Ontario Court of Appeal Finds Pay Equity Tribunal Unreasonable

  • June 13, 2021
  • Ed Montigny

ONTARIO NURSES ASSOCIATION v. PARTICIPATING NURSING HOMES, AND SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 1

2021 ONCA 148 (March 2021)

JUSTICES: STRATHY, BENOTTO, BROWN, HUSCROFT, ZARNETT

ON APPEAL FROM JUDGEMENT OF DIVISIONAL COURT                                              

(Justices Morawetz, Gordon and Backhouse)

PARTIES

PARTICPATING NURSING HOMES (PNH) – groups of employers that operate 143 for-profit nursing homes

ONTARIO NURSING ASSOCIATION (ONA) - bargaining power for approximately 2,100 registered nurses and allied health care professionals working at nursing homes

INTERVEENERS:

Added:  Attorney General’s Office (AGO) and Equal Pay Coalition.

ISSUES/BACKGROUND

What is the proper method to maintain pay equity

This case dealt with the Pay Equity Act (Act), which was intended to redress systemic gender discrimination in compensation experienced by those in female job classes.

The Act requires employers who are subject to the Act to establish and maintain compensation practices that provide pay equity in every establishment of the employer

The issue in dispute was the proper method of comparison to be used to maintain pay equity.

Three methods exist to achieve pay equity

  1. Job to job;
  2.  proportional value methods involve comparing the value/compensation relationship of female job classes to the value compensation relationship to male job classes within the employers establishment; and
  3. Proxy Method: In places without any male job classes the proxy method is used. This method involves comparing female job class in the seeking establishment (PHN) to a female job class at a proxy employer establishment (in this case, Municipal Homes for Aged) The proxy female job class is used, since it has already been comparted to a male job class within the proxy employer establishment - so it is the “deemed” male comparator.

Within the Nursing Homes Sector PHN took steps to establish pay equity compliant compensation in 1994 using the proxy method. This process was not finalized until 2005.

Unions now argue that PHN have failed to maintain pay equity compensation practices since 2005. They noted that scope of work increased and pay gaps re-emerged between PHN employees and those at Municipal Homes for the Aged doing comparable work.

While there was agreement that the proxy method was necessary to establish pay equity, the parties dispute whether the proxy method is to be used in ensuring that pay equity is maintained. The ONA argued that Municipal Homes for the Aged have increased pay because they have constant access to male comparators.

ONA argued that since PNH established pay equity via the proxy method they must use same process to maintain levels since otherwise pay disparities would emerge. The ONA also submitted that if the Act does not require use of the proxy method then the Act contravenes s. 15 of Charter.

The Participating Nursing Homes and AGO submitted that the proxy method is only used to establish pay equity – not to maintain it.

The dispute was brought before the Pay Equity Tribunal.

HISTORY

  1. PAY EQUITY TRIBUNAL

The Pay Equity Tribunal (Tribunal), following applications by ONA and the Service Employees’ Union (SEU) ruled that the proxy method did not need to used to maintain pay equity.  The Tribunal agreed with PNH that a maintenance method which requires only a one-time comparison with a female job class in a proxy establishment is reasonable.

The Tribunal found that:

  • The proxy method was ‘extraordinary,” and an ongoing requirement to obtain information from the proxy employer was a ‘substantial practical impediment”;
  • There was no obligation in the Act to use any specific method to maintain pay equity; and
  • it did not need to consider Charter values since there was no ambiguity in the statute.

The Tribunal set out a formula for maintaining pay equity that did not include a proxy method.

The matter was appealed to Divisional Court.

  1. DIVISIONAL COURT

The Divisional Court found the Tribunal decision to be unreasonable. 

The Court held that the proper interpretation of Act requires ongoing access to male comparators, as set out in the proxy method, to maintain pay equity.  The Divisional Court referred the matter back to the Tribunal instructing the Tribunal to establish processes to ensure access to ongoing male comparators.

The Court also found that while the Act does not contravene section 15 of the Charter, the Tribunal  erred in failing to consider Charter values, asserting that Charter values must be considered even in the absence of ambiguity in the statute, since administrative decision makers must balance the Charter values at play with the statutory objectives of the legislation in question.

