Arbitrator rules hospital must compensate pensioner rehired part time for benefits

An arbitrator has ruled that part-time employees who have returned to work after retiring and are receiving pension benefits from the Healthcare of Ontario Pension Plan aren’t “members” of the plan for the purpose of calculating their benefit entitlements if they choose not to re-enrol in the HOOPP on resuming service.

The upshot of arbitrator Christine Schmidt’s decision is that these employees were entitled to 14 per cent of their straight-time hourly rate for all straight-time hours worked in lieu of benefits, as opposed to the 10 per cent to which “members” were entitled under article 32.01 of the collective agreement.

“The decision reflects a case of simplistic drafting that didn’t fit the facts in the case at all,” says Jordan Fremont, a partner and pensions lawyer at Bennett Jones LLP.

The case originated when a part-time employee of Norfolk General Hospital in Simcoe, Ont. — and a member of the Service Employees International Union Local 1 — retired but then returned to the hospital as a part-time employee. On retirement, the employee, who had enrolled voluntarily in the HOOPP during her initial tenure, began receiving pension benefits and continued to receive them when she returned to work. However, she didn’t re-enrol in the plan when she returned on a part-time basis, nor did the hospital make contributions on her behalf.

Article 32.01 of the collective agreement states that part-time employees are entitled to receive 14 per cent of their straight-time hourly rate for all straight-time hours paid “in lieu of all health and welfare benefits and income protection plans and paid holidays.”

But it also allowed part-time employees “to enrol in the hospital’s pension plan when eligible,” and went on to say, “For part-time employees who are members of the pension plan, the percentage in lieu of benefits is ten per cent.”

The union argued that, read in context, the collective agreement reflected the fact that an employee who enrolled in the HOOPP received the advantage of the hospital’s contribution. Since the employee in this case didn’t receive that advantage, she was entitled to the 14 per cent in lieu of benefits.

The difference in percentage, according to the union, was to prevent “double-dipping,” which hadn’t occurred in this case because the hospital wasn’t making pension contributions.

The hospital’s position was that the collective agreement made it plain that an employee collecting a pension was a “member” of the HOOPP. And article 32.01 clearly provided that “members” were entitled to just 10 per cent in lieu of benefits.

The arbitrator sided with the union. “The hospital is entitled to pay such employees less of a percentage in lieu presumably because, as members of HOOPP, they are receiving something else of value from the hospital,” wrote Schmidt.

In this case, however, the employee hadn’t enrolled in the HOOPP on returning to work and, therefore, the hospital wasn’t making contributions to the pension plan on her behalf. Subsequently, she was receiving nothing in substitution for the four per cent that was attributable to the pension portion of the 14 per cent.

That couldn’t have been what the parties intended, concluded Schmidt. “When article 32.01 is read in its entirety within a labour relations context, it is clear that ‘part-time employees who are members of the pension plan’ means members of the pension plan for whom the hospital is matching the members’ contributions to the pension,” she wrote.

In that light, it was irrelevant that the employee was already receiving pension benefits based on her previous service and membership in the HOOPP.

“The key to this decision is the arbitrator’s reasoning that article 32.1 had to be read in the context of the collective agreement as a whole,” says Andrea Boctor, a pension law partner at Stikeman Elliott LLP.

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