BETWEEN:

(the "Company")

AND

(The "Union")

ARBITRATION BOARD: Professor Paul C. Weiler - Chairman

M. J. O’Brien - Company Nominee

Drummond Wren - Union Nominee

There appeared on behalf of the Company:

J. W. Healy, Q.C. – Counsel

R. S. Finegan – Employee Relations Officer

And on behalf of the Union:

M. W. Wright, Q.C. – Counsel

G.C. Kurtz – District Chairman, Prairie District

A. G. Ingram – General Secretary-Treasurer

A hearing in this matter was held at Toronto, Ontario on 25 October 1968.

Pursuant to the provisions of a collective agreement between the parties, professor Paul C. Weiler was appointed as Chairman to deal with this dispute, with Mr. M.J. O’Brien as Company Nominee and Mr. Drummond Wren as Union Nominee. The Board met at Toronto, Ontario on 25 October 1968 when evidence and arguments were presented. Representatives of the parties were:

This arbitration was concerned with a grievance brought by the union in respect of certain unilaterally-initiated changes in job classifications and work assignment. By a letter of 21st December, 1967 the Company informed the Union that it intended to eliminate two job categories, the late Night Automatic Supervisor and the late night assistant manager. The first was a bargaining unit job, the second was a supervisory position outside the unit. The company also proposed to create a new job, late night chief operator (Non-Technical), within the bargaining unit, at a rate of $144.70 (compared to the rate of $ 140.70 a week paid to the late night automatic supervisor). The new job incorporated almost all of the functions of the two jobs now eliminated.

As a result of these changes in existing job categories, certain shifts in personnel became necessary. The incumbent as late night automatic supervisor, Mr. Lamond, was resting and, indeed, this was the reason the company elected to make these changes at this time. The late night assistant manager, Mr. Bavington, whose job was eliminated, elected to exercise his seniority rights in returning to the bargaining unit and occupying the post of day automatic supervisor. As a result Mr. Cresswell, who was bumped from this job, was forced in self-protection to bid for the newly-created job of late night chief operator. The effect of the company’s unilateral steps then, as far as bargaining unit employees were concerned, is that a new job in the unit was created, at $4.00 a week more than the unit job it replaced, while Cresswell was forced to move from the day to the late night shift, at a cut of $6.00 a week in pay (from $150.70, the rate for day automatic supervisor).

The Union does not argue that the Company was absolutely precluded by the collective agreement from making these changes. It does claim that the changes should have been preceded by negotiations within the framework established by article VII of the master agreement. Should the board hold that these changes did come within the ambit of article VII, the Union asked for a declaration that they were improperly instituted, for a restoration of the status quo pending proper negotiations, and for compensation for harm suffered by employees affected by the employer initiative.

Article VII read as follows:

There are several different, relevant conditions which must be satisfied before this provision becomes operative. the change must be organizational, it must be permanent, effecting a material change in working conditions with adverse effects on unit employees, and not a case where workers are affected by a recognizable general decline in business. There is no dispute that the change in this case was intended to be permanent and that it had adverse effects on a unit employee, to wit, Cresswell’s lesser wage and assignment to a less desirable shift. Three of conditions were disputed, the organizational and material quality of the change, and whether it stemmed from a decline in business.

The company denied that what happened was an organizational change, alleging that it really consisted in an everyday, administrative adjustment. The undisputed facts were that the automatic supervisor controlled five automatic operators along with a clerk, in the receiving and transmitting of messages. The assistant manager was in charge of the whole operation, comprising the above, together with a telephone operator, a counter and delivery clerk, a service clerk a messenger, and two technical employees. The new job category, the chief operator, was placed in charge of the whole of the operation, save for the technical staff, without any non-bargaining unit supervision. As a result of this change in job classifications, two employees, Bavington and Cresswell, were assigned to different jobs and shifts. It is certainly arguable that shift changes and different work assignments should not be characterized as "organizational" changes. However, Where this is accompanied by the elimination of two jobs, the creation of a new job, and the removal of non-unit supervision from the whole of a shift operation, we have moved from administrative adjustments to significant changes in organization. This is enhanced by fact this is part of a pattern of changes across the Company. The fact this has occurred, and the changes were negotiated about, obviously does not bind the company in this case. However, it is evident that this is a real, permanent, organizational change, and not just an individualized adjustment in jobs. The question of whether it is a significant or major organizational change is irrelevant to this inquiry, being encompassed whether by the dispute over the material nature of the change.

