AD HOC – 262




(the "Corporation")



(the "Union")






There appeared on behalf of the Corporation:

Marcel St. Jules – Labour Relations



And on behalf of the Union:

A.S. Wepruk – Representative

T. McGrath – National Vice-President



A hearing in this matter was held in Ottawa on September 23, 1989.


At the hearing the parties filed the following joint statement:


Sale of the Ottawa Power Plant by CN to VIA Rail Canada Inc. and the transfer rights of affected CN employees under the Special Agreement.


On September 16, 1988, CN issued a notice to the C.B.R.T.& G.W. pursuant to Article J.1 of the Special Agreement dated July 7, 1978, stating that twelve positions would be abolished as a result of the sale of the Ottawa Power Plant to VIA Rail Canada Inc.

For operational reasons, VIA elected to contract out the operation and maintenance of the steam plant, and as such, there will be no transfer of CN employees to VIA.

The Brotherhood maintains that VIA is mandated to accept a transfer of CN employees by virtue of the provisions of the Special Agreement.

The facts are not in dispute. The Corporation operates a passenger train station at Ottawa. For many years that facility, as well as a number of outside users, has been provided with steam from the Ottawa Power Plant which, prior to April 19, 1988, was owned and operated by Canadian National and Canadian Pacific and apparently manned by CN employees. On that date, the Corporation concluded an agreement for the purchase of the Ottawa Power Plant from CN and CP.

For a number of years the Corporation has been in the process of acquiring land, plant, equipment and personnel previously under the ownership and control of CN. That process has been pursuant to the transfer of passenger services previously performed by CN into the hands of VIA Rail. It is common ground that the transfer of assets and personnel has been governed by a Special Agreement dated July 7, 1978 between CN, CP, VIA Rail and several unions representing employees affected, including the instant union. That Agreement is made pursuant to a Railway Passenger Services Adjustment Assistance Regulations (Order-In-Council P.C.1977-2987). The following provisions of the Regulations are pertinent to the instant dispute:

"changes" means changes in the Railway Passenger Services made in accordance with government initiatives introduced pursuant to the Department of Transport Vote 52d, Appropriation Act No. 1, 1977; (changements)

"special agreement" means an agreement between a railway company or railway companies and a trade union or trade unions with respect to the provision of benefits that result from the special agreement process; (accord special)

Special Agreements

In negotiating a special agreement, the parties to the special agreement process shall, inasmuch as the following are generally incorporated in their existing job security agreements, give consideration to the following:

(a) in so far as possible, ensuring continuing employment for the employees concerned;

(b) where preferred and to the extent possible, keeping employees in gainful employment at the same location;

(c) where necessary, training employees for alternative employment;

(d) when required, providing appropriate assistance in relocation;

(e) in so far as possible, avoiding loss of employees’ earnings;

(f) developing a separation plan for the assistance of employees close to or eligible for retirement who wish to leave the work force;

(g) minimizing seniority obstacles for the purpose of facilitating

(i) continuing employment by Canadian National Railway Company and Canadian Pacific Railway Limited where mutually agreed to by the parties, and

(ii) the transfer of employees to VIA Rail Canada Inc.;

(h) where employees are laid off, providing reasonable weekly lay-off benefits or severance payments; and

(i) assisting employees unable to maintain their jobs to secure employment outside the railway industry.

With federal government consent the parties to the Special Agreement of July 7, 1978 agreed to its extension on several occasions, the most recent being an extension to June 27, 1990 pursuant to a further memorandum of agreement dated December 19, 1988.

Pursuant to the Regulations, the Corporation, along with Canadian National Railways negotiated the terms of the Special Agreement, initially executed on July 7, 1978. It contains, in part, the following provisions:


(i) The purpose of this Special Agreement shall be to provide the terms, conditions and benefits for employees adversely affected as intended by Regulations 4, Sub-section (a) through (i), 5(1)(a) and (b), 5(2), 6(a) and (b) and 7 of the Railway Passenger Services Adjustment Assistance Regulations.

(ii) This Special Agreement shall apply to all employees who have two or more years of cumulative compensated service, except that Article G shall apply to all employees regardless of length of service. Employees who have less than two years of cumulative compensated service shall be entitled to the layoff and severance benefits as provided in the Job Security - Technological, Operational, Organizational Changes Agreement.


G.1 Employees represented by the Unions signatory hereto shall be transferred to VIA Rail Canada, Inc. in accordance with the provisions outlined in Appendices "A" and "B" attached hereto and made part of this Special Agreement.

The original Special Agreement appears to have contemplated with some precision the identity of positions which were to be transferred from CN and CP to VIA Rail Inc. Appendix "A" referred to in Article G of the original Special Agreement pertains to off-train employees of CN and CP and states, in part:

1. The positions which are to be transferred from CN and CP to VIA are identified in Appendix A-1. Also attached as Appendix A-2 are tentative integrated seniority lists by VIA Region.

