AH - 214













(the ”Union”)








(the “Company”)




and D. L. Reynolds (Merits)



Sole Arbitrator:            Innis Christie



There appeared on behalf of the Company:

                                                A. H. Neville                         Manager, Industrial Relations

                                                J. W. Thorndyke                  Regional Manager, Atlantic Region

                                                H. J. Vinette                          Maintenance, Atlantic Region


There appeared on behalf of the Union:

                                                E. G. Abbot                           System General Chairman

                                                C. H. De Laroche                 Regional General Chairman



A hearing in this matter was held at ___, on the 26th day of April, 1971.

Employee grievance alleging breach of the collective agreement between the parties signed December 18, 1968 in that the Company failed to allow reasonable expenses to employees when they were called upon to perform duties at other than their regular place of employment. At the first hearing in this matter, on December 7, 1970, the Company and the Union made certain preliminary objections which were disposed of in an award dated February 2, 1971. This award is concerned with the merits of the grievances.




                The Facts:


                The collective agreement provides for the payment of expenses incurred by employees in the following terms:

Article 13, clause 2 - Employees when called upon to perform duties at other than their regular place of employment shall be allowed all actual reasonable expenses incurred…

During the month of April, 1970 the grievors, who were “Roving T & R Technicians”, incurred various meal expenses which they submitted in the regular way, as they had done for several months previously. These expenses were no greater than those that they had incurred on similar occasions in the past but, according to the testimony of the grievors, for the first time their expense claims were disallowed. Similarly, Mr. Czepiela’s expense claims for the month of May were disallowed.


                The disallowances did not come as any surprise because the claims submitted were in excess of certain maximum expense guidelines established by the Company in an effort to control costs, of which the grievors had been advised. The evolution of the guidelines is briefly described in a memorandum from H. J. Vinette, Superintendent, Operations and Maintenance, which he submitted in conjunction with his testimony at the hearing.

History of Dispute

During the summer of 1969 I noted that certain employees under my jurisdiction were making personal expense claims substantially in excess of the amounts normally claimed by the vast majority of Atlantic Region officers and scheduled personnel who traveled on Company business. It was at about this same time that the Plant and Regional Managers also became aware of this situation and, after general discussions, I was requested to initiate corrective action.


I might say that the problem of keeping personal expense meal claims within reasonable limits has been a recurring one throughout my many years experience as a Company officer. The wording of the Collective Agreement does not specifically define “REASONABLE”, nor does it set forth how this criteria should be established and these factors are the root of this problem.


In former years we have rarely found it necessary to issue any formal instructions in order to convince employees concerned that their meal expense claims were excessive. The usual approach was to have the employee’s immediate supervisor discuss the excessive meal claims with him, pointing out that very adequate meals could be obtained at the locations concerned, and in good restaurants, at far lower costs. As Company supervisors commonly travel in the same areas and frequent the restaurants referred to, this approach invariably resulted in more moderate claims being submitted.


On this occasion, we initially adopted the same general approach, and except for the grievors in this case, with the same satisfactory results. When meetings with the grievors immediate supervisor and later with the general supervisor failed to have the desired effect, however, I personally met with the grievors in an attempt to convince them that certain of their meal expense claims were excessive. Unfortunately, I was no more successful than their supervisors had been…


I was therefore faced with the alternative of abdicating my responsibility to control Company expenditures, or establish formal procedures to exercise this control in a fair and equitable manner consistent with the provisions of the Collective Agreement. As you know, the latter alternative was adopted and through discussions with other senior Regional Officers, a set of “MAXIMUM MEAL EXPENSE” guidelines was developed. I should add here that the grievors and several other employees had, at various times, stated or requested that the Company should specifically set forth what it considered the word REASONABLE to mean, in terms of specific meal costs.


Method used to establish “Maximum Meal Expense” guidelines


1)            A randomly selected sampling of approximately 225 employee expense accounts for the previous three months was obtained, and from the meal claims listed, mean and maximum amounts were tabulated for each of the three meals concerned.


2)            Supervisors working away from headquarters obtained menus or other meal cost data from restaurants they and other employees commonly frequented. (In some cases supervisors were specifically dispatched to certain locations to obtain the required data.)


3)            Like information was obtained (verbally) from Canadian National Telecommunication, who had recently completed a similar meal cost survey.


