CUB 14387A

IN THE MATTER OF an appeal to an Umpire by the claimant from the decision
of a Board of Referees given at St. Catherines, Ontario, on April 8, 1987.

DECISION

The starting point of any discussion of the issues here must be the Canada Labour Code which makes provision for a lay day plan. It also provides that no employee shall be permitted to accumulate more than 45 lay days, unless exceptional circumstances arise when it is possible to secure a Minister's permit. Employers must therefore find or determine a scheme whereby employees get "accumulated leave", "lay days", "leave days", "leave pay" or "accumulated leave pay".

However, the Commission, cognizant of the fact that seamen are entitled to this benefit, drafted Regulations 37(3) and 42(4) to deal with this phenomenon.

Sec. 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.

Sec. 42(4) Where in each week an insured person regularly works a greater number of hours, days or shifts than are normally worked in a week by persons employed 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.

[emphasis added]

Although there has been a tendency to use the Canada Labour Code words "lay days", these words are not found in Regulations 37(3) or 42(4).

Counsel for seven of the claimants stated that "lay days", "accumulated leave", or "leave days" are interchangeable. Personally, I feel other terms in collective bargaining agreements are used, such as "accumulated leave pay" and "leave pay", so the employer has an answer to its requirements under the Labour Code and the employee has a term other than lay days or accumulated leave in the hope of bypassing Regulations 37(3) and 42(4).

It was an extremely busy day for all concerned with 14 appeals to the Umpire, when it became clear that despite a solid effort to coordinate these appeals, each seaman listed in the nominal roles will have to have his or her claim amended on an individual basis. There were, however, only two issues, namely:

(1) the allocation of lay days for the period immediately following the claimants' last day of work and;

(2) the allocation of vacation pay to the period immediately following the claimants' last day of work.

In view of the fact that some cases involve claimant appeals and others Commission appeals, I will use the word claimant rather than appellant. Ms. D. Lemieux (Lemieux) represented the following claimants:

(1) Kevin KELLY (Kelly)

(2) Craig WILLIAMS (Williams)

(3) George MITCHELL (Mitchell) (Commission appeal)

(4) George KEAGAN (Keagan)

(5) Robert GREEN (Green)

(6) Robert KNOX (Knox)

(7) Brian FARAGO (Farago) (also represented by Mr. M. Grimaldi)

The claimants are members of separate unions. Keagan, Green, Knox, and Farago are members of the Canadian Maritime Union, Local 401. Kelly, Williams, and Mitchell are members of the Canadian Merchants’ Service Guild. Lemieux, dealt first with the representative appeals of Williams and Kelly and they were dealt with in detail. Because the claimants’ supporting arguments were essentially identical for all concerned, the other claimants appeals were only briefly touched on.

It was conceded by Lemieux that lay days are earnings, jurisprudence being quite clear on that point. The real debate centred on how these "lay days" are arrived at.

The various claimants applied for benefits in the months from December 6, 1986 to March 1987. Terms "lay days", "accumulated leave" and "leave days" are interchangeable.

In Kelly's case, he was advised that he was not entitled to benefits because he did not prove he was unemployed. Williams was informed that he was not eligible for UI benefits because he did not have an interruption of earnings when he was laid off. In the Mitchell case, he was informed that he was not entitled to benefits because he did not have an interruption of earnings.

Mr. Kelly was employed with ULS International as a first and second mate from January 11-April 1, 1986; April 2-May 28, 1986; July 8-August 5, 1986; August 6-September 4, 1986; September 9-December 31, 1986. His basic hourly rate was $12.39 and his rate of leave pay was $4.14. The Commission, when calculating lay days, took into account the lay days earned as of July 8, 1986. For the period July 8 to December 31, 1986, Mr. Kelly worked a total of 176 days or 1,188 hours. The Commission calculated that the claimant was owed 49.49 lay days and suspended benefits from January 18, 1987 to February 21, 1987.

