A-818-84
Canadian Air Traffic Control Association (Appli-
cant)
v.
The Queen in right of Canada as represented by
the Treasury Board (Respondent)
Court of Appeal, Heald, Ryan and Marceau JJ.—
Ottawa, January 16 and February 20, 1985.
Public service — Collective agreements — Whether persons
ceasing employment during retroactive period entitled to
retroactive pay — Whether common law doctrine of privity of
contract should be imported into labour law — Whether
privity of contract applicable to Public Service collective
agreements — Meaning of "employee" in P.S.S.R.A. —
Lavoie and Gloin decisions applied — Unjust, absurd result
avoided unless clearly intended by legislation — Consideration
of statutory scheme — Bargaining agent representing all
employees — All entitled to benefit of representation —
Union's duty of fair representation contemplated by
P.S.S.R.A. — Public Service Staff Relations Act, R.S.C. 1970,
c. P-35, ss. 2 (as am. by S.C. 1973-74, c. 15, s. 1; S.C.
1974-75-76, c. 67, s.1J, 3, 26, 40, 49(1), 51, 54, 57, 58, 68 las
am. idem, s. 17J, 70, 90(1), 91(1), 98 (as am. idem, s. 271 —
Retroactive Remuneration Regulations, C.R.C., c. 344 —
Public Service Employment Act, R.S.C. 1970, c. P-32, ss. 1, 8,
22, 36 — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s.
28.
The applicant, the bargaining agent for air traffic controllers
employed in the Public Service, entered into a collective agree
ment with the Treasury Board which provided, inter alia, that
employees covered thereby would receive retroactive pay for
work performed during the retroactive period. Eleven members
of the bargaining unit whose employment had ceased before the
signing of the new collective agreement had performed work
during the retroactive period. The Public Service Staff Rela
tions Board dismissed the applicant's reference submitted under
section 98 of the Public Service Staff Relations Act on behalf
of those members who were seeking retroactive pay for work
performed during the retroactive period and payment of the
operational facility premium for the retroactive period. The
main basis for the Board's decision was that the term
"employee", as used in the Act and applicable to the collective
agreement, would not include a former employee in the absence
of specific language such as that found in the definition of
"grievance".
This is a section 28 application to review and set aside that
decision.
Held, the application should be allowed.
Per Heald J. (Ryan J. concurring): The Board's conclusion is
directly contrary to this Court's decision in Lavoie, followed in
Gloin, where subsection 90(1) of the Act, a provision granting a
right to an "employee" who feels himself to be aggrieved, was
read as including any person who feels himself to be aggrieved
as an "employee", even if that person is a former employee. In
both Lavoie and in the present case, the subject matter is very
similar: an employee's right to challenge a decision affecting his
entitlement to benefits arising out of his employment relation
ship. The reasoning in Lavoie is therefore most persuasive in
the case at bar.
It would be absurd and unjust if two employees working side
by side, performing identical functions for an identical salary
prior to a given date would receive different salaries for work
performed after that date because one of them subsequently
had his employment terminated before the signing of a new
collective agreement. In the absence of very clear words, no
such incongruous result could have been intended.
Since the duty of a bargaining agent is to represent all
employees who are members of the bargaining unit at any time
during the currency of the collective agreement and since those
members are required to pay monthly dues to the bargaining
agent so long as they are employed in that unit, the members
are therefore entitled to be represented by the agent and to
receive the benefit of that representation. They are also entitled
to receive the benefits of the agreement, whether or not they
were still members when it was signed. This conclusion is
strengthened by the provisions of the Act (sections 57 and 58)
concerning the effective date of collective agreements as
applied, in this case, to the pay increment provisions of the
Agreement.
Per Marceau J.: In the private sector, there are still two
opposing tendencies in the case law. One line of thought,
applying the doctrine of privity of contract, denies former
employees the benefits of a collective agreement because they
were not privy to it, their employment having ceased before it
was signed. The other line of thought, insisting on the represen
tation function of the union and the apparent requirements of
justice, arrives at the opposite conclusion.
In the federal public sector, there is no case law on the
question.
The applicant's first argument, that the decisions of this
Court in Lavoie and Gloin plainly contradict the contention
that the term "employee" in the Act does not include a former
employee unless there is specific language to the contrary,
cannot be accepted. Lavoie and Gloin did not decide that the
term "employee" simply includes a former employee. Those
decisions were concerned with the standing of individuals griev
ing against the very action taken by their superiors to put an
end to their employment. They cannot be seen as having
expanded the meaning of "employee" as used in the Act.
The fact that a bargaining agent has the right under para
graph 49(1)(a) of the Act, to commence bargaining with the
employer on behalf of the employees in the bargaining unit at
the commencement of negotiations does not assist in deciding
who is to be bound or who is to benefit from the result of such
bargaining.
The argument based on the duty of a bargaining agent to
represent fairly all the members of the bargaining unit, includ-
ing former employees, is not convincing. The breach of that
duty could give the injured members a right of action against
the union, but could not impose on an employer an obligation
not contemplated in the final agreement entered into by the
parties.
In the federal public sector, the legislation does not allow the
introduction of the notions of representation, agency and privity
of contract because the position and role of the parties to the
collective bargaining, the authority they both have and the
binding effect of their agreement are all established exclusively
and peremptorily by statute.
The solution can only be inferred from the principles adopted
by the legislation and with sole regard to the scheme estab
lished by Parliament. The essential purpose of the collective
bargaining and the basic role of the collective agreement are
the establishment of scales of rates of pay for each position, or
group of positions of the same occupational nature, occupied by
the members of the unit. It is clear that more than one scale of
rates of pay at any one time for one position in a bargaining
unit is unthinkable if the system is to remain workable. All
those who have occupied the positions in the period of time
covered are entitled to the wages to which their services entitled
them according to the applicable rates.
