AD HOC – 282




(the "Company")



(the "Brotherhood")






There appeared on behalf of the Company:

D. C. St-Cyr – Manager Labour Relations, Montreal

D. L. Brodie – System Labour Relations Officer, Mtl

D. T. Cooke – C.P. Observer



And on behalf of the Brotherhood:

R. A. Bowden – System Federation General Chairman



A hearing in this matter was held in Montreal on February 4, 1991.


This is the arbitration of a claim for the payment of overtime hours. The statement of the dispute and issue filed by the Brotherhood is as follows:


Appropriate rate of pay for overtime hours worked by Mr. J. White, Assistant Track Maintenance Foreman.


In 1985, pursuant to a sale of business certain employees of Canadian Southern Railways (CSR), including the grievor, were transferred to the employ of Canadian National Railways.

In conjunction with the transfer, a "Special Agreement" dated June 13, 1985 was entered into between the Union and the Company to provide certain benefits to the employees transferred. Included in these benefits was a Maintenance of Earnings provisions (Article E) which provided "red circled" rates to transferred employees.

There is no dispute between the parties that Article E applies to the grievor and his regular rate of pay is $13.113 per hour.

The Union contends that this rate is applicable to both regular and overtime hours.

The Company contends that the red circled rate is applicable only to regular hours and the grievor is not entitled to "Maintenance of Earnings" for overtime hours worked.

The Union requests that the Company compensate the grievor for the discrepancy in the rate.

The material facts are not in dispute. In May of 1985 the Company, together with Canadian Pacific Limited, purchased the Canada Southern Railway Company from the Consolidated Rail Corporation (Conrail). A Special Agreement was then negotiated among the Company, CP Rail and the Brotherhood. The Special Agreement determined conditions and benefits that were to apply to employees adversely affected by the purchase of the Canada Southern Railway Company, and to provide for the orderly integration of its employees into the service of the Company. The integration of the employees became effective on July 20, 1985, from which time they became covered by the collective agreement between the Brotherhood and the Company.

A central feature of the Special Agreement is article E which provides for the maintenance of employee earnings for persons whose earnings would otherwise be reduced by $2.00 or more per week by reason of their position having been abolished or their having been displaced by the purchase of the Canada Southern Railway. It provides, in part, as follows:


E.1 An employee whose position rate is reduced by $2.00 or more per week, by reason of his position being abolished or his being displaced will continue to be paid at the position rate (exclusive of incidental overtime) applicable to the position permanently held at the time of the change providing that, in the exercise of seniority, he first accepts the highest-rated position at his location to which his seniority and qualifications entitle him. An employee who fails to accept the highest-rated position for which he is senior and qualified, will be considered as occupying such position and his incumbency shall be reduced correspondingly.


E.3 The maintenance of employee’s earnings, will continue until:

(i) the dollar value of the incumbency above the prevailing position rate has been maintained for a period of five years, and thereafter until subsequent general wage increases applied on the basic rate of the position he is holding erase the incumbency differential; or

(ii) the employee fails to apply for a position, the rate of which is higher by an amount of $2.00 per week or more than the rate of the position which he is presently holding and for which he is qualified at the location where he is employed.

In the application of Article E.3(ii) above, an employee who fails to apply for a higher-rated position (excluding a temporary vacancy of less than three months), for which he is qualified, will be considered as occupying such position and his incumbency shall be reduced correspondingly. In the case of a temporary vacancy of three months or more, his incumbency will be reduced only for the duration of that temporary vacancy.


The payment for overtime hours is governed by the provisions of article 8 of the collective agreement which reads, in part, as follows:

8.1 Except as otherwise provided, when employees are required to work in excess of eight hours per day, they shall be paid for overtime on actual minute basis at the rate of time and one-half.

8.2 Except as otherwise provided, work in excess of forty straight time hours in any work week shall be paid for at one and one half times the basic straight time rate, except where such work is performed by an employee moving from one assignment to another, or to or from a laid-off list.

8.3 Except as otherwise provided, employees working more than five days in a work week shall be paid one and one half times the basic straight time rate for work on such sixth and seventh days worked in any work week, except where such work is performed by an employee due to moving from one assignment to another, or to or from a laid-off list.

