An arbitrator has ordered New Brunswick Power to shorten the time employees must work after returning from leave before they can qualify for merit-based pay increases, ruling the company’s four-month requirement was excessive.
Arbitrator Michel Doucet found that while the utility had the right to set a minimum work period for performance evaluations, requiring four months was “unreasonable” compared to other timelines in the collective agreement.
“I find it perplexing that an employee returning from ‘maternity leave’ must undergo a four-month period before a ‘performance review’ is done, while an employee receiving an ‘unsatisfactory review’ only has to wait three months before their next evaluation,” Doucet wrote in his Jan. 3 award.
The case arose after NB Power changed its merit increase policy in February 2025. The company told employees they had to work at least four months within a performance assessment year to be eligible for step increases after any type of leave — including maternity, parental, compassionate, military or disability leaves.
The International Brotherhood of Electrical Workers, Local 37, filed a grievance challenging the new rule.
Performance review challenges
NB Power implemented the policy after supervisors said they struggled to evaluate employees who had been away from work for extended periods. The company also wanted to create more consistent procedures across departments.
The utility’s director of employee wellbeing and total rewards testified that NB Power selected four months based on an existing process requiring new hires to undergo reviews after four months.
The union argued the requirement violated the collective agreement, which states step increases “shall fall due” on employees’ anniversary dates. The agreement says increases may only be withheld “when upon review by the employer, satisfactory performance and progress are not shown.”
Workers who receive unsatisfactory reviews get placed on performance improvement plans with follow-up evaluations at three months and six months.
Management rights affirmed
Doucet ruled that step increases under the collective agreement are performance-based benefits, not automatic payments tied to length of service.
“An employee will only receive this benefit on his/her anniversary date if the employer determines that his/her work performance is ‘satisfactory,'” he wrote.
The arbitrator said NB Power had the right under its management rights clause to establish evaluation procedures for employees returning from leave. Evidence showed supervisors historically worked with the compensation team to determine eligibility based on performance reviews, and had denied increases in at least three cases over five years.
However, Doucet found no justification for the four-month threshold.
“Although it is within the employer’s management rights to impose a period for a ‘performance review’ for employees returning from a leave of absence, the ‘four-month requirement’ now in place is unreasonable,” he concluded.
He ordered the company to reduce the requirement to no more than three months and update all related documents.
No discrimination found
The union also argued the policy discriminated against employees on maternity leave, violating both the collective agreement and New Brunswick’s Human Rights Act.
Doucet disagreed, finding the appropriate comparison was between employees on different types of leave rather than between those on leave and those actively working.
“There is no evidence to suggest that, for the purposes of Article 8.03 (a) 2, employees on maternity leave are treated differently from other employees on leave,” he wrote. “Therefore, there is no evidence of discrimination.”
The arbitrator cited several precedents where tribunals ruled that policies applying equally to all forms of leave do not constitute sex-based discrimination, even if they affect women on maternity leave.
Implementation questions
NB Power had already granted exemptions to some employees before the arbitrator’s ruling. The company reviewed cases of workers who returned from maternity or parental leave in 2024 and 2025 and exempted them from the four-month requirement if they had not been told about the policy change before going on leave.
The utility employs about 10 staff in its compensation processing team, which handles all pay-related changes. The department experiences high turnover, with employees often viewing it as a stepping stone to other roles.
The arbitrator retained jurisdiction to resolve any disputes about implementing the decision.
The ruling highlights ongoing challenges employers face in evaluating workers who have been on extended leaves while ensuring policies comply with collective agreements and human rights protections.
See the full ruling here: International Brotherhood of Electrical Workers, Local 37 v New Brunswick Power Corporation, 2026 CanLII 23 (NB LA).