Respondent's argument that subsection 57(1) and section 58
of the Act are a clear indication that the collective agreement is
to apply only to those employees who are still members of the
bargaining unit at the date the agreement is signed, implies an
interpretation based on an application of the traditional concept
of representation, which should not be applied here, and leads
to the implementation of a double set of rates, which is
impossible in principle. The error consists in taking the phrase
"collective agreement" in subsection 57(1) as referring to the
agreement as a whole. The expression, however, refers to any
autonomous part of the agreement, and each autonomous part
can have its own "effective date".
In short, the former employees are entitled to retroactive pay
because they held positions for which the only rates of pay
applicable were those established by the new contract.
CASES JUDICIALLY CONSIDERED
APPLIED:
R. v. Lavoie, [1978] I F.C. 778 (C.A.); Gloin v. Attorney
General of Canada, [1978] 2 F.C. 307 (C.A.); Canadian
Merchant Service Guild v. Gagnon et al., [1984] 1
S.C.R. 509; 9 D.L.R. (4th) 641.
REFERRED TO:
Re Penticton and District Retirement Service and Hospi
tal Employees' Union, Local 180 (1977), 16 L.A.C. (2d)
97 (B.C.); Re Air Canada and Canadian Air Line Flight
Attendants' Assoc. (1981), 1 L.A.C. (3d) 37 (Can.); Re
Ottawa Board of Education and Ontario Secondary
School Teachers' Federation, District 26 (1976), 13
L.A.C. (2d) 46 (Ont.); Re Ontario Federation of Labour
and Office & Professional Employees Intl Union, Local
343 (1977), 16 L.A.C. (2d) 265 (Ont.); Re Neilson
(William) Ltd. and Milk & Bread Drivers, Dairy
Employees, Caterers & Allied Employees, Local 647
(1982), 6 L.A.C. (3d) 123 (Ont.); R. v. Thibault, [1983]
1 F.C. 935 (C.A.); McGavin Toastmaster Ltd. v. Ains-
cough, [1976] S.C.R. 718.
COUNSEL:
Catherine H. MacLean for applicant.
Robert Cousineau for respondent.
SOLICITORS:
Nelligan/Power, Ottawa, for applicant.
Legal Services, Treasury Board, Ottawa, for
respondent.
John E. McCormick, Public Service Staff
Relations Board, Ottawa, for Public Service
Staff Relations Board.
The following are the reasons for judgment
rendered in English by
HEALD J.: This is a section 28 application to
review and set aside the decision dated June 18,
1984 of J. H. Brown, Q.C., the Chairman of the
Public Service Staff Relations Board wherein the
learned Chairman dismissed the applicant's refer
ence under section 98 of the Public Service Staff
Relations Act, R.S.C. 1970, c. P-35 [as am. by
S.C. 1974-75-76, c. 67, s. 27] ("the Act").
The relevant facts may be summarized as fol
lows. The applicant herein is the bargaining agent
for air traffic controllers employed in the Public
Service. On March 21, 1979, the applicant and the
Treasury Board executed Collective Agreement
402/79, which, by its terms, was to remain in
effect until December 31, 1980. Pursuant to sec
tion 51 of the Act, the terms of Collective Agree
ment 402/79 were extended pending the conclusion
of a new collective agreement. A new collective
agreement (402/82) was not executed until May
28, 1982, approximately 17 months after Collec
tive Agreement 402/79 was to have expired.
Article 14.02 of Collective Agreement 402/82 pro
vides for employees to receive retroactive pay for
work performed between the signing of Collective
Agreement 402/82 on May 28, 1982 and
January 5, 1981 ("the retroactive period"). Article
31 of that same agreement also provides for pay
ment of an operational facility premium during the
retroactive period.
Eleven members of the bargaining unit ceased
employment during the retroactive period as a
result of either voluntary resignation or release at
the end of probation.' All eleven members per
formed work for varying lengths of time during the
retroactive period. One member performed work
for 15 months, one for 13 months, one for 12
months, two for 11 months each, with the remain
der working for lesser periods. All eleven were paid
for work performed during the retroactive period
at the rates of pay set out in Collective Agreement
402/79. All eleven were denied retroactive pay for
work performed during the retroactive period at
the rates set out in Article 14.02 of Collective
Agreement 402/82. They were also refused pay
ment of the operational facility premium for the
retroactive period. The reasons for the Board's
decision commence at page 45 of the case as
follows:
The positions of both counsel for the Bargaining Agent and
counsel for the Employer are based on the principle of privity of
contract and whether or not it should be strictly applied to
collective agreements. Counsel for the Bargaining Agent argues
that the doctrine of privity of contract was developed in the
context of commercial contracts and should not be strictly
applied to collective agreements. The converse argument was
advanced by counsel for the Employer. He argued that privity
of contract does apply to collective agreements in the same way
as it applies to commercial contracts.
On pages 46 and 47, the ratio of those reasons
reads:
After considering the representations of the parties and review
ing the cited arbitral jurisprudence, the Board is inclined to the
position that the "privity of contract" argument cannot be
strictly applied to collective agreements. Moreover, the deci
sions cited by counsel for the Bargaining Agent provide logical
' The appellant's memorandum of fact and law
(paragraph 5) states that the correct number of members in
this regard is 13. However, Appendix A to the agreed state
ment of facts (Case, p. 10) establishes that the employment of
grievors Carriere and Sevestre did not terminate until Decem-
ber 9, 1982. Accordingly, it is not correct to state that their
employment ceased during the retroactive period. Therefore, it
would seem that even on the interpretation advanced by the
respondent, grievors Carriere and Sevestre were entitled to
retroactive pay.
and compelling reasons for providing retroactive benefits to
former employees. Be that as it may, however, those decisions
are based essentially, if not exclusively, on the language of the
particular collective agreement and do not involve the applica
tion of the provisions of the enabling legislation.
