Canada: Divisional Court Upholds Decision Requiring Unionized Employer to Pay Ontario Health Premium

Originally published in the Employment and Labour Relations Bulletin October 2005

In a somewhat controversial case, the Ontario Divisional Court recently upheld an arbitrator’s decision requiring an employer to pay the Ontario Health Premium on behalf of its employees.

In Lapointe-Fisher Nursing Home v. United Food and Commercial Workers International Union, Local 175/633, a three-judge panel of the Divisional Court found that the arbitrator’s decision was not "patently unreasonable" given the language of the collective agreement between the employer and the union.¹

While the Court did not expressly state that it agreed with the arbitrator in Lapointe-Fisher, its language certainly showed strong sympathy for her view, which until now has only been shared by a minority of arbitrators who have considered the issue.

The employer or the union can apply for judicial review of an arbitrator’s decision, but a Court will only intervene if it is of the opinion that the arbitrator’s interpretation of the collective agreement was patently unreasonable. Unlike an appeal, the Court’s role is limited to determining whether the arbitrator’s interpretation was reasonable given the language of the collective agreement. The Court may not agree with the arbitrator’s decision, but the court will not interfere unless the arbitrator was significantly mistaken in his or her interpretation.

Given this standard of review, the Court in Lapointe-Fisher did not find the arbitrator’s decision patently unreasonable. The collective agreement stated that the "Employer agrees to pay 100% of the O.H.I.P premiums for all full-time employees." This language, which originated when individuals were required to pay O.H.I.P. premiums, had remained in the collective agreement over several renewals notwithstanding the elimination of those premiums in 1989. When the new Ontario Health Premium came into effect in 2004, the union argued that the employer was responsible to pay it on behalf of its employees.

The Court relied heavily on another arbitration award, Ontario Power Generation Inc. and Power Workers’ Union, in which it was found that this type of "left-over" language was sufficient to ground the claim for payment of the current premium. The arbitrator in Ontario Power found that by not amending the language, the parties must have intended that if a similar type of premium was introduced in the future, it would be the employer’s responsibility to pay on behalf of individual employees.

The Court stated that such reasoning was "logical, reasonable and compelling," and given the similarities between the language of the collective agreements in the Ontario Power case and in Lapointe-Fisher, the Court found that the arbitrator’s decision was not patently unreasonable.

However, the Court engaged in very little analysis of its own, and while the Lapointe-Fisher decision may lend some support to a union’s claim that the employer is responsible for paying the premium on behalf of its employees, each case will turn on the language of the potential collective agreement in issue. It should be noted that a majority of arbitral decisions in this area have held that the employer is not liable to pay the Ontario Health Premium on behalf of its employees. Arbitrators have done so either by characterizing the Ontario Health Premium as a tax (which, it should be noted, appears to have been the intent of the government in enacting the Ontario Health Premium), or by disagreeing with the reasoning of the arbitrators in Ontario Power and Lapointe-Fisher. Generally, those arbitrators have held that while the parties intended that the employer pay O.H.I.P. premiums when the language was first inserted into the collective agreement, such language does not address any possible future premiums that might be imposed.

It is not certain that the Divisional Court’s decision in Lapointe-Fisher will constitute a binding precedent in these types of cases, given that the Court expressly stated that the arbitrator was "reasonable" as opposed to correct in her conclusion. However, it is a major cause for concern to employers who are parties to collective agreements containing provisions to the effect that the employer will pay any O.H.I.P. premiums. An employer can only hope that the employer will appeal the decision, though given the standard of review there is no guarantee that the Court of Appeal will reverse the decision. Ontario’s Provincial Government could fix the problem by amending the legislation that created the Ontario Health Premium if had the political will to do so.

If you have any questions about the Lapointe-Fisher case or the Ontario Health Premium, please do not hesitate to contact any member of the Employment & Labour Relations group.