AH 288




Canadian Pacific Limited

(the “Company”)




International Association of Machinists and Aerospace Workers


International Brotherhood of Electrical Workers


United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada


International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers


Sheet Metal Workers International Association


International Brotherhood of Firemen and Oilers


Transportation Communication Union and


Brotherhood of Maintenance of Way Employees


(the “Unions”)




ARBITRATOR:                                             Michel G. Picher


APPEARING FOR THE UNIONS:                       

                                                            Abe Rosner-Executive Secretary, CCRSU


                                                            Dennis Deveau-Executive Vice-President, TCU


Louis DiMassimo-System Federation General

Chairman, BMWE   







D.V. Brazier-Assistant Vice-President, Industrial Relations, Montreal


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


L.G. Winslow-Labour Relations Officer, Montreal















A hearing on this matter was held in Montreal on October 11, 1991.



This arbitration is in respect to the policy grievance filed by eight unions with respect to the recently announced closure of the Company’s Angus Shops in Montreal.  The Unions maintain that inadequate notice was given to them, in violation of the requirements of the collective agreement.  The dispute is reflected in the following joint statement filed at the hearing:



The applicability of the Semi-Annual Plan provisions to proposed staff reductions and the closure of Angus Shops.


Joint Statement of Fact

On September 16, 1991, the Company served a number of notices, pursuant to Article 8.1 of the Job Security Agreement, announcing the closure of Angus Shops and a series of staff reductions at that location and others in Montreal, to be effective January 3, 1992.


The Semi-Annual Plans filed by the Company in July 1991 contained no indication of the aforementioned staff reductions.


Joint Statement of Issue

The Unions maintain that the Company, in remaining silent in its Semi-Annual Plan about the possibility of such changes, violated its contractual obligations in this regard.  The Unions request a declaration to this effect.  The Unions further request that the Article 8.1 notices be deemed null and void, and a finding that no further such notice can validly be issued prior to the inclusion of the changes in the questions in a Semi-Annual Plan.


The Company denies the Unions’ contention and requests.


The material facts are not in dispute.  The Angus Shops in Montreal are one of the Company’s three main shops for the heavy maintenance of railway equipment in Canada.  The closing of the main shops facility effective January 3, 1992 as well as a simultaneous reduction of jobs at the Côte St-Luc Running Point will negatively impact as many as 1300 positions through job abolishments and displacements.  The circumstances which occasioned the closing of the Shops and the potential impact on unionized employees was related in the following terms in part of a Company press release issued on September 16, 1991:


Angus Shops, CP Rail’s 87-year-old locomotive and freight car repair facility in east-end Montreal, will be closing permanently on Jan. 3, 1992, it was announced today.  Eighty-four jobs and some of the locomotive and freight car maintenance work currently handled at Angus Shops will be transferred to CP Rail’s repair facility at St. Luc yard.  Nineteen positions will be relocated to shops in Western Canada.


After employees exercise their seniority rights to “bump” into other jobs, the closure will result in the lay-off of 57 apprentices and helpers at Angus Shops and at the St. Luc repair shops in Côte St-Luc.


All the remaining unionized employees – 810 at Angus Shops and 443 at St. Luc shops – have eight or more years of service and are covered by the employment security provisions of their Job Security Agreements.  Under the Agreements, these employees will continue to receive full wages and benefits even if there is no work to be done.


Under their collective agreements, 52 of the 57 laid-off railway employees are eligible for supplementary unemployment benefits or a severance payment.


In notifying the railway unions today of the closure, CP Rail proposed that a new and special Voluntary Separation Option Package be negotiated to supplement and enhance retirement, severance and relocation benefits provided under the Job Security Agreements.


One feature would provide a lump-sum cash payment for employees who sever their job relationship with the railway.


Other features include financial counseling and retraining assistance, an enhanced early retirement incentive program for eligible employees, special “bridging” payments for employees who are close to retirement, and a relocation incentive payment for employees who transfer to jobs available outside their seniority territory.


Under the Voluntary Separation Options Package, which requires agreement from the unions representing the affected employees, individual employees would have the right to accept or reject specific features which apply to them.