Lemieux complained about the inconsistency of the Commission with respect to the formula used in calculating lay days, and cited four different approaches or formulas used. With respect to Kelly, the Commission took hours worked divided by 48, times 2 i.e. (1188 ¸ 48) x 2 = 49.49 lay days. It is the position of the counsel for the claimants that neither the Unemployment Insurance Act nor the Regulations stipulate how lay days are to be calculated. Therefore "when calculating lay days the Commission should be consistent in its formula and, whenever possible, refer to the Collective Agreement and the formula set out therein. The entitlement to lay days results from the Collective Agreement as stated in Regulations 37(3) and 42(4) and therefore what better place to look for the formula of how to calculate lay days?"

Article 13 of the Guild Collective Agreement (which covers Kelly, Mitchell and Williams) provides for accumulated leave and leave pay as follows:

13.1 for every 6 days worked of 8 hours, employee entitled to 2 lay days;

13.2 sets out calculations for leave pay which is .334 the basic hourly rate for each hour worked;

13.4 states all leave must be taken by the December 1st;

13.7 states that leave pay is paid at the end of every month.

Articles 13.1 and 13.2 provide two separate calculations. Kelly would be entitled to 58.78 lay days, calculated on the basis of 176 days worked times .334. The counsel for the claimants argues that the actual number of hours worked in a day is irrelevant. Lemieux submits that, "if lay days were dependant on the number of hours worked, including overtime, the authors of the collective agreement would have adopted a similar or identical formula as that resorted to by the Commission" and further, "Mention should be made of the fact that the Commission takes into account the total number of hours worked and yet continues to divide this number by a normal 48 hour work week. By so doing the Commission refuses to take into account the overtime hours worked during the week and it is our position that that result is far from equitable."

I cannot treat too seriously the counsel for the claimants’ second submission that, " by allocating the total unused lay days to the period immediately following the lay-off, the Commission has drastically altered their employment contract", i.e., it violates Article 13.4. Collective agreements are subject to the law of the land and an intention under an agreement may not be possible in law, e.g. if the agreement stated "vacation pay earned while working is not insurable earnings".

In the case of Craig Williams the facts are basically the same so I do not propose to detail them here.

In the case of George Mitchell (Commission appeal), Mr. Mitchell is governed by the same terms as Mr. Kelly and Mr. Williams, namely, the collective agreement between the Canadian Lake Carriers Association and the Canadian Merchants Service Guild - Article 13. Mr. Mitchell is a member of the Canadian Merchant Service Guild. Mr. Mitchell was employed as a deck officer with the Algoma Central Railways-Marine Division, from March 26, 1987 until November 13, 1987 (exhibit 2). He was recalled on November 30, 1987 and laid off on January 8, 1988 (exhibit 7-1). The claimant voluntarily took vacation from July 28, 1987 to September 17, 1987 (50 days) (Exhibits 6-1, 7-1). According to the claimant, he only received his legal percentage of vacation pay. According to his employer, the claimant was paid $1,328.92 as vacation pay and received 1257.5 leave hours at the time he took vacation. On November 13, 1987 the claimant was paid $81.69 vacation pay and 596 hours of leave credits, or 74.50 days. The claimant's hourly rate of wage is $12.39. The Commission allocated these days (71) to the period from November 13, 1987 to January 23, 1988 and the balance of 3.5 days was allocated to the week of January 24, 1988. The claimant's vacation pay was also allocated to the week of January 24, 1988 (exhibit 9).

Lay days are not defined in the Unemployment Insurance Act or Regulations. I believe claimants are entitled to a formula that provides some consistency to the process. This is not to suggest that different formulas cannot be used but most careful consideration must be given to the individual collective agreements and the method used there by employer and employee alike.

The collective bargaining agreement for members of the Canadian Merchant Service Guild provides inter alia in Article 13, that leave pay is paid at the end of every month. Lemieux stated at page 35 of the transcript in Reply:

Under the Collective Agreement that leave pay is paid on a monthly basis in their cheques, and there, is no option for the employees to decide whether or not they wish to have that money banked and paid off at the end when they're laid off.

[emphasis added]

Both Regulations 37(3) and 42(4) use the word "entitled" and before the claimant can be deemed to have worked a full week, he must be "entitled" to "lay days", "leave days", "accumulated leave" or "accumulated leave pay".

Here, the contract specifically states that leave pay is paid at the end of each month effectively removing any entitlement to leave pay as at that date. When a claimant is laid off his entitlement to lay days or accumulated leave or leave pay can only run from the first day of the month in which he is laid off.

