Smith v Hayes Albion – 4.27

Smith v Hayes Albion
Digest no. 4.27

Section 48

Cite as: Smith v Hayes Albion, 214 Mich App 82 (1995); lv den 453 Mich 912 (1996).

Appeal pending: No
Claimant: Bernard Smith, et al.
Employer: Hayes Albion
Docket no.: B86-11358-111657, et al.
Date of decision: October 20, 1995

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COURT OF APPEALS HOLDING: Where collective bargaining agreement allowed employer to allocate vacation pay to plant shutdown period, vacation payments made were remuneration for the shutdown period and rendered claimants ineligible for benefits.

FACTS: Under 1985 collective bargaining agreement, seniority employees were entitled to vacation or pay in lieu of vacation as specified in Paragraph 90. Paragraph 91 provided that employer could schedule all vacation during a plant shutdown period if certain procedures were followed, such as notification to employees. Pursuant to the contract payments for accrued vacation time were made in February and June, 1986. Employer scheduled a two week shutdown from June 30, 1986, through July 11, 1986. Notices were posted indicating the earned vacation time and pay would be allocated to the shutdown period and that the allocation might render the employees ineligible for unemployment benefits.

DECISION: Claimants are ineligible for benefits under Section 48(2).

RATIONALE: Under Paragraph 90 of the collective bargaining agreement, employees had the option of receiving pay in lieu of vacation. Under Paragraph 91, the employer could allocate vacation pay to plant shutdown period. The fact these provisions appear in separate paragraphs does not mean the payment in lieu of vacation provided for in Paragraph 90 is independent of the period of unemployment (vacation shutdown) provided for in Paragraph 91. Thus the contract did not preclude the employer from designating the vacation pay to the shutdown period. As the employer maintained that discretion, the claimants’ option to take pay in lieu of vacation was extinguished when the employer exercised its Paragraph 91 authority. Therefore the payments were not “bonuses” under Brown v LTV Aerospace Corp, 394 Mich 702 (1975).

Digest Author: Board of Review (original digest here)
Digest Updated:

Blanding v Kelsey Hayes – 4.06

Blanding v Kelsey Hayes
Digest no. 4.06

Section 48

Cite as: Blanding v Kelsey-Hayes Co, No. 80 022124 AE, unpublished opinion of the Wayne County Circuit Court, issued February 18, 1981 (Docket No. 80 022124 AE).

Appeal pending: No
Claimant: James Blanding, et al.
Employer: Kelsey-Hayes Co.
Docket no.: B76 13949(1) 60456 et al.
Date of decision: February 18, 1981

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CIRCUIT COURT HOLDING: Where a contract requires payment of vacation pay in March of each year, and allows designation of a vacation shutdown period, the March payment is not remuneration.

FACTS: The claimants received their vacation pay in March of each year, as specified in the union contract. Section 19 of the contract allowed designation of a vacation shutdown period. “At various times in 1975 and 1976 the management at the three plants invoked the company’s option, as provided in Section 19, to require vacations to be taken during a plant shutdown period.”

DECISION: The payments in question are not remuneration under Section 48 of the Act.

RATIONALE: The Court cited Renown Stove Co v UCC, 328 Mich 436 (1950), and Hubbard v UCC, 328 Mich 444 (1950). “The lesson of the Hubbard and Renown Stovecases is that the questioned payments, being payable at the specific time and without regard to whether vacation time is also taken, do not qualify in the first instance under Section 48 as ‘amounts paid … for a vacation,’ are bonuses instead, and are therefore not subject to the employer’s right of allocation.” “The rationale of the Supreme Court’s interpretation of Section 48 seems clear. Although vacation pay is deemed remuneration, a payment cannot be considered remuneration for the period of unemployment if the employee is entitled to the payment in all events without regard to the period of unemployment.”

Digest Author: Board of Review (original digest here)
Digest Updated:

Renown Stove Co v UCC – 4.21

Renown Stove Co v UCC
Digest no. 4.21

Section 48

Cite as: Renown Stove Co v UCC, 328 Mich 436 (1950).

Appeal pending: No
Claimant: George Sheldon, et al.
Employer: Renown Stove Company
Docket no.: B8 5900 1 9580
Date of decision: September 11, 1950

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MICHIGAN SUPREME COURT HOLDING: Where the option to receive vacation with pay or payment in lieu of vacation rests with the employee, a payment received during a period of unemployment will be deemed a bonus rather than vacation pay.

FACTS: One group of employees worked under a contract which provided for vacation pay and specified the vacation period from July 5 to July 18, 1948. There was no option for payment in lieu of vacation. The second group’s contract also provided for vacation pay but their vacation period was not specified and these claimants had the right to receive pay in lieu of vacation. Both groups of employees were laid off for lack of work in April, 1948 and filed for and began receiving unemployment benefits. On June 28, 1948, they received checks equal to either 1 or 2 weeks of wages. The employer contested the payment of benefits for the period following July 5, 1948 asserting that the workers had vacation pay for the same period.

DECISION: The claimants covered by the first agreement received vacation pay and are not entitled to receive unemployment benefits for the same period. Those covered by the second agreement received a bonus and not vacation pay and are entitled to receive benefits with respect to the period beginning July 5 during which they did not work.

RATIONALE: The controlling question is whether the employer paid the employees for or with respect to the 1 or 2 week period beginning July 5. The first agreement specified that the period from July 5 to July 18 was a vacation period and those claimants were not entitled to the June 28 payment for any other reason. But, the claimants who worked under the second agreement had the option to take a vacation with pay or work, and in addition to wages for such work, receive a bonus in lieu of the vacation with pay. Since the option rested with the employees, the June 28 payment was a bonus and not vacation pay.

Digest Author: Board of Review (original digest here)
Digest Updated: