AD HOC – 264
IN THE MATTER OF AN ARBITRATION
VIA RAIL CANADA INC.
CANADIAN BROTHERHOOD OF RAILWAY, TRANSPORT AND GENERAL WORKERS
GRIEVANCE RELATING TO THE INTERPRETATION OF ARTICLE 7 OF THE SUPPLEMENTAL AGREEMENT ON EMPLOYMENT, SECURITY AND INCOME MAINTENANCE
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 interpretation of Article 7 of the Supplemental Agreement.
JOINT STATEMENT OF ISSUE:
On October 12, 1989, the Corporation served an Article "J" notice to the Brotherhood pursuant to the Special Agreement for both Agreement No. 1 and No. 2 employees.
Article 7 of the Supplemental Agreement between both parties governing Employment Security and Income Maintenance provides that no technological, operational or organizational change, whether under the above Supplemental Agreement or the Special Agreement, will be implemented if it would result in an employee having four or more years of service being laid off as a result.
The Brotherhood contends that an Article J notice cannot be served to employees having four or more years of employment because employment is provided through filling various classifications as spelt out in the Collective Agreement, and that the notice on any person over four years would violate 7.1 of the Supplemental Agreement.
The Corporation contends that Article 7.1 refers to the implementation of a technological, operational or organizational change and not to the serving of the notice itself. Furthermore, the Corporation maintains that Article 7.2 of the Supplemental Agreement specifically states that "in determining whether a change would result in the layoff of an employee with at least four years of service after exhausting seniority rights at his or her home station or terminal, the employee will be considered eligible for any work on the System, in both Collective Agreement No. 1 and No. 2, for which the employee is qualified or for which the employee can, in the judgment of the Corporation, become qualified within a reasonable period of time".
The Corporation recognizes that if there is no work available to the employee across the System in either Agreement No. 1 and No. 2, such employee cannot be laid off and as such, continues to be paid and receive all benefits as if he remained on this former position until such time as work falling under Agreement No. 1 and No. 2 is made available to that employee.
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:
The Companies signatory hereto will not put into effect any change in the Railway Passenger Services made in accordance with Government initiatives introduced pursuant to the Railway Passenger Services Adjustment Assistance Regulations which will have adverse effects on employees without giving as much advance notice as possible to the General Chairman representing such employees or such other officer as may be named by the Union concerned to receive such notices. In any event, not less than a three-month notice shall be given, with a full description thereof and with appropriate details as to the consequent changes in working conditions and the expected number of employees who would be adversely affected.
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:
8.1 The Corporation will not put into effect any technological, operational or organizational change of a permanent nature which will have adverse effects on employees without giving as much advance notice as possible to the Regional Vice-President representing such employees or such other officer as may be named by the Brotherhood to receive such notices. In any event, not less than three months’ notice shall be given with a full description thereof and with appropriate details as to the consequent changes in working conditions and the expected number of employees who would be adversely affected.
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:
No technological, operational or organizational change, whether under this Employment Security and Income Maintenance Agreement or the Special Agreement, will be implemented if it would result in an employee having 4 or more years of service being laid off as a result.
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:
CBRT & GW - affiliated employees
VIA currently has 3,331 employees who are members of the Canadian Brotherhood of Railway, Transport and General Workers.
Employees in this category with two or more years of compensated service are entitled to layoff benefits equivalent to 80 per cent of their salary, minus UIC payments and other earnings, for a period ranging from ten weeks to five years, depending on length of service.
Employees may resign once they have completed 30 days of layoff and receive a severance payment of up to a maximum of 78 weeks based on service. The severance payment will be reduced by the amount of layoff benefits received.
In addition, employees with four or more years of compensated service are entitled to "employment security". Employees lose this right if they are unwilling to relocate or if they refuse to take a position for which they are qualified elsewhere in the system. If the company is unable to provide employment, those affected receive full salary until they reach normal pension age.
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 changes to the national passenger rail service which take effect January 15, 1990, will be made under the terms of existing Special Agreements with the different unions. These Special Agreements came about when, in the creation of VIA Rail in 1978, the Federal Government passed legislation allowing VIA and other railways to negotiate agreements designed to protect employees who were adversely affected by changes in passenger rail service. These Special Agreements provide employees with lay-off, separation and early retirement benefits.
In addition to the Special Agreements, both the CBRT & GW and the shopcraft unions have provisions for special "job/or employment security" benefits over and above these standard benefits (cited above) which apply when the Corporation initiates changes that adversely affect employees.
