FPSLREB Decisions
Decision Information
Termination (disciplinary) - Conflict of interest - Suspension during the employer's investigation - Reinstatement - the grievor was an officer in a Canada Employment Centre (CEC) and his duties were related to the employment insurance program - he also owned two corner stores - after a disciplinary investigation that lasted four and a half months, the employee's employment was terminated - the grievor presented a grievance against his suspension during the disciplinary investigation - he also presented a grievance against the termination of his employment and requested his reinstatement - the employer showed that the grievor had processed the files of two of his former employees, although the files had been assigned to other CEC officers - the employer established that the corner stores owned by the grievor had set in place a hiring and firing system under which employees alternated continually between one week of work and one week of unemployment - the employer showed that the grievor was aware of his obligations under the Human Resources Development Canada Code of Conduct, as well as the Conflict of Interest and Post-Employment Code of the Public Service - the employer argued that the grievor had placed himself in a conflict of interest situation by handling files of persons with whom he had had an employment relationship - the employer also argued that the grievor had placed himself in a conflict of interest situation by using information obtained in the course of his employment to benefit his corner stores - the grievor argued that his handling of the files of two of his former employees was limited to interventions that had no financial consequences - he added that, as regards the allocation of work at his corner stores, he was free to develop the method that best responded to his needs and that the method he had selected was legal and used in other businesses - he also claimed that the disciplinary investigation was not conducted properly - the adjudicator found that the grievor had placed himself in a conflict of interest - he concluded that, given the employer's laxness with respect to the disciplinary investigation, the termination of employment was not justified - he added, however, that in the circumstances the grievor's reinstatement was not desirable and substituted an award equivalent to 10-months pay. Grievance relating to the suspension denied. Grievance relating to the termination of employment allowed in part. Cases cited:McKendry (166-2-674); Threader v. Canada (Treasury Board), [1997] 1 F.C. 41; Ennis (166-2-8773).
Decision Content
Files : 166-2-28380 166-2-28381
Public Service Staff Before the Public Service Relations Act Staff relations Board BETWEEN JEAN-MAURICE BELLAVANCE Grievor and TREASURY BOARD (Human Resources Development Canada)
Employer Before: Guy Giguère, Member For the grievor: Denis Tremblay, Counsel For the employer: David Merner, Counsel Heard at Matane, Quebec, on September 1 to 4, 1998.
Decision Page 1 DECISION
Until the termination of his employment, the grievor, Jean-Maurice Bellavance, was an employee of Human Resources Development Canada. He began work on February 21, 1974 as an employee at the then Canada Employment and Immigration Commission (CEIC) and in May 1981, he was appointed an Agent II, at the PM-02 level, at the Canada Employment Centre in Matane.
Jean-Maurice Bellavance was first informed of the suspension of his duties by letter dated July 24, 1996 from André Gladu (Exhibit E-9), Assistant Deputy Minister, Quebec Region, Human Resources Development Canada. Mr. Gladu informed the employee that he had been the subject of an investigation as an employer and that there were sufficient facts to conclude that his conduct was contrary to the Code of Conduct of Human Resources Development Canada (hereafter referred to as the HRDC Code of Conduct) and the Conflict of Interest and Post-Employment Code for the Public Service (hereafter referred to as the Public Service Code of Conduct). Mr. Gladu also informed him that the period of suspension would be from July 16 to August 26, 1996, and that he had "[. . .] instructed your senior manager to proceed with an administrative investigation to determine whether allegations of fraud, conflict of interest and other offences that might be discovered during the investigation are valid".
The suspension without pay during the administrative investigation was extended on August 23 to September 23, 1996, on September 20 to October 31, 1996, and finally, on November 1, 1996 to November 29, 1996.
In a letter dated November 27, 1996, Mr. Gladu informed Jean-Maurice Bellavance that he had approved the termination of his employment, as of November 29, 1996. The following two paragraphs give the reasons: [Translation] [. . .] The review of your file shows that you placed yourself in a situation of conflict of interest and of apparent conflict of interest. It also reveals that as a private businessman you issued or had issued false records of employment and/or records of employment with incorrect reasons. You gave preferential treatment to your former employees and to certain members of your family. Lastly, the review reveals
Public Service Staff Relations Board
Decision Page 2 that you personally intervened in the processing of unemployment insurance claim files belonging to some of your employees, thereby contravening the directives issued by the Claims Branch.
Your actions contravene the Code of Conduct and the Conflict of Interest and Post Employment Code for the Public Service. Further, you have broken the relationship of trust between you and the employer.
[...] Mr. Bellavance filed two grievances that are considered in this decision. In his first grievance, dated August 6, 1996, he objects to his suspension without pay during the initial investigation, and requests his immediate reinstatement and reimbursement of his lost wages during the initial period of the suspension, that is, from July 16 to August 26, 1996.
In his second grievance, Mr. Bellavance states that: [Translation] Following notice of my dismissal on November 27, 1996, I contest the decision. I request my reinstatement with reimbursement of lost wages and all benefits. I intend to show that the reasons given for this dismissal are false.
The facts The following facts relevant to the settlement of the grievances were revealed during the hearing.
As previously indicated, Mr. Bellavance has been an employee of CEIC since 1974. In 1980, he began operating a grocery-convenience store and, in 1984, he opened a second convenience store that was part of the same company, Les Entreprises J.M. Bellavance Ltée.
On June 29, 1984, Mr. Bellavance filed a Statement of Conflict of Interest with his employer (Exhibit E-4). His statement was made in writing to his director at the Matane CEC, at the time Denis Fortin, who countersigned the statement. Mr. Bellavance indicated in this statement that "[...] there is no ambiguity between my
Public Service Staff Relations Board
Decision Page 3 work as an unemployment insurance agent and as owner of the company [...] " and he submitted an application for two "Career Access" projects.
On September 11, 1984, the Executive Director, Personnel of the CEIC, Jérôme Cyr, informed Jean-Maurice Bellavance that his activities as owner of Les Entreprises J.M. Bellavance Ltée did not place him in a conflict of interest. He wrote to him telling him that he could take advantage of the "Career Access" projects because he was not involved in this type of program as a CEIC employee. However, in order to protect his integrity and that of the CEIC, Mr. Bellavance was required to submit his application for the projects to a CEC other than the Matane CEC. He also informed Mr. Bellavance that, if his official duties in the CEIC or his personal interests changed, "I request that you re-examine your situation and inform us of any potential or real conflicts of interest that may result therefrom".
In 1986, Mr. Bellavance signed a certification to the effect that he had read and understood the Public Service Code of Conduct and reported that he owned assets identified under section 22(b) (such as proprietorships, private companies, etc.), but that owning or possessing such assets did not give rise to a real or potential conflict of interest relative to his official duties and responsibilities.
In 1989, Mr. Bellavance decided to change the way in which he operated his convenience stores by changing the employee work schedule and adopting the "7/7" method. Under this method, once employees qualified for unemployment insurance, that is, after they had accumulated the minimum number of weeks required, they would experience a work stoppage of more than seven consecutive days so that they could claim unemployment insurance benefits. Other individuals were hired to replace them and, the following week, the employees who had been laid off would return to work while the new employees were in turn laid off. The employees declared their earnings to the CEIC for the week worked by filling out their unemployment insurance card.
In 1993, Mr. Bellavance decided to lease his convenience stores and to no longer be involved in the management of his businesses. He leased his convenience store on Dion Boulevard on December 1, 1993 and the one on Desjardins Street on March 21, 1994, as shown in the leases filed in evidence.
Public Service Staff Relations Board
Decision Page 4 On January 6, 1996, Mr. Bellavance entered the CEC and saw Line Charette, a former employee of his Desjardins convenience store. It was after the holidays and a very busy time for the CEC because many businesses, like "Canadelle", where Ms. Charette had been working, were closing their doors and therefore there are a great many unemployment insurance claims. She had filled in her card and was waiting in the reception room. Although Lyne Blouin, an Agent I was actually responsible for Ms. Charette's file, Mr. Bellavance took her card because he knew her and entered the data it contained in the computer system.
A few days later, the computer rejected the entries because of a processing error. It was then that Ms. Blouin learned that Mr. Bellavance had handled the file and she informed their supervisor, Christian Fournier. When informed, Mr. Fournier considered this an unusual situation because an agent is not allowed to work on a file assigned to another agent, unless an agreement has been reached between them or authorization has been given by management. Further, Mr. Fournier felt that Mr. Bellavance had contravened a directive stating that, when a file is inactive for three months, the claimant must make a new claim to reactive it. The reason for this is that new facts could have arisen during this three-month period, such as an illness, other work, etc.
