After electing early retirement over a layoff, a hospital worker grieved when the employer notified her that her last day of work would be two months earlier than the effective date of the layoff.
B.M. was a full-time Psychological Associate with 29 years’ service when she was informed that budget cuts necessitated reducing her position to half-time hours in order to save another position on the ward.
Notified by the employer on June 9, 2009 that her hours were to be reduced as of September 28, B.M. responded one week later to say that she had chosen early retirement instead. B.M. indicated that she understood that her last day would be September 28.
The employer responded in turn, accepting B.M.’s request for early retirement and informing her that her last day would be July 31.
The union grieved, seeking damages for lost wages.
Before the Arbitrator, the union said that early retirement is an option exercised by the employee and that it is up to the employee to set the date. The employer should not have the right to abbreviate the notice of layoff just because the employee decided to retire, the union said.
Voluntary option
Context was significant, the union said. Early retirement is meant to be an attractive, voluntary option — an incentive offered by the employer to induce some employees to retire so that others need not be laid-off. Acceptance of the offer, and the date of its effect, fell within the employee’s prerogative.
The employer disagreed. Once an employee had accepted the offer of early retirement, management was within its rights to determine when that early retirement would occur. There were no express provisions in the collective agreement to limit management’s rights in these circumstances. Moreover, if the purpose of the early retirement option was to lessen the need to make mandatory layoffs, then the retirement dates would have to precede the projected layoff dates, the employer said.
While the Layoff provisions in the collective agreement offered guidance on timing and the incentives available for resignation as an alternative to layoff, the agreement did not address early retirement options in a similar fashion, the Arbitrator noted.
“What, then, of the timing of the option to retire? There is no inducement that it occur early, as there is for the separation allowance on resignation. The Union says, in the absence of specifying when the retirement is to occur, it is effective from the date of layoff; the Employer says that it has the management right to set the date once the employee has made that election,” the Arbitrator said.
It was reasonable for the employer to want to know who had opted for early retirement soon after the layoff notice had been issued in order to rescind layoff notices where possible, the Arbitrator said. However, that did not affect the actual date of retirement. “Knowing at a relatively early date that some employees will accept retirement early does not imply that their retirement must occur at that early date. It could equally occur on the date of the projected layoff.”
No specific language
The Arbitrator agreed, in general, that in the absence of specific language, management rights entitle the employer to stipulate the date on which early retirement becomes effective. However, the employer is required to be transparent.
“With no clear date stipulated in the collective agreement for the early retirement option, the information the Employer conveys to the affected employee is important in determining the employee’s ‘last day of work.’ If the Employer inserts the effective date of the early retirement option, that would be the last day of work if the employee accepted that option. The Employer may stipulate the date of the early retirement, but it must do so before the employee makes the election. Otherwise, the employee would make their decision on an uncertain, or possible false, assumption.”
By not stipulating a different date from the date of layoff, the employer was bound by that date.
The grievance was allowed.
