IN THE MATTER OF AN ARBITRATION
BETWEEN: CANADIAN NATIONAL RAILWAY COMPANY
AND NATIONAL AUTOMOBILE, AEROSPACE, TRANSPORTATION AND GENERAL WORKERS OF CANADA, LOCAL 100
AND IN THE MATTER OF THE GRIEVANCE OF D. PARKER
SOLE ARBITRATOR: J.F.W. Weatherill
A hearing in this matter was held at Winnipeg on October 9, 2003.
J.R. Moore-Gough, for the union.
J.A. Coleman, for the company.
The Joint Statement of Issue in this matter is as follows:
The correct supplemental unemployment benefits (SUB) entitlement of Mr. D. Parker, under the provisions of article 4 of the Employment Security and Income Maintenance Agreement (ESIMA), as a result of his temporary layoff from September 26 to December 6, 2002.
Joint Statement of Issue:
Mr. D. Parker, a Carman employed by Canadian National Railway at its facilities in Melville, Saskatchewan, was temporarily laid off from September 26, 2002 until December 6, 2002. During this time Mr. Parker collected Employment Insurance at a weekly rate of Four Hundred Thirteen dollars ($413.00). In addition he was topped off from the ESIMA under the provisions of article 4.5 to eighty percent (80%) of his basic weekly rate of pay at the time of layoff. However, at the time of completion of his income tax for the year 2002, Mr. Parker was required by Section 145 Part VII Benefits Repayment of Employment Insurance Act to repay to the Receiver General one thousand three hundred and sixty-two dollars and ninety cents ($1362.90). This was a result of Mr. Parker’s income from 2002 exceeding 1.25 times the maximum yearly insurable earnings.
It is the union’s contention that the reduction in the employment insurance benefits paid to Mr. Parker from his period of layoff is to be paid to Mr. Parker from the employment security and income maintenance agreement , in order that he receive his rightful entitlement to eighty percent (80%) of his basic weekly rate of pay while on layoff, as required by Article 4 of the Employment Security and Income Maintenance Agreement. The union requests in settlement of this matter that the company pay to Mr. Parker the $1362.90 that was clawed back from his employment insurance benefit.
It is the company’s contention that Mr. Parker was paid his proper top up of employment insurance benefits while laid off and that any clawback of moneys from Mr. Parker’s employment insurance benefits is a matter between Mr. Parker and Revenue Canada. The company requests that the arbitrator dismiss the grievance.
It is agreed that the grievor was entitled to and, while he was laid off, received payments in accordance with the provisions if article 4 of the Employment Security and Income Maintenance Agreement. Reference may be made to clause 4.5(b)(i) of the agreement:
4.5 Eligible Employees, as defined in Article 4.4 may, at the expiration of the seven-day waiting period specified in paragraph (ii) of Clause (a) of said Article 4.4, make application to a designated officer in the form and manner prescribed by the Labour Adjustment Committee for a weekly layoff benefit as follows:
(b) Employees with TWENTY OR MORE YEARS of Cumulative Compensated Service:
(I) A weekly layoff benefit for each complete week of seven calendar days laid off following the seven-day waiting period referred to in Article 4.4 of an amount which, when added to employment insurance benefits and/or outside earnings in
excess of those allowable under employment insurance for such week, will result in the employees receiving 80 percent of their Basic Weekly Rate at time of layoff.
Subsequently, however, as noted in the Joint Statement, the grievor was required to pay a portion of his income, due to the operation of section 145 (1) of the Employment Insurance Act. That section provides as follows:
145.(1) Benefit Repayment - If a claimant’s income for a taxation year exceeds 1.25 times the maximum yearly insurable earnings, the claimant shall repay to the Receiver General 30% of the lesser of
(a) the total benefits, other than special benefits, paid to the claimant in the taxation year, and
(b) the amount by which the claimant’s income for the taxation year exceeds 1.25 times the maximum yearly insurable earnings.
It was argued that because of this “clawback”, of his employment insurance payments, the grievor could not be said to have received the full amount of the benefits to which he was entitled under the provisions of the Employment Security and Income Maintenance Agreement, since he did not, once he had made the “benefit repayment”, in fact receive the full 80 percent of his Basic Weekly Rate, and that the company should make a further “top up” payment to restore him to that position. The company’s response to this is that the appropriate weekly payments were made, that the grievor did receive 80% of his Basic Weekly rate, and that the subsequent “clawback” was based on the amount of his income at the end of the year and was a tax.