Mr. Fournier asked Mr. Bellavance for an explanation and he responded: "Do what you have to do". Mr. Bellavance did not receive any disciplinary measure but, in light of the lack of an explanation, Mr. Fournier went to see the CEC Director, Mr. Fortin, for advice. Mr. Fortin asked him to do some more checking.
Prior to these events, Mr. Bellavance had always had excellent performance appraisals and was highly thought of by his supervisor and his director. In the context of the 1995 budget cuts, the atmosphere at the CEC had changed and Mr. Bellavance had had an argument with the Director when the latter asked him to perform the tasks of an Agent I along with his own. Mr. Fournier did not take any action regarding the incident with Ms. Charette's file but he did, on March 22, 1996, include mention of it in the appendix to Mr. Bellavance's performance appraisal (Exhibit G-3), stating:
Public Service Staff Relations Board
Decision Page 5 [Translation] [. . .] I had to meet with Jean-Maurice concerning a file that was not handled according to existing procedures. He apparently re-activated the claim of a person whose claim had been dormant for more than 3 months, even though the directive is clear in such situations. I tried to determine why he had acted in this manner but he simply told me to do what I had to do.
I have trouble understanding why Jean-Maurice acted in this way and I have tried to discuss it with him on several occasions but he is very difficult to approach. Discussions are very difficult.
[. . .] Mr. Fournier testified that, initially, he was unaware of the relationship between Ms. Charette and Mr. Bellavance but ex-employee/ex-employer relationship and he felt that this was a real or potential conflict of interest. He informed the CEC Director, Mr. Fortin.
Pierre Sirois, the Director responsible for the Lower St. Laurence network, confirmed that Mr. Fournier had called him to tell him that Mr. Bellavance appeared to be using questionable practices, that there were allegations of conflict of interest. To verify the validity of these concerns, Mr. Sirois first authorized Serge Picard to determine whether there was cause for an investigation. Following an oral report from Mr. Picard, which indicated that there was in fact cause for investigation, he asked the Program Investigation and Control Branch in Montréal to assign an investigator from outside the region for greater impartiality. This was why, in June 1996, Marcel Pouliot was instructed to conduct the investigation in collaboration with Mr. Picard.
Mr. Pouliot's investigation focused on Mr. Bellavance as an employer. Mr. Pouliot went to Matane in the first week of July to investigate and to meet with some twenty persons, including former employees of Les Entreprises J.M. Bellavance Ltée. He testified that there were many comings and goings of employees, many layoffs, and that this situation raised questions.
Mr. Pouliot determined that there was a "process" of layoffs and unemployment. It was a work method that he had not seen in his 26 years of service Public Service Staff Relations Board
that, later on, he discovered the
Decision Page 6 as an investigator. This method was called the "7/7" method: one week of work and pay, followed by a seven-day layoff covered by unemployment insurance. He testified that, contrary to what was reported on the records of employment, it could not be said that there was a shortage of work.
Mr. Sirois, Director of the Lower St. Laurence network, testified that, based on this investigation report, he had no doubt that Mr. Bellavance had employed questionable practices as an employer regarding the issuing of records of employment, and the hiring and layoff of employees at his business. He considered the situation to be extremely serious, particularly in the context of a small semi-urban town like Matane, where there was a lot of gossip.
Mr. Sirois therefore decided to have a meeting with Mr. Bellavance at which the Director of the Matane CEC, Mr. Fortin, was also present. After hearing the allegations against him, Mr. Bellavance refused to discuss the situation. Under cross-examination, Mr. Sirois admitted that he had suggested that Mr. Bellavance resign, but he had refused saying, "I will not resign. We will see each other again".
As a result of this meeting, the investigators' reports and the absence of an explanation by Mr. Bellavance, Mr. Sirois decided to suspend him without pay for the duration of the investigation. He believed that there were several of Mr. Bellavance's files as an employer in which the facts were sufficiently serious to justify this suspension without pay. He felt that it was important that Mr. Bellavance not have access to these files during the investigation, as a security precaution and because it was standard procedure for Human Resources Development Canada.
Mr. Sirois then consulted a staff relations specialist at the Montréal office, Ms. Legault, and then discussed his recommendation to suspend Mr. Bellavance with Mr. Gladu, Assistant Deputy Minister, Quebec Region, HRDC. Mr. Gladu accepted the recommendation and suspended Mr. Bellavance by letter dated July 24, 1996. Robert Gagné, an investigator, was assigned to conduct an administrative investigation of Mr. Bellavance as an employee. The investigation focused on the allegations of conflict of interest in the handling of unemployment insurance claims.
Public Service Staff Relations Board
Decision Page 7 Mr. Gagné testified that he consulted the files in Rimouski and found many anomalies in the files of the former employees of Les Entreprises J.M. Bellavance Ltée. He also found several instances in which Mr. Bellavance had intervened in the files of former employees, placing him in a position of conflict of interest.
In August 1996, Corporal Ouellet of the RCMP and Mr. Pouliot, the person who investigated Mr. Bellavance as an employer, went to Mr. Bellavance's home. They met with him outside his house and asked to see the accounting records of Les Entreprises J.M. Bellavance Ltée. After consulting with his lawyer, Mr. Tremblay, by telephone, Mr. Bellavance refused because the Unemployment Insurance Act states that the employer must hand over these documents at his place of business and not at his home. Mr. Pouliot and Corporal Ouellet accepted this argument, but since Mr. Bellavance no longer operated his convenience stores, they could not access the books at his place of business. They returned in November 1996 with a warrant, but did not find the payroll records.
Following Mr. Gagné's administrative investigation, a meeting was held on November 13, 1996 with Mr. Bellavance, who was accompanied by Mr. Tremblay. Mr. Gagné was present, as was his superior, Mr. Lajoie and the Director of the Lower St. Lawrence network, Mr. Sirois. Mr. Gagné asked questions about each of the anomalies he had discovered, but Mr. Tremblay stated, on behalf of his client, that his client was not present to provide answers at this point and that he would wait to provide explanations "in appeal".
Under cross-examination, Mr. Tremblay confronted Mr. Gagné with Exhibit E-3, a letter of convocation dated November 4, 1996 addressed to Mr. Bellavance, in which Mr. Sirois wrote: "[. . .] I am now in a position to inform you that the investigation is been completed and I am able to invite you to a meeting to inform you of the specific allegations against you". Mr. Gagné stated that, at the meeting, Mr. Tremblay explained that Mr. Bellavance did not have to respond to the allegations and that he would exercise this right "in appeal". Mr. Lajoie then responded that it was the duty of the employee to answer the employer's questions concerning his conduct and to explain the facts noted in the file, even if this had not been mentioned in the letter.
Public Service Staff Relations Board
Decision Page 8 Mr. Gagné also testified that Mr. Tremblay and Mr. Bellavance did provide explanations on the question of the Statement of Conflict of Interest contained in Exhibit E-4. Mr. Bellavance explained to them that, at the time, in 1984, he was operating two convenience stores in Matane as a company and that he had informed the employer accordingly.
Following this meeting, Mr. Sirois met with Ms. Legault, a staff relations expert, and Mr. Lajoie and Mr. Gagné, to evaluate all of the evidence and the seriousness of the allegations. The recommendation that they made to Mr. Gladu was for termination of employment. Mr. Gladu followed their recommendation and decided to terminate Mr. Bellavance’s employment. He informed Mr. Bellavance of this decision in the letter dated November 27, 1996, cited at the beginning of this decision.
Mr. Bellavance testified that, since the termination of his employment, he has been working full-time in his business. He would have preferred to work for another employer in an office job but, under the circumstances surrounding his leaving his job at the CEC, all the doors of employers in the region were closed to him. He owns some twenty housing units and also receives rental income from the two convenience stores involved in this case. He does a lot of home construction and renovation work. This physical work is very demanding and he would prefer a desk job at HRDC, even if it meant working in Rimouski.
The issues In addition to the facts already recounted, the evidence essentially dealt with the following questions: did Mr. Bellavance break the HRDC Code of Conduct and the Public Service Conflict of Interest and Post-Employment Code for the Public Service in dealing with claims from his ex-employees? Was the termination justified in light of the offences alleged, especially the "7/7" policy? Below is a summary of the main testimony on these points.
