IN THE MATTER of the UNEMPLOYMENT INSURANCE ACT, 1971
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IN THE MATTER of a claim for benefit by HENRI FORTIN
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IN THE MATTER of an appeal to an Umpire by Canadian Marine Officers Union from
a decision by the Board of Referees given at Welland, Ontario, on May 29, 1986.
WALSH, J:
The issue in the present appeal from the decision of the Board of Referees as outlined in its decision was whether accumulated leave pay of Henri Fortin, a marine engineer who was in the employ of Halco Inc. on one of its vessels from March 23, 1985 to February 19, 1986, being a member of appellant Canadian Marine Officers Union, should be considered as earnings pursuant to Unemployment Insurance Regulations. The appeal was submitted in English and the decision will affect a large number of seamen. Although there were written representations on the record a request for adjournment was made to permit counsel to study the issue further. This was refused and oral argument was heard on the understanding that further written argument could be submitted before any decision was rendered. These further written submissions have now been made.
It does not appear that the text of the written agreement between the Canadian Lake Carriers Association of which Halco is a member and the Canadian Marine Officers Union in effect from June 1, 1984 to May 31, 1987 was before the Board of Referees, but the pertinent section dealing with accumulated leave and leave pay reads in part as follows:
14. ACCUMULATED LEAVE AND LEAVE PAY
a) Leave pay shall be earned and payable for each working hour in the working week for which leave entitlement is credited. In the case of employees engaged in continuous annual employment, payment may be deferred to the end of the month following their service anniversary dates with that Company. Subject to the conditions and exceptions stated in the section, each engineer officer shall be entitled to take leave from the vessel on which he works, the leave to be calculated as equivalent to two (2) days leave for each six (6) days worked of eight (8) hours per day. (.334 factor).
b) Each eligible engineer officer shall be credited with leave pay as follows:
each eligible engineer officer shall be entitled to .334 basic hourly rate for each hour worked.
c) Accumulated leave will not be granted for periods of less than fourteen (14) days without mutual consent.
d) When an engineer officer has accumulated fourteen (14) days or more of leave and, provided he has made his request in writing fifteen (15) days in advance, he shall be granted a minimum of fourteen (14) days leave. However, all such leave shall be completed before the first day of December. On vessels operating twelve (12) months of the year, leave shall not be taken between December 1st, and the following January 15th, unless suitable arrangements can be made.
e) An engineer officer shall not be compelled to take leave from his ship or be prevented from doing so.
f) Only one (1) engineer officer per vessel Will be permitted to take leave at one time and leave shall be granted on the basis of rank for the vessel on which the engineer officer is employed, unless otherwise mutually agreed upon amongst the engineer officers involved.
g) Leave pay shall be paid at the end of every month, but leave will continue to accrue.
h) When an engineer officer who is on paid leave as provided by this article and is recalled to work prior to the expiration of such leave, he shall be paid at the overtime rate of pay for all work performed between the time of recall and the time his paid leave would normally have expired.
It is common ground that the claimant was not in continuous annual employment, the vessel being laid up on February 19, 1986 and thus his case can be distinguished from that of Jacques Cloutier, A-658-79, where appellant was employed on a tanker on a year round basis of 90 days on followed by 30 days off being prepaid in each monthly pay for his leave time.
In the present case, claimant did not take all the leave to which he was entitled prior to December 1. The record discloses that he worked 150 days from March 23 to August 20, 1985 accumulating thereby 50 days leave. From August 21 to September 25, he took 36 days leave, the balance being 14 days. From September 26, 1985 to February 19, 1986, he worked 138.5 days accumulating 46 days leave, making a total of 60 days. His pay for this was allocated for 2 months from February 20 to April 20, the balance of $91.52 being allocated to the last week. It is this allocation which he appeals. (It should be noted that the remaining 14 days of accumulated leave due to him on September 25, plus further accumulation to December 1 would appear to be lost but not the pay for same as he did not use this leave up before that date. Following December 1, he would have accumulated a further 27 days to February 19).
Although appellant's counsel argued that the claimant was not on leave after February 19, 1986, his employment having ceased and that he did not know if it would resume, he had had 20 years experience as a Marine Engineer and it would appear more likely that his employment as such would resume when the ship recommenced operations. In any event, this is not determinative of the issue, which relates to the allocation of his leave pay and not to his right to leave.
By relying on Section 37(3) of the Regulations, the Board of Referees dealt with the matter on the basis of there having been no interruption of earnings. No reference was made to Regulation 57(2) dealing with allocation of earnings to determine whether there was an interruption, although it is implicit in the decision of the insurance officer that this was the basis of his finding as he attributed a balance of $91.52 to the last week of disentitlement.
