AH – 330
IN THE MATTER OF AN ARBITRATION
CANADIAN NATIONAL RAILWAY COMPANY
UNITED TRANSPORTATION UNION
ARBITRATION RE FREIGHT CREW CONSIST
SOLE ARBITRATOR: Michel G. Picher
There appeared on behalf of the Company:
D. C. Fraleigh – Assistant Vice-President, Labour Relations
M. Delgreco – Director, Labour Relations, Montreal
J. P. Green – Director, Labour Relations, Montreal
J. B. Bart – Manager, Labour Relations, Montreal
M. Fisher – Transportation Head, Montreal
B. O’Neill – Research Officer, Labour Relations, Montreal
P. Morrisey – Manager, Labour Relations, Montreal
S. McConville – System Labour Relations Officer, Montreal
L. Harms – System Labour Relations Officer, Montreal
R. Paquette – System Labour Relations Officer, Montreal
A. Dufour-Smith – Secretary, Montreal
M. Hughes – Senior Labour Relations Officer, Montreal
And on behalf of the Union:
L. H. Olson – Vice-President, Ottawa
M. Hone – Research, Ottawa
W. Scarrow – General Chairperson, Sarnia
T. G. Hodges – General Chairperson, St. Catherines
J. W. Armstrong – General Chairperson, Edmonton
B. Leclerc – General Chairperson, Quebec
R. LeBel – Vice General Chairperson, Quebec
F. Garant – Vice General Chairperson, Montreal
G.J. Binsfeld – Secretary General, St. Catherines
M. P. Gregotski – Vice General Chairperson, St. Catherines
R. A. Beatty – Local Chairperson, Hornepayne
G. E. Bird – Local Chairperson, Local 1872, Montreal
M. G. Eldridge – Vice General Chairperson, Edmonton
P. G. Gallagher – Secretary General Chairperson, CN Central Region (Y), Niagara Falls
B. J. Henry – Vice General Chairperson, Edmonton
S. Aubin – Vice Local Chairperson, 1139, Montreal
R. Rondeau – Local 1139, Montreal
D. Daoust – Local Chairperson 1139, Montreal
A hearing in this matter was held in Montreal on February 15 and 16, 1990.
I THE DISPUTE
This award is in the nature of an interest arbitration to resolve issues outstanding between the parties following the signing of Memoranda of Agreement revising the parties’ collective agreements on October 26, 1989. During national negotiations which led to the renewal of the collective agreements both the Union and the Company submitted demands respecting crew consists. "Crew consist" refers to the number and classification of employees who must make up the crew of a train or yard assignment, as required by the collective agreement.
During the course of negotiations for the renewal of collective agreements 4.3 and 4.16, which govern the employment of trainmen and yardmen on the Company’s Western Lines and Eastern Lines, respectively, it became apparent that the parties would be unable to reach agreement on this issue. It was decided that the crew consist issue should be resolved by separate negotiations following the renewal of the collective agreement, thereby avoiding a general impasse because of the parties’ inability to reach a specific agreement on that question. Consequently the parties drafted a separate Letter of Understanding, designated as Appendix L to the Memoranda of Settlement signed on August 29, 1989 and subsequently ratified and executed on October 26, 1989, providing for further negotiations, with the assistance of Federal Conciliation Officers M. F, Carson and J. Winter. In the event that negotiation and conciliation did not succeed, the Letter of Understanding further provided for referral of the issue of crew consists to final and binding arbitration by an arbitrator appointed by the Minister of Labour. This arbitration was duly convened pursuant to that process, and the parties take no exception to the arbitrator’s jurisdiction to resolve all issues in dispute.
The issue in dispute is the composition of freight crew consists. The Union represents conductors and brakemen in freight service, as well as yard foremen and yard helpers in yard service. A full freight crew, excluding the locomotive engineer represented by a separate bargaining agent, consists of one conductor and two brakemen, while a frill yard crew is comprised of one yard foreman and two yard helpers. For the purposes of this dispute a reduced freight crew is one conductor and one brakeman while a reduced yard crew is one yard foreman and one yard helper. When a crew is operated on a reduced basis in freight service the rear end brakeman’s position is eliminated and, in yard service, one of the two yard helpers’ positions. The position eliminated in a reduced crew operation is referred to as a "non-essential position". Reduced yard crews, which were the subject of a separate agreement, are not part of the dispute before me. Changes in the rules governing road or freight service crews are the sole matter to be resolved.
For some years now the collective agreements before the arbitrator have contained provisions governing, the use of reduced freight crews. Those provisions were inserted into collective agreement 4.3 on August 3, 1978 and into agreement 4.16 on December 1978. The articles governing the terms and conditions under which reduced crews may be operated, and non-essential positions discontinued, were further amended by a second Freight Crew Agreement executed August 27, 1982. The reduced crew provisions are found in paragraphs 11.5 to 11.14 in agreement 4.16, as well as in Addenda 3 and 3A- In agreement 4.3 they comprise Addenda 31 and 31A.
