template for ad hoc

DISPUTE:

The propriety of Article “J” notice served by the Corporation to the International Association of Machinists & Aerospace Workers ( I.A.M. ) pursuant to the Special Agreement dated October 25, 1988, with respect to staff reductions to be effective January 15, 1990.

STATEMENT OF FACT:

On October 4, 1989, the Minister of Labour announced the Order in Council P.C. 1989-1974 (SOR/89-488) effecting reductions in passenger train service throughout Canada. On October 11, 1989, the Corporation served an Article “J” notice on the I.A.M. pursuant to the Special Agreement dated October 25, 1988, that a number of positions would be abolished on January 15, 1990. Attached to the notice were tables indicating a total of 98 job reductions within the bargaining units represented by the I.A.M.

The Association and Corporation disagree as to which provision of which agreement notice ought to have been served. The position of the Association is two fold.

1) That the special Agreement of October 25, 1988, has no application to the instant change, and that therefore more particularly the serving of a notice pursuant to Article “j” of said agreement is inappropriate.

2) That the instant change constitutes and/or result from a Technological, Operational and/or Organizational Change, and that therefore notice thereof must be served pursuant to Article 8.1 of the Employment Security and Income Maintenance Agreement.

The Association requests that the Article “J” notice be rescinded, that an Article 8.1 notice be substituted in its place, and all affected employees would be deemed as eligible for any rights and benefits flowing from the serving of an Article 8.1 notice as provided.

The Corporation acknowledges that the changes announced by the Minister will result in changes in operations. However, it maintains that inasmuch as it is a change in railway Passenger services made in accordance with Government initiatives introduced pursuant to the Railway Passenger Serviced Adjustment Assistance Regulations which will have adverse effects on employees, the proper notice to be served is an Article “J” notice and that the Article 8 notice under the Collective Agreement is not applicable nor required. The Corporation therefore denies the specific claims and remedies advanced by the Union.

AWARD

This arbitration concerns the employment security entitlement of employees adversely impacted by recently announced cuts in railway passenger services in Canada. The employees affected were given notice under a document known as the Special Agreement of October 25, 1988. The protections under that agreement are not as extensive as those available to employees under the terms of their collective agreement, and in particular of the Employment Security and Income Maintenance Agreement (ESIMA), which forms part of the collective agreement. Under the ESIMA employees with eight (8) years of cumulative compensated service cannot be laid off as a result of an operational or organizational change which result in the abolition of their position or their displacement by a senior employee. The same protection is not available to employees if they are adversely impacted by a change in railway passenger service as a result of government initiatives introduced pursuant to the Railway Passenger Services Adjustment Assistance Regulations, in which case the Special Agreement would apply. The issue is, therefore, whether the employees represented by the Union were entitled to notice only under the Special Agreement, with its limited protections, or notice under the ESIMA, which would invoke its substantially broader employment security protections. As issue is the vulnerability to layoff of a substantial number of Shopcraft employees.

The events giving rise to this grievance are well known. In April of 1989 the Government of Canada tabled a budget which drastically cut the Corporation’s subsidies over a five-year period. This necessitated cutback and reorganisation of railway passenger services in Canada. Accordingly, the Corporation submitted to the government a business plan for the rationalization of its passenger services, which resulted in the Order in Council 1989-1974 (SOR/89-488) on October 4, 1989 effecting the cancellation of a number of passenger trains and the reduction in the frequency of other trains as of January 15, 1990.

On October 11, 1989 the Company served notice on the Union of the abolition of 98 positions within its bargaining unit effective January 15, 1990. This is part of a larger staff reduction totalling some 2,761 unionized and non-unionized personnel. The notice to the Union, as well as to three other Shopcraft unions, was made under Article J.1 of the Special Agreement, which provides as follows:

J.1 The Companies signatory hereto will not put into effect any change in Railway Passenger Services made in accordance with Government initiatives introduced pursuant to the Railway Passenger Serviced Adjustment Assistance Regulations which will have adverse effects on employees without giving as much advance notice as possible to the General Chairmen representing such employees or such other officer as may be named by the Unions concerned 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.

The Union subsequently filed a two-fold grievance, in the form of a letter dated October 18, 1989 which states, in part, the following:

1) The union submits that the staff reductions in question constitute and/or result from a technological, operational and/or organizational change. Hence, pursuant to Article 8.1 of the Employment Security and Income Maintenance Agreement, such change(s) must be preceded by Article 8 notice to the organisation. By way of remedy, the union requests that no such changes by implemented until 90 days following the issuance of such proper notice, and that all affected employees be made whole for any losses incurred, whether monetary, benefits, displacement rights, etc.