The decision of the Board of Referees was based on section 37(3) of the Regulations which reads as follows:
37.(3) Where an insured person regularly works a greater number of hours, days or shifts than are normally worked in a calendar week by persons employed in full-time employment and for that reason is entitled under his contract of service to a period of one or more weeks off work, the insured person shall not be regarded as having had an interruption of earnings in respect of that period.
Regulation 42(4) reads:
42.(4) Where in each week an insured person regularly works a greater number of hours, days or shifts than are normally worked by personsemployed in full-time employment and for that reason is entitled under his contract of employment to a period off work, that insured person shall be deemed to have worked a full working week during each week that falls wholly or partly in that period.
The appeal is based on the following grounds:
i) The Board of Referees exceeded its jurisdiction and erred in fact and in law in its interpretation and application of sections 37(3) and 42(4) of the Regulations;
ii) Section 37(3) as interpreted and applied by the Board of Referees is ultra vires and is not authorized by the Unemployment Insurance Act;
iii) Section 37(3) and 42(4) of the Regulations as interpreted and applied by the Board of Referees are contrary to section 15(1) of the Canadian Charter of Rights and Freedoms.
Section 2 (n) of the Act defines "interruption of earnings" as follows:
2.(n) "interruption of earnings" means that interruption that occurs in the earnings of an insured person when after a period of employment with an employer the insured person has a lay-off or separation from that employment or a reduction in his hours of work for that employer resulting in a prescribed reduction in earnings;
The power to make Regulations is found in Section 58 of the Act and sub-paragraph (r) of that section authorizes regulations "defining and determining when an interruption of earnings occurs" which is what Regulation 37(3) purports to do and Regulation 42(4) is to the same effect.
While at first sight there may appear to be a conflict with subsection 2(n) of the Act, I believe the regulations must be read in conjunction with it, as supplementing the section of the Act. The Act itself appears to contemplate this, since otherwise Section 58(r) would be meaningless.
An analogous problem was dealt with by the Court of Appeal in the case of Roger Coté, A-178-86* dealing with earnings referred to in Section 26(2) of the Act. Regulation 57(2)(a) provides for allocation of income resulting from employment and was adopted by virtue of Section 58(q) of the Act authorizing the regulation, reading as follows:
57.(2) Subject to this section, the earnings to be taken into account for the purpose of determining whether an interruption of earnings has occurred and the amount to be deducted from benefits payable under section 26 or subsection 29(4), 30(5) or 32(3) of the Act and for all other purposes related to the payment of benefit under Part II of the Act, are
(a) the entire income of a claimant arising out of any employment;
In rendering the decision, Justice Pratte stated (translated) "The Commission has the power to adopt regulations, not merely a power of decision. Therefore, it not only has the power to make precise and clarify what are earnings (remuneration in French version) in the sense of the law but also to complete the law by assimilating to earnings, gains which in reality are not earnings but in certain respects resemble them". He cites as an example Regulation 52(2)(c) dealing with payments under a group sickness or disability wage-loss indemnity plan.
In his judgment, Justice Marceau stated (translated):
"I do not believe that it is possible to restrict the meaning of the word "earnings" found in Section 58(q). Without doubt, it must be admitted that the use of the term implies that Parliament wished to maintain the power of the Commission to make regulations within certain limits which are in any event already imposed by the meaning and spirit of the law. One cannot interpret the word in a strict and limiting sense without making totally illusory and without meaning the power of definition which this disposition formally attributes and thus as a consequence go against the real intention of Parliament."
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* Application for leave to appeal to the Supreme Court was dismissed on January 29, 1987.
In that case the argument for not allocating pension payments was even stronger than in the present case, since they were partially paid for by claimant, so it was argued that they were savings rather than earnings.
The case of Frank Vennari, A-261-86, can be distinguished. In it vacation pay was put into a trust fund to be paid out twice yearly. Justice Stone in rendering judgment stated:
"In my opinion, the recited reasoning of the Supreme Court of Canada in the Bryden case supports the view that the employer's contributions lost their character as "income" under paragraph 57(2)(a) upon being paid into the Trust Fund and, accordingly, that the payment of May 15, 1985 was not received as "earnings" or as "income" but as savings."
In the present case, there was no trust fund in which accumulated base pay was banked as it was earned.
The situation in the Roger Coté case was much the same as in the present case in which the impugned Regulation deals with when an interruption of earnings can be considered to occur whereas the Coté case dealt with the Regulation defining earnings. The argument that the Act does not permit the making of a Regulation such as 37(3) therefore falls.