2. On the transfer date, September 29, 1978, such positions are to be transferred from CN and CP to VIA. This date will hereafter be referred to as the "transfer date".

3. The permanent incumbents on those positions identified in Appendix A-1 as at the transfer date will be considered as being transferred to VIA, without the necessity of bidding. An employee on annual vacation or approved leave of absence on the transfer date, will transfer to VIA on the expiration of such annual vacation or approved leave of absence.

The remainder of Appendix A makes provision for the possibility of senior employees not transferred to VIA availing themselves of the right to do so according to seniority, with displaced junior VIA employees being returned to employment in CN or CP. It also sets out the conditions for an employee transferred to VIA being permitted to remain at CN or CP by displacing a junior employee in his former seniority group within those companies. Material to the purposes of the instant dispute, however, is the apparent intention of the parties to the Special Agreement, as reflected in the language of Article G, that the Agreement was not simply about providing notice and severance benefits for employees who are adversely affected by the abolishment of their positions, but also includes substantive provision for the actual transfer of positions and personnel into the service of Via Rail Inc.

The Special Agreement was initially extended by a Memorandum of Agreement executed between the parties on May 29, 1985, pursuant to federal government consent.

The extension was granted in the context of the federal government’s initiative in 1982 to construct for Via Rail Canada Inc. a number of maintenance centres across Canada. It is not disputed that maintenance facilities have also been transferred from CN, apparently involving some 2,000 CN employees, apart from the initial transfer of some 2,500 CN and CP onboard and off-train employees. The extension of the Special Agreement was, therefore, made in contemplation of the construction and transfer of maintenance facilities, as evidenced by the preamble which states in part:

AND WHEREAS Via Rail Canada, as a result of decisions taken by the Federal Government, will be owning/leasing maintenance facilities and will perform their own maintenance on passenger equipment, thereby requiring the transfer of certain CN employees to VIA Rail Canada;

Section I of the Memorandum continues the terms and conditions of the initial Special Agreement of July 7, 1978 "except as otherwise indicated herein". Article G of the Renewal Memorandum is as follows:


For the purposes of this Agreement Article G will read:

G.1 Employees represented by the Brotherhood shall be transferred to VIA Rail Canada Inc. in accordance with the provisions outlined in Schedule "C" attached hereto and made part of this Special Agreement.

Schedule "C" to the Memorandum describes a bulletining process which is to be put into effect with respect to positions being transferred from CN to VIA. Unlike the original version of the Special Agreement, which provided for the right of employees to opt out of a transfer to VIA which was effected automatically without bidding, the Extension Agreement provides for bidding on positions within VIA in accordance with a bulletining process which originates with CN. While the process is different, the result contemplated is the same, namely the transfer of employees from CN to VIA as a consequence of the take-over of maintenance facilities by VIA Rail Canada Inc. Schedule "C", like Schedule "A" to the original Special Agreement, further provides for the dovetailing of seniority lists and the right of employees who have successfully bid into VIA positions to return to CN within a period of one year, without loss of seniority. Subparagraph (d) of Schedule "C’ also provides for the treatment of unsuccessful applicants for VIA positions who are laid off at CN, who, it is provided, "… will be given the opportunity of filling future vacancies at VIA for which they are qualified." The foregoing provisions were renewed in the further extension of the Memorandum of Agreement executed on December 19, 1988, with no material change.

As noted above, the current grievance arises out of the purchase of the steam power plant at the Ottawa passenger station by the Corporation. By letter dated December 19, 1985, CN and VIA Rail Canada Inc. jointly gave notice, pursuant to article 11311 of the Special Agreement, of the transfer of passenger maintenance activities in Ottawa affecting the twelve positions in the power plant. The CN positions were to be abolished April 3, 1986. The parties met pursuant to that notice and agreed to conditions outlined in the letter from the two railway companies, dated February 3, 1986 describing the procedures for bulletining positions to be established at VIA Rail Canada Inc. in Ottawa. Under that arrangement the twelve positions were to be subsumed by VIA, with the incumbents of the positions to have the first opportunity to transfer to VIA, failing which the positions were to be advertised for ten days on a special regional bulletin at CN. That arrangement did not come to fruition, however, as CN and VIA Rail were unable to agree on the terms of sale for the power plant. Notice of the cancellation of the Article "J" notice was communicated to the national vice-president of the Union by the companies jointly on May 21, 1986.

