FPSLREB Decisions
Decision Information
Unfair labour practice - Application under section 21 alleging a violation of section 52 of the Public Service Staff Relations Act (PSSRA) - Wage rates - Statutory freeze - Remedy - the applicant was the bargaining agent for all employees of the employer in the foreign service (FS) group bargaining unit - clause 42.07 of the relevant collective agreement specified that an employee was entitled on promotion to an increase of 4% in his rate of pay or such greater amount that would bring his rate of pay to the minimum rate of pay for the higher level - this provision was first introduced into the collective agreement in 1991 and had been renewed in all subsequent collective agreements for the FS group - clause 42.01, on the other hand, specified that "except as provided in this Article" the existing terms and conditions governing pay would continue - thus, the pay provisions contained in the Public Service Terms and Conditions of Employment Policy (PSTCE Policy) were incorporated by reference into the collective agreement to the extent that they did not conflict with another provision contained therein - the PSTCE Policy specified that an employee was entitled on promotion to an increase of 4% of the new maximum rate of pay, which was a higher amount than was provided for by clause 42.07 - the PSTCE Policy applied to all employees in the federal Public Service on promotion, except for employees in the FS group - the applicant gave notice to bargain to the employer on April 3, 2001 - in September 2001, the employer became aware that after August 2000, most but not all of the employees in the FS group who had been promoted had had the provisions of the PSTCE Policy applied to them rather than clause 42.07, resulting in a continuing overpayment of salary - the employer did not immediately notify the applicant and the employees concerned because it feared that such news would have an adverse effect on negotiations - on March 22, 2002, the employer advised the applicant of the error and of the employer's intention to initiate recovery action of the overpayments made to the employees in question - the employees were notified of the error on April 17 and 18, 2002, and the employer initiated recovery action on May 8, 2002 - by virtue of section 52 of the PSSRA, once notice to bargain has been given, all existing terms or conditions of employment applicable to the employees in the relevant bargaining unit are frozen and cannot be changed by the employer without the consent of the bargaining agent until the parties have bargained to an impasse - the applicant alleged that the employer's practice of applying the PSTCE Policy to the employees in the bargaining unit on promotion, rather than the provisions of clause 42.07, was a term or condition of employment which was in force on the day the applicant gave the employer notice to bargain - therefore, according to the applicant, the employer's decision to recover the amounts in question from the employees violated section 52 of the PSSRA - the employer, on the other hand, maintained that its error in applying the provisions of the PSTCE Policy, rather than clause 42.07 of the collective agreement, was not a term or condition of employment as contemplated by section 52 of the PSSRA - the Board noted the parties' agreement that the statutory freeze imposed on the employer by section 52 required the employer to carry on its business as usual in relation to its employees - the Board was unable to conclude on the evidence that at the time notice to bargain was given, a practice existed of calculating salary on promotion according to the PSTCE Policy for the FS group - rather, it was a mistake on the employer's part that for a limited period of time affected the majority of, but not all, employees promoted in the FS group - however, the Board concluded that the employer, in failing to abide by its own policy relating to the Recovery of Amounts due to the Crown, violated section 52 of the PSSRA - under this policy, the employer had an obligation to prevent overpayments but, instead, it chose to wait almost eight months before taking any action - the Board found that the only remedy which it could award to the applicant under the circumstances was a declaration - declaration issued. Complaint allowed to the extent indicated.
Decision Content
Public Service Staff Relations Act
- Date: 2003-01-28
- File: 148-2-376
- Citation: 2003 PSSRB 4
Before the Public Service Staff Relations Board
BETWEEN
PROFESSIONAL ASSOCIATION OF FOREIGN SERVICE OFFICERS
Applicant
and
TREASURY BOARD
Respondent
RE: Application under section 21 alleging a violation of
section 52 of the Public Service Staff Relations Act
Before: Evelyne Henry, Deputy Chairperson
For the Applicant: Ron Cochrane, Executive Director, Professional
Association of Foreign Service Officers
For the Respondent: Neil McGraw, Counsel
Karl G. Chemsi, Counsel
Heard at Ottawa, Ontario,
November 25 and 26, 2002.
