School Board Update
Court Rules that Education Act Authorizes Payment of Post-Retirement Benefits to Retirees Over Age 65
Date: May 18, 2016
The Divisional Court has ruled that two school boards have authority under the Education Act (Act) to continue paying post-retirement benefits to retirees aged 65 or over, notwithstanding the argument of the Ministry of the Education (Ministry) and the school boards that the long-standing practice of the boards to pay these benefits was not authorized by the Act and therefore should be discontinued.
In this School Board Update, we discuss this decision, In the Matter of s. 10 of the Education Act.
For over 50 years and in accordance with their collective agreements, the Greater Essex County District School Board (GECDSB) and the Windsor-Essex Catholic District School Board (WECDSB) (collectively, the Boards) had been paying life insurance and health benefits to retired employees aged 65 or older. In 2013, the Ministry advised the Boards that this practice was not authorized by the Act. As a result, the Boards notified the affected retirees that benefits would end August 31, 2014.
Unifor Local 2457 represents custodial maintenance workers and office, clerical and technical workers of WECDSB. CUPE Local 27 represents custodial, building maintenance and preventative maintenance employees of GECDSB. Both unions brought policy grievances against the applicable Board, grieving the discontinuance of benefits.
The CUPE grievance resulted in an arbitrator’s award (Award). The arbitrator found that the payments were lawful under the Act and directed the GECDSB to continue making the payments further to the collective agreement. The Attorney General applied for judicial review of that Award. In December 2014 the Minister of Education (Minister) referred two questions on the issues raised in this grievance to Divisional Court (Stated Case). The Unifor grievance was placed on hold pending the outcome of these proceedings.
The Stated Case:
The Stated Case posed two questions:
- Do ss. 177(3) and 177(4) of the Education Act authorize a school board to pay for post-retirement benefits of the nature described in s. 177(1) of the Education Act on behalf of persons who have retired from employment with the board and have reached the age of 65?
- Does any other section of the Education Act authorize a school board to pay for post-retirement benefits of the nature described in s. 177(1) of the Education Act on behalf of persons who have retired from employment with the board and have reached the age of 65?
In the Matter of s. 10 of the Education Act: The Ruling of Divisional Court
The Court engaged in a detailed analysis of sections 177(3) and 177(4) of the Act and concluded that they only authorize post-retirement benefit payments to retirees under the age of 65, not to retirees aged 65 or older. The answer to the first question was “no”.
However, it found that other provisions of the Act authorize such payments and therefore the answer to the second question was “yes”. This School Board Update focuses on the analysis used to reach the conclusion on the second question.
The Minister had argued that nothing in the Act authorized payment of these benefits, and as well had outlined the significant costs to the Boards associated with the provision of the benefits.
The Court noted that the collective agreements between the applicable Board and Unifor/CUPE provided for payment of the post-retirement benefits over age 65. Regarding the cost of the benefits, it stated that these payments were a negotiated benefit: through collective agreement negotiations over the last 40 years, “all agreed that a portion of the wages those Boards were willing to pay current employees would be used to pay for life insurance and health benefits for retired employees.” The Court also referred to the “human side of the story”, citing examples of certain hardships existing retirees would face should the benefits be discontinued.
In its analysis of the relevant provisions of the Act, the Court made the following comments:
- The Labour Relations Act, 1995 confers on school boards the authority to enter into collective agreements and “to bargain in good faith and make every reasonable effort to make a collective agreement.”
- Statutes must be interpreted contextually and the provisions of the Act applicable in this case were drafted very broadly:
Sections 58.5(1) and 170(1)18 reflect a legislative intent that school boards not be limited in conducting their affairs to those functions that are specified in the Education Act. Rather, school boards should be free to act as modern, democratic, dynamic legal personalities, provided only that there be some statutory foundation for, and no express statutory prohibition of, their conduct. Should the Minister become concerned about a school board incurring a specific kind of liability, the Education Act can be amended to prohibit boards from doing so. [para 56]
- A board is permitted to pay “all money expended for school purposes”, and to pay “such other expenses for promoting the interests of the schools” as so authorized.
- Referencing a prior decision, the Court stated that the term “school purposes” must be interpreted liberally: the benefits in issue here were directly linked to a school purpose, e.g. “compensating … employees, including former employees, in compliance with a legally binding collective agreement.”
- Unless otherwise stated, the Act gives a board the power to appoint employees and “determine the terms on which such … servants … are to be employed, prescribe their duties and fix their salaries.” Therefore the Boards had the authority to agree to payment of the benefits for the retirees in question, who in turn had given up more immediate monetary benefits in their negotiated bargain with the employer.
- Nothing in the Act limits payment of benefits to only active employees nor is there an express prohibition of payment of these benefits to those retirees aged 65 or older.
Based upon this analysis, payment of post-retirement benefits to retirees aged 65 or older is permitted by the Act.
As a consequence of the finding in this Stated Case, the judicial review application of the Award was dismissed.
Implications of the Decision
As a result of this decision, it is now clear that it is permissible for school boards in Ontario to offer these types of benefits to retirees age 65 years and older.
It is also significant to note that courts will take a broad and contextual approach in interpreting statutes, particular where employment-related issues are raised. The courts will consider not only the wording of the particular provision in the “home statute” (in this case the Education Act), but also the Labour Relations Act, 1995 and any other related legislation, as well as taking into account the practical employment and labour-related consequences of a particular interpretation. Practically, if a court is faced with two competing interpretations of a statute, the courts will consider all the relevant circumstances to determine if there is a logical interpretation of the statute which allows the collective agreement to remain enforceable.
Should you have any questions about this decision or require further information, please contact Glenn P. Christie at 519.883.3125, Kathryn L. Meehan at 519.883.3120 or any member of our School Board practice group.
The article in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©