In the federal Public Service collective agreements are nego
tiated and concluded under the authority of the Public Service
Staff Relations Act. That Act contains a number of provisions
that have a direct bearing on the contents of a collective
agreement, as well as on the persons who are entitled to the
benefits contained therein. More particularly, under the Act
"employee" means a person employed in the Public Service
other than ...". The definition goes on to provide that a person
does not cease to be employed in the Public Service by reason
only of his ceasing to work as a result of a strike or by reason
only of his discharge contrary to this or any other Act. Further,
after defining what a "grievance" is, the definition thereof goes
on to state that for any of the provisions of this Act respecting
grievances with respect to disciplinary action resulting in dis
charge or suspension, a reference to an "employee" includes a
former employee.
In the definition of "employee" specific provision is made
whereby a person who has ceased to work, in the circumstances
described, does not cease to be employed in the Public Service.
The implication being that a person who ceases to work in the
Public Service for any reason other than that described above
ceases to be a person employed in the Public Service. In other
words a person who ceases to work because of retirement,
death, quit, rejection on probation, abandonment, lay-off,
release for incompetence or incapacity, or discharge, where the
discharge is not successfully challenged, ceases to be a person
employed in the Public Service and as such ceases to be an
employee for purposes of the Act. Moreover, in the definition of
"grievance" specific provision is made as to the circumstances
in which a former employee is deemed to be an employee. By
implication the term "employee" for purposes of all other
provisions of the Act must mean, by definition, "a person
employed in the Public Service" and would not include a
former employee in the absence of specific language such as
that found in the definition of "grievance".
Also, subsection 40(1) of the Act provides that on certifica
tion an employee organization acquires the exclusive right to
bargain collectively on behalf of the employees in the bargain
ing unit. Further, section 54 provides the Treasury Board with
the authority to enter into a collective agreement with a
bargaining agent applicable to the employees in the bargaining
unit. As well, section 58 provides, inter alia, that a collective
agreement is binding on the employees in the bargaining unit.
By definition the term "employees" as found in these sections
must mean persons employed in the Public Service and does not
include a former employee in the absence of express language
to that effect.
The negotiations for and the completion of a collective
agreement are authorized by the Public Service Staff Relations
Act. Accordingly, the term "employee" as defined in the Act
will have the same meaning in the collective agreement unless a
contrary intention is expressed. In the result, the retroactive
benefits provided for in a collective agreement would not extend
to former employees unless express language to that effect is
contained in the collective agreement, e.g., for the purposes of
the retroactive benefits (or pay provisions) contained in this
agreement the term "employee" includes a former employee.
No such express language is found in the current collective
agreement between the Bargaining Agent and the Employer.
Accordingly, in the absence thereof, the benefits contained in
the collective agreement which have retroactive application
cannot be said to extend to former employees.
In these reasons, the Board considers some of
the relevant provisions of the Act to determine the
meaning of the word "employee" as used in the
Act. That approach is a proper one for use in the
interpretation of words used in a statute. However,
with deference, I have concluded that in conduct
ing this exercise, the learned Chairman appears
not to have considered all of the statutory provi
sions which are relevant nor to have had regard to
the applicable jurisprudence in this Court. It is
apparent that the main basis for the Board's deci
sion is that, "the term `employee' for the purposes
of all other provisions of the Act must mean, by
definition, 'a person employed in the Public Ser
vice' and would not include a former employee in
the absence of specific language such as that found
in the definition of `grievance' ". In my view, this
conclusion is directly contrary to this Court's deci
sions in R. v. Lavoie, [ 1978] 1 F.C. 778 and Gloin
v. Attorney General of Canada, [1978] 2 F.C. 307.
In the Lavoie case, the Court, as in this case, was
required to determine the meaning of "employee"
as used in a section of the Act. In Lavoie the issue
for determination was the meaning to be ascribed
to "employee" in subsection 90(1) of the Act
which provides that: "Where any employee feels
himself to be aggrieved" in respect of certain
specified matters arising out of his employment
relationship, he may present a grievance. The posi
tion of the Treasury Board was that the Board had
no jurisdiction to consider an application for exten
sion of time to grieve a dismissal because the
person was not an employee at the time of the
proposed extension. The Court held that the intro
ductory words of subsection 90(1) must be read as
including any person who feels himself to be
aggrieved as an "employee". Chief Justice Jackett
said in the Lavoie case, supra, at page 783:
In my view, the introductory words of section 90(I) of the
Public Service Staff Relations Act must be read as including
any person who feels himself to be aggrieved as an "employee".
Otherwise a person who, while an "employee" had a griev-
ance—e.g. in respect of classification or salary—would be
deprived of the right to grieve by a termination of employ-
ment—e.g. by a lay-off. It would take very clear words to
convince me that this result could have been intended. [Empha-
sis added.]
While the section of the Act in question in
Lavoie was section 90, which confers the right to
grieve personally upon an "employee", whereas in
the case at bar, the authority to refer a matter to
the Board is contained in section 98, the subject
matter in each case is very similar, namely, the
matter of an "employee" 's right to challenge a
decision made affecting his entitlement to benefits
arising out of his employment relationship.
