BETWEEN:

(the "Corporation")

AND

(the "Brotherhood")

SOLE ARBITRATOR: Michel G. Picher

There appeared on behalf of the Corporation:

M. E. St. Jules – Manager, Labour Relations

A. Léger – Manager, Labour Relations

P. Newsome – Section Director, Human Resources Services

And on behalf of the Brotherhood:

A. Cerilli – Regional Vice-President, Prairie Region

R. Storness–Bliss – Regional Vice-President, Mountain Region

R.J. Stevens – Regional Vice-President, Great Lakes Region

Barry Murray – Regional Vice-President, Atlantic Region

René Moreau – Regional Vice-President, St. Laurent Region

Tom McGrath – Nation President, Ottawa

G.A. Gellant – President, Local 333, Halifax

Andy Wepruk – Representative

Joan H. Brown – Representative

J.J. Journault – President, Local 301, Montreal

Fabien Bisson – Representative, Local 301, Montreal

A hearing in this matter was held in Montreal on November 17, 1989.

The Brotherhood seeks a declaration by the Arbitrator that a recently announced program of passenger service reduction in Canada to be implemented shortly by the Corporation is in violation of the collective agreement. It further seeks a direction to the Corporation that it not implement the operational changes and that it maintain the affected employees on their positions.

The facts are not in dispute. On October 4, 1989 the Minister of Transport announced changes in passenger services involving the discontinuation of certain train routes in Canada and a reduction in the frequency of others. The announcement took the form of Order in Council P.C. 1989-1974. Shortly thereafter, on October 12, 1989, the Brotherhood was served notice by the Corporation under Article "J" of the Special Agreement, with a full description of the material changes in service to take place. It included the number of employees covered by collective agreements nos. 1 & 2, dealing with off-train employees and on-board employees respectively, who were expected to be adversely affected by the changes. The Special Agreement, originally made pursuant to the Railway Passenger Services Adjustment Assistance Regulations (Order in Council P.C. 1977-2987), was first executed on July 7, 1978 and has subsequently been extended to June 27, 1990. Its general purpose is to provide certain rights and protections for employees adversely affected by regulations made under the Railway Passenger Services Adjustment Assistance Regulations, which were originally instituted to facilitate the establishment of VIA Rail and the assumption by it of passenger services previously provided by Canadian National Railway and the Canadian Pacific Railway. For the purposes of this grievance the parties are agreed that the Article "J" notice was given properly and in accordance with the terms of the Special Agreement. Article J.1 provides as follows:

As part of their collective agreement, the parties have negotiated a Supplemental Agreement on Employment Security and Income Maintenance. Article 8 of that agreement provides, in part, as follows:

It is common ground that the changes being implemented as a result of the Minister’s announcement constitute organizational change of a permanent nature within the meaning of the foregoing provision. It is also agreed that these circumstances trigger the application of article 7.1 of the supplemental agreement, which provides as follows:

The changes resulting from the Minister’s announcement are far reaching and have been the subject of widespread public discussion. They did not originate with the Corporation itself, which is duty-bound to implement a reduced program of passenger service not of its own making. The precise impact of the changes has yet to be calculated. It does not appear disputed however, that a substantial number of jobs will be lost. A press release of October 4, 1989 by Mr. Ron E. Lawless, President and Chief Executive Officer of the Corporation estimates that the Corporation’s present national total of 7,300 employees will be reduced by 2,760 employees by 1990. The Brotherhood received a notice on October 12, 1989 from Mr. P.J. Thivierge, Acting Director of Labour Relations of the Corporation, under Article "J" of the Special Agreement advising of changes in passenger service effective January 15, 1990, resulting in a number of position abolishments. According to the Brotherhood, the information provided to it by the Corporation, coupled with its own records of existing seniority lists in both bargaining units indicate the possible loss of some 1,900 positions overall from the ranks of this union alone. These are developments which bring joy to neither the Brotherhood nor the Corporation.

The issue raised in this grievance, as it is pleaded by the Brotherhood, is whether the Corporation is entitled to implement the organizational changes described in its notice to the Brotherhood of October 12, 1989. Simply put, the Union’s position is that the changes planned by the employer will result in the layoff of employees having four or more years of service. This, its representative argues, is prohibited by article 7.1. On that basis, the Union seeks a declaration from the Arbitrator that the implementation of the planned operational or organizational change is prohibited insofar as it would constitute a violation of article 7.1 of the Supplemental Agreement.