The principle underlying the existing reduced crew agreement is that the Company should be permitted, over time, to realize gains in efficiency and productivity by operating with reduced crews through attrition. Under the first reduced crew agreements of 1978 the parties established a class of protected freight employee "A". Employees in that category are those with seniority dates as brakemen on or prior to the effective date of the Reduced Freight Crew Agreement, being August 3, 1978 for employees under agreement 4.3 and December 21 of the same year for employees under agreement 4.16. Those protected freight employees ‘A’ have the right to fill any non-essential rear end brakeman’s position in all classes of service and on all territories. When, for whatever reason such protected employees do not claim such an assignment the Company may exercise its right to operate with a reduced crew.
Following the subsequent Reduced Freight Crew Agreement of August 27, 1982 a second class of protected employee, known as the Protected Freight Employee "B" was established. It includes employees holding seniority as brakemen on or before March 17, 1982 but after the effective date of the original reduced freight crew agreement of 1978. Employees in that category enjoy the right to fill any non-essential rear end brakeman’s position in way freight, road switcher and work train service as well as in through freight service on territory not covered by the original Reduced Freight Crew Agreement of 1978.
The intent of the parties was to establish a system whereby, through the eventual termination, resignation or retirement of protected freight employees, the Company would be able to operate its freight service entirely with reduced crews. The instant dispute arises because the Company has found an unacceptably slow rate of attrition in the 12 years that have elapsed since the initial reduced crew agreement. It illustrates its concern by comparison with the effects of reduced crew agreements implemented within its principal competitor, CP Rail. The Company now operates only 52 percent of its trains on the basis of a reduced freight crew consist. By contrast, CP Rail, which has had a reduced freight crew consist agreement in place since 1979, now operates 90 percent of its trains with reduced freight crews. The Company stresses that the differential in manpower costs which these figures represent seriously undermines its competitive position with respect to CP Rail. Noting that at the present rate of attrition it could not hope to attain an equivalent percentage of reduced crew operations until early in the next century, the Company argues that its competitive position from the standpoint of productivity and profitability is suffering unduly and will continue to do so unless some significant alteration in the reduced crew consist provisions of the collective agreement is made. The Company’s immediate objective at the bargaining table and before the Arbitrator, is to establish mechanisms that will deal with what it perceives as the unduly high number of protected employees among the bargaining unit as a whole. To this end it proposes a number of measures to accelerate attrition, including voluntary early retirement and voluntary severance provisions designed to make it attractive for protected freight employees to retire. In essence, the Company is prepared to shoulder the burden of additional short-term costs in the form of retirement and severance incentives paid to protected employees in exchange for significant productivity gains in the future.
Not surprisingly, the Union has strongly resisted any initiatives which would expand the operation of reduced crews. The limitations on reduced crew operations contained within the collective agreement, and in particular the establishing of two categories of protected employees, operate as a significant form of employment security for Union members. While it does not object in principle to the concept of its members freely electing to take advantage of retirement and severance incentives which may, on balance, be to their benefit, the Union retains a general concern for the overall reduction of the bargaining unit by the elimination of available jobs, and the indirect impact of that development on the work opportunities and job security of members of the bargaining unit who are not protected freight employees.
Like other parts of the economy, the railway industry has undergone substantial transformation as a result of technological advancements over the last several decades. The labour intensity and manpower needs of the steam age have been greatly reduced in the age of diesel powered trains operating with the advantage of computers and advanced communications systems. The pattern for dealing with the problem of job redundancy brought about by changes in equipment was first confronted in a substantial way by the industry in the 1956 negotiations between the Canadian Pacific Railway and Brotherhood Locomotive Firemen and Enginemen concerning the elimination of firemen on diesel locomotives. A strike over that issue in January of 1957 resulted in the establishing of a Royal Commission under Mr. Justice Kellock. On the basis of that Commission’s recommendations the employer and the Brotherhood reached an agreement that would allow the elimination of firemen’s positions by attrition, with protected status being granted to firemen whose seniority predated the Company’s notice of its intention to reduce diesel locomotive crews. The same issue was resolved in like fashion subsequently on CN, following the recommendations of a Board of Conciliation chaired by the Honourable Mr. Justice André Monpetit, dated March 14, 1959.
The Company stresses that the pattern of attrition adopted to resolve the firemen’s dispute was not without substantial cost. It notes that within its own operations, 30 years after the report of the Monpetit board, some 12 firemen were still employed in its operations. It estimates that between 1961, when steam power was virtually eliminated, and 1988 the compensation paid to redundant firemen was in the order of $207 million.
The Union in the instant dispute was not, of course, involved in the firemen’s attrition agreement. The first application of the attrition principle in respect of its membership arose in relation to the reduction of the consist of yard crews. In 1967 the Union and Company amended the collective agreements to allow, in certain defined circumstances, the operation of reduced yard crews, consisting of a yard foreman and a single yard helper. At that time, employees whose seniority predated December 16, 1966 were granted protected status, whereby they remained entitled to work as a second yard helper where a reduced crew would otherwise be utilized.
