Granger v. M.N.R., docket 97-1663-UI

Docket: 97-1663-UI

BETWEEN:

ERNEST GRANGER,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Mogan, J.T.C.C.

[1] The Appellant was an employee of Balzer Canada Inc. ("Balzer") at various sites in the province of Saskatchewan in 1994 and 1995. On a number of occasions and in connection with his working conditions, the Appellant made certain complaints under the Occupational Health and Safety Act, 1993, Statutes of Saskatchewan. As a result of those complaints, Balzer subjected the Appellant to discriminatory treatment resulting in a loss of earnings. Because of the lost earnings, the Appellant filed a further complaint with the Occupational Health and Safety Authority claiming compensation from Balzer because of the discriminatory treatment which had caused him to lose the earnings.

[2] On July 9, 1995, the Occupational Health and Safety Authority issued a Notice of Contravention (NC 2218) to Balzer. The Notice stated:

The recent Departmental investigation revealed that you have taken a discriminatory action against Mr. Granger by not recalling him on the "steady crew" at the Poplar River Power Plant in 1994. The investigation asserted Mr. Granger's contention that the discrimination was taken because of his health and safety complaints.

This contravenes The Occupational Health and Safety Act, (1993). Section 27 of the Act provides that no employer shall take discriminatory action against a worker because the worker acts or has acted in compliance with the Act or the Regulations, seeks or has sought the enforcement of the Act or the Regulations, or has assisted with the activities of an occupational health committee.

You must:

(a) cease the discriminatory action against Mr. Granger;

(b) reinstate Mr. Granger to his former employment, or equivalent;

(c) compensate Mr. Granger for loss of earnings due to the discriminatory action; and

(d) remove any reprimand or reference to the matter from any employment record maintained by your company with respect to Mr. Granger.

On August 24, 1995, Balzer appealed against the Notice of Contravention claiming in substance that it had not discriminated against Ernest Granger. The Balzer appeal was heard in November 1995 by Steve Phillipow in his capacity as an Adjudicator. On December 8, 1995, the Adjudicator issued his decision (Exhibit A-1) in which he determined that Balzer (through Elmer Vipond and Vic Mann) did in fact discriminate against Ernest Granger because of his involvement in health and safety issues at the workplace. Accordingly, Balzer contravened section 27 of the Saskatchewan Occupational Health and Safety Act which states:

27 No employer shall take discriminatory action against a worker because the worker:

(a) acts or has acted in compliance with:

(i) this Act or the Regulations

(i.l) The Radiation Health and Safety Act, 1985 of the Regulations made pursuant to that Act;

(ii) a code of practice; or

(iii) a notice of contravention or a requirement or prohibition contained in a notice of contravention;

(b) seeks or has sought the enforcement of:

(i) this Act or the Regulations; or

(ii) The Radiation Health and Safety Act, 1985 of the Regulations made pursuant to that Act;

(c) assists or has assisted with the activities of an occupational health committee or occupational health and safety representatives;

(d) seeks or has sought the establishment of an occupational health committee or the designation of an occupational health and safety representative;

(e) performs or has performed the function of an occupational health committee member or occupational health and safety representative;

(f) refuses or has refused to work pursuant to section 23;

(g) is about to testify or has testified in any proceeding or inquiry pursuant to:

(i) this Act or the Regulations; or

(ii) The Radiation Health and Safety Act, 1985 or the Regulations made pursuant to that Act;

(h) gives or has given information to an occupational health committee, an occupational health and safety representative, an occupational health officer or other person responsible of the administration of this Act or the Regulations with respect to the health and safety of workers at a place of employment;

(h.1) gives or has given information to an officer within the meaning of The Radiation Health and Safety Act, 1985 or to any other person responsible for the administration of that Act or the Regulations made pursuant to that Act;

(i) is or has been prevented from working because a notice of contravention issued pursuant to section 33 with respect to the worker's work has been served on the employer;

(j) has been prevented from working because an order has been served pursuant to The Radiation Health and Safety Act, 1985 of the Regulations made pursuant to that Act on an owner, vendor, or operator within the meaning of that Act.

Section 29 of the same Act states:

29 Where an employer is convicted ot taking discriminatory action against a worker contrary to any provision of this Act, the convicting judge or justice shall order:

(a) the employer to cease the discriminatory action and to reinstate the worker to his or her former employment under the same terms and conditions under which the worker was formerly employed;

(b) the employer to pay to the worker any wages the worker would have earned if the worker had not been wrongfully discriminated against; and

(c) any reprimand or other reference to the matter in the employer's records on the worker be removed.

