Federal Court Decisions

Date: 1999**

Docket: T-87-98

IN RE an application for judicial review and quashing pursuant to ss. 18(1) and 18.1 of the Federal Court Act, R.S.C. 1985, c. F-7,

AND the decision of an adjudicator appointed pursuant to s. 93 of the Public Service Staff Relations Act, R.S.C. 1985, c. P-35 rendered by Jean Charles Cloutier, member, on December 18, 1997 (cases: 166-2-27758; 166-2-27761; 166-2-27681 to 27687 incl.; 166-2-27691 and 27692; 166-2-27709 and 166-2-27759 and 27760; 166-2-27762 and 27763; 166-2-27954).

Between:

          JOHANNE TREMBLAY, GÉRALD FORGUES, MARIE-CLAUDE CYR,

                  DOMINIQUE JOLY, TARA WHELTON, CHANTAL VICTOR,

    CAROLE LACOSTE, RUTH LEIMANIS, DIANE DESJARDINS-LAGANIÈRE,

      MONIKA FRIEDBERG, ANNICK HÉBERT, MARIA LUCIA, LESLIE ROY,

                        RÉMI ST-CYR, BENOÎT GUAY, ANDRÉ BOUDREAU,

                                 GHISLAIN BOUCHARD ET LOUISE BINET

                                                                                                                              applicants,

                                                                     and

                                   THE ATTORNEY GENERAL OF CANADA

                            (Revenue Canada, Health Canada, Veterans Affairs)

                                                                                                                             respondent.

                                                  REASONS FOR ORDER

LUTFY J.:

[1]                The applicants are unionized employees in the public sector. They filed grievances challenging their placement in the salary scale laid down in their respective collective agreements at the end of the extension period imposed by the Public Sector Compensation Act, as amended in 1993 and 1994.^[1] Their grievances were referred to arbitration and were the subject of a decision by an arbitrator.^[2]

[2]                By an application for judicial review,^[3] the applicants are asking the Court to quash the decision of the arbitrator who had to interpret subsection 5(1.1) of the Public Sector Compensation Act in light of the collective agreements. Subsection 5(1.1) was adopted in 1994.^[4] The applicants formulated the principal issue in the case at bar as follows:

[TRANSLATION]

Did the adjudicator make an error of law when he found that pursuant to s. 5(1.1) of the Act the employees lost their entitlement to receive their salary increments during the extension period, namely from June 14, 1994 to June 14, 1996, and when he found [that] the date for payment of the amounts for the salary increments was other than June 17, 1996?^[5]

In her brief, counsel for the applicants noted that the parties' arguments at the hearing of the grievances and the arbitration were limited to interpretation of subsection 5(1.1) of the Act. No evidence was called. Similarly, the arguments submitted to the Court dealt primarily with statutory provisions affecting budgets and referred to salary grids in the collective agreements only incidentally, for purposes of illustration.

[3]                The applicants recognized that one of the purposes of the legislation was to remove their right to a salary increment during the extension period. However, they challenged the interpretation of the arbitrator and the respondent that subsection 5(1.1) of the legislation also interrupted their horizontal progression on the salary grid.

[4]                Salary increments specified in the Treasury Board Manual, the chapter headed "Personnel Management Component", are subject to satisfactory performance on the part of the employee.^[6] This provision applies to all the applicants. For the purposes of the case at bar, the parties agreed that the period for the salary increment was the following:

C            twelve months for full-time employees and increases taking effect on the date specified in the collective agreements, namely their anniversary dates; and

C            1,950 hours for part-time employees and increases generally taking effect on the first working day immediately following the accumulation of such hours.^[7]

At the close of the hearing the parties also agreed that subsection 5(1.1) should be given the same interpretation in the case of full-time and part-time employees, as regards the salary increment during the extension period.

[5]                Counsel simplified the principal contentious issue by reference to the remuneration rate of a group of public servants (medical doctors) which was in effect on June 15, 1994 when subsection 5(1.1) came into force:

Level 1              Level 2              Level 3              Level 4

52 408 $                       55 194 $                       57 980 $                       60 766 $

By way of example, it was assumed that an employee was paid in accordance with level 1 of the salary grid on May 18, 1994, the assumed anniversary date pursuant to the collective agreement.^[8]

[6]                The applicants argued that, immediately after the end of the two-year extension of the remuneration plan, this employee would be remunerated on the basis of having progressed from level 1 to level 3 of the salary grid. This would reflect a horizontal progression to level 2 of the salary grid on May 18, 1995 and to level 3 of the salary grid on May 18, 1996. As a consequence of this progression, this employee would be paid under level 3 on June 17, 1996, the first working day subsequent to the end of the wage freeze, and under level 4 on the next anniversary date under the collective agreement, May 18, 1997.