The codes of conduct Mr. Sirois, Director, Lower St. Lawrence network, testified that every year when he made his rounds of the employment centres in his region, he reminded employees of the requirements of the HRDC Code of the Conduct and the Public Service Code of
Public Service Staff Relations Board
Decision Page 9 Conduct. However, he stated under cross-examination that there was no training program, as required under the Public Service Code of Conduct (Exhibit G-2, page 5, number 10, first paragraph)..
Mr. Tremblay cross-examined Mr. Sirois regarding Exhibit E-1, a memorandum dated 1992 addressed to all employment centre directors and all network directors, from Mr. Gladu, at the time the Director of Operations. The subject was "Service delivery and the Code of Conduct" and the fourth paragraph reads as follows: [Translation] An employee shall not handle the files of an employer or worker who is a relative, a close friend, a person with whom he is living, or someone with whom he has personal or business interests. If the file of any such client should come before an employee, the latter shall submit it to management, which will take the appropriate action.
Mr. Sirois admitted that nowhere in this document was the issue of former employees specifically mentioned. However, in his view, the spirit of the Public Service Code of Conduct was broader and the employer relied on the judgment of its employees. Mr. Sirois also testified concerning the third paragraph on page 2 of Exhibit E-1: [Translation] Employees responsible for processing claims for benefits may be placed in a position of apparent conflict of interest when they are required to process, for example, a claim made by a work colleague, a relative, a person with whom they have personal or business relations. In such situations, the file should be submitted to the supervisor who will decide whether it should be processed locally, sent to another office or sent to the SISA.
According to Mr. Sirois, the expression "with whom he has personal or business relations" covers the case of former employees who might submit claims to the CEC and to Mr. Bellavance.
Mr. Bellavance testified regarding his knowledge of the codes of conduct and the concept of conflict of interest. He stated that the CEC Director had warned them about not putting themselves in a conflict of interest situation with relatives, friends
Public Service Staff Relations Board
Decision Page 10 and acquaintances in general, and that he remembered receiving the HRDC Code of Conflict in 1991, but did not remember having received the Public Service Code of Conduct in 1990. The procedure he had adopted in Matane with his colleague Solange Plante was that she would handle files that Mr. Bellavance thought might present a conflict of interest for "acquaintances in general". In response to the question of what he meant by "acquaintances in general", he defined it as "persons that one knows well".
He testified that he was familiar with the memorandum (Exhibit E-1) from Mr. Gladu on conflicts of interest. He stated: "It talks about business relations". He did not consider that he was in a conflict of interest with a former employee. He stated that he was always very cautious in not authorizing benefits on records of employment from his own business and, in the case of his son and his wife, he never processed their claims. Mr. Bellavance explained in particular: "It was always my policy never to authorize the claims of an employee, or even a former employee." In the case of Line Charette, where he forwarded the claim, he stated: "I never gave it a thought; it was such a small thing."
Mr. Bellavance testified that the Director, Mr. Fortin, as well as the supervisor, Mr. Fournier, knew that he owned the convenience stores and they were customers, especially of the store on Dion Boulevard, because they lived very close to it, and everyone at the CEC knew it.
Solange Plante, Mr. Bellavance's colleague, also testified concerning the concept of conflict of interest. A long time ago there had been a meeting on this topic and she remembered from it "never to process a claim from someone you know really well personally, or a neighbour, for example."
She testified that, if she had a file in which she knew the person and she was alone in the CEC, in Mr. Bellavance's absence, she would give it to Mr. Fournier, her supervisor, who normally sent it to Caupascal or to Rimouski for processing, for example, in the case of the spouse of a CEC colleague. But even if she knew the person, she would not have sent for processing elsewhere a file for a "9(6)(d)". She explained this saying that a "9(6)(d)" did not involve "any material implication, any
Public Service Staff Relations Board
Decision Page 11 financial impact" because it involved terminating one claim early in order to establish a new claim.
The allegations against Mr. Bellavance Mr. Fournier, Mr. Bellavance's supervisor at the time, testified that there were three factors that led to the launching of the investigation. First, it was Ms. Blouin who was handling Ms. Charette's file and Mr. Bellavance meddled in the file of another employee without an agreement on it. Second, the said file had been inactive for three months and it was against CEC directives to reactivate such a file. And third, Ms. Charette was a former employee of Mr. Bellavance, so that there was a conflict of interest or the appearance of a conflict of interest.
Mr. Fournier also pointed out that, through Mr. Bellavance's intervention, Ms. Charette received preferential treatment because the normal delay in receiving benefits is three to four weeks and, by intervening directly in the file, the delay was reduced. The normal three to four week delay arises from the need to fill out a claim containing all of the information to be processed.
After Mr. Pouliot's investigation, Mr. Gagné was assigned to the administrative investigation and it was he who testified mainly on the facts that led to Mr. Bellavance's dismissal.
Exhibit G-14 is reproduced below, except for the social insurance numbers. It provides a summary of Mr. Pouliot's investigation. Mr. Gagné testified concerning the various anomalies discovered in the files of former employees of Les Entreprises J.M. Bellavance Ltée. Column D shows the last day of work. Column E refers to situations in which Mr. Bellavance would find himself in a conflict of interest with respect to claims for benefits from former employees. Column F is a week code used by the CEC. Column G describes the alleged offences, if any, and Column H, the delay in issuing the record of employment.
Public Service Staff Relations Board
Decision Page 12 Reproduction of Exhibit G-14 [Translation] 14-07-96 Page 1 DEPAN.XLS Entreprises J.M. Bellavance. VEK-211153 - SIN. born 14-11-1950 A B C D E F G H 1 N First S.I.N. L.D.W Conflict DPP Information collected and confirmed Delay in issuing a names . m e s 2 B Simon 14-09-91 762 False termination certificate N-82291860 142 days. el la v a n c e 3 B Simon 15-08-92 814 False termination certificate # N-84830600 169 el la v a n c e 4 B Madeleine 13-06-92 782 Artificial shortage of work - favouring his e wife r ni e r 5 B Madeleine 15-05-93 834 Artificial shortage of work - favouring his 35 e wife r ni e r 6 B Madeleine 19-03-94 886 Artificial shortage of work - favouring his 105 e wife r ni e r 7 C Line 31-07-93 x 843 Artificial shortage of work - favouring Linda 14 h Lacroix a r e tt e 8 C Line 12-03-94 x 888 Artificial shortage of work - favouring Linda 19 h Lacroix a r e tt
Public Service Staff Relations Board
Decision Page 13 e 9 G Louise 03-05-93 830 wife of subject - no known irregularity a g n é- B el la v 10 G Louise 12-03-94 882 wife of subject - no known irregularity 79 a g n é- B el la v 11 H Sylvie 31-10-92 816 no known irregularity 73 a rr is s o n 12 H Sylvie 09-10-93 x 868 no known irregularity 121 a rr is s o n 13 J Margot 22-05-92 789 Incorrect reason for termination - Quit 89 e n ki n s 14 L Linda 30-10-93 x 854 Artificial shortage of work - favouring Line a Charette c r o ix 15 L Ghislaine 02-08-92 802 Incorrect reason for termination - dismissal 87 e (replaced by Dany Lévesque)) v e s q u e 16 L Dany 05-12-92 x 809 Artificial shortage of work - 7/14 32 é v e s q u e 17 L Dany 09-10-93 x 854 Artificial shortage of work - 7/14 26 é v e s q u e 18 L Josée 16-10-91 n/a accountant acting on instructions of JMB - not issued é never received ROE. v e s
Public Service Staff Relations Board
Decision Page 14 q u e 19 P Christine 08-10-93 851 Artificial shortage of work - 7/14 e rr o n 20 T Jocelyne 17-07-93 839 Artificial shortage of work - 7/14 r u c h o n 21 T Jocelyne 12-03-94 891 No irregularity 79 r u c h o n 22 T Eugéna 22-05-93 n/a From 1987 to 1993, worked "under the not issued u table" for $5.00/hr - r c o tt e 23 6 4 false records of employment 16 infractions Marcel Pouliot, ISA
Public Service Staff Relations Board
Decision Page 15 The first case on which Mr. Gagné testified was that of Line Charette, where he believed there were two conflict of interest situations. The first is found in a document in Exhibit G-9, entitled [Translation] " Claim for benefits - Supplementary information". Ms. Charette filed a claim to terminate her benefits early in order to establish a new claim for benefits. Mr. Bellavance approved this claim under paragraph 9(6)(d) of the Unemployment Insurance Act, noting: "[...] No exclusion or inelig. to serve". This decision was dated July 23, 1994. The other situation was that which appears in Exhibit G-4, where the user code is shown as "Bellavance". This is a computer entry by Mr. Bellavance in Line Charette's file where, for the week of December 17, 1995, he indicates remuneration. On this point, Mr. Gagné testified that there was a directive which clearly states that, when a file is inactive for three or more months and the claimant requests that benefits begin again, the old claim may not be reactivated, but rather the request should be treated as a new claim, which was not done in this case in which Mr. Bellavance reactivated an old claim almost six months later. It was concerning this file that a note was included in Mr. Bellavance's appraisal, which was sent to Mr. Gagné during his investigation.
