Arbitrator rules in favour of OPSEU over pro-rating of vacation pay for workers on pregnancy, parental and adoption leave at not-for-profit

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An arbitrator has ruled in favour of the Ontario Public Service Employees’ Union (OPSEU) in a fight over vacation pay entitlements during leaves of absence.

OPSEU filed a grievance against Resolve Counselling Services Canada, a not-for-profit charitable agency serving southeastern Ontario, on behalf of its employees — which include counsellors, therapists, administrative support, and facilitators.

The dispute revolved around the practice of pro-rating vacation pay based on the length of leave periods, particularly during pregnancy, parental, and adoption leaves. The union filed several individual and one policy grievance challenging this practice, leading to objections and defenses raised by the employer.

Union, employer bought thought collective agreement was clear

Instead of delving into the evidence required to examine these defenses, both parties decided to seek an interpretation of their collective agreement based on the language of relevant provisions and applicable case law.

Both parties asserted that their collective agreement is clear and unambiguous, even though they interpreted the relevant terms differently.

The critical question at hand was whether employees on leaves of absence should have their vacation pay pro-rated based on their absence during the fiscal year. The arbitration ruling examined the language of the collective agreement (full text below) and relevant precedents to arrive at a conclusion.

The ruling clarified that vacation entitlements, including pay, are not dependent on active service for employees on pregnancy, parental, and adoption Leaves. The collective agreement specified that these leaves are protected, and the entitlements continue to accrue without pro-rating.

Financial implications for not-for-profits

The ruling acknowledged the financial implications for the not-for-profit organization but emphasized that contract interpretation should follow the plain meaning of the agreement’s words. It clarified that the reference to the Employment Standards Act in the collective agreement does not limit entitlements to the statutory minimums.

“For all the reasons set out above, I must declare that this Collective Agreement does not allow for the pro-rating of vacation time or pay during Pregnancy, Parental and Adoption Leaves,” wrote arbitrator Paula Knopf in the decision.

While this conclusion resolves the issue of vacation pay during leaves of absence, it leaves open questions related to other aspects of the dispute, such as estoppel, waiver, laches, timeliness, and potential remedial consequences. The parties have retained their rights to address these matters separately.

For more information, see Resolve Counselling Services Canada v Ontario Public Service Employees’ Union, 2023 CanLII 91508 (ON LA).

Full text from collective agreement

ARTICLE 3 – MANAGEMENT RIGHTS

3.01   The Union acknowledges that it is the exclusive function of the Employer to manage and direct the employees in the workplace. This right shall not be abridged except as specific restrictions are set forth in this agreement.

ARTICLE 13 – SERVICE AND SENIORITY

                        13.01 (a) Seniority as referred to in this agreement shall mean length of continuous service in the bargaining unit from the last date of hire in the employ of the employer and shall be on a bargaining unit-wide basis.

                                    Clarity Note:

                                    Last date of hire includes all unbroken service prior to certification of the Union for all bargaining unit members.

                                    13.07  Loss of Seniority and Termination of Employment

                        Continuity of service shall be considered broken and employment terminated if the employee:

a)            resigns or retires;

                                    b)         is discharged (and the discharge is not reversed through the grievance arbitration procedure); fails to report to work at the expiration of a leave of absence unless a reason satisfactory to the Employer is given;

                                    c)         fails to notify in writing the Employer of the employee’s intentions within seven calendar days and fails to report for work within fourteen calendar days after issuance of notice of recall by registered mail to the employee’s last address on record with the Employer;

                                    d)         is absent from work for three days without providing a reason satisfactory to the Employer;

                                    e)         is laid off for a period in excess of 24 months;

                                    f)         uses a leave of absence for a purpose other than that for which it was granted;

                                    g)         is absent from work more than twenty four (24) months by reason of illness or other physical disability, and there is no reasonable likelihood the employee will return to work within the near future.

                                    h)        It shall be the responsibility of the employee to keep the Employer informed of the employee’s current address. If any employee fails to do this, the Employer will not be responsible for a failure of a notice to reach an employee.

ARTICLE 18 – VACATIONS

                        18.01 For the purposes of calculating entitlement

                                                a)       The annual leave year shall be based on the employee’s service with the Employer calculated from the last date of hire.

b)       Full-time and Part-time employees will be credited with their vacation entitlement at the beginning of the vacation year. The vacation year shall run from the first day of the first pay commencing the fiscal year and ending the last day of the last pay of the fiscal year.

Employees who resign, retire, or otherwise leave their employment for any reason, shall have their vacation entitlement pro-rated in accordance with the time worked in the vacation year of leaving, such that

(i)              If the employee has not taken all vacation time accrued up to the time of departure, they will be paid in lieu of any vacation time accrued but not taken, and

(ii)            If the employee has used vacation time beyond their accrual entitlement at the time of departure, they will have deducted from their final paycheque any vacation time that was used but not accrued.

c)         Unless there is specifically authorized carry-over, all vacation should be taken prior to the last day of the last payroll of each vacation year. Should an employee have more vacation at this time then their 2 weeks of carry over, it can be scheduled by the employer or it will be paid out on the final payroll of the fiscalyear.

d)       Vacation will not accrue during any absence exceeding thirty (30) continuous calendar days with the exception of maternity/parental leave, Leaves covered under the ESA and short term disability.

f)          All Full-time and Part-time employees shall receive vacation with pay as follows:

            i)       Upon hire employee will be credited fifteen (15) working days of vacation leave

            ii)      In the vacation year during which the employee will complete five (5) full years of employment, they will be credited with twenty (20) working days of vacation leave.

            iii)    In the vacation year during which the employee will complete ten (10) years of employment, they will be credited with twenty five (25) working days of vacation leave.

            iv)    In the vacation year during which the employee will complete twenty (20) years of employment, they will be credited with thirty (30) working days of vacation leave.

18.05 Vacation entitlement for part-time staff will be pro-rated as to full-time staff.

                        19.06  Pregnancy/Parental/Adoption Leave

a)       Pregnancy Leave

            Pregnancy Leave will be granted in accordance with the provisions of the Employment Standards Act, 2000.

b)       Parental Leave/Adoption

            Parental/Adoption leave will be granted in accordance with the provisions of the Employment Standards Act,2000.

c)During the leave(s) expressed above, an employee shall continue toaccumulate seniority, vacation and sick leave. The Employer is also obliged to continue making all contributions to health and welfare plans and pension plans.

d)       Vacation will not accrue during any absence exceeding thirty (30) continuous calendar days with the exception of maternity/parental leave, Leaves covered under the ESA and short term disability.

f)          All Full-time and Part-time employees shall receive vacation with pay as follows:

            i)       Upon hire employee will be credited fifteen (15) working days of vacation leave

            ii)      In the vacation year during which the employee will complete five (5) full years of employment, they will be credited with twenty (20) working days of vacation leave.

            iii)    In the vacation year during which the employee will complete ten (10) years of employment, they will be credited with twenty five (25) working days of vacation leave.

            iv)    In the vacation year during which the employee will complete twenty (20) years of employment, they will be credited with thirty (30) working days of vacation leave.

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