Arguments for the Bargaining Agent
[64] The present complaint alleges that the employer violated a statutory prohibition during negotiation, more specifically that contained in section 52 of the PSSRA. PAFSO referred to the decision of Public Service Alliance of Canada and National Capital Commission [1995] C.P.S.S.R.B. No. 101, Board files 148-29-218 and 161-29-761, as the leading case with respect to the application of section 52. [65] The bargaining agent referred to pages 27, 28 and 29 and submitted that the National Capital Commission case establishes the principle of business as usual during the period of negotiation. It also provides that the Board will look at the employer's normal business practices through the evidence to see if the changes complained of are part of the employer's normal practices. In PAFSO's opinion this decision was confirmed by the Federal Court in [1996] F.C.J. No. 57 DRS 96-14988. [66] The bargaining agent submits that the statutory freeze is not just about the language of the collective agreement but also about informal agreements and employees' normal expectation of how the employer applies these agreements. The bargaining agent submits that the test to be applied is not as onerous as that required in estoppel arguments. It simply requires a look at what were the practices of the employer when notice to bargain was given. [67] The evidence establishes that the employer conducted itself in a certain manner, and the Board can decide how it was calculating the rate of pay on promotions and acting assignments. It is that conduct which is frozen by section 52 and, without the express consent of the bargaining agent, would have to continue for the life of the collective agreement or until, in the present case, June 19, 2002, when PAFSO was in a legal position to strike. [68] When notice to bargain was given on April 3, 2001, the collective agreement being renegotiated was the one which expired on June 30, 2001 (Exhibit B-3). It covered the period June 1, 1999, to June 30, 2001, and was signed on August 31, 2000. The bargaining agent submits that what the Board must look at is the conduct of the employer from August 31, 2000, to the date notice to bargain was served on April 3, 2001 and how it applied the collective agreement in the calculation of pay on promotion. [69] The evidence shows that in 2000, six promotions were calculated in accordance with the employer's interpretation of clause 42.07 and 21 promotions were calculated using another provision of the collective agreement, clause 42.01, which includes the PSTCE Policy. In 2000, four acting-pay calculations were made using clause 42.07 as the basis for calculation and 51 using clause 42.01. [70] During the life of the collective agreement until notice to bargain was given, ten calculations were made on the basis of clause 42.07 and 72 on the basis of 42.01. The promotions that were effective in 2001 would have occurred after the date the employer believed it had made a mistake in pay calculation and decided to rely solely on clause 42.07. [71] It is PAFSO's view that the evidence clearly shows that the conduct of the employer with respect to the calculation of pay on promotion or acting pay strongly favours the rule of using 4% of the higher maximum rate as opposed to 4% of the employee's rate of pay. That conduct prevailed when notice to bargain was given and was frozen by section 52. [72] In the alternative, PAFSO is arguing that section 52 includes in the freeze the employer's conduct in how it administers the collective agreement. A further review of the evidence reveals that the employer decided to change the way it was doing business in September 2001 and, instead of informing the bargaining agent of its intention, it decided to withhold disclosure of this change in conduct until after a collective agreement would have been entered into. The employer not only decided not to tell the bargaining agent but decided not to tell the employees affected by this decision. [73] The employer's strategy of waiting until a collective agreement was signed would prevent the bargaining agent from negotiating a change to the collective agreement that would regularize the practice of paying employees who were promoted or on acting pay on the basis of 4% of the higher maximum rate of pay instead of 4% of their rate of pay. [74] The second effect of that strategy of waiting a further eight months to tell employees of the over-payment and failure to negotiate the recovery amounts placed the employees in the position of having to pay a further eight months of the alleged mistake made by the employer. [75] The evidence further shows that the employer decided to come clean with the bargaining agent after the conciliation board had been appointed by the Chairperson of the Board and its terms of reference established. This strengthened PAFSO's view that the employer was trying to prevent the bargaining agent from attempting to seek a modification of the clause which the employer had decided to rely on in September 2001. [76] The broader idea of section 52 is the idea of creating a level playing field to ensure there are no surprises during negotiations. There are enough issues and the relationship is stressful enough during the bargaining process. It is unfair to either side to alter the way to do business during negotiations because that goes to the very important part of bargaining: trust on both sides. PAFSO is convinced the employer clearly intended that clause 42.07 as written not be altered until the next round. [77] Section 52 must be given its broadest interpretation and the Board must look at the employer's conduct, which was the calculation of the increase upon promotion and acting pay at 4% of the higher maximum in an overwhelming number of cases during the previous collective agreement. [78] In the alternative, the bargaining agent argues "laches" or estoppel in the application of the collective agreement. It is now apparent that the employer intends to recover over-payments relating not only to salary but also to overtime and vacation pay. There has to come a point when delays in recovery that the employer has caused when it decided on its own not to take action create a laches, a "sleeping on its right". To go back now and suggest further recovery actions only makes matters worse for the employees. [79] In the alternative, the bargaining agent argues equitable estoppel and that what was frozen by section 52 is the practice of the employer. PAFSO cited Canadian National Railway Co. et al and Beatty et al, 128 D.L.R. (3d) 236 (CNR case) to show that a practice does not have to apply to all employees in order to exist. In the CNR case there was a practice of applying a payment to some 664 employees and not to some 415 employees. The arbitrator found that there was an estoppel. The Court looked at the equitable doctrine of estoppel in judicial review and maintained the arbitrator's decision. The bargaining agent read from pages 240, 241 and 242 and quoted more specifically from pages 243, 244 and 245:. True, a collective agreement, like a contract, should be construed without reference to extrinsic evidence if it is clear upon its face. What the arbitrator did here, however, was not to interpret the agreement but to make a finding as to its proper application and to give consequential relief.