A similar question has arisen under other forms of guaranteed wage plans. The decisions of arbitrators are conflicting. The union relies on the decision in the Labatt Brewing Co. case, (1982), 5 L.A.C.(3d) 164 (Larson). The arbitrator there relied on the unreported decision of arbitrator Palmer in Ford Motor Company (November 30, 1981). At p. 172 of the Labatt decision, the arbitrator stated:
- - - U.I.C. benefits were intended by the guaranteed wage plan to be a component of the gross income of an employee yielding a total 70% minimum wage during periods of lay-off. To the extent that benefits are available, the employer’s share is reduced. On the other had, to the extent the U.I.C. benefit might be reduced, it was intended that the employer’s contribution would increase to the extent necessary to make up the 70%. The fact that the 70% is calculated and paid on a weekly basis and the reduced U.I.C. benefit under Part VIII of the Unemployment Insurance Act, 1971 is annualized, only requires that the unemployment insurance repayment be factored into that schedule.
The union referred as well to the decision of arbitrator G.C. MacLean in the Province of Manitoba case (unreported) (February 26, 1987), where a similar conclusion was reached, the arbitrator stating at p. 6 of the award that “the fact that the Unemployment Insurance program has a system that make[s] a retrospective determination as to the correct amount of benefits payable earlier in the calendar year should not act to the detriment of the Grievor or act to confound the pertinent Collective Agreement and S.U.B. provisions”.
With respect, I am unable to agree with the reasoning of these decisions. I think it is true that if the payment of weekly employment insurance benefits were to be reduced during the course of the year, the amount the employer would be required to pay to top them up would be increased, just as it would be decreased if the benefits were increased. That, however, is not this case, nor was it the case in the decisions referred to. I think, further, that what occurs in these cases cannot properly be described as “a retrospective determination as to the correct amount of benefits”. There was no “mistake” in the calculation of the weekly benefits. The “clawback”was not because these benefits
were too great - at least not on a weekly basis. It was required to be paid because the grievor’s total income for the taxation year was sufficiently great to require it.
That is how the matter was seen by arbitrator Jutras in the Alcan case (unreported), (May 16, 1985), where the arbitrator, referring to similar, although not identical legislative and collective agreement provisions, stated at p. 10 of his award:
Ces articles font donc bien voir que les remboursements des prestations sont des dettes dues à Sa Majesté, en vertu de la Loi sur l’assurance-chômage et de la Loi de l’impôt sur le revenu: le plaignant a reçu les prestations auxquelles il avait droit mais à cause de son revenu, il doit remboursement - - .
This decision was followed by arbitrator Boisvert in the Journal de Montréal case (unreported), June 21, 1989. At p. 10 of that award the arbitrator stated:
Ces constatations suffisent dès lors, à mon avis, pour présumer que le but visé par la partie VII de la Loi concernant l’assurance-chômage, était d’obliger une salariée dont l’ensemble des revenus était élevé pendant une année d’imposition, à verser à titre d’impôt une partie des prestations d’assurance-chômage qu’elle avait antérieurement touchées en toute légalité, et ce, précisément parce qu’elle jouissait de revenus élevés.
More recently, a similar result has been reached by arbitrator Brandt in Cami Automotive Inc. (1999), 86 L.A.C. (4th ) 272, where the arbitrator stated, at p. 288:
The gross up that the union claims in this case appears designed to hold the employer responsible for replacing losses which occur as a result of a statutory policy aimed at recovering benefits (financed from government revenues) that have been paid to persons whose current income, for whatever reason, is seen to be sufficiently high to justify reimbursement.
I am, with respect, in agreement with the reasoning of arbitrators Jutras, Boisvert and Brandt. During the period for which employment benefits were payable to the grievor, those benefits were topped up by the employer in accordance with the Agreement. During the taxation year, however, the grievor’s income consisted not only of those employment insurance benefits and top-up payments, but also his wages during other parts of the year, and any other earnings or other income he may have had. It was because of that income for the year that the grievor came within the provisions requiring him to make a payment to the Receiver General based on the formula in section 145.(1) of the Act. The company had made the payments it was required to make, and did not violate any provisions of the agreement.
For all of the foregoing reasons, the grievance must be dismissed.
DATED AT OTTAWA, this 27th day of October, 2003,
Original signed by: J.F.W. Weatherill ,