©b69r AD HOC 131
IN THE MATTER OF AN ARBITRATION
BETWEEN: VIA RAIL CANADA INC.
CANADIAN BROTHERHOOD OF RAILWAY, TRANSPORT AND GENERAL WORKERS
AND IN THE MATTER OF THE CLAIM OF L. MONTREUIL
SOLE ARBITRATOR: J.F.W.. Weatherill
A hearing in this matter was held at Ottawa on December 30, 1981.
©u28rG. Thiverge and J.D. Hunter for the union
©u37rA. Leger, A.D. Andrew and J. Cameron for the company
©b69r A W A R D
This matter was referred to the arbitrator by the parties pursuant to
the provisions of a Special Agreement dated July 7, 1978, between
them and other parties. The parties have, by agreement, extended the
time for the making of an award.
The Special Agreement relates to conditions and benefits to apply to
employees adversely affected by changes in railway passenger service
made in accordance with government initiatives introduced pursuant to
the Railway Passenger Services Adjustment Assistance Regulations.
The issue in the instant case relates to the interpretation of
article F of the Special Agreement.
The Statement of Facts in this matter, submitted jointly, is as
Mr. L. Montreuil has credit for 38 years and 9 months of
railway service. Most of that service was actually acquired
at Canadian National, but his CN service was continued
unbroken when he transferred to VIA in 1978.
While employed at CN, Mr. Montreuil did not contribute to
their pension plan. Upon transfer to VIA he was, however,
compelled to join the VIA pension plan. He has consequently
contributed to a company pension plan for a total of 3 years
and 3 months. In addition, he took advantage of an
opportunity to "buy back" 10 years of his previous
non-contributory service at CN. In other words, Mr.
Montreuil now has credit for 13 years and 3 months of
pensionable service under the VIA pension plan.
Mr. Montreuil was adversely affected by the service cuts made
at VIA on November 15, and is eligible to take advantage of
the Separation Plan, Article F, of The Special Agreement.
Article F.2 provides that an eligible employee with 35 or
more years of service will receive a separation allowance
which, when added to his company pension, will give him 80%
of his average earnings.
It is the Brotherhood's position that the separation
allowance must be sufficient to give Mr. Montreuil 80%,
regardless of how small his pension might be. If there is a
pension deficiency, the Brotherhood holds that the separation
allowance must be correspondingly increased to offset the
pension deficiency; if there is no pension deficiency, the
separation allowance itself would be relatively smaller.
It is the Corporation's position that the 80% mentioned in
Article F.2 is based on the assumption that an employee is a
fully paid-up member of the company pension plan. Although
an employee with a pension deficiency may have the right to
elect early retirement, his pension is lower than that of an
employee having no deficiency. Under the Separation Plan,
the Corporation maintains that the separation allowance
should not be greater for an employee having a pension
deficiency, than it would for another employee who is a fully
paid-up member of the pension plan.
Article F of the Special Agreement provides as follows:
©b69r ARTICLE F - SEPARATION PLAN
F.1 An employee adversely affected by the implementation of
changes under the Regulations who:
(a) is sixty years of age or over and is eligible for
early retirement under his own company pension plan:
(b) is under sixty years of age, is eligible for early
(i) would be laid off at his home location; or
(ii) would be required to relocate in order to hold
(iii) by electing for a separation allowance, would prevent
another employee in his seniority group at that
location with two or more years of service from being
laid off; or
(c) is one year or less away from eligibility for early
retirement under his company pension rules, and who
meets one of the conditions set out in sub-paragraph
(i), (ii), or(iii) of sub-paragraph (b) above shall
be entitled to elect to take early retirement and
receive a separation allowance as hereinafter
F.2 An employee defined in Article F. 1 (a) or F. 1 (b) above
shall receive a monthly separation allowance until the
age of 65 which, when added to his company pension, will
give him an amount equal to a percentage of his average
annual earnings over his best five-year period, as
defined under the pension rules. In accordance with the
©b67r Years of Service Percentage Amount as
©b17rat Time Employee ©b26r Defined Above
35 & over 80
25 or less 60
F.3 An employee defined in Article F. 1 (c) above (a) shall
receive the layoff benefits provided in Article "H" of
the relevant special agreement until he becomes eligible
for early retirement, and
(b) thereafter shall receive a monthly separation
allowance in accordance with Article F.2 above.
F.4 A separation allowance shall cease upon the death of the
employee who dies before reacting the age of 65.