A further Article "J" notice was issued to the Union with respect to the Ottawa Power Plant on September 16, 1988, advising of CN’s intention to abolish the twelve positions affected as of December 22, 1988. Again, due to a delay in the finalization of the sale, the notice was cancelled effective December 9, 1988. By a letter of that date the regional vice-president of Canadian National, St. Lawrence Region, advised the Brotherhood that the positions were to be abolished effective March 22, 1989. That is the effective date of the abolition of the positions which gives rise to this grievance.

Following the notice of December 9, 1988, however, there was no negotiation with respect to the transfer of the affected employees into the service of VIA Rail Canada Inc. The Corporation chose instead to contract out to a private company the work previously performed by the twelve employees at the CN Power Plant in Ottawa.

The position of the Corporation is that under the terms of the Special Agreement it is under no obligation to transfer employees from CN even where the facilities and work of a maintenance facility are transferred to VIA Rail Canada Inc. In other words, its representative asserts that upon acquiring the plant from CN, the Corporation was free to decide whether to transfer CN employees to perform the work pursuant to the Special Agreement or to treat their positions as abolished and contract out the same work to an outside source. By way of explanation of the Corporation’s position, its representative notes that although not essential, it was deemed preferable to have the work within the Ottawa Power Plant performed by accredited operating engineers holding the qualifications outlined in the Operating Engineers Act of Ontario, a credential not held by the incumbent employees of CN. The Corporation asserts that the contracting out in which it engaged was, in any event, justifiable under Appendix "C" of the parties’ collective agreement which governs the contracting out of work. Specifically it submits that the undertaking was in the nature of a "new venture" as defined in CROA 1694, and secondly, that it falls within exceptions outlined in Appendix "C" which allow contracting out under the following conditions:

(1) When technical or managerial skills are not available within the Railway; or

(2) where sufficient employees, qualified to perform the work, are not available from the active or laid-off employees, or …

The Arbitrator has some difficulty with the position advanced by the Corporation. In approaching the instant dispute, in my view the Railway Passenger Services Adjustment Assistance Regulations, the Special Agreement negotiated and extended pursuant to their terms and the collective agreement between the parties must all be construed as a single, harmonious whole. The intent of the Special Agreement must be gleaned, in substantial part, from the terms of the Regulations and it must be construed and applied against the background of the parties’ collective agreement which was in place at the time. Under the Regulations the parties are charged with giving the fullest consideration to "insofar as possible, ensuring continuing employment for the employees concerned". In light of that clear regulatory mandate, coupled with the express language of the Special Agreement, the Arbitrator is unable to accept the suggestion of the Corporation’s representative that the purpose of the Special Agreement is restricted to assisting employees adversely affected in the sense that their jobs are abolished, and does not extend to the transfer of employees to the Corporation. As the language of Article "G" plainly demonstrates, a primary purpose of the Special Agreement is the transfer of work and employees from CN and CP to the Corporation, such transfers to be accomplished in keeping with Schedules "A" and "B" of the original Special Agreement and Schedule "C" of its 1985 and 1988 extensions.

The issue raised by this grievance is whether work can be transferred from CN to VIA Canada Inc. without any rights of the employees incumbent in that work or their Union, to be transferred with it. It appears to the Arbitrator that if the position of the Corporation is accepted it would be at liberty in all cases to acquire the work previously performed by CN employees, and to contract it out at will. Admittedly its spokesperson did not advance so sweeping a position, stressing instead the rationale of the Corporation preferring to have the benefit of provincially accredited operating engineers working in its power plant at Ottawa.

In the Arbitrator’s view the Corporation’s need to upgrade the requirements for the positions in the Ottawa Power Plant is not established in the material before this Board. The Corporation may find it preferable that the persons working within the Ottawa Power Plant hold provincial qualifications. It is not disputed, however, that that is not a necessity. The employment of the CN incumbents would satisfy the only operative mandatory requirements, namely the heating and power boilers regulations made pursuant to the National Transportation Act and the Railway Act. There has, in other words, been no material change in the qualifications required to perform the work, whether from a legal or from a practical standpoint.

In the Arbitrator’s view the Corporation’s wish to upgrade the qualifications for the positions at Ottawa can have no bearing on its obligation to respect the bulletining provisions of the Memorandum of Agreement extending the Special Agreement. Given the clear intention of the Special Agreement, having transferred the work from CN to VIA Rail Canada Inc., the Corporation was under an obligation to respect the bulletining provisions attaching to the work in question. While the Corporation may have been at liberty to reorganize the work in such a way as to require a smaller number of employees, or employees with higher qualifications as determined by valid business purposes, it was contractually committed to bulletin the work so transferred in accordance with Schedule "C". It would be contrary to the spirit and intent of the Special Agreement for the Corporation to disregard the rights of the incumbents performing the work, and of bargaining unit employees generally, by simply asserting a right to contract it out. It is contrary to the purpose and direction of the Special Agreement to conclude that the parties to it agreed, expressly or implicitly, that when the work of CN employees is transferred to VIA Rail Canada Inc. the latter can either choose to treat the work in question as belonging to the bargaining unit, or contract it out, as it sees fit.

