Premium Rate Hours Don’t Trigger Overtime: Grievance

Unite Here, Local 47 v Horizon North, 2023 CanLII 46717 (AB GAA) (McFetridge) is a recent Alberta Grievance Arbitration Award whereby Horizon North employees filed a policy grievance against Horizon North, a week following the implementation of the Collective Agreement, challenging Horizon North’s interpretation of the overtime provisions.

Facts

The following are the pertinent facts summarized by Arbitrator William McFetridge:

• The grievors were all of Horizon North’s employees
• Pursuant to Article 8 of the Collective Agreement, employee work schedule was as follows:

ARTICLE 8 – HOURS OF LABOUR SHIFTS

8.1         An employee’s work week shall consist of the following: 1.Four (4) continuous ten (10) hour days Monday to Thursdayinclusive commencing Sunday midnight. No employee covered within the scope of this agreement shall be employed at straight time for more than:

(a)     ten (10) hours in any day

(b)   forty (40) hours in any one week 

This was referred to as straight time hours 

• On the week of September 6, 2021, the grievors worked a 10-hour shift on Labour Day Monday and worked 10 hour shifts from Thursday to Friday. In total the grievors worked 5,10-hour shifts
• Pursuant to the Collective Agreement, the grievors were to be paid premium rate hours on statutory holidays as stated in Article 13.04 of the Collective Agreement:

All work performed on statutory holidays, or days observed in place of statutory holidays, shall be paid for at double time (2X) in addition to the statutory and annual holiday pay as outlined above. On all occasions where an employee is required to work on a statutory holiday, there shall be no day off in lieu thereof

• Article 9.01 of the Collective Agreement states the following about overtime pay:

(a)Time and a half will be paid for all hours worked in excess of ten (10) hours per day as defined in Article 8.01(1).

(b) All hours worked after twelve (12) hours from the commencement of the shift shall be paid at double time (2X) the hourly rate.

• The grievors were paid and received the premium rate hours for the Labor Day shift. However, the grievors’ position was that they were entitled to overtime pay for the Friday shift, as this shift was in addition to straight time hours (regular Monday to Thursday shifts). In other words, the grievors argued they were entitled to overtime pay, as they had worked more than 40 hours that week
• The grievors further argued that Horizon North was required to apply the Collective Agreement fairly and reasonably pursuant to its Article 7.01, and failing to pay the grievors overtime was a violation of that section
• The employer disagreed. It considered the Labor Day shift as premium rate hours which did not fall within straight line hours.  Since the grievors did not work more than 40 straight line hours in a week, they were not entitled to overtime.
• The following were the three (3) main issues for the Arbitrator

1. Does the plain language of Articles 7, 8, 9 and 13 entitle members to overtime pay at 1.5 times their regular rate when they work 10 hours per day Monday to Friday in a week where they received double time for working a Statutory Holiday that is observed on a Monday?;
2. If there is ambiguity in the language of the Collective Agreement, would evidence of past practice support the interpretation urged by either party?; and
3. If the Union’s interpretation is accepted, is it estopped from relying upon strict interpretation of the relevant Articles?

Analysis / Conclusion

The Arbitrator noted the general principle of contractual interpretation as follows:

36 […] Discern intention of the parties from the written words. But the words must be read in their entire context, in their grammatical and ordinary sense, harmoniously with the scheme of the agreement and the intention of the parties

However, Arbitrators are able to consider evidence surrounding the circumstances of a contract when there is ambiguity:

 37 […] It is well accepted in labour law that arbitrators should consider evidence of the origin and purpose of the collective agreement, the nature of the relationship created by it and the industry in which the parties are operating when it considers the general context within which collective agreements are negotiated. For instance, from the early days of labour arbitration, it has been recognized that arbitrators should be aware of the labour relations context, and the elements of policy and statutory goals within which the collective agreement is formed.

The Arbitrator concluded that the Collective Agreement was not ambiguous and therefore there was no need to examine extrinsic evidence to determine the mutual intentions of the parties.  

The Arbitrator held that the grievors’ interpretation of the Collective Agreement was incorrect, because it was inconsistent with its plain language:

• The grievors inferred an entitlement to overtime pay when they worked more than 40 hours in a week, when the Collective Agreement specifically stated when they were to receive overtime pay;
• “Straight time” was not ambiguous despite not being defined in the Collective Agreement, as it was a term widely used in labour relations to mean the following:

1: the regularly established working time for employees during a standard period (such as a week) excluding time lost through absence or gained through overtime, 2: the rate of pay appliable for straight time work or as an adjustive 1: constituting or taking place in straight time or 2: constituting or fixed at a regular base rate per hour, day, week or month and excluding any overtime pay, merit, bonus, shift differential, or commission

• Article 8.01 of the Collective Agreement prohibited employees from working straight time for more than 40 hours per week, 10 hours per day; whereas Article 9.01 expressly stated when employees were to be paid overtime. Therefore, there was no ambiguity;
• The employer’s interpretation of the Collective Agreement resulted in a harmonious interpretation of the agreement, whereas the grievors’ interpretation would not result in a harmonious interpretation; and
• Had the parties intended for the employees to be paid overtime after 40 hours in a week, they would have done so, as employees’ entitlement to overtime and premium pay is an important promise made by an employer. Pursuant to principles of contractual interpretation it is a clause that would have been expressed by the parties clearly and unambiguously.

Altogether the Arbitrator held that the Collective Agreement clearly and ambiguously outlined when employees would be paid overtime, when they worked more than 10 hours in a day or 40 hours in a week at straight time. As such, the grievance was dismissed.

My Take

A collective agreement is a special kind of contract, but it is still a contract.  This case is a healthy reminder for contracting parties to not only ensure that they are on the same page when it comes to drafting contracts, but to also to contemplate the potential issues that may arise moving forward.  Otherwise, the contracting parties are at risk of the third party interpreting the contract for them, with results they may not expect.

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