Yellow Pages to pay $117K for favouring ‘pension eligible’ staff for severance packages

An arbitrator has ordered Yellow Pages Group Co. to pay an employee $102,000 for breaching a collective agreement and an additional $15,000 for a Human Rights Code violation after finding the company discriminated against the worker when it refused to grant a voluntary severance package because of her relative youth and instead favoured older, “pension eligible” employees with fewer years of service.

“What’s unusual about this case is that there was direct evidence of discrimination,” says Craig Flood, managing partner and a labour lawyer at Koskie Minsky LLP in Toronto, who represented the union involved in the case. “Generally, findings of discrimination have to be teased out of the circumstances or gleaned from something systemic.”

When Yellow Pages Group Co. v. Unifor Local 6006 arose in November 2013, Usha Debideen was 54 years old. She had more than 35 years of service, making her the second-most senior employee at Yellow Pages’ office in Scarborough, Ont., where she worked as a customer service representative.

Read: How to avoid an age discrimination claim

In November 2013, the company embarked on a workforce reorganization, which necessitated the elimination of various jobs. Employees with five years or more of service were eligible for voluntary severance packages. The collective agreement stipulated that that packages were to be awarded in accordance with seniority, defined as “net credited service.” Debideen applied, but the company chose not to remove her position. Instead, it removed three other positions held by employees who had less service but were older than Debideen.

Debideen testified that her manager told her the company was “going with age seniority” as the sole reason for rejecting her application. Although the company denied that, arbitrator Gordon Luborsky accepted Debideen’s testimony.

Yellow Pages maintained it had the right not to declare Debideen’s position surplus under the “management rights” clause in the collective agreement, a provision that gave Yellow Pages the “exclusive right” to manage its business in all respects. But Luborsky noted the right to run the business as management saw fit wasn’t absolute.

Read: Economic council suggests backtrack on retirement age

“There is a presumption that managerial discretion conferred under a collective agreement shall be exercised in good faith; that all relevant factors must be taken into account; and that no extraneous or irrelevant matters will be considered,” he wrote.

At the hearing, the company asserted its legitimate need for the continuation of the griever’s position as she was the only senior customer service representative at her level with responsibilities for training, taking customers’ escalated complaints and dealing with inquiries from certain executive accounts. Luborsky, however, didn’t buy it.

“Having found that Ms. Norman’s statement to the griever on Dec. 5, 2013, was that the company was ‘going with age seniority’ as the sole reason for rejecting the grievor’s request for a [package], which is also consistent with its actual selection of employees to receive this benefit who were all over the age of 55 and thus eligible to immediately retire on an early pension, I must conclude that the company breached its underlying obligation to act fairly, reasonably and in good faith in the general administration of its managerial discretion,” he wrote.

Read: Assessing the prospects of retiree motion to wind up Sears pension plan

Flood says he’s not sure what Yellow Pages was thinking. “I don’t know if they were misguided throughout or simply wanted to save money by offering the [package] to older people who could retire immediately or to people who were on a lower wage grid,” he says.

Luborsky’s decision, Flood adds, isn’t a pronouncement that employers can’t run their businesses as they see fit. “Rather, the decision makes it clear that management rights are subject to the general law and residual arbitral review,” he says.

However that may be, Yellow Page’s actions were costly.

“I conclude that the company owes damages to the grievor of $102,144, less statutory deductions, but without a set off for any amounts paid by the company to the grievor on account of her employment during 2014, to place the grievor in the same position she would have been in but for the company’s contravention of the collective agreement,” wrote Luborsky.

Read: BCLC criticized for retirement payouts

Adding salt to the wound, the arbitrator added damages for the Human Rights Code violation.

“I have determined that an award to compensate the grievor for injury to her dignity, feelings and self-respect as a result of the company’s infringement of the Human Rights Code . . . including the aggravating factors arising out of the manner in which she was misled, in a sum equivalent to approximately 15 per cent of the restitution also owing to the grievor for breach of the collective agreement, is appropriate in all of the circumstances,” wrote Luborsky. “This results in an award of $15,000 to the grievor on account of general damages for the company’s breach of the code.”