[3] The Adjudicator upheld the Contravention Order NC 2218 and concluded his decision on December 8, 1995 (part of Exhibit A-1) with the following words:

In the event that the parties are unable to agree upon the rights and benefits to which Mr. Granger would have been entitled, as ordered by this award, I retain jurisdiction to deal with those matters and will reconvene the adjudication hearing to deal with them on the request in writing of Counsel for either of the parties. This opportunity will be extended for a period of 30 days from the date of this award.

[4] The parties were unable to agree upon Ernest Granger's rights and benefits and so they appeared before the Adjudicator again on March 12, 1996 when the hearing was restricted to determining the appropriate compensation to be awarded to Ernest Granger. By a second award dated April 8, 1996 (part of Exhibit A-1), the Adjudicator determined that the Appellant's claim for monetary loss was to be computed as follows:

May 13 to May 25, 1994- Lost Earnings $ 3,084.08

September 12 to December 17, 1994 - Earnings Owed 8,377.66

April 10 to December 21, 1995 – Earnings Owed 11,653.54

Total Award $ 23,115.28

The Adjudicator concluded his supplementary award on April 8, 1996 with the following words:

I hereby instruct Balzer Canada Inc. to re-imburse Mr. Granger's wage to the sum of $23,115.28 plus employment benefits.

[5] As a result of some confusion in the second award issued by the Adjudicator on April 8, 1996, the Adjudicator issued a final addendum to his adjudication hearing dated May 24, 1996 (part of Exhibit A-1). Because this final addendum is contained on only one page, I will set it out in full:

As requested by Mr. Thor Kristiansen, counsel for Mr. Ernest Granger, I am submitting a final addendum to my earlier award which will state the exact figure that Balzer Canada Inc. shall pay to Mr. E. Granger.

1994 - Total money owed – $13,440.03 of which $11,461.74 shall be directly payable to Mr. Ernest Granger and $1978.29 shall be payable to Mr. E. Granger's pension plan and sent directly to:

J.J. McTeer, Boilermaker Administer

Thornhill Square, 300 John St., Suite 601,

Thornhill, Ontario

L3T 5W4.

1995 - Total money owed - $13,664.94 of which $11,653.54 shall be directly payable to Mr. Ernest Granger and $2,011.40 shall be payable to Mr. E. Granger's pension plan and sent directly to:

J.J. McTeer, Boilermaker Administer

Thornhill Square, 300 John St., Suite 601,

Thornhill, Ontario

L3T 5W4.

Since there were no medical or dental expenses incurred by Mr. Granger, for which he would have been reimbursed out of the Health and Welfare benefits and paid for by the employer contributions, no additional amount will be awarded with respect to those contributions.

Balzer Canada Inc. shall comply with the provisions of the Unemployment Insurance Act with respect to the foregoing payments.

[6] There is some doubt concerning what the Adjudicator meant by the last sentence in his final addendum:

Balzer Canada Inc. shall comply with the provisions of the Unemployment Insurance Act with respect to the foregoing payments.

Did the Adjudicator mean that Balzer was required to report the aggregate compensation of $13,440.03 for 1994 and $13,664.94 for 1995 so that the UI authorities would know that the Appellant had received compensation for lost earnings in those two years? Alternatively, did the Adjudicator mean that Balzer should regard the aggregate compensation as insurable earnings (within the meaning of the Unemployment Insurance Act) from which the employee's premium should be deducted and remitted and for which the employer's premiums should be remitted? I am satisfied that Balzer adopted the first meaning and concluded that it was required only to report the aggregate compensation for 1994 and 1995 to the UI authorities.

[7] Exhibit A-2 is a letter dated November 27, 1996 from Revenue Canada to the Appellant ruling that the aggregate amount of $27,104.97 was earnings from employment in 1996 for income tax purposes (because it was paid and received in 1996), and that the same aggregate amount was insurable earnings allocated to 1994 and 1995 for UI purposes. It is apparent from Exhibit A-3 that Balzer appealed from the Revenue Canada ruling in Exhibit A-2 to the extent that it determined that the aggregate of $27,104.97 was insurable earnings. Exhibit A-3 is a letter dated June 17, 1997 from Revenue Canada to the Appellant reversing its earlier position and ruling that any amounts received by the Appellant with respect to the periods May 13 to 25, 1994; September 12 to December 17, 1994; and April 10 to December 21, 1995 were not insurable earnings for UI purposes because, during such periods, the Appellant was not employed under a contract of service; and also because such amounts were damages.

