12/11/2006

In a series of rulings, the Ontario Court of Appeal upheld the findings of labour arbitrators in cases related to the payment of the Ontario Health Premium (OHP).
Prior to 1990, a number of employers made Ontario Health Insurance Plan (OHIP) contributions on behalf of their employees. These arrangements were generally negotiated through collective agreements. Although employee OHIP contributions were eliminated in 1990 and replaced with an employer health payroll tax, some collective agreements retained provisions related to the payment of employee contributions in the event that OHIP is reinstated.

These provisions were brought into question with the introduction of the Ontario Health Premium (OHP) in 2004. The OHP was implemented through an amendment to the Income Tax Act. Described by the government as an “income-based premium”, the amount of the premium is based on the taxable income of the employee. Unions, however, have argued that the premium reawakened provisions in collective agreements relating to employers’ obligations to pay OHIP premiums on behalf of their employees. Some employers refused to pay the OHP, contending that it was in fact a tax, not a premium. Since the old collective agreements covered premiums only, they argued that the unions could not stretch them to apply to the new OHP.

This difference of opinion was embodied by the filing of several grievances. Some arbitrators agreed with the unions while others sided with the employers. Six of these cases were appealed and are now the subject of the rulings by the Ontario Court of Appeal.

Analysis:

In four of the six cases, arbitrators ruled in favour of unionized workers at the Toronto Transit Commission, National Steel Car, the Hamilton Fire Department and the Lapointe-Fisher Nursing Home in Guelph. In these cases, the arbitrators determined that the old OHIP premium was not fundamentally different from the new OHP tax/premium. The fact that collective agreements contained wording tied to Ontario health insurance costs was more important than the nature or purpose of the OHP.

In the other two cases, which involve academic and support staff at colleges of applied arts and technology, the arbitrators determined that the employers were not obligated to pay the premium on behalf of employees. In these cases, the arbitrators attached more significance to the wording of the individual collective agreements and ruled that the nature of the surcharge or its amount was not contemplated at the time of bargaining.

All six rulings illustrated the Court’s preference to uphold the decisions of labour arbitrators on questions related to the payment of the OHP. Reaffirming “patent unreasonableness”, the highest standard of review, the Court indicated that arbitrators’ rulings would not be overturned as long as decisions demonstrated logic. Discrepancies in arbitrators’ rulings illustrate systemic problems inherent in the current system of arbitration.

Many municipal collective agreements still contain language obliging the municipality to pay “OHIP Premiums” (or some variant of this), should they be reintroduced by the government. Municipalities should be aware of whether their existing collective agreement language may require them to pay the OHP on behalf of their employees. In anticipation of a possible request for such payment in upcoming negotiations, Councils may also wish to consider the development of a municipal strategy to ensure a consistent and equitable compensation structure for their workforces.

AMO will continue to monitor the situation. Members are asked to keep us informed of any local developments.