Accordingly, I find the reasoning of Lavoie most
persuasive as related to the case at bar. Here, as in
Lavoie, the persons seeking relief were employees
during much of the time period covered by the
Collective Agreement. These employees have a
grievance in respect of the salary to be paid to
them during that period. The result, if the position
taken by the Treasury Board is correct, would
mean that two employees working side by side in
the same workplace, performing identical func
tions, and being paid identical salaries prior to
December 31, 1980 would receive different sal
aries for the same work in 1981 and 1982 because
one of those employees had his employment ter
minated before May 28, 1982 while the other
employee continued to be employed on May 28,
1982. Such a result produces absurdity, injustice
and hardship in my view. Accordingly, I agree
with Chief Justice Jackett that, in the absence of
very clear words, no such incongruous result could
have been intended. 2
In section 90 of the Act, as was pointed out by
the Court in Lavoie there are no clear words
expressly excluding or including former employees
2 The Lavoie decision was followed by this Court in the Gloin
decision supra where the Court adopted the Lavoie definition
of "employee" as used in both subsections 90(l) and 91(1) of
the Act.
who are in the position of the grievors in this case.
What we have in the definitions of "employee"
and "grievance", as noted supra, are certain
express inclusions dealing with certain restricted
categories but there are no express exclusions.
I said earlier that I had no quarrel with the
approach of the learned Chairman in interpreting
the word "employee" in the context of this factual
situation but that it was my view that sections of
the Act other than the ones discussed by him are
germane to a complete consideration of the statu
tory scheme as it pertains to the case at bar. In my
view, section 49(1) of the Act is relevant. It reads:
49. (1) Where the Board has certified an employee organiza
tion as bargaining agent for a bargaining unit and the process
for resolution of a dispute applicable to that bargaining unit
has been specified as provided in subsection 36(1),
(a) the bargaining agent may, on behalf of the employees in
the bargaining unit, by notice in writing require the employer
to commence bargaining collectively, or
(b) the employer may by notice in writing require the
bargaining agent to commence bargaining collectively,
with a view to the conclusion, renewal or revision of a collective
agreement.
It was agreed by counsel that, in this case, the
applicant union had, approximately two months
prior to the expiration of Collective Agreement
402/79 on December 31, 1980, served a notice to
commence bargaining collectively for the renewal
of the Collective Agreement as is contemplated by
subsection 49(1) supra. In my view, the bargaining
agent, when it serves that notice, is engaging in a
collective bargaining process on behalf of all those
employees in the bargaining unit at that time
together with any new employees who may become
a member of that bargaining unit during the bar
gaining process and during some or all of the term
of the collective agreement entered into as a result
of that bargaining process. The duty of a bargain
ing agent is to represent all employees who may be
members of the bargaining unit at any time during
the currency of the collective agreement. Those
members are required to pay monthly dues to the
bargaining agent so long as they are employed in
that unit. Based on this circumstance as well as the
scheme of the Act, they are, in my view, entitled to
be represented by the agent and to receive the
benefit of that representation. As stated by Choui-
nard J. in the case of Canadian Merchant Service
Guild v. Gagnon et al., [1984] 1 S.C.R. 509, at
page 527; 9 D.L.R. (4th) 641, at page 654:
5. The representation by the union must be fair, genuine and
not merely apparent, undertaken with integrity and compe
tence, without serious or major negligence, and without hostili
ty towards the employee.
It is true, as pointed out by Mr. Justice Choui-
nard that the Canada Labour Code [R.S.C. 1970,
c. L-1], as well as several provincial statutes con
tain specific provisions regarding a union's duty to
represent its members. However, it is also true as
observed by Chouinard J. at page 522 S.C.R.; 650
D.L.R. of the judgment that: "the Canadian cases,
following the U.S. precedents, has already recog
nized the existence of a union's duty of representa
tion and of the resulting obligations." Neverthe
less, it is necessary to ask the question—is the
generally accepted duty of fair representation
imposed on a bargaining agent altered, eliminated,
reduced or enhanced by the provisions of the
Public Service Staff Relations Act? I can find no
specific provision in the Act specifically setting out
this duty. However, my perusal of the provisions of
the statute lead me to conclude that such a duty is,
indeed, contemplated and- implied (see for exam
ple, sections 40 and 90 of the Act).
On this basis, and in light of the entire scheme
of the Act, I conclude that the bargaining agent
was entitled to bargain and conclude a collective
agreement on behalf, inter alia, of subject grievors
since they were members of the bargaining unit for
some portion of the term of the Collective Agree
ment. Accordingly I think it follows that the grie-
vors are entitled to receive the benefits of that
Agreement, whether or not they were still mem
bers when it was signed. I think section 58 of the
Act gives strength to this conclusion since it pro
vides that: "A collective agreement is ... binding
on the employer, on the bargaining agent ... and
on the employees in the bargaining unit in respect
of which the bargaining agent has been certified,
effective on and from the day on and from which it
has effect pursuant to subsection 57(1)." [Empha-
sis added.] Article 14.02 provides that the rates of
pay applicable are those set out in Appendix "A"
to the Agreement. Appendix "A" provides that the
rates of pay for operating employees shall be effec
tive January 5, 1981. Accordingly since the rele
vant provisions of the Agreement in so far as pay
increments are concerned became effective on
January 5, 1981, and since all of the grievors
performed work during some portion of the
retroactive period, it seems clear to me that they
are entitled to the benefit of those pay increment
provisions if the language used in section 58 is to
be given its plain and ordinary meaning.
Accordingly, and for these reasons, I would
allow the section 28 application, set aside the
Board's decision and refer the matter back to the
Board for reconsideration on the basis that the
grievors herein are "employees" for the purposes
of these benefits contained in Collective Agree
ment 402/82 which have retroactive application.
RYAN J.: I concur.
* * *
The following are the reasons for judgment
rendered in English by
MARCEAU J.: I have had the advantage of
reading the reasons for judgment prepared by Mr.