A significant feature was grafted onto the formula for reducible yard crews, however. Under an arrangement which the Company characterizes as "true attrition", whenever a protected employee left the active working list for reasons such as retirement, resignation or death, a reducible yard crew at the affected location became permanently reduced. For that crew the second yard helper’s position no longer remained available to be occupied by a protected employee, save where the protected employee would be otherwise unable to hold a position on a regular assignment at that terminal. In the result the process of yard crew reduction was substantially more accelerated than was the case either for firemen or for reduced freight crews. At present, as a result of the "true attrition principle" which governed the reduction of yard crews, all yard crew consists within the Company’s operations have been fully reduced for a number of years. From the Company’s perspective, therefore, the elimination not only of staff by resignation and retirement, but of available jobs as protected employees withdraw from the workforce, is a significant feature of any effective crew reduction formula based on attrition.
Freight crew consists of one conductor and two brakemen was the norm from the earliest part of this century. Operational limitations and safety requirements necessitated the placement of a brakeman in the locomotive unit as well as the placement of the conductor and a second brakeman in the caboose of the freight train. The rear brakeman’s main function was to provide flag protection to the rear of the train. With the advent of automated signalling and radio communications in the 1960s, the necessity of a rear end brakeman was effectively eliminated. Commencing in 1966 both CN and CP tabled bargaining demands for the reduction of freight crews by the elimination of the rear brakeman. The Union resisted the proposal and the matter remained unresolved through several rounds of negotiations which, along with other unresolved issues, culminated in a national railway strike in August of 1973. The strike was ended by legislation, the Maintenance of Railway Operations Act of 1973, by which all issues in dispute were submitted for final and binding arbitration before the Honourable Mr. Justice Emmett Hall as Arbitrator.
The Award of Mr. Justice Hall, handed down on January 8, 1975, made provision for reduced freight crew consists subject to certain conditions. However, the Hall award did not adopt the "true attrition" principle reflected in the previously established arrangement for reducible yard crews. Under the terms of that award the number of the available jobs was not reduced with the permanent withdrawal of protected employees from the workforce by resignation, retirement or otherwise. While the Hall Award, which became the subject of protracted judicial review proceedings, was never implemented by the parties, the principles governing freight crew reduction within the Award were adopted as the basis for their reduced freight crew consist agreements of 1978 and 1982 respectively, which established the "A" and "B" classes of protected freight employees.
The 1978 agreement contained significant provisions going beyond the Hall formula. Among them was the establishment of a Special Fund whereby the Company was obligated to deposit, over a period of 10 years, 25 percent of its productivity savings resulting from reduced freight crew operations, with accumulated funds, eventually amounting to $14.4 million, being shared among the protected employees. The agreement further provided for 608 early retirement opportunities to be scheduled over the five year period between 1979 and 1983. Under the agreed formula, depending on his or her length of service, an employee taking early retirement received a monthly separation allowance which, combined with pension, could yield as much as 80 percent of the employee’s average earnings over his or her best five years. Alternatively, the amounts could be capitalized into a lump sum payment, fully payable upon early retirement upon the election of the employee. It is common ground that the incentives fulfilled their purpose and that all of the early retirement opportunities offered by the Company were taken, with a corresponding reduction of protected employees within the work force. However, for the reasons related above, the process was not one of "true attrition", to the extent that reducible freight crew assignments did not become permanently reduced upon the retirement of a protected employee. They remained available for any protected employee to bid and obtain.
Meanwhile CP Rail made its agreement with the Union providing for the implementation of reduced freight crew operations on its roads. Because of the positions taken by the parties to the instant dispute it is important to note certain aspects of that agreement which differ from the reduced freight crew agreements negotiated on CN in 1978 and 1982 and which appear to have contributed to a more accelerated rate of crew reduction within CP.
The reduced freight crew agreement entered into by CP in 1979 was immediately broader in its application than the CN agreement of 1978. The CN agreement applied only to through freight service, which is the operation of a freight train between two terminals or out of and back into the same terminal. The CP agreement applied to all classes of service. A second material difference in the CP agreement involved an amendment of the seniority rules governing employees qualified to work as conductors. This additional factor further contributed to the acceleration of the use of reduced freight crews on CP lines.
It was not until 1982 that the Company was able to attain the same scope of reduced freight crew operations as CP. The agreement of August 27 of that year allowed CN to extend reduced freight crew operations to way freight, road switcher and work train service. As part of the settlement, however, the Company was obligated to provide a further 304 early retirement opportunities. According to its estimate, the cumulative cost of the total of 912 such opportunities which by then were cashed in, amounted to more than $18 million. Moreover, as noted above, the 1982 agreement arguably slowed the rate of the reduction process in that it established a second category of protected freight employees. The protected freight employee "B" was defined as anyone hired after the effective date of the 1978 reduced freight crew agreement and prior to March 17, 1982. Those employees gained protected status on way freight, road switcher and work train service as well as on any trains running over territory where reduced freight crew operations had not yet been implemented under the original 1978 agreement. In the result, the Company found itself with two substantial categories of employees who retained the right to work the rear end brakeman’s position on what would otherwise have been reduced crew operations.
The Company notes that at the time of their inception the reduced freight crew agreements on both CN and CP were heralded as breakthrough measures in the North American railway industry. It appears to be common ground that they represented a superior form of reduced crew operation agreement than anything to be found on American roads. The Company submits, however, that its Reduced Freight Crew Agreement contained a number of inherent shortcomings, the impact of which could not have been predicted at the time the agreements were made, but whose consequences are clearly evident today. Its position, in essence, is that the errors of those first agreements should not be repeated and that their agreed original underlying purpose of reducing crew costs to the Company by manpower reduction should now be fully implemented.