The next case is that of Linda Lacroix. Ms. Lacroix worked for the "Gazor" convenience store, one of the convenience stores of Les Entreprises J.M. Bellavance Ltée. In a letter dated August 15, 1994 to Ms. Lacroix (Exhibit G-10), Mr. Bellavance told her that "[. . .] the Canada Employment and Immigration Commission agrees to grant you a disability period from August 1, 1994 to September 16, 1994. " According to Mr. Gagné, this was another irregularity because there was an employee-employer or former employee-former employer relationship.
The next case involved Dany Lévesque. Ms. Lévesque worked for Mr. Bellavance's convenience store on Dion Boulevard. Mr. Gagné testified that, in this file (Exhibit G-8), he noted various interventions by Mr. Bellavance despite the fact that Ms. Lévesque was his former employee. On April 20, 1994, Ms. Lévesque filed a claim to terminate her unemployment insurance benefits so that she could file a new claim. Mr. Bellavance authorized this action under paragraph 9(6)(d) of the Unemployment Insurance Act. The file contains the statement, "[. . .] no exclusion [. . .]", with Mr. Bellavance's initials and the date of November 18, 1993. Ms. Lévesque's last day of work for Mr. Bellavance's business was October 9, 1993. Thus, it was barely a month and a half later that he handled her file. Public Service Staff Relations Board
Decision Page 16 Under cross-examination, Mr. Gagné stated that, in his view, the conflict of interest arose from the business relations that existed, or had existed, between Mr. Bellavance and his former employees. Mr. Bellavance had previously had a business relationship with these persons as their employer. Is there a conflict of interest? That is the question that the grievor should have asked himself and that the members of the community might ask themselves.
Mr. Gagné also explained that, in his opinion, records of employment should be completed by the employer within five working days of the termination of employment. However, he noted that, in the case of Mr. Bellavance's convenience stores, there were often completed after the deadlines (Exhibit G-14, column H).
There was also the case of Viel Desrosiers who, following a tip, was investigated by Guy Savard, an investigator assigned to the Matane CEC; he found nothing out of order. Mr. Bellavance handled this file indicating "case in order". Mr. Gagné stated that Mr. Bellavance had a choice: he could have gone back to the investigator for more information, but he did not do so. According to certain information, Mr. Desrosiers was Mr. Bellavance's tenant. He had placed his signature on a file belonging to a person he knew; this constituted a conflict of interest.
Mr. Gagné also testified concerning the "7/7". He stated that this was a system that enabled people to collect unemployment insurance benefits every second week when there was no real shortage of work. In his experience as an investigator, a convenience store is a business that operates 12 months of the year; there is no shortage of work. He had asked himself why there were so many layoffs when they were hiring? Why report a shortage of work when someone is hired the next day?
The "7/7" system is allowed in only two instances. Such a system must be approved within the context of a job creation program and in a business that would normally be laying off workers. An example would be the memorandum of understanding in the case of job-sharing. Another instance in which the "7/7" would be allowed without a memorandum of understanding would be to meet needs, but employers would still have to meet certain conditions. The first condition would be that the number of unemployment insurance claimants would not increase and the second, that the duration of employment would not decrease. One such example
Public Service Staff Relations Board
Decision Page 17 would be a seasonal business which, rather than remaining open for only six months, would open for 52 weeks a year and not create any unemployment. The employees would work shortened shifts but for 52 weeks rather than six months.
In the case of Les Entreprises J.M. Bellavance Ltée, there was no memorandum of understanding and no authorization, but there was a substantial increase in the number of claimants. This system required greater expenditures from the unemployment insurance fund. Although not an expert in this area, Mr. Gagné calculated that between 1992 and 1994, it required $100,000.
Under cross-examination, Mr. Gagné admitted that he had based his decision on whether the "7/7" was allowed on the file of "Les Fruits de mer de l’est du Québec Ltée" (a memorandum from S. Ricci on this subject was submitted as Exhibit G-12). He consulted the Montréal technical expert to find out whether the "7/7" system, as set up in Mr. Bellavance's business, was legal. He admitted that he had not checked to see if other businesses in Matane were using the "7/7" and he did not consult the technical expert in Matane.
Mr. Gagné also testified that, in order to conduct his investigation, he needed the payroll records from Les Entreprises J.M. Bellavance Ltée but that Mr. Bellavance had refused to turn them over to him. Mr. Gagné needed them to verify the records of employment and the reasons for the termination of employment, but they were never provided. He wanted to find out whether the employees were still employed by Mr. Bellavance while they were receiving unemployment benefits. Access to the books would have facilitated his work and have shown which weeks were covered by unemployment and which had been paid in the "7/7" system; this information did not appear in the documents in Mr. Gagné's possession, that is, not on the records of employment and not in the claims for benefits. Mr. Gagné added that he was able, without access to the books, to prepare a table showing the beginning and end of the employees' periods of work and the records of employment.
Mr. Bellavance was questioned concerning the case of Line Charette. With respect to Exhibit G-9 in particular, he testified that, under paragraph 9(6)(d) of the Unemployment Insurance Act, a claimant is able to terminate an unemployment insurance claim. As for Exhibit G-4, he stated: "Ms. Charette gave me her card and I
Public Service Staff Relations Board
Decision Page 18 entered it in the computer. All of the cards we receive have holes punched in them. I never thought there was anything wrong with it". He also stated that, had he wanted to hide what he had done, he could have used the former OLIS system and the user code would never have shown up.
Mr. Tremblay filed Exhibit E-6, a letter dated December 11, 1995 from the technical expert, Mr. Labrie, which states that the Canadelle company was preparing for a massive layoff. Mr. Bellavance stated that Canadelle closed it doors on Christmas Eve, as it did every year, and he had acted on the basis of this fact.
Under cross-examination and in response to Mr. Merner's question, "You stated that a conflict of interest involved acquaintances. Would Line Charette not be an acquaintance?", Mr. Bellavance explained that: "Yes, I was acquainted with her, but since I had closed my convenience stores, it was obvious that I could work on these files. However, I did not authorize any new claims."
Mr. Bellavance also explained that, in each of the files of the former employees in which he had intervened, his interventions were inconsequential, almost routine. Linda Lacroix's case (Exhibit G-10) involved a medical certificate attesting to Ms. Lacroix's incapacity and it was the CEC's policy to approve this type of claim. In Dany Lévesque's case (Exhibit G-8), it was a decision in accordance with paragraph 9(6)(d) of the Act; that was the only intervention. Mr. Bellavance specified that he would not have intervened in this way for a current employee: "No, when it was my own employees, it was other agents. I would never have done a 9(6)(d)." He added, "My policy was always never to authorize benefits for an employee or even a former employee."
Public Service Staff Relations Board
Decision Page 19 Mr. Bellavance testified that he did not know Viel Desrosiers. Mr. Desrosiers was not his tenant, but rather the spouse of his tenant, Nathalie Gauthier. Mr. Fournier lived close to the convenience store and undoubtedly saw Mr. Desrosiers in Ms. Gauthier's company (Exhibit G-11). According to the tip, Mr. Desrosiers allegedly started fishing on or about February 25, 1994. Mr. Savard did some checking and discovered that there was no fishing in February because the river was frozen. Since it was impossible to fish in February, Mr. Bellavance had approved his claim without question.
Mr. Bellavance then testified on the "7/7" system he used in his business. He admitted this fact and he stated: [Translation] "I adopted the "7/7" policy in order to have a larger pool of trained employees available at all times, which allowed me to have trustworthy, trained people and this was important because they were the only people in the stores. I always had a pool of four employees for each convenience store. In this way, I did not need any part-time workers. Prior to 1989, I had two full-time employees per convenience store and two part-time for the weekends. The person who was on unemployment week of the "7/7" could work and, from time to time, I hired him in the convenience store when our employee was ill or absent."