The issue in the instant case is relatively straight-forward. The Brotherhood claims that the overtime hours worked by the grievor should be paid at the rate of time and a half calculated on the grievor’s protected rate of pay, which at the time of the grievance was $13.11 per hour, or $19.665 for each hour of overtime worked. The Company maintains that the grievor is entitled to the payment of overtime calculated on the rate established in the collective agreement for the position of assistant track maintenance foreman, which is $12.56 per hour, resulting in an overtime hourly payment of $18.84.

From a purposive standpoint there is a compelling aspect to the Brotherhood’s position. If an employee is to enjoy the maintenance of earnings in the sense contemplated by the Special Agreement, it is arguable that the protection should extend to all hours worked, including overtime hours. There is, however, one substantial difficulty with the Brotherhood’s position, namely that there is no language in the Special Agreement, or in the collective agreement, which specifically confers the privilege of overtime premium rates being calculated on an incumbency rate. From a standpoint of literal interpretation the language of the Special Agreement, read together with the overtime provisions of article 8, tend to support the position of the Company. For example, article E.3(i) of the Special Agreement makes a distinction between the "value of the incumbency" and the "basic rate of the position (the employee) is holding". The latter phrase appears to be close to the concept of "the basic straight time rate" which appears in the language of articles 8.2 and 8.3 of the collective agreement, and which is established as the basis for the calculation of time and a half for overtime.

As a matter of principle overtime is a form of premium, the payment of which must be clearly identified in some part of the collective agreement or, as in this case, in the supplementary provisions of a Special Agreement (See Chrysler Canada Ltd. (1985), 22 L.A.C. (3d) 342 O’Shea; and Niagara College (1977), 15 L.A.C. (2 d) 344 Weatherill). From the literal interpretation standpoint, therefore, it can be argued that neither the collective agreement nor the Special Agreement make any provision for the calculation of overtime on the basis of an employee’s protected rate of earnings established by the collective agreement.

In the Arbitrator’s view, however, that argument can only be taken so far. It is equally arguable that the excepting phrase, "Except as otherwise provided" appearing in articles 8.2 and 8.3 of the collective agreement could be interpreted as a recognition by the parties that incumbency rates provided in the Special Agreement are to be taken into account in the calculation of overtime. In the Arbitrator’s view what this suggests is that, at best, the position of both the Brotherhood and of the Company can be supported on the language of the Special Agreement and the collective agreement read together.

How then is the dilemma to be resolved ? In the Arbitrator’s view in the instant case there is evidence which conclusively resolves the uncertainty between these two positions. The material before me establishes beyond substantial controversy that the incumbency protections provided in the Special Agreement are similar, if not identical, to incumbency protections negotiated within the Employment Security Income Maintenance Plan of the Company governing employees who are members of the Brotherhood, as well as a number of other special agreements, without substantial change since 1970. The practice of the Company since that date has been overwhelmingly to pay overtime to employees on the same basis as has been applied to Mr. White in the instant case. In other words, the preponderant practice of many years is that overtime is calculated at the rate of one and one half times the basic straight time rate for the position in which an employee works, and not on the basis of his or her wage protection or incumbency rate. That practice has continued without apparent objection by the Union to the present time.

While the Union’s representative seeks to characterize this grievance as an assertion of the Union’s right to correct an error in interpretation, I find that view of the matter difficult to accept. In my view the more compelling inference to be drawn from the fact that the Company has applied the language of the Special Agreement, and the overtime provision of the collective agreement, in the manner which it has without protest from the Brotherhood for some 20 years is that the practice of the Employer has reflected the original mutual understanding and intention of the parties as regards the treatment of employees who are rate protected. In that context, I am persuaded that the intention which operated as at the execution of the Special Agreement on June 13, 1985 remained the same. Given 15 years of preponderant practice, it would require clear and unequivocal language within the terms of the Special Agreement itself to establish that the parties intended to effect a change in the payment of overtime rates to employees covered by the Special Agreement, as compared with other employees with the same protections.

For the foregoing reasons the Arbitrator is compelled to conclude that the intention of the parties with respect to the payment of overtime to rate protected employees is reflected in the position adopted by the Company in its treatment of Mr. White. For the foregoing reasons the grievance must be dismissed.

DATED AT TORONTO, this 8th day of February, 1991.