F.5 An employee entitled to the separation allowance as
hereinabove set out may elect to receive in its stead a
lump sum payment equal to the present value of his
monthly separation payments calculated on the basis of a
discount rate of ten (10) per centum per annum.
F.6 An employee who receives the monthly separation allowance
under Article F.2 above shall be entitled to have his
group life insurance coverage continued for the duration
of his allowance and paid for by the company concerned.
F.7 An employee whose monthly separation allowance ceases at
age 65 in accordance with Article F.2 above, shall be
entitled to a life insurance policy, fully paid up by the
Company, in an amount equal to that in effect in existing
F.8 An employee who is in receipt of a monthly separation
allowance calculated in accordance with Article F.2
above, and who lives in a province ,where medicare
premiums are required, will have his premiums paid by the
company concerned for the duration of his allowance but
only up to the amount of the maximum medicare allowance
provided under the existing collective agreements.
It is agreed that Mr. Montreuil is a person eligible to take
advantage of the separation plan, as set out in article F. The
particular issue is as to the extent of the separation allowance to
be paid to Mr. Montreuil pursuant to article F.2 of the agreement.
Mr. Montreuil is entitled to certain payments under a company pension
plan. Because, in his earlier employment, Mr. Montreuil had been a
member of what has been referred to as the "CN 1935" plan (which
provides a pension not based on earnings), and because his subsequent
"buy-back" of previous service for pension service has given him a
credit for only 13 years and 3 months of pensionable service (despite
his actual service of 38 years and 9 months), the result is that Mr.
Montreuil's pension is substantially lower than that of employees who
had, over the years, made more substantial contributions to one or
another of the pension plans from which employees may draw
The separation allowance contemplated by article F.2 is a payment
intended to make up the difference between the pension paid to a
person who retires, and an amount equal to a percentage of his
average annual earnings over his best five-year period. The
percentage varies in accordance with the table set out in article
F.2. In Mr. Montreuil's case, of course, the percentage is 80, since
he had more than 35 years' service at the time of electing early
The Special Agreement does not distinguish between employees by
reason of the pension plan or plans to which they may belong, nor
does it distinguish between them in terms of earnings or on any other
ground than length of service. It is clear from article F.2 that the
amount payable by way of the monthly separation allowance is an
amount that will vary from case to case. In each case, it must be
whatever amount is necessary so that, when it is added to his company
pension plan (whether the benefit under that plan be great or small)
will give an amount equal to the appropriate percentage of earnings.
The company, while not denying that the the grievor is entitled to
the benefit of article F.2, and to some payment by way of monthly
separation allowance, contends, in effect, that there should be a
limit to the amount paid in cases such as that of the grievor. It is
said in effect, that it is unfair to make larger payments in cases of
employees with "pension deficiencies" than in those of employees who
are fully paid up members of the pension plan.
In my view, the language of the Special Agreement, and in particular
of article F.2 does not allow this limitation on the payment to be
made thereunder. The formula established by article F.2 is quite
clearly stated and contains no ambiguous terms. No eligible person
is excluded from its benefit. There is no difficulty in computing
the amount necessary to be paid in any case, in order to bring the
total of pension plus separation allowance up to the percentage of
earnings applicable to that case.
Whether the results of the application of the formula in certain
cases should be regarded as fair or unfair is not in issue before me.
Whether or not the results may sometimes be considered as anomalous,
they are not absurd or contradictory; this is not a case in which the
ordinary sense of the words used should be modified to avoid
inconsistency: there is, in fact, no inconsistency with the other
provisions of the agreement.
Further, although it may or may not be the case that it was (or
would have been: this provision was established as part of the
Special Agreement by an award of an arbitrator), the "intent" of the
parties (or of the arbitrator) to deal only with employees who were
fully paid-up members of the pension plan, that intention does not
appear on the face of the agreement, which must be taken as being the
whole agreement between the parties.
It may be noted that article F of the Special Agreement provides for
other payments as well as that of the monthly separation allowance.
There is no necessary uniformity in these payments which, in certain
cases, could lead to larger payments in respect of some employees
than in respect of others, and without, perhaps,any basis in terms of
length of service or other contribution for such distinctions. It
could be argued (not successfully, I should think) that such payments
were "unfair". It is, in any event, quite clear that they are to be
made. That is true as well in the case of the monthly separation
allowance. It is to be remembered, finally, that the separation
allowance ceases at age 65 (or before, if the employee dies). It is
a quite special form of variable payment associated with early
retirement, and is not payable in the retirement period after that
For all of the foregoing reasons, the claim is allowed.
DATED AT TORONTO, this 8th day of February, 1982.