To assist affected employees and to keep uncertainties to a minimum over the next three months, CP Rail has called on the unions to begin negotiations without delay on the voluntary package.  The railway is also establishing information offices at Angus Shops and St. Luc Shops to help employees.


CP Rail made a detailed study of the 20 major repair shops used for maintaining locomotives and freight cars across Canada, including heavy repair and overhaul facilities at Montreal, Winnipeg and Calgary.


The study determined that Angus Shops is no longer required because of improved reliability of locomotives and a less frequent need for major overhauls, plus a reduction in the size of freight car fleets and a concentration of rail traffic in Western Canada.  Future needs would be met by the remaining shop system.


As part of the study, CP Rail examined a number of alternatives for Angus Shops, including trying to find ways of using its work force and equipment for non-railway repair jobs.


”We are not the only railway to face problems of over-capacity in heavy repair and overhaul facilities,” said R.J. Ritchie, President of CP Rail.  “Other railways in Canada and the United States are experiencing the same difficulties at their maintenance shops.”


“Angus Shops is being closed because the majority of the work being done there can be handled with the excess capacity at our two main shops in Western Canada where we currently do 75 per cent of our business,” he said.


“If CP Rail is to remain competitive in the North American transportation industry, it must keep adjusting its plant and workforce to achieve high levels of productivity.”


It is common ground that prior to the meeting held between the Company and officers of the Unions on September 16, 1991 there had been no notice that the Company intended to close the Angus Main Shops.  Of specific concern in this regard, and the basis of the Unions’ grievance is the failure if the Company to have given any indication of its intentions or plans in the issuing of its semi-annual planning report to the Unions in July of 1991.  This, the Unions allege, is a contravention of the Master Agreement executed between the Company and the Unions on July 29, 1988, the text of which is incorporated in the collective agreements of the Unions party to this arbitration.  The provisions in questions are as follows:


(a)  Effective January 1 and July 1 each year the Company will provide a written report to each Union setting out in specific detail any plans that it has that involve displacement or lay off of any employee represented by that Union or otherwise involve a permanent decrease in the work force.  The report will be provided to the General Chairman of each Union within 15 days of the commencement of the period.  The first six month report will be produced July 1, 1988.


(b)  The report will identify which changes will be of a technological, operational or organizational nature and which changes are expected to be made because of a permanent decrease in traffic, a normal reassignment of duties arising out of the nature of the work, or normal seasonal staff adjustments.  Additionally, the report shall state the number of employees who are likely to be affected, their geographical location, when the changes will occur and the plans to preserve their employment including training or placement into vacant permanent positions.


(c)  The Company will meet with the General Chairman within 30 days of the receipt of the report to discuss it and its implications for the work force.  The purpose of the meeting is to convey and discuss information related to planned changes and not to negotiate the actual changes or restrict the entitlement of the Company to make changes to rationalize its work force or to displace or lay off employees consistent with collective agreement provisions.


(d)  No employee may be laid off or displaced as a result of a planned change of the nature contemplated in (b) unless and until the employer has substantially complied with the above provisions and a planned change has been included in a report.


(e)  If, during any six month period between report publishing dates the Company plans to initiate a change of the nature contemplated in paragraph (b) above, which will have adverse effects on any employee, and that was not included in the current report, the appropriate General Chairman will be contacted and the change will be made if mutually agreed upon.  If mutual agreement is not reached, the Company may place the issue at any time before the arbitrator at the Canadian Railway Office of Arbitration who shall be authorized to abridge the time limit feature and/or permit a special report to be delivered to the General Chairman in the event of an emergency.  For Organizations signatory hereto who do not belong to the Canadian Railway Office of Arbitration, the issue or issues will be submitted to a single Arbitrator who shall be the person from time to time occupying the position of Arbitrator for the Canadian Railway Office of Arbitration.



The substance of the foregoing provisions was established by Arbitrator Dalton L. Larson as part of his award of April 11, 1988.  While the terms were imposed on three of the Unions at that time, the above language was adopted consensually by agreement between the five other Unions and the Company in June of 1991.


