Ontario court upholds arbitrator’s decision, section of collective agreement unchanged since 1980 means employer has to foot the bill
The health premium introduced by the Ontario government in 2004 was meant to be a tax on employees, not employers, to help fund the province’s cash-strapped health-care system. But a handful of arbitrators have ruled the language in some collective agreements leaves some unionized employers on the hook for the premium.
The Ontario Divisional Court heard an appeal from Lapointe-Fisher Nursing Home in Guelph, Ont. The employer was appealing an arbitrator’s decision that it had to pay the premium for workers covered by a collective agreement with the United Food and Commercial Workers union.
The critical part of the agreement was a section that was first negotiated in 1980. It said the employer agreed to pay 100 per cent of the Ontario Health Insurance Plan (OHIP) premiums for all full-time employees and 50 per cent of the premiums for part-time employees as long as the worker was the principle breadwinner in their family.
When that section was negotiated, the 1969 Health Insurances Act was still in force. Under that legislation, employees were primarily responsible for paying the premium subject to any agreement or contribution or payment by the employer.
But in 1989 the Employer Health Tax Act repealed the requirement to pay a premium for individual or family coverage under OHIP. The 1989 statute replaced the premium with a payroll tax on employers. It was a progressive payroll tax and was the responsibility of employers, not employees.
But the section from the 1980 agreement with the union that stated the employer was responsible for paying OHIP premiums was never removed from successive collective agreements, including the most recent one in effect from April 1, 2003, to March 31, 2006.
The health premium introduced in 2004 requires those with a taxable income of more than $20,000 to make payments. It is a rising scale, reaching a maximum of $900 with a taxable income of $200,600. The premium is collected by employers through the income tax system by way of payroll deductions.
The employer argued the new health premium was a “tax” and the collective agreement did not obligate the employer to pay taxes owing by employees. But the arbitrator said the language in the collective agreement was wide enough and comprehensive enough to include the new premium and said the employer had breached the agreement.
The Ontario Divisional Court dismissed the employer’s application for appeal. It said the arbitrator’s ruling was “logical, reasonable and compelling.”
“The employer and the union agreed to continue to include in successive agreements an employer’s obligation to pay OHIP premiums of employees when there was no OHIP premium in existence, but rather an employer health tax,” the court said. “However, the parties agreed that should future legislation require payment by the individual employees, the employer would again be required to pay for this employee benefit.”
The court said the standard of review for an arbitrator’s decision in Ontario is patent unreasonableness. It said the arbitrator’s decision in this case simply wasn’t patently unreasonable.
For more information see:
• Lapointe-Fisher Nursing Home v. U.F.C.W., Local 175/633, 2005 CarswellOnt 5050 (Ont. Div. Ct.)
The Ontario Divisional Court heard an appeal from Lapointe-Fisher Nursing Home in Guelph, Ont. The employer was appealing an arbitrator’s decision that it had to pay the premium for workers covered by a collective agreement with the United Food and Commercial Workers union.
The critical part of the agreement was a section that was first negotiated in 1980. It said the employer agreed to pay 100 per cent of the Ontario Health Insurance Plan (OHIP) premiums for all full-time employees and 50 per cent of the premiums for part-time employees as long as the worker was the principle breadwinner in their family.
When that section was negotiated, the 1969 Health Insurances Act was still in force. Under that legislation, employees were primarily responsible for paying the premium subject to any agreement or contribution or payment by the employer.
But in 1989 the Employer Health Tax Act repealed the requirement to pay a premium for individual or family coverage under OHIP. The 1989 statute replaced the premium with a payroll tax on employers. It was a progressive payroll tax and was the responsibility of employers, not employees.
But the section from the 1980 agreement with the union that stated the employer was responsible for paying OHIP premiums was never removed from successive collective agreements, including the most recent one in effect from April 1, 2003, to March 31, 2006.
The health premium introduced in 2004 requires those with a taxable income of more than $20,000 to make payments. It is a rising scale, reaching a maximum of $900 with a taxable income of $200,600. The premium is collected by employers through the income tax system by way of payroll deductions.
The employer argued the new health premium was a “tax” and the collective agreement did not obligate the employer to pay taxes owing by employees. But the arbitrator said the language in the collective agreement was wide enough and comprehensive enough to include the new premium and said the employer had breached the agreement.
The Ontario Divisional Court dismissed the employer’s application for appeal. It said the arbitrator’s ruling was “logical, reasonable and compelling.”
“The employer and the union agreed to continue to include in successive agreements an employer’s obligation to pay OHIP premiums of employees when there was no OHIP premium in existence, but rather an employer health tax,” the court said. “However, the parties agreed that should future legislation require payment by the individual employees, the employer would again be required to pay for this employee benefit.”
The court said the standard of review for an arbitrator’s decision in Ontario is patent unreasonableness. It said the arbitrator’s decision in this case simply wasn’t patently unreasonable.
For more information see:
• Lapointe-Fisher Nursing Home v. U.F.C.W., Local 175/633, 2005 CarswellOnt 5050 (Ont. Div. Ct.)
