AH 295

IN THE MATTER OF AN ARBITRATION

BETWEEN:

Canadian Pacific Limited

(the "Company")

- and -

International Association of Machinists and Aerospace Workers

International Brotherhood of Electrical Workers

Sheet Metal Workers' International Association

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

International Brotherhood of Firemen & Oilers

(the "Unions")

GRIEVANCE RE PROPOSED EXERCISE OF SENIORITY RIGHTS

ARBITRATOR: Michel G. Picher

APPEARING FOR THE COMPANY: D.V. Brazier - Assistant Vice-President,

Industrial Relations,

Montreal

I.J. Waddell - Manager, Labour Relations,

Montreal

L.G. Winslow - Labour Relations Officer,

Montreal

J. Lachance - Deputy Chief of Unit

Mechanical, Toronto

APPEARING FOR THE UNION: Abe Rosner - Executive Secretary, CCRSU

Claude Robert - System General Chairman,

IAM&AW

Robert Laroche - System General Chairman,

IBEW

Pierre Watson - System General Chairman,

IBB

Domenic Mancini -President, IBF&0 System

Council No. 7

John Brady - System General Chairman,

UAJAPP

Alain Desmarais- System General Chairman,

SMWIA

Foster Conway - Vice-President, SMWIA

District No. 4

A hearing in this matter was held in Montreal on December 5, 1991.

©b62r AWARD

This is the arbitration of a dispute in respect to the proposed

exercise of seniority rights for employees eligible for employment

security as a result of the closure of the Angus Main Shops, in

Montreal, pursuant to notices served by the Company on September 16,

1991. The dispute concerns the application of two separate job

security agreements which cover the Unions party to this dispute. As

the terms of those agreements which are pertinent to this case are

identical, they shall be referred to, for the purposes of

convenience, as the "Job Security Agreement". As the dispute before

the Arbitrator involves jurisdictional issues, it is useful to

reproduce the following pertinent provisions of the Job Security

Agreement:

8.1 The Company 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 General Chairman

representing such employees or such other officer

as may be named by the Union 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.

...

8.4 Upon request the parties shall negotiate on items,

other than those specifically dealt with in this

Agreement with a view to further minimizing the

adverse effects on employees. Such measures, for

example, may be related to exercise of seniority

rights, or such other matters as may be appropriate

in the circumstances, but shall not include any

item already provided for in this Agreement.

8.5 If the above negotiations do not result in mutual

agreement within thirty calendar days of the

commencement of such negotiations, or such other

period of time as may be agreed upon by the

parties, the matters in dispute may be referred for

mediation to a Board of Review composed of an equal

number of senior officers of the Company and the

Union.

8.6 If the Board of Review is unable to resolve the

differences within a fixed period of time to be

determined at the commencement of its meetings, or

some mutually agreed extension thereof, the matters

in dispute may be referred for final and binding

settlement to arbitration in the manner provided in

Article 2.10 or 2.1 1, as the case may be. The

matters to be decided by the arbitrator shall not

include any question as to the right of the Company

to make the change, which right the Unions

acknowledge, and shall be confined to items not

otherwise dealt with in this Agreement.

The Joint Statement of Fact, filed at the hearing, is as follows:

©b69r Joint Statement of Fact

On September 16, 1991, the Company served Article 8 notices

on the Unions announcing the abolishment of all positions at

Angus Shops and a number of positions at running points in

Montreal, as well as the concurrent creation of a number of

new positions at the St. Luc running point, a number of

transfer opportunities to Winnipeg and Calgary, and a number

of temporary positions to be established at Angus following

the official closure date.

On September 23, the parties commenced negotiations pursuant

to Article 8.4 of the Agreement.

On September 27, the Unions submitted certain proposals

titled "Union Proposals re Article 8.4 Negotiations".

A Board of Review was subsequently established pursuant to

Article 8.5 of the Agreement, but certain issues in dispute

remained unresolved. The matter is now before the

Arbitrator pursuant to Article 8.6 of the Agreement.