Mr. Bellavance testified that the "7/7" system was an employer schedule and there was nothing illegal about it. When he gave "shortage of work" as the reason on the termination of employment forms, it was because he had two employees in the same position. He also testified that there were other businesses that worked the same way, including the "St. Gélais" convenience store, since 1985, and the "Audet" grocery store, and there was nothing illegal. He had handled the unemployment insurance files of employees from the "St. Gélais" convenience store and the benefits had been approved. Richard Labrie, Insurance Services Advisor (ISA) at the Matane CEC, had looked into this situation and Alexandre Chouinard, Special Insurance Services Advisor (SISA) had been consulted.
Public Service Staff Relations Board
Decision Page 20 Under cross-examination, Mr. Merner questioned Mr. Bellavance about the "7/7" system and especially about his obligation as an employee to protect the unemployment insurance fund. Mr. Bellavance answered that the Act and regulations were there to protect the fund. He added: [Translation] If there is a loophole, a gap, it is not my responsibility to close it. The changes in business have not been reflected in the 1971 Act. If it is not prohibited, and if it is an option for the business, then I will take advantage of it. There is no directive that prevents me from employing two people in the same position. I was free to do that. The "7/7" was accepted by the Matane CEC; nothing happened."
Except for Christine Perron and Linda Lacroix, who worked 52 weeks because they worked days, and Simon Bellavance, who was a casual employee in the summer, Mr. Bellavance admitted that all of the other employees had worked the minimum number of weeks to qualify and that they were entitled to unemployment insurance and introduced the "7/7". They worked one week and were on unemployment the next week. The evidence shows that, in two years, there were no new employees; there was simply a rotation, the "7/7".
In the case of his spouse, Ms. Gagné-Bellavance, the reason for hiring her under the "7/7" was that during vacations or when there was a problem with an employee who found the work too stressful, she would fill in. Ms. Gagné-Bellavance could also provide supervision since she was on the premises and could ensure that there was no stealing going on.
Mr. Bellavance also testified that he had not informed management at the CEC or the CEIC in general of his use of the "7/7" in his business.
As for the company records, Mr. Bellavance testified that they were destroyed in 1997. In August 1996, on the advice of Mr. Tremblay, he refused to turn them over to Corporal Ouellet and to Mr. Pouliot because they appeared at his place of residence and not his place of business, contrary to the provisions of the Act. When the RCMP officers returned with a warrant in November 1996, he had left the payroll records on the desk and they allegedly had had the opportunity to see them or to take them, but they did not do so "so I thought they no longer needed them". After his termination of
Public Service Staff Relations Board
Decision Page 21 employment, he divorced and moved in 1996 and in 1997. He destroyed the accounting records when he moved in 1997.
Solange Plante, a colleague at the Matane CEC, came to testify on Mr. Bellavance's behalf. Questioned about the "7/7", she stated that it was a work schedule and that she was aware of three employers in Matane who used the system: Les Fruits de mer de l’est du Québec Ltée, the Audet et Fils grocery store, which has since closed, and the St. Gélais convenience store. She also testified that, on various occasions, she had had "questions from employers as to whether the practice was legal. I told them that it was, as long as they respected the Labour Standards Act, the minimum wage and that Employment and Immigration was not there to set employer's work schedules". Ms. Plante also testified that the Investigation and Control Section had investigated the St. Gélais convenience store. The case was sent to Alexandre Chouinard, SISA at the regional level.
According to Ms. Plante, only 20 per cent of employers complete the records of employment within five working days as set out in the Act.
Arguments For the employer Here is a summary of Mr. Merner's main arguments. First, Mr. Merner argued that sufficient training had been given at the Centre for Mr. Bellavance to know his obligations under the HRDC Code of Conduct and the Public Service Code of Conduct. Mr. Sirois had shown that he had made several visits to the Matane CEC, that the codes had been distributed and that training had been given to the staff. Mr. Sirois explained that it was the intent of the Code that was paramount and that the Code counted on the judgement of the staff, even if it did not state that a former employer was included in cases of conflict. Mr. Sirois was correct to count on the judgment of the staff and Mr. Bellavance and Ms. Plante revealed this in their testimony. For example, when Mr. Bellavance said, "acquaintances, the people whom I know well" or when Ms. Plante said, "If there was a file in which I knew the person and I was alone, then I would send the file to Rimouski". The code does not make specific mention of the spouse of an employee, but Ms. Plante knew that it was
Public Service Staff Relations Board
Decision Page 22 covered. It is not possible to describe all possibilities; one must rely on the judgment of the people involved.
It is also prohibited under the Public Service Code of Conduct (Exhibit G-2, page 4, paragraph (g)) to use information obtained in the course of one's work for personal purposes. Mr. Bellavance used information obtained in the course of his duties as an employee to benefit, as an employer, from the unemployment insurance fund. What is worse is that he had an obligation as an employee to protect the fund. There were two opposing interests here: the public interest in protecting the security of the unemployment insurance fund and Mr. Bellavance's interest to use these funds to assist him in paying his employees. This is where the conflict of interest arose.
Mr. Bellavance explained his actions by referring to the investigation that was made of the "7/7" system by Richard Labrie, ISA, in the 1980s, but he was unable to provide documents in support of his claim. These documents are not therefore accessible to the public, nor even to employer's counsel. Mr. Bellavance used this information to set up his system and is using it now to justify his actions. No evidence was presented to show that management was aware of the "7/7" system used by Mr. Bellavance. On the contrary, the employer's reaction was to suspend Mr. Bellavance when it heard that he had used this system. Even if Mr. Bellavance had acted correctly in setting up his "7/7" system, there is still a flagrant appearance of conflict of interest.
Second, in terms of the alleged offences, Mr. Bellavance allowed himself freedom not allowed of others. It was shown that he knew Line Charette but, according to him, his intervention in her file was harmless. He gave himself permission to meddle in the file of a person he knew and which was not assigned to him. According to Mr. Fournier, his supervisor at the time, there was not enough information to process this file. Mr. Bellavance should have handed the file over to someone else. Then, when Mr. Fournier asked him for an explanation, he said: "Do what you have to do"; that is what sparked the investigation. The investigators found five other conflict of interest situations and the "7/7" problem. The conflict of interest is important, but what is worse, what is more serious, is the "7/7". According to the testimony of the investigators, the records of employment of Mr. Bellavance's employees were false records of employment because they gave "shortage of work" as
Public Service Staff Relations Board
Decision Page 23 the reason for the termination of employment. Convenience stores operate 52 weeks a year; the "7/7" system normally involves 26 weeks worked and 26 weeks on unemployment. Then why did the records of employment not show 26 weeks of work?
In reality, employees worked the minimum number of weeks required to qualify for unemployment insurance. As an explanation, Mr. Bellavance stated that he was entitled to exploit the loopholes in the system. According to the testimony of the investigator, Mr. Gagné, there were two legitimate ways for the employer to set up the "7/7": either with a memorandum of understanding or without prior authorization, if it would not create any additional expense for the unemployment insurance fund. The problem was that, with Jean-Maurice Bellavance's system, there was an increased number of claimants, involving an amount of approximately $100,000 for the years 1992 to 1994 alone. This leads us to the question of the security of the unemployment insurance fund, which is a factor that has been accepted in adjudication case law. Mr. Sirois, and the security officer, Mr. Gagné, indicated that Mr. Bellavance presented a risk to the unemployment insurance fund. The employer has the obligation to protect this fund.
The problem is that an employee, in this case Mr. Bellavance, used the information he obtained in the course of work and from his professional expertise to his benefit in his private life. "At the very least, if the adjudicator finds that there was no conflict of interest", there is clearly an appearance of a conflict of interest in the fact that an employee, without authorization and without an agreement, gave himself permission to use the unemployment insurance fund to subsidize the wages of his own employees.
Third, there is the issue of the relationship of trust. The seriousness of the offences could have been mitigated if Mr. Bellavance had collaborated or had explained his actions, if he had acknowledged his errors, or even if he had demonstrated that he had learned a lesson. The first time that Mr. Bellavance gave any explanation was at the last level of the grievance procedure in November 1997. This was the first time that Mr. Bellavance answered the employer's questions. "Should the adjudicator decide that termination of employment is not warranted, the date to be used for calculation of the suspension should be the date of this first explanation,
Public Service Staff Relations Board
Decision Page 24 that is November 1997." Throughout the investigation, Mr. Bellavance kept saying, "We will see in appeal." As for the leases, they were submitted at the hearing.