As to the calculation, careful attention should be paid to the collective agreement, and for Kelly, Williams and Mitchell, this is the formula that should be used.

In the Knox case, the Board of Referees did not specifically address the vacation pay issue, and so counsel for the claimants proceeded on the premise that "the Board of Referees specifically addressed the issue of vacation pay and did not allow the claimant's appeal".

Mr. Keagan was employed with Upper Lakes Shipping (ULS) International Inc. as a marine cargo maintenance worker from September 5, 1986 to December 23, 1986. During this period he worked 110 days or 1,259 hours. His basic hourly rate was $9.18 and his rate of leave pay was $3.07 per hour. The Commission calculated that Mr. Keagan was owed 36.74 leave days (lay days). These lay days were considered to be earnings and allocated to the period of December 24, 1986 to January 29, 1987.

Mr. Green was employed with ULS International Inc. as an ordinary seaman from: April 7-8, 1986; July 18-August 2, 1986; August 30-September 7,1986: September 30-November 1, 1986; November 14-December 24, 1986. The Commission, when calculating the claimant's qualifying period, took into account the accrued leave days from November 14 to December 24, inclusive for a total of 41 days. The claimant agrees with this. The claimant's basic hourly rate was $8.42 and he earned leave pay at the rate of $2.81 per hour. The Commission calculated that Mr. Green was owed 32.73 lay days. These days were considered earnings, the Commission suspended benefits from December 29, 1986 to January 2, 1987 and allocated earnings of $237.78 to the week commencing January 4, 1987.

Mr. Knox is a member of the Canadian Maritime Union, Local 401. The claimant was employed as an ordinary seaman with ULS International Inc. from June 4 to Sepember 4, 1987 and from September 28, to December 23, 1987 when he was laid off due to work shortage. He filed an application for benefit on December 30, 1987. According to the employer, the claimant had worked 93 days from June 4 to September 4, 1987 and 87 days from September 28 to December 23, 1987 and he was therefore entitled to 60.12 lay days for the two periods of employment. Twenty-three lay days were allocated to the off-period from September 5 to 27, 1987, leaving a balance of 37.12 days to be allocated after the separation of December 23, 1987. The claimant's balance of 37.12 unused lay days was allocated to:

24, 25, 26 December 1987 3 days

27 December 1987 to January 2, 1988 7 days

3 to 9 January 1988 7 days

10 to 16 January 1988 7 days

17 to 23 January 7 days

The remainder of the 6.12 lay days was allocated to the week starting 24 January 1988 (exhibit 6).

Mr. Farago is a member of the Canadian Maritime Union, Local 401. He was employed as a wheelsman with ULS International Inc. from August 1, 1987 to September 11, 1987 and September 14, 1987 to October 2, 1987. According to the employer, the claimant had 61 days on board ship (exhibit 5). The claimant's hourly wage is $9.61 per hour. The Commission calculated that the claimant had 20.37 accrued leave days and allocated 17 of these days to the period from October 5 to October 16. The remaining 3.37 days were converted into monetary terms (3.37 days x 8 x claimant's hourly wage of $9.61) for a total of $259.09 and, together with the claimant's vacation pay, was allocated to the week commencing October 18, 1987 (exhibits 12, 11, 15). The claimant's calculations are contained in exhibit 6).

Here again counsel for the claimants demanded consistency with its choice of formula for the calculation of lay days.

It is alleged by Lemieux that this particular collective agreement does not provide for accumulated leave and so the claimants are not entitled to lay days.

Mr. G. Ramsay (Ramsay), counsel for the Commission, states that, "we have indeed applied the conditions of the Collective Agreement to our Regulations 37(3) and 42(4) and we have sought to determine the amount of time off as per the Collective Agreement, that each individual was entitled to by virtue of working the longer hours, so that those Regulations could apply."

With respect to the Collective Agreement involving Keagan, Green, Knox and Farago, I am more persuaded by the view expressed here by Ramsay for the Commission. He points out,

"Now this Collective Agreement, under our examination, appears to have applied a 'patchwork' type of approach to the leave in the pay leave situation..."

...