Leaving aside this latter problem (one raising special issues of its own), the next inquiry is whether the exception in Article VIII(5) (a) applies. The next Company contended its initiative was, indeed, due to a general decline in business activity". There was no doubt that such a decline did occur in the quantity of telegrams sent and received, both in Toronto office and in the system as a whole. Although such a decline had continued for several years, the Company has decided this is the propitious time to make organizational changes in response to it. On the other hand, a simple correlation of business decline and organizational change is not sufficient for this section. Since the provisions reads: "workers are affected by a recognizable general decline", it means there must be must be some specific causal relationship between the business decline and the position of the employees who are involved in the organizational change. In other words, simply because the company is suffering from a decline in its business somewhere in its operations, it will not be warranted in making changes, for economic reasons, in the position of employees whose job activities are not affected by the business decline.

What is the evident in this regard? Although there was no doubt of the decline in massage traffic, there was no evidence of any specific decrease in traffic on the late night shift. Although it might be reasonable to infer that there would be a proportional decline in message on all shifts, this is not necessarily true. The great bulk of traffic on the late night shift consists of night rates, something quite different from full rate short messages common to the other shifts. In addition, there is no evidence of any decrease in operational personnel on the late night shift. The Company witness, Mr. Finegan, admitted that the natural response to a decrease in message traffic would be a reduction in the number of operators sending and receiving them, something which has not occurred. Moreover, the jobs which were eliminated and the one which replaced them are all essentially supervisory. The number of people being supervised remained constant, and Mr. Finegan said that less work for these people might mean a more difficult job of supervision. Finally, Mr. Finegan, who participated in the Company decision, admitted he had no idea whether the supervisory jobs had been affected by the decline in message traffic while the Union witness,

Mr. Cresswell, said there had been no change. On the basis of this evidence, we are unable to find that these "workers were affected by a recognizable general decline in business activity"

The real basis of the Company argument appeared to be the contention that the change in question here did not "effect a material change in working conditions". However, this condition precedent to the operation of the provision raises a problem unique to itself. In article VII it is provided that "the matter to be decided by the referee … shall be confined … and if there is also a dispute with respect thereto, to the question as to whether such change would materially or permanently affect working conditions". By article VII (4) it is provided that "the question of the referee shall be final and binding" these two section suggest that the decision whether this is a "material change" is confined by the parties to the exclusive jurisdiction of the referee, and thus is outside the terms of reference of the ordinary arbitration board.

There is no doubt that the agreement explicitly singles out the question of "materiality" for special treatment. Unlike the question whether this is an organizational change, or involved adverse effects, or is a case of workers being affected by a decline in business activity, This issue is specifically referred to the referee for decision. The referee is the person who hears the arguments in detail about what might be done to minimize the adverse effects of the change in question. The probable rationale for this is the belief that there is a close connection between the issue of materiality and the purpose of negotiating and eventually arbitrating about the affects of a change.

As we shall see, "material" here connotes important or significant. Presumably, the parties wanted this question to be disposed of in a context where an informed decision might be made about the importance of this change in relation to the usefulness of bargaining and arbitrating about the adverse effects.

Were we to decide this issue of "materiality" we would then deprive either of the parties of the right to raise it in the forum designated by the agreement. On the other hand, there is no doubt that it is within the scope of the arbitrator’s jurisdiction to decide if there is a duty to negotiate within the framework of article VII. The "materiality" of a change is as much a condition precedent to the duty as its "organizational" character or its adverse consequences Moreover, by ordering the parties to bargain on the basis that the other conditions are satisfied, there will be a hiatus before the issue of materiality is resolved by the referee. We think an appropriate resolution of these competing factors would be a very limited jurisdiction for the arbitration board. It should inquire whether a reasonably plausible case has been made that this is a material change in working conditions, so that obviously inappropriate claims are screened out. There are cases where there is not a real dispute on the matter: it should not attempt to decide that a reasonable claim for bargaining is, on balance, unjustified so as to deprive either party of a chance to persuade the referee, the person designated by the agreement to make this decision.