2) The union submits that the service on an Article J notice by the Corporation is improper, inasmuch as the Special Agreement dated October 25, 1988 has no application whatsoever to the contemplated changes. By way of remedy, the union requests that the purported Article J notice be rescinded.

Given the urgency of these matters and the concern of the parties to have their mutual rights and obligations clarified in advance of the implementation of the staff reductions, the instant dispute was processed to arbitration on an expedited basis, and was heard at Montreal within five weeks of the time the grievance was filed. The Arbitrator is advised that identical grievances filed by three other Shopcraft unions are, by agreement, held in abeyance pending the outcome of this dispute.

The position of the Corporation is that it is putting into effect a change in railway passenger services in accordance with the Railway Passenger Services Adjustment Assistance Regulations, and as its actions will have adverse effects on employees, it is required to give notice under Article J.1 of the Special Agreement. The Union’s position is that the Special Agreement and the regulations to which it refers relate exclusively to changes in passenger services arising out of the transfer of such services from the Canadian National Railway and the Canadian Pacific Railway to VIA Rail Canada Inc., a process which has been ongoing since 1977. It maintains that that agreement has no application in the case of job reductions unrelated to the transfer of any such work. It asserts that the sole provision for notice to employees is Article 8 of the ESIMA, and that in this circumstance the employees are entitled to invoke the protections of Article 9 of that agreement.

The provisions of the ESIMA upon which the Union relies are, in part, the following:

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 System General Chairman representing such employees or such other officer as may be named, by the Association, to receive such notices. In any event, not less than three (3) 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.

…

9.1 Subject to the provisions of this Article, and in the application of Article 8.1 of this Agreement, an employee will have Employment Security when he has completed eight (8) years of Cumulative Compensated Service with the Corporation.

9.2 An employee who has Employment Security under the provisions of this Article will not be subjected to layoff as the result of a change introduced through the application of Article 8.1 of this Agreement .

9.3 An employee who has Employment Security under the provisions of this Article and who is affected by a notice of change issued pursuant to Article 8.1 of this Agreement, will be required to exercise his maximum seniority rights(s), e.g., seniority terminal and region, first, in his classification and then in any lower classifications, in accordance with the terms of the collective agreement applicable to the employee who has Employment Security.

The Corporation relies on the provisions of the Special Agreement between itself and the Canadian National Railway Company, on the one hand, and the four Shopcraft unions, the most recent renewal of which was executed October 25, 1988. It relies on Article J.1 of that agreement. The Corporation does not dispute that the announced reduction in service and the reassignment of a smaller number of employees within its projected downsized operations constitutes operational or organizational change as those terms are understood within Article 8 of the ESIMA. It submits, however, that as the changes are, in its view, “… made in accordance with Government initiatives introduced pursuant to the Railway Passenger Services Adjustment Assistance Regulations …” it is Article J.1 and the more restrictive provisions of the Special Agreement which govern in the circumstances.

With that position the Arbitrator has substantial difficulty. The Railway Passenger Services Adjustment Assistance Regulations have their in the decision taken by the Government of Canada in 1977 to rationalize passenger train service in Canada by establishing VIA Rail Canada Inc. and transferring to it all passenger services previously operated by the Canadian National Railway and the Canadian Pacific Railway. It was anticipated that the transfer of facilities, equipment and staff from CN and PC to VIA Rail would have adverse impacts on employees of CN and CP whose jobs would be affected. On July 7, 1978 a Special Agreement (known as the “Blue Book”) was entered into between CN, CP and the predecessor bargaining agent of the Shopcraft unions. As it was not then contemplated that VIA Rail would be performing train equipment maintenance operations other than on a contract basis with the two other railways, that agreement made no provision for the transfer of employees from CN and CP to VIA. It did, however, provide for special assistance to the Shopcraft employees of the two Railways who might be affected by the changes made in accordance with the regulations, and made allowance for employees to transfer between CN and CP where passenger related maintenance work was itself transferred between CN and CP by virtue of VIA’s contracting arrangements. VIA Rail was not a party to that special agreement, as it was not contemplated that it would itself be employing Shopcraft and maintenance personnel.

