Canadian HR Reporter

CanaDian hr reporter october 20, 2014 EmploYmENT lAw 5 Want to attract and retain top talent? More than just a software solution, Employer D Select equips managers by giving them access to critical, essential data that is linked to human resource management and strategic company planning. Employer D, scalable solutions from Desjardins for payroll, human resources as well as occupational health and safety management. THE END JUSTIFIES THE MEANS! desjardins.com/HR • (514) 356-5050 / 1 (888) 311-1616 It's all of Desjardins supporting your business labatt's severance program a perfect pour, says arbitrator A voluntary retirement incentive did not discriminate against disabled employees by calculating payment based on what they earned when they worked, rather than the current wages for their posi- tions, an arbitrator has ruled. Pay rates for Labatt employees were set in collective agreements so in each new agreement, wages were set at a higher rate — there were no wage progressions. e agreement allowed for higher wages for "seniority employees" and did not guarantee the same pay for everyone for the same work. Long-term disability (LTD) benefits were part of the ben- efits package and the negotiated LTD plan paid about two-thirds of a disabled employee's regular earnings if she was "totally and permanently disabled and is un- able to do any job at all." e LTD benefit payments re- mained tied to the disabled em- ployee's wages when she stopped working and did not increase when wage rates increased. If an employee on LTD recovered and was able to return to her former job, she would be paid the cur- rent wage rate. In 2008, Labatt Breweries Ontario and its main union ne- gotiated a one-time, voluntary severance program (VSP) that encouraged long-time employees to voluntarily retire. In return, they would receive a lump-sum payment. e opportunity was offered to all employees who were at least 55 and whose age and years of service totalled at least 85, whether actively employed or not. e program would be rolled out over the next few years until 2012, with a cap at 70 employ- ees. e payment was slated to be equal to "800 hours' (pay) at the employee's base hourly rate on his last day of work." Seventy employees opted to accept the incentive — 62 active employees and eight employees who had been gone from the workplace for several years and were receiving (LTD) benefits. Because of the wording in the agreement, the payment to the employees who were on LTD was calculated to be their pay when they last actually worked, which was several years in the past and, therefore, significantly lower than employees who were currently working. e union grieved this arrange- ment, arguing employees on LTD were being discriminated against because of their disability. e union recommended the payment to LTD employees be calculated using the current job rates for the positions in which they had last worked. Arbitrator looks at LTDs The arbitrator noted the LTD employees had been gone from the workplace for many years, in most cases, and it was "extremely unlikely" they would be able to return to work. It was just a matter of time until they had to transition from long-term disability benefit pay- ments to their pensions — under the collective agreement, LTD benefits could not continue past age 65. The arbitrator also pointed out the LTD plan was a partial indemnification for the wage losses of disabled employees and was fixed in relation to their past earnings. ere was no question an em- ployee who went on LTD at a later date than one who went on it earlier would receive a greater incentive payment under the VSP, found the arbitrator. More senior employees would also re- ceive a greater payment if they were making a higher wage. ough active employees who volunteered for the program re- ceived a greater payment, they were also giving up their existing jobs with a greater flow of wages. LTD employees who gave up their status received payment based on their full wages when last working, even though LTD benefits were only paying them two-thirds of that amount. LTD employees were being compen- sated differently, but what they were exchanging was different as well, said the arbitrator. "e VSP offers volunteers a choice between continuing their current situation (whatever it is) and receiving a lump sum pay- ment as an inducement to retire on pension," said the arbitrator. "It is the individual employee who decides to change the status quo, based upon his/her own as- sessment of the options and his/ her own personal circumstances." e arbitrator also found the intention of the VSP was to cut wage costs by eliminating senior positions. However, it was still made available to long-term dis- ability employees who were not contributing to wage costs and not making actual contributions to Labatt. In addition, the VSP was ne- gotiated by Labatt and the union and, at that time, neither felt the formula was discriminatory or unfair to any group eligible — and both would be responsible for any discriminatory elements. Since it was voluntary, no one was obliged to participate and each employee could choose to maintain the status quo, said the arbitrator. "e very fact the parties have created a differential payment… recognizes that the benefit is not just contingent upon 'em- ployment' alone, but should be evaluated in relation to the value of work done," said the arbitrator. "Because in each instance what is being paid to employees re- flects the 'value' of the work that they provided — a sum 'objec- tively' determined from time to time, on an hourly basis, through Jeffrey smith Legal View No > pg. 13

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