AH 285






(the Company)


-          and –



(the Brotherhood)






ARBITRATOR:                               MICHEL G. PICHER



THE COMPANY                 D.W. Coughlin – Manager, Labour Relations, Winnipeg

                                                M. Delgreco  - Director, Labour Relations, Montreal

                                                P.D. Morrisey – Manager, Labour Relations, Montreal

                                                R. Anderson – District Manager, Saskatoon

                                                R. Pezesh




            THE BROTHERHOOD      D.S. Kipp – General Chairman, Kamloops




A hearing was held in this matter in Toronto on May 28, 1991





            This is an interest in respect of impasse between the parties concerning measures to minimize the adverse effects on locomotive engineers occasioned by the transfer of two subdivisions from the Company to CP Rail.  The dispute and joint statement of issue tabled at the hearing are as follows:



Failure to reach agreement pursuant on measures to minimizing adverse effects on Locomotive Engineers at Regina as a result of the Company notice dated 13 June 1990 to transfer of the Bengough and Weyburn Subdivisions to CP Rail.


Joint Statement of Issue:

On 13 June 1990, the Company served notice pursuant to Article 89 of Agreement 1.2 for the transfer of the Bengough, Weyburn subdivisions to CP Rail.


The Brotherhood contends that the failure of the parties to reach agreement is the result of the Company’s unwillingness to provide adequate measures to minimize the adverse effects of the transfer of the Bengough and Weyburn subdivisions on Locomotive Engineers at Regina, Saskatchewan.


The instant dispute has been progressed for resolution under the terms of Article 89 of the parties’ collective agreement.  That article provides a mechanism for negotiation and, if necessary, adjudication of any dispute between the parties concerning measures to minimize the adverse effects of material changes in working conditions affecting locomotives engineers.  It provides, in part as follows:



Adverse Effects of Changes in Working



89.1     Prior to the introduction of run-throughs or changes in home stations, or of material changes in working conditions, which are to be initiated solely by the Company by the Company and would have significantly adverse effects on locomotive engineers, the Company will:


(a)    negotiate with the Brotherhood measures to minimize any significantly adverse effects of the proposed change on locomotive engineers, but such measures shall not include changes on (sic) rates of pay, and

(b)   give at lease six months advance notice to the Brotherhood of any such proposed change, with a full description thereof along with details as to the anticipated changes in working conditions.


While not necessarily limited thereto, in the case of run-throughs, and in the case of other changes where applicable, the matters considered negotiable will include the following:


1.      Appropriate timing

2.      Appropriate phasing

3.      Hours on duty

4.      Equalization of miles

5.      Work distribution

6.      Appropriate accommodation

7.      Bulletining

8.      Seniority arrangements

9.      Learning the road

10.  Use of attrition


(c)    The negotiations referred to in sub-paragraph (a) of this paragraph 89.1 shall commence within 20 days of the date of the notice specified in sub-paragraph (b) of this paragraph 89.1  If the negotiations do not result in mutual agreement within 60 calendar days of their commencement, the issue or issues remaining in dispute shall, within 20 days of the cessation of negotiations, be referred for mediation to a Board of Review composed of two senior officers from each party.

(d)   The Board of Review, shall, within 30 days, make its findings and recommendation.  If the Board is unable to arrive at a decision or if its recommendations are not agreeable to either party, the issue or issues remaining in dispute may be referred by either party to a single Arbitrator whose decision shall be final and binding upon both parties.  The request for arbitration shall be made in writing by either party to the other within 7 days following the Board’s findings.  If the parties cannot agree on the selection of an Arbitrator within 7 days of the request for arbitration, the Minister of Labour shall be requested by the parties or either of them to appoint an Arbitrator.


The parties will prepare a joint statement of issue or issues remaining in dispute to be submitted to the Arbitrator.  The Arbitrator shall hear the dispute within 30 days from date appointment and shall render his decision together with reasons therefore in writing within 30 days of the completion of the hearing.


In the event that the parties cannot agree upon a joint statement of the issue or issues remaining in dispute either party desiring arbitration may submit a separate statement and proceed to a hearing and the other party will be so informed


At the hearing before the Arbitrator argument may be presented orally or in writing, and each party may call such witnesses as it deems necessary.



(e)    The limits specified in sub-paragraph (c) and (d) of this paragraph 89.1 may be extended by mutual agreement.

(f)    The decision of the Arbitrator shall be confined to the issue or issues placed before him and shall also be limited to measures for minimizing the significantly adverse effects of the proposed changes upon employees who are affected thereby.



