Canada: Arbitrator Rules That Benefits Provided Under A Collective Agreement For Post-Age 65 Retirees Are Permissible Under The Education Act

On July 29, 2014, the Ontario arbitration decision of Greater Essex County District School Board and CUPE, Local 27 (Retiree Benefits), held that a collective agreement which mandated the school board to provide benefits to retired employees over the age of 65 was permissible under subsections 177(3) and (4) of the Education Act.

Background

The terms of the collective agreement between CUPE, Local 27 (the "Union") and the Greater Essex County District School Board (the "Board") provided that the Board would pay the full cost of premiums for retirees over the age of 65 in certain benefit plans. At the insistence of the Ministry of Education (the "Ministry"), the Board informed the Union that it would no longer pay retiree benefits past the age of 65. The Ministry and Board relied on subsections 177(3) and (4) of the Ontario Education Act:

177 (3) If a person retires from employment with a board before he or she reaches 65 years of age, the board may retain the person in a group established for the purpose of a contract referred to in clause (1) (a) until the person reaches  65 years of age.

(4) If a person is retained in a group under subsection (3), the premium required to be paid to maintain the person's participation in the contract may be paid, in whole or in part, by the person or by the board.

The Union filed a grievance, asserting that the Board was in contravention of the collective agreement in denying benefits to post-age 65 retirees. At issue before Thomas Kuttner, the arbitrator, was whether subsections 177(3) and (4) of the Education Act prohibit a school board from retaining a post-age 65 retiree in a health benefit plan provided under the terms of a collective agreement.

Decision

Arbitrator Kuttner concluded that subsections 177(3) and (4) of the Education Act are permissive. Accordingly, the terms of the collective agreement providing for retirement benefits to be paid by
the Board for retirees over the age of 65 were enforceable.

Arbitrator Kuttner began his analysis by noting  the supremacy of statutory terms over collective agreement provisions. If he found the legislation to be prohibitive, then the impugned term of the collective agreement would be unenforceable. He determined that the interpretative methodology to be applied in the collective bargaining context is,

A statute must clearly prohibit the parties from entering into an agreement before the court should declare the agreement illegal.

Arbitrator Kuttner sought to harmonize the EducationAct with the Labour Relations Act, 1995 (the "LRA"). He determined that subsections 58.5(1) and 170(1).18 of the Education Act – which state, respectively, that a school board "...has all the powers and shall perform all of the duties" conferred or imposed on it by any Act, and "...do anything that a Board is required to do" under any Act – led to permissive interpretation. The combined effect of these provisions coupled with the LRA gave the Board the inherent jurisdiction to provide retirement benefits for persons over the age of 65.

Arbitrator Kuttner also considered the effect of the Putting Students First Act, 2012 (the "PSFA") on the statutory context. The PSFA imposed a set of mandatory collective bargaining terms that were incorporated into collective agreements. One of these terms provided that retirees who currently had access to post-retirement benefits continued to be included in their current experience pool. The PSFA did not distinguish post-age 65  retirees. Arbitrator Kuttner concluded that since the PSFA and the Education Act are to be read harmoniously, the fact that post-age 65 retirees were not distinguished from other retirees in the PSFA served to strengthen the permissive reading of subsections 177(3) and (4).

Even if he was mistaken, and subsections 177(3) and (4) were prohibitory in their effect, the arbitrator still found that the collective agreement was enforceable based on a close reading of the statute. Subsections 177(3) and (4) only reference post-age 65 retirees retained in groups. Given that the benefits in this case were for  health services rather than group contracts, the arbitrator determined that they were not caught by subsections 177(3) and (4).

Finally, Arbitrator Kuttner commented on the process by which the Ministry had precipitated this grievance. He was critical of the Ministry's unilateral prohibitive interpretation of the legislation, stating "[o]urs is not a system of labour relations governed by bureaucratic ukase or governmental diktat". He stated that the proper course would have been for the Ministry to direct the Board to bring a policy grievance, so that the alleged illegality of the impugned provision could be determined in accordance with the LRA scheme.

Take-Away

Arbitrator Kuttner in this case was willing to take a liberal approach to interpreting statutory
provisions alleged to alter the terms of a collective agreement. He concluded that the terms of
a collective agreement are not to be found unenforceable unless their operation is clearly excluded by the broader statutory context.

As a result, parties should think carefully before concluding that the terms set out in a collective agreement are not enforceable. This case suggests that if a legislative provision is
ambiguous and a collective agreement provision is not clearly in conflict with such provision, an arbitrator will likely find the impugned collective agreement provision to be enforceable.

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