[8] The Appellant was required to repay the benefits which he received under the UI Act for those same three periods (May 13 to 25, 1994; September 12 to December 17, 1994; and April 10 to December 21, 1995) for which he was compensated by Balzer pursuant to the Adjudicator's award. The Appellant does not dispute his obligation to repay such benefits. The issue in this appeal is whether those three periods giving rise to the compensation are periods of insurable employment entitling the Appellant to further unemployment insurance benefits.

[9] The three periods are all within 1994 and 1995 when the Unemployment Insurance Act was in force. Section 3 of the UI Act states that insurable employment is "employment in Canada ... under any express or implied contract of service". In my opinion, this appeal must be dismissed because during the three periods in question the Appellant was not employed in Canada by Balzer under any express or implied contract of service. In Élément v. M.N.R. (heard and decided May 21, 1996), the Federal Court of Appeal considered monetary compensation and insurable employment. When giving judgment for the Court, Hugessen J.A. stated:

The applicant, a seasonal employee, was not recalled to work when he should have been. Two years later, after a grievance was settled, the employer paid him monetary compensation equal to the amount of wages he would have earned during the period he would normally have worked. However, the applicant did not perform any work during that period.

We are all of the opinion that the Minister and the Tax Court of Canada judge reached the proper conclusion when they decided that the applicant did not hold insurable employment during the period in question. Despite Mr. Lepage's very able argument that the applicant's employment contract continued to exist because he had a right to be recalled, the fact remains that a person who does not perform any work or receive any wages does not hold insurable employment within the meaning of paragraph 3(1)(a) of the Act.

[10] In Attorney General of Canada v. Forrestall (decided December 12, 1996), the employee was discharged for disciplinary reasons and he grieved. An arbitrator rescinded the discharge and substituted a three-day suspension. The employer chose not to take back Forrestall but to pay him what he would have earned for a period of 11 days from the end of the three-day suspension until the time when the job ended and he would have been laid off in any event. When delivering the judgment of the Federal Court of Appeal, Hugessen J.A. stated:

The respondent was discharged by his employer for disciplinary reasons. He grieved that discharge and an arbitrator ordered him reinstated. The operative part of the award reads as follows:

In the result, therefore, the grievance is allowed in part. The grievor's purported discharge is rescinded and a three-day suspension is substituted in lieu thereof. The suspension is deemed to have commenced on July 21st and to have been served during the next three working days on the job. The Employer is directed to compensate the grievor for all loss of earnings and benefits incurred thereafter. The Employer is also directed to offer employment to the grievor on the Nicholson Hall job as soon as reasonably practical, with damages continuing to run until such offer is made.

The employer chose not to take back the respondent but rather to pay him what he would otherwise have earned for a period of eleven days from the end of the suspension until the time when the job ended and he would have been laid off in any event.

We are all of the view that the Tax Court judge erred in holding that those eleven days represented insurable employment for the respondent. He did no work in that period. What he received from his employer was, in the words of the arbitrator, "damages"; it was not wages.

As we said in Élément v. M.N.R. (May 21, 1996), A-751-95 (F.C.A.) (unreported):

... a person who does not perform any work [and] receive[s no] wages does not hold insurable employment within the meaning of paragraph 3(1)(a) of the Act.

[11] The above decisions in the Federal Court of Appeal are consistent with earlier decisions in this Court. In Berns v. M.N.R. (decided November 9, 1987) this Court was concerned with compensation for wrongful dismissal. Mr. Berns was engaged by the Ottawa Ski Club as director of marketing effective September 13, 1982. On December 29, 1982, he was informed in writing by the Ski Club that his services would not be retained after January 1, 1983. Accordingly, Mr. Berns ceased working but commenced an action in the Quebec Superior Court for damages for wrongful dismissal. In his action, he did not request that the Court order his reinstatement. The Quebec Superior Court awarded damages in the amount of $3,750 for wrongful dismissal. When Mr. Berns applied for UI benefits, he was refused such benefits on the basis that he had only 16 weeks of employment from September 13 to December 31, 1982. Upon his appeal to this Court, Millar D.J.T.C. dismissed Mr. Berns' appeal and stated in his concluding paragraph:

... The fact that he gained an award for unlawful dismissal simply serves to confirm that he was indeed dismissed. He performed no services. He received no payment. If he performed no work he was not employed. If he received no remuneration then he was not in insurable employment and was not in receipt of insurable income. ...

