Award Number 15-006

Individual Grievor
- and -
Leamington Police Services Board

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Award Date: 2015-11-05
Arbitrator: Trachuk, L.
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Municipality: Leamington
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Region: South West
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Classifications: Severance Pay, Severance Pay, Severance, Severance, Remedies
Grievor: Officer M
Appearances: J. Mauro, for Officer M, for the Association
S.M. Porter, for the Employer
Length of Award:18 pp
Collective Agreements Cit. Art. 8.02, 15 and 16.02
Statutory Cit. Police Services Act, s. 40

Summary


Severance Pay   Calculation - Uniform members - Section 40 arbitration - Quantum of severance owing to estate of deceased member - Severance agreement negotiated between association and board applied with modifications as necessary - Officer entitled to 1.25 months of severance pay per year of service, 12% in lieu of benefits, and vacation pay - Estate of officer not entitled to death benefit, pension contributions or sick leave payout - Supplementary award.

Severance Pay   Entitlement - Uniform members - Section 40 arbitration - Quantum of severance owing to estate of deceased member - Board’s obligation to pay severance did not cease with officer’s death - Supplementary award.

Severance   Uniform members - Section 40 arbitration - Quantum of severance owing to estate of deceased member - Severance agreement negotiated between association and board should be applied to officer - Severance agreement subject to modifications consistent with the fact that officer’s employment was terminated after disbandment - Supplementary award.

Severance   Entitlement - Uniform members - Section 40 arbitration - Quantum of severance owing to estate of deceased member - Board’s obligation to pay severance did not cease with officer’s death - Supplementary award.

Remedies   Damages - Duty to mitigate - Uniform members - Section 40 arbitration - Quantum of severance owing to estate of deceased member - Onus on board to demonstrate that officer failed to mitigate his losses - Severance agreement negotiated between board and association applied to officer with necessary modifications - Under severance agreement, terminated employees required only to apply to OPP - Officer not subject to any more demanding mitigation terms than other members - No requirement to mitigate lost salary - Alternatively, board failed to demonstrate that officer did not do so - Supplementary award.


Facts

Pursuant to s. 40 of the Police Services Act the arbitrator was appointed to determine the amount of severance payable to Officer M upon the disbandment of the Leamington Police Service. Officer M passed away on January 4, 2014. In an award dated September 30, 2014 [OPAC #14-011] the arbitrator issued orders with respect to production of documents and particulars. In an award dated January 20, 2015 [OPAC #15-001] the arbitrator found that Officer M had been terminated by the board on April 27, 2013 and that he was entitled to severance pay after that date. The board applied for judicial review and requested that the matter be adjourned pending the judicial review. In a decision dated February 9, 2015 the arbitrator denied that request. At the conclusion of the January 20, 2015 award the arbitrator found that Officer M was entitled to a severance package equivalent to that negotiated for other members of the service, and she requested submissions on how the package should be quantified and applied to Officer M. This supplementary award dealt with these issues of severance.

Argument

The estate of Officer M submitted that the board was obligated to continue providing benefits, including life insurance, during the severance period. The estate asserted that under the policy in effect at the date of disbandment, i.e. December 2010, Officer M was entitled to life insurance in the amount of 2X salary and the board was required to pay this benefit. The estate also argued that pursuant to the collective agreement, Officer M’s dependents were entitled to receive health and welfare benefits for the period of his service, 18 years. The estate challenged the board’s assertions that Officer M failed to mitigate his losses and that any severance payable would cease as of the date of his death. The estate also sought pension contributions from M’s date of termination, April 27, 2013 to the date of his death, as well as vacation pay and sick bank payout. The board pointed out that on April 26, 2013 it advised Officer M that his life insurance would cease and that he could assume the policy. The board offered contact information and initiated a new policy on his behalf. However, Officer M failed to follow through with the application and the board claimed that it was not required to pay his estate the death benefit. Alternatively, the new policy had a suicide-within-2-years exception which applied in this case. With respect to health and welfare benefits, the board submitted that Officer M was not entitled to any award for loss of those benefits. The board contended that Officer M failed to mitigate his losses. The board also contended that any severance payable ended with his death. Finally, the board denied that Officer M’s estate was entitled to pension contributions, vacation pay or sick leave payout.

