CUB 62226

R.C. STEVENSON, UMPIRE:

The Commission appeals from the decision of a Board of Referees allowing Mr. Martins's appeal from its allocation of certain monies as earnings.

Mr. Martins was employed as a shipper by Maple Lodge Farms. He was a union steward. The employer terminated his employment on September 11, 2003. The employer issued a record of employment on September 17 entering Code K (other), without comment, as the reason for issuing it.

Mr. Martins was involved in several pending grievances, some as the grieving employee including a grievance of his dismissal, and some in his role as union steward.

On October 16, 2003 the union, the employer and Mr. Martins entered into a settlement agreement. The preamble to the agreement recited that Mr. Martins's termination had been grieved by the union and was scheduled for arbitration on November 18, 2003 and that the parties wished to fully resolve all grievances specifically related to Mr. Martins including the termination grievance. Pursuant to one of the terms of the agreement the employer paid $60,000 to Mr. Martins as damages. As is usually the case, the agreement said the employer admitted no liability and denied liability.

The employer issued a revised record of employment on October 27, 2003 again using Code K but with this comment:

It is specifically agreed that Mr. Martins neither quit nor was he terminated for cause or as a result of his own misconduct.

In response to an inquiry from the Commission the employer's solicitors said, in a letter dated November 27, 2003:

The Company terminated Mr. Martins employment because it had concluded that he was unmanageable and had breached Company rules. Mr. Martins disagreed.

Mr. Martins believed that his employment was terminated because he was carrying out his duties as a Union steward. He believed he faced harassment and discrimination. The Company disagreed.

Mr. Martins had several dozen complaints that were proceeding slowly through the grievance arbitration process under his collective agreement. During arbitration of these complaints, discussions took place with respect to whether Mr. Martins would simply leave the Company in exchange for a payment. Through his Union, Local 175 of the United Food and Commercial Workers', it was agreed that Mr. Martins would be paid $60,000 if he would leave the Company and withdraw all grievances he had against it.

Martins was employed for only 2.5 years. The $60,000 sum is not reflective of any severance entitlement he could reasonably claim at law and the Company maintains he had no severance entitlement whatsoever. Mr. Martins, through his Union, maintained that the payment was damages arising from discrimination and harassment. On a without prejudice basis, though the Company disputes the accuracy of his claims, it agreed to make the payment.

The Commission ruled that the $60,000 was earnings and allocated it accordingly.

Mr. Martins and his counsel appeared before the Board of Referees. The employer was not represented. I reproduce the Board's summary of the evidence and its findings:

The claimant was dismissed by his employer for alleged dissatisfaction with his on-job conduct. The claimant had filed union grievances with his employer on behalf of himself and, in his role as Union Steward, on behalf of other employees. The company felt his disruptive conduct deserved dismissal and cases in which he was involved were heading to Arbitration under the Labour Relations Act. (Exhibit 22.2). During the lead time before arbitration took place, the Company and Union lawyer were in discussions. In order to remove at least 10 grievances from the formal arbitration process (Exhibit 10.8) and have the claimant permanently removed from the workplace and not reinstated, the company agreed to a lump sum payment of $60,000.00 with no deductions (Exhibit 10.3). This amount was determined by the company in response to the claimant lawyer's request for $80,000.00. The amount has no relationship whatsoever to the claimant's wage, it was a large amount that would satisfy the claimant's willingness to accept upon being reinstated, agreeing to sever all ties with the employer and would remove grievances under consideration from further consideration. It was a payment for "damage control" that might have dragged on for a considerable period of time. In fact it was stated that the amount would represent earnings in the vicinity of 19 months which is outlandish based on an employment period of only 2.5 years.

The claimant confirmed that he has just received his T-4 slip and the $60,000.00 is not reported anywhere on that slip. No deductions have been made from the total amount, including income tax.

FINDINGS OF FACT, APPLICATION OF LAW

The evidence clearly indicates that the payment made to the claimant was not in lieu of lost wages and had no relationship to any reasonable amount the company might have been expected to pay under law for unjust dismissal. The fact that this large employer has determined the amount does not have to be reported for income tax purposes indicates clearly the amount was not deemed by them to be paid or payable in respect of an employment. It can only be considered as damages paid to have the claimant discontinue any dispute about his termination and to finalize outstanding grievances prior to arbitration. Monies paid in this manner are not considered to be lost wages or earnings under the E.I. Act and are not to be allocated over a benefit period pursuant to Sections 35 and 36 of the EI Act.

The Commission argues that there was no evidence that the $60,000 was paid for reasons other than the loss of employment and that the whole amount should be considered as damages for wrongful dismissal. It asserts, correctly, that the burden of proof was on Mr. Martins to show clearly that the settlement was in whole or in part for something other than lost wages and says the claimant had not discharged than onus.

The Board of Referees was of a different view. It said, "The evidence clearly indicates that the payment made to the claimant was not in lieu of lost wages ....". While the Board did not expressly refer to the burden of proof it obviously was conscious of it. Thus the Board did not err in law.

The remaining question is whether the Board's findings of fact were made in a perverse or capricious manner or without regard for the material before the Board.

While the Board may have attached too much weight to the employer's determination that the money was not taxable income (a determination that would be open to review by Revenue Canada) and may have ignored the fact that the settlement agreement expressly resolved "all grievances specifically related to Mr. Martins including the termination grievance", I am not persuaded that the Board's decision was unreasonable or that it was based on any erroneous finding of fact.

The Commission's appeal is dismissed.

Ronald C. Stevenson

Umpire

FREDERICTON, NEW BRUNSWICK
November 3, 2004