III. THE PRESENT AGREEMENTS: THE COMPANY’S VIEW
In summary, and at the risk of oversimplification, the Company submits that it has been denied the productivity gains originally intended by the reduced freight crew agreements because of a number of factors. Among them is the fact that the original 1978 agreement did not extend to all classes of service, thereby retarding the reduction process and ultimately resulting in the establishing of a second class of protected employees. Most importantly, the attrition formula did not represent "true attrition" on the model of the yard crew reduction agreement whereby crew assignments become permanently reduced as protected employees withdrew from the work force. Additionally, CN’s reduced freight crew agreement suffered in comparison with that of CP, both because CP’s agreement applied to all classes of service from the outset, and the special seniority rules governing the allocation of conductor’s assignments within CP enhanced the rate of crew reduction within the operations of CN’s major competitor.
The following are the provisions of collective agreement 4.16 which govern the reducibility of freight crews, which are agreed to be materially similar to the parallel provisions of agreement 4.3:
11.5 Notwithstanding the provisions of paragraph 11.4 and subject to the provisions of this Article and Addenda 3 and 3A, all freight crews operating on trains covered by the provisions of Article 2 in CTC, ABS, MBS, train order or other territories are considered to be "reducible crews".
11.11 A brakeman’s position on a "reducible crew" may be discontinued at any time hereafter, provided that:
(a) employees defined as "protected freight man - A." shall have the right to work in their Seniority turn on any brakeman’s position, in any class of assigned or unassigned freight service, on their seniority district on which, under the rules and practices in effect on or prior to December 21, 1978, the use of two brakemen would have been required;
(b) employees defined as "protected freightman - B" shall have the right to work in their seniority turn on any brakeman’s position, in any class of assigned or unassigned freight service, on their seniority district (except those territories identified by Addendum 3 and that territory referred to in the note to paragraph 11.10) on which, under the rules and practices in effect on or prior to December 21, 1978, the use of two brakemen would have been required;
NOTE: In the application of this item, when a tour of duty involves operation over a combination of CTC/ABS and Train Order/MBS territories, a "protected freight man - B" shall have the right to work the tour of duty when the portion of the trip’s road mileage in Train Order/MBS territory is 25% or more.
(c) the provisions of sub-paragraphs (a) and (b) of this paragraph are subject to the following:
(i) there shall not be any preference as between the head-end brakeman’s position and the rear- end brakeman’s position where such practice may now be in effect on a crew or crews declared reducible pursuant to the provisions of this Agreement if such preference results in the filling of a vacancy on such crew by an unprotected employee;
(ii) when additional positions are created in a pool or set of runs in which crews are reducible and which would otherwise require the employment of unprotected employees, such positions will be filled, to the extent available, by "protected freight men" then filling reducible brakemen’s positions in such pool of crews or set of runs;
(iii) when no applications are received from "protected freight men" for a permanent vacancy in a reducible position, such position need not be filled until claimed by "protected freight men" who are later displaced or who have been absent during the period such assignment was under bulletin; such reducible positions shall again be bulletined at each change of timetable and the same conditions will apply;
(iv) when no applications are received from "protected freight men" for a temporary vacancy in a reducible position, such position need not be filled Poor the duration of the temporary vacancy until claimed by a "protected freight man" who is later displaced or who has been absent during the period such temporary vacancy was under bulletin. However, a temporary vacancy in a reducible position will, during the time temporary vacancies are normally filled from the spare board in keeping with the applicable provisions of the collective agreement, be filled by "protected freight men" on the spare board on a first-in, first out basis. This will not constitute a run-around of unprotected freight men.
The foregoing provisions disclose the concerns which the Company brings to these proceedings. The collective agreement requires that the Company advertise any non-essential position which is vacated by a protected employee. Thereafter it must be awarded to the senior protected freight employee who applies for it. In the result, a non-essential position can only be discontinued on a temporary basis where no protected employees apply for it. The same is true in respect of temporary vacancies. In the result, so long as protected employees remain available to apply for and fill non- essential positions vacated by other protected employees the degree to which the Company is able to operate with reduced crews is substantially constrained.
Another aspect of the restrictions imposed upon the Company is the requirement to rebulletin unfilled non-essential positions at each change of timetable, as provided in article 11.11(c)(iii). The change of timetable occurs twice yearly, to coincide with the change from standard time to daylight saving time and vice versa. Thus, at those times, any non-essential position which went unfilled because it was not claimed by a protected employee must be reposted as an available vacancy which can again be claimed and filled by protected employees for the period of the new timetable. Moreover, during the term of the timetable, a protected employee whose position is abolished has an unqualified right to claim a discontinued non-essential position, a right which takes precedence over any obligation to displace a junior employee. This can result in protected employees moving from essential to non-essential positions.
