Re: Update on Outstanding Pay Equity Issues

Attached please find a “Memorandum” from the PSAC Representation Section Co-ordinator, Anne Clarke-McMunagle outlining the status of the outstanding issues regarding Pay Equity.

In Solidarity,

Betty Bannon

National President

Encl.

MEMORANDUM
April 12, 2002

TO: Components
Regional Offices

RE: Update on Outstanding Pay Equity Issues

As you know, there are still several outstanding issues concerning the Treasury Board/PSAC pay equity settlement. The purpose of this memorandum is to provide an update of where we are with these issues.

Part-Time Employees - Actual Hours Worked

The issue of pay equity payments to part-time workers on the basis of hours actually worked has been addressed on several occasions with Treasury Board. Treasury Board’s position has been that part-time employees will be paid only for their scheduled hours of work. However, they have advised us that employees who have “consistently” worked more than their scheduled hours will be paid. Needless to say, we have not been able to determine with Treasury Board what they mean by “consistently worked.” Of course, we do not agree that the hours would have to be worked “consistently” in any case.

In this context, a draft motion for a contempt of court finding has been prepared to be presented to the Federal Court. Treasury Board was provided with a draft of the motion in an attempt to resolve the issue prior to going to the Federal Court, and was asked for a meeting to discuss the issue again. Should the parties be unable to resolve the issue informally, the application will be filed with the Federal Court to have part‑time employees paid for all hours actually worked.

Section 99 Collective Agreement Issues

In March, 2001, the PSAC had filed a Section 99 reference with the Public Service Staff Relations Board (PSSRB) asking the Board to declare that the pay equity adjustments were pay for all purposes for the entire retroactive period (i.e. back to March 8, 1985) and should be recalculated accordingly, except for those situations covered in two specific sections of the pay equity agreement for which the payment of average entitlements was agreed upon, in the interest of getting cheques to members within a reasonable time frame (i.e., overtime, acting and promotions as well as some types of severance payments).

The case was heard in June, 2001. The PSSRB subsequently side-stepped the issue. In his brief decision of July 30, 2001, Mr. Y. Tarte dismissed the reference, stating that he was “not satisfied that the PSAC has established the existence of an obligation for purposes of s.99.” The Board’s decision said that, unless the parties could agree on the issues in dispute, they should go back to the Federal Court or to the Human Rights Tribunal.

The PSAC reviewed the PSSRB decision and has decided to appeal it to the Federal Court of Appeal. No date for the hearing has yet been set.

If our application is successful, this decision will affect such issues as salary protection in workforce adjustment and downward reclassification situations, the cashing out of vacation leave credits, education allowances, part-time employees’ designated paid holiday compensation, salary-based foreign service directive entitlements, severance pay for resignation, lay-off, rejection on probation and termination for incompetence and incapacity, and other salary-related collective agreement issues.

Recovery of Overpayments

This situation has been the source of much frustration not only for members facing a recovery, but also for the PSAC. As you will recall, we had advised Components and Regional Offices in our January 8, 2001 Memorandum (MSB/01/01) of the supporting evidence required for such situations, more particularly, evidence to support an argument of promissory estoppel/detrimental reliance.

Since that time, many grievances were reviewed; unfortunately, very few grievances were referred to adjudication. In most cases, overpayments were recovered from interest payments, which presents an insurmountable difficulty in proving that the recovery itself would cause financial hardship, an element necessary to prove promissory estoppel/detrimental reliance.

In two recent expedited adjudication cases, unrelated to pay equity, the adjudicator denied the grievances, relying on the employer’s authority to recover overpayments under the Financial Administration Act. These decisions underlined the necessity of having very strong evidence of promissory estoppel.

In addition to the heavy burden of proof required in these cases, we must first establish a collective agreement violation to gain jurisdiction at adjudication. It is for this reason that those grievances which have been referred to adjudication are being held in abeyance of the appeal decision of the s.99 decision.