Justice Heald. I agree with my Brother that this
section 28 application should be granted, but I
come to this conclusion on different grounds. As
the Court is here called upon to deal for the first
time with a problem that appears of particular
importance, it might be proper that I set forth
briefly my own view of the matter.
The facts that gave rise to the decision here
under attack, a decision of the Public Service Staff
Relations Board rendered pursuant to the Public
Service Staff Relations Act (hereinafter the
P.S.S.R. Act), need not be reviewed again. They
are clearly set out in the reasons of Mr. Justice
Heald and the truth is that they do not, by them
selves, have much significance beyond the formu
lation of the question to be resolved. On May 28,
1982, the Treasury Board as employer and the
applicant as bargaining agent for a bargaining unit
in the Public Service entered into a collective
agreement in which increased rates of pay were
established with retroactive effect: the question is
whether individuals, who performed work during
the retroactive period but had resigned or been
released on the date the agreement was signed,
were entitled to receive additional salary payments
on the basis of the new rates?
The practical dimensions of the general issue
underlying the question to be answered are easy to
appreciate. On the one hand, it is an issue subja-
cent to any retroactive duration clause in a collec
tive agreement and clauses of that type in today's
collective agreements, in the public as well as in
the private sectors, are apparently quite common
as they serve functions essential to good collective
bargaining. 3 On the other hand, it is an issue that
is of practical interest to a significant number of
people. In the present proceedings, the union is
acting on the sole behalf of individuals whose
employment was terminated during the retroactive
period by voluntary resignation or release at the
end of probation. But, equally concerned, and in
exactly the same manner, are all those who have
ceased to be employed for any other possible
reason, be it retirement, death, lay-off, release for
incompetence, release for incapacity, or discharge.
3 It could be useful to reproduce here, in passing, a passage in
the decision of the B.C. Labour Relations Board in Re Pentic-
ton and District Retirement Service and Hospital Employees'
Union, Local 180 (1977), 16 L.A.C. (2d) 97 [at page 99] which
explains very vividly the reasons why these clauses are a
common place item in negotiated collective agreements today:
The point of such a duration clause is to establish a fixed
anniversary date for the negotiation and renegotiation of
successive collective agreements; and, as well, to provide
legal continuity in the rights and obligations of the Employ
er, the Union, and the employees, throughout the life of their
collective bargaining relationship. There are a number of
apparent virtues to such a provision. The Employer and the
employees can anticipate with some degree of assurance the
(Continued on next page)
And yet, for all its practical dimensions, the
issue seems to have never been clearly resolved. In
the private sector, arbitrators have many times
been called upon to deal with it, but their jurispru
dence is still conflicting. One line of thought,
which was prevalent until recently, is that, in the
absence of specific language to the contrary in the
agreement, employees who have terminated their
employment before the date of execution are not
entitled to any of the new contract benefits. This
solution is said to be required by the doctrine of
privity of contract: the rights created by the agree
ment are not vested in the employees until the
agreement is settled and therefore can only accrue
normally to the benefit of the employees in the
bargaining unit and represented by the union at
that moment; the former employees are not privy
to the contract and only very clear language could
make any of the terms thereof applicable to them
(see for instance Re Air Canada and Canadian Air
Line Flight Attendants' Assoc. (1981), 1 L.A.C.
(3d) 37 (Can.) and Re Ottawa Board of Educa
tion and Ontario Secondary School Teachers'
Federation, District 26 (1976), 13 L.A.C. (2d) 46
(Ont.)). The other line of thought, which seems to
attract more and more adherents since the decision
in the Penticton case (supra note 1), goes the other
way being that the employees who have left during
the negotiations are entitled to any retroactive
wage increases in so far as the parties have not
used specific language to the contrary. The reason-
(Continued from previous page)
date at which new compensation increases will be forthcom
ing, changes which provide greater income to the employees
and impose larger pay-roll costs on the Employer. As well,
such a clause helps defuse some of the crisis at the end of a
contract—the attitude of "no contract, no work". Many
times negotiators may be trying to work out complex solu
tions to difficult issues—technological change, for example—
and this may require protracted discussions. Suppose that all
parties expect that negotiated changes in compensation will
be retroactive to the expiry date of the old contract. This
usually is the best antidote to charges that the Employer is
stalling negotiations to save money, and to possible wildcat
strikes by militant employees who are exasperated at the
delay. Finally, this continuity in the life of successive collec
tive agreements provides legal support to the real life experi
ence that there is one, enduring collective bargaining rela
tionship between the parties; and this relationship sets the
basic terms and conditions of employment in the plant, until
and unless they are modified by the parties.
ing supporting this departure from the traditional
view is generally built up around the following
propositions: the common law doctrine of privity of
contract should not be imported into labour law on
unqualified terms; the basic right of the union to
negotiate on behalf of employees and the effect of
the collective agreement it enters into are estab
lished by statute, they do not derive from the
operation of the common law; in the same manner
that the union is clearly empowered to negotiate
on behalf of individuals who will enter the bargain
ing unit only after the signing of the agreement,
privity of contract should not be seen as a bar to
the union negotiating improved contract terms on
behalf of individuals who have left the unit before
the date of signing; it is so much consistent with
the normal expectations of the departing
employees and in keeping with the apparent
requirements of justice, that there is always a
presumption that the parties to a collective agree
ment intend to make the retroactive monetary
benefits agreed upon by them applicable to all
those who have performed work during the
retroactive period (see for example Re Penticton
and District Retirement Service and Hospital
Employees' Union, Local 180 (1977), 16 L.A.C.
