A-672-79
Robert Bryden (Applicant)
v.
Canada Employment and Immigration Commis
sion (Respondent)
Court of Appeal, Urie and Ryan JJ. and MacKay
D.J.—Toronto, March 13 and June 23, 1980.
Judicial review — Unemployment insurance — Application
to review and set aside decision of the Umpire that a November
1977 payment to claimant was "vacation pay", and thus was
earnings pursuant to subs. 173(16) of Unemployment Insur
ance Regulations — Applicant's employer paid vacation pay to
trustees who were obliged to make payments out of the fund in
June and November each year — Applicant received such
payment after he had been laid off, and it was allocated to the
week in which and the week after it was received — Whether
vacation pay was paid when he actually received money in his
own hands or when employer made payments to trustees —
Application dismissed — Unemployment Insurance Regula
tions, SOR/55-392, as amended, ss. 172(1),(2)(a), 173(1),
(13),(14),(16),(18) — Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, s. 28.
Application to review and set aside the decision of the
Umpire that a November 1977 payment to claimant was
"vacation pay" as that term is used in section 173 of the
Unemployment Insurance Regulations, and thus was earnings
within subsection (16). Applicant's employer paid vacation pay
on behalf of employees to trustees who were obliged to make
payments out of the trust fund in June and November of each
year. Applicant received his vacation pay after he had been laid
off, and it was allocated pursuant to subsection 173(16) to the
week in which and the week after the sum was received, thus
adversely affecting his unemployment insurance benefits. The
issue is whether the vacation pay was paid to him when he
actually received the money in his own hands, or when the
employer made the payments to the trustees.
Held, the application is dismissed. The sums in question,
when paid by the employer, were paid to the trustees who took
legal title to them, which title they held for the benefit of the
applicant, who at once acquired a vested equitable interest.
Pending payment from the fund, no employee may require
payment out of the fund or may assign any interest he has in it.
The vacation pay was not paid to the applicant until it was paid
to him by the trustees. The payment made by the trustees to
the claimant constituted earnings, in the sense of vacation pay,
which were paid to the claimant after his lay-off had occurred
and were thus allocable under subsection (16) of section 173.
APPLICATION for judicial review.
COUNSEL:
Raymond Koskie, Q.C. for applicant.
B. Evernden for respondent.
SOLICITORS:
Robins and Partners, Toronto, for applicant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment
rendered in English by
RYAN J.: This is a section 28 application to
review and set aside the decision of an Umpire
under the Unemployment Insurance Act, 1971'
("the Act"). The decision, dated February 20,
1979, allowed an appeal by the respondent from
the decision of the Board of Referees, dated May
29, 1978, in favour of the applicant.
The application involves the interpretation of
section 173 of the Unemployment Insurance
Regulations 2 ("the Regulations"), and particular
ly its subsection (16). This subsection has to do
with the allocation of vacation pay paid to a
claimant after he has been laid off from work. The
applicant, Mr. Bryden, received such pay after he
had been laid off, and it was allocated pursuant to
subsection (16) to the week in which and the week
after the sum was received. His unemployment
insurance benefits thus were adversely affected. If
it had been allocated under subsection (18) 3 , as
the Board of Referees had decided it should be, his
benefits would not have been reduced.
' S.C. 1970-71-72, c. 48, as amended.
2 SOR/55-392, as amended by SOR/71-324 and SOR/77-
755.
3 Subsection 173(18) of the Regulations reads in part as
follows:
173... .
(18) Where a claimant has earnings to which subsections
(1) to (17) do not apply, those earnings shall be allocated,
(a) if they arise from the performance of services, to the
period in which the services were performed, ...
Mr. Bryden was a member of a labour union
("the Union"). The Union had a collective agree
ment with the Boilermakers Contractors Associa
tion ("the Association") of which the applicant's
employer was a member. The collective agreement
provided for the payment by the employers of
vacation pay to trustees on behalf of employees of
employers who were members of the Association.
Payment by an employer to the trustees on behalf
of an employee amounted to nine per cent of his
gross wages. As I understand it, both income tax
and unemployment insurance deductions were
made prior to transmitting the sums to the trus
tees. Payments were required to be made by the
trustees out of the trust fund to employees in
respect of whom the employer had made payment
to the trustees; these payments were required to be
made on or about June 15 and November 15 each
year.
Mr. Bryden had been laid off and was unem
ployed when he received his vacation pay from the
trustees on or about November 11, 1977. The
unemployment insurance officer allocated the pay
ment, $876.62, as earnings in the amounts of $509
to the week of November 6, 1977 and $268 to the
week of November 13, 1977. The amounts so
allocated were deducted from the unemployment
insurance benefits to which Mr. Bryden would
otherwise have been entitled.
The unemployment insurance officer had pur
ported to make the allocation pursuant to subsec
tion 173 (16) of the Regulations.
Subsections 173(13), (14) and (16) of the Regu
lations read in part as follows:
173. ...