. By its conduct, in persistently paying many classifications of employees from the first day of illness in the face of a clause providing for a waiting period, the company gave the union an assurance which was intended to affect the legal relations between them. The union took the company at its word and refrained from requesting a formal change in the agreement. The company should not now be allowed to revert to the previous relations as if no such assurance had been given.
. We think the arbitrator was within his powers in applying the doctrine of estoppel. No jurisdictional error has been demonstrated and the application to quash should be dismissed with costs. .
.
I am aware of no decision by the Court of Appeal to the effect that the doctrine of estoppel by conduct may not in a proper case be applied by an arbitrator. As I have already stated, this is such a case. The reliance by the union on the company's long-established practice and the company's failure to indicate or request any change in that practice led the union not to make any proposals on its part regarding the maintenance or the alteration of that practice and represented an act by the union to its detriment. That act justified the invocation of the doctrine.[80] PAFSO submits that the present case goes beyond what occurred in the CNR case in that the employer was prepared to hide the alleged mistake until the collective agreement was signed. [81] The bargaining agent then cited a CLV summary report No. LV13276, dated April 1, 2002, involving Owens Corning Canada and Union of Needletrades, Industrial and Textile Employees, Local 1305. In the present case not only the bargaining agent, but also the employees, believed the pay calculations were correct until the employer decided to alter the practice and rely only on a strict interpretation of clause 42.07 and not apply clause 42.01. [82] PAFSO then introduced an unreported decision of a board of arbitration chaired by Jane H. Devlin, file MPA/Y200472, between Rouge Valley Health System and Ontario Public Service Employees Union. This was a grievance where estoppel was invoked by the employer. The employer had breached the collective agreement by scheduling a short tour in one area of the hospital. The union had not grieved the employer's decision and was estopped from grieving when the employer applied the same practice in other parts of the hospital, until the employer was given an opportunity to negotiate a change in the collective agreement. [83] In conclusion the bargaining agent submitted that the Board does not have to go as far as estoppel in deciding what is contained in the statutory freeze provisions of section 52. [84] In the alternative, what is frozen is the application of clause 42.07 in light of an estoppel argument. The fact is that here is a conduct that existed in year the 2000 illustrating how the employer was not relying strictly on the provisions of clause 42.07 but rather relying on clause 42.01 in a majority of cases. The evidence shows the employer more consistent in using 4% of the higher maximum than the alleged correct calculation of clause 42.07, which is more of an anomaly and which can be compared to the practice in the CNR case. [85] The bargaining agent relied on this application of the clause, not being advised of the change until it was too late to propose a change, thus creating the detriment. In both scenarios, the employer's conduct of withholding information adds considerable weight to the PAFSO submission. Arguments for the Employer [86] The central argument of the employer in this complaint before the Board is that the correction of an error does not constitute a change in terms or conditions of employment. [87] In the employer's view, this situation is not one where the interpretation of the collective agreement came into question. The collective agreement is very clear in its writing. While there is a mention in clause 42.01 of the PSTCE Policy, it is important to note the qualifier "except as provided in this article". [88] For the 62 people subject to the over-payment, it was not clause 42.01 that applied because it clearly states that all the clauses under Article 42 applied foremost before resorting to the Policy. Clearly, clause 42.07 applied and there is no other interpretation that can be given. On promotion, an employee is given 4% of his rate of pay or the minimum of the higher level. There is no interpretation possible where it could mean 4% of maximum rate of the FS-02 level. [89] The central point is that it is not a change or modification in the terms or conditions of employment but an honest mistake in the application of the collective agreement. The