I would argue that a clause that so carefully talks about accumulated leave pay must indeed be attached to a period of time, and it then becomes a matter of determining what is that time and how much of that time is there.

I would point out that the money for this time is very clearly calculated. It's total hours worked, every hour worked, times the hourly rate, times .334, again the traditional .334, and indeed I would suggest that there is the traditional working pattern for this group of workers, which is basically 3 months on, one month off; 90 days on, 30 days off; 3 to one; .334 ratio between hours worked and leave entitlement.

In the Collective Agreement, Article 17, subparagraph (c) in fact talks about people who work that pattern of 3 on and 1 off shall accumulate leave pay for the 3-month period, until he takes the monthly vacation.

...

If he's not gotten it by the time he leaves, he shall become entitled to it.

In the clauses on vacation and vacation time I would suggest that the use of the word "vacation" in this Collective Agreement is a very liberal and open usage of the word, and that it does include time off work such as is specified in Regulations 37(3) and 42(4).

These employees, being members of the inter-provincial transport industry, are governed by the Federal labour standards, and in those labour standards, in order to fulfill them with regard to vacation pay, all you need do is pay the money for seasonal workers, it is not necessary that they have time. But, all of a sudden, you have a chap in article 16.01 with less than 2 years’ seniority who is going to get a vacation of 30 days, but he's going to get it with 4 percent of his earnings for the time actually worked during the navigation season in question. So at the time this chap leaves on his 30 days of holidays, he may have worked one month, 2 months, 3 months, 4 months, any time up to 10 months, and he wants his 30 days vacation, and he's getting 4 percent of what he has already worked. Now that could be 4 percent of one month's salary et cetera.

So I would say that the use of the words "together with vacation pay" simply fulfills the requirement -- and this first clause is parallel to the Federal vacation pay statutes, Labour Code statutes -- in that he's going to get 4 percent cash, because they know that he probably will be a seasonal employee. But he's getting 30 days off. Now 4 percent is roughly 2 weeks’ vacation pay pay, and here's an industry that's going to put this man on shore for 30 days and, all of a sudden, only get -- give him pay for 2 weeks.

Similarly, with anybody with over 2 years’ seniority -- and seniority accumulates quite quickly in this industry by trips out -- that he's going to get 60 days off, but he's only going to get 6 percent, the equivalent of 3 weeks’ salary, for 2 months off.

So that I would contend that this vacation time that they're talking about is connected up with the community leave pay.

The solution that Miss Lemieux proposed to you as the second one, that you use the hours worked, times hourly rate, times .334, but only from December 1st -- or November 20th in this one, is it -- yes, November 20th in this Collective Agreement -- I would contend that is exactly the formula that ought to be used for the whole working period. That in maintaining this pattern of employment, this traditional pattern, the chap can, after 2 years at sea or 2 years on the boat, he's going to have 60 days holidays in the middle of the season, which is going to guarantee him that he's working the traditional pattern, and they, generally speaking, are not particularly concerned about guaranteeing another month's holidays for greater seniority, because they know that most of the boats are going to be tied up for this group, are going to be tied up during the non-sailing season when the Seaway is closed.

So that, in effect, the time that is a necessity to the Regulations is indeed time that is being accumulated and tacitly dealt with -- is being accumulated at the same rate as the money is. These people are definitely getting the money at this rate, at this .334 rate.

So I would suggest to you that the appropriate adjudication is the one that has been applied and which the Board has accepted, in unexceptional judgments, in our opinion, that basically one can take the hours worked, times hourly rate, times .334, and time or money, the chap has his entitlement to his accumulated leave and time off work, and that this leave doesn't disappear against the application of the Fortin decision here. I would contend that this entitlement does not disappear, it simply says: "Your must take your vacation between the 15th of June and the 20th of November, in the navigation season", or such other arrangement as may be duly agreed.

Now, obviously, entitlement can't be lost if you can make an agreement with your employer to take it after that date.

I find it difficult to see how this entitlement miraculously disappears on that date if you can make arrangements to liquidate it later.

However, having accepted that Keagan, Green, Farago and Knox are indeed subject to the provisions. of Regulations 37(3) and 42(4), it remains once again to look at the Collective Agreement to determine the rate and length of time applicable.