As the Company stresses, all of the above conditions essentially ensure the availability of all non-essential positions to protected employees. Two aspects of the process cause the Company particular concern. One is the reactivating of the availability of unfilled non-essential positions twice yearly at the change of timetable. This obviously militates against true attrition. The second is what may be described as the backfilling of non-essential positions by protected employees who leave essential positions. The essential positions so vacated must be posted. To the extent that a non-protected employee may move into the newly vacated essential position, leaving still another vacancy to be filled, the Company may be compelled to hire a new employee to fill in the final link in the chain of vacancies. The foregoing concern is more than theoretical, as it appears that the most desirable assignments often involve non-essential positions to which protected employees, with greater seniority, tend to gravitate as they leave positions which are not non-essential, but nevertheless attractive to junior employees. This causes a chain of displacement which ultimately frustrates the process of attrition and the Company’s ability to move to a more cost-effective and productive ratio between the number of essential positions and the number of employees on its active payroll.
To illustrate its concerns the Company points to the example of the terminal of Biggar, Saskatchewan. Two pool crews operate out of Biggar, one running westward to Waynewright, Alberta and the other eastward to Watrous, Saskatchewan. Employees generally find the west pool to be more desirable, and as a result, at present none of the 17 crews in the west pool operates with a reduced crew. Conversely, the east pool, which senior employees find less desirable, operates reduced virtually all of the time. The Employer stresses that situations of that kind typify the problems it has encountered in achieving real attrition as a means of moving to reduced crew operations, in a way that seriously prejudices its competitive position.
It further emphasizes that the costs involved are substantial. On the basis of past performance the Company projects that the present rate of 52 percent of trains being operated on a reduced crew basis will rise to only 78 percent by 1999. The direct wage cost which it will incur from now until then for non-essential employees will be in the order of $162 million, which, coupled with the monies paid for non-essential positions since 1978, would involve an overall cost of over $427 minion for the payment of work performed in positions which were long ago agreed to be non-essential. That, coupled with the contrary position at CP Rail, which currently operates about 90 percent of its trains on a reduced basis, raises this issue in the eyes of the Company to one of major importance to its present and future economic viability. The Company estimates the current annual operating expenditure for non-essential brakemen’s positions to represent approximately $20 million per year, a burden which it submits should not be required to bear, at least without rules that will ensure its reduction over a reasonable period of time by the operation of a true attrition principle.
The Company further tables facts and figures in support of its position that the cost of supporting non-essential positions cannot be minimized or subsumed in light of its overall revenues and its general market position. It points to its indebtedness of $1.8 billion at the end of 1989, unavoidable annual capital expenditures, a shrinking market share due to competition from both Canadian and American rail carriers as well as the trucking industry. It notes also that the Staggers Rail Act of 1980 in the United States, deregulating American competitors, has substantially eroded CN’s trans-border rail revenues. Additionally, it cites the National Transportation Act of 1987 in Canada, which substantially altered the regulatory framework governing the Canadian railway industry, causing a downward impact on rail rates over the long term. While many of these factors impact equally on CP and CN, the Company stresses its greater vulnerability because it bears the burden of relatively higher manpower costs. Specifically, it tables figures which establish that from 1986 through 1988, taking the cost of transportation labour (i.e. wages) as a percentage of the total of transportation expenses, CP has consistently enjoyed a 15 percent advantage. That is reflected in the following table:
Transportation Labour $ as %
of Total Transportation Expense
1986 1987 1988
CN 50.9 49.3 50.2
CP 42.9 41.6 42.6
CP % Advantage 15.7 15.6 15.1
It is against the foregoing background that the Company tabled a demand to amend the collective agreement provisions in respect of crew consists at the outset of the open period for the renegotiation of collective agreements 4.16 and 4.3 which commenced on October 1, 1988. The Union took a counter-position, tabling a demand for a mandatory freight crew consist of one conductor and two brakemen and revisions in the protected status list to include all employees, with the entitlement to occupy non-essential positions upon the attainment of one year’s service. Five negotiation sessions ensued, including a number of shifting positions and counter-positions culminating on April 24, 1989. The Company proposed substantial lump sum payments to be offered to protected employees on a terminal-by-terminal basis in exchange for their retirement or resignation. The number of such buy-out opportunities was to be no greater than the number of freight crews at each terminal operating on a non-reduced basis. A condition of the Company proposal, however, is true attrition. In other words, for each retirement or severance voluntarily taken up there is to be a permanent discontinuation of one non-essential position in a freight crew at the terminal in question. The only qualification to that is that a discontinued position could be taken up, but only by a protected employee who would otherwise be unable to hold any work at the terminal. This, it may be noted, was identical to the formula which the parties have implemented in respect of the reduction of yard crews. These proposals became the core elements of the positions taken consistently by the Company in all subsequent negotiations. On May 3, the Union responded, indicating that it could agree to the Company’s proposal for accelerated attrition only if 27 specific demands were met. The positions tabled by the Union were broad-ranging, including requirements in respect of the benefits to be made available to employees electing separation, job protection benefits for employees remaining in service, a formula for the sharing of reduced crew savings and overall improvements in wages, benefits and working conditions. As noted above, it soon became clear that a mutually acceptable resolution of the freight crew consist dispute could not be achieved at the bargaining table, even though all other outstanding issues between the parties seemed to be resolved or resolvable. Conciliation was resorted to between June 6 and August 29, 1989. The parties then signed a Memorandum of Settlement, accepting the recommendation of the conciliation officers to set the matter of the crew consist dispute over to the closed period of the collective agreement for further negotiation and, failing agreement, final and binding arbitration by appointment of the Minister of Labour. These proceedings are the result of that agreement.