[7]                The respondent's view is altogether different. Neither the employee's pay nor his increment level would change on May 18, 1995 or May 18, 1996, the two anniversary dates during the two-year extension of the remuneration plan. The employee in question would, immediately after the end of the wage freeze on June 14, 1996, continue to be remunerated in accordance with level 1. The employee would only progress to level 2 of the salary grid on May 17, 1997, the next anniversary date subsequent to the end of the wage freeze.

[8]                One can readily see the substantial difference in remuneration as the result of the parties' divergent positions. For the applicants, the employee's salary, which would have been frozen at $52,408 during the two-year extension imposed by paragraph 5(1.1), would increase to $57,980 immediately thereafter and to $60,766 on May 18, 1997. For the respondent, it would only be on May 18, 1997 that the employee's salary would increase to $55,194.

[9]                A similar problem arose under the 1982 Public Service Compensation Restraint Act,^[9] which extended public service compensation packages for a two-year period, subject to limited upwards adjustment of wage rates. However, during this two-year extension, employees whose salary exceeded $49,500 were not entitled to the incremental increases their compensation plan might otherwise provide.^[10]

[10]            In Parliament v. Canada,^[11] a medical doctor was at the 5th salary increment level of his pay category prior to the enactment of the legislation. In dispute was whether, upon the end of the two-year extension, he should fall into the 6th pay increment level, as suggested by the employer, or the 8th pay increment level, as suggested by the employee. In interpreting subsection 6(5) of the 1982 legislation, the provision which removed the entitlement to the incremental increases, my colleague Justice Reed adopted the more restrictive position and ruled in favour of the employer:

I do not see anything in the collective agreement which provides for the continual progression of an employee along the grid when he has not received the immediately preceding salary level. Also, I read subsection 6(5) of the Act as expressly designed to halt this progression.

...

While I agree that the intention of the legislation was to create a dampening effect on employee expectations and that the Act was only designed to be in operation for two years, it was clearly intended that it would have a permanent residual effect in the sense that employees would, at the end of the two-year period, be at a lower level of compensation than they might otherwise might have been.

Justice Reed's twofold conclusion is equally applicable in this case.

[11]            First, there is no evidence of any clause in the collective agreements which allows for the horizontal progression of any employee who has yet to receive the immediately preceding salary level.

[12]            Second, in enacting subsection 5(1.1), Parliament did not intend that salary levels would increase during the two-year extension of the remuneration plan, any more than it did in 1982 for those earning in excess of $49,500. The legislation does have "the permanent residual effect", referred to by Justice Reed, in that the employee remains at the same level of the salary grid until the next anniversary date, immediately following the end of the two-year extension of the remuneration plan.

[13]            In urging that subsection 5(1.1) should be interpreted in a manner which least impacted on the salary restraints of public servants, the respondent relied on Nova Scotia Government Employees Union v. Queen Elizabeth Health Sciences Centre,^[12] where the employer attempted to extend a 3% rollback in salaries beyond the intended term of the legislation. In noting that "nothing muddles the waters but the effect to read into the statute what was not there originally", the Nova Scotia Court of Appeal ruled against the employer. In its view, the absence of an express expiry date was not sufficient support for the employer's position when the legislation "... is read in context with effect given to what is necessarily intended".^[13] I agree with the respondent's counsel that this decision is of no assistance to the applicants.

[14]            In their memorandum of law, the applicants attempted to distinguish the decision in Parliament, supra paragraph 10, by relying on wording in subsection 5(1.1) which was not included in the equivalent provision of the 1982 legislation:

5.(1.1) Notwithstanding any provision of this Act other than subsection (1.2) or a provision of any compensation plan, no employee shall be entitled to the incremental increases, including those based on the attainment of further qualifications or the acquisition of skills, merit or performance increases, in-range increases, performance bonuses or other similar forms of compensation that would, but for this subsection, form part of their compensation plan, during the period of twenty-four months beginning on the day on which this subsection comes into force.