(13) Holiday pay or vacation pay of a claimant shall be
allocated to such number of consecutive weeks, beginning with
the first week that is wholly or partly within his holiday period,
as will ensure that the claimant's earnings in each of those
weeks, except the last, are equal to the weekly rate of his
normal earnings from his employer or former employer.
(14) Notwithstanding subsection (13), holiday pay or vaca
tion pay, ...
(a) that is paid or payable to a claimant at the time of his
lay-off or separation from employment or prior thereto in
contemplation of the lay-off or separation, and
(b) that is not allocated to any specific weeks of holidays or
vacation that occurred prior to the lay-off or separation
shall be allocated to such number of consecutive weeks, begin
ning with the first week in which the lay-off or separation
occurs, as will ensure that the claimant's earnings in each of
those weeks, except the last, are equal to the weekly rate of his
normal earnings from his employer or former employer.
(16) Where the earnings described in subsections (9) and
(14) are paid after a claimant's lay-off or separation occurs and
have not been allocated pursuant to subsections (9), ... (13)
[or] (14) ..., those earnings shall be allocated to such number
of consecutive weeks, beginning with the week in which those
earnings are paid, as will ensure that the claimant's earnings in
each of those weeks, except the last, are equal to the weekly
rate of his normal earnings from his employer or former
employer. 4
The unemployment insurance officer was obvi
ously of the view that the money which Mr.
Bryden received on or about November 11, 1977
was vacation pay paid to him at that time. Accord
ingly he allocated it to the week it was received
and the following week, attributing it to each at
the weekly rates of his normal earnings from his
former employer.
The applicant's case is that the unemployment
insurance officer erred because (it was submitted)
the vacation pay was not paid to him when he
actually received the money in his own hands, but
when his employer, pursuant to the collective
agreement, made the payments to the trustees.
The trustees, he says, received the payments on his
behalf. Once paid to the trustees, his employer had
neither a legal nor an equitable interest in the
payments. So far as the employer was concerned,
he had fully discharged his duty in respect of
payment of wages under the collective agreement.
In the hands of the trustees, the moneys paid were,
it was argued, part of the trust fund in which, to
the extent of his share, Mr. Bryden had a vested
equitable interest which was bound to become
actual by mere passage of time.
I am of opinion that this submission is correct so
far as it goes. It remains to consider, however, the
precise time at which Mr. Bryden's vacation pay
(his "earnings") was paid to him.
4 Subsection (9) has to do with earnings paid or payable as
bonuses or wages in lieu of notice.
It seems to me that a rather more precise anal
ysis of what happened to Mr. Bryden's vacation
pay is this: The sums in question, when paid by the
employer, were paid to the trustees who took legal
title to them, which title they held for the benefit
of Mr. Bryden. Mr. Bryden at once acquired a
vested equitable interest. The sum paid to Mr.
Bryden on or about November 11, 1977 was paid
to him, not by his employer, but by the trustees.
He nevertheless received and was paid his vacation
pay at that time.
Support for this conclusion is, as I see it, to be
found in the terms of the trust instrument which
was executed in accordance with clause 21:02 of
the collective agreement. Article 21:00 of the col
lective agreement reads:
ARTICLE 21:00 - VACATION WITH PAY
21:01
Each employee shall receive a vacation allowance on his
gross wages in accordance with the appropriate Appendix,
which shall be included in his weekly pay except in the Province
of Ontario.
21:02
In the Province of Ontario, this allowance shall be remitted
monthly, by the 15th day of the following month, to a trust
fund to be set up and administered by the Union at its own
expense.
The Union will hold the Employer harmless from all liabili
ties and claims by employees, Union, or any other party, other
than for prompt payment into the fund as required in the
foregoing.
The trust instrument is headed "Boilermakers'
Vacation Pay Trust Fund—Ontario". The parties
to it are the International Brotherhood of Boiler-
makers, Shipbuilders, Blacksmiths, Forgers and
Helpers ("the Union") and J. Van Sickle, Stan
Petronski and M. P. Janigan ("the Trustees").
The preamble refers to article 21:00 of the
collective agreement. It recites that the collective
agreement provides for "the payment of vacation
pay into a trust fund on behalf of certain
employees of certain employers in Ontario". It also
recites that the collective agreement provides for
"the administration of the trust fund by the Union
at its own expense".
The trust instrument provides that the title to all
assets of the trust fund is vested in the trustees. It
also provides that the trustees agree to receive,
hold and administer the trust fund "for the pur
pose of providing vacation pay benefits".
The trustees are empowered to receive and hold
contributions to the fund and to take such steps,
including legal action, as the trustees consider
necessary or desirable to collect contributions. The
trustees also have power, in their discretion, to
invest the trust funds.
The trust instrument stipulates that income
earned from the trust fund must be applied, in the
first place, to the payment of reasonable and
necessary expenses; in the second place, to satisfy
claims by employees of individual employers who
have not received vacation pay owing to the failure
of such employers to make the required contribu
tions to the fund; and in the third place to establish
a reserve trust account; and any remaining income
must be dealt with in such ways as the trustees
determine.
It also provides that no interest of any kind in
the trust fund or any benefits or moneys payable
from the fund shall be subject to "sale, transfer,
assignment, encumbrance or any other anticipa
tion ...".
It is thus clear that, pending payment from the
fund, no employee may require payment out of the
fund or may assign any interest he has in it.
In my view, the vacation pay was not, for rele
vant purposes, paid to the applicant until it was
paid to him by the trustees. It is, of course, true
that the trustees were not his employers, but sec
tions 172 and 173 of the Regulations envisage as
allocable earnings income received by a claimant
from an employer or "any other person" as income
"arising out of any employment". I have in mind,
in particular, subsection 172(1), paragraph
172(2)(a), and subsection 173(1) of the Regula
tions:
172. (1) In this section,
(a) "income" means any pecuniary or non-pecuniary income
that is or will be received by a claimant from an employer or
any other person, and
(b) "employment" means
(i) any employment, whether insurable, not insurable or
excepted employment, under any express or implied con
tract of service or other contract of employment,
(A) whether or not services are or will be performed by
the claimant for any person, and
(B) whether or not income received by a claimant is
from a person other than the person for whom services
are or will be performed, and
(ii) any self-employment whether on the claimant's own
account or in partnership or co-adventure.
(2) Subject to this section, the earnings to be taken into
account for the purpose of determining whether an interruption
of earnings has occurred and the amount to be deducted from
benefits payable, under section 26, subsection 29(4) and sub
section 30(5) of the Act and for all other purposes related to
the payment of benefit under Part II of the Act, are
(a) the entire income of a claimant arising out of any
employment;
173. (1) The earnings of a claimant as determined under
section 172 shall be allocated to weeks in the manner described
in this section and for the purposes mentioned in subsection
172(2) shall be the earnings of the claimant for those weeks.
In my view, the payment made by the trustees to
the claimant on or about November 11, 1977
constituted earnings, in the sense of vacation pay,
which were paid to the claimant after his lay-off
had occurred and were thus allocable under sub
section (16) of section 173.
I would note that the decision of the Board of
Referees, which was reversed by the Umpire, was
that the November 1977 payment to the claimant
was not "vacation pay", but was a payment of
savings of the claimant which had been accumulat
ed from the sums paid out of his wages by the
employer to the trustees. The Board noted that the
moneys, when paid by the employer to the trustees,
"... had already been taxed for income tax ...
and also deductions for Unemployment Insurance
premiums had been made .... The interest off
these monies was used to defer expenses of the
Boilermakers' Union and the original amount is
not matched in any way by the employers ...".
The Umpire, however, found that the Novem-
ber, 1977 payment to the claimant was "vacation
pay" as that term is used in section 173 of the
Regulations, and thus in the circumstances was
earnings within subsection (16). After considering
the terms of the trust agreement, he said:
By Article 4 the Trustees are given complete control over and
wide powers of investment of the fund. The situation is not, as
was suggested at one point, the same as if the employer had
paid the 9 per cent for vacation pay, to the employee on each
pay day and the employee had then deposited it in a bank, for
in the latter case it would have been his own money to do what
he chose to do with it.
To my mind, the intention to collect and accumulate money
and pay it out at certain dates for vacation pay benefits is the
sole purpose of the trust agreements and that purpose is
intended to continue until each June 15 and November 15 rolls
around. At those times the amount due each employee will be
paid to him as vacation pay.
There is no doubt that the money paid in this case was income
arising out of his employment and earnings to be taken into
account for the purpose of determining whether an interruption
of earnings had occurred and the amount to be deducted from
benefits payable (Section 172(2) of the Regulations).
The situation we are dealing with fits exactly, into the provi
sions of subsection 16. The money was paid to the claimant
between November 4 and 15, 1977. His average weekly earn
ings had been $509.00. The Insurance Officer allocated
$509.00 to the week beginning November 6 and the balance to
the following week. Subsection (18) therefore is irrelevant, as it
is expressly applicable where subsections (1) to (17) do not
apply.
The only real dispute in this case has been whether the money
received by him in November 1977 was vacation pay or wheth
er it was really savings of his own money, having been convert
ed from vacation pay to savings when on successive pay days it
was paid to the Trustees. As indicated above, in my view, the
money continued to be vacation pay throughout.
I see no reason to disagree with the Umpire's
conclusion that "... the money continued to be
vacation pay throughout."
Counsel for the applicant did not, as I under
stood him, abandon the submission that the sum in
question constituted savings, not vacation pay. The
principal thrust of his argument before us was,
however, that, for relevant purposes, the claimant
had been paid the money which he received in
November, 1977—assuming it to have been vaca
tion pay—when his employer made the payments
to the trustees on his behalf.
I would dismiss the application.
* * *
URIE J.: I agree.
* * *
MACKAY D.J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.