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August 10, 2018

Arbitrator Finds Employees Entitled to STD and LTD Benefits are Disentitled to Paid PEL Days

Authors Hendrik Nieuwland and Domenica Moran

Following Bill-148’s recent changes to job-protected Personal Emergency Leave (“PEL”) days in the Ontario Employment Standards Act, 2000 (“ESA”), many employers are left wondering whether their contracts of employment or collective agreements provide greater rights or benefits to the ESA’s new paid PEL days.  The ESA used to provide employees with 10 unpaid PEL days, but Bill-148 now requires the first two PEL days to be paid.  The difficulty arises with section 5(2) of the ESA, which states that where provisions in a contract of employment or collective agreement directly relate to the same subject matter as the statutory employment standard, and provide a greater benefit than the employment standard, only the benefits in the contract or collective agreement apply and benefits in the ESA do not apply.    

The recent decision of Arbitrator Mitchnick in USW, Local 2020 and Bristol Machine Works Ltd (“Bristol”), is the first to determine whether a collective agreement contained a greater right or benefit to the ESA’s new paid PEL days.  A dispute arose between the employer and the union as to whether the employees were entitled to the two paid PEL days for personal illness in addition to the benefits provided in their collective agreement.  The employer argued that the collective agreement provided a greater right or benefit, so the paid PEL provisions did not apply.

The collective agreement did not provide individual sick days, but it included income-protection provisions that apply in the event of illness or injury through weekly indemnity benefits (STD) and long-term disability (LTD) insurance.  The collective agreement’s STD benefits for sickness apply after 7 days.  Employees will receive up to 17 weeks of STD benefits at 65% of earnings ($700 weekly maximum).  Employees with 18 months of seniority will also be entitled to an unlimited period of LTD insurance, also at 65% of earnings ($2,500 monthly maximum).  Employees must work for 60 days before they are eligible for the STD benefits.    

The Collective Agreement Provides a Greater Right or Benefit

Arbitrator Mitchnick decided that the income-protection provisions in the collective agreement were superior to the ESA’s PEL days. 

To reach this conclusion, Arbitrator Mitchnick first reviewed the extensive case law on how to assess the value of benefits provided in a collective agreement against those provided in the ESA.  On the one hand, the case law reiterated the importance of construing section 5(2) narrowly, because the comparison is to a benefit from the collective agreement that “directly relates” to the “same subject matter” as the ESA’s benefit.   

On the other hand, the case law demonstrated that it is important to weigh benefits in their entirety. The Ontario Divisional Court’s decision in Queen’s University v Fraser demands “one must look at the entirety of the terms of the agreement respecting holidays and not compare each individual item.”  Consequently, a “comparison between the collective agreement provisions respecting a particular benefit must be weighed in their entirety against the same benefit in the Act rather than an item by item comparison of the provisions.”

Arbitrator Mitchnick determined that the correct approach was to consider the “totality of the benefit in question as it exists under the collective agreement verses the totality of the benefit as provided by the Act.”  He determined the main issue was whether the ESA provided a greater benefit than the collective agreement regarding income protection for personal leave for illness.  Arbitrator Mitchnick concluded that the collective agreement’s benefits were better.  The ESA only provides two paid PEL days, while the collective agreement provides much greater benefits.  He found this to be true even though illness under the collective agreement’s STD benefits required a waiting period of 7 days, and that 18 months of service was required for the extensive coverage under the LTD insurance. 

The Employer Can Request Medical Notes  

Under the ESA, an employer is forbidden from requiring an employee to prove his or her illness with a medical note if they choose to take a PEL day for personal illness.  Arbitrator Mitchnick determined that the collective agreement’s requirement that an employee must provide a medical note to receive either the STD benefits or the LTD benefits did not preclude a comparison of those benefits to the two paid PEL days, as to do so would be the “line by line” comparison that the Divisional Court in Queen’s University decided was improper.  Arbitrator Mitchnick determined that due to the significant compensation the STD benefits and the LTD plan provided, requiring employees to provide a medical note was justified in the circumstances.    

Probationary Employees are Entitled to PEL Days

Arbitrator Mitchnick then addressed the fact that employees must work for 60 days to gain seniority and to become eligible for the benefits stipulated in the collective agreement.  For this issue, Arbitrator Mitchnick concluded that probationary employees are entitled to the ESA’s PEL benefits.  His reasoning is that an employer should not be able to create a benefit plan that overrides the minimum protections of the ESA to a group of employees that cannot yet participate in that plan.  This is especially so because probationary employees have no security of employment and there is no guarantee that they will ever be able to participate in the plan. 

Implications for Employers

This decision confirms that the greater right or benefit analysis requires consideration of the totality of benefits provided and not a “line by line” approach. 

In conducting the greater right or benefit analysis, Arbitrator Mitchnick’s approach focuses solely on an employee’s use of PEL days for personal illness as the basis of comparison to the collective agreement’s income-protection provisions for sickness or injury.  This is an interesting approach, since PEL days can also be used for other purposes, such as family illness or injury, bereavement, and urgent matters involving family members.  For now, it is unknown whether other arbitrators will adopt this same approach, and therefore the outcome in this case should not necessarily be taken as the final statement of the law on this important issue. 

The foregoing is for informational purposes only, and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyers by email or telephone.
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