AH - 218













(the ”Union”)







(the “Company”)








Sole Arbitrator:            J. F. W. Weatherhill



There appeared on behalf of the Company:

                                                D. N. Macleod

                                                J. W. Thorndyke

                                                W. F. Harding                                      



There appeared on behalf of the Union:

                                                C. W. Pethick

E.      G. Abbot



A hearing in this matter was held at Toronto, Ontario, on the 24h day of April, 1969.



                The grievor seeks the payment to her of severance pay, pursuant to a memorandum of agreement made between the parties on October 11, 1968.


                The master agreement, dated March 14, 1967, provides, by article VII thereof, for the negotiation by the parties measures to minimize the adverse effects of proposed technological, operational or organizational changed on employees. On February 16, 1968, the Railway Transport Committee of the Canadian Transport Commission approved a memorandum of agreement dated January 25, 1968, made between the Canadian National Railway Company and the Canadian Pacific Railway Company. By that agreement the two companies undertook the reciprocal withdrawal of competitive commercial offices for telegraph traffic and the consolidation of plant facilities at certain locations. This clearly constituted an operational or organizational change, and negotiations were instituted between the companies and the unions representing the employees affected, as contemplated by article VII of the collective agreement. Such provisions were contained in the agreements between each of the companies and the appropriate trade unions. These negotiations led to the memorandum of agreement above referred to, dated October 11, 1968. The memorandum sets out conditions intended to provide for the minimization of the adverse effects upon employees involved in the reciprocal withdrawal of services at a number of named cities in Canada, including Ottawa. It contains provisions relating to maintenance of income; inter-district transfer of employees; integration of employees; relocation expenses; sale of homes and cancellation of leases; severance; early retirement allowances and lay-off benefits. Grievances arising under the agreement, as in the instant case, may be the subject of arbitration proceedings under the appropriate collective agreement.


                The memorandum provides a number of alternatives for employees involved in the reciprocal withdrawal of services at any location. By article 3, provision is made for the integration of seniority lists of the two companies on a classification seniority basis, at each of the locations involved. The senior employees of either company on such integrated seniority lists were to be offered positions, as of the date of withdrawal of service by one company, with the surviving company. Many employees of each company, it seems, have taken advantage of these provisions and have become employees of the surviving company at locations from which their former employer has withdrawn. By article 3(d) of the memorandum, an employee who transfers to a surviving company retains his seniority with the withdrawing company, for the purpose of  bidding on bulletins, for a period of not more than five years from the date of transfer. There is also provisions for the protection of such employee’s pension rights with the withdrawing company.


                By article 2 of the memorandum an employee displaced as a result of reciprocal withdrawal is allowed, within ninety days of displacement, to transfer to another district, subject to certain conditions. In this case, of course, the employee remains an employee of this original employer.


                A third alternative available to employees affected by reciprocal withdrawal is that of resignation from the service of his employer. In this event, subject to certain conditions, severance payments are to be made pursuant to article 6 of the memorandum. The material provisions of article 6 are as follows:

(c)     Subject to (a) and (b) above, an employee affected by reciprocal withdrawal of service and who elects to resign within ninety days of the date of the change shall receive severance pay as follows:

(d)    An employee who qualifies for severance pay in accordance with this Clause 6 need not accept transfer to the surviving Company.


                The grievor was an employee of the Canadian Pacific Railway at its telegraph office in Ottawa. Pursuant to the agreement between the railroads relating to reciprocal withdrawal of services, Canadian Pacific withdrew from its telegraph operations, and Canadian National was the surviving company at that location. The grievor, like other employees, was interviewed prior to the withdrawal of service and elected to exercise the rights open to her under the memorandum of agreement to become an employee of Canadian National, with seniority status provided for under the agreement. The exercise of these rights resulted, it may be observed, in a “chain reaction” whereby a number of employees were displaced in turn; one was eventually forced to relocate, and one was laid off. There was nothing untoward in this, it was simply the result of the grievor’s choice which she was entitled to make. It was also open to the grievor at that time to resign from the employ of Canadian Pacific, and to receive the severance pay provided for.


                Canadian Pacific withdrew its telegraph service at Ottawa on November 7, 1968, and on that day the grievor was transferred to Canadian National, pursuant to the memorandum of agreement. She then became an employee of Canadian National, although she retained certain seniority and pension rights with Canadian Pacific. If there were any doubt as to this, it is made clear by article 3(e) of the memorandum, in which it is provided that an employee transferring to the surviving company will thereafter be governed by the provisions of the collective agreement in effect in that company. Specific provision is then made with respect to the retention of seniority rights in the withdrawing company.


                On November 10, 1968, the grievor resigned from Canadian National and applied to Canadian Pacific for severance pay pursuant to article 6 of the memorandum of agreement. It is the union`s contention that the grievor has made the election to resign within ninety days of the date of the change and that she is therefore entitled to severance pay. It is the company’s contention that the grievor did not resign from its service, but from that of Canadian National, and that the provisions of the memorandum were not intended to permit employees who had exercised one of the options open to them, subsequently to exercise another. While the grievor might have changed her mind before the transfer, she was no longer entitled to do so once the transfer had taken place.


                In my view, upon a reading of the whole of the memorandum of agreement, the company’s interpretation is correct. While it was argued that if is was intended that only one election could be made of such an intention ought to have been expressed in the memorandum, it could with equal force be argued that, had it been intended to permit an employee who had made an election and acted upon it subsequently to change his mind, then that intention ought to have been expressed. The purpose of the memorandum of agreement, of course, was to provide for the minimization of adverse effects upon employees. It seems clear that if the union’s contention in this matter is correct, adverse effects upon employees affected by the shifting feelings of senior employees would be multiplied.


                More to the point, however, is the very language of the memorandum itself, which of course governs the situation. The intention of article 6(c) seems quite clearly to be to provide for the payment of severance pay to employees of the withdrawing company who resign within ninety days of the change. (Nothing in this award relates to any question as to the rights of employees of the surviving company against it.) The resignation in such a case can only mean a resignation from the withdrawing company. This is consistent with article 6(d) which provides that an employee qualifying for severance pay need not accept transfer to the surviving company. Once the transfer is actually made, however, the person concerned is no longer an employee of the withdrawing company, as article 3(e), referred to above, makes clear. Certainly such persons retain certain rights as to seniority and pension, but their entitlement to these rights does not made them employees. There can be no doubt that by their transfer they have become employees of the surviving company, and are no longer employees of the withdrawing company, even though in the exercise of their rights they might one day return to it.


                There are employees affected by reciprocal withdrawal of service who may elect to resign up to ninety days after the date of the change. In particular, employees who are laid off (and who remain employees of the withdrawing company for this purpose) may subsequently elect to resign and take severance pay. This is provided for, with a number of qualification, in article 8 of the memorandum. The provision for election `within ninety days of the date of change”, then, is intended to accommodate such persons, and is consistent with the view that only those who are “employees” - either actively at work, or on lay-off - are in a position to resign.


                For the foregoing reasons it is my conclusion that the grievor, having exercised her right to transfer from Canadian Pacific to Canadian National, and having subsequently resigned from Canadian National, is not entitled to a severance pay from Canadian Pacific.


                Accordingly, the grievance must be dismissed.


                Dated at Toronto, Ontario, on the 5th day of May, 1969.