History Behind Annual “Lump-sum Payment,” Part II

Annual Lump Sum
Bargaining Updates 2014
General Wage Increase
Professional Development Funds

While the parties have agreed on many issues there are a number of issues still in dispute. On some of these issues the parties are likely to engage in further discussion that might lead to resolution, others will have to be decided by an Arbitrator. Please note that any items agreed to at the bargaining table will not be implemented until the interest arbitration is complete. This is the twenty-third in a series of blog posts to discuss both the matters that have been agreed to and those that are still in dispute, and the fifteenth dealing with matters still in dispute.

In our previous blog we discussed how contingent productivity payments instituted in the 2004/06 bargaining round disappeared in the 2010/12 bargaining round. There were two such payments, one predicated on fundraising, which was converted into the annual lump-sum payment, and one predicated on Tri-Council research grants. The question remains, what happened to the contingent “research grant” productivity payments? These were payments, equal to 1% of “regular salary” that would be made in a lump sum at the end of the contract year, contingent on Tri-Council grant funding exceeding the preceding year’s by a certain amount.

The conversion of the contingent research grant payment into something that was not contingent was a complex problem. The condition had, at that time, only been met occasionally. Obtaining it in the future would require significantly increasing Tri-Council grants over time, which was an uncertain prospect. The Association concluded that the certainty equivalent of that uncertain occasional payment was no more than fifty cents on the dollar. In retrospect we believe that was the correct calculation. The University suggested that, rather than convert the 0.5% to an annual lump-sum payment, or a 0.5% general wage increase (GWI), it be converted into an increase in our annual Professional Development Funds. From our point of view that suggestion was attractive, but with some problems. First, since the contingent lump-sum payments, in the years they were paid, were calculated on the basis of regular salary, which increases with GWI, the total value of the payments increased as salaries increased to keep pace with inflation, and also as the membership grew. The Professional Development Fund payments only grow as the membership grows, but do not automatically increase in line with GWI, as the contingent productivity payments did. Second, all members got the productivity payments, but sessional lecturers without continuing appointments were not eligible for Professional Development, so the University’s proposal would, in effect, be a transfer from sessionals without continuing appointments to everybody else. Third, at the time, each year PD funds that were left unused for two years “disappeared” from member’s accounts, and were returned to the University. Despite these problems, we counter proposed a mechanism for transferring the contingent productivity payments into Professional Development Funds in a way that we felt maintained their value. Ultimately the University accepted our counter proposal.

First, we increased Professional Development Funds by $600 per eligible member from $500 to $1,100, and introduced PD for sessional lecturers without continuing appointments in the amount of $25 per credit taught.

Second, we increased the carry-over of PD funds from two years to five years to reduce wastage.

Third, we agreed that unused PD funds would not return to the University, but be placed in the pool of money used to pay Career Progress Increments (unused PD for sessional lecturers without continuing status was similarly recaptured, although in a different way). Career Progress Increments are part of base salary, and thus form part of the base upon which salary increases are calculated, which mitigates the fact that money that increases with GWI was being converted to money that did not increase with GWI. Further, the extra money that, under our proposal, gets paid into the Career Progress Pool is not just the unused amount from the $600 per person converted from the contingent productivity payment, but also unused amounts from the $500 per person that was already in existence, and that previously had been returned to the University. Again this mitigates the problem that PD funds do not increase with GWI, as the productivity payment did.

It is very unusual for a union to agree to take salary money that is subject to GWI and convert it into a fund that is not subject to GWI. In this case we felt that a) because we eliminated the contingent nature of the payment, b) because we met or exceeded our certainty equivalent valuation of the uncertain payment, and c) because of the specific changes we made to the PD Fund, we had found a way to make that transfer in a way that we thought provided increased value to the members. Looking back, we are still quite satisfied that we had at the very least preserved the total value of the old contingent productivity payments.

Next up on the blog: What Happens Now?

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