The Unions proposed a procedure, in part, on September 27,

1991 with respect to the exercise of seniority, as follows:

which will require to be filled in the Basic

Seniority Territory after all job reductions have

been accomplished. These will include, for

example, all newly-created positions at St. |Luc

(resulting from transfer of work from Angus) and

all positions at the running points which would

normally be affected by the displacement process.

|The only positions excluded would be those (if

any) currently occupied by senior employees who

would not in any event be bumped through the normal

displacement process.

(d) ©b9rRound One: All the positions identified in item

to all eligible employees in the Basic Seniority

Territory (that is, by seniority classification).

Applications will be on a voluntary basis and

applicants would be encouraged to indicate a series

of choices in order of preference. Upon

completion, successful applicants will be awarded

their positions.

(e) ©b9rRound Two: Any positions remaining unfilled after

the completion of Round One will then be awarded to

the most junior employees who remain unassigned in

each seniority classification. In doing so, the

"top-down principle" will once again be observed,

and this may require a second and final round of

bulletins restricted to the aforementioned group of

most junior unassigned employees. In the latter

case, bidding will be mandatory (for those

employees who wish to retain their Job Security and

Employment Security entitlements).

(f) Upon the completion of Round Two, all required

positions in the Basic Seniority Territory will

have been assigned. For the sake of clarity only,

it is noted that the remaining unassigned employees

will assume "Employment Security status" (except

for possible displacement in the Region -- see

Proposal #3 below), and all those wishing to retain

their Employment Security would be required to

indicate their readiness to accept work as it

becomes available within the parameters of Article

7 of the Agreement.

3. ©b60rSuspension of Regional Displacement Rights

For the purpose of the exercise of seniority

flowing from these Article 8 notices, the

provisions of Rule 23.18 (displacement in the

Region) shall be modified as follows: If all

members of a given seniority classification outside

the Basic Seniority Territory have eight (8) or

more years of C.C.S., then the right of an

affected employee in Montreal to displace outside

the territory (as per Rule 23.18) shall be

temporarily suspended. When an employee(s)

outside the Territory does have less than eight (8)

years of C.C.S., the displacement of such

|employee(s) by senior affected employees will be

handled in accordance with the "top-down

principle".

It is the Company's position

i) that the dispute is not |arbitrable in that,

pursuant to Articles 8.4 and 2.12 of the Job

Security Agreement, the matters are beyond the

Arbitrator's scope;

ii) in the event that the dispute is declared

arbitrable, the position of the Company is that

changes in procedure are unnecessary since

displacement procedures covering individuals whose

jobs are abolished due to an Article 8 notice and

provisions applicable to the filling of vacancies

are already satisfactorily covered in the

collective agreements.

Under the terms of article 7 of the Job Security Agreement an

employee has employment security when he or she has completed eight

years of cumulative compensated service with the Company. By the

operation of Article 7.2, an employee with Employment Security is

protected against layoff which would result from a change introduced

by the application of article 8.1 of the Job Security Agreement.

Article 7.3 and 7.4 are the provisions which motivate the instant

dispute. They establish that an employee who has employment

security and is affected by a change made pursuant to article 8.1 of

the agreement is required to exercise his or her maximum seniority

rights on the Basic Seniority Territory, and failing an ability to do

so, to exercise seniority against a wider range of options, up to and

including the exercise of seniority rights in accordance with the

terms of the collective agreement on the entire region, as mandated

by article |7.4(vii). It is the operation of that provision which

the Unions maintain should be mitigated in the circumstances of this

case. Reduced to its simplest terms, the Unions' argument is that it

is inappropriate to force senior employees who have employment

security to exercise their rights to fill positions, thereby

displacing junior employees who are then retained on the payroll

without any work assignment, because they also have employment

security protection. In the result, the junior employees who have

employment security retain the advantage of their wages and benefits,

without being required to perform the obligations of a particular

job, while the senior employees are compelled to occupy the job of

junior personnel, and in some cases may be required to displace to

other locations in the region to do so. The Unions submit that it is

inequitable to force the application of such a system on the senior

employees, and proposes a system for the posting and voluntary

bidding on positions in Montreal, and the filling of any unclaimed

positions on a mandatory basis by inverse seniority. The Union's

proposal would also avoid Shopcraft tradesmen being required to

displace in the region except on a vacancy.