4)            The “Maximum Meal Expense” guidelines were established on the basis of this data. The specific amounts were set by averaging the highest 25% of submissions examined, rounding out to the nearest $0.05.


                “Maximum Meal Expense” Guidelines - Amounts

                Meal Cost (inc. tax)                            Gratuities

                B.            1.50                                        .15

                L.            2.25                                        .25

                D.            3.00                                        .30




A)  If an employee in a specific situation was not able to obtain a reasonable meal within the above mentioned guidelines; claims for higher amounts if supported by a satisfactory explanation, would be authorized by his supervisor.

B)  Employees were advised that the amounts listed in the guidelines were MAXIMUM amounts that could be claimed in normal situation, and were not to be considered as fixed allowances.

C)  Employees were advised that meal expense claims in excess of the guideline amounts would, except as provided for in B) above, be reduced to lesser amounts inside the guidelines.


The memorandum as reproduced is a useful statement of the facts. Certain conclusions drawn from the facts have been omitted.


                At the hearing, Mr. Vinette testified that in 1969 he was first asked by some of his supervisors to give them some guidance on the meaning to be given to the word “reasonable” in the relevant provisions of the collective agreement. He made calculations from expense accounts that had been submitted and gave the supervisors a set of limits substantially above he expenses claimed by most employees. These guidelines were not revealed to employees until the grievors challenged the Company’s policy.


                Mr. Vinette’s meeting with the grievors, to which he refers in the fourth paragraph of the memo quoted above, occurred early in 1970, probably in March, and at that time he simply told the grievors what was generally being claimed in each geographic area by each classification of employee. The grievors neither agreed nor disagreed that these amounts constituted appropriate guidelines, but for a month Mr. Stanhope’s expense account improve, from the Company’s point of view. When it was ascertained that the grievors were not going to reduce their expense claims significantly they were given the more precise maximum meal expense guidelines set out in the memorandum. These guidelines were not published but were revealed to other employees on request. The Company feared that as employees learned about the guidelines they would regard them as norms rather than maximums, a fear which, apparently, has subsequently proved to be well founded.


                About the same time, without collaboration with Mr. Vinette, Mr. Johnson, Superintendent of External Plant, posted maximum meal expense guidelines for the installers who work under his authority. The amounts totaled $7.75 for three meals and gratuities, that is $0.30 more than the total established under Mr. Vinette’s guidelines. Once this discrepancy came to the attention of management, Mr. Johnson’s guidelines were adjusted downward to conform. It was pointed out that those working under Mr. Johnson are out of town and on expenses for periods of several months at a time while the grievors are on expenses for a day of two at a time. This is of little significance because, in my view, a discrepancy of $0.30 between the guidelines established by Mr. Johnson and Mr. Vinette is so slight that is point sot nothing more than their good faith in reaching the totals established.


                At the hearing Mr. Czepiela detailed, item by item, the meals that he had eaten during April. He testified, as did the other grievors, that in that period they ate in good, clean restaurants and ate the same kind of food that they chose when they eat in restaurants in Montreal at their own expense. Mr. Czepiela customarily eats two hot meals, usually chicken or beef, every day, which is not per se “unreasonable”, although many people eat one lighter meal. In general, I have no basis for saying that, apart from the guidelines, any of the grievors incurred “unreasonable” meal expenses during April or May, in the sense that they ate abnormally or extravagantly.


                The meal expenses claimed by the grievors during April were reduced by Company clerks, as indicated on the altered expense claim forms introduced in evidence. Wherever an expense item exceeded Mr. Vinette’s guidelines it was disallowed and a lesser amount, well within the guidelines was substituted. Since the guidelines were considered to be “maximums” it was not the guideline amount but a lesser amount within the guideline that was substituted. It is obvious from the documents, and Mr. Vinette frankly admitted, that there is no consistency in the amounts to which the claims were reduced. Apparently the Company’s clerks substituted amounts claimed by some other employees while working in the same locality. This , of course, was a quite arbitrary basis of substitution. Indeed, it was because of this inconsistency that the Company attempted to settle these grievances by paying the amounts claimed. (See my award on the preliminary objection.)