IV. COMPANY PROPOSALS
The position which the Company tabled during negotiations under the letter of understanding, and which it brings to this arbitration, is found in four documents delivered to the Union on November 4, 1989. The first document proposes a formula for accelerated true attrition through the establishment of voluntary separation opportunities, the elements of which are as follows:
1. All non-essential brakeman’s positions not filled as of the effective date of the Memorandum consequent upon no applications being received from protected employees i.e., positions currently the application of the existing freight crew consist provisions) would be declared permanently discontinued. Thereafter, such permanently discontinued positions could only be filled to avoid the lay off of a protected employee at his or her home station.
2. A lump sum payment of $60,000 for protected freight employees who are eligible for early retirement and who voluntarily elect to do so. Group life insurance and extended health care benefits would be maintained until age 65 with premiums fully paid by the Company. At age 65, the employee would be entitled to a paid up life insurance policy equivalent to that provided under the terms of the collective agreement in effect at that time.
3. A voluntary deferred separation plan for protected employees who are at least 50 years of age and within f eligibility for early retirement under the pension rules. Employees voluntarily deferred separation would be entitled to bi-weekly payments of 65% of their basic weekly salary of leaving active service until eligible for early retirement. In addition, they would be entitled to a lump sum payment equivalent to 30 to 40 weeks’ salary dependent upon length of service. Group life insurance and extended health care benefits would be maintained until age 65 with premiums fully paid by the Company. At age 65, the employee would be entitled to a paid up life insurance policy equivalent to that provided under the terms of the collective agreement in effect at that time.
4. A lump sum severance payment of $50,000 for protected employees who are not eligible for early retirement or the deferred separation plan but who voluntarily elect to sever their employment relationship
5. A lump sum payment of $25,000 for protected freight employees who elect to voluntarily forfeit their protected status.
6. The various separation opportunities would be made available at each terminal, on a one time basis only, but the total number of such opportunities would be limited to the number of occupied non-essential rear-end brakeman’s positions at the particular terminal. They would be distributed, on the basis of seniority, with preference given first to employees eligible for early retirement, next to employees eligible for the deferred separation plan and, thereafter, to employees electing to sever or to forfeit their protected status in that order.
7. For each such opportunity taken by a protected freight employee, a non-essential brakeman’s position would be permanently discontinued. Thereafter, such permanently discontinued positions would only be filled to avoid the lay off of a protected employee at that location.
The second document tabled by the Company was a draft Letter of Understanding, the terms of which would allow the Company to distribute any separation opportunities unused after the exhaustion of the process of voluntary separation described in its first proposal, among members of the Brotherhood of Locomotive Engineers. In the result, as a locomotive engineer leaves the Company’s workforce to be replaced by a permanently promoted trainman with protected status, a further non-essential brakeman’s position would be permanently discontinued. Again, that position would be available to be filled only to avoid the layoff of a protected employee at the location in question.
The third document tabled concerned the introduction of a seniority rule analogous to that operating on CP Rail, the effect of which would be to further accelerate the use of reduced crews. The Company’s proposal (referred to hereinafter as "the CP Rule") was worded as follows:
A trainman whose seniority entitles him or her to a conductor’s position or a temporary vacancy of six day’s or more or a temporary vacancy known to be of six consecutive days or more shall not be permitted to fill a brakeman’s position if, as a result thereof, the Company would be deprived of reducing a "reducible crew" in road freight service. In these circumstances, the junior protected conductor not holding a conductor’s position or temporary vacancy, as the case may be, will be required to fill a conductor’s position or temporary vacancy.
A fourth and final document tabled by the Company consisted of a proposed Letter of Understanding designed to protect present employees falling under collective agreements 4.16 and 4.3 in the event of any further reduction in crew size beyond the limits of the existing Reduced Freight Crew Agreement.
As is evident from the foregoing, the centrepiece of the Company’s proposal is the utilization of voluntary separation opportunities as a means of achieving true attrition to accelerate the use of reduced crew consists. The separation opportunities would be offered on a terminal-by-terminal basis being equal in number to the number of crews operating out of that terminal on a full-crew basis. In other words, for example, where 15 of 20 freight crews running out of a hypothetical terminal operate with full crews rather than reduced crews, fifteen separation opportunities would be made available to protected employees who are home-stationed at that terminal. In the aggregate, according to the Company’s calculations, a total of approximately 580 separation opportunities would be made available across its system nationally. The separation opportunities would take three forms: early retirement opportunities, deferred separation opportunities and severance or resignation opportunities, all to be distributed in that order among protected employees on a seniority basis. If protected employees entitled to early retirement do not utilize all of the opportunities available at a terminal, those entitled to deferred separation would have the next opportunity, followed by protected employees willing to elect severance, until the quota of available opportunities at the terminal is exhausted. For the purposes of clarity, trainmen entitled to early retirement opportunities are protected employees who are 55 years of age and have accumulated 85 points under the Company’s pension rules, whereby one point is given for each year of age and each year of cumulative compensated service. As of March 1, 1990 employees in that category are entitled to retire on full pension, without any actuarial reduction. The lump sum payment of $60,000 proposed by the Company would then be payable to that individual, over and above his or her normal pension. Additionally, the employee electing early retirement would be entitled to the proposed insurance and benefit protections to the normal retirement age, and receive a fully paid-up life insurance policy at age 65.