The Company objects to the arbitrability of the issue as raised by

the Union. Firstly it submits that the scope of article 8.4 would

preclude the Arbitrator granting the relief in respect of the

application of seniority rules which is sought by the Unions. It

submits that the intention of article 8.4 of the Job Security

Agreement, although it does mention the exercise of seniority rights,

should not be interpreted to apply sweepingly as the Unions would

have it in this case. The Company maintains that the reference to

measures related to the exercise of seniority in that provision

should be more narrowly construed, as for example, to permit the

dovetailing of seniority lists, as has been done in the past, by

negotiation, where operations from different basic seniority

territories have been consolidated. By way of example it cites the

Special Agreement negotiated with the Transportation and

Communication Union (then BRAC) on November 11, 1987, with respect

to consolidating crew calling functions in separate seniority

territories, and the resulting dovetailing of the seniority of

employees concerned, for assignment to a centralized location in

Winnipeg. As an additional example it cites a similar agreement

with respect to the integration of clerical employees from the

Toronto, Hamilton and Buffalo railways into the Company's London

division, by means of an agreement dated January 23, 1987.

Secondly, the Company submits that the jurisdiction of the Arbitrator

is limited by article 2 of the job security agreement which provides,

in part, as follows:

2.1 There is hereby established an Administrative

Committee consisting of ten members, five of whom

shall be appointed by the Company, and five

of whom shall be appointed by the Unions.

...

2.7 Except as otherwise provided in this Agreement,

should any dispute arise respecting the meaning,

interpretation, application, administration or

alleged violation of this Agreement, such dispute

shall be progressed in accordance with the

provisions of the applicable Collective Agreement

commencing at the final step of the grievance

procedure.

2.8 Failing settlement of such dispute at the final

step of the grievance procedure, should either

party elect to progress the dispute it shall do so

by referring it to the Committee EXCEPT that if the

dispute is one involving the question of whether or

not a change is of a Technological, Operational or

Organizational nature as contemplated under Article

8.1 of this Agreement, then such a dispute shall be

progressed to arbitration under the provisions of

the applicable Collective Agreement.

...

2.10 Except as otherwise provided in this Agreement, in

the event the Committee is unable to reach a

decision on any question, any five members of the

Committee may require the question to be referred

to arbitration. If the Administrative Committee is

unable to reach a decision on the selection of an

Arbitrator, it shall apply to the Minister of

Labour of Canada for appointment of an Arbitrator.

...

2.12 When a question has been referred to an Arbitrator

as provided for in Article 2.10 hereof, the

Arbitrator shall have all the powers of the

Committee as set out in Article 3 hereof in respect

of that question. The Arbitrator shall have no

power to add to, subtract from, or modify any of

the terms of this or any other Collective

Agreement. The decision of the Arbitrator shall

be final and binding.

I deal firstly with the jurisdictional objection made by the Company

on the basis of article 2. |The Arbitrator is persuaded that the

submission of the Unions on this aspect of the dispute is more

compelling. The Administrative Committee established under article 2

is empowered to deal, among other things, with disputes arising

concerning the meaning, interpretation, application, administration

or alleged violation of the Job Security Agreement. Ibis would

plainly refer to the substantive provisions of the Job Security

Agreement. If, for example, a trade union or employee claimed the

failure of the payment of relocation expenses as contemplated in

article 6 of the Job Security Agreement, a dispute could be

progressed before the Administrative Committee to resolve that

issue. Failing the ability of the Committee to reach a decision, the

matter can then be progressed to arbitration as contemplated under

article 2.10. The process is in the nature of a reference to rights

arbitration, with the jurisdiction of the arbitrator being

circumscribed, in the usual manner, by the language of article 2.12.

Article 8 contains a separate and parallel process for dispute

resolution. The process found within that article does not, as with

article 2, involve the interpretation or administration of the terms

of the Job Security Agreement. Rather, it deals with the negotiation

and/or arbitration of items minimizing the adverse affects on

employees of a change resulting from a notice under article 8.1 of

the agreement. The dispute in that case does not go before the

Administrative Committee established under article 2 but, rather,

proceeds to a Board of Review, and thence to an arbitrator in the

event that it remains unresolved. So viewed, the process under

article 8 of the collective agreement must be characterized in the

nature of an interest arbitration.