(2d) 97 (B.C.); Re Ontario Federation of Labour
and Office & Professional Employees Int'l Union,
Local 343 (1977), 16 L.A.C. (2d) 265 (Ont.) and
Re Neilson (William) Ltd. and Milk & Bread
Drivers, Dairy Employees, Caterers & Allied
Employees, Local 647 (1982), 6 L.A.C. (3d) 123
(Ont.)). So, in the private sector, we are still today
left with an unclear situation.
In the federal public sector, the situation is even
more unexpected: the difficulty is not that the
jurisprudence is still unsettled, the difficulty is that
there appears to be no jurisprudence at all. Con
sidering that collective bargaining was introduced
in the Federal Public Service close to twenty years
ago, it is difficult to understand that it can be so.
In 1964, under the authority of the Appropriation
Act No. 5, 1963, S.C. 1963, c. 42, regulations
under the title Retroactive Remuneration Regula
tions [SOR/64-44] were adopted authorizing
Treasury Board to "approve a retroactive upward
revision in remuneration . .. which ... shall apply
to ... a person who ... ceased to be an employee
during the period because of ... lay-off, ... retire
ment, or ... death". These Regulations, which are
now found in chapter 344 of the 1978 Consolidat
ed Regulations of Canada, have not been revoked
and it appears that, pursuant to or in accordance
with them, the Treasury Board has always felt free
to apply and has always indeed applied the
retroactive pay provisions of the collective agree
ments subscribed by it to former employees who
had died, had retired or had been laid-off during
the retroactive periods. 4 This, undoubtedly, is the
explanation of how conflicts could be avoided in
practice. Except that there is a decision of this
Court indicating that the Retroactive Remunera
tion Regulations do not apply to agreements
entered into under section 54 of the P.S.S.R. Act.
In R. v. Thibault, [1983] 1 F.C. 935, the Court, in
the words of Mr. Justice Pratte, stated as follows
(at pages 938-939):
4 The point was only briefly alluded to before us, but appar
ently it was discussed at some length before the Adjudicator
since paragraph 17 of the decision of the Board reads thus:
According to counsel there are currently some 58 collective
agreements in force in the federal Public Service. Of these,
36 contain language similar to that found in the collective
agreement here under consideration. The remaining 22 col
lective agreements contain language which specifically grants
retroactive remuneration to certain persons who have ceased
to be employed during the retroactive period. This is done in
one of two ways. In the first instance the pay provisions of
the collective agreement are specifically applied retroactively
in accordance with the Retroactive Remuneration Regula
tions. In the second instance the retroactive pay provisions of
the collective agreement are specifically applied to the same
former employees who are entitled to receive it under the
afore-mentioned Regulations, that is, to persons who ceased
to be employees during the retroactive period because of
lay-off, retirement or death. Thus, counsel argued, when the
parties wish to grant retroactive remuneration to former
employees, they can do so by specific words to that effect in
the collective agreement.
These Regulations, in my view, apply only to pay increases that
have been approved pursuant to the Regulations. They do not
apply to increases provided for in a collective agreement that
Treasury Board has entered into pursuant to its authority under
section 54 of the Public Service Staff Relations Act. In other
words, the Regulations prescribe the effect of approval of a
retroactive pay increase by the Governor in Council or Trea
sury Board, they do not in any way govern the interpretation or
effect of a collective agreement providing for such increases.
But, we are not concerned with that problem, and
all we can do here is note that until the present
case was submitted to arbitration, the Board had
never been called upon to dispose of the issue in
the federal public sector.
The decision of the Board, the main passages of
which are reproduced in Mr. Justice Heald's rea
sons, contains a complete and interesting review of
the respective positions of the parties including
lengthy quotations taken from previous decisions
by arbitrators, but its determination is based on a
reasoning that is novel and quite simple. The
"privity of contract argument cannot be strictly
applied to collective agreements", the Board
states, and there is no reason to deny that the
parties could extend benefits to former members of
the unit, so the answer to the question to be
resolved only depends on the meaning to be
attributed to the word "employees" in the articles
of the agreement providing for retroactive pay.
Since the federal Public Service collective agree
ments are negotiated and concluded under the
authority of the P.S.S.R. Act, the Board then
reasons, the term "employees" in the collective
agreement must be given the same meaning as in
the Act, unless a contrary intention appears. The
Board, therefore, searches the Act, and looking
particularly at the definition of section 2 and the
wording of subsection 40(1) and section 58, it
takes the view that the term "employee" therein
refers exclusively to people actually employed in
the Public Service and "does not include a former
employee in the absence of express language to
that effect". The conclusion follows: no such
express language being found in the current agree
ment, the benefits conceded therein cannot be said
to extend to former employees.
The applicant launched its attack against the
determination of the Board on the basis of three
arguments: a) the decisions of this Court in R. v.
Lavoie, [ 1978] 1 F.C. 778 and Gloin v. Attorney
General of Canada, [1978] 2 F.C. 307, plainly
contradict the contention that the term
"employee" in the P.S.S.R. Act does not include a
former employee unless there is specific language
to the contrary; b) paragraph 49(1)(a) of the Act
clearly entitles the bargaining agent to bargain
collectively on behalf of all employees who are in
the bargaining unit at the time when notice to
bargain is given; c) the bargaining agent has a
duty to represent fairly all the members of the
bargaining unit on behalf of which it is entitled to
enter into a collective agreement, and that duty
would be breached if the former employees were
excluded.
