ performance reviews were not in fact done by the supervisor but by the Review Committee. Yet, clause 40.03(b) requires that the employer’s representative who conducts a review must have supervised the employee for at least 50% of the review period. The representative submitted that this process is unfair and that it constitutes an abuse of authority and an abuse by management of its discretion set out in clause 45.08. Improperly exercised discretion is tantamount to arbitrariness.

23        Therefore, the grievors’ representative sought the following remedies for them. For the three grievors who received a 2% performance bonus for the fiscal year 2008-09 due to the flawed process, their bonus should be adjusted to 3%. As for the two grievors who did not receive a performance bonus on the basis of a “did not meet” rating, their performance ought to be re-evaluated using the “2008 Performance Management Policy” set out in the 2008 Guidelines.

24        The grievors’ representative referred me to the following authorities: Jones and de Villars, Principles of Administrative Law,5^th Edition, 2009, at 174 and 195; Dubé v. Treasury Board (Department of National Defence), 2007 PSLRB 77; Allad v. Treasury Board (Transport Canada),PSSRB File No. 166-02-24466 (19950310), [1995] C.P.S.S.R.B. No. 27 (QL); and Salois v. Treasury Board (Correctional Service of Canada),2001 PSSRB 88. As for the employer’s jurisdictional objection, I was directed to Prévost v. Office of the Superintendent of Financial Institutions, 2011 PSLRB 119; and Matear v. Treasury Board (Department of Industry), 2008 PSLRB 11.

B. For the employer

25        Counsel for the employer first argued that the reference to clause 40.02 of the collective agreement purports to change the nature of the grievances and that it should not be considered. Counsel reiterated the employer’s objection to an adjudicator’s jurisdiction and argued that such jurisdiction in this case is limited to determinations of discrimination, bad faith, or arbitrariness. The grievors’ only challenge is based on an allegation that the performance process was conducted arbitrarily because it was conducted differently from how it had been in the previous year.

26        Counsel for the employer contended that the only change was to the definition of “exemplary leadership”. The objectives and goals set out in the 2009 Guidelines remained the same as the previous year’s. Counsel explained that the definition was changed to ensure greater consistency across the employer in the application of that criterion. It is not arbitrary to proceed in that fashion, as the employer had a legitimate management objective.

27        Counsel further submitted that the employer has a wide and expressly worded discretion under clause 45.08 with respect to the evaluation process. The adjudicator has no jurisdiction over the process.

28        Counsel for the employer referred to the following authorities: Ball v. Canada Revenue Agency, 2007 PSLRB 12; Bahniuk v. Canada Revenue Agency,2005 PSLRB 177; Bratrud v. Office of the Superintendent of Financial Institutions, 2006 PSLRB 63; and Zakaib v. Deputy Head (Canadian International Development Agency), 2009 PSLRB 90.

IV. Reasons

29        The Public Service Labour Relations and Employment Board’s case law is rather clear that an adjudicator does not have jurisdiction to review a performance appraisal as such (see Bahniuk and Ahad v. Treasury Board (Department of National Defence),PSSRB File Nos. 166-02-15840, 16038, and 16233 (19870126) and foll., [1987] C.P.S.S.R.B. No. 9 (QL)), unless of course the substantive evaluation process is set out in the collective agreement.

30        That is not so in this case. The clause on which the grievors based their grievances expressly signals that the employee evaluation process and eligibility for a performance bonus is a management right and is to be applied at management’s discretion, as follows:

45.08 Performance Bonus - Management Group

(a) At the discretion of the Employer, employees who perform Management Group (MG) duties during the annual performance review period, shall be eligible, subject to the conditions established by the Employer, to receive a lump-sum performance bonus of up to five percent (5%) of the employee’s salary of his/her substantive position on the last day of the annual performance review period.

(b) The lump-sum performance bonus awarded to employees under this clause shall not form part of salary.

[Emphasis added]

31        Clause 45.08 provides for an entitlement for employees to receive a lump-sum performance bonus of up to 5%, subject to the eligibility conditions established by the employer. Those conditions are not incorporated into the collective agreement and are left to the employer’s discretion in the exercise of its management rights. However, as stated in Bahniuk, I have jurisdiction, albeit limited, to make a determination as to whether by exercising its rights in relation to the grievors’ annual performance reviews, the employer acted in a discriminatory, bad faith or arbitrary manner.

32        Before addressing that question, I will deal with the employer’s argument that the grievors are attempting to broaden the scope of their grievances by referring to clauses 40.02 and 40.03(b) of the collective agreement, contrary to the Burchill principle.

33        With respect, I do not subscribe to that argument. As I understand the grievors’ position, they are not relying on those clauses as independent sources of their right but as incidental support for their allegation that the discretion conferred to the employer by clause 45.08 was applied arbitrarily. In any event, some of the grievances refer to clause 40.03(b), and I do not consider that referring to those two clauses changes the nature of the grievances, as understood in Burchill.

