—._ A-275-74
Wolf W. Gruber (Appellant)
v.
The Queen, as represented by the President of the
Treasury Board (Respondent)
Court of Appeal, Jackett C.J., and Pratte and
Ryan JJ.—Ottawa, June 4, 1975.
Public service—Settlement bonus paid to public servant
under collective agreement—Excluded from salary in comput
ing amount of superannuation annuity—Public Service Staff
Relations Act, R.S.C. 1970, c. P-35, s. 58—Public Service
Superannuation Act, R.S.C. 1970, c. P-36, ss. 2(1), 10.
In a collective agreement, reached under the Public Service
Staff Relations Act, between the Treasury Board and the
Professional Institute of the Public Service of Canada, bargain
ing agent for a group of professional employees, provision was
made for a settlement bonus relating to duties and pay. As a
member of the group, the plaintiff received $3,600. No deduc
tions were made for contribution to the superannuation
account. On his retirement in 1972, the plaintiff was entitled to
an annuity under the Public Service Superannuation Act,
based on his average salary for a six-year period of pensionable
service chosen by him. The plaintiff selected the period 1966-
1972 and claimed that the amount of the settlement bonus paid
him in 1970 should be included in computing his salary for the
purpose of the superannuation annuity.
Held, allowing the appeal, a retroactive wage increase in the
Public Service is a bonus. The fact that it is authorized or
contracted for after the public servant has performed the
services for which he has been compensated does not make it
any less compensation for such services. The only justification
for paying an employee out of public monies is as compensation
for services rendered. There is no difference between a prospec
tive or a retroactive wage increase, and giving a fancy name to
a retroactive wage increase does not change the situation. As to
respondent's reliance on the reference under section 2(1) to the
"regular duties of the position", appellant apparently per
formed no duties other than his "regular duties" for which he
was paid the amounts in question.
Curran v. M.N.R. [1959] S.C.R. 850 and Fullerton v.
M.N.R. [1939] Ex.C.R. 13, discussed.
APPEAL.
COUNSEL:
M. W. Wright, Q.C., and L. Gilbert for
appellant.
R. G. Vincent for respondent.
SOLICITORS:
Soloway, Wright, Houston, Greenberg,
O'Grady and Morin, Ottawa, for appellant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment
delivered orally in English by
JACKETT C.J.: This is an appeal from a judg
ment of the Trial Division dismissing an action
for a declaration that certain amounts received by
the appellant represented "salary" for work per
formed by the appellant in the Public Service and
"is to be included as salary for purposes of com
puting the annuity to which he is entitled" under
the Public Service Superannuation Act. 2
The sole question involved in the appeal is
whether certain amounts received by the appellant
under a collective agreement are "salary" within
the meaning of that word as defined by that part
of section 2(1) of the Public Service Superannua-
tion Act that reads as follows:
"salary", as applied to the Public Service, means the compensa
tion received by the person in respect of whom the expression
is being applied for the performance of the regular duties of a
position or office, and, as applied to the regular force or the
Force, means the pay or pay and allowances, as the case may
be, applicable in the case of that person, as determined under
the Canadian Forces Superannuation Act or the Royal
[1974] 2 F.C. 384.
2 At trial, counsel agreed that, if such a declaration is made,
an accounting sought by the statement of claim would be
unnecessary as the parties would be able to calculate the
revised amount of superannuation payable to the appellant.
Canadian Mounted Police Superannuation Act; 3
By the collective agreement in question, which
was signed on behalf of the Government of
Canada and the respondent's union on November
4, 1969, it was agreed that, effective July 1, 1969,
rates of pay would be determined in accordance
with a table set out in Appendix "A-1" to the
agreement and that an employee such as the appel
lant was would be granted a "settlement bonus" of
7 per cent. of his rate or rates of pay during the
period July 1, 1967 to June 30, 1968 and 14.49 per
cent. of his rate or rates of pay during the period
July 1, 1968 to June 30, 1969 for each pay period
provided that during the pay period he received at
least 10 days' pay. In addition, for an employee
such' as the appellant was, there was provision in
the collective agreement for payment of a "lump
sum" equal to 2 3 / 4 per cent. of the rate that he was
receiving on July 1, 1969 for the period ending on
June 30, 1970.
