Union Obtains Landmark Decision on Ontario Health Premium

HRinfodesk---Canadian Payroll and Employment Law, October 2004

In an October 6, 2004 ruling that could set a precedent, a trade union obtained a landmark decision that collective agreements containing a dormant clause requiring payment of OHIP Health premiums require employers to fund the new Ontario Health Premium (OHP) that came into force July 1, 2004. This clause had been included in all collective agreements since 1980, and retained into agreements although the OHIP premiums had been discontinued since January 1990, in the event it was reintroduced.

The clause in the collective agreement in this particular case read as follows:

24.01 (a) The Employer agrees to pay 100% of the OHIP premiums for all full-time employees who are regularly scheduled to work seventy-five (75) hours in a bi-weekly pay period on a permanent base.

(b) The employer agrees to pay 50% of the OHIP premiums for all employees who work in excess of forty-eight hours but less than seventy-five (75) hours in a bi-weekly pay period on a permanent base. The employee shall pay 50% of the OHIP premiums through payroll deductions.

(c) To be eligible for (a) or (b) above, the employee must be the principle breadwinner in their family.

The employer’s argument was that the new premium (OHP) established by the Ontario government effective July 1, 2004 was a tax and not the long ago discontinued OHIP premium referred to in the collective agreement. Stating that Bill 106, the Budget Measures Act, tabled in the spring session of legislature, makes it clear that the OHP is a tax based on overall taxable income and implemented through the Income Tax Act.

The Union argued that the new premium meets the defining characteristic of a "premium" in that it is a flat rate (if graduated) amount payable to support health care, irrespective of its being collected through the tax system. It was argued by the Union lawyer that although the new premium “may be characterized as a form of taxation, not all taxation is in the form of premiums. Thus the issue is not whether this is a “tax” or a “premium” but whether it meets the definition of “premium” despite its being collected through the tax system…” The new premium, even if it is also a tax is going to fund the Ontario Health Insurance Plan.

Arbitrator Barrett rejected the employer’s argument that the new Ontario Health Premium (OHP) was really a tax and not a premium, and held that the employer was in breach of the collective agreement by failing to pay the required portion of the OHP for employees covered by the clause. The arbitrator concluded that he did not think that the fact that the premium is collected through the tax system robs it of its character as a premium. He further referred to the fact that: The Kirby Report on Health Care in Canada suggested that premiums based on income were an equitable way to fund health care and that collecting premiums through the tax system made sound administrative sense.

Arbitrator Barrett stated that in this case, the premium/tax is dedicated solely to funding OHIP and can fairly fit the wording of Article 24.01 of the collective agreement. The employer has an obligation under Article 24.01 of the collective agreement, and accordingly must comply and pay the new Ontario Health Premium on behalf of its employees.

The Union was represented by John Stout, from the law firm of Cavalluzzo Hayes Shilton Mcintyre & Cornish LLP Barristers & Solicitors. The transcript of the case is provided by their offices http://www.cavalluzzo.com/publications/Reference documents/Lapointe and UFCW Decision Sep 15 04.pdf.

Reference:

Lapointe Fisher Nursing Home & United Food and Commercial Workers Union, Local 175/633

By Yosie Saint-Cyr, Editor at HRinfodesk

Published on HRinfodesk---Canadian Payroll and Employment Law

HRinfodesk is a service that is published by First Reference which includes legislative updates, a Library of Articles, FAQs, a Calendar of Events, Important Dates and an HR Internet Directory for expanded research. Our search tools will help you to quickly find results by jurisdiction, topic, date and keyword.

First Reference is a publisher of Canadian employment law reference manuals that are comprehensive, updated and practical.

Publications include The Human Resources Advisor, Human Resources PolicyPro and the HRinfodesk Bulletin and website.

For more information or to purchase one of our publications, go to www.firstreference.com