Canadian Pacific Kansas City (CPKC) Railway must compensate employees for paid personal leave days based on their actual average earnings rather than a minimum contractual rate, the Federal Court of Appeal has ruled in a decision that clarifies how employers should calculate wages for the statutory benefit.
The Jan. 8 ruling upheld a Canada Industrial Relations Board decision requiring the railway to pay a conductor $569.38 for a single day of personal leave in 2021 — nearly three times the $193.19 the company had initially provided based on what it called a “basic day” rate in the collective agreement.
At the heart of the case is how employers should interpret federal regulations that took effect in 2019, giving federally regulated workers up to five days of personal leave annually, with the first three paid if they’ve worked for at least three months.
The regulations specify that employees whose hours vary must be paid either the average of their daily earnings over the previous 20 workdays, or “an amount calculated by a method agreed on under or pursuant to a collective agreement.”
CPKC argued its collective agreement with the Teamsters Canada Rail Conference contained such a method: the “basic day” rate covering “100 miles or less, 8 hours or less” that had been used in the agreement for years and referenced in multiple articles.
But the Board found the basic day represented “a minimum payment and is paid in some limited circumstances” and “does not represent what the employee could have expected to earn under normal circumstances.”
The conductor in question worked on the spareboard, filling conductor and brakeperson vacancies with hours and earnings that varied daily depending on factors including which terminal he worked from, miles travelled and available allowances. His pay records showed he was paid the basic day rate only once in the 20 workdays before his personal leave — for deadheading, when he travelled between terminals without performing service.
Union witnesses testified that conductors were “rarely paid just a basic day,” while the railway’s estimate that 12 to 18 per cent of assignments received only the basic day rate was “not supported by any documentary evidence,” according to the ruling.
The railway argued the Board had improperly imposed a minimum payment requirement not found in the regulations. The court disagreed.
“The Board reasonably analyzed the text of section 17 and declined to add to the plain text of subsection 17(b) a requirement that a collective agreement must include a provision that relates to personal leave specifically,” the court stated.
The ruling emphasized that the personal leave provision “is essentially aimed at mitigating the financial consequences of an absence from work due to specific personal obligations.”
The court also noted the collective agreement was negotiated in April 2019, before the paid personal leave amendments took effect, and contained no specific provision addressing how to calculate wages for the new statutory benefit.
CPKC alternatively argued the Board should have applied the collective agreement’s bereavement leave calculation method, which provides payment of lost earnings exclusive of overtime. But the Board found the agreement contained varying provisions for different types of leave with no consistent calculation method, making it impossible to infer the parties intended one method to apply to personal leave.
The decision affects multiple similar cases between the railway and employees that were held in abeyance pending this ruling’s outcome.
The Federal Court of Appeal ordered the railway to pay $6,000 plus disbursements in costs to each respondent.
The ruling provides clarity for federally regulated employers navigating the relatively new personal leave entitlement, particularly those with collective agreements predating the 2019 amendments and workforces with variable hours and compensation structures.