In 1985 it was decided that VIA Rail should take over the repair and maintenance of its fleet. This resulted in the transfer of some 1,075 Shopcraft employees from CN and VIA at Toronto and Montreal effective June 28, 1985. Accordingly, a Memorandum of Agreement was entered into between CN, VIA Rail and the Shopcraft unions on May 14, 1985, providing for benefits and conditions to apply to employees adversely affected by the transfer of the passenger related work from CN to VIA. It specifically addressed the transfer of employees at Toronto and Montreal as well as the less substantial work from Winnipeg and Edmonton to Toronto. That Memorandum expired on June 27, 1988. Meanwhile, in May of 1985, VIA granted voluntary recognition to the Shopcraft bargaining agents of the Employees coming from CN, which shortly thereafter matured into certification by order of the Canada Labour Relations Board. Several years later on September 22, 1988 the parties jointly executed a letter of intention to negotiate a special agreement to deal with the contemplated transfer of passenger maintenance activities at Halifax and Winnipeg as well as at such other locations as might later be identified. Subsequently, on October 25, 1988 they executed a Special Agreement, the Agreement here at issue, between CN, VIA Rail and the four Shopcraft Unions. Known as the “Green Book”, that Agreement is, according to Article M.1, to have the following duration and application:

M.1 This Special Agreement shall apply to those changes in Railway Passenger Services made up to and including December 31, 1990 in accordance with Government initiatives introduced pursuant to Railway Passenger Services Adjustment Assistance Regulations.

The cover, as well as the title page of the Green Book, states that it is:

Re: CONDITIONS AND BENEFITS TO APPLY

TO EMPLOYEES ADVERSELY AFFECTED BY THE TRANSFER OF PASSENGER RELATED WORK FROM CANADIAN NATIONAL RAILWAY COMPANY TO VIA RAIL CANADA INC., MADE IN ACCORDANCE WITH REGULATIONS ESTABLISHED BY ORDER-IN-COUNCIL

The preamble to the Special Agreement further provides:

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, Subsections (a) through (i); 5(1)(a) and (b); 5(2); 6(a) and (b) and 7 of the Railway Passenger Services Adjustment Assistance Regulations.

The regulations referred to in the foregoing part of the preamble relate generally to the efforts of the parties to shelter employees from adverse impacts, including retraining, providing assistance in relocalisation, developing separation plans for early retirement and facilitating the transfer of employees to VIA Rail Canada Inc., among other things. The entire thrust of the regulations as they were initially drafted, as well as the Special Agreement or “Green Book” is to minimize the adverse effects on employees arising from the transfer of passenger related maintenance work from CN to VIA. For example, Article A.1 of the Special Agreement speaks of the options to be made available to an employee whose position is abolished or who is displaced and who is unable to hold work under various CN collective agreements or to gain work through the inter-company transfer agreement contained in Article G of the “Green Book”. Article B.1 provides for the transfer of unbroken service for an employee moving from CN to VIA, and vice-versa. Other articles of the agreement deal variously with training, relocation, maintenance of earnings for employees in downgraded positions, separation benefits as well as layoff and severance benefits.

It is clear from the further context of the regulations that “changes” were seen as relating to the transfer of railway passenger service from CN and CP to VIA Rail. The initial Regulation of changes:

“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)

The government initiatives so contemplated related to the transfer of passenger operations to Via Rail from CN and CP.

The word “changes” has undergone some revision over the life of the regulations. The most recent amendment came with P.C. 1988-1482, on July 21, 1988 (SOR/88-401). It provides the following definition:

1. The definition “changes” in subsection 2(1) of the Railway Passenger Services Adjustment Assistance Regulations is revoked and the following substituted therefor:

“changes” means changes in the provision, management or operation of selected Railway Passenger Services as a result of

(a) the implementations of the contact between the Minister of Transport and VIA Rail Canada Inc., entered into pursuant to Department of Transport Vote 52d of Appropriation Act No.1, 1977, or

(b) The discontinuance of a Railway Passenger Service; (changements)

The Regulatory Impact Analysis Statement which accompanies the Regulation with accompanies it but which does not form part of it, contains the following comments:

Description

In 1976 and 1977 the federal government announced major policy initiatives aimed at improving the quality and cost-efficiency of rail passenger services. VIA Rail Canada Inc. (VIA) was created and assumed from Canadian National (CN) and Canadian Pacific Railway (CP) the responsibility for managing such services. Concurrently, a review was underway to develop, and ensure the implementation of a plan to eliminate duplication and otherwise “rationalize” services across the country.

In recognition of the far-reaching impact the foregoing would have on railway labour, the Labour Assistance Program (LAP) was established in 1977 through the Appropriation Act. The objective of the Program is to minimize, through the award of more generous benefits than those offered under the normal railway job security agreements, the negative effects on labour which could result from government initiatives.

