# 2011-093 - CF Policy on Remission of Debts, Component Transfer (CT), Overpayment, Pay
F&R Date: 2011–11–30
The grievor who was serving as a Corporal (Cpl) in the Reserve Force, transferred to the Regular Force as an officer at which time her pay was established at the rate of pay for an Officer Cadet (OCdt) pay increment (PI) 9. Some three years later, it was determined that OCdt PI 9 was the equivalent of a Sergeant PI 4 pay rate rather than that of a Cpl PI 4 which should have been her rate of pay on transfer. Her enrolment, transfer and posting (ETP) instruction message was amended accordingly, resulting in the grievor having been overpaid by an amount in excess of $10,000; the grievor was informed that this constituted a debt against the Crown which she had to repay.
The grievor took issue with this decision. She stated that the error caused a significant difference in her pay and that not only would she be required to pay back $300 per month for the next 36 months, but her monthly rate of pay had also been reduced by $206. This, in her opinion, amounted to financial hardship. As redress, the grievor requested that the Canadian Forces (CF) honour the original offer, that the amendment to her ETP message be cancelled and that any payments she has made be returned to her. In the alternative, she requested that the overpayment be written-off.
In a synopsis prepared for the initial authority (IA), it was indicated that although the grievor had not specifically mentioned the issue of contractual obligation, ETP and component transfer offers are not contracts. It was pointed out that the courts have affirmed that contract and labour laws do not apply to the relationship between a 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. As for the grievor's request that the debt be written-off, the synopsis indicated that the CF cannot write-off debts arising from pay as those debts are "collectible" from CF members.
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 noted that the IA admitted than an error had been committed and took issue with the IA's succinct conclusion that the grievor had not been denied any pay benefits to which she was entitled, had not suffered an injustice and that redress was not warranted. In the Board's opinion, the fact that the grievor had been offered a certain pay level which was considerably and retroactively reduced some 40 months later constituted an injustice. Notwithstanding that in the case at hand the Board agreed with the IA that employment-related debts cannot generally be written-off, it was the Board's position that the injustice could be redressed.
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 of both pay and benefits and that, although in some of these 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.
From a systemic point of view, the Board also recommended that the CDS direct that CF/DND policy on remission be formulated and publicized.
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 interfering 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 Personnel (CMP) that the grievor be appointed to the rank of MCpl and be considered enrolled in the University Training Plan Non Commissioned Member effective June 2006, and be paid as OCdt under CBI 204.211(10) (b), 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 correspondence that the Assistant Deputy Minister (Finance 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.
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