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Collective agreement, not software, drives employee entitlements

collective agreementSoftware limitations and accounting procedures cannot restrict employee entitlements under a collective agreement. This seemingly obvious proposition was contested recently in a grievance (the “Grievance”) between the Government of the Northwest Territories (“GNWT”) and the Union of Northern Workers (the “Union”). (See Northwest Territories Government v Union of Northern Workers, 2016 CanLII 82442 (AB GAA)).

The grievance

GNWT employees earn and bank sick and special leave credits, depending on the number of hours which they work (the “Banks”). The GNWT uses the PeopleSoft software to process payroll and generate records, including T4s; and maintain benefit entitlements and data for the Banks, pensions, seniority and other purposes. PeopleSoft also performs accounting functions, including allocating employee costs to business units for budgeting and other operational reasons.

GNWT employees work in various institutions, boards, facilities or other workplaces, and it may appear that each of these workplaces is a separate employer. However, the GNWT was the sole employer and there was only one collective agreement covering all the workplaces. Employees could move from one workplace to another consecutively or could provide service to multiple workplaces concurrently.

Each employee has a single unique PeopleSoft profile. But within this unique profile an employee who provides services to multiple workplaces concurrently would have multiple distinct sub-profiles or data subsets, each of which is described as a Record. For example, an employee who has three jobs at Workplaces A, B and C, has one master profile and three Records—Record 0, Record 1 and Record 2. Each of these Records reflects the payroll and employment data associated with a single workplace. The PeopleSoft silos meant that an employee could not draw down on a Bank in one Record while working in a position associated with a different Record.

The employee in this Grievance worked concurrently in two workplaces. She did relief work at Workplace B without interrupting her regular employment at Workplace A. She had special credits in her Bank at Workplace A, but none in her Bank at Workplace B. Because the Banks are siloed, she could not draw down on credits in her Record for Workplace A, for shifts at Workplace B. She filed a Grievance because she could not transfer her Banks between Records so that she could access her credits regardless of where she was working.

The GNWT advanced several reasons for its siloed approach, including the following:

  1. The collective agreement allowed employees to hold concurrent jobs but did not expressly permit the stacking of Banks into a “superbank”. Because the collective agreement was silent on this issue, it could only be resolved through changes at the collective bargaining table.
  2. The benefits specialist explained that the GNWT had to maintain separate Records to calculate pension benefits accurately, because the role associated with each Record could affect pension entitlements differently.
  3. The Manager of Operations for the Department of Finance-Employee Shared Services gave evidence about the GNWT’s data management practices. She explained that data related to a new but concurrent employment within the GNWT could not be added to an existing PeopleSoft Record, hence the need to create a new Record. She reiterated that each of the employee’s roles may have differing benefit entitlements and obligations, for example with respect to union dues, so separate Records were necessary. She also explained that PeopleSoft could not automatically transfer Banks between Records; the GNWT would have to do this manually.
  4. The Manager of Advice and Adjudication for Labour Relations and Human Resources testified that it was important to silo benefits into separate Records because of the fiscal responsibility and operating requirements of each department. He testified that it would be inappropriate if an employee Banked credits at a certain rate in one position but was able to access these Banked credits in a position where they were paid at a much higher rate.

The Union argued that the separation of Banks into silos or Records was artificial and contrary to the collective agreement. Moreover, the Union argued, this practice was driven by accounting procedures and PeopleSoft’s need to allocate costs to various departments. The Union’s position was that this administrative convenience denied employees the use of Banks which their collective agreement provided.

The ruling

The arbitrator allowed the Grievance. He held that outside of certain express restrictions, the collective agreement did not contain any limitations on the drawing down of Banks. He also found that nothing in the collective agreement supports the use of separate Records although this is clearly necessary for other business purposes, particularly the calculation of pension benefits. He explained that what is a necessity for one entitlement prescribed by external legislation (that is, pension legislation) does not translate into applicability for a different entitlement, particularly where the collective agreement sets eligibility. He concluded that it was the terms of the collective agreement which drove entitlements, not PeopleSoft—noting that although PeopleSoft could not transfer Banks automatically, the GNWT could do this manually.

The takeaways

This Grievance reminds employers that business requirements and software limitations cannot restrict employees’ entitlement to whatever the collective agreement grants them. Beyond that, there are lessons related to software acquisitions. Legislative, accounting, contract and other operational needs often drive software specifications. Given the multiplicity of user groups and requirements which IT systems must satisfy, user requirements may conflict. Faced with limitations in software capabilities, cost or other factors, organizations may need to prioritize and choose which requirements to satisfy.

Consequently, organizations must carefully and proactively determine user requirements and document them with great specificity when designing or evaluating software options. Failure to do this may lead to breaches of collective agreements, as above, and may necessitate costly modifications to existing systems, the building of new software interfaces, manual instead of automated procedures, or other workarounds. All of the foregoing are alternatives which the GNWT could have considered as a way to achieve compliance with the collective agreement while satisfying business needs.

Policies and procedures are essential to managing payroll and compensation, but the work required to create and maintain them can seem daunting. Information Technology PolicyPro, Not-for-Profit PolicyPro and Finance and Accounting PolicyPro, co-published by First Reference and Chartered Professional Accountants Canada (CPA Canada) contain sample policies, procedures and other documents, plus authoritative commentary in the areas of finance, corporate governance and administration, human resources and marketing to save you time and effort in establishing and updating your internal controls.

Apolone Gentles, JD, CPA,CGA, FCCA, Bsc (Hons)

Apolone Gentles is a CPA,CGA and Ontario lawyer and editor with over 20 years of business experience. Apolone is leveraging 20 years of business and accounting experience to build a commercial litigation practice with an emphasis on construction law. She has held senior leadership roles in non-profit organizations, leading finance, human resources, information technology and facilities teams. She has also held senior roles in audit and assurance services at a “Big Four” audit firm. Apolone has also lectured in Auditing, Economics and Business at post-secondary schools. Read more here

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