Layton v. M.N.R., docket 97-663-UI

Date: 19981008

Docket: 97-663-UI

BETWEEN:

GREGORY JOHN LAYTON,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Hamlyn, J.T.C.C.

[1] The Appellant applied to the Respondent to determine whether vacation pay received from B.C. Institute of Technology, the Payor, when he was on unpaid leave should be considered as insurable earnings when they were paid or if they had to be used as "top up" to his last regular pay period within the meaning of the Unemployment Insurance Act.

[2] The Respondent informed the Appellant that it had been determined that vacation pay had to be allocated to the last pay period in which he was employed with the Payor.

[3] The Appellant was employed with the B.C. Institute of Technology as a teacher and went on unpaid leave on September 27, 1994. The Appellant's last pay period in which he received regular salary was September 17 to September 30, 1994. The unpaid leave extended to July 31, 1995 when he retired. On March 31, 1995 the Appellant received a cheque for vacation pay in the amount of $986.12.

[4] The Appellant, in his pleadings, wishes to allocate the vacation pay to the period in which it was paid, March 1995, while the Respondent contends that it must be allocated to the last pay period in which the Appellant received regular salary.

ANALYSIS

[5] In his determination, the Minister of National Revenue (the "Minister") relied on the Unemployment Insurance (Collection of Premiums) Regulations. Section 2 provides the following definitions:

2(1) In these Regulations,

"Act" means the Unemployment Insurance Act;

"pay period" means the period in respect of which earnings or other remuneration are paid to or enjoyed by an insured person;

"pay week" means a period of seven consecutive days that ends, or any one of two or more such periods that are contiguous, the last of which ends, on the employer's payroll ending date.

[6] Section 3.1 of these Regulations speaks to the issue of the allocation of earnings:

3.1(1) Earnings from insurable employment shall be allocated as follows:

(a) a remuneration, other than the remuneration referred to in subparagraph (b)(i), paid in respect of a pay period shall be allocated to the pay period in respect of which it is paid; and

(b) subject to subsection (2),

(i) overtime pay, retroactive pay increases, bonuses, gratuities, accumulated sick leave credits, shift premiums, incentive payments, cost of living allowances, separation payments and wages in lieu of notice shall be allocated to the pay period in which they are paid, and

(ii) remuneration not paid in respect of a pay period shall be allocated to the pay period in which it is paid.

(2) Where a person is on unpaid leave, has abandoned his employment or has been dismissed or laid off, the remuneration referred to in paragraph (1)(b) shall be allocated to the last pay period for which regular salary, wages or commissions are paid.

[7] From section 3.1, I conclude vacation pay is "remuneration not paid in respect of a pay period" and therefore, according to subsection 3.1(2) must be "allocated to the last pay period for which regular salary" was paid. That pay period ended September 30, 1994.

[8] The Appellant contended that subparagraph 58(8)(a)(i) of the Unemployment Insurance Regulations was applicable to this fact situation. The Appellant argued that paragraph 58(8)(a) allowed for an interpretation that the vacation pay was paid in March 1995 and was pursuant to a collective agreement to be paid by the end of February. Therefore, the proper allocation of earnings for benefit purposes would be March or February 1995.

[9] Subsection 58(8) of the Unemployment Insurance Regulations provides:

58(8) Where vacation pay is paid or payable to a claimant for reasons other than a lay-off or separation from an employment, it shall be allocated as follows:

(a) where the vacation pay is paid or payable for a specific vacation period or periods, it shall be allocated

(i) to a number of weeks that begins with the first week and ends no later than the last week of the vacation period or periods and

(ii) in such a manner that the total earnings of the claimant from that employment are, in each consecutive week, equal to the claimant's normal weekly earnings from that employment; and

(b) in any other case, the vacation pay shall, when it is paid, be allocated

(i) to a number of weeks that begins with the first week for which it is payable, and

(ii) in such a manner that, for each week except the last, the amount allocated under this subsection is equal to the claimant's normal weekly earnings from that employment.

[10] I conclude paragraph 58(8)(a) is not applicable to the Appellant's scenario. From the Appellant's facts, vacation pay was not paid or payable for a specific vacation period; his unpaid leave was not a "vacation period".

[11] The Appellant's third argument was based on an apportionment theory of premiums paid. I conclude this argument does not assist his position.

CONCLUSION

[12] The vacation pay had to be allocated to the last pay period for which a regular salary was paid (September 14 to 30, 1994).

DECISION

[13] The appeal is dismissed and the determination of the Minister is confirmed.

Signed at Ottawa, Canada, this 8th day of October 1998.

"D. Hamlyn"

J.T.C.C.