Article XVII - Accumulated Leave Pay, provides inter alia that " an employee shall be paid his accumulated leave pay monthly or when he separates from the Company for any reason". (emphasis added). I am satisfied that the word "or" is disjunctive because the Collective Agreement makes no provision for the employee to make a choice, i.e., to be paid monthly or when he leaves or, if he wants to, how he should go about it. Therefore, in the case of Keagan, Green, Farago and Knox, the only entitlement for accumulated leave pay is that amount due from the first of the month until termination date, and that amount is earnings.

All claimants involved in this appeal are members of the Seafarers International Union of Canada (S.I.U.) and are governed by the Great Lakes Agreement between S.I.U. and the Canadian Lake Carriers Association. The new agreement provides in Section 31(k) for the terms of the old agreement to continue through 1987.

Article 31(q) of the 1984-1987 agreement provides that leave pay shall be paid every month. Thus there is no "entitlement" to enable Regulations 37(3) and 42(4) to apply, except during the period of time worked in the month the claimant was laid off. It is true the parties are entitled to money or leave. Thus if a seaman works 21 days and earns 7 days off he can take these days or he will be paid for them at the end of the month. In either case, at the end of the month there is no further entitlement.

"All of these cases, although they involve different Collective Agreements, are variations on the same theme in terms of lay days or accumulated leave days", so stated counsel for the Commission, Mr. M. Duffy (Duffy).

In these cases, the evidence that was before the Board of Referees consists of the information in Exhibit 4, which was a request by the Commission for certain information. One of the questions was a request for the number of leave days taken during a certain period, and another the number of leave days unused at the time of separation. The argument of Duffy seems most plausible, namely, Popescu. worked 89 days and one must use the .33 or .334 figure to determine the number of days of leave. The figure of 19.72 days leave credit is correct.

The Agreement here is somewhat different for deck officers, and in my view is the classic application of Regulation 37(3). Here there is no payment for the leave credits - but rather the deck officers are entitled to the time off earned (Article 14). There is a restriction about when it cannot be taken, but clearly they are "entitled".

This is not a case where credits are lost, but the credits remain, and alternative arrangements are provided for. Mr. Speed stated this making of arrangements was impractical and for all intents and purposes he in fact lost these credits. That of course is something to be worked out between the Union and the employers but for the purposes of Unemployment Insurance benefits, is irrelevant. Whether paid for as part of the salary or not, the leave credits accrue, and are not wiped out by the payment of dollars in the cases at hand.

It is of course irrelevant whether the claimants here received compensation because Regulation 37(3) states "is entitled to one or more weeks off work" and is not regarded as having an interruption of earnings.

The Commission's appeal will be allowed. The case of Henri Fortin does not apply; the facts here are quite different.

Special Note: There were arguments advanced about a discrepancy regarding times on and off work. That should be resolved by the employer/employee and the Commission notified of any error.

I could find no instance in any of the collective bargaining agreements where a claimant would be able to claim an exemption under paragraph 57(3)(h) of the Unemployment Insurance Regulations.

Under the authority of section 96 of the Unemployment Insurance Act, I propose to render a decision rather than refer these cases back to a differently constituted Board of Referees.

KELLY, WILLIAMS AND MITCHELL: each claimant is bound by the terms of Regulations 37(3) and 42(4) of the Act but earnings are only from the first of the month to date of lay-off. Vacation pay is earnings.

KEAGAN, GREEN, KNOX AND FARAGO: each claimant is bound by the terms of Regulations 37(3) and 42(4) but the amount of earnings is that amount of accumulated leave pay from the first day of the month when he was laid off. Vacation pay is earnings.

KOWALSKY, CHEESE, FORD: each claimant is bound by the provisons of Regulations 37(3) AND 42(4) but leave pay shall only be that amount earned from the first day of the month when he was laid off. Vacation pay is earnings.

POPESCU, VILLAFANA, SPEED: each claimant is bound by the provisions of Regulations 37(3) and 42(4). The Commission's appeal is allowed, save and except any discrepancies about the calculation made by the employer and employee be corrected by them. This should be done within two weeks or the figures used by the Commission will stand. Vacation pay is earnings.