BETWEEN:

(the "Company")

AND

(the "Brotherhood")

SOLE ARBITRATOR: Michel G. Picher

There appeared on behalf of the Company:

I. J. Waddell – Manager, Labour Relations, Montreal

D . David – Labour Relations Officer, Montreal

And on behalf of the Union:

B.R. McDonagh – System General Chairman, CP Joint Protective Board

S.A. Horodyski – President

A hearing in this matter was held in Montreal on April 4, 1990.

This grievance concerns the rights of employees of the Company affected by the recent reduction of VIA Rail passenger services in Canada. The dispute and joint statement of fact filed by the parties is as follows:

The material facts are not in dispute. The Company employs carmen at Havelock, Ontario who, until recently, included as part of their duties the servicing of VIA passenger trains between Toronto and Havelock. Similarly, it employs carmen at Victoria who have serviced the VIA Rail RDC units which have travelled between Victoria and Courtenay, B.C., on the Esquimalt and Nanaimo line, which is wholly owned by CP Rail. Both the Havelock service and the Vancouver Island service were cancelled effective January 15, 1990 by VIA Rail Canada Inc., pursuant to Order-in-Council 1989- 1974 (SOR/89/488), dated October 4, 1989. The Esquimalt and Nanaimo service has subsequently become the subject of litigation, the final outcome of which is still pending. As at the date of hearing the service remained in operation pursuant to a court order made against VIA Rail Canada Inc., an order which, at present appears to be under appeal. It is common ground that the merits of that litigation need not have any bearing on the determination to be made in the instant grievance. For the purposes of the matter before the Arbitrator, therefore, it may be assumed without finding that the carmen’s work at Victoria relating to passenger service on the Esquimalt and Nanaimo line ceased to be available, just as it did at Havelock.

The issue is whether the Company was entitled, in the circumstances, to give notice to the employees affected of the abolition of the three positions at Victoria and one at Havelock under the terms of the Special Agreement dated July 7, 1978, as the Company maintains, or whether such notice should have been provided under the terms of article 8 of the Job Security Agreement between the Company and the Brotherhood, as the Union maintains. The latter notice would, of course, import the protections of employment security contained within the Job Security Agreement to protect employees adversely impacted by technological, operational and/or organizational change. Those protections would not, however, be available under the Special Agreement. The Brotherhood’s position is two-fold: firstly, it submits that the Special Agreement has no application and that the Job Security Agreement should prevail. Secondly, it submits in the alternative that even if the Special Agreement does apply, the circumstances further require additional notice to be served pursuant to article 8.01 of the Job Security Agreement.

The history of the Special Agreement, executed originally on July 7, 1978 between Canadian National Railways and CP Rail on the one hand, and the Railway Employees’ Department Division No. 4 (the predecessor bargaining agent to the instant union) has been reviewed in some detail in prior arbitral awards (see VIA Rail Canada Inc. and International Association of Machinists and Aerospace Workers, an award of the instant arbitrator dated December 8, 1989). It is not disputed that that agreement insofar as it might operate, would bind the Brotherhood as the lawful successor to the rights of the Railway Employees’ Department Division No. 4, as regards carmen, following certification of the Brotherhood by the Canada Labour Relations Board on March 25, 1985.

The Special Agreement known as the "Blue Book" was originally entered into in the late 70s to provide certain protections to employees affected by the transfer of passenger services from CN Railways and CP Rail to the newly established VIA Canada Inc. An important aspect of the overall scheme is that the Railway Passenger Services Adjustment Assistance Regulations, under which the Special Agreement was made, provide for the reimbursement of the Company by the Federal government for the cost of labour assistance benefits payable under the Special Agreement.

The position of the Brotherhood is that the Special Agreement between itself and the Company did not continue beyond December 31, 1985. The Company maintains that an arrangement was entered into as of February 26, 1982 which had the effect of implementing the indefinite continuation of the agreement so long as the Minister of Transport extended the effective date of the Regulations. In that regard it draws the Arbitrator’s attention to a Memorandum of Agreement between CN Railways, CP Rail and the Canadian Council of Railway Shopcraft Employees and Allied Workers executed on February 26, 1982 which is as follows:

The Company’s representative submits that the second paragraph of the above memorandum has the effect of continuing the application of the Special Agreement in respect of changes made after December 31, 1980, subject only to the willingness of the Minister of Transport to provide the necessary reimbursement by extending the time limits for the operation of the Passenger Services Assistance Regulations. In the Union’s submission, however, the extension in respect of changes subsequent to December 31, 1980 is limited to the terminal date of December 31, 1983 cited in the first paragraph.