[12] And finally, in Falconbridge Ltd. v. M.N.R. (decided March 31, 1989), the question was whether a former employee (Roy Saukko) was engaged in insurable employment after March 17, 1986. In the Falconbridge case, there was what appears to be a friendly dismissal because Mr. Saukko received a letter from Falconbridge dated March 17, 1986 regretfully terminating his employment immediately. The letter contained the following passage:

This letter will confirm our conversation today in which I informed you that your employment with Falconbridge Limited is regretfully terminated effective immediately. However, in respect of your position and service, and to assist you in securing new employment, the Company will provide the following:

1. Continuation of your present salary amount for 78 weeks as a termination allowance. Following the expiration of this termination allowance period, your outstanding vacation entitlement will be paid to you in a lump sum. At the same time, settlement will be made of the pension entitlement due you under the terms of the Retirement Income Plan.

The issue in the Falconbridge case was whether Mr. Saukko was engaged in insurable employment during the 78-week period when his salary was continued following March 17, 1986. The Minister of National Revenue had concluded that there was insurable employment because he regarded Mr. Saukko as under a contract of service. When Falconbridge appealed to this Court, Baryluk D.J.T.C., allowed the Falconbridge appeal and concluded his judgment with the following words:

... In his letter of determination dated December 31, 1986, the Respondent in answering Mr. Saukko's request for a decision on his insurability for unemployment insurance purposes, clearly stated: "It has been decided that this employment was insurable for the following reason: You remained under a contract of service".

The evidence clearly discloses that after March 17, 1986 the Appellant was not engaged under any contract of service with the Appellant, Falconbridge, and not under obligation to perform any service for Falconbridge.

This appeal is allowed and the decision of the Respondent is reversed.

[13] I return to the first decision of the Adjudicator as delivered on December 8, 1995. Toward the end of his reasons (part of Exhibit A-1), the Adjudicator stated:

This contravenes The Occupational Health and Safety Act (1993). Section 27 of the Act provides that no employer shall take discriminatory action against a worker because the worker has acted in compliance with the Act or the regulations, seeks or has sought the enforcement of the Act or the regulations or has assisted with the activities of an occupational health committee.

The definition of "Discriminatory Action" in the context of Health and Safety means any action or threat of an action by an employer that does or would adversely affect a worker with respect to any terms or conditions of employment or opportunity from promotion, and includes dismissal, layoff, suspension, demotion or transfer of a worker, discontinuation or elimination of a job, change of a job location, reduction of wages, change in hours of work, reprimand, coercion, intimidation or the imposition of any discipline or other penalty.

Contravention Order #NC 2218 of which I am upholding requires that Balzer Canada Inc. to

(a) cease the discriminatory action against Mr. Granger;

(b) re-instate Mr. Granger to his former employment or equivalent;

(c) compensate Mr. Granger for loss of earnings due to the discriminatory action; and

(d) remove any reprimand or reference to the matter from any employment record maintained by your Company with respect to Mr. Granger.

[14] According to part (c) of Contravention Order No. NC 2218, Balzer was required to "compensate Mr. Granger for loss of earnings". It is clear from the terms of the second award dated April 8, 1996 (also part of Exhibit A-1) that the amount of $23,115.28 (allocated $11,461.74 to 1994 and $11,653.54 to 1995) was compensation for lost earnings. As such, it falls within the scope of the decisions of the Federal Court of Appeal in Élément and Forrestall (see above).

[15] The Appellant's counsel, Mr. Merchant, argued that in ordering payment of lost wages, the Adjudicator was confirming that the contract of service existed during the relevant periods and had to be honoured. I take the opposite view. Balzer was required to "compensate" the Appellant for loss of earnings under the terms of Contravention Order No. NC 2218. A compensatory payment was made because the contract of service was broken. Balzer refused to employ the Appellant during the relevant periods and the Appellant could not earn any wages from Balzer during such periods. The contract of service did not exist during the relevant periods.

[16] If I should be wrong, and if a contract of service did exist during the relevant periods, there were no services performed by the Appellant for Balzer during those periods and no wages earned. An amount received as a compensatory payment for loss of earnings is not earnings from insurable employment. See Élément, Forrestall, Berns and Falconbridge referred to above.

[17] It may not seem equitable that the aggregate amount of $27,104.97 is income in 1996 for income tax purposes but is not earnings from insurable employment for 1994 and 1995 for UI purposes but the Income Tax Act and the Unemployment Insurance Act operate on different principles. The appeal is dismissed.

Signed at Ottawa, Canada, this 7th day of July, 1999.

"M.A. Mogan"

J.T.C.C.