It is significant to note that the restriction of the arbitrator's

jurisdiction "...to items not otherwise dealt with in this Agreement"

and excluding any question with respect to the right of the Company

to make the change, is separately laid out in article 8.6 of the Job

Security Agreement. In the circumstances, article 8 must be viewed

as establishing a separate mechanism for the resolution of disputes

of a particular kind. Moreover, there is nothing in the terms of

article 8.6, including the references therein to article 2.10 or

2.11, which would support any contrary conclusion. Article 2.10 and

2.11 are entirely procedural, containing provision for reference to

the Minister of Labour of Canada for the appointment of an arbitrator

in the event of the inability of the parties to reach a decision on

the selection of a person to fill that office. Article 2.11

establishes the procedures to be followed with respect to the

remuneration of the arbitrator, the preparation of joint or separate

statements of issue and the time during which the dispute is to be

heard and the award is to be written. The language of article 8.6

must be construed as an incorporation by reference of the procedural

provisions found in articles 2.10 and 2.11, for the purposes of

convenience. It cannot, as the Company suggests, be construed as the

wholesale importing of article 2, in all of its particulars, to an

arbitration conducted under the separate terms of article 8 of the

Job Security Agreement.

Nor can the Arbitrator accept the submission of the Company that the

dispute is not arbitrable insofar as it might involve measures

relating to the exercise of seniority rights which may be

inconsistent with the strict terms of the collective agreement.

Relief against the application of seniority rights in certain

circumstances is what the parties contemplated, at least in part, by

their reference to the example of establishing measures with respect

to the exercise of seniority rights, within the language of article

8.4 of the Job Security Agreement. The very examples cited to the

Arbitrator by the Company clearly involve departure from the strict

terms of the collective agreements in both cases, to enable the

dovetailing of separate seniority lists in a manner otherwise

inconsistent with the collective agreements there in question. As a

general matter, therefore, the Arbitrator is satisfied that it is

within his jurisdiction to deal with issues of seniority, subject to

one qualification discussed below, and to fashion measures to

minimize the adverse impact of the article 8.1 change, even where

those |might involve an exception to the strict terms of the

collective agreement. In this regard, the Arbitrator's jurisdiction

is to be distinguished from the more limited jurisdiction in respect

of the resolution of rights disputes under article 2.12 of the Job

Security Agreement, where there can be no departure from the terms of

the Job Security Agreement, or of any collective agreement.

The final argument of the Company with respect to the Arbitrator's

jurisdiction is, however, more persuasive. It submits that the

Arbitrator's jurisdiction in respect of the dispute at hand is

restricted by the language of article 8.4, and in particular by the

limiting language, "Such measures ... shall not include any item

already provided for in this agreement". The Company submits that

employment security, provided under article 7 of the Job Security

Agreement, and all of the rules and requirements which attach to it,

must be construed as being an item already provided for in the Job

Security Agreement, within the contemplation of the language of

article 8.4.

In my view that argument is well founded. Firstly, article 8.4 is

specific in confining the parties with respect to the scope of their

negotiations which, by its very terms, are to be limited to matters

"...other than those specifically dealt with in this Agreement..".

The granting of employment security under the terms of article 7 of

the Job Security Agreement is clearly an item specifically dealt with

in the agreement, and is arguably the most far-reaching protection of

all with respect to minimizing the adverse effects of an article 8.1

change on employees. In my view for the Arbitrator to render an

award which would effectively alter the rules by which employment

security is obtained, held or forfeited is to deal with matters which

are settled by the terms of article 7 of the Job Security Agreement.

The remedial jurisdiction of the Arbitrator is plainly circumscribed

by the final sentence of article 8.6 which provides that "The matters

to be decided by the arbitrator ... shall be confined to items not

otherwise dealt with in this Agreement".