On June 13, 1990 the Company served notice pursuant to Article 89, notifying the Brotherhood of its intentions to transfer the Bengough and Weyburn Subdivisions to CP Rail effective August 1, 1990.  Subject to its rights under Article 89, the Brotherhood signed an interim agreement which permitted the sale of the subdivision to CP Rail on July 25m 1990.  Negotiations ensued between the parties with respect to measures to mitigate the adverse impact of the elimination of the two subdivisions as it would affect locomotive engineers in Regina.   The parties’ Subdivision and the Corning Subdivision.  It is not disputed that these changes occasioned a reduction of availability work to locomotive engineers home-stationed at Regina.  The Company estimates that the loss involved is 0.6 person years of work, while the Brotherhood maintains that 1.0 person years of work have been estimated.


            The parties met in September and November of 1990, but were unable to resolve their disagreement on the appropriate measure to mitigate the adverse impacts on the members of the Brotherhood affected by the changes in question.  The possibility of a retirement allowance in relation to the retirement of one employee was discussed, it appearing that three members of the Brotherhood in the location in question were eligible to retire at that time. This alternative, however, was not acceptable to the Brotherhood, although it appears to have been utilized in other similar circumstances.  In the result the Company reverted to the offer of a lump sum of $27,500.00 to the Brotherhood, to be administered or disbursed in the discretion of the Brotherhood, without reference to any particular article of the collective agreement, in full and final settlement of the dispute.  This was rejected by the Brotherhood, which countered with a proposal for the payment of a lump sum of $55,930.00 based on the estimate of a locomotive engineer’s annual earning at Regina.  It appears that the Brotherhood’s position also included a proposal respecting the movement of the outer switch on the Qu’Appelle Subdivision, a measure which would apparently have augmented the payment of terminal time.  It does not appear disputed that that proposal was eventually abandoned by the Brotherhood.  It appears from the record that the final position taken by the Brotherhood at the negotiation stages was for the payment of a lump sum amount of $35,000.00, but the parties were nevertheless unable to reach agreement at that point.


The rationale of the Company for its offer of $27,500.00 is drawn form the negotiations of an agreement with the United Transportation Union, concluded of February 1, 1991 with respect to the minimizing of the impact of the subdivision transfers on the members of that union.  It was there estimated that the work lost to the union was three persons years of work, and the parties agreed on a lump sum payment of $27,000.00 for each of the positions lost for a total of $81,000.00.  It appears that when the instant matter proceeded to the Board of Review in Regina on April 2, 1991 the Brotherhood changed its position and claimed a lump sum payment of $81,000.00 based on the settlement made with the United Transportation Union.  Although the matter is not entirely clear, it appears that the rationale of the Brotherhood was that it should receive a lump sum payment equal to that offered to the United Transportation Union.  In any event, given the obvious disparity of positions between the parties, the dispute was not resolved by a joint recommendation of the Board of Review, and, therefore, it was duly progressed to arbitration as contemplated under Article 89.1(d) of the collective agreement.


Before the Arbitrator the Company took what it described as a “hard nosed” position with respect to its offer for the purposes of arbitration.  Its representative submits that it was made clear to the Brotherhood that if the offer of a lump sum payment of $27,500.00 was not accepted at the negotiation stage that it would be withdrawn.  In the result, in the Company’s view, the Brotherhood would be left to obtain such mitigating measures as it could within the purview of Article 89.1 (b).  The Company further argues that, as the Arbitrator is without jurisdiction to amend the provisions of the collective agreement, the Brotherhood could only obtain such mitigation measures as might be found within those terms. Implicitly, the position of the employer is that the Arbitrator could not award the payment of any sums which exceed the amounts provided within Article 89 of the collective agreement, such as the early retirement allowance contained in Article 89.3.


In the strictest sense the Arbitrator cannot disagree with the principle advanced by the Company.  It would, it seems to me be beyond the jurisdiction of the Arbitrator to make an award for the payment of an early retirement allowance in excess of the amounts provided for under 89.3, just as it would be improper to decree the payment of relocation expenses in excess of the amounts agreed to be appropriate within the terms of Article 89.2.  That, however, does not address the full scope of the dispute before me.  It is undisputed that in the course of their negotiations, for reasons which they best appreciate, the parties did not formulate their final positions in relation to the payment of any particular allowance or benefit defined under the collective agreement or contained within Article 89.  Rather, in the interest of resolving their disagreement, they revert to discussing the payment of a lump sum directly from the Company to the Brotherhood, to be administered in the discretion of the Brotherhood.  That amount was not earmarked or related to any discrete category of benefit or premium payment contained in the collective agreement.  In other words, the dispute became a discussion of the payment of a sum in lieu of specific provisions found within the collective agreement, including the kind of issues deemed negotiable under Article 89.1 (b) of the collective agreement.