Employment security benefits were first negotiated between the railways and their unions in the 1960s and were designed to protect employees from lay offs that were the result of management initiatives involving organizational, operational and technological change. Contracts between VIA and its unions stipulate that no employee with more than four years service or shopcraft employee with more than eight years service can be laid off in these circumstances.
Under this agreement, VIA is responsible for the maintenance of an employee’s full salary and benefits until retirement or until that employee is absorbed back into the work force. In the case of the CBRT & GW however, employees lose their right to these benefits if they are unwilling to relocate or if they refuse to take a position for which they are qualified anywhere else on the system. Similar conditions exist for the shopcraft employees, except that they are only required to take another position in their own regions. The company undertakes in these circumstances to train employees to qualify for another position, to absorb moving expenses including compensation for losses sustained in the sale of a home and to maintain earnings if employees are required to occupy a lower rated position.
In the 1986 national negotiations between VIA and the CBRT & GW, this union secured additional "employment security" protection in exchange for certain concessions. The employment security protection was extended to apply to CBRT & GW employees whether the change affected them was initiated by the company or by the federal government.
EMPLOYMENT SECURITY - THE COST TO VIA
The current changes to passenger rail services are, in VIA’s view, government initiated. Therefore, while all unionized employees are eligible for layoff, separation and early retirement benefits, only employees of the CBRT & GW are protected in this instance by "employment security" benefits.
While nearly 70 percent of the 3,331 CBRT & GW employees have more than the minimum four years compensated service required to qualify for these employment security benefits, it is estimated that fewer than 200 of these will be affected by the current lay offs as the first to be laid off are those with less than four years of service.
VIA will be laying off 1,265 CBRT & GW employees in January 1990 and fully 1,069 of these have less than four years service. VIA estimates that of the 196 employees with more than four years of service who will be affected by the layoffs, approximately 100 will qualify for early retirement benefits. In addition, past experience has demonstrated that most of the remaining 96 employees will eventually be a) absorbed back into the workforce as active employees, retire or leave VIA or b) will lose their employment security benefits if they refuse, for whatever reason, to accept a job elsewhere on the system.
Thus "employment security" does not imply that these employees will continue to be paid regardless of whether or not they choose to work. Rather, this benefit provides a security net until such time as these employees can be absorbed into the existing workforce or until they reach retirement age, whichever comes first.
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:
ARTICLE 7 - EMPLOYMENT SECURITY
7.1 No technological, operational or organizational change, whether under this Employment Security and Income Maintenance Agreement of the Special Agreement, will be implemented if it would result in an employee having 4 or more years of service being laid off as a result.
7.2 In determining whether a change would result in the layoff of an employee with at least 4 years of service after exhausting seniority rights at his or her home station or terminal, the employee will be considered eligible for any work on the System, in both Collective Agreements No. 1 and No. 2, for which the employee is qualified or for which the employee can, in the judgement of the Corporation, become qualified within a reasonable period of time.
7.3 An affected employee who transfers from one seniority group to another or from one collective agreement to the other under these Employment Security provisions, will transfer his or her full seniority to the new seniority group/collective agreement.
7.4 A determination that a change can be made without resulting in the layoff of an employee with at least 4 years of service, using System seniority in both collective agreements, will not compel an employee to actually exercise his or her seniority on the System or from one collective agreement to the other. The option will be the employee’s; however, failure of the employee to exercise his or her full option will not impede the Corporation from implementing the change.
7.5 An employee who does not opt to exercise his or her full seniority will be eligible to take layoff under the terms of his or her collective agreement, and will be entitled to layoff benefits under this Employment Security and Income Maintenance Agreement or the Special Agreement, if he or she satisfies the eligibility provisions of the applicable agreement.
7.6 An employee displaced by an employee exercising seniority under these Employment Security provisions, will, if otherwise qualified, also be entitled to these Employment Security provisions.
7.7 For the purpose of these Employment Security provisions "service" will be based on an employee’s seniority date under Collective Agreement No. 1 or No. 2. If an employee concurrently has seniority in more than one seniority group/collective agreement, "service" will be based on the earliest seniority date.
7.8 An employee who is on layoff on March 1, 1986, will not be entitled to Employment Security under this Article until recalled to service.
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:
8.7 The terms operational and organizational change shall not include normal reassignment of duties arising out of the nature of the work in whicih the employees are engaged nor to changes brought about by fluctuation of traffic or normal seasonal staff adjustments.
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.
(signed) MICHEL G. PICHER