Arbitrator Larson was mandated by Parliament to resolve all matters in dispute between a number of railways, including the Company, and a number of associated railway unions pursuant to the 1987 Maintenance of Railway Operations Act.  That legislation brought an end to work stoppages at the time and provided arbitration as the means for final and binding dispute resolution.  In these unique circumstances, therefore, the genesis of these new provisions of the collective agreement is a matter of public record, and the intentions of their author are readily discernable from the award of the Arbitrator.  As it has become common practice in the railway industry to refer to the decisions of prior arbitrators whose interest arbitration awards have resolved major disputes in the industry, I deem it appropriate to follow the same practice in endeavoring to interpret and apply the obligation to report semi-annually on plans that may involve displacement or layoff of employees, as contemplated in the Master Agreement.


At pp.61-68 of his award Arbitrator Larson addressed the concerns expressed by the unions with respect to the negative impact of small seniority units in the face of job reductions, and the need for better communication in respect of long-range planning.  He commented, in part, as follows:


Jim Germaine, General Chairman of System Federation Board 14, BRAC, confirmed that in his Union, at least, there were numerous small seniority units.  He said that while he viewed the proposal of the companies to be unrealistic, his union would be prepared to consolidate all of their members onto one seniority list.  He said that he proliferation of seniority units often results in senior employees being without work while junior employees hold senior positions.  The company may be hiring new employees in one place while across the city employees are being laid off.  But he said that part of the problem is not the seniority restrictions but the failure of the employer to make long term staffing plans:


“For more than 20 years conciliators and the like have made recommendations for the employer to develop a long term staffing plan.  These recommendations have been ignored by the employer.”


The idea there is that with long-term planning, employees who would be laid off could be more easily placed in positions into which new employees would otherwise be hired and, in addition, if the employees required training, there would be time to do it.


Under Article 3 of the Employment Security and Income Maintenance Plan and “Administrative Committee” has already been established to deal with “special cases”.  That is the forum that is normally used by the parties to negotiate about the configuration of seniority lists and special transfers.  Indeed, it was done in conjunction with these negotiations and several agreements were successfully concluded.  Nevertheless, it should be emphasized that matters dealt with under those provisions tend to be of an emergent nature and result in a kind of crisis bargaining since the union normally only gets 90 days notice of an impending T/O/O change.  Moreover everything is done on an ad hoc basis without reference to any contractual undertakings.


[emphasis added]


T/O/O refers to technological, operational and organizational change which is dealt with in the Employment Security Income Maintenance Agreements of the Unions.  After a discussion of the merits of establishing larger seniority units Arbitrator Larson continued at pp. 64-68 as follows:


Based on those principles, all the collective agreements shall be amended to provide as follows:


(1)    Long Term Planning

Effective July 1, 1988 and every six months thereafter, the companies shall provide a written report to each union setting out in specific detail any plans that is has that involve the displacement or lay off of any employee represented by that union or otherwise involve a permanent decrease in the work force.  The report shall be delivered to the union no later than January 15 and July 15 respectively in each calendar year at the beginning of the applicable six month period and shall state which changes will be of a technological, organizational or operational nature and which changes are expected to be made because of a permanent decrease in traffic, a normal reassignment of duties arising out of the nature of the work or normal seasonal staff adjustments.  In addition, the report shall state the number of employees who are likely to be affected, their geographical location, when the changes will take place and what plans have been made to preserve their employment including training or placement into vacant permanent positions.


I expect that as much care will be taken in the preparation of the report as is presently taken I the preparation of the business plan that is prepared annually for the board of directors of each company.


I think it would be appropriate at this stage to provide some explanation for this requirement since counsel for the companies indicated that they consider that manpower planning was not an issue.  In his argument, Counsel for CN even suggested that I had made a ruling to that effect.  The facts are otherwise.  When Counsel for the unions raised the matter of long term planning at volume 23, p. 63 of the transcript, I suggested that it was not in issue since it had not been raised earlier.  However, Counsel insisted that it was in issue and that I should require the companies to disclose the “details of the employment planning or staff planning that they have done since they were requested to do so by Emmett Hall in 1974.”  My ruling was only that I did not think that particular request was appropriate but I did not order that the matter could not be addressed in other ways.