34        The heart of the grievors’ contention is that the employer improperly changed the ground rules upon which employees’ evaluations were conducted. The changes touched on an important criterion, displaying “exemplary leadership” as a team leader, which is the trigger to becoming eligible for performance pay. Recognition of exemplary leadership in any one of the EPM objectives could translate into a performance bonus between 2% and 5%. The key difference in the definition, as reflected in the PowerPoint presentation of June 2009 and the 2009 Guidelines, is that the following sentence was added after the definition of “leadership”:

A manager demonstrates “exemplary leadership” when their innovative or inspiring actions or behaviors, especially in the face of challenging circumstances, have a positive impact on people and results either at the individual, team or broader organization level.

35         The grievors argued that the employer applied those changes retroactively, after the end of the review period, which prevented employees from knowing in advance the criteria upon which their performance would be evaluated, thus depriving them of the opportunity to correct any misgivings or shortcomings during the course of the review period. The grievors also alleged that the two-tier system established to review the supervisors’ assessments of employees is inappropriate, in that persons other than the grievors’ managers actually conduct the performance reviews, without knowledge of the grievors’ work and accomplishments during the performance cycle under review. Therefore, the process constitutes an abuse of authority and arbitrarily affects the rights of employees under clause 45.08.

36        The employer explained the reasons that motivated the changes to its policy in April 2009. Performance assessment is in large measure a subjective judgment based on objective criteria. In particular, given the difficulty of applying the criterion of “exemplary leadership”, the employer provided a more detailed description of what should be understood and demonstrated in the narrative by the adjective “exemplary” in relation to the exercise of leadership in EPM.

37        In the same breath, the employer expanded on the Review Committee process in its 2009 Guidelines. It set up a two-tier Review Committee structure, one at the directorate level, the other at the Branch and Region level, essentially to ensure consistency in the narrative in relation to the rating. I note that the concept of a review committee existed in previous years.

38        The change affected not so much the factors to be assessed (e.g., leadership and its five objectives) but added more information on what had to be demonstrated to support an “exemplary leadership” finding, so as to provide more objectivity and consistency in its application. The 2007 Guidelines and the 2008 Guidelines also speak about exemplary leadership, although they offer no assistance to the assessor as to the grounds on which to assess the adjective “exemplary”.

39        The question before me then is whether, against that factual background, the employer acted in bad faith or in an arbitrary manner by establishing and applying the conditions related to the grievors’ eligibility for a performance bonus for the performance cycle of 2008-09. The grievors do not, and could not, challenge their evaluation as such or the assessment that was made of their performance. Such a challenge would take us into the realm of an inquiry into an exclusive management right, which cannot be reviewed at adjudication, as mentioned earlier.

40        The very narrow window of review in this case is whether a case has been made that the employer acted in bad faith or in an arbitrary manner by specifying, retroactively, how the criterion of “exemplary leadership” should be applied and what evidence-based actions and behaviour were required to support it.

41        In my view, the employer acted unreasonably and in an arbitrary manner when it reviewed the definition of “exemplary leadership” and applied it retroactively to the performance review year that had just ended.

42        A fundamental tenet of good management is to ensure that the expectations of employees about their performance and conduct are clearly communicated. This must be done at the outset of a performance review period and, as may be required, adjusted over the course of it.

43        The change the employer made in April 2009 was more than cosmetic or semantic. I consider it a substantive modification to the prism through which employees’ performance was to be assessed for the purpose of determining their eligibility for a performance bonus. In my view, it strikes directly at the heart of management’s expectations of its employees’ behaviour and the basis upon which management’s discretion is exercised. The added text to the 2009 Guidelines describes more concretely the types of behaviour, actions, and results that the employer would consider favourably when determining the employees’ eligibility for performance pay and, if eligible, the percentage of the bonus.

44        I am not suggesting that the employer was not within its rights to modify the parameters under which employees’ performance should have been assessed and the kind of evidence required to support performance ratings. Where it was at fault, in my view, was in applying those changes retroactively to a performance review year that had already ended. This made it impossible for the employees to know in advance their employer’s expectation with respect to their responsibilities for leadership in EPM. To put it colloquially, the employer “moved the goal posts” on employees well after the end of the performance year that was under review.

45        Consequently, I am persuaded by the grievors’ argument that such an approach satisfies the threshold of arbitrariness on the part of the employer in its application of clause 45.08 of the collective agreement, which allows me to review how it exercised its discretion under that provision.

46        I conclude that the employer improperly applied clause 45.08 in that respect in the circumstances that gave rise to the grievances, and for that reason, I find that the grievances are well founded on their merits.

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

V. Order

48        The grievances are allowed.

49        The corrective action sought is granted, to the following extent: the performance bonus for the year 2008-09 shall be adjusted to 3% for the three grievors who received 2%. As for the two grievors who did not receive a performance bonus on the basis of their “did not meet” ratings, their performance ought to be re-evaluated using the 2008 Performance Management Policy set out in the 2008 Guidelines.

50        I shall remain seized for a period of 30 days in the event that the parties encounter difficulties implementing this decision.

April 13, 2017.