The issue then becomes whether the Arbitrator has jurisdiction in the circumstances to consider and direct the payment of a lump sum payment in lieu as an adjudicated means of resolving the dispute at hand.  Having regard to the history of the administration of Article 89, and in particular to the pattern of settlements over the years which has involved the payment of lump sums, including their occasional adjudication by arbitrators, I am compelled to answer that question in the affirmative.  The intention of Article 89.1 (d) is plainly to allow a form of interest arbitration to examine the dispute between the parties.  That involves considering the merits of the positions which they advanced during their direct negotiations, as well as before the Board of Review, and making a final and binding disposition of those differences, provided of course that there is no departure from or amendment of the provisions of the collective agreement.  In the case at hand, as in many cases previous, the parties clearly considered that the payment of a lump sum amount, in lieu of any of the specific enumerated rights and benefits found within the collective agreement, is an appropriate measure of redress to be negotiated at the level of direct bargaining, and mediated at the Board of Review.  In these circumstances I can se no basis upon which to conclude that the same standard should not apply when the parties come before the Arbitrator for a final decision in respect of their dispute.  I accept the position of the Company that the Arbitrator is manifestly without jurisdiction to depart from the terms of the collective agreement.  However, I cannot see anything in the provisions of Article 89 which would prevent the awarding of the lump sum payment in lieu of any such provisions, particularly where that has been the very nature of the negotiation between the parties which has been progressed to the arbitration stage.


I turn to consider the merits of the dispute at hand.  Given the nature of the positions taken during the course of negotiations, and the obvious pattern of lump sum payments which asserted itself both in respect of the settlement reached with the United Transportation Union in this case and with other unions, as well as the Brotherhood, in other cases, I am of the view that the awarding of a lump sum payment to the Brotherhood is appropriate in the circumstances.  The only issue becomes the measure of such payment, and the principle upon which it is to be assessed.


The record reveals that the sum of $27,5000.00 offered by the Company during the course of negotiations was based, essentially, on the sum of $27,000.00 per position lost which was offered to the United Transportation Union and became the basis of a settlement between that union and the Company.  In that case an aggregate sum of $81,000.00 was paid to the United Transportation Union in recognition of the loss of three positions, each being roughly valued at $27, 000.00.  While it is arguable that any number of possible formulas might be advanced for justifying a particular lump sum, the Arbitrator sees no reason to reject the general principle applied by the Company in its settlement with the United Transportation Union.  Indeed, although the parties to the instant dispute were disagreed on the final amount, it seems that they both accepted that principle in the positions which they advanced in the instant dispute.


The obvious point of difference between the parties is the appropriate rate of differential between the amount of a lump sum that would be appropriate to compensate for the loss of locomotive engineer’s position as compared with the lump sum payable in respect of the loss of a trainman or conductor’s position.  In the Arbitrator’s view, the figure of $27,500 advanced by the Company does not fairly reflect that differential.  Neither does the figure of $35,000.00 espouse by the Brotherhood.  While in matters such as this absolute precision is not possible, if base rates payable to conductors and trainmen are compared, on an average basis, with base rates payable to locomotive engineers, a relatively clear differential can be identified.  While the Arbitrator appreciated that there may be many variables which would impact the difference in earnings available to a locomotive engineer as compared to a conductor or a trainman in actual practice, reference to average base rates is, nevertheless, a reasonably fair means of assessing the parties own view as to the wage differential between a locomotive engineer person year and a conductor or trainman person year.  For the purposes of clarity, in assessing the differential on the basis of average base rates, the Arbitrator has referred to base rates applicable on lines east of Edmonton as of January 1, 1991 for both locomotive engineers and employees represented on the Company’s western lines by the United Transportation Union.


Applying the above principle the Arbitrator comes to the conclusion that the payment of a lump sum of $32,400 is appropriate as means of lump sum compensation to the Brotherhood for the loss of work previously available to it on the subdivision in question.  In coming to that conclusion it is unnecessary for the Arbitrator to resolve the factual issue of whether the loss is in the order of 0.6 person years or 1.0 person years.  I am content to rely on the precedent and pattern of the Company’s own agreement with the United Transportation Union, and to extrapolate the figure payable to the Brotherhood from the amount deemed appropriate to have been payable to the United Transportation Union.


For all of the foregoing reasons the Arbitrator directs that the Company pay to the Brotherhood, forthwith, the amount of $32,400.00 as a lump sum payment in lieu of all other rights and entitlements which it could claim under the terms of Article 89 of the collective agreement, to minimize the impact of the loss of work experienced y the Brotherhood’s members because of the transfer and/or closure of the mentioned subdivisions.  As agreed in principle between the parties, the lump sum payment is to be paid to the Brotherhood to be disposed of in such manner as it deems appropriate.


I retain jurisdiction in the event of any dispute between the parties having regard to the interpretation or implementation of this award.


DATED at Toronto this 13th day of June 1991.







MICHEL G. PICHER - Arbitrator