language does not bear the application of an increase of 4% of the maximum higher rate of pay. In its reference to an "alleged mistake", the bargaining agent made no real statements of fact that it was something other than a mistake. [90] In reference to the National Capital Commission decision (supra) there is no issue of the conduct of the employer. What is clearly stated in the decision is that the principle which applies is business as before. The employer has the ability to continue to manage its operation. The rights of the employer continue just as do the rights of the employees. [91] Something made clear in the evidence is that the employer has a continued right to recover an over-payment in salary. The only testimony heard in two days regarding the proper calculation of pay was from Johanne Hotte. She stated what proper calculation was found in the collective agreement. If this proper calculation was applied, there was an error for these 62 employees who were overpaid. The statutory freeze does not prevent recovery. The central focus is whether this constitutes a change. [92] There are a number of Board decisions that refer to this. The employer referred to Public Service Alliance of Canada and Treasury Board [1982] C.P.S.S.R.B. No. 68 (Board file 148-2-75) at paragraph 15 on the last page. If the employer had a right to recover over-payment before notice to bargain was given, it continues to have the right to recover after notice to bargain is given. [93] The employer referred to United Food and Commercial Workers Union, Local 1973 and Staff of the Non-Public Funds, Canadian Forces [1986] C.P.S.S.R.B. No. 95 (Board file 148-18-114) on the last page. There is no way the employer, by action or inaction, indicated that 4% of the higher maximum rate of pay would be the way to calculate pay on promotion. [94] The employer referred to Professional Institute of the Public Service of Canada and Treasury Board [1991] C.P.S.S.R.B. No. 23 (Board file 148-2-185) at page 9. It was made clear that the employer let slide the over-payment regarding inactive employees and with regard to overtime and vacation pay, but it demonstrated its intention to recover these over-payments. With this statement of intention, the employer never gave up the right to recover the over-payments. The employer at no time stated that the calculations would be different nor that they would not recover over-payments. [95] A central point is the authority to recover found in subsection 155(3) of the Financial Administration Act. This section deals with over-payment in salary. There are no time limits and no limit on how far back the calculations can be verified. At no time did the employer indicate that it would not be applying its discretion to recover over-payments. [96] The employer cited another decision involving the Professional Institute of the Public Service of Canada and Treasury Board (Agriculture Canada) [1991] C.P.S.S.R.B. No. 82 (Board file 161-2-692) where the issue was the same as the central point of this complaint, that is the employer's authority under section 155 of the FAA. In that case, it was a complaint under section 23 of the PSSRA and the Board found on the last page:
.
However, I also added that an adjudicator has no jurisdiction under the Public Service Staff Relations Act to decide on the validity of the Crown's exercise of its authority under subsection 155(1) of the Financial Administration Act. The essence of this complaint is a challenge to the right of the employer to exercise that authority.[97] The employer underlined that the bargaining agent mentioned the inability to negotiate a change. There were no requests made to deal with the recovery of over-payments because those salary over-payments were not a condition of employment. [98] To sum up its main argument, the employer stated that section 52 prohibits any change in terms or conditions of employment. An error in calculation does not on its own become a term or condition of employment. A simple fact is that an error was committed for several months for a lot of employees, the majority of which occurred after August 31, 2000, but only four mistakes occurred before that date. All errors occurred after August 31, 2000, while the clause in the collective agreement existed over the course of 10 years. Over these ten years, 150 individuals were paid on promotion an increase at the rate of 4% of their salary. [99] A clear interpretation and application of clause 42.07 has occurred since 1991 and at no time over the last 10 years was any individual or union grievance filed that employees were improperly paid. [100] A central issue of estoppel or past practice argument begins with a promise or unambiguous representation by the employer, then a clear reliance based on that promise and finally a clear detriment from reliance on that promise. [101] To demonstrate a promise, the bargaining agent attempted to demonstrate a practice over a limited period of time. What occurred, in fact, was that there were no errors until 1998, seven years after the clause was inserted in the collective agreement. [102] The bargaining agent claims there were 21 errors on promotion and 51 on acting pay; this is rather odd since 62 employees were on the list. When the error continues from acting pay to promotion, this does not inflate the figures by counting the same error twice. [103] In commenting on the CNR case, the employer pointed to a number of differences. What is underlined in that decision are errors that occurred over many years. Estoppel by conduct or past practice requires a long standing course of conduct. The facts of the instant case do not demonstrate a longstanding practice; there was not a practice at all. [104] At page 241 of the CNR case, there is a reference to an agreed statement of facts. At no time in the instant case did the employer agree that there was a practice or that these errors would constitute a practice. There were 150 cases where the collective agreement was applied correctly and which were never grieved. The error in calculation was unknown to everyone until a pay advisor discovered the error. It was not something that the bargaining agent was aware of when it entered into negotiations. No one knew the error had been made. A correct application also continued over ten years. [105] The employer then referred to Chapter 3:4430 Past Practice from Canadian Labour Arbitration (3d Edition) by Donald Brown, Q.C. and David Beatty, where a number of cases are referred to. This chapter describes a number of different events that may constitute a past practice. [106] The employer also referred to the case of International Association of Machinists, Local 1740, and John Bertrand & Sons Co. Ltd., LAC Volume 18, p. 361, and argued that past practice is no aid to the interpretation of clause 42.07, which is quite clear. [107] To conclude, the employer stated there was no bad faith on the part of the employer. This complaint is not a complaint of bad faith bargaining, nor is it a reference of a grievance to adjudication. While there may be grievances brought by employees, this is not a grievancee and the effect on employees is not an issue here, as it would be in an individual grievance. [108] The central point here is about terms or conditions of employment. Does the conduct of the employer over time make it a term of employment if the employer interpreted the collective agreement correctly but errors occurred over a short period of time? If it did, section 155 of the FAA would be rendered moot. It cannot be said that there was a change in the terms or conditions of employment. To quote the PSAC case, the first case cited by PAFSO, the ability to rectify and recover over-payments is "business as usual".
Reply Arguments
[109] The bargaining agent stated that the cases cited by the employer were clearly distinguishable on their facts. [110] Because the employer characterizes its practice as a mistake, it claims the bargaining agent cannot claim it is a practice. [111] It was in Johanne Hotte's evidence that pay advisors were using the PSTCE policy to calculate pay on promotion after August 2000 instead of a strict application of clause 42.07. Honest mistakes are the odd mistakes, not the consistent application of clause 42.01. [112] The bargaining agent is not sure it can bargain out of the Policy; that is, for something less than what the PSTCE Policy provides. [113] The bargaining agent differed with the employer in its opinion that there was no bad faith on the part of the employer and referred to the evidence of Mr. Bélanger. Reasons for Decision [114] The issue to be determined in this case is whether the employer has violated section 52 of the PSSRA after PAFSO gave notice to bargain on April 3, 2001. Section 52 reads:52. Where notice to bargain collectively has been given, any term or condition of employment applicable to the employees in the bargaining unit in respect of which the notice was given that may be embodied in a collective agreement and that was in force on the day the notice was given, shall remain in force and shall be observed by the employer, the bargaining agent for the bargaining unit and the employees in the bargaining unit, except as otherwise provided by any agreement that may be entered into by the employer and the bargaining agent, until such time as
.