[Italics added.]

5.(1.1) Malgré toute autre disposition de la présente loi, à l'exception du paragraphe (1.2), ou malgré toute disposition d'un régime de rémunération, les salariés n'ont pas droit aux augmentations d'échelon -- qu'elles résultent de l'acquisition d'un niveau de formation ou de compétence supérieur ou soient fondées sur le mérite ou le rendement --, aux augmentations à l'intérieur des fourchettes salariales ni aux primes de rendement, ni aux autres formes de rémunération similaires que comporterait, en l'absence du présent paragraphe, leur régime de rémunération, et ce pendant la période de deux ans commençant à la date d'entrée en vigueur du présent paragraphe.

It is the phrase "or other similar forms of compensation" upon which the applicants rely.

[15]            In their view, the statement "no employee shall be entitled to the incremental increases", when read with the words "or other similar forms of compensation", means that public servants lost only their entitlement to monetary increases and not their right to horizontal progression on the salary grid.

[16]            I respectfully disagree with the distinction the applicants make between not having the entitlement to the monetary increase while still moving along the salary grid, for the reasons set out by the respondent.

[17]            First, Parliament made no such distinction when it stated "no employee shall be entitled to the incremental increases".

[18]            Second, the applicants' interpretation of the addition in 1994 of the words "or other similar form of compensation" would have the opposite effect of that intended by Parliament. In both 1982 and 1994, the legislation removed the employees' entitlement to incremental increases during the two-year extension of their compensation plans. I interpret this to exclude horizontal progression on the salary grid. If Parliament had intended otherwise in 1994, it would have used language much more direct than the words relied upon by the applicants.

[19]            Third, section 13 of the Public Sector Compensation Act, which repeats a similar provision in the 1982 legislation,^[14] supports the respondent's position that no provision in a compensation plan can have the effect of bringing wage rates to a level they would have reached without the legislation:

13. A provision of a compensation plan for employees to whom this Act applies that is entered into or established at any time is of no force or effect to the extent that it provides for an increase in wage rates that would bring wage rates to a level that they would, but for this Act, have reached.

13. Indépendamment de sa date d'établissement, est nulle la disposition du régime de rémunération de salariés visés par la présente loi qui a pour effet de porter les taux de salaire au niveau qu'ils auraient atteint en l'absence de celle-ci.

[20]       The applicants' submissions were focussed on statutory interpretation. They argued that section 13 spoke only of "wage rates" and not the employees' level on the salary grid. However, in my view, subsection 5(1.1) and section13 must be together. Even assuming that there existed a provision in the compensation plan which specifically dealt with the employees' horizontal progression beyond the salary they received, the result urged by the applicants would be defeated by section 13. I accept the respondent's submission that section 13 is a "catch-all" provision to assure the result intended by Parliament. For this reason, I would dismiss the applicants' position on my interpretation of subsection 5(1.1), even without reliance on section 13. I understand Justice Reed to have adopted a similar view in Parliament.^[15]

[21]            Counsel for the applicants added another argument, not included in her written submissions, to distinguish the decision in Parliament^[16]. Some public servants, unlike the applicants, receive increases in compensation on the basis of their years of experience and not on their performance. Subsection 5(1.2) of the Public Sector Compensation Act, a provision which was not included in the 1982 legislation, states that:

5.(1.2) The period referred to in subsection (1.1) shall not be counted for the purposes of calculating any increase in any form of compensation referred to in that subsection that is based on years of experience.

5.(1.2) La période visée au paragraphe (1.1) n'est pas prise en compte dans le calcul, en fonction du nombre d'années d'expérience, de l'augmentation de toute forme de rémunération visée à ce paragraphe.

[22]            As I understand the applicants' argument, the words "any increase in any form of compensation" is broader language which clearly prohibits increment level progression. Accordingly, in their view, Parliament must have intended otherwise in subsection 5(1.1). No such conclusion can be reached without examining the compensation plans with performance increases and those with increases based on years of experience. There may exist a number of reasons for having dealt with increases based on years of experience in a different subsection. More fundamentally, however, the applicants' interpretation of subsection 5(1.1) simply runs so deeply counter to the intention of Parliament that it cannot be justified by the language of subsection 5(1.2).