                Mr. Czepiela’s meal expense claims for May once again exceeded the guidelines and were one again written down to amounts within the guidelines, but this time on a consistent basis. According to Mr. Vinette’s testimony, reduction was made on the basis that where the employee had exceeded the guidelines he should be granted expenses of $1.10 for breakfast, $2.10 for lunch and $2.60 for dinner. Mr. Vinette once again quite frankly, admitted that these figures were intended to discourage employees from claiming over the maximum meal expense guidelines. Mr. Vinette did, however, stress that these amounts were still at least equal to the average of expense claims submitted by employees other than the grievors.


The grievors claimed the amounts by which their April expense accounts were reduced and Mr. Czepiela claimed the amount of reduction for May as well. After some negotiation and as part of an attempt to reach agreement with the Union on fixed meal allowances, the Company offered to pay the amounts claimed by the grievors. The grievors refused to accept the payment and insisted that the arbitration proceed. At the first hearing in this matter on December 7, 1970, the Company objected that the arbitrator was without jurisdiction because the grievances had been settled. The Company’s offer of settlement expressly did not constitute acceptance of the grievor’s claim that their expenses were “reasonable”. In an award on this preliminary objection, dated February 2, 197, I noted, therefore, that the collective agreement provides that “Any dispute or grievance arising between the parties relating to the interpretation, application or administration of this agreement” may be taken to arbitration (emphasis added), and held that the individual grievors had a right to insist that the difference between them and the Company over the proper interpretation of the collective agreement be settled by arbitration..


The Issue:


                The issue is whether, by refusing to reimburse the grievors for the expense claims submitted, the Company was refusing to allow “all actual reasonable expenses incurred” by the grievors when they were called upon to perform duties at other than their regular place of employment. The Company did not question that the expenses were “actual” but does question whether they were “reasonable”. Since it is clear that the notion of “reasonable” expenses it not specific but could include a range of expenses, it must be determined upon whom the onus lies of establishing that the expenses claimed were “reasonable”. Did the Company act properly in establishing “maximum meal allowance guidelines” as a standard of “reasonableness” and were the amounts established reasonable in the particular instances grieved?




                Initially, the onus of proving that the Company failed to “allow reasonable expenses” is on the union acting on behalf of the grievors. They must make their case. It is not enough to establish that the expenses claimed were, in some sense, “reasonable”; it must be established that the Company failed to allow “reasonable expenses”. For example, Mr. Czepiela’s claims based on the fact that he customarily eats two hot meals a day are not per se unreasonable, but neither is the allowance of a somewhat lesser amount necessarily unreasonable. This means that the Company may unilaterally establish guidelines with regard to the expenses it will pay. It cannot, of course, unilaterally amend the collective agreement so it must be prepared to prove that its guidelines are reasonable in any particular case, if challenged. The Company’s power in this respect is quite similar to the widely recognized right of an employer to make rules, a breach of which may lead to discharge or other forms of discipline, provided that the rules can operate within the confines of the collective agreement, which will usually provide that discipline or discharge may only be for just or proper cause. In K. V. P. Company Limited (1965), 16 L. A. C. 73 at p. 85 Robinson C.C. J. , as chairman of the Board of Arbitration, summarizes the requisite of a rule unilaterally introduced by the Company;

A rule unilaterally introduced by the Company, and not subsequently agreed to by the Union,        must satisfy the following requisites:

1. It must not be inconsistent with the collective agreement.

2. It must not be unreasonable.

3. It must be clear and unequivocal.

4. It must be brought to the attention of the employee affected before the Company can act on it.

5. (irrelevant)

6. Such rule should have been consistently enforced by the Company from the time it was introduced.


                If the grievances before me involved a straightforward challenge by an individual employee to the Company’s refusal to pay expenses claimed on the basis that they exceeded the Company’s guidelines, I suppose I would first test the guidelines against the requisites set out in the quote from Judge Robinson’s award. In such a case the issue would be precisely that considered in Hawaiian Airlines, Inc. (1962), 39 L. A. C. 257 (Tsukiyama, Arbitrator) where the arbitrator considered the following provision of the collective agreement.

Section 13(a). Pilots when laying over at a place other than their base station shall be reimbursed by the Company for reasonable actual expenses incurred for suitable lodging, transportation and meals.