The position of the Corporation is that in fact no employee with more than four years of service will be laid off as a result of the changes. In this regard it relies on the Supplemental Agreement on Employment Security and Income Maintenance, whereby employees with four years or more of service who are unable to hold an active position by virtue of their seniority as a result of operational or organizational change assume "employment security" status. That means that they continue to be fully paid all wages and benefits under the collective agreement, indefinitely, until such time as they are reassigned to active work. The Union asserts that employees in that situation would be "laid off" within the meaning of Article 7.1.

The employment security protections to which bargaining unit employees are entitled were described in general terms in a statement contained in an information package released by the Corporation’s Acting Director of Labour Relations on October 5, 1989. That material contains, in part, the following explanation of the consequences of the reduction in service for bargaining unit members:

The concept of a large body of employees within a national workforce being immune from any loss of wages as a result of technological, operational or organizational change represents an extraordinary degree of protection negotiated on behalf of employees by their union. The scope of protection afforded to members of the Brotherhood in this regard is further described in a public statement of VIA Rail Canada Inc., issued on October 16, 1989, which contains, in part, the following:

The merits of this dispute are better appreciated in the light of the entirety of the provisions of the Supplemental Agreement respecting employment security. These are as follows:

The facts pertinent to the dispute may be summarized as follows: On October 4, 1989 the Government of Canada announced sweeping reductions in passenger train services, nationwide. These constitute "operational or organizational change" within the meaning of article 7.1 of the parties’ Supplemental Agreement and involve the elimination of job assignments that include the regular job assignments of a substantial number of employees with four or more years of service. It does not appear disputed that precise impacts cannot be known in advance, as indeterminate numbers of employees may opt for early retirement or may decline to exercise their seniority to transfer or relocate. It is accepted that a number of employees with four years of service will be without a regular or active job assignment when the cutbacks are fully implemented. It is also not disputed that those employees having four or more years of service whose regular jobs are abolished will continue to receive full salary and benefits so long as they comply with the requirements of article 7 of the Supplemental Agreement. It should be noted that the parties are not necessarily agreed on the number of employees who have employment security status who will be affected by the cutbacks in service. It is therefore not necessary for the Arbitrator to adopt the projections related in the Corporation’s statements as being necessarily accurate or indeed to make any conclusions in respect of precise numbers for the purposes of this grievance. It is sufficient to conclude, as the parties do on agreement, that some employees having four or more years of service will be placed in a position where there is no regular job assignment for them, although they will continue to be fully remunerated on the same basis as employees holding regular assigned positions.

The issue raised in this grievance is whether employees in that circumstance are "laid off" within the meaning of article 7.1 of the Supplemental Agreement on Employment Security. The Brotherhood asserts that they are, and that the Corporation’s program of reorganization is therefore in violation of the Agreement.

The question of what constitutes a layoff has generated a substantial amount of arbitral jurisprudence in Canada. Cases have dealt with many situations, including strikes, lockouts, slowdowns, reductions in hours, demotions and forced transfers, to name but some, in considering whether a given situation amounts to a layoff within the meaning of a collective agreement. It appears generally accepted that the term "layoff" is one of flexible meaning to be gleaned from the circumstances and intention of a particular collective agreement (See Re Air Care Ltd. v United Steelworkers of America (1974), 49 D.L.R. (3d) 467 (S.C.C.) and, see, generally Brown and Beatty, Canadian Labour Arbitration, 3rd Ed., 6.220 - 6.2352). Those cases relating to the status of persons on layoff have generally concerned themselves with the residual rights retained by such individuals such as seniority, rights of recall, living allowances, severance pay, welfare premiums, settlement pay and wage protection. Those kinds of considerations, as common as they may be, are of limited value for the purposes of analysis in the instant case.

The issue to be resolved here is the status of employees who, although not attached to particular jobs or assignments since their jobs may have been abolished, continue to be attached to a given location, and paid full wages and benefits, retaining all rights and privileges under the collective agreement indefinitely, even though they may do little or no productive work. It does not appear disputed, however, that employees who have employment security are liable to be required by the Employer to attend at work for such assignments as may become available from time to time as for example in a period of increased business activity. Or they may be asked to do work on an intermittent or occasional basis for substantially reduced periods of hours. In the Arbitrator’s view persons in that circumstance, who remain fully paid, are more akin to employees who are required to hold themselves available on an "on-call basis" than to employees who are on layoff, with or without layoff benefits and with little more than a right of recall based on seniority. The employees whose jobs have been abolished and who remain on employment security status with full wages and benefits can at any time be required by the Corporation to perform various duties. While the concept of sporadic or occasional assignment may in some respect be likened to the treatment of a laid-off employee who receives a recall for temporary work, there is, in the Arbitrator’s view, a significant difference. There is, on the part of the Corporation, an obligation to pay full wages and benefits and, on the part of the employee, a commensurate obligation to perform such work as the employer chooses to assign. This is not the trade-off of rights and obligations normally associated with a layoff. Under the terms of the Special Agreement there would appear to be nothing to prevent the Corporation from requiring the employees on employment security status to attend at a given work location daily for the duration of a normal shift, even if it saw fit to give them no specific work assignment. While such a scenario is neither contemplated by the parties nor suggested by the Arbitrator, its very possibility distinguishes the status of the employees concerned from those who are truly laid off.