The decision of whether a change is material, or whether it is plausibly called material, cannot be made by the application of a relatively objective rule to the facts as found. It depends on an individualized evaluation of all the circumstances in the case. It was common ground between the parties that the condition of a material change was intended to distinguish important from insignificant changes. The parties have provided a very complicated system of notice, negotiation, mediation, findings by a board of review, and then compulsory arbitration. Such a process is cumbersome, costly and time-consuming. There are real reasons, documented by the Freedman report about CNR "Run-Throughs", why it is justified, in principle. However, that same report suggested that the use of this machinery should be confined to cases where the severity of the question warrants the costs involved. On the other hand, it must be recognized that, in the first stages, once appropriate notice is given, the degree of negotiation and the use of medication can be adjusted to the wishes and self-interest of the parties. Only when compulsory, binding third-party arbitration is brought in does the decision as to materiality attain over-riding importance.

The facts as to this issue have already been recounted. We are dealing with the elimination of two jobs, the creation of a new one with a different rate of pay, and the shift of two individuals for one job to another, with loss of pay for each. We had no evidence of the kinds of issues that had been previously included or excluded from this provision, as a reference for evaluating this case. As we have seen, this change in the Toronto operation and unit was part of a pattern of similar changes across Canada. Although the situation is a close one, we feel that the union has made out a reasonably plausible case that the process of negotiation should have been instituted. There is a permanent loss of pay inflicted on a bargaining unit employee who now is to take complete, unsupervised charge of a shift, and this is part of a country-wide pattern of changes. This is much more substantial than many issues which are grieved through to arbitration. If private agreement is not reached, the referee can decide whether it is material or significant enough for compulsory arbitration. We are conscious of the fact that too wide an interpretation of "material change could enable a Company to institute change on a piecemeal basis and thus avoid the negotiation procedure.

Hence we declare that the company was under an obligation to negotiate about the effects of the organizational change it made. This decision is based on a finding only that a plausible case has been made out for the contention that the change was material. It is possible that our decision that we have only a limited jurisdiction on this issue would be reserved. To avoid the necessity of a new hearing on the merits in such a contingency, we express our finding that, on balance, this does not appear to be a sufficiently material change to warrant putting the article VII negotiation process in motion.

At the hearing the parties agreed that any further remedies beyond the declaration of a breach of agreement, would be further discussed by the parties, with recourse to be board if necessary. The arbitration Board retains jurisdiction for this purpose. In particular, the parties are to consider whether restoration of the status quo is feasible and non-punitive at the present, what damages can be attributed to the failure of the company to give 60 days’ notice instead of 16 and to bargain within the article VII framework, and what order, if any should be made in respect to bargaining about this change at present.

DATED November 4, 1968.

(Chairman) (Union Nominee)

I appreciate having the opportunity of studying the award of the chairman. However, I regret that I am unable to agree with it.

As I interpret the evidence before the board one job outside the bargaining unit was eliminated and one job in the bargaining unit was changed by having some extra duties added to it. These extra duties were recognized and the salary rate for the changed job was increased.

The changes in staff were made in accordance with the seniority provision of the collective agreement. There are still the same number of jobs in the bargaining unit and the total pay for these jobs has been increased.

In these circumstance I cannot agree that this constitutes an organizational change such as contemplated by article VII of the master agreement.

If, by any chance, the majority of the board is right in stating this is an organizational change such as contemplated by article VII of the master agreement, then it is my submission that clause 5(a) of article VII applies. The unchallenged evidence was that there had been a recognized general decline in business activity. In my view it is important to note that the agreement speaks of a general decline and does not limit it a small group.

The majority of the board question their jurisdiction to rule on the materiality of the change. However, they rule on the permanence of the change. In my view, the board has the jurisdiction to rule on the materiality of the change and I agree that the change was not material enough to put article VII of the master agreement in motion.

In conclusion, I would have dismissed the grievance.

All of which is respectfully submitted

DATED at Toronto this 21st day of November, 1968.

Company Nominee

Commentary: Due to a continuing decline in telegraph message traffic, the company decided coincident with the retirement of one of the supervisors, to re-arrange and reduce supervisory coverage on the late night tour in the Toronto office. This was done in accordance with the seniority and staff reduction rules in the current collective agreement. The Company’s position was that such a charge did not requires negotiation under the provisions of Article VII, Clause 5 of Master Agreement excepting such changes which are affected by a general decline in or fluctuations in traffic. The Union contended that the company was in default under article VII of the Master Agreement in that Clause 5 was not applicable and therefore due notice should have given and the change negotiated. The arbitration hearing was arranged under Article 25 of the current collective agreement rather than by a referee as set out in the Master Agreement. This in itself led to questions as to the jurisdiction of the board and this is reflected in the somewhat contradictory statements of award.