By virtue of the collective agreement, the appel
lant received, as a result of the provision for the
"settlement bonus", $3,231.08, and, as a result of
the provision for a "lump sum", $412.64, in addi
tion to
(a) the retroactive element in the new, and pre
sumably increased, schedule of rates in respect
of the period from July 1, 1969 to the date of
the signing of the collective agreement on
November 4, 1969, and
3 It is true that, by virtue of section 10 of the Act, the factor
in the computation in which the word "salary" is used is "the
average annual salary received by the contributor during any
six-year period". This, however, in my view, means the average
salary (compensation) for the period determined on an "annu-
al" basis as opposed to a monthly or weekly basis. The word
"annual" is not used, as I read it, to indicate that the base is the
basic "annual" rate. I am supported in this view by paragraph
10 of the memorandum filed by the respondent in this Court,
which paragraph reads as follows:
10. The incorporation into s. 10 of the concept "annual
salary" requires that all payments to the Appellant, as
compensation for the performance of his regular duties be
totalled for the purpose of calculating the value of his
annuity. Irregular payments not paid as compensation for
performance of regular duties would not form part of the
annual salary.
Note that what counsel for the respondent says is excluded is
irregular payments "not paid as compensation for performance
of regular duties". (The underlining is mine.)
(b) the salary in respect of future services at the
new, and presumably increased, schedule of
rates.
The position taken on behalf of the government
is that those two special payments—i.e., the pay
ment of $3,231.08 and the payment of $412.64—
are not part of the "compensation received" by the
appellant "for the performance of the regular
duties" of his position in the Public Service and
are not, therefore, part of his "salary" within the
meaning of that word as defined by the Public
Service Superannuation Act. That position was
upheld by the learned Trial Judge. With respect, I
am unable to agree that it is correct.
In a strict analysis, as I view it, a retroactive
"wage" increase in the Public Service is a
"bonus". At the time when the public servant
performs the services required of him to discharge
the duties of his position, he is paid the salary
(compensation) for those services to which he is,
by law, entitled. When the wage rates are
increased retroactively, he is, in effect, given a
duly authorized extra amount or "bonus" in
respect of such services. The fact that such bonus
is authorized or contracted for after the event does
not make it any the less a payment (compensation)
for such services even though they have already
been rendered. Such payments are paid out of
monies appropriated for Public Service salaries
and the only justification for making a payment
out of public monies to the employee is as compen
sation for the services rendered by him to the
government. In my view, the position is no differ
ent because a retroactive payment is called some
special name such as "settlement bonus" or "lump
sum". What we are concerned with is the sub
stance of the matter and we must not let ourselves
be misled by the words used. (Compare Curran v.
M.N.R. 4 ) Nor, in my view, must we allow our
selves to be misled by the fact that a bonus is
called a "settlement" bonus. In my view, every
concession by one party towards the desires or
demands of the other is made with a view to
obtaining a "settlement". From this point of view,
I see no difference between a prospective or a
retroactive wage increase and, in my view, the
situation is not altered by giving a fancy name to a
4 [1959] S.C.R. 850.
retroactive wage increase. 5
The respondent relies on the words in the defini
tion of "salary" that refer to compensation for the
performance of "the regular duties" of a position. I
cannot see any facts in this case that bring these
words into play. As far as we know, the appellant
performed no duties other than the "regular
duties" of his position and the amounts in question
were paid to him for having performed those
duties.
In my view, the appeal should be allowed with
costs (both of the appeal and of the action in the
Trial Division) payable by the respondent to the
appellant, and it should be declared that the
amounts of $3,231.08 and $412.64 received by the
appellant under Article 20.02 and Article 20.08,
respectively, of the collective agreement between
the Treasury Board and the Professional Institute
of Canada re the "Engineering and Land Survey
(All Employees)" Group represented salary that
was paid to and received by the appellant for work
performed by him in the Public Service of Canada
and, is to be included in salary for purposes of
computing the annuity to which he is entitled
under the Public Service Superannuation Act.
* * *
PRATTE J. concurred.
* * *
RYAN J. concurred.
5I find no ambiguity here that warrants reference to èvi=
dence of what the parties thought the effect of the agreement
was in deciding the meaning of the Public Service Superannu-
ation Act. Compare Fullerton v. M.N.R. [1939] Ex.C.R. 13.
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.