…

As VIA involved, the government decided to both extend and expand the scope of the Labour Assistance Program in order to embrace new initiatives, such as the transfer of train crews and the transfer of the equipment maintenance function from CN and VIA. The regulations were amended in 1985 with the intent of broadening the definition of “changes” so that the Minister would have the authority to recognize railway claims arising from these new initiatives. Instead, the 1985 amendment may have had the opposite effect. It may have unintentionally narrowed, rather than broadened, the definition of “changes” such that the Minister’s authority to pay claims relating to the new initiatives is in question.

The amendment to the definition in the regulations rectifies the situation by giving the Minister clear authority to make the necessary payments.

The revised definition is also broad enough to include railway claims which arise from VIA initiatives that, while not specially identified by the government as falling under the Program, nonetheless have been determined by arbitration decisions on disputes between railways and unions to fall within the scope of the Program.

…

The amendment will not remove any benefits currently granted to railway unions nor affect them in any other way.

[emphasis added]

While the Arbitrator appreciates that the foregoing comments are not in the nature of an interpretation of binding authority, they are at least reflective of a governmental intent consistent with the position of the Union. The reference to VIA initiatives which have been determined by arbitration to fall within the scope of the Program can be understood by reference to certain prior arbitration awards. An example is the decision of Arbitration Weatherill, in an award dated March 20, 1989 between CN, VIA Rail and the Canadian Brotherhood of Transport and General Workers. In that case the Brotherhood argued that the closing of the CN Winnipeg steam plant required an Article J notice under the VIA Special Agreement (known as the “Red Book”). CN maintained that the closure of the plant was not VIA related, but was a discrete internal operational or organizational change which triggered a notice under Article 8 of the Security and Income Maintenance Plan in effect between itself and the Brotherhood. The award relates that in 1988 CN ceased operation of its steam plan, entirely as a result of an agreement between itself and a government re-development corporation concerned with building projects in downtown Winnipeg. CN’s agreement with the public authority required the demolition of the steam plant prior to December 16, 1988. Learning that it could no longer obtain steam for its operations from CN, VIA proceeded to build new facilities of its own in the station complex. The issue then became whether there was a sufficient linkage of these events as to bring the adverse effect on CN employees within the purview of Article J of the “Red Book” Special Agreement. Arbitrator Weatherill ruled that the two events, the closing of CN’s steam plant and the opening of VIA’s were sufficiently related as to come within the purview of the Special Agreement. In so doing he reviewed his own earlier award in the Canadian Pacific (Medicine Hat Trains Crew ) arbitration which involved the United Transportation Union (February 8, 1982), holding that changes in passenger service on certain western lines had been “in accordance with” government initiatives. At pp.8-9 he made the following observations:

I do not think that case turned on the fact that the change there in question was made at the request of VIA Rail; what was important, as I think the excerpt quoted indicates, was that the change was in accordance with the rationalization of railway passenger services contemplated by the regulations, and indeed that it was considered by the parties to be a part of that process.

In other circumstances, as I have noted, there have been transfers of activities such as station maintenance, in which an article J notice has, quite properly in my view, been given. At some terminals, there has been a transfer of steam plant operations, and article J notices have been given, again (whether the transfer was at the request of VIA or not), quite properly. If, in such cases, CN had simply ceased operation of a steam plant, while allowing VIA coincidentally to take over the operation of that plant for the purposes of its passenger train operations, it would be natural to conclude that there had in fact been the sort of “change” contemplated by the Special Agreement, and that an article J notice should be given. The question is whether the instant case is, essentially, of that nature and can properly be described as a “change in Railway Passenger Services made in accordance with Government initiatives”.

In my view the change in question was a “change” of the sort contemplated by the Special Agreement. It is true that there are two distinct aspects to what occurred: CN closed its steam plant and transferred the property on which it stood to the Fork Development Corporation; VIA constructed a new steam facility in the station which CN had previously transferred to it. there is, however, an obvious relationship between those two events: the requirement of VIA for steam. That requirement, essential to the operation of passenger services, which had been met by the activities of CN, now had to be met by VIA. Otherwise the “rationalized” passenger services contemplated by government initiatives would be adversely affected. That the particular occasion which led CN to close the steam plant came at the request of the Forks Development Corporation is, in my view, immaterial to the question before me, which is whether or not these were circumstances where the change which then occurred was one calling for the increased employee protection provided for under the Special Agreement.

Award like the Winnipeg steam plant decision required the parties to re-examine the scope of the meaning of “changes” within the Regulation and, as the analysis statement indicates, to widen it sufficiently to include initiatives which have been more broadly found to fall within the scope of the federal government program.