In order that there should be no misunderstanding over the plan that is to be provided to the unions, there is no necessity that any specific employee be named in the report or that an employee be notified of an impending displacement at the time that the report is issued.  Employees are already required to be notified of T/O/O changes 90 days in advance under Article 8 of the employment security plan.  Further, although the unions proposed that I enlarge the notice period to coincide with the 120 days stipulated by Section 150 of the Canada Labour Code, there is no legislative requirement that I do so.  Nor do I think that the present requirement of 90 days will be insufficient under the circumstances.


Within 30 days of the report being delivered to the union the company shall meet with the executive of the union at which time the company shall elaborate on the content of the written report and explore its full implications with the union on the work force.  That meeting is not intended to provide an opportunity to the union to negotiate about the changes but only for the company to explain the plan that is contained in the written report.  There is already a mechanism in Article 3 of the employment security plan by which negotiations may be triggered should any of the circumstances contained in there report be considered by the union to be of special significance.  Nor is it my intention to restrict the entitlement of the companies to make changes, to rationalize their work forces or to displace or lay off employees consistent with existing provisions of the collective agreements.  My intention is simply to provide additional information to the unions to assist them in the administration of the employment security plan.


In order to ensure that this planning process is adopted, I think it would not be inappropriate to stipulate an enforcement mechanism, namely, that no employee shall be displaced or laid off unless and until the employer has substantially complied with these requirements and the change has been made the subject of a report.  The company, however, may apply at any time to the arbitrator at the Canadian Railway Office of Arbitration who shall be authorized to abridge the time limit and otherwise to permit a special report to be delivered to a union in the event of an emergency.



It is cleat from the foregoing passages that the mischief intended to be addressed by the articles on the Master Agreement which are here in questions is the difficulty previously encountered by unions in the face of company initiatives which involve the displacement or layoff of employees or permanent decreases in the workforce.  Specifically, the arbitrator sought to respond to the requests of the unions for a mechanism that would provide them a greater lead time in their efforts to improve the opportunities of their members to avail themselves to the fullest extent of the protections of the Employment Security and Income Maintenance Plan.  As the arbitrator stresses in the reasons for his decision, it is not intended that employees be specifically identified in a planning notice requires to be provided under the Master Agreement, but rather that the unions be given earlier general advice as to the nature of the changes which are planned, the number of employees likely to be affected, the time and place of the changes and measures contemplated by the Company to preserve the employment of persons affected.


The issue raised by this grievance is relatively straightforward.  The Unions maintain that at such time as the Company formulated its plan to close the Angus Shops it was under an obligation to so advise the Unions according to the requirements of the Master Agreement which have been incorporated as provisions of the collective agreements of the respective unions.  The Company, on the other hand, maintains that the semi-annual plan provisions of the collective agreements are complied with in respect of the closure of the Angus Shops if, as it intends to do, the Company included the Angus Shops closure as part of the report for the six-month period commencing January 1, 1992.  As the closure of the Shops is scheduled for January 3, 1992, the Company submits that it properly falls within the plan report relating to the first sox-month period of 1992, and not within the ambit of any earlier report.


The position of the Unions is that whenever a decision is made by the Company which is part of its business plans, the Company is under an obligation to disclose the plan to the Union immediately, no matter which six-month reporting period the actual implementation of the plan may fall into.  In other words, according to the Union’s interpretation, a decision taken at the present time to implement a workforce reduction in decision is made anytime between reporting dates and is, therefore, not included in the then current report, it cannot be implemented until such time as it has properly incorporated in a semi-annual report or, in the case of an emergency, authorization has been obtained through the arbitration mechanism contained in subparagraph (e).


From a purposive standpoint the argument advanced by the Unions has a certain appeal.  The objective of giving the trade unions the fullest opportunity to assist their members in protecting their employment security is plainly increased in direct proportion to the notice which the Unions have of a planned change.  Conversely, it is arguable that the protections intended by the Master Agreement are, for all practical purposes, eliminated where, as in the instant case, a plan which significantly impacts a large segment of employees on January 3, 1992 need only be communicated to the union two days prior, on


Page 13 missing


Page 14

Narrowly to the facts at hand as they apply to the obligations reflected in the collective agreements.