Mr. Bellavance never produced the payroll records of Les Entreprises J.M. Bellavance Ltée. Today, he said that they had been destroyed. This point certainly impacts on his credibility. Mr. Merner argued that, in labour law, the refusal to explain one's actions constitutes a basis for disciplinary measures in itself. Even when an employee is facing allegations, the employee has an obligation to explain his conduct to the employer. The fear of incriminating oneself or the desire not to provide elements of proof to the employer are not acceptable grounds and Mr. Merner cited in support of this position the decision in Re Toronto East General Hospital Inc. and Service Employees International Union [1975], 9 L.A.C. (3d) 311. On the sanctions, Mr. Bellavance did not respond in accordance with his obligation to provide an explanation and, in the context, he could have produced the books, but he refused to do so. "His refusal to respond should, at the very least, justify the period of suspension from July 1996 to the day on which the decision is rendered."
Credibility is essential in this case. The employer's reputation is at stake in a small community such as Matane. Mr. Bellavance, through his conduct toward management regarding the payroll records for his convenience stores and in his testimony, certainly does not have the same credibility as the managers, Mr. Sirois and Mr. Fournier, who were honest, direct, sensitive to Mr. Bellavance's interests and responsible in their duties.
Other factors to be considered, which make the matter even more serious, is the fact that Matane is a small town, where everyone knows each other and the fact that Mr. Bellavance knew exactly what he was doing. An employee who gives himself permission to build "an unemployment factory", and, who abuses his employer's trust, or who gives the appearance thereof, should suffer the consequences. Accordingly, the relationship of trust with the employer is broken.
Lastly, Mr. Merner argued that the investigation was not conducted properly. While the letter of convocation was not identical to that described in the Operations Manual entitled [Translation] "Administrative investigation for disciplinary purposes" (Exhibit E-2), this was not a fundamental error because the operations manual is
Public Service Staff Relations Board
Decision Page 25 flexible. Moreover, there were two types of investigations: one on the employer file, by Mr. Pouliot and then, subsequent to that investigation, an administrative investigation of the employee, by Mr. Gagné. In theory, they were two parallel investigations, but for legitimate reasons, the information in one was used for the other. This disclosure of information is allowed under section 127 of the Unemployment Insurance Act and Mr. Merner submitted as an example a standard copy of the Minister's instrument of delegation.
The following decisions were cited: Teeluck (Board file 166-2-27956); Kikilidis (Board file 166-2-3180); McKendry (Board file 166-2-674); Re Toronto East General Hospital Inc. and Service Employees International Union (supra); and Tripple and The Treasury Board (Federal Court of Appeal file A-66-85).
For the grievor Mr. Tremblay's arguments can be summarized as follows. First, on the question of conflict of interest, there was never any training program, contrary to what is stipulated in the Public Service Code of Conduct (Exhibit G-2, paragraph 10). The employer certainly did not provide any evidence of conduct that contravened the Public Service Code of Conduct because nowhere does it specify "former employee" or even "employee". These words ("former employee" or "employee") are not explicitly mentioned in the memorandum from André Gladu on this topic (Exhibit E-1), nor covered indirectly by the words "personal or business interests" or "business relations". Further, the employer should have provided evidence from an expert of the contravention of the Public Service Code of Conduct. The investigator, Mr. Gagné, himself stated in his testimony that Mr. Lajoie, his boss, was the conflict of interest expert. Mr. Gagné is not a conflict of interest expert, nor is he an expert to testify on the "7/7" system or on job sharing.
Mr. Bellavance was entitled to own businesses and, in 1984, he declared them. In 1989, Mr. Bellavance introduced into his businesses a new operating method when he set up the "7/7" work schedule. It must be remembered that Les Entreprises J.M. Bellavance Ltée is an employer that is entitled to establish a work schedule based on the available positions. Employees worked there on a rotating basis. It was legal, known to everyone and was being done elsewhere. Mr. Bellavance's supervisor and the
Public Service Staff Relations Board
Decision Page 26 CEC Director lived very close to one of the convenience stores and regularly saw the convenience store employees. According to Mr. Tremblay, it was known that the staff at these convenience stores filed claims for unemployment insurance benefits because they came into the CEC; therefore, it was all above board.
At no time did Mr. Bellavance use devious tactics. He took the action of which he is accused with the full knowledge and in full view of everyone. In Ms. Lévesque's file, he even signed his name and initials (Exhibit G-8). In Ms. Charette's file, it was a totally innocent intervention, as he said. Also, as Ms. Plante indicated in her testimony: "In the case of a 9(6)(d) termination, I would intervene for a neighbour. There would be no problem with that."
Second, if the employer had had all of the information rather than just that provided by Mr. Gagné, it would never have terminated Mr. Bellavance’s employment. Mr. Bellavance's intervention in Line Charette's unemployment insurance file was a small thing, he did nothing wrong, he even signed his initials to the file. That is why he told his supervisor, Mr. Fournier: "Do what you have to do." When the supervisor used the opportunity of Mr. Bellavance's performance appraisal to comment on the Charette incident, he did so three months later (Exhibit G-3), on March 23, 1996, and took no disciplinary action at that time. It was not until Mr. Bellavance's return from sick leave that he was told that he must take a week of paid leave because he was under investigation. All of a sudden, it was decided that this intervention in Ms. Charette's file warranted a special investigation of an event that had occurred in January 1996. In actual fact, the employer was trying to abolish Mr. Bellavance's position because layoffs were expected at the CEC as a result of Minister Martin's 1995 budget.
In the case of Viel Desrosiers, even if he had been one of Mr. Bellavance's tenants and if someone else had conducted the investigation, all Mr. Bellavance did was file the file. A tenant is not even specified in the Code.
In the case of Linda Lacroix, the period of incapacity was not preferential handling; it was simply a physician's report that the person was providing.
Mr. Gagné testified that there were only two possibilities for the "7/7" to be done legally: by memorandum or by job sharing. But Mr. Gagné never spoke to the
Public Service Staff Relations Board
Decision Page 27 staff of the Matane CEC, in this instance Ms. Plante or the technical expert. If he had done so, he would have been told that, at that time, other businesses were operating on the same principle, without a memorandum and without job sharing. The "7/7" was not job sharing because, in job sharing the number of hours worked is reduced to create positions for two people in the same week. But at Les Entreprises J.M. Bellavance Ltée, there was in fact a shortage of work because another employee was working that week.
As for the arguments that the "7/7" threatened the security of the unemployment insurance fund and that false records of employment had been issued, the RCMP returned the documents to Mr. Bellavance and no civil or criminal action was taken against him or his former employees. Moreover, it is incorrect to say that, under the traditional system, the unemployment insurance funds would not have been committed. Under the traditional approach, one employee would have worked five days a week and the other would have worked part-time two days a week. The part-time employee could have collected unemployment insurance. The advantage of the "7/7" for the employer was to have trained, reliable staff and to be able to keep them.
As for the relationship of trust, and especially Mr. Bellavance's refusal to explain his actions, the employer's statements need to be qualified. From the outset, there was an atmosphere of mistrust created when, on July 6, 1996, Mr. Sirois asked Mr. Bellavance to resign. The latter told him: "We will see in appeal." Mr. Sirois adopted the attitude of someone who had already made a decision, regardless of the explanations he might receive, without even having completed his investigation. That constituted blackmail because Mr. Sirois was threatening to take action if Mr. Bellavance did not resign.
Further, at the meeting on November 13, 1996, Mr. Bellavance was not given a reasonable period of time to respond. He was unable to respond at the time that he was informed of the allegations and he was dismissed just 11 days later.
Mr. Tremblay argued that an employee does not have to provide his employer with all information and that, in any event, the employer must have followed at least a minimum of procedure, something that was not done in this case. The investigator,
Public Service Staff Relations Board
Decision Page 28 Mr. Gagné, never met with Mr. Bellavance during the investigation and he never asked him for the payroll records from his business. The Unemployment Insurance Act allows for the retrieval of payroll records at an employer's place of business and not at his home. Mr. Bellavance's credibility cannot be impugned on this point. Mr. Bellavance refused to turn over his books to Mr. Pouliot because the latter asked for them at his residence.
Lastly, the investigation process was tainted by irregularities and the Operations Manual entitled "Administrative investigation for disciplinary purposes" (Exhibit E-2) was not followed. Mr. Sirois chose Mr. Picard, a colleague of Mr. Bellavance in Rimouski, to conduct a pre-investigation of Mr. Bellavance under the Unemployment Insurance Act. Then Mr. Picard conducted the investigation itself with Mr. Pouliot. Contrary to subsection 94(11) of the Unemployment Insurance Act, Mr. Pouliot and RCMP officers went to Mr. Bellavance's residence to look for the payroll records. The investigation was to have been completed on August 9 according to the mandate given on July 24, 1996 (Exhibit E-11) by Mr. Gladu but, after several extensions, it was not until November 1996 that the investigation was completed.