There is consistency in the history of the evolution of the regulation and its interpretation by boards of arbitration, as well as the interpretation of the special agreements made pursuant to it. In virtually all cases the dispute concerns the rights of employees impacted by reason of the rationalizing of passenger services in Canada through the establishment of VIA Rail and the gradual transfer to it of a number of operations previously conducted by CN or CP, most recently, Shopcraft Maintenance. That is what the Regulation and the Special Agreement have traditionally and consistently addressed and that, in the Arbitrator’s view, is what they continue to address. The present definition of “changes” found within the Regulation would, standing alone, appear to support the position of the Corporation to the effect that the discontinuance of a railway passenger service is, in and of itself, a change which triggers the application of the Special Agreements negotiated pursuant to it. A full appreciation of the scheme of these provisions, however, does not support that view. It is not disputed that there are still employees of CN and CP working within the Shopcrafts whose jobs are substantially dedicated to servicing the needs of VIA Rail. Given that relationship, a unilateral decision by VIA to reduce railway passenger service would obviously have an adverse impact on those employees. While such a decision might not have qualified under the prior definition of “changes”, the CN and CP employees concerned would nevertheless be direct victims of the overall scheme of transfer and rationalization of passenger service which commenced in 1977. Because that process continues to affect them, the regulation now defines “change” in such a way as to afford them and the railways which employ them the fullest protection of the Special Agreements. That is the intent and purpose of the definition of “changes” now found in the Regulation. It was not intended to affect the rights of VIA Rail employees in respect of decisions taken unilaterally by VIA Rail which are unrelated to the process of transfer which the Regulation has always addressed.

In the Arbitrator’s view in light of the history of both the Regulation and the Special Agreement, it cannot be concluded that the unilateral abolishment of Shopcraft positions within VIA Rail, entirely unrelated to the transfer of employees as between other railways and VIA, falls within the definition of “changes” as contemplated within the Regulation, or within the Special Agreement or “Green Book”. What has transpired is an internal decision, obviously driven by external budget constraints imposed by the government of Canada, to make substantial operational and organizational change of a permanent nature. That is precisely what is contemplated by the term of Article 8.1 of the Employment Security Income Maintenance Plan negotiate between the Corporation and the Union. The fact that the change results from political and budgetary decisions made in Ottawa does not alter the character of the change or its impact on employees for the purposes of the Plan or the collective agreement. Most importantly, it does not bring it within the provisions of the Special Agreement which, for the reasons above, relates exclusively to the impact of transfers of passenger related work from other railways to the Corporation pursuant to government initiatives. If it were otherwise, given that the employer is a Crown corporation which is obliged to take direction from the Government of Canada, the important protections of Article 8.1 of the Employment Security and Income Maintenance Agreement would be reduced to the vanishing point. In considering whether the Special Agreement applies, the question is not whether the change in question has been caused by some governmental action, it is whether it relates causally to the transfer of passenger related work from other railways VIA Rail Canada Inc. as originally contemplated in P.C. 1977-2987.

In my view these conclusions are consistent with the overall scheme of the Regulation, the Special Agreement and the collective agreement, read together. It must be borne in mind that the Regulation was arrived at consultatively, and in the knowledge of the protections available to bargaining unit employees under their respective collective agreements. As the explanatory note states, in my view quite properly, the amendment in respect of the word “changes” within the Regulation: “… will not remove any benefits currently granted to railway unions nor affect them in any other way”. In the Arbitrator’s view it would require clear and unequivocal language to conclude that either the Regulation or the Agreement was intended to deprive long service employees of employment security protection under their collective agreement whenever an operational or organizational change implemented by the Corporation was in some way caused by a decision of the federal government. That conclusion is not supported on the material before me.

For the foregoing reasons the grievance must be allowed. The Arbitrator finds and declares that the notice served on the Union by the Corporation on October 11, 1989 was required to be served pursuant to Article 8 of the Employment Security and Income Maintenance Agreement contained within the parties’ collective agreement. and not under Article J.1 of the Special Agreement. As the parties indicated to the Arbitrator at the hearing that they agree that the notice originally given may, in light of this Award, be deemed to have been given under Article 8 of the ESIMA, no further direction need be made by me in respect of a corrective notice. For the purposes of clarity, however, all affected employees are to be deemed eligible for such rights and benefits as flow to them from the serving of an article 8.1 notice.

I retain jurisdiction in the event of any dispute respecting the interpretation or implementation of this Award.

DATED AT TORONTO, this 8th December, 1989.

(signed) MICHEL G. PICHER

ARBITRATOR