Entitlement of former employees to retroactive pay

Our new collective agreement includes a provision that workers are entitled to retroactive pay. Are workers who left the company before the new agreement was signed eligible for the retroactive pay?

Colin Gibson
Question: When we concluded the last round of collective bargaining with our union, we agreed to implement the wage increases retroactively, going back to the expiry date of the old collective agreement. The memorandum of agreement clearly states that only current employees are eligible for retroactive pay. Notwithstanding that provision, are we required to make retroactive payments to employees who left the company after the old collective agreement expired but before the new agreement was reached?

Answer: In this situation, the provision in your memorandum agreement should govern. As the exclusive bargaining agent for all employees in the bargaining unit, your union has agreed that only current employees are eligible for retroactive pay. As such, employees who left prior to the date of ratification do not have any right to claim retroactive wage payments.

A more difficult question relates to the rights of former employees to claim retroactive pay when the memorandum of agreement is silent on this issue. There are two competing lines of authority regarding such claims.

One line of authority stands for the proposition that wage increases contained in a new collective agreement cannot apply retroactively to former employees unless the memorandum of agreement specifically creates that entitlement. This position was set out in Re Air Canada and Canadian Air Line Flight Attendants’ Association (1981), 1 L.A.C. (3d) 37 (Brown), where the arbitrator concluded that former employees who left prior to ratification were paid properly under the collective agreement as it applied to them while they were working. Accordingly, nothing more was owed to them upon ratification of the new collective agreement. The arbitrator ruled monetary improvements such as increased pay can only accrue to the benefit of persons who are members of the bargaining unit at the time of ratification, because they are the only employees the union represents at that time.

The British Columbia Labour Relations Board set out a different approach in Re Penticton and District Retirement Service and Hospital Employees’ Union, Local 180, BCLRB No. 6/77. Under this approach, arbitrators start from the presumption that retroactive increases are applicable to former employees unless a contrary intention clearly appears in the memorandum of agreement. Arbitral preference for this latter approach was recently expressed in Re Kitchener-Waterloo Record v. CEP, Local 87-M, [2003] O.L.A.A. No. 302 (Brent).

Colin G.M. Gibson is a partner with Harris & Company in Vancouver. He can be reached at [email protected] or (604) 891-2212.

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