Article 7 is, arguably, the cornerstone provision of the Job Security

Agreement. It provides to employees who have eight years of

cumulative compensated service a guarantee against layoff in the

event of the implementation of a technological, operational or

organizational change instituted under article 8.1 of the Agreement.

That protection for employees was the result of bargaining between

the parties and, no doubt, of the kind of give and take that is

commonplace in the fashioning of collective agreement provisions.

Article 7 reveals that holding employment security rights is subject

to an elaborately articulated obligation to exercise one's maximal

seniority rights in the manner provided under articles 7.3 and 7.4.

What the Union seeks in the instant case is a fundamental change in

the trade-off of rights and obligations which underlies those

provisions. That, however, is precisely what is prohibited by the

terms of articles 8.4 and 8.6.

Even if it can be said, for the sake of argument, that instituting a

system of reverse seniority for filling vacancies and forcing

displacements could be said to minimize adverse effects on employees,

the inescapable conclusion is that the formula to be followed in

respect of the maintenance and protection of employment security is

clearly a protective item which is specifically dealt with in the

terms of the Job Security Agreement. The reasons for the Agreement

as framed within the terms of article 7 of the Job Security

Agreement, and whether those provisions might be improved upon, is

not a matter which is open for an arbitrator to consider under the

provisions of article 8.6 of the Agreement. While, for the reasons

touched upon above, the Arbitrator may relieve against certain

collective agreement provisions in fashioning items to minimize the

adverse effects on employees, the adjudicator is not at liberty to

deal with matters which are specifically settled within the terms of

the Job Security Agreement itself.

Alternatively, even if I were of the view that the Arbitrator's

jurisdiction could extend to the measures sought by the Union, I

would not be inclined to grant them. As noted above, the

extraordinary protections of employment security, and the complex of

rights and procedures which the parties have fashioned in respect of

those protections are intrinsic elements in a fundamental bargain of

the parties' own making. The interest of the Company to have the

most senior, and presumably the most qualified, employees in active

service, on the one hand, and the interest of the Union, on the other

hand, to see junior employees first made subject to the obligations

of displacement contemplated in article 7 are both legitimate and

understandable competing interests. However, it is difficult to

prefer the Union's position in the face of specific language in the

Job Security Agreement. The parties must be taken to have

contemplated the consequences of the set of rights and obligations

which they fashioned within the terms of article 7 of the Job

Security Agreement. In that circumstance, quite apart from the

proscriptions of article 8.6, an arbitrator must be loathe to undo so

fundamental a bargain.

support of its view that the spirit of the collective agreement is

consistent with senior employees having a first right of refusal in

matters involving the exercise of seniority rights. However, the

Arbitrator is not persuaded that the comments of Arbitrator

Weatherill in that case, which dealt with two employees exercising a

right of choice to fill desirable vacancies, is instructive to the

issue at hand. Article 7 of the Job Security Agreement provides an

extraordinary protection in an extraordinary circumstance. If the

parties had intended to have the "Senior may, junior must" principle

operate in the application of article 7 of the Job Security Agreement

they would have so provided expressly. On the contrary, the language

of the Agreement contemplates election, followed by an obligation.

For example, article 7.4 provides, in part, "An employee ... who does

not elect to displace a junior employee or fill a vacancy on the

region ... will then be required to exercise the following options

...... To accede to the Union's position would ignore the parties'

agreed intention and would effectively amend the terms of the Job

Security Agreement in a manner inconsistent with articles 8.4 and 8.6

of its terms.

For the foregoing reasons the Arbitrator is satisfied that the relief

sought by the trade unions is beyond the jurisdiction of the

Arbitrator to grant, because the obligation to exercise one's

seniority as a condition to maintaining employment security is a

matter expressly dealt with in the Job Security Agreement and is, by

the operation of article 8.6, beyond the remedial jurisdiction of the

Arbitrator. Alternatively, should such jurisdiction be vested in the

Arbitrator, it would be inappropriate to make a remedial order which

is so directly contrary to the fundamental positions bargained by the

parties themselves with respect to the holding and forfeiture of

employment security under the terms of the Job Security Agreement.

The referral must therefore be dismissed.

DATED at Toronto this 18th day of December, 1991.

Michel G. Picher - Arbitrator