The Divisional Court performed that analysis, finding that the Tribunal decision undermined the purpose and limited s. 15 of the Charter because it denied women in predominantly female workplaces the right to maintain pay equity (in the same manner as women within mixed workplaces) The comparison of male and female pay rates is the touchstone of pay equity .

The Court found that the proxy method was the only viable method to achieve the goals of the Act. They found that a proportional balancing of the Charter right of equality with the stated mandate of the Act, properly construed, requires the maintenance of pay equity in predominantly female workplaces through the proxy method of comparison.  The Court sent the matter back to the Tribunal to establish a proxy method process.

The Divisional Court found that when properly read and construed, the Act did not contravene the Charter

COURT OF APPEAL

The Court of Appeal was asked to review the decision.

The Court of Appeal agreed with the Divisional Court that the Tribunal decision was unreasonable. However, the Court of Appeal did not rely on Charter arguments.

The focus of the decision was on the reasonableness of the Tribunal’s decision.

The Court noted that:

  • the reasonableness analysis begins with Vavilov.
  • The tribunal’s governing statute is an important part of considering whether the tribunal decision was reasonable in light of the factual and legal constraints that bear on it.
  • The words of the statute must be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act
  • Administrative decisions must be consistent with principles of statutory interpretation and be compliant with the “rationale and purview of the statutory scheme under which it is adopted.”
  • A reviewing court is not interpreting the statute de novo, the focus is on the reasonableness of the tribunal decision.

The Court of Appeal found that the Tribunal’s finding that it is possible to maintain pay equity without continuing to access proxy data deprives woman in establishments without a male job class access to an on-going deemed male comparator and thus ignores the purpose, scheme, and plain wording of the Act.  

The Court stated that the Act is built upon the fundamental premise that in order to redress systemic gender discrimination in compensation there must be a comparison between male and female job classes.  The Act indicates that comparison to male job classes is the way to identify systemic discrimination. The Tribunal failed to consider this.  

The Court of Appeal also found that the distinction the Tribunal made between establishing pay equity and maintaining it was unreasonable and not grounded in the plain language of the scheme, which makes no such distinction. The Act uses “achieve” – not “establish”.

The Court found that the purposes of the Act include both establishing and maintaining pay equity. Methods outlined therefore are to be used not only to establish pay equity but also to maintain it. To not use the proxy method to maintain pay equity  would therefore undermine the purposes of the Act. Failing to use the proxy method would place barriers along the path to equal pay.

In conclusion, the Court outlined that pursuant to Vavilov, they must be satisfied that there are sufficiently serious shortcomings in the decision such that it cannot be said to exhibit the requisite degree of justification, intelligibility, and transparency.

The Court was satisfied that the Tribunal decision lacked justification. The decision was unreasonable given the text, context, scheme and purpose of the Act all make it clear that ongoing access to male comparators through the proxy method is required. Accordingly, the appeals and cross appeal were dismissed.

 

***************************

 

DISSENT (Justices HUSCROFT & STRATHY)

Two of the Panel prepared a dissent. Justices Huscroft and Strathy disagreed with the majority on two key issues.

  1. They found the Tribunal decision to be reasonable and
  2. They found that when conducting the reasonableness assessment, Charter Values are not to be employed if there is no ambiguity in the Statute.  

The dissent argued that:

  • the Act itself says nothing about how pay equity is to be maintained.
  • The majority decision does not actually assess whether the Tribunal’s decision would result in a failure to maintain pay equity; they find only that proxy method is the only way to maintain pay equity.
  • Courts should take care when deciding that there is only one reasonable interpretation of a complicated regulatory scheme such as pay equity.
  • The Tribunal decision was cogent, thorough, and makes sense of an extremely complex statutory scheme. The decision engaged the considerable expertise of the Tribunal and consequently the decision was entitled to a high degree of deference.
  • The reasonableness standard as outlined in Vavilov is an inherently deferential standard of review meant to ensure that courts interrvene in administrative matters only where it is truly necessary to do so in order to safeguard the legality, rationality, and fairness of the administrative process.  
  • They found  Charter values are relevant to statutory interpretation only when genuine ambiguity exists, asserting that to the extent Taylor-Baptiste says otherwise, it should not be followed.
  •  It was an error, therefore, to invoke Charter values so as to override the Tribunal decision.

 

Any article or other information or content expressed or made available in this Section is that of the respective author(s) and not of the OBA.