Under the Company’s proposal certain protected employees not eligible for early retirement would have eligibility for deferred separation opportunities. This category would be limited to employees who are at least 50 years of age and are within five years of eligibility for retirement under the Company’s pension rules. It cites an example of an employee who is 50 years old and has 25 years of cumulative compensated service. That person would be eligible for early retirement in five years under existing rules and would, under the Company’s proposal, be eligible for a deferred separation opportunity, whenever such an opportunity might remain available at a given terminal after the exhaustion of the early retirement elections of the protected employees. The protected employee voluntarily electing a deferred separation would receive compensation calculated on 65 percent of his or her basic weekly pay until the time that the employee becomes eligible for early retirement, with payments to be made on a bi-weekly basis. For road service employees this is to be calculated on the basis of 1/52 of total earnings over the previous 26 bi-weekly pay periods. Yard service employees are to be calculated on the basis of five days’ straight time pay. Employees treated under this provision would be required to retire when they reach eligibility for early retirement. They would then be entitled to a lump sum payment equating to between 30 and 40 times their basic weekly pay. Twenty-five years of cumulative compensated service or less would entitle the employee to 30 times the amount of basic weekly pay, with the multiplier being increased by one up to a maximum of 40 for each additional year of service over 25.
By way of example, the Company cites the employee who has accumulated 35 years of service. He or she would be entitled to a lump sum payment calculated at 40 times the basic weekly pay of $1,031.11 yielding $41,244. If that employee is two and a half years from eligibility for early retirement the total monetary value of the Company’s proposal is assessed at $128,000. It estimates that the combination of bi- weekly payments and the lump sum payment at retirement give to that employee the equivalent of 85 percent of basic weekly pay over the pre-retirement period, assuming no lump sum payment is made at retirement. Additionally, protected employees electing deferred separation remain entitled to group life and extended health care benefits up to age 65 and the receipt of a paid-up life insurance policy at that age. In justification of this offer, the Company notes that it was applied with the agreement of all unions affected in 1988 upon the closure of the Company’s rail operations in Newfoundland, as well as to an agreed arrangement with the Brotherhood of Maintenance of Way Employees in respect of a major reorganization of track forces which involved the elimination of over 1,500 positions.
The third category of voluntary separation contemplated in the Company’s proposal is aimed at persons not eligible for early retirement or who are not within five years of eligibility to retire. Protected employees in that category who elect to avail themselves of an unused separation opportunity at a given terminal would be simply entitled to a $50,000 lump sum payment upon voluntary resignation. Severance of employment in that circumstance would involve no further health or insurance benefits.
Lastly, as a means of further accelerating the reduction of crews, the Company offers a lump sum payment of $25,000 to any protected employee not eligible for the first two options, and not electing the third option, as a means of forfeiting his or her protected status. In other words, where there is an unused separation opportunity in a given terminal, the protected employee at that location who is not eligible for early retirement or a deferred separation, and who does not elect resignation, may surrender his or her protected employee status in exchange for a lump sum payment of $25,000. He or she then remains on the active workforce with no further right to claim non-essential brakemen’s assignments.
A cornerstone aspect of the proposal so advanced by the Company is that for each voluntary surrender of a protected position a non-essential position in a reducible crew is to be permanently discontinued. In other words, at the terminals affected, non-essential positions so eliminated would not be rebulletined at the next change of timetable and would no longer be available to protected employees who remain active, save in the circumstance where a protected employee would otherwise be unable to hold any work at the home station. To ensure the clear implementation of these attrition rules, the Company would require that a process whereby all non-essential positions discontinued pursuant to the rules are to be so identified and to be declared permanently discontinued. Thereafter the discontinuation of further non-essential positions by the election of protected employees to accept separation opportunities or forfeit their protected status would apply only to the remaining non-essential position. The Company’s concern is to minimize the revival of non-essential positions available to protected employees at the change in timetable. According to its proposal, therefore, effective October 29, 1989 where no applications for protected employees were made in respect of non-essential positions, such positions are to be declared permanently discontinued, only to be filled in situations where protected employees would otherwise be unable to hold work at their home station.
An essential element of the Company’s proposal is the determination of a time limit during which separation opportunities and forfeitures of protected status may be elected by eligible employees. In this regard it proposes a period of 90 days immediately following the effective date of the Arbitrator’s Award. It submits that the 90 days is a sufficient time to permit employees to obtain such information as they may require in respect of pension entitlements, and to give them the needed time to reflect on the pros and cons of their decision.
The second document tabled by the Company proposes offering unused separation opportunities to enginemen, represented by the Brotherhood of Locomotive Engineers. Almost without exception employees in that classification originally progressed through the ranks of the trainmen’s union. Trainmen are entitled to qualify as locomotive engineers and gain standing on the locomotive engineer’s seniority list. While, generally speaking, they cannot then hold permanent work as a locomotive engineer, over time, while working principally as a trainman or yardman, and occasionally as a locomotive engineer on a replacement basis, they accrue seniority which eventually allows them to hold permanent work as an engineman, at which point they are permanently promoted to the status of locomotive engineer. The Company’s proposal is intended to use the departure of protected trainmen who are promoted to the rank of permanent locomotive engineer as a further means of attrition in the reduction of non-essential trainmen’s positions.