I must say, with respect to those who see it
otherwise, that I am not convinced by any of these
arguments. Firstly, I do not read the decisions in
Lavoie (supra) and Gloin (supra) as having decid
ed that the term "employee" simply includes a
former employee. Those decisions were concerned
with the standing of individuals grieving under the
provisions of the P.S.S.R. Act against the very
action taken by their superiors to put an end to
their employment in the Public Service. Guided by
the same type of common sense that had dictated
the provision found in section 2 of the Act to the
effect that "for the purposes of any of the provi
sions of this Act respecting grievances with respect
to disciplinary action resulting in discharge or
suspension, a reference to an `employee' includes a
former employee", the Court found in those cases
that the introductory phrase of section 90(1) relat
ing to the right to present grievances, - which is:
"Where any employee feels himself to be
aggrieved" - had to be understood as meaning
"any person who feels himself to be aggrieved as
an employee". These decisions could perhaps be
relevant to support the right of the individuals to
act by themselves (although it appears that person
al grievances were originally filed by the thirteen
individuals here interested, but they were rejected
on the ground that they did not come from "per-
sons aggrieved as employees"). They cannot be
seen, however, as having introduced an expansion
of the meaning of the term "employee" as used in
the various sections of the P.S.S.R. Act. An
employee is, and necessarily is, someone who is
employed and I simply fail to see how it can be
said that the term may also mean someone who is
not employed even if he has been in the past.
Secondly, paragraph 49(1)(a) must be taken
strictly for what it says:
49. (1) Where the Board has certified an employee organiza
tion as bargaining agent for a bargaining unit and the process
for resolution of a dispute applicable to that bargaining unit
has been specified as provided in subsection 36(1),
(a) the bargaining agent may, on behalf of the employees in
the bargaining unit, by notice in writing require the employer
to commence bargaining collectively, or
with a view to the conclusion, renewal or revision of a collective
agreement.
The fact that a bargaining agent has the right to
commence bargaining with the employer on behalf
of the employees in the bargaining unit does not
assist in deciding who is to be bound or who is to
benefit from the result of such bargaining. It does
not follow that because certain persons are within
the bargaining unit at the commencement of
negotiations they continue to be included in the
unit covered by the agreement even after having
had their employment terminated and, therefore,
their entitlement to be members of such unit taken
away. Thirdly, I would have thought that a breach
by a bargaining union of its duty towards some
members of the bargaining unit in the way it
negotiated a collective agreement could give the
injured members a right of action against the
union, but not impose on an employer an obliga
tion not contemplated in the final agreement
entered into by the parties.
Counsel for the respondent, in an effort to sus
tain the decision of the Board on a less vulnerable
reasoning and render irrelevant the main argu
ments advanced by the applicant, submitted for his
part that the real question was not one of construc
tion of the Agreement but rather one of authority
on the part of the parties thereto. Sections 40 and
54 of the P.S.S.R. Act provide, in part, as follows:
40. (1) Where an employee organization is certified under
this Act as the bargaining agent for a bargaining unit,
(a) the employee organization has the exclusive right under
this Act
(i) to bargain collectively on behalf of employees in the
bargaining unit and to bind them by a collective agreement
until its certification in respect of the bargaining unit is
revoked, and
54. The Treasury Board may, in such manner as may be
provided for by any rules or procedures determined by it
pursuant to section 3 of the Financial Administration Act,
enter into a collective agreement with the bargaining agent for
a bargaining unit, other than a bargaining unit comprised of
employees of a separate employer, applicable to employees in
that bargaining unit.
These provisions, argued counsel, leave no doubt
that the bargaining agent does not have the right
to bargain collectively on behalf of persons who
are not members of the bargaining unit and Trea
sury Board cannot enter into a collective agree
ment which would be applicable to persons other
than those employed in the bargaining unit for
which the bargaining agent is certified. The
approach adopted in this argument is, in my view,
the proper one, but the argument, as afterwards
developed by counsel, appears to me to beg the
issue and to lead nowhere since it does not give a
clear answer as to the date at which the members
of the bargaining unit affected by the various
provisions of the agreement must be identified.
My own view of the matter, to which I now
come, derives from the premise that the issue
cannot be resolved in the public sector on the same
terms as in the private sector. Collective bargain
ing with respect to employer-employee relations in
the private sector is, of course, basically governed
by statute law, but provincial labour relations
legislation does not cover every aspect and leaves
room for the introduction of superadded elements
which will carry necessarily the application of
common law rules (see on this point, the reasons of
Chief Justice Laskin in McGavin Toastmaster
Ltd. v. Ainscough, [1976] S.C.R. 718). For
instance, there is nothing to prevent a bargaining
union from trying to have an advantage negotiated
for members of its bargaining unit extended to
others, for example former employees, as there is
nothing in principle to prohibit an employer from
assuming, in contracting with the union, an obliga
tion for the benefit of others than members of the
bargaining unit. Of course, the situation of the
non-members as to their rights under the contract
will raise a problem, but between the employer and
the union the contract will certainly be binding
(see Chitty on Contracts, 24th Edition, Volume 1,
General Principles, paragraphs 1104 et seq.). One
may easily understand, therefore, that the con
sideration of the issue we are concerned with has
always resolved, in the private sector, around
notions of representation of agency, of privity of
contract, and has been seen as bringing into play
mainly the rules of construction of agreement. In
the federal public sector, on the contrary, the
legislation, as I read it, simply does not allow the
introduction of such superadded elements, the
position and role of- the parties to the collective
bargaining, the authority they both have and the
binding effect of their agreement being all estab
lished exclusively and peremptorily by statute. If
this is the case, and it seems to me clearly that it
is, it would be inappropriate to seek a solution to
the issue, when a Federal Public Service collective
agreement is involved, by having recourse to the
common law doctrines of agency, of representa
tion, or of privity of contract, and by reducing it to
a question of intention of the parties. The solution,
if not spelled out, can only be inferred from the
principles adopted by the legislation and with sole
regard to the scheme established by Parliament.