Mr. Sirois had, in fact, already made his decision and consequently, Mr. Bellavance cannot be blamed for a lack of cooperation. According to the Operations Manual entitled "Administrative investigation for disciplinary purposes" (Exhibit E-2, page 18), the letter of convocation sent to Mr. Bellavance should have stated the allegations against him and indicated that he would have an opportunity to respond to them. In actual fact, in the letter of convocation dated November 4, 1996 (Exhibit E-3), Mr. Sirois stated that the purpose of the meeting was to inform Mr. Bellavance of the specific allegations against him. At no point was it indicated that he would have to explain his actions. Nevertheless, even though he was not required to do so, given the nature of the convocation, Mr. Bellavance did explain that there was no conflict of interest because he owned two convenience stores and he had made the declarations in 1984 concerning said ownership.
In Mr. Bellavance's case, elements of the employer investigation were used in the employee investigation. This means that the latter investigation was not conducted properly. The employer did not adhere to the policies on administrative investigations and yet Mr. Bellavance is accused of not respecting the Public Service
Public Service Staff Relations Board
Decision Page 29 Code of Conduct in which there is no mention of the concept of a conflict of interest with a former, or even a current, employee.
The conduct that led to the suspension took place on January 6, 1996 with the Charette file. After receiving a performance appraisal in March, Mr. Bellavance was suspended in July. There was no risk to security because Mr. Bellavance worked for six months after the event in question. Mr. Bellavance is an employee who had always been trusted until then. The evidence shows that there was no cause to suspend Mr. Bellavance.
According to case law, the adjudicator must take into consideration the length of the suspension. In this instance, the investigation was extended beyond August and, during the administrative investigation, there was no communication with the employee. "Even if the adjudicator finds that the grievor was in a position of conflict of interest, it would not justify the ultimate punishment, if one relies on the case law."
The following decisions were cited: K... (Ville de) and the Association des policiers de K. . . Inc. (D.T.E. n o 92T-100); Canadien National et Association des policiers du Canadien National (D.T.E. n o 93T-23); Syndicat des employées et employés de bureau d'Hydro-Québec, section locale 2000 et Hydro-Québec (D.T.E. n o 93T-629); Chatterton et Angelica international ltée. (D.T.E. n o 93T-869); Banque Laurentienne du Canada et Syndicat des employées et employés professionnels et de bureau (D.T.E. n o 96T-15); Union des chauffeurs de camions, hommes d'entrepôts et autres ouvriers, section locale 106 c. Imbeau (D.T.E. n o 96T-726); Société canadienne des postes et Syndicat des postiers du Canada (D.T.E. n 95T-218); Fraternité des policiers de la ville de X. et X. (Ville de) (D.T.E. n o 94T-202); Blanchard v. Control Data Canada Ltd, [1984] 2 S.C.R. 476; Fraternité des policiers de la Communauté urbaine de Montréal Inc. v. Montréal; Urban Community, [1985] 2 S.C.R. 74; McManus (Board files 166-2-8048 and 166-2-8078); Casselot (Board file 166-2-3352); Vaillancourt (Board file 66-2-3617); and Simon Bellavance and the Minister of National Revenue (Tax Court of Canada file 97-906(UI)).
Public Service Staff Relations Board
Decision Page 30 Reasons for decision In short, the employer claims that Mr. Bellavance's termination of employment was justified because he placed himself in a position of conflict of interest by intervening in the unemployment insurance files of certain former employees of his convenience stores, by establishing in these convenience stores a "7/7" system, which turned them into an "unemployment factory", and by issuing false records of employment to the employees of these convenience stores. The grievor argues that he was not in a conflict of interest by intervening in the files of former employees, that the "7/7" method is legal and therefore that the records of employment were completed in accordance with the standards applied to employers in the region.
After considering all of the evidence submitted, the arguments of counsel and the case law cited during the hearing, I have reached the following conclusions.
First, on the question of conflict of interest, in 1984, Mr. Bellavance declared that he was the owner of two convenience stores, and in 1986, he signed a document certifying that he had read and understood the Public Service Code of Conduct. This Code states, in article 6, the responsibility of employees to conform to several quite strict principles, which they undertake to observe under article 7. The Code does not give specific examples but rather provides general principles. Paragraphs (a), (b), (d) and (g) of article 6 of the Code of Conduct are relevant to this case: Principles 6. Every employee shall conform to the following principles:
(a) employees shall perform their official duties and arrange their private affairs in such a manner that public confidence and trust in the integrity, objectivity and impartiality of government are conserved and enhanced;
(b) employees have an obligation to act in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law;
[. . .]
Public Service Staff Relations Board
Decision Page 31 (d) on appointment to office, and thereafter, employees shall arrange their private affairs in a manner that will prevent real, potential or apparent conflicts of interest from arising, but if such a conflict does arise between the private interests of an employee and the official duties and responsibilities of that employee, the conflict shall be resolved in favour of the public interest;
[. . .] (g) employees shall not knowingly take advantage of, or benefit from, information that is obtained in the course of their official duties and responsibilities and that is not generally available to the public;
[. . .] The memorandum from André Gladu concerning conflicts of interest (Exhibit E-1) was addressed mainly to employees of the CEIC. It stipulated that employees should not handle claims of "[. . .] anyone with whom he has personal or business interests. [. . .]" (Exhibit E-1, page 1, paragraph 4) and, further on (Exhibit E-1, page 2, paragraph 3), that they could "[. . .] be placed in a position of apparent conflict of interest when they are required to process, for example, a claim for benefits [. . .] from a person with whom they have personal or business relations." I am convinced that that includes the situation where a CEIC employee has a business and employees of his own. And while former spouses, former friends, former associates, former tenants and former employees were not specifically mentioned, they are still covered by these examples. Moreover, the last paragraph of this memorandum encouraged employees to refer to the Public Service Code of Conduct.
Mr. Bellavance admitted during his testimony that he had intervened in the files that were the subject of the employer's allegations, but that his position was that there had been no resulting financial benefit for his former employees, and that his intervention was routine, automatic and inconsequential. While his initial position was that the Code of Conduct does not explicitly mention "employee" or "former employee", he himself admitted that he would never have handled the files of his former employees for the purpose of approving a claim for benefits. The nuance he saw was that he had allegedly not given any financial benefit or preferential
Public Service Staff Relations Board
Decision Page 32 treatment, so that, in his opinion, there was no potential or apparent conflict of interest.
He also admitted that he saw the "7/7" system as a "loophole in the system, a gap that he exploited". According to his testimony and that of Ms. Plante, another convenience store and a grocery store in Matane also operated on this system. However, Mr. Bellavance had to consult with the experts at the Montréal office in 1995 in the case of Les Fruits de mer de l’est du Québec Ltée to verify whether this method was approved for that seasonal business, which wanted to remain open all year. For his part, Mr. Gagné stated that the "7/7" was allowed only if there was a memorandum of understanding and in cases like that of Les Fruits de mer de l’est du Québec Ltée, where the duration of employment did not decline and the unemployment insurance premiums did not increase. Mr. Gagné admitted that he did not verify whether other businesses in Matane were using the "7/7" and he did not consult the technical expert (ISA) in Matane.
In McKendry (supra), Edward B. Jolliffe, Q.C., Chief Adjudicator (as they were called at the time) clearly expressed in his decision the rule governing conflict of interest: The essential requirements are that the public servant should serve only one master and should never place himself in a position where he could be even tempted to prefer his own interests or the interests of another over the interests of the public he is employed to serve. Those requirements constitute the rationale of the doctrine that he should avoid a position of apparent bias as well as actual bias, and that he should never place himself in a position where -- as Dean Manning puts it -- "two interests clash, or appear to clash".
It is my view that, in handling the files of his former employees, Mr. Bellavance placed himself in a position where he might have preferred their interests or even his own over the public interest.
Public Service Staff Relations Board
Decision Page 33 Moreover, in Threader and Spinks v. Her Majesty in Right of Canada represented by the Treasury Board, [1987] 1 F.C. 41 (page 57), 68 N.R. 143 (page 152), Mahoney, J. described as follows the criteria that can be applied to determine whether there is an appearance of conflict of interest: Would an informed person, viewing the matter realistically and practically and having thought the matter through, think it more likely than not that the public servant, whether consciously or unconsciously, will be influenced in the performance of his official duties by the considerations having to do with his private interests?
