Trust argued it wasn’t bound by any arbitration decisions
An employee, who worked for Kone Canada in British Columbia, was disabled for three years, but a dispute arose over who should cover his long-term disability (LTD) benefits.
Paul Schwagly was off work from Oct. 9, 2012, to Oct. 9, 2015, and was denied LTD payments. The union, International Union of Elevator Constructors (IUEC), Local 82 grieved the decision on May 23, 2013, after Sun Life Insurance refused to pay LTD benefits to Schwagly.
The grievance also named the National Elevator and Escalator Association (NEEA), which was an elevator industry representative body that included Kone and Otis, Schindler and Thyssenkrupp as members. All companies were parties to the Canadian Elevator Industry Welfare Plan, which was managed by an independent board of trustees, which was also part of the grievance.
Arbitrator Emily Burke, in a 2014 ruling, found that the welfare plan was incorporated into the collective agreement but she didn’t have jurisdiction to rule over Sun Life or the trustees.
That decision was eventually overturned by the B.C. Labour Relations Board.
Arbitrator Michael Fleming then heard the appeal and he ruled that the LTD plan was incorporated into the collective agreement.
However, another appeal to the board resulted in the current case to decide which party should be liable for the LTD benefits: the employer or the trustees.
The 1952 collective agreement said, under article 15: “The welfare plan covering life insurance, sickness and accident benefit and hospitalization, or any changes thereto that are in accordance with the Canadian Elevator Industry Plan and Declaration of Trust, shall be part of this agreement and be adopted by all parties signatory thereto.”
That part of the agreement remained “essentially unaltered” in subsequent agreements, said Fleming.
Kone argued that the trust had a fiduciary responsibility for the LTD payments to Schwagly, and not the employer. It said that the LTD plan was initiated into the trust in 1998 but was done under no participation from Kone and, therefore, the trust must make the payments to Schwagly.
The trustees argued that because they were not party to any collective bargaining, they were not bound by any arbitration decisions.
As well, the trust instituted the LTD plan as an insured one, which meant it was not liable for any payments.
The IUEC argued that despite handing off pay-out responsibility to the trust, the employer was ultimately responsible for any payments, such as the LTD.
Arbitrator Fleming agreed. “The LTD plan is incorporated into the collective agreement. Sun Life found (Schwagly) to be ineligible to receive LTD benefits. (Schwagly) is eligible to receive those benefits. Kone, as guarantor, is primarily responsible for the payment of those benefits in those circumstances. The trustees have refused to authorize payment of the LTD benefits to (Schwagly) from the trust. They are not parties to the collective agreement, nor are they agents. The collective agreement does not contain an express provision that LTD plan disputes are to be resolved by arbitration. The trustees have not expressly consented to be bound by arbitration. Kone, not the trustees, is responsible to pay the LTD benefits to (Schwagly).”
And all three parties were counselled by the arbitrator to address the issue to prevent further problems. “The welfare plan has operated for approximately 65 years on a multi-employer basis, apparently very successfully. The LTD plan had been in place for more than 15 years prior to this grievance. Given the particular nature of the industry as described by the employer in its submissions, the effects of a finding Kone is liable to pay (Schwagly’s) LTD benefits will be unsettling. That may well have implications for the successful operation of the LTD plan which will need to be addressed,” said Fleming.
Reference: Kone and National Elevator and Escalator Association and International Union of Elevator Constructors, Local 82. Michael Fleming — arbitrator. Sheila M. Tucker, Maggie Campbell, Mike Hamata for the employer. Theo Arsenault, Bennett Arsenault for the employee. Bruce Laughton for the trustees. Dec. 17, 2018. 2018 CarswellBC 3532
Paul Schwagly was off work from Oct. 9, 2012, to Oct. 9, 2015, and was denied LTD payments. The union, International Union of Elevator Constructors (IUEC), Local 82 grieved the decision on May 23, 2013, after Sun Life Insurance refused to pay LTD benefits to Schwagly.
The grievance also named the National Elevator and Escalator Association (NEEA), which was an elevator industry representative body that included Kone and Otis, Schindler and Thyssenkrupp as members. All companies were parties to the Canadian Elevator Industry Welfare Plan, which was managed by an independent board of trustees, which was also part of the grievance.
Arbitrator Emily Burke, in a 2014 ruling, found that the welfare plan was incorporated into the collective agreement but she didn’t have jurisdiction to rule over Sun Life or the trustees.
That decision was eventually overturned by the B.C. Labour Relations Board.
Arbitrator Michael Fleming then heard the appeal and he ruled that the LTD plan was incorporated into the collective agreement.
However, another appeal to the board resulted in the current case to decide which party should be liable for the LTD benefits: the employer or the trustees.
The 1952 collective agreement said, under article 15: “The welfare plan covering life insurance, sickness and accident benefit and hospitalization, or any changes thereto that are in accordance with the Canadian Elevator Industry Plan and Declaration of Trust, shall be part of this agreement and be adopted by all parties signatory thereto.”
That part of the agreement remained “essentially unaltered” in subsequent agreements, said Fleming.
Kone argued that the trust had a fiduciary responsibility for the LTD payments to Schwagly, and not the employer. It said that the LTD plan was initiated into the trust in 1998 but was done under no participation from Kone and, therefore, the trust must make the payments to Schwagly.
The trustees argued that because they were not party to any collective bargaining, they were not bound by any arbitration decisions.
As well, the trust instituted the LTD plan as an insured one, which meant it was not liable for any payments.
The IUEC argued that despite handing off pay-out responsibility to the trust, the employer was ultimately responsible for any payments, such as the LTD.
Arbitrator Fleming agreed. “The LTD plan is incorporated into the collective agreement. Sun Life found (Schwagly) to be ineligible to receive LTD benefits. (Schwagly) is eligible to receive those benefits. Kone, as guarantor, is primarily responsible for the payment of those benefits in those circumstances. The trustees have refused to authorize payment of the LTD benefits to (Schwagly) from the trust. They are not parties to the collective agreement, nor are they agents. The collective agreement does not contain an express provision that LTD plan disputes are to be resolved by arbitration. The trustees have not expressly consented to be bound by arbitration. Kone, not the trustees, is responsible to pay the LTD benefits to (Schwagly).”
And all three parties were counselled by the arbitrator to address the issue to prevent further problems. “The welfare plan has operated for approximately 65 years on a multi-employer basis, apparently very successfully. The LTD plan had been in place for more than 15 years prior to this grievance. Given the particular nature of the industry as described by the employer in its submissions, the effects of a finding Kone is liable to pay (Schwagly’s) LTD benefits will be unsettling. That may well have implications for the successful operation of the LTD plan which will need to be addressed,” said Fleming.
Reference: Kone and National Elevator and Escalator Association and International Union of Elevator Constructors, Local 82. Michael Fleming — arbitrator. Sheila M. Tucker, Maggie Campbell, Mike Hamata for the employer. Theo Arsenault, Bennett Arsenault for the employee. Bruce Laughton for the trustees. Dec. 17, 2018. 2018 CarswellBC 3532