Until 1967, it will be recalled, collective bar
gaining had no role to play in the Federal Public
Service. Staff associations and a National Joint
Council were called upon to express their points of
view and give advice, but the establishment of the
terms and conditions of employment of the public
servants rested with the government. In 1967, the
P.S.S.R. Act was passed providing bargaining
rights to public service employees, and the Finan
cial Administration Act (now, R.S.C. 1970, c.
F-10) was amended to confirm the Treasury
Board's role as employer for most of the public
service. The characteristics of the scheme then
introduced by Parliament are to be found in the
provisions of those statutes and as I read them,
specially sections 2 [as am. by S.C. 1973-74, c. 15,
s. 1; S.C. 1974-75-76, c. 67, s. 1], 3, 26, 40, 49, 54,
57, 58, 68 [as am. by S.C. 1974-75-76, c. 67, s. 17]
and 70 of the P.S.S.R. Act and sections 2, 8, 22
and 36 of the Public Service Employment Act
[R.S.C. 1970, c. P-32], I understand this scheme
as having the following basic aspects.
The employees in the Public service, in respect
of whom Her Majesty, as represented by the Trea
sury Board, is the employer, are all regrouped in
occupational "groups" within occupational
"categories" specified and defined by the Public
Service Commission. Each occupational group
within the various occupational categories normal
ly forms a bargaining unit and an employee organ
ization is certified by the Public Service Staff
Relations Board to enter into a collective agree
ment with the Treasury Board on behalf of all
members of this unit. The scope of bargaining is
clearly circumscribed since, although it is first
stated broadly that the collective agreement may
contain provisions respecting "all terms and condi
tions of employment and related matters", later
are excluded expressly all terms, conditions and
matters that would require legislative implementa
tion (other than the appropriation of moneys) and
those that are regulated by other specified Acts.
One of these specified Acts is, of course, the
Public Service Employment Act (R.S.C. 1970, c.
P-32) which gives to the Public Service Commis
sion, in order to better assure the respect of the
merit principle, exclusive autonomy over the
recruitment, selection, classification and advance
ment of public employees. The essential purpose of
the collective bargaining and the basic role of the
collective agreement are obviously the establish
ment of scales of rates of pay for each position, or
group of positions of the same occupational nature,
occupied by the members of the unit. The scales of
rates established in a collective agreement with
respect to the various positions occupied by the
members of the unit are binding on everyone con
cerned. For his services while occupying a position
in the unit, an employee is entitled to a remunera
tion at the rate that corresponds to his classifica
tion in the scale of rates established in the agree
ment for that position, and his right thereto is
absolute, no one having the authority to change it.
If this general description of the basic elements
of the legislative scheme introduced by Parliament
in 1967, is correct, I think the solution to the issue
we have to dispose of is immediately apparent. It is
clear that more than one scale of rates of pay at
any one time for one position in a bargaining unit
is unthinkable if the system is to remain workable.
So, while there is nothing to prevent the parties to
a collective agreement under section 54 of the
P.S.S.R. Act from giving retroactive effect to the
new rates of pay they establish for the positions
occupied by the employees of a certain bargaining
unit, the new rates will supersede the old ones and
will immediately become, for all purposes and for
everyone, the only rates applicable during the
retroactive period. Those who have occupied the
positions in the period of time covered can all
claim not having received the wages to which their
services entitled them according to the applicable
rates; and their claim is justified regardless of
where they are or what they do today.
Subsection 57(1) and section 58 of the P.S.S.R.
Act provide as follows:
57. (1) A collective agreement has effect in respect of a
bargaining unit on and from,
(a) where an effective date is specified, that day; and
(b) where no effective date is specified, the first day of the
month next following the month in which the agreement is
executed.
58. A collective agreement is, subject to and for the purposes
of this Act, binding on the employer, on the bargaining agent
that is a party thereto and its constituent elements, and on the
employees in the bargaining unit in respect of which the
bargaining agent has been certified, effective on and from the
day on and from which it has effect pursuant to subsection
57(1).
Counsel for the respondent would see in those
provisions a clear indication that the collective
agreement is meant to have effect only as regards
the employees who are still members of the bar
gaining unit at the date the agreement is signed.
This interpretation is obviously suggested by a
certain application of the traditional concept of
representation and leads to the implementation of
double sets of rates of pay for the same positions
during a certain period of time. I have just said
that, in my view, the concept of representation as
developed in the common law should be left out
here and the implementation of a double set of
rates for the same positions is impossible in princi
ple. Counsel's interpretation is, to me, unaccept
able. In my respectful opinion, the error consists in
taking the phrase "collective agreement" in sub
section 57(1) as referring to the agreement taken
as a whole. The expression, as I understand it,
applies to any autonomous part of the agreement.
Indeed, the "effective date", to be different from
the date of execution, as it is meant to be in the
spirit of the provision, can only concern the imple
mentation of the substance of the collective agree
ment, and in that respect, a collective agreement is
made up of several parts, each one consisting of a
particular agreement with its own substance the
implementation of which may be set at a particu
lar date.
My view, in short, is that the former employees
were definitely entitled to receive additional salary
payments on the basis of the new rates, not
because they were represented by the bargaining
union at the date of signing of the agreement or
because the intention of the parties therein was to
that effect. They were entitled simply because they
held positions for which the only rates of pay
applicable were those established by the new
contract.
The decision of the Board is therefore wrong
and ought to be set aside. The section 28 applica
tion should be granted, and the matter should be
referred back to the Board for reconsideration on
the basis that any individual who has performed
work as an employee during the retroactive period
is entitled to a remuneration calculated on the
basis of the new rates established retroactively.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.