# 2011-091 Pay and Benefits, Component Transfer (CT), Overpayment, Pay, Remission

Case Summary

F&R Date: 2011–11–30

The grievor who was serving as a Master Seaman (MS) in the Reserve Force, transferred to the Regular Force as an officer. Her pay was established at the rate of pay for an Officer Cadet pay increment (PI) 9. Some three years later, it was determined that the pay rate assigned on transfer was equivalent to that of a Petty Officer 2nd Class (PO2) PI 4 rather than that of a MS PI 4. The grievor's enrolment, transfer and posting (ETP) instruction message was amended accordingly, resulting in her having been overpaid by an amount in excess of $5,000; the grievor was informed that this constituted a debt against the Crown which she had to repay.

The grievor took issue with the decision and submitted a grievance. She stated that in addition to having to disburse what she considered a substantial amount on a monthly basis for some time to come, she was being paid $216 less monthly than she would have been had the original ETP offer stood. She indicated that she had done research at the time of her transfer and nothing in the original offer appeared to be out of line based on the information given to her. She added that she had upheld her part of the agreed upon terms and requested as redress, that the terms of her original ETP instruction be restored.

In a synopsis prepared for the initial authority (IA), it was indicated that ETP and component transfer offers are not contracts and that contract and labour laws do not apply to the relationship between a Canadian Forces (CF) member and the Crown. It was also noted that according to current CF policy, if an error is made in the determination of a member's pay, that error must be corrected because members must be paid at the rate to which they are entitled. The synopsis also indicated that the CF cannot waive or write-off debts arising from pay as those debts are "collectible" from CF members.

In his decision, the IA explained that at the time of her transfer, the grievor had been paid at the rate of pay for a PO2, not that of a MS and found that the grievor's correct rate of pay should have been that of a MS PI 4.

On the issue of contract, the Board recognized that the relationship between CF members and the Crown is not contractual in nature; however, the Board indicated that although the often-cited Gallant case does shield the Crown from the civil remedy of breach of contract, it does not mean the Crown should not honour its commitments or deny relief in the grievance process.

The Board added that this case was but the latest example in a category that is all too large, involving serious errors on the part of CF "experts" resulting in overpayments to members. Often, as in the case at hand, the errors go undetected for long periods; the amounts overpaid mount up, sometimes to very high levels and CF authorities then belatedly demand repayment. The Board recognized the fact there is no relief within the grievance system in cases of negligent representation and administrative error, and given the compelling facts of this case, was left with considering the possibility of remission of debt.

The Board acknowledged that an error in pay occurred; however, the Board carried out a careful review of the statutory and regulatory structure relating to the remission of debts owing to the Crown, and also of recent CF history relating to remission. The Board noted that it sees a considerable number of grievances relating to overpayment and that, although in some cases, the debt might qualify for and be deserving of remission, this avenue of redress appears not to be available to CF members. In the Board's opinion, the CF position on this subject is incorrect, inconsistent with the provisions of the Financial Administration Act, based on misinterpretation of Treasury Board (TB) direction, and prejudicial to CF members.

The Board noted that it is of some significance that, in 2004, in two grievance cases, the Chief of the Defence Staff (CDS) of the day concluded that seeking remission of the debt was the appropriate remedy. However, although the CDS directed that a submission be made to the Governor in Council (GIC) with the recommendation of TB to seek remission of the debt, TB staff did not support the request based on the fact that the grievors in question did not meet the "stringent criteria" required for remission and, consequently, no formal submissions were made to the TB Ministers or the GIC.

The Board recognized that, regrettably, there is no CF policy on debt remission; the Board indicated, however, that some federal government departments have well-developed policies on remission that specify what is required in terms of substantiation in order to recommend to the appropriate Minister that the case be forwarded to the TB Ministers for consideration. The Board mentioned the policy on remission of debt used by the Canada Revenue Agency as an example and proposed to apply the criteria set out in its guidelines (extreme hardship, incorrect action or advice, financial setback coupled with extenuating circumstances, and unintended use of the legislation) to the case at hand. The Board stressed that, in considering the criteria, it would not be necessary for the grievor to meet every one; meeting just one of the elaborated criteria could be enough to find that the debt should be remitted.

The Board found that, in the circumstances, it would be unreasonable and unjust to collect this debt from the grievor or from the other CF members who were given incorrect pay rates upon component transfer.

The Board recommended to the CDS that the grievance be upheld.

The Board recommended that the CDS direct department authorities to prepare a submission to be forwarded to TB recommending remission of the grievor's debt and that all other CF members similarly situated to this grievor should likewise have their cases put forward. The Board further recommended that recovery be ceased until a decision is made by the GIC.

CDS Decision Summary

CDS Decision Date: 2013–02–28

The CDS partially agreed with the Board's recommendation that the grievance be upheld, considering that internal mechanisms under his authority enabled him to repair the errors made in the overall management of this case. Therefore, the CDS did not direct that a submission be forwarded to TB for remission of the grievor's debt.

The CDS found that the original ETP instruction appropriately determined the grievor's pay rate upon CT and enrolment in the ROTP in June 2006 as per CBI 204.211(10) b), Table A level D. Although this Table was repealed with a retroactive effect to April 2006, the CDS applied the Interpretation Act and the presumption against interferring with vested rights: he concluded that the grievor was entitled to the pay rate of the Table effective when she enrolled. However, the CDS wrote that he did not have the authority to reinstate the subject Table. The CDS determined that the grievor was given the wrong pay rate because the central computerized pay system was not properly aligned.

In order to provide relief to the grievor from the undue hardship, the CDS directed, amongst others, the Chief - Military Personel (CMP) that the grievor be enrolled in the University Training Plan Non Commissioned Member effective June 2006, a more suitable option to recognize the grievor's former service, that she be commissioned to the rank of 2Lt with immediate promotion to Lt under CFAO 11-6 Annex 6 and paid under CBI 204.211 (4b)Table C level D and 204.04(3b), and that she be granted two additional Lt IPC, the day following commission.

The CDS endorsed the Board's systemic recommendation by asking in a separate correspondance that the Associate Deputy Minister (Financial and Corporate Services) review the Board's report and provide advice on a departmental process to leverage the provision of the FAA on remission as a remedy for the FA in the CF grievance system. The CDS also directed CMP to take proactive measures to administratively review and resolve the cases of several other CF members that were treated similarly to the grievor upon CT during the period 1 April 2006 to 30 November 2006.