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Trustee Report & Secretary-Treasurer Response Re Supplemental Pay

Air Canada Component Trustees’ Report & Recommendations:

Dear members,

In October 2018, two members contacted the Component Trustees to request assistance to look at the supplemental pay for the current Component President, Vice-President and Secretary-Treasurer as outlined in the Air Canada Component of CUPE (ACC) Bylaws. The members were concerned that standard and previous practices were not followed when determining the supplemental pay and that payouts such as vacation back pay or company settlements were used to justify increased supplemental pay amounts. After multiple discussions and back and forth emails with the Component Officers, the Component Trustees secured a date (January 17, 2019) to review the supplemental pay top up cheques as per the members’ requests. During our discussions, the Component Trustees also received a third email from a member concerned about this same issue.

The eligibility and amount of the supplemental pay is outlined in the ACC bylaws.

ACC Bylaws concerning supplemental pay for Component Officers:
In our ACC bylaws, under 6.1(k), 6.2 (e), 6.3 (s),
The Component President shall:
6.1 (k) In combination with any Company paid flight release, receive a supplementary payment from the Union, in order to receive a total monthly pay of one dollar ($1.00) more than the highest earner of the bargaining unit in that month.
The Component Vice-President shall:
6.2 (e) In combination with any Company paid flight release, receive a supplementary payment from the Union, in order to receive a total monthly pay equal to the highest earner of the bargaining unit in that month.
The Component Secretary-Treasurer shall:
6.3 (s) In combination with any Company paid flight release, receive a supplementary payment from the Union, in order to receive a total monthly pay equal to the highest earner of the bargaining unit in that month.
All Union officers continue to receive a paycheque from the employer, Air Canada, while they are working for the Union. The above-quoted bylaws are carried out through an additional paycheque written to the Component officers. The calculation and criteria for these additional supplemental paycheques is the focus of this review.

Process and Past Practice:
Prior to this term, the process to determine the Highest Earner (HE) was in place for many years. The Union bookkeeper and staff would determine the top 10 highest earners in the membership and the list would be sent to the Central Site Committee to be vetted according to criteria that had been determined through past practice. Central Site typically disqualified from consideration any illegally awarded flying, vacation payouts, any other payouts, and/or earnings associated with short/long term assignments and Leave of Absences.

January 2019 ACCEX Bulletin:
On January 10, 2019, ACCEX issued a bulletin that covered many of the concerns raised by the members who had contacted us. The ACCEX bulletin (click HERE for a copy) outlined the Component Officers’ explanation of the series of events leading up to the January ACCEX meeting. At this meeting, the Component President provided an interpretation regarding the criteria to be used for determining Highest Earner. The January 2019 interpretation reiterated the June 2017 interpretation while adding more specific exclusions. ACCEX further enshrined this interpretation by motioning it and applied it retroactively to February 2017, the beginning of the current administration’s term. All of ACCEX, except the Component Vice-President, voted in favour. When motioned, the understanding was clear that any amounts already paid out in excess of the January 2019 interpretation’s parameters would be returned to the Union.
On January 17 and 23, 2019, the Component Trustees convened to review the Component supplemental pay amounts, review the cheques, and investigate the members’ concerns.

When and How the Practice of Determining the Highest Earner changed:
In February 2017, the Central Site recommendation was not followed and the #1 Highest Earner was instead chosen to calculate supplemental pay. For the months of March and April 2017, Central Site was not included in the determination process. When asked, the Component Secretary-Treasurer said that he had indeed changed the process and had not checked to see if the #1 Highest Earner he used included pay that was not eligible in the past.

In June of 2017, the Central Site representative contacted the bookkeeper, Component Secretary-Treasurer and finally the Component President when she realized that Central Site’s oversight had been removed from the determination process.

On June 20, 2017, the Component President emailed an interpretation that past practice would be followed and Central Site would continue to send in their recommendations according to their vetting criteria. If Central Site had been permitted to review the Highest Earners for March and April they would have disqualified the Highest Earner on the list.
From May 2017 to January 2018, the Component Secretary-Treasurer used Central Site’s recommendations when determining the Highest Earner. This determination became contentious in five separate months when Central Site recommendations were not the highest grossing amount on the list.

In March 2018, there was an ACCEX meeting wherein the Component Vice-President demanded a new interpretation from the Component President. A new interpretation was not given. Discussions were centred on process and it was agreed that the Component Secretary-Treasurer would follow past practice, ask Central Site for their Highest Earner Recommendation and write cheques. The Component President agreed to include some specific short assignment (gate support) if minimum days off were respected. Following the meeting, the Component Secretary-Treasurer issued cheques representing backpay that would match the supplemental pay to the Highest Earner of the bargaining unit regardless of Central Site’s recommendations. From February 2017 to January 2018, there were five months where the supplemental pay amount was increased. There was no motion to authorize the retroactive compensation.

From February 2018 to November 2018, there were seven months where the Component Officers did not use Central Site’s recommendations and matched themselves to a higher earner. Although Central Site’s recommendations were not used, we did not see evidence of supplemental pay being matched to arbitration or similarly large payouts.

In January 2019, the process was reviewed at an ACCEX meeting, the Component President made a new interpretation and ACCEX enshrined it in a motion to be applied retroactively.