In that case the arbitrator held, correctly I think:

I do not find that the Company’s method of paying for Pilot’s layover meals at normal layover stations by cash advances based on average fixed-price limits and as applied to actual layover meal expenditures incurred by the Grievant here, violates the provisions of Section 13(a) of the Agreement. The purpose of Section 13 generally requires the Company to pay for meals, hotels and transportation expenses incurred by its Pilots in varying situations covered therein away from base station when they are “at work”…

Thus any system adopted and put into effect by the Company which would provide Pilots on layover with suitable meals (lodging and transportation, though not in issue here) would comply with the general intent and purpose of Section 13(a) as I read it.


                I must say that the guidelines set out in Mr. Vinette’s memo, quoted above, do appear to be consistent with the collective agreement and reasonable, but there is nothing improper about a challenge to the Company’s guidelines either by an individual grievor or as a policy grievance. An individual employee or the Union may wish to test, in effect, whether the guidelines meet the requisites which I have quoted above from the K. V. P. award. Moreover, an individual grievor could always attempt to establish that there was something peculiar about his case which made the application of the Company’s guidelines “unreasonable”. In such a case, in my view, he would be called upon to justify any failure on his part to follow the procedure established for cases of extraordinary expenses. It will be recalled that in such cases, Mr. Vinette’s guidelines provide that supervisors may authorize claims for higher amount if there is “a satisfactory explanation”.


                If the Company’s guidelines were unknown to the grievor he would be in a stronger position. He would still bear the onus of establishing that the Company had failed to allow reasonable expenses but the arbitrator in such a case would be more concerned with the abstract “reasonableness” of the claim, perhaps, with the question of whether the grievor was eating according to his regular habits and less concerned with the guidelines or the usual expenses submitted by other company employees.


                All that I have said up to this point relates to the “normal” situation where an employee has claimed expenses in excess of the Company’s guidelines and has been allowed an amount reduced accordingly. That, however, is not what happened here. In the case of the April expense accounts of the three grievors the Company admittedly reduced their claims to arbitrary and inconsistent amounts. Mr. Vinette was not certain just what standard had been applied but he thought that a Company clerk has simply spotted amounts claimed by other employees working in the same location. This is manifestly not a “reasonable” standard. The Union has, therefore, discharged the onus of establishing in the case of the April expense accounts that the Company did not allow “all actual reasonable expenses”.


                The next question is whether the Company should be obliged to pay the grievors their actual expenses for April or the difference between what they were allowed and the maximum meal allowance guidelines. I am of the opinion that once the Union has discharged the initial onus of establishing a breach of the collective agreement by the Company, the onus shifts to the Company to show that the actual expenses claimed were not “reasonable”. Bearing in mind that the word “reasonable” can include a range of expenses, as I have already said, the expenses claimed were not per se unreasonable. The Company failed to apply any rational standard by which the claims could be reduced so I must hold that the grievors are entitled to be compensated for their actual expenses as claimed for April.


                Mr. Czepiela’s expense claim for May is a slightly different case. Mr. Vinette frankly admitted that in May, where the maximum meal expense guidelines were exceeded, the lesser amounts that the Company decided were determined not by reference to “reasonableness” as the only standard, but also took into account an element of discouraging people from going over the guidelines. He acknowledged that in thus establishing the amounts paid to Mr. Czepiela for the May the Company was, in effect, applying “penal” guidelines. In setting this standard of expenses allowed, the Company did not even attempt to allow “all actual reasonable expenses”, it attempted to allow “all actual reasonable expenses with something off for having exceeded the guidelines.”


                In the case of Mr. Czepiela’s May expense account, just as in the case of the April expenses  accounts of all three grievors, the Union has discharged the onus in showing that the Company did not allow all reasonable expenses based on any rational standard of reasonableness. Therefore, In the case of Mr. Capiela’s May expense account as well the Company must pay the actual expense as claimed.


                I realize, of course, that the payments that I have directed the Company to make are only those to which they offered to the grievors in settlement of these grievances. I hope, however, that the discussion here of the reasons why the Company in obliged to make these payments will have settled, as far as possible, the difference between the Company and the grievors over the proper interpretation of Article 13 of the collective agreement.


May 20, 1971

Kingston, Ontario

                                                                                                                Innis Christie, Arbitrator