[23]            The Public Sector Compensation Act, together with its amendments in 1993 and 1994, was part of the governments' budget restraint program. The legislation imposed limitations on the salaries and wages of public servants. The introduction in 1994 of subsection 5(1.1) was intended to freeze pay increments during the two-year period extension of remuneration plans, for all public servants, including unionized employees. The applicants' position concerning subsection 5(1.1) is, in my view, not justified when applying the normally accepted rules of statutory interpretation. Their interpretation is simply inconsistent with the words of the statutory provision when "read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament".^[17]

[24]            The conclusion I have reached concerning the correct meaning of subsection 5(1.1) is reinforced when the consequences of the applicants' position are taken into consideration.

[25]            The medical doctor, according to the example referred to earlier, supra paragraphs 5 through 8, would continue to earn the salary negotiated as of May 18, 1994 through the first eleven months of the two-year extention of the remuneration plan. This unionized employee would lose, however, the monetary increase that would have been triggered upon satisfactory performance, on May 18, 1995 and May 18, 1996, if subsection 5(1.1) had not been enacted. In other words, the applicants concede that the medical doctor's salary level is unaffected by subsection 5(1.1) for the first eleven months of the two-year extension and that the monetary value of the two incremental increases were not to be paid during the period prior to June 14, 1996. The salary level would be frozen through the last thirteen months of the extension.

[26]            If the applicants' interpretation were correct, however, the employee's salary would increase by 10.6% on June 17, 1996, thirteen months subsequent to the negotiated salary period ending May 18, 1995. According to this view, Parliament would have frozen pay increments during the extended period in enacting the government's budget restraint program, only to have this employee receive a 10.6% increase some thirteen months after the end of the last negotiated salary period. In my opinion, this consequence is incompatible with the object of the legislative enactment.^[18]

[27]            For the respondent, the medical doctor's salary would remain at the same level until May 18, 1997, when it would increase by 5.3%. This would occur two years subsequent to the negotiated salary period ending May 18, 1995. This result is far more consistent with the purposes and object of the legislation.

[28]            For these reasons, this application for judicial review will be dismissed. As I agree fully with the arbitrator's conclusion, it is not necessary to consider the parties' submissions on the appropriate standard of review.

                                                                                                                                                                                          

                                                                                                                                   J.F.C.C.

Ottawa, Ontario

***, 1999

Certified true translation

Pierre St-Laurent, LL.M.

Documents for the translation department

C            1982 Legislation

C            1991-1993-1994 Legislation

C            English and French versions of Parliament v. Canada

C            Decision of the adjudicator

C            Memoranda of each of the parties

FEDERAL COURT OF CANADA

TRIAL DIVISION

NAMES OF COUNSEL AND SOLICITORS OF RECORD

COURT No:	T-87-98
STYLE OF CAUSE:	JOHANNE TREMBLAY, GÉRALD FORGUES,
	MARIE-CLAUDE CYR, DOMINIQUE JOLY,
	TARA WHELTON, CHANTAL VICTOR,
	CAROLE LACOSTE, RUTH LEIMANIS,
	DIANE DESJARDINS-LAGANIÈRE, MONIKA
	FRIEDBERG, ANNICK HÉBERT, MARIA
	LUCIA, LESLIE ROY, RÉMI ST-CYR, BENOÎT
	GUAY, ANDRÉ BOUDREAU, GHISLAIN
	BOUCHARD AND LOUISE BINET,
	- and -
	THE ATTORNEY GENERAL OF CANADA
	(Revenue Canada, Health Canada, Veterans
	Affairs)
DATE OF HEARING:	APRIL 6, 1999
PLACE OF HEARING:	OTTAWA, ONTARIO
REASONS FOR ORDER BY:	LUTFY J.
DATE:	MAY 7, 1999
APPEARANCES:
?' ,SCALE-SONIA ROY	FOR THE APPLICANTS
MICHEL LeFRANÇOIS	FOR THE RESPONDENT
SOLICITORS OF RECORD:
NELLIGAN, POWER	FOR THE APPLICANTS
OTTAWA, ONTARIO
MORRIS ROSENBERG	FOR THE RESPONDENT

DEPUTY ATTORNEY GENERAL OF CANADA