In the Arbitrator’s view an appreciation of these admittedly complex documents requires a broad overview of the various special agreements which evolved since 1977 under the Railway Passenger Service Adjustment Assistance Regulations. A separate special agreement was made under the regulations between Canadian National Railways, Canadian Pacific Limited and VIA Rail Canada Inc. and a number of unions representing both clerical and operating employees. Referred to as the "Red Book" it contains an article "M" which provides as follows:

It may be noted that the above formulation clearly contemplates the indefinite continuation of the "Red Book" Special Agreement to apply to changes made subsequent to December 31, 1980, without any qualification that would cut it off at December 31, 1983 or any other date. The submission of the Company before me is that by the Memorandum of Agreement of February 26, 1982 the Company and the Union’s predecessor bargaining agent intended to achieve the same result respecting the "Blue Book". In support of that position the Company’s representative further points to the terms of the "Green Book" special agreement made between Canadian National Railways and Canadian Pacific Limited and the Canadian Brotherhood of Railway Transport and General Workers, the International Brotherhood of Firemen and Oilers and Division No. 4 Railway Employees’ Department. Noting that the terms of that agreement are identical to the agreement between the parties to this grievance, he stresses that article J notices issued to those bargaining agents have not been the subject of any dispute or grievance. In other words, in the Company’s submission it has been accepted broadly within the industry, and by the Government of Canada, that all of the special agreements negotiated pursuant to the regulations have continued in effect, subject only to the willingness of the Minister of Transport to extend regulatory time limits for the payment of government funds, as contemplated by the agreements themselves.

In the Arbitrator’s view that characterization of the instant Special Agreement appears to be substantiated by the prior dealings between these parties respecting the continuation of their Special Agreement. The material before me discloses that on September 15, 1983 the Union’s then representative wrote to the Company requesting an extension of the Special Agreement for a further two years, which would have expired December 31, 1985. That letter was sent jointly to CP Rail and Canadian National Railways by Mr. Asprey who was then President and Secretary of the Canadian Council of Railway Shopcraft Employees and Allied Workers. On September 21, 1983 Mr. Asprey received the following reply, signed jointly by the Assistant Vice-Presidents of both railway companies:

What the foregoing reveals is that the approach taken by both railways to the inquiry of the bargaining agent is that the extension of the Special Agreement was to be affected simply by obtaining the consent of the Minister of Transport to an extension of the repayment provisions of the Regulation. The reply of the Railways of September 21, 1983 was, in effect a statement advising the bargaining agent that the Minister was already being petitioned for an extension through December 31, 1986, and that this had been done at the initiative of VIA Rail Canada. It may be noted that VIA Rail Canada is not a party to the Blue Book Special Agreement which is before me. In the Arbitrator’s view these documents are of substantial significance for what they reveal of the understanding and intention of the parties to the original Blue Book Special Agreement.

There is nothing before me in the nature of a joint document agreeing to the extension of Special Agreement made between the Company and the predecessor bargaining agent. On the contrary, all that appears to exist is an exchange of correspondence which suggests that extension of the Special Agreement was contingent only on consent of the Minister of Transport. In my view that consent could only relate to the extension by the Minister of the effective date of the Regulation under which he would be willing to subsidize the payments to be made under the Special Agreement The Union has put nothing before me to suggest that the predecessor bargaining agent objected to the approach reflected in the letter of the two railway companies of September 21, 1983. Specifically, it appears that it did not take exception to the suggestion that the special agreement could be extended as a result of a request by VIA Rail Canada, which was itself not party to the Blue Book Special Agreement. In the Arbitrator’s view the record reveals, on the balance of probabilities, that the parties to the Special Agreement did agree, by their Memorandum of Agreement of February 26, 1982 that the Blue Book should continue indefinitely in effect, beyond December 31, 1980, provided only that the Minister of Transport should agree, from time to time, to extend the time limit prescribed in section 3(a) of the Passenger Services Assistance Regulations. There is, I think, no other way to understand the exchange of correspondence between the parties in September of 1983, and the apparent silence of the bargaining agent in the face of the employers’ reply. For these reasons the Arbitrator must sustain the position of the Company respecting the continuation in effect of the Special Agreement.