The facts disclosed at the hearing establish that in December of 1990 the Company undertook a study to determine ways to bring greater efficiency to the Company’s mechanical function.  The initial phase of the study, which concluded in April of 1991, was to compare the Company’s mechanical maintenance operations with those of other selected railways for the purposes of assessing relative performance.  The conclusions of the study, issued in April, were to the effect that the mechanical function was not operating at an acceptable level of efficiency.  At that time the Executive Committee of the Company directed the chief mechanical officer to establish a group to study alternatives and recommend a course of action.  The report of the group was put before the Executive Committee at a meeting in Minneapolis, Minnesota in June of 1991.  The report, which recommended the closing of the Angus Shops was not immediately confirmed by the Executive Committee as a decision, as further clarifications and refinements needed to be completed before a final decision could be made.  The Company’s spokesman confirms, however, that by mid-August, at the regular monthly meeting of the Executive Committee, the decision was confirmed.


The Arbitrator appreciates, as the Company submits, that corporate decisions can be the result of a complex, many faceted process.  The fact that a problem or deficiency has been recognized, that a study has been commissioned or even that a recommendation has been made does not necessarily mean that the corporate decisional process has matured to the point where it can fairly be said that the corporate decisional process has matured to the point where it can fairly be said that a decision has been made which constitutes a “plan” for the purposes of a document such as the Master Agreement.  In this regard, the Union draws to the Arbitrator’s attention the decision of the Ontario Labour Relations Board in Consolidated Bathurst Limited, [1983] O.L.R.B. Rep. Sept.1411, where it was found that an employer violated the statutory duty to bargain in good faith when it failed to discuss a contemplated plant closure with the union during bargaining for the renewal of the collective agreement.  While that decision is instructive in a general sense, the finding of the Labour Board that the company violated the duty to bargain in good faith must be understood in its context.  In the Consolidated Bathurst decision, as in earlier decisions of the Ontario Labour Board in Inglis Limited, [1977] O.L.R.B.Rep.Mar.128 and Westinghouse Canada Ltd., [1980] O.L.R.B.Rep.Apr.577, the Board found violations of the duty to bargain in good faith by the failure of the employers to disclose to the union that they were seriously contemplating closing plants at or about the same time they were in collective bargaining with the union for renewal of the collective agreement at the locations which would be affected.  The interest there to be protected is a union’s ability to fulfill its function to conduct meaningful bargaining under the labour relations statute.  In that circumstance the withholding of information by the employer is tantamount to a misrepresentation which is prejudicial to the union in that it is deprived of its ability to negotiate collective agreement provisions which will best protect its members on the event of a shutdown or, alternatively, to negotiate terms which might make that outcome avoidable.

The rationale which underlies the labour board decisions, which may well bind the parties during open period negotiations under the Canada Labour Code, clearly does not apply in the context of the Master Agreement.  As is clear in the language of paragraph (c) of that document, the purpose of the notice and consultation is not to negotiate the actual changes or to limit the latitude of the Company to manage its enterprise by implementing the planned changes.  Rather, it is limited to requiring an exchange of information which will assist the Union to more effectively administer the Employment Security and Income Maintenance Plan which is already established for the protection of employees in the event of a layoff.  It is against that particular background that the concept of a “plan” for the purposes of a Master Agreement must be viewed.


In the Arbitrator’s opinion the term “plan” in the sense intended within that document must be taken to mean something more than merely contemplating or entertaining a possibility, or even being in possession of a particular recommendation for future plans.  It is only when a decision has been made as to a future course of action that the Company can be said to have a “plan” that triggers the obligations contained in the Master Agreement.


