Ontario arbitrator finds employees entitled to short-term and long-term disability plans under collective agreement not entitled to Personal Emergency Leave

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Focus readers will recall that recent changes to Personal Emergency Leave (PEL) under the Employment Standards Act (ESA) have given all employees two paid and eight unpaid PEL days. These changes have left many employers that provide additional paid leave (such as sick, bereavement, and other leaves) questioning whether they must now also provide the PEL under the ESA. A recent arbitral decision sheds some light on this issue.

An arbitrator ruled that employees covered by a collective agreement that provides both short-term and long-term disability benefits are not entitled to an additional two paid PEL days under the ESA. Having weighed the totality of the benefits provided by the collective agreement in the event of personal illness as compared to the ESA’s PEL entitlements, the arbitrator had no hesitation in concluding that the collective agreement conferred a greater benefit than the legislation.

In United Steel Workers, Local 2020 and Bristol Machine Works Ltd., (April 2018), the evidence showed that in the first two months of 2018, following the introduction of the two paid PEL days, several employees in the bargaining unit called in sick, claiming PEL entitlements. The employer denied these employees paid leave, on the grounds that the benefits provided by the collective agreement constituted a greater benefit with respect to sick leave than what was provided for under the ESA. The union filed a group grievance claiming violation of the ESA.

Section 5(2) of the ESA states that if one or more provisions in an employment contract, including a collective agreement, that “directly relate to the same subject matter as an employment standard” provide a greater benefit, then the employment contract provisions prevail and the employment standard does not apply. While the collective agreement in issue did not provide for “sick days” per se, it did provide bargaining unit employees who had completed the 60-day probationary period:

  • short-term disability benefits consisting of 65% of wages for 17 weeks, up to a maximum of $700/week; and
  • long-term disability benefits consisting of 65% of basic monthly earnings, to a maximum of $2500/month, indefinitely.

Significantly, while employees were entitled to STD benefits on the first day in the case of an accident, there was a seven (7) day waiting period in the case of sickness. The union alleged that the employer’s refusal to grant PEL during this waiting period violated the ESA.

Having reviewed many arbitral decisions on the issue of greater benefits, arbitrator Mitchnick rejected the approach proposed by the union, which would have required him to compare an employee’s income protection entitlements for the first two days of illness in a year to the ESA PEL entitlement for those same two days. In his view, the decided cases confirmed that the proper approach was to compare “the totality” of the collective agreement benefit in question to the totality of the ESA benefit emphasizing substance over form.  On this basis, arbitrator Mitchnick determined that he must consider “the extent to which income protection is provided along with personal leave for illness.” In this regard, the ESA provides two paid days of leave. By contrast, the employer-funded plan provided by the collective agreement provides 17 weeks of STD benefits and unlimited LTD benefits. In the words of the arbitrator, “[w]hen these two levels of income protection for sickness are placed in the pans of the metaphorical scale … the comparison … is not close.”  In his view, it was clear that the plan negotiated by the Steelworkers is “manifestly better than the minimal pay protection provided to all employees” under the ESA. That the collective agreement plan included a seven-day waiting period, and that entitlement to LTD benefits kicked in only after 18 months of service was insufficient to “negate the vast superiority of the collective agreement’s Income-protection plan over the [ESA].”

Arbitrator Mitchnick noted that employees who had not yet completed the 60-day probationary period had no access whatsoever to the income protection plan in the event of accident or illness. Rather than allow this exclusion to affect his overall conclusion, he considered that the proper approach was to view probationary employees as a separate category, in respect of whom the collective agreement does not confer a greater benefit than the ESA. As such, he upheld the grievance only in relation to this subgroup of probationary employees, such that they would be entitled, in the event of personal illness, to claim ESA PEL minimum entitlements.

Finally, arbitrator Mitchnick made clear that he considered only the interaction between the ESA PEL provision as it relates to personal illness, and the comparable benefits under the collective agreement. He left any issues with respect to other reasons for which PEL might be claimed (e.g. bereavement) to be addressed at another time.

 

In our view

This decision, which follows closely on the introduction of the new PEL provisions effected on January 1, 2018, is an important one, in that it confirms that an assessment of whether a collective agreement or other employment contract confers a greater benefit than the statutory minimums requires consideration of the totality of benefits provided and not a “line by line” approach. This decision may be of assistance to employers determining whether the benefits already provided by an employment contract or collective agreement constitute a greater benefit than the ESA minimums, although each assessment will be made on a case-by-case basis.

For further information please contact Lynn Harnden at 613-940-2731 or Lauren Brecher at 613-563-7660 ext. 266.