AH – 309




(the “Company”)



(the “Union”)




SOLE ARBITRATOR:                Michel G. Picher



There appeared on behalf of the Company:

M. Hughes                                - System Labour Relations Officer, Montreal

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

D. Gignac                                  - System Labour Relations Officer

Y. Lemieux                                - Manager, S&C Installations East, Montreal

M. Paquette                              - Construction Supervisor, Montreal

J. Little                                      - Coordinator Special Projects, Engineering, Montreal


And on behalf of the Union:

John E. Platt                             - International Representative

A. G. Cunningham                     - System General Chairman

L. Clements                               - Regional Chairman


A hearing in this matter was held at Montreal on December 7, 1992.



This is the arbitration of a grievance in respect of the abolishing of a number of positions. The Union grieves the failure of the Company to provide a notice pursuant to the terms of the Employment Security Income Maintenance Agreement. The position of the Company is that no such notice was required, as the abolishing of the positions was brought about by general economic conditions beyond its control.

The Dispute and Joint Statement of Issue, filed at the hearing, are as follows:


Claim by the Brotherhood that it ought to have received a notice pursuant to Article 8.1 of the Employment Security and Income Maintenance Agreement, dated April 21, 1989, when the Company abolished 11 positions on the St. Lawrence Installation gangs on April 12, 1991.


The Union contends that this reduction was the result of a Technological, Operational and Organizational change, as contemplated in Article 8 of the Employment Security and Income Maintenance Plan, and submits that the Company should have given the Union at least three months advance notice and negotiated to further minimize any adverse effects.

The Company denies the Union’s contentions.

The material facts are not in dispute. The Union represents a bargaining unit of employees which includes persons assigned to the Signals and Communications (S&C) Installation Department. On or about October 2, 1990, the Company provided an Article 8 notice pursuant to the Employment Security Income Maintenance Agreement, advising of the abolishment of 11 positions in Quebec City and the establishment of 11 new positions in Montreal. It appears that in fact no one moved from Quebec to Montreal and there was no reduction in staff in the result. Rather, the reorganization resulted in the affected employees being considered as having the St. Lawrence Region as their headquarters and territory, effective December 31, 1990. This is reflected in an agreement negotiated between the parties pursuant to the Article 8 notice, contained in a joint letter dated November 2, 1990, signed by the Assistant Vice-President, Labour Relations of the Company and the National Vice-President of the Union. That agreement provides as follows:

This follows the Company’s Article 8 notice dated October 2, 1990, pertaining to the consolidation of the Signal and Communications Installation Group located in Quebec, effective December 31, 1990.

In order to minimize the adverse effect on the employees affected and pursuant to Article 8.4 of the Employment Security and Income Maintenance plan dated April 21, 1989, both parties met on October 31, 1990 and negotiated the following:

1.             On November 7, 1990, Mr. Carbonneau, Foreman S&C and subsequently Mr. Gosselin, Maintainer S&C will be served notice abolishing their respective positions effective December 31, 1990.

2.             As stipulated in Article 9.13(b) of Agreement 11. 1, both employees mentioned in item one above will notify the Company of their displacement intentions within ten (10) calendar days of the date of receipt of their notice abolishing their position.

3.             Effective January 1, 1991, the employees remaining in the Signal and Communications Installation Group located in Quebec as of December 31, 1990, and referred to in the Company’s Article 8 notice dated October 2, 1990, will have the Headquarter and Territory of their respective positions modified to align with the other Signal and Communications Installation Gangs operating across the St. Lawrence Region, (i.e.: Headquarter and Territory to be St. Lawrence Region).

4.             All practices presently in place for the other Signal and Communications Installation Gangs on St. Lawrence Region will also apply to the Signal and Communication Installation Group located in Quebec.

5.             It is understood that all positions stipulated in Item 3 above will be filled by the employees affected by the Company’s Article 8 notice dated October 2, 1990.

6.             With the exception of Messrs. Carbonneau and Gosselin or any other employees affected by the exercise of seniority of these two employees, no other employee will be required to relocate as a result of the implementation of this change.

Some three months after the effective date of the above agreement, on March 28, 1991, the Company provided the Union with notice of the abolishing of 16 positions in the S&C Installation Department on the St. Lawrence Region. It is common ground that the later notice generally affected the same employees who were the subject of the earlier Article 8 notice. The notice of March 28, 1991, however, was served under the general terms of the collective agreement governing reductions in manpower including, it would appear, Article 9.13 which provides as follows:

9.13        Not less than four working days’ advance notice will be given when regularly assigned positions are to be abolished, except in the event of a strike or a work stoppage by employees in the railway industry, in which case a shorter notice may be given.

The notice issued on March 28th also abolished some twenty positions on the Great Lakes Region and four in the Atlantic Region, in addition to the sixteen positions on the St. Lawrence which give rise to this grievance. The Union immediately took the position that the abolishments were the result of operational and organizational change, and therefore fell under the terms of Article 8 of the Employment Security and Income Maintenance Agreement. It provides as follows:

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.

The definition section of the Agreement contains the following:

“Operational or Organizational Change” means: a change in the manner, method, procedure or organizational structure by which the employer carries on the work, undertaking or business not directly related to the introduction of equipment or material provided that any such change is not brought about by:

(i)            a permanent decrease in the volume of traffic outside of the control of the company; or

(ii)           a normal reassignment of duties arising out of the nature of the work in which the employee is engaged; or

(iii)         a normal seasonal staff adjustment.

NOTE:   Any permanent shutdown or permanent partial shutdown of an operation, facility or installation, shall be considered as a Technological, Operational or Organizational change. Any permanent Company-initiated change, excluding changes which are brought about by general economic conditions, and which result from the reduction or elimination of excess plant capacity shall also be considered as Technological, Operational or Organizational changes.

(emphasis added)

The Company relies on the application of the “Note” to the definition of “Operational or Organizational Change” as it appears in the agreement. Specifically, it submits that the abolishing of the positions pursuant to the notice of March 28, 1991 constitutes “… changes which are brought about by general economic conditions,” within the meaning of the “Note”. In other words, in the Company’s submission, the circumstances do not fall within the purview of Article 8.1 of the Employment Security and Income Maintenance Agreement because, in its view, the positions were not abolished by reason of operational or organizational change of a permanent nature.

The material before the Arbitrator discloses that the notice of March 28, 1991 did not, in fact, lead to any reduction of positions, and with the exception of one employee, to any reduction in rates. In its reply to the grievance filed by the Brotherhood’s Senior System General Chairman on April 3, 1991, the Company’s letter of April 8, 1991 advised that five of the positions originally scheduled to be abolished would not be cancelled. It also appears that a number of other employees received verbal instructions cancelling their job abolishments. In the result, according to the Union’s estimate, three employees located at Quebec City had their jobs abolished. While the Company places the estimate at four employees at that location, the difference between the parties does not appear to be material to the merits of the grievance.

The three employees affected at Quebec City are S. Carbonneau, Y. Laliberté and P. Gravel. It is not disputed that Mr. Laliberté and Mr. Gravel were able to move onto other installation gangs, and did not displace anyone in so doing. Mr. Carbonneau was then the only employee left with the option of protecting his rights by the exercise of seniority. He chose to displace an STC technician in the Radio Shop in Quebec City, as a result of which his rate was reduced by $2.14 per hour. It does not appear disputed, however, that he might have exercised his seniority to a position elsewhere on the St. Lawrence Region, thereby avoiding any loss in wages. The application of Article 8.1 of the Employment Security and Income Maintenance Agreement could have substantial consequences for an employee in the position of Mr. Carbonneau. If he is negatively impacted by an operational or organizational change, he has the benefit of certain protections provided under the Employment Security and Income Maintenance Agreement. These would include the application of Article 8.9 which provides for the maintenance of basic rates for an employee whose rate of pay is reduced by $2.00 or more per week by reason of being displaced due to an operational or organizational change. He might also have the benefit of other parts of that agreement, or of any terms specifically negotiated between the parties by the application of Article 8.4 of the agreement. The issue to be resolved, therefore, is whether the displacement of Mr. Carbonneau was occasioned by an operational or organizational change, as the Union alleges, or whether it was the result of general economic conditions beyond the Company’s control. If it was the latter, the grievance cannot succeed.

The material before the Arbitrator tends to support the position advanced by the Company. Central to its case is a document which lists the contemplated projects for 1991 and the reduction of certain of those projects which impacted the labour force in the Quebec Region. While the projected labour costs at the commencement of 1991 were slightly in excess of $4 million, at the end of that calendar year, labour expenditures were in fact approximately $2,220,000. A number of projects within Quebec, including the replacement of cross arms at Montmagny and certain rail programs, crossing rehabilitations, turnouts and the installation of snow clearing devices were scaled down from their original estimates. Additionally, several projects were cancelled, including a project involving fibre optic installation at St-Hyacinthe, retiring the Longue-Pointe subdivision and a CP Rail interconnect project at Debeaujeu. In addition, other projects were reduced in scale, including work in Taschereau Yard, on the Victoria Bridge and work in relation to the replacement of line and cables at Turcot.

The evidence further discloses that certain projects which, at the time of the notice issued on March 28, 1991 were subsequently revived by outside customers. It appears, that Unitel and Ontario Hydro at Ottawa decided to proceed with projects which later caused a resurgence in the need for manpower. Indeed, as the year progressed the workload became such that 29 new employees were hired by the Company by the end of the year to cope with the heavier workload on the St. Lawrence Region.

In the face of the evidence adduced by the Company, which is essentially unchallenged, it is difficult for the Arbitrator to conclude otherwise than that the Company was faced with adverse economic conditions in the early months of 1991, and that it was in anticipation of those conditions that it decided to abolish the positions identified in the notice of March 28, 1991. As the work season approached, all outward indications were that the volume of activity in the S&C Installation Department on the St. Lawrence Region would be substantially reduced because of budgetary constraints. The Arbitrator can readily understand the concern of the Union. He questions the bona fides of a Company decision made in contemplation of reduced budgets when, in fact, the decision was partially reversed between March 28 and April 8, 1991 when the Union was advised that five of the layoffs were rescinded. The Brotherhood submits that the normal procedure would have been to cancel the abolishment of the Senior S&C Foreman’s position, to reduce the displacements, rather than reinstate the junior foreman’s position, as was done by the Company. However, that issue is beyond the scope of the grievance which is before me. The sole issue to be resolved in this arbitration is whether the initial abolishment of the positions as projected on March 28, 1991 falls within the purview of Article 8.1 of the Agreement. While the Arbitrator has some sympathy for the confusion and frustration obviously felt by the Union and its members, the case must stand or fall on the basis of the objective evidence before me.

The preponderance of the evidence overwhelmingly confirms that in the spring of 1991 the Company was faced with a serious scaling down of the projects contemplated for the St. Lawrence Region. These involved both reductions in the projected spending of the Company’s transportation department, with respect to maintenance and installation projects, as well as the activities of outside customers such as Unitel and Ontario Hydro. In the Arbitrator’s view those constraints must be taken to fall within the purview of “general economic conditions” as that phrase is intended to apply within the “Note” to the definition of “Operational or Organizational Change” appearing at page 5 of the Employment Security and Income Maintenance Agreement. On the merits of the case, therefore, the Arbitrator is compelled to sustain the position of the Company, as the facts are not substantially different from those found in prior arbitral awards (See SHP 345, CROA 1227, 1410 and 2023). In the Arbitrator’s view, the concept of changes brought about by general economic conditions must, at a minimum, include changes occasioned by reductions in operating and capital budgets which are generally traceable to overall declines in business and economic activity. There is nothing in the material before me to suggest an artificial manipulation of budgets, or the mere transfer of funds elsewhere within the Company – circumstances which might well constitute operational or organizational change. I am satisfied, on the balance of probabilities, that the budget reductions were generated by a reduction in the Company’s basic capital projects, as well as an anticipated reduction in the projects of outside customers and are the result of general economic conditions of the kind contemplated within the “Note” appearing on page 5 of the Agreement.

It appears to the Arbitrator, however, that one further comment is appropriate. As noted above, the sentiments expressed by the Union at the hearing are understandable. It would seem that a full explanation of the budgeting and project planning, which I have found justified the Company’s action, was not provided to the Union until a letter of explanation from the Company’s Assistant Vice-President, Labour Relations issued to the Senior System General Chairman of the Brotherhood on March 19, 1992. While the Arbitrator appreciates that there is no obligation of disclosure or consultation upon the Company in the circumstances of this case, it may well be that a better level of communication between the Company’s officers and the officers of the Union at the time of the notice of March 28, 1991 might have avoided or reduced, at least to some degree, the misunderstanding which led to this arbitration.

For all of the foregoing reasons the Arbitrator is satisfied that the abolishing of the positions pursuant to the notice of March 28, 1991 was not brought about by reason of an operational or organizational change within the meaning of Article 8 of the Employment Security and Income Maintenance Agreement. The grievance must therefore be dismissed.


DATED at Toronto this _________ day of December, 1992.