The Arbitrator finds it unnecessary to resolve, for the purposes of this Award, the dispute as to whether the general obligation of the Company under the document is merely to provide a plan which discloses actions which are intended to be taken within the six-month period immediately following a reporting date or whether, as the Union argues, the obligation is broader and extends to all long term plans.  It appears to me that this dispute can be resolved, even accepting the Company’s more narrow interpretation of the obligation, by reference to the overriding purpose of the document.  It is clear, both from the language of the Master Agreement and from the reasons expressed by Arbitrator Larson, that the semi-annual plan is intended to provide to the Union a degree of notice, albeit in a more general sense, of a layoff or shop closure so as to give the Unions a greater ability to plan and respond than would be possible under the minimum 90-day notice previously available to them by the operation of the Employment Security and Income Maintenance Plans.  The disclosure of plans on a six-month timetable would, in many cases, achieve that end.  However, it would clearly not be so if, as in the instant case, a major plant shutdown could be implemented only two days after the tabling of the semi-annual plan which gives notice of it.  In the Arbitrator’s view, it is to guard against frustrations of purpose and anomalies of that kind that paragraph (d) of the Master Agreement was fashioned to read as it does, which is as follows:


(d) No employee may be laid off or displaced as a result of a planned change of the nature contemplated in (b) unless and until the employer has substantially complied with the above provisions and a planned change has been included in a report. 


[emphasis added]





There are two requirements in the foregoing provision.  The first is that a planned change be included in a semi-annual report.  That obligation would be met by the Company’s interpretation of the document.  The second obligation, however, is that the employer substantially comply with the provisions and intent of the Master Agreement.  Among the provisions intended to be complied with is a meeting with the General Chairman of each Union within 30 days following the report, the duty of disclosure and discussion contemplated in paragraph (c) of the document could not be complied with.  Any such discussion, if it were to take place on a technical or perfunctory basis with virtually no notice would be meaningless, and is plainly not what was intended by the Master Agreement.


The issue then becomes what would amount to substantial compliance within the intent of the document, so as to satisfy the purpose of paragraph (c) and free the employer from the prohibition which would otherwise be imposed by paragraph (d).  In the Arbitrator’s view, in the instant case, substantial compliance with the requirements of the Master Agreement would have been achieved if the Company had given notice to the Unions of its plan to close the Angus Shops at or about the date of its decision to do so, which I take to be August 15, 1991.  Disclosure at that time would have given the Unions a full 30 days in excess of the notice period which they received under the Employment Security Income Maintenance Plans.  That would, in my view, meet the spirit and intention of the Master Agreement, and would have satisfied the requirement of substantial compliance.  That conclusion is instructive as to the remedy that is appropriate to make the unions and employees whole.


For the foregoing reasons the grievance is allowed.  The Arbitrator finds and declares that the Company has failed to substantially comply with the requirements of the Master Agreement by scheduling the implementation of the shutdown of the Angus Shops on a date which would deprive the Unions of their right of the meaningful advice and discussion contemplated in paragraph (c) of the Master Agreement provisions, in the instant case, as the notice given to the Unions was in fact issued some 30 days after the Company decided to close the Angus Ships, the most appropriate form of redress in the circumstances is to restore the 30 day period to the Unions, and thereby fashion the practical equivalent of substantial compliance.  This can be achieved by directing that the Company accord all job security, displacement and layoff rights to employees which they would have enjoyed under the collective agreements and the Employment Security Income Maintenance Plans if the notice of the closure of the Angus Shops had been for February 3, 1992, rather than for January 3, 1992.  The Company remains at liberty to close the Angus Shops effective January 3, 1992, and indeed the Unions seek no remedy that would prevent it from doing so, as long as the employment security rights of their members are otherwise protected.


The arbitrator therefore directs that the Company treat all employees affected by the notice of September 16, 1991 in relation to the Angus Shops and the Cote St. Luc Running Point, for all purposes relating to the displacement, layoff and employment security under collective agreements and the Employment Security Income Maintenance Plans as employees who are displaced, laid off or placed on employment security status effective February 3, 1992.  The matter is referred to the parties for implementation, and the Arbitrator retains jurisdiction in the event of any dispute with respect to the interpretation or implementation of this award.


DATED at Toronto this 21st day of October, 1991.






Michel G. Picher - Arbitrator