(b) in the case of a bargaining unit for which the process for resolution of a dispute is by the referral thereof to conciliation,
(i) a collective agreement has been entered into by the parties,
(ii) a conciliation board has been established, or a conciliation commissioner has been appointed, in accordance with this Act and seven days have elapsed from the receipt by the Chairperson of the report of the conciliation board or conciliation commissioner, or
(iii) the Chairperson has notified the parties pursuant to subsection 77(2) or 77.1(4) of the Chairperson's intention not to establish a conciliation board or appoint a conciliation commissioner and seven days have elapsed from the date of the notice.[115] PAFSO is asking the Board to find that there was, when notice to bargain was given, a practice of calculating pay on promotion in accordance with the PSTCE Policy and that the practice constituted a term or condition of employment applicable to the employees in the FS group. PAFSO alleges that the recovery action taken by the employer was a violation of section 52 of the PSSRA. [116] The evidence that was submitted shows that the employer used the PSTCE Policy to calculate the salary of a vast majority of employees in the FS group after August 2000, but not of all employees. [117] No evidence was submitted by PAFSO to explain the employer's departure from the application of clause 42.07, which had been in the FS collective agreement since 1991, and which reads:
42.07 Promotion
An employee is entitled on promotion to an increase of four percent (4%) in his rate of pay or such greater amount that would bring his rate of pay to the minimum rate of pay for the higher level.[118] In fact, PAFSO was unable to say why the clause appeared in the FS collective agreement in the first place or how and why it was renewed in the collective agreement signed on August 31, 2000 (Exhibit B-3). Along with clause 42.07, clause 42.01 was renewed, it reads:
42.01 Except as provided in this Article, the existing terms and conditions governing the application of pay to employees, where applicable, are not affected by this Agreement.[119] The employer's witnesses explained the departure from the application of clause 42.07 to that of the PSTCE Policy as a mistake made in good faith by remuneration staff. The PSTCE Policy applies to all other employees in various groups except to the FS and EX groups. The employer's witnesses were unable to say why the mistake seems to coincide with the implementation of the collective agreement (Exhibit B-3). It appears to be a coincidence. [120] The employer discovered the mistake in September 2001 and, within a month of discovery, made the determination that at least 62 employees were overpaid and that recovery would be initiated pursuant to section 155 of the FAA. The decision to recover was implemented in May 2002. [121] The pertinent provision of section 155 of the FAA provides:
PART XI
MISCELLANEOUS
Deduction and set-off
155. (1) Where any person is indebted to
(a) Her Majesty in right of Canada, .
the appropriate Minister responsible for the recovery or collection of the amount of the indebtedness may authorize the retention of the amount of the indebtedness by way of deduction from or set-off against any sum of money that may be due or payable by Her Majesty in right of Canada to the person or the estate of that person. .
(3) The Receiver General may recover any over-payment made out of the Consolidated Revenue Fund on account of salary, wages, pay or pay and allowances out of any sum of money that may be due or payable by Her Majesty in right of Canada to the person to whom the over-payment was made.
.[122] Exhibit E-4 which is "Chapter 7 - Recovery of Amounts due to the Crown" provides at item 2:
2. Overpayments of salary or wages
The Receiver General has authority to recover an overpayment of salary or wages made to an employee from any money payable by the Crown to the employee or to the employee's estate (Financial Administration Act, Section 155(3)).
Where possible, the overpayment is deducted from subsequent salary payments, but it may also be recovered from superannuation benefits or any other money payable to the employee or to the employee's estate, or to a third party, pursuant to an assignment or a power of attorney.
Where there is any conflict between the provisions of this policy and those in a collective agreement, the terms of the collective agreement will apply.
2.3 Responsibilities
The department, not the paying office, is responsible for ensuring that all overpayments of salary, wages, or pay and allowances are recovered from any sum of money that may be due or payable to an employee or former employee.
Paying office responsibility
When an overpayment is discovered by the paying office pertaining to an active employee, the department or agency will be advised of the amount of the overpayment. The paying office will take no further action until the appropriate department or agency provides written advice as to the method, rate and/or period of recovery.
When an overpayment of salary remains after all available funds of an employee who has terminated employment have been applied, the paying office will advise the department or agency of the outstanding balance of the salary overpayment. Once the department or agency has been notified of the outstanding amounts, no further action will be taken by the paying office.
Departmental responsibility
When a department or agency discovers an overpayment with regard to an active employee and the overpayment can be recovered over a specified period, the reporting document sent to the paying office must indicate the method, rate and/or period of recovery. If no direction on the reporting document is given to the paying office, the recovery of the overpayment will be made in full from the first available funds payable to the employee.
When the paying office notifies the department or agency that an overpayment still exists after all available funds of a former employee have been exhausted:
the former employee should be contacted as soon as possible to solicit voluntary payment of any amount still owing. Failing voluntary arrangements more stringent collection action may be pursued with the aid of senior departmental financial officers in accordance with the policy and guidelines on the collection of overdue accounts;
should the individual be entitled to an immediate annuity, an immediate annual allowance or a deferred pension benefit under the PSSA, the departmental personnel must advise the Superannuation Branch of the amount and method of recovery of the overpayment. When the individual's public service pension becomes payable, the Superannuation Branch will recover the overpayment either at the rate specified by the department or agency or by instalments equal to a minimum of 10% of the individual's monthly basic pension. If the overpayment is liquidated prior to the commencement of the pension, the department or agency must inform the Superannuation Branch accordingly.