The question then becomes whether the changes at Havelock and Victoria that are the subject of this grievance are changes within the meaning of the Special Agreement, and, secondly, whether the Minister of Transport has extended the regulations to apply to such changes. The answers to those questions must be given in the affirmative. It is common ground that, as related in the VIA Rail award cited above, the definition of the word "changes" under the Regulations was amended on July 21, 1988 by P.C. 1988-1482 (SOR/88401) to provide, in part, as follows:

In light of the foregoing provision it does not appear controverted that discontinuance of passenger services at Havelock and Victoria would, insofar as CP Rail employees are concerned, constitute changes within the meaning of the Regulation and the Special Agreement made pursuant to it. That is, moreover, consistent with the original intention of the Regulations, which was to protect CP and CN employees affected by the new working relationships created by the transfer of services to VIA Rail Canada Inc. In addition, it is not disputed that the Minister of Transport has extended the Railway Passenger Services Adjustment Assistance Regulations, and in particular paragraph 3(a) to apply up to and including December 31, 1990 (see SOR/85- 701, 1985 Canada Gazette Part II P3302).

For all of the foregoing reasons the Arbitrator cannot accept the position of the Brotherhood that the Blue Book Special Agreement lapsed as of December 31, 1985. On the contrary, both the general understanding within the industry governing a number of special agreements, and the specific conduct of the Brotherhood’s predecessor bargaining agent reflect an understanding that the terms of the Special Agreement were to continue in effect indefinitely beyond December 31, 1980, subject only to the agreement of the Minister of Transport to provide funding by the extension of the time limit in section 3(a) of the Regulations. That consent has been forthcoming and continues to operate until at least December 31, 1990. Moreover, the amendment of the definition of "changes" would clearly have the effect of bringing the cancellation of passenger services at Victoria and Havelock within the contemplation of the Regulation and of the Special Agreement. For all of these reasons the position of the Union with respect to the application of the Special Agreement must be rejected.

The next issue to be addressed is whether, notwithstanding the application of the Special Agreement the terms of article 8 of the Job Security Agreement separately governing the parties apply in the circumstances of this case. Article 8.1 of that agreement provides as follows:

In considering the application of the foregoing provision it is instructive to have regard to the definition of technological, operational or organizational changes included within the terms of the Job Security Agreement itself, which is as follows:

As the foregoing provisions indicate, technological, operational and organizational changes are intended to mean changes which are, generally speaking, within the control or discretion of the Company. Changes which are a result of external economic conditions which are outside the control of the Company are not deemed technological, operational or organizational changes for the purposes of the Job Security Agreement.

What does the instant case reveal? For reasons beyond the control of the Company, Via Rail Canada Inc. decided to cancel its passenger operations between Victoria and Courtenay, B.C. as well as between Toronto and Havelock, Ontario. As a result of that decision the Company, CP Rail, was no longer called upon to provide carmen’s services for passenger equipment at Victoria and Havelock. It is the resulting loss of work which gave rise to the notice under the Special Agreement which is the subject of this grievance. In the Arbitrator’s view that notice should not have issued under the terms of the Job Security Agreement because it did not constitute a technological, operational and organizational change implemented by CP Rail, as contemplated by the terms of the Job Security Agreement. For these reasons I cannot sustain the alternative position of the Brotherhood that it was entitled to receive notice under the terms of the Job Security Agreement in the circumstances.

In summary, the Arbitrator’s finding may be stated as follows: the Blue Book Special Agreement did not lapse on December 31, 1985. By the terms of the parties’ Memorandum of Agreement on February 26, 1982 it continues in effect indefinitely, subject only to the consent of the Minister of Transport to extend the application of section 3(a) of the Regulations. The changes at Havelock and Victoria fall within the definition of "changes" within the Regulations and the Special Agreement and, consequently, the notices issued by the Company on October 13, 1989 were notices properly given under the terms of the Special Agreement of July 7, 1978. Additionally, the cancellation of passenger services at both Victoria and Havelock were not changes initiated or in any way controlled by CP Rail, and therefore do not constitute technological, operational or organizational changes within the control of the Company as contemplated in the Job Security Agreement. The Company was therefore under no obligation to provide notice to the Brotherhood under article 8.1 of the Job Security Agreement.

For all of the foregoing reasons the grievance must be dismissed.

DATED AT TORONTO, this 17th day of April, 1990.