Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of "governed by performance pay" under section A.2.2 of Appendix "A" to the Directive on Terms and Conditions of Employment was the central dispute.

• Whether the LP-02 salary position follows a lockstep pay progression versus a performance-based pay regime determined the applicant's salary step placement.

• The Board found that in-range performance increases of only 4.6% to 7% for LP-01 to LP-03 levels do not constitute being "governed" by performance pay.

• Reasonableness was the applicable standard of judicial review, requiring deference to the Board's interpretation of the collective agreement.

• Collective agreement interpretation falls within the "heartland" of the Board's expertise and Parliamentary mandate.

• No fatal flaw existed in the Board's reasoning or conclusion to warrant appellate intervention.

Background and facts of the case

Aditya Ramachandran, a lawyer covered by the LP collective agreement between the Treasury Board and the Association of Justice Counsel, filed a grievance after being promoted from the LP-01 to the LP-02 level. Upon promotion, the employer placed Ramachandran at step 1 of the LP-02 salary scale. Ramachandran contested this placement, claiming that he should have been placed at step 2 of that scale. His grievance centred on the interpretation to be given to section A.2.2 of Appendix "A" to the Directive on Terms and Conditions of Employment and alleged a breach of the management rights clause in the collective agreement. No objection was made as to the arbitrability of the grievance.

The central legal question

The relevant portion of the Directive raised the issue of whether the salary of the LP-02 position was "governed by performance pay." If it was, the applicant should have been placed at the second step of the LP-02 salary scale. If it was not, the employer was correct in placing him at the first step in that salary scale.

The Board's analysis and findings

The Federal Public Sector Labour Relations and Employment Board issued a decision in Ramachandran v. Treasury Board (Office of the Information Commissioner), 2024 FPSLREB 176, dismissing the grievance. In a thorough and carefully reasoned decision, the Board adequately dealt with the applicant's arguments and found that the LP-02 position was not governed by performance pay because Appendix "A" to the collective agreement sets out a lockstep pay progression for levels LP-00 to LP-03. The Board contrasted this to the pay progression system for those at the LP-04 and LP-05 levels, where salary progression is determined by a performance pay regime. The Board noted that for lawyers at the LP-01 to LP-03 levels, in-range increases to the job rate based on performance are equal to only an additional 4.6% to 7%. In reaching this conclusion, the Board interpreted "governed" as meaning "having predominant or determinative control over" and relied on case law and dictionary definitions in support of its interpretation.

Collective agreement provisions

Section 11 of Appendix "A" to the LP collective agreement provides that pay increments for lawyers at the LP-00, LP-01, LP-02, and LP-03 levels will be to the next higher rate on the applicable lockstep pay range. Additionally, section 4.1 of Part 2 of Appendix "B" to the LP collective agreement provides that in-range increases to the job rate based on performance range from 4.6% to 7% for the LP-01 to LP-03 levels. As such, the vast majority of the salary paid to those at the LP-02 level is not performance pay.

Standard of review and appellate analysis

The Federal Court of Appeal applied the reasonableness standard of review, as established in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. The Court owed deference to the Board's decision and could only set it aside if it was unreasonable. The Court found nothing unreasonable in the Board's decision, given the clear wording in Appendix "A" to the LP collective agreement and what it found was a reasonable interpretation of the words "governed by performance pay" in the Directive. This interpretation was amply supported by the dictionary definitions of "governed" and the case law the Board cited. The Board interpreted "governed" in accordance with its commonly accepted and ordinary meaning. The Court emphasized that collective agreement interpretation is the heartland of the Board's expertise and of the mandate Parliament has given to the Board. Under the reasonableness standard of review, the Court could not second guess the Board's interpretations and could only intervene if there was a fatal flaw in its reasoning or conclusion.

Ruling and outcome

The Federal Court of Appeal dismissed Ramachandran's application for judicial review, finding no such flaw in the Board's decision dismissing the applicant's grievance. The Court noted that before it, the applicant essentially sought to re-argue his case and have the Court find that the Board was wrong, which is not the Court's role. The application was dismissed without costs because the respondent, the Attorney General of Canada, abandoned its request for a costs award. The Attorney General of Canada was the successful party in this matter. No exact monetary amount was awarded or ordered, as the case concerned salary step placement interpretation rather than a specific sum.