Award #

As explained in previous awards in this matter, the arbitrator’s jurisdiction was limited to determining the appropriate severance payable to Officer M upon disbandment of the service. The arbitrator had no jurisdiction to remedy perceived wrongs which might have occurred during the term of M’s employment. With respect to life insurance, the board continued to pay premiums on behalf of M pursuant to the policy arranged under the collective agreement after the service was abolished. When the insurer advised the board in September 2012 that it could not continue M under the group policy, the board arranged an individual policy for him. One of the terms of that new policy was that no benefit would be payable if he took his life within two years of the commencement date. In accordance with the common law jurisprudence which informed severance assessments under s. 40 of the Police Services Act, an employer was not responsible for paying insurance benefits where a terminated employee had an opportunity to assume the policy and did not do so. Officer M agreed to the new policy but did not assume that policy. He could have remained insured but did not. Under the circumstances, the board was not required to pay his estate the equivalent of the death benefit. In any event, the terms of the new policy contained an exclusion for suicide. The collective agreement which contained the life insurance policy expired on December 31, 2010. Accordingly, the estate was not entitled to be paid the death benefit under either policy. With respect to health and welfare benefits, the severance agreement between the association and the board included continuation of benefits during the severance period for full-time members, and 12% in lieu for part-time members. It was not possible to retroactively provide benefits for Officer M and his dependents since the severance period had passed. However, the 12% in lieu negotiated for part-time members represented a reasonable percentage. Accordingly, the estate was entitled to 12% of the severance payment awarded for loss of salary in lieu of benefits. With respect to mitigation, the severance agreement did not require members to mitigate their losses other than to apply to the OPP. Officer M should be subject to no greater mitigation demands than other members. In fact, M twice applied to the OPP and was twice rejected. The onus was on the board to prove a failure to mitigate, and the board failed to do so. With respect to the board’s argument that its severance obligation ended with M’s death, there was no severance agreement frustrated by M’s death. The employment contract was breached when the board terminated him, and that breach gave rise to an obligation to pay severance. The board’s liability might have been reduced had M been able to mitigate his losses. However, he was not able to do so as there were no jobs available. Thus the board’s obligation to pay severance did not cease with his death. According to the terms of the severance agreement negotiated between the association and the board, members were entitled to 1.25 months’ salary per year of service. Given M’s 18 years of service, he was therefore entitled to 22.5 months’ severance pay. He was also entitled to the same vacation payment as other members, adapted to his date of termination. For 2014, that amount was 4/12ths of his entitlement or 69.3 hours. The severance package did not provide for continued pension contributions or payout of accrued sick leave. Therefore M was not entitled to claim either of those benefits. The total awarded for severance pay, 12% in lieu of benefits and vacation pay amounted to $173,227.82. The board was ordered to pay M’s estate this amount less applicable statutory deductions.

Authorities Cited

• A. Estate v. B.C. Rail Ltd., [1999] B.C.J. No. 2941 • Lee v. Bank of Nova Scotia, [2004] O.J. No. 3503 • Olguin v. Canac Kitchens, 2011 ONSC 1011 (CanLII) aff’d 2012 ONCA 61 • Pioro v. Callan Technology Services Ltd., 2000 CanLII 22362 (ONSC) • Re Sandy Bay Ojibway First Nation and MGEU (2012), 222 L.A.C. (4th) 435 (Deeley) • McMaster Estate v. Imark Corp., 2000 CanLII 22740 (ONSC) • Rickards (Estate of) v. Diebold Election Systems Inc., 2007 BCCA 246 (CanLII) • Carleton Place Police Services Board and Insp. Wayne Drummond (unreported, Oct. 7, 2003, Simmons, OPAC #03-013) • Temiskaming Shores Police Services Board and Chief Douglas H. Jelly (unreported, June 17, 2008, Snow, OPAC #08-006) • Dunning v. Royal Bank, 1996 CanLII 8159 (ONSC) • Point Edward Police Services Board and Point Edward Police Association (unreported, Sept. 21, 1999, Welling, OPAC #99-016)


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