Promotions Outside Affected Groups BEFORE April 1, 1994

This situation mainly concerns members who were promoted from a pay equity related group (i.e., CR), to a non-pay equity related group (i.e., AS, PM). Applying paragraph 9.5 (Overtime, Acting and Promotion Situations), Treasury Board recalculated the rate of pay for acting appointments and/or promotions, only for such events which occurred after April 1, 1994. Any acting appointments or promotions which occurred in the retroactive period from March, 1985 to March 1994 were not recalculated.

Many grievances were filed on this issue, and we received many inquiries. It is clear that, for promotions or acting appointments which occurred before April 1, 1994 no recalculation is required. We reviewed extensively whether we could file an application with the Federal Court concerning the interpretation and application of this paragraph, in the context of acting appointments. The concept we had examined was that, while an initial acting appointment may have occurred prior to April 1, 1994, any renewal of the acting appointment after April 1, 1994 may constitute an “event” to trigger a recalculation, in accordance with paragraph 9.5.

However, our evaluation of this concept determined that the issue was in fact very difficult and complex. In order to present an application to the Federal Court, we must be able to present to the Court a very straightforward and non-ambiguous argument. Unfortunately, an argument on the basis that the renewal of an acting appointment constitutes an “event,” thus triggering a recalculation, is decidedly ambiguous. Indeed, the possible outcomes to such an argument would likely negatively affect members, rather than create a positive outcome.

For example, one possible outcome of arguing that the renewal of an acting appointment constitutes an “event” in accordance with paragraph 9.5, would be that each and every subsequent renewal of an acting appointment would require a recalculation; a result of such an application of this argument would be that an employee whose acting appointment was consecutively renewed over a long period of time (i.e., 12 - 18 months) would not earn increments in the acting position. If such would be the case, employees who received increments in an acting position may in fact be required to repay any potential overpayments.

In the result, we have determined that the complications are such that we cannot proceed with a clear and unambiguous application to the Federal Court.

Taxability of Interest

There are some new developments in the PSAC’s challenge of the taxation of pay equity interest payments. In an earlier pay equity bulletin (#44), the union indicated that it was going to challenge the government’s taxation of the interest received on retroactive pay equity adjustments. We urged members to file a notice of objection concerning the taxation of interest and thousands of members did so.

We have now selected a test case and our legal counsel is having discussions with the Canada Customs and Revenue Agency (CCRA) on how the case should proceed. As a result of the large number of Notices of Objection filed, CCRA also reviewed its policy regarding the taxation of such payments. They have now advised our counsel that they have decided to await the decision of the Tax Court. Because of the many steps involved in the court process, it is unlikely the actual hearing in the Tax Court will take place until much later this year, at the earliest.

We will be asking that any favourable ruling be applied to anyone who received interest payments, regardless of whether or not they filed a notice of objection. Nonetheless, the union strongly recommends that current and former members file a Notice of Objection, if they have not already done so, (see Pay Equity Bulletin No. 44) in order to be certain that their cases will be covered by the test case.

Rumours About More Pay Equity Cheques

There are some final pay equity cheques which are still outstanding which the PSAC understands will be issued later this year. For most members, the amount will be quite small - less than $10 in some cases, probably no more than $50 to $150 on average. A very few members may receive as much as $500 or more. These cheques represent the interest owed between April 1, 2000 and the date that the pay equity cheques (NOT the interest cheques) were actually printed. In many cases, this involved a period of only a week or so; hence the small amounts.

Pensions and DI Issues

Treasury Board has advised the PSAC that it may now be the end of the year 2002 before all former members receive an adjustment to their superannuation and Disability Insurance. The PSAC finds this situation abominable. Because there is no provision in any legislation governing pensions or DI for the payment of interest, these former members are not earning such interest on the monies owed to them, in spite of the fact that the agreement between PSAC and TB includes the words “accepting the principle of no disadvantage for employees and former employees in receipt of DI/LTD benefits”. The Treasury Board has dragged its feet on these payments for far too long. For this reason, we are strongly encouraging former members affected by this situation to contact their Member of Parliament, in order to pressure Treasury Board to immediately pay them what is rightfully owed to them.

Anne Clark-McMunagle
Coordinator, Representation Section
Collective Bargaining Branch

c.c.: AEC, Directors
Legal Services
G&A Officers, G&A Analysts
M. Jaekl, D. Pease