The right of the Corporation to contract out work which would otherwise be performed by members of the bargaining unit is governed by the terms of Appendix "C’ to Collective Agreement #1. Since the Corporation has placed the terms of that Agreement before the Arbitrator within the framework of this dispute, it is appropriate to comment on them. Firstly, the characterization of the undertaking at the Ottawa Power Plant as a "new venture" cannot, of itself, take it outside the terms of Appendix "C" to the collective agreement. As the Award in CROA 1694 discloses, the facts there involved the establishment of a small quantity of janitorial work, the volume of which did not justify the operating expenditure involved, within the meaning of subparagraph (4) of Appendix "C". Similarly in CROA 1856 the Arbitrator, viewing the grievances strictly through the prism of Appendix "C" to the collective agreement concluded that the contracting out of certain ticketing responsibilities was not "work presently and normally performed by employees represented by the Brotherhood’ within the meaning of Appendix "C". It should be stressed that that decision did not involve the application or consideration of the over-arching provisions of the Special Agreement of July 7, 1978.

Secondly, the Arbitrator cannot accept the position of the Corporation that it was justified in ignoring the bulletining provisions of the Special Agreement, and was entitled to revert to contracting out because the required technical skills were not available within the Corporation, as described within subparagraph (1), or that sufficient qualified employees were not available, as contemplated in subparagraph (2). It seems to the Arbitrator that there is a self-serving exercise in bootstrapping in this side of the Corporation’s argument. It declines to transfer the incumbent CN employees who have operated the Ottawa Power Plant lawfully for years, and whose transfer is plainly contemplated by the bulletining procedures of the Special Agreement, because, it asserts, qualified employees are not to be found within the ranks of the bargaining unit. Having regard to the unchallenged representation that the incumbent CN employees are fully qualified for all of the requirements of the National Transportation Act Regulations, and accepting that the Special Agreement and the Collective Agreement must be construed together, the Arbitrator cannot see how the

Corporation can assert that sufficient qualified employees were not available to do the work in question. The Operating Engineers’ Act of Ontario does not apply to the Ottawa Power Plant. In the circumstances the Arbitrator cannot find that the imposition of its requirements by the Corporation were a legitimate business requirement that would justify the extraordinary recourse to contracting out contemplated within the collective agreement.

In summary, therefore, the Arbitrator makes the following conclusions. Upon the transfer of the Ottawa Power Plant from CN to VIA Rail Canada Inc. the Corporation, in conjunction with CN, was under an obligation to apply the bulletining provisions of the Special Agreement. The work transferred to the Corporation thereby came under the terms of the collective agreement between the Corporation and the Brotherhood. Given the clear intention of the Special Agreement to preserve employment, wherever possible, it was then incumbent upon the Corporation in conjunction with CN to bulletin the positions, and to treat them as flowing into the bargaining unit of the Brotherhood. That is its obligation under the mandatory terms of article "G" of the Special Agreement. It could not assert a right to contract out the work in question on the basis of the exceptions enumerated within Appendix "C". Reading that provision together with the Special Agreement, it must be concluded that the work in question was at all times "presently and normally performed by employees represented by the Brotherhood". By the normal operation of the Special Agreement, technical skills were available within the Railway, and employees qualified to do the work must likewise be deemed to have been available.

What then is the appropriate measure of redress? In the circumstances of the instant case, I deem it appropriate, for the time being, to limit this Award to a declaration that the Corporation has violated the transfer and bulletining provisions in Article "C" of the Special Agreement, as further described in Schedule "C" to the Extension Agreements of 1985 and 1988. The parties are therefore directed to negotiate the terms of the bulletining of such positions to be established at the Ottawa Power Plant as correspond to the work previously performed by members of the Brotherhood as employees of CN. In the Arbitrator’s view it is appropriate at this time to allow the parties the opportunity to discuss and determine together what redress is appropriate in respect of individual employees.

For the purposes of clarity, the Arbitrator finds that the contracting out of the work previously performed by members of the Brotherhood under CN is contrary to the Special Agreement, and cannot be justified under the terms of Collective Agreement #1. The Corporation is therefore directed to cease and desist forthwith from the contracting out of the work, and to proceed to the bulletining of the established positions in a manner consistent with the Special Agreement.

The Arbitrator retains jurisdiction in respect of any dispute between the parties regarding the interpretation or implementation of this Award.

DATED AT TORONTO, this 17th day of October, 1989.