Many of the discrepancies between what Central Site chose and what was actually paid will be remedied by the retroactive motion. We recommend that a bulletin be issued to inform the membership when funds have been returned.

The bylaws regarding supplemental pay must be amended to reflect the criteria that has been in place for years to determine eligibility. Bylaw amendment suggestions have already been submitted to the Bylaw committee.

The minutes from the March 2018 ACCEX meeting caused much confusion. They were convoluted, contradictory and could not be relied upon as some used it as proof that a new interpretation had been given when it was stated that one had not. We recommend that greater care be given to writing clear minutes.

Financial Practices
Dual authority to release funds from Union bank account:
The Component Secretary-Treasurer instituted a new direct deposit payment system in April 2017. To replace the requirement of two signatures on a cheque in a paper-based system, every supplemental pay order was accompanied by an extra paper for Component officers to countersign their approval.

It came to the Component President’s attention in November 2018 that despite the internal process where two Component Officers would countersign their approval of the expense, the

Component Secretary-Treasurer had been authorizing payments from the Union’s bank account based on his sole approval.

On December 21, 2018, due to the Component President’s initiative, the vulnerability was rectified and the bank now requires two authorizations to release funds for a direct deposit.

It was noted that as the new direct deposit system was implemented there was an improvement in the process. In the beginning, amounts were not included on the accompanying authorization sheet so it was unclear how much was being approved for payment; this was later rectified. There were also multiple instances where authorization signatures were missing. Based on CUPE National’s recommendations, dual authorizations are required before payment can be processed.  We recommend that dual signatures and approved amounts continue to be applied for any payments.

There is no evidence of fraud or theft. This audit, however, has revealed several deficiencies in the bylaws, processes and the transparency of our financial policies. This experience has shown that strengthening bylaws through bylaw amendments and clearer enshrinement of process and practice is necessary. The current interpretation and retroactive motion will hopefully rectify past irregularities, enforce accountability to the members, and if followed through, will effectively provide remedy to the Union.

The Component Trustees thank the membership for their interest and patience regarding this issue. If “We are the Union”, then we are definitely better when we all contribute our views and concerns. We would also like to gratefully acknowledge the assistance we received from Central Site, the Component Officers, the Belfield staff and the CUPE National representatives.

In service to the membership,

Andrea de Verteuil, Joyce Nakanishi & Marc Roumy
Your Component Trustees

Secretary-Treasurer’s Response:

Hello Trustees,

Thank you for coming in over a two-day period to determine that there was no evidence of fraud or theft.

Please note that all of your recommendations will be passed on and will certainly be endorsed by myself.

I would like to add some clarity and corrections to some of your comments within the report.

Process and Practise
1.   The process and practise of the highest earner was established and in this term for two months, as mentioned, was not sent to Central Site until they raised the concern to the Component President. Both months, April and May 2017 were immediately sent to Central Site, who confirmed receipt of them.
2.  The highest earner cheques that went back retroactively were done following a discussion that took place at ACCEX in March 2018.  This was paid by cheque and not direct deposit and signed off by all officers.
3.  From February 2018 to November 2018, if a higher selection was made, it was to a special assignment member as agreed, and had been done in previous terms. It was also to include the president as the highest earner, as this had always been done in the past.   At the time of the audit November 2018 was the last month completed.

Financial Practices
1.  The Component has had direct deposit for many years, and prior to our term, only the bookkeeper had access to release funds and she did not require any approval to do so. When we came into office and changed over the banking, this service was also changed over to Meridian and instead of the bookkeeper processing payments it was the Secretary-Treasurer who did this as he was elected and responsible for finances.   When this was raised in December 2018 that there is no dual clearance, it was immediately changed to two officers for clearance. I instituted a system where we would sign off on “pink slips” for the approved payments and those would be attached to the payments for “approval”. There were two months where the pink slips were not signed by the Component President.  As we were not all in the office on days direct deposits went out, email threads were provided for the payments going out.   This again was 3 payments out of 66 payments. (22 months, 3 officers).  This was also solely for EFT payments and was a continuation of past practise at Component when it came to the wages of staff, and from there moved over to top up payments.
2.  There were a few months that the pink sheets were missing, with our bookkeeper at the time, we noticed many files had missing information, incorrect attachments and items not corresponding to the files. This was corrected in April 2018 but going back some files needed to be rebuilt. The pink sheet was changed to include financial information for ease, review and clarity, however the payment amount going to the officers was always attached to the packages.

I agree with the CUPE National recommendations, they are there to safe guard our money hence the adoption of the pink sheet this term.

We have further bylaws that discuss this being prepared, ACCEX strengthened it by removing special assignment from being eligible, and in the meantime, to strengthen the process the Component President has given an interpretation as well.

During this process the trustees were given access to all top up files from 2007 forward. In the process the Component Officers reviewed the information. The past determinations were often made by Central Site and then if changed, were done after the fact. The Component President always “qualified” as highest earner and special assignment was selected by Central Site in some occasions in the past.  This reiterates that we didn’t have a clear bylaw or documented clear practise moving us forward.

Again, thank you for your time in reviewing the books relating to the top up.

In solidarity,

Wesley Lesosky

Click HERE for a printable, and downloadable, version of this bulletin.