I also find that the argument based on Section 15(1) of the Charter of Rights is without merit. While Section 15 may not perhaps limit discrimination to the particular types mentioned therein, it would clearly be limited to discrimination between workers of the same class and that is not the case here. Certainly seamen cannot be compared to workers working a 5 day week with 2 days off each week but must work long periods before taking leave. This is inherent in the nature of the employment and is recognized by the agreement, but discrimination would only result if some seamen doing the same class of work were treated differently than others. It is of course true that the members of the union who took all the leave to which they were entitled prior to December 1, while Fortin did not, were more fortunate than he, but this was a matter of choice and not as a result of discrimination and with respect to the pay it was the same in all cases. Whether leave pay is paid in advance each month or only when leave is taken does not appear to affect the allocation. Regulation 37(3) makes the interruption of earnings dependent on leave entitlement rather than pay.
Jurisprudence referred to by Appellant's counsel such as the cases of Addy v. The Queen in Right of Canada (1985) 22 D.L.R. (4th) 52, Weinstein et al and Minister of Education for British Columbia et al (1985) 20 D.L.R. (4th) 609 and Gerol v. Attorney General of Canada (1985) 24 D.L.R. (4th) 705, are not in point for the reasons I have given, and the facts and Regulations in the case of John Butts decided by a Board of Referees also referred to are totally different. In any event, a Board decision in another case is not binding on an Umpire who must decide the case before him on the basis of the facts and law as he interprets it.
Appellant's counsel argues that the very system which encourages mariners to continue to work while the vessel is in operation now discriminates against them when they are laid off when the vessel is laid up with respect to their Unemployment Insurance benefits. This may be the result of the interpretation of Section 37(3) and it may well be that a special regulation should be adopted to deal with seamen. Certainly Regulation 57 leaves much to be desired in its wording as Justice Stone commented in the Vennari case (supra), but it is the existing regulations which must be interpreted.
Somewhat troubling is a letter dated March 22, 1972 from P.E. Miller, Chief of Regional Claims of the Commission to D. Cairns of Upper Lakes Shipping Limited relating to leave pay and vacation pay of seamen which reads in part:
"As far as Vacation Pay at the time of lay-off is concerned, this money will be normally allocated to the period immediately following his layoff in an amount per week equal to his normal weekly wages. This then, very clearly does effect a seaman's application for Unemployment Insurance. There is, however, an exception to this. If a seaman specifically took time off without pay prior to his actual lay-off and for the specific purposes of a vacation, then the Vacation Pay received at the time of lay-off can be allocated to the period in which the seaman actually took his holidays."
The Board of Referees in considering this said:
"The board concludes that Unemployment Insurance Legislation dated 1984 takes precedence over exhibit 8, a letter dated March 22, 1972 from P.E. Miller of the Unemployment Insurance Commission addressed to D. Cairns, Upper Lakes Shipping Ltd. Section 37(3) of Unemployment Insurance Regulations indicates "Where an insured person regularly works a greater number of hours, days or shifts than are normally worked in a calendar week by persons employed in full-time employment and for that reason is entitled under his contract of service to a period of one or more weeks off work, the insured person shall not be regarded as having had an interruption of earnings in respect of that period."
It is the opinion of the board that Accumulated Leave as described in the extract from the Collective agreement (exhibit 9) falls under the above regulation."
While it is regrettable that what was apparently an earlier interpretation has now been changed, this letter does not constitute an estoppel against a subsequent different interpretation by the Commission and in any event is not binding on the Umpire. I agree with the Board of Referees that Section 37(3) must take precedence over this earlier interpretation.
As a subsidiary argument, Appellant's counsel submits that in any event only 20 days pay should have been allocated instead of 60 days on the basis that the base pay is 1/3 of the daily rate. This contention is erroneous however, as the 60 days leave accumulation resulted from 180 days of work, so it is full pay for 60 days to which claimant was entitled. However, it is correct to state that since some of the days of leave entitlement were lost, not having been taken before December 1, it is only the days of work following that date which resulted in leave entitlement, resulting in 27 days of such leave and not 60.
A careful reading of Regulation 37(3) indicates that it clearly states that it is the period of leave to which the claimant is entitled which leads to the conclusion that he shall not be regarded as having had an interruption of earnings "during that period" - in this case 27 days.
Although there is considerable confusion resulting from the fact that it is leave which claimant lost and not pay for it, the ratio decidendi of the Board of Referees appears to have been based on Regulation 37(3), Regulation 57 not having been considered save incidentally by the insurance officer in breaking down the number of days of accumulated leave (erroneously found to be 60) into weeks, and attributing a small balance of pay to the last week.
Save for reducing the period of interruption of earnings from 60 days to 27 days therefore I dismiss the appeal. Rather than send the matter back to the Board of Referees, I invoke Section 96 of the Act in finding that this reduction of the period of disentitlement should have been made.
UMPIRE
OTTAWA
March 26, 1987
2011-01-10