When an overpayment has been partially or fully recovered from a pension benefit, it is the responsibility of the department or agency to inform the paying office in order that their records can be kept current.
In order to prevent over-payments, the practice of withholding or returning for cancellation or amendment, any payroll cheques which are obviously inaccurate must continue. Furthermore, departments should make every effort to eliminate overpayments by prompt dispatch of pay action documents.
(emphasis added)
[123] The reason given for the delay in implementing the recovery of the over-payments was the employer's fear of a negative impact on the negotiations for the collective agreement because of the magnitude of the error and the number of employees affected. [124] Both parties agree that section 52 of the PSSRA includes in the statutory freeze not only expressed and implied terms of employment, information agreements and established employer policies, but also the employees' reasonable expectations as to the employer's conduct, in other words "normal business practice" or "business as usual". Where they disagree is what, on the facts of this case, was the "normal business practice" or "business as usual". [125] I cannot find on the basis of the evidence presented that a practice existed of calculating salary on promotion according to the PSTCE Policy for the FS group. The only evidence I heard regarding pay calculation on promotion came from the employer's witnesses who claimed it was a mistake that affected a majority of, but not all, employees promoted or acting in a higher classification for a limited period of time. No evidence was submitted to show that the bargaining agent was even aware of the "practice" or "mistake" of calculating salary or promotion in accordance with the PSTCE Policy. The only witness for the bargaining agent was new to PAFSO and unable to provide any history of clause 42.07 or of its application. The principle of "business as usual" during the statutory freeze means that the collective agreement as well as the other employer policies were to continue during the negotiation period. These include the "Recovery of Amounts due to the Crown" (Exhibit E-4). [126] While the calculation of pay on promotion in accordance with the PSTCE Policy instead of clause 42.07 may have been an honest mistake initially, the process of recovery of over-payment was deliberate, and in violation of the employer's own policy. [127] Clearly the principle of "business as usual" entails that the employer had to notify the employees as soon as possible of the alleged mistake. By its own policy the employer had an obligation to prevent over-payments but it chose to wait almost eight months before taking any action. [128] I cannot accept that the employer was acting in good faith when it withheld the information from the bargaining agent and from the employees concerned. The mistake was the responsibility of the employer and by allowing it to continue during the negotiation period, which was also the statutory freeze period, the employer was not only violating its own policy but contravening section 52 of the PSSRA. [129] This complaint did not allege a violation of section 51 of the PSSRA so I will not deal with the effect of bad faith on the part of the employer on negotiations. [130] It would appear that the bargaining agent has no remedy, except a declaration, when the employer is wilfully causing an injury to employees whom it represent by overpaying them over a long period of time knowing it will recover the sums over much shorter periods. The employer's witnesses have said that recovery of over-payment was not negotiable and, therefore, they had no alternative but to recover in the manner that they did. I disagree. The very words of the policy imply that it is negotiable because it states: "Where there is any conflict between the provisions of this policy and those in a collective agreement, the terms of the collective agreement will apply". [131] The beliefs of the employer's witnesses that they had no option but to recover in the manner they did make their contravention of section 52 even more serious. It shows a callous disregard for the employees' right to be treated fairly by their employer. The evidence has revealed that active employees have reimbursed the over-payments identified in Exhibit E-5 but that employees who have left, transferred or retired may still be facing recovery action. I cannot find words to describe my outrage at the unfairness of a system that lulls employees into believing their employer is properly calculating their pay or their retirement allowance but who may face not only a reduction in their income but also a recovery action against which recourse is doubtful. [132] In conclusion, I hereby declare that a violation of section 52 of the PSSRA has taken place in so far as the employer failed to abide by its policy of preventing over-payments from continuing when it found a mistake in pay calculation. The evidence presented does not support PAFSO's submission that a practice existed that employees not be paid on promotion in accordance with clause 42.07 of their collective agreements. [133] Accordingly, for all these reasons, this complaint is allowed to the extent indicated.
Evelyne Henry,
Deputy Chairperson.
OTTAWA, January 28, 2003.