The distinction between employees on employment security status and those on layoff is further reflected within the terms of the Supplemental Agreement itself. Article 4 of the Agreement makes extensive provision for the payment of "weekly layoff benefits" to employees who are laid off. It should be noted that such benefits are contemplated as payable to employees at all levels of seniority, including those with thirty years or more of service. The layoff provisions found in that article are obviously intended to work in tandem with the employment security protections found in article 7. It is not disputed that an employee with employment security can be laid off for reasons other than technological, operational or organizational change. That is specifically contemplated by article 8.7 which provides:

In the result, employees with employment security can be laid off as a result of fluctuations of traffic. This differentiated treatment discloses a distinction in the parties’ agreement between those circumstances in which an employee with employment security may be laid off, and those where he or she may not. By the clear terms of article 7.1, the instant case involves a circumstance of operational change in which employees can not be laid off.

In the Arbitrator’s view article 7.5 sheds substantial light on the issue at hand. It expressly reflects the agreement of the parties that an employee who enjoys employment security is compelled to exercise his or her seniority to retain that status. The employee is not required to do so. However, should he or she choose, for example, not to bump onto a position at another location, the employee forfeits employment security but remains "eligible to take layoff" under the terms of the collective agreement as well as the Supplemental Agreement. There is, in other words, a status distinction drawn between layoff, and the entitlement to layoff benefits, on the one hand, and the preservation of employment security status on the other hand within the terms of the Supplemental Agreement itself. By its own terms, the Supplemental Agreement differentiates the employee who is laid off in the fallout of an operational or organizational change from the employee who retains employment security.

These conclusions are, moreover, consistent with the concept of a layoff as it is generally understood in industrial relations parlance. Generally speaking, at a minimum, a layoff connotes a rupture of the normal employment relationship, normally imposed by the reduction in manpower requirements of an employer, which results in a form of unemployment and reduced income for the employee affected. (See Northern Electric Company Limited (1971), 23 L.A.C. 104 (Weatherill); Ferguson Industries Ltd. (1975), 8 L.A.C. (2d) (Richard); Caland Ore Company Ltd. (1973), 4 L.A.C. (2d) 169 (Palmer); Central Precision Ltd. (1972), 2 L.A.C. (2d) 85 (Brown). It is, to say the least, counterintuitive to view a person who retains the right to his or her full salary and benefits, including annually negotiated increments and improvements, until retirement, and for whom union dues continue to be deducted, as an employee on layoff within any generally accepted understanding of that term. While the employee may be described as inactive or on call with full pay, that status is to be distinguished from the less fortunate fate of one who is laid off and who, subject to recall rights, generally faces the inexorable dwindling and eventual extinguishment of all monetary benefits. It is clear to the Arbitrator, both on the basis of these general considerations, and the specific provisions of the Supplemental Agreement that there is a distinction between employment security status and layoff status for the purposes of the Supplemental Agreement of the parties. The employees who are the subject of this grievance, who have employment security and who will continue to be fully paid, will not be laid off within the meaning of Article 7.1.

On the basis of the material before me I am satisfied that the reduction in services contemplated by the Corporation constitutes an operational or organizational change within the meaning of article 7.1 of the Supplemental Agreement. The Corporation is bound by the terms of that Agreement, subject to the exceptions found within it, not to lay off an employee having four or more years of service. It has clearly undertaken to honour that obligation. The service of notice by the Corporation, whether under Article "J" of the Special Agreement or under Article 8 of the Supplemental Agreement, does not constitute a violation of the collective agreement. For the purposes of clarity, the implementation of the operational or organizational change contemplated by the Corporation does not, of itself, constitute a violation of the collective agreement to the extent that employees with four or more years of service are not to be laid off, subject, of course, to their satisfying the conditions of the employment security provisions of the Supplemental Agreement. Employees whose jobs are abolished but who continue to be fully paid wages and benefits are not laid off. In the circumstances, no violation of the collective agreement being disclosed, the Arbitrator cannot accede to the request of the Brotherhood that he direct the Corporation not to implement the operational change announced by the Government of Canada.

For these reasons the grievance must be dismissed.

DATED AT TORONTO, this 27th day of November, 1989.