I am convinced that a person as described by Mahoney, J. above would believe that Mr. Bellavance, in handling the files of his former employees, consciously or unconsciously, would have been influenced by considerations of personal interest in performing his duties, even if he did not give them any preferential treatment or financial benefit.
I am also of the opinion that Mr. Bellavance placed himself in a conflict of interest by using, for his own benefit, information obtained in the course of his duties and which was not generally available to the public. In effect, the "7/7" system is not an established program, nor is information on it widely known among businesses and the population; consequently, the employee contravened article 6(g) of the Public Service Code of Conduct. Before implementing the "7/7" system in 1989, Mr. Bellavance could have acted with the same transparency he showed in 1986 for the "Career Access" projects and informed management. Along these lines, I think it appropriate to cite the comments of David H. Kates, then Deputy Chairman, in Ennis (Board file 166-2-8773): The Public Servants Conflict of Interest Guidelines make it abundantly clear that not only must an employee be circumspect in the type of outside activities he engages in, particularly where he is liable to secure a financial gain, but he must consciously avoid activities that might appear to compromise his effectiveness as a public servant. Where there may exist the slightest doubt that such extra curricular activities may appear to impair his effectiveness as an employee, the public servant is duty-bound to disclose his outside business interests to his superiors. Obviously, should such disclosure occur, the employer may in the exercise of its judgment direct the employee to divest himself of those interests and thereby cease to engage further in the
Public Service Staff Relations Board
Decision Page 34 impugned activity. In such circumstances, the employee may elect to resign his position as a public servant so that he may continue to participate in those private business interests. There is absolutely no question that when a public servant engages in outside activities that may be perceived to cast the slightest shadow upon his duties and responsibilities as an employee, a conflict of interest may reasonably be concluded to exist. In such instances, the onus rests upon the public servant to take sufficient and definite corrective action to remove any such conflict.
As for the records of employment, it would appear clear to me that in the section "Reason for issuing this ROE" and especially in section 22 (Comments), the records of employment should have clearly indicated that it was a "7/7" system. To enter "shortage of work", as Mr. Bellavance testified he did, appears to be subterfuge to me, or at least a lack of transparency, intended to hide the reality. Further, I find that Mr. Bellavance did not reveal the nature of his activities to his employer, as he was required to do under the Code of Conduct as an employee.
From Mr. Tremblay's arguments on the investigation process, I agree that the Operations Manual entitled "Administrative investigation for disciplinary purposes" (Exhibit E-2) was not followed to the letter. However, there was not legal obligation to apply this manual, as is indicated in the memorandum from the Regional Director, Personnel, Ms. Binette, dated May 4, 1990, attached to the manual. However, it would have been preferable for the letter of convocation to the meeting in November 1996 to have mentioned the allegations against Mr. Bellavance and it would have been preferable to indicate to him that he would have the occasion, at the meeting, to provide explanations. Similarly, it would have been logical, during their investigation, for Mr. Pouliot or Mr. Gagné to have met with Mr. Bellavance to ask him for explanations concerning the allegations.
However, between January and November 1996, Mr. Bellavance had other opportunities to explain his action and he did not take advantage of any of them: not at the beginning of this case, when Mr. Fournier asked him for explanations, not later, in March 1996, in his appraisal report, not at the meeting with Mr. Sirois and Mr. Fortin, where he learned of the allegations against him. Once he was suspended and threatened with termination of employment, he could have -- in order not to lose his livelihood -- chosen to provide as much explanation as possible, even if the letter
Public Service Staff Relations Board
Decision Page 35 of convocation did not invite him to do so. He could also have asked for a short delay to examine and respond to the specific allegations that had just been presented to him. He did not seize any of these opportunities to give his version. I therefore have no reason to believe that he would have provided more explanation if the investigators had asked him for them during their investigation or following the letter of convocation. Consequently, it is my view that, despite its shortcomings, the administrative investigation did not cause any irreparable harm to Mr. Bellavance. However, in future, it would be to the benefit of all parties for investigations to be conducted in accordance, as much as possible, with the Operations Manual entitled "Administrative investigation for disciplinary purposes" (Exhibit E-2).
It is my opinion that the employee placed himself in a conflict of interest situation contrary to the Public Service Code of Conduct and that, in light of the seriousness of the actions alleged against him, the relationship of trust with the employer was seriously damaged. The fact that Mr. Bellavance did not provide any explanation until the last level of the grievance procedure and at the hearing of his grievance certainly did nothing to rebuild this relationship of trust. Moreover, it was not until the hearing that he provided a copy of the leases showing that he was leasing his convenience stores. He never provided the payroll records for his business and, at the hearing, he explained that they had been destroyed in 1997. I do not find this explanation by Mr. Bellavance credible, since he told me that he waited until "the appeal" to explain his actions and then, before the hearing, he destroyed the payroll records that might have supported his comments and demonstrated his good faith to his employer.
As for mitigating circumstances, Mr. Bellavance is an employee with 24 years of seniority at the CEC and who, until then, had always received very good performance appraisals. At the age of 47, and with his many years of service, he could even had been contemplating retiring when he turned fifty. Further, article 10 of the Public Service Code of Conduct stipulates that a training program on the Code should be implemented for all employees and Mr. Sirois admitted that had not been done. The employee has obligations, but management definitely has a duty to ensure that employees understand those obligations. Evidence showed that this could be particularly important in small communities where everyone knows each other and where conflicts of interest may potentially arise more frequently. The employer made Public Service Staff Relations Board
Decision Page 36 no effort to follow up with Mr. Bellavance after he declared, in 1984, that he owned two convenience stores. Management also knew that he owned several multiple-unit buildings. A discussion on potential or apparent conflicts of interest with tenants, employees, suppliers and former employees, etc. might have avoided the situation in which Mr. Bellavance finds himself. Better follow-up by HRDC with similar cases would certainly be appropriate. Further, training in accordance with article 10 of the Public Service Code of Conduct should be undertaken.
The evidence presented to me on the "7/7" system raises questions for me of the control exercised over CEC operations. If Agents II are allowing employers to use this method, without the knowledge of CEC and regional management, then the situation needs to be corrected. And if it is a "loophole in the system", a "gap" in the legislation as Mr. Bellavance stated, corrective action should be taken or clarification provided.
It is my finding that Mr. Bellavance's actions would have warranted his termination of employment had it not been for the laxness of the employer and for the employee's long service without any disciplinary record. While termination of employment is not appropriate, given the employer's share of the blame, the fact remains that Mr. Bellavance committed serious offences.
However, I am also convinced that it would be counter-productive to order Mr. Bellavance's reinstatement in his former position following a lengthy suspension of more than 15 months, given the seriousness of the misconduct and the fact that the employer has lost all trust in the grievor. The working atmosphere that would result would be unhealthy for both parties.
At the hearing, I asked that representations be made in the event that I did not find it appropriate to reinstate Mr. Bellavance in his position. His counsel declined to respond maintaining that Mr. Bellavance's position was full reinstatement. For his part, counsel for the employer submitted that his client might consider paying Mr. Bellavance compensation of six-months' remuneration.
Given that Mr. Bellavance is still relatively young and he is now working full-time in his business, and considering the arguments of counsel and adjudication case law, I consider it appropriate to award Mr. Bellavance compensation equivalent to
Public Service Staff Relations Board
Decision Page 37 10 months' remuneration at the rate in effect at the time of his employment termination. In calculating my order, I took into consideration Mr. Bellavance's years of service, the absence of a disciplinary record and his suspension without pay.
As for the grievance of his suspension during the investigation, Mr. Bellavance was suspended without pay from July 16 to November 29, 1996, the date of his dismissal. This more than four-month suspension was very long. However, prior to and during the suspension, Mr. Sirois and Mr. Gladu had strong grounds to believe that Mr. Bellavance had committed serious offences and had contravened the Code of Conduct. Further, it is my opinion that Mr. Bellavance, through his lack of cooperation and his failure to provide an explanation, is in part responsible for the length of the suspension without pay during the investigation. This does not, however, change the fact that this suspension was too long under the circumstances and I have taken this factor into consideration on ordering compensation equal to 10 months' remuneration. Accordingly, no additional remuneration is required under these circumstances.
For all these reasons, I uphold the grievance concerning Mr. Bellavance's suspension and the grievance of his dismissal, to the extent indicated above.
Guy Giguère, Member
OTTAWA, February 5, 1999. Certified true translation
Serge Lareau Public Service Staff Relations Board
Decision Page 38 Public Service Staff Relations Board