The Company notes that this concept of attrition was accepted by the Union in the agreement governing the reduction in the consist of yard crews. Under that agreement, one non-essential position of yard helper was discontinued for each protected employee promoted to a locomotive engineer’s position. It submits that the same principle should operate in respect of the reduction of non-essential brakeman’s positions in freight crew consists. According to the terms of the -Company’s proposal, it could enter into an agreement with the Brotherhood of Locomotive Engineers whereby separation opportunities initially identified as available to trainmen which went unused, could thereafter be made available to locomotive engineers, on condition that the separation of the locomotive engineer would trigger the promotion of a protected employee to the locomotive engineers’ working list. The promotion of the protected employee out of the ranks of the trainmen’s bargaining unit would then result in the permanent discontinuance of a non-essential position at the terminal in question, in the same manner as is described above, subject always to its availability to protected trainmen remaining in service who would otherwise be unable to hold work at that home terminal.
The third document tabled by the Company concerns the acceleration of attrition by rules governing the ability of protected employees to elect to fill non-essential brakemen’s positions in circumstances where they have sufficient seniority to hold a conductor’s position. The Company’s concern is that under the present rules a protected employee can elect to fill a non-essential rear end brakeman’s position, thereby waiving the opportunity to hold a conductor’s position. This occasionally results in a crew being composed of a non-protected employee occupying the conductor’s position while a non-essential rear end brakeman is required to be assigned because that position has been elected by a protected employee with greater seniority. The Company submits that that result runs counter to the underlying purpose of the Reduced Freight Crew Agreement. It therefore proposes that in circumstances when a non-protected employee would be the successful applicant to a conductor’s position advertised pursuant to the provisions which require the posting of permanent or temporary vacancies, the junior protected employee who would otherwise occupy a non-essential position, will be required to fill the conductor’s position. By way of precedent for this arrangement the Company points to the existing provisions of the collective agreements which compel a junior qualified conductor to fill a posted conductor’s position when there are no voluntary applicants for it.
The Company’s fourth and final proposal consists of a document clarifying the work entitlements of non-protected employees who are employed as of the date of the Memorandum of Settlement of August 29, 1989, and employees hired after that date. It guarantees protected status to non-protected employees who were working on that date in respect of all positions to which they are presently entitled to work. In other words, non-protected employees on the payroll, as of August 29, 1989, gain protected status in the event of any future reduction of crews beyond the size of crew consist in freight service established in the existing Reduced Freight Crew Agreement.
The Company cites a number of further arguments in general support of its overall proposal. It underscores, of course, the voluntary nature of the election of separation opportunities which is at the heart of its proposal to attain true attrition. No protected employees forfeit their employment, or their protected status, unless they freely elect to do so. The choice to so elect is not coerced, but is made attractive by what the Company characterizes as generous retirement and severance incentives. It argues that in fact no employee remaining in the work force, whether protected or non-protected, will suffer adversely by the operation of its proposal, and that specifically no employee will lose work as a result of it.
In the Company’s view the likely outcome of the implementation of its proposal is that non-essential positions on less desirable assignments will in all likelihood be discontinued and be no longer available to protected employees, save where they would otherwise be laid off. However, the loss of the opportunity to a less desirable job assignment is a disadvantage that is more theoretical than real. The Employer further suggests that in fact the taking up of early retirement and deferred separation opportunities will result in the vacating of assignments by relatively senior employees, resulting in the greater availability of more desirable jobs for junior protected employees. Moreover, to the extent that the Union argues that the reduction of non-essential positions will adversely impact on the work opportunities of protected spare board employees, the Company cites its proposal, whereby there is provision to increase the number of available separation opportunities at locations where there are protected employees on the spare board, up to a maximum of 25 percent. To the suggestion of the Union that a reduction in the number of non-essential positions will make non-protected employees more vulnerable to layoff as they may be displaced from essential positions, the Company submits that that is the natural consequence of non- protected status, as in any system where layoff is to be implemented on the basis of seniority. In the Employer’s view the establishment of the two classes of protected employees was never intended as a form of job security for non-protected bargaining unit members. That, it submits, is inherent in the original Reduced Freight Crew Agreements.
V. THE UNION’S POSITION
Not surprisingly, the position of the Union before the Arbitrator is in substantial disagreement with the Company’s proposal. It submits that the present freight crew consist rule provides a sufficient formula for gradual reducibility, and should not be amended. In its view the existing rule meets the needs of the Company to eventually achieve full reducibility through attrition while, at the same time, protecting the job security and seniority rights of its membership. Its representatives argue that any tampering with a previously agreed attrition formula may have a serious impact on labour relations generally, resulting in an erosion of mutual trust.
The Union invokes the history of attrition as a concept to deal with reductions in the face of non-essential positions within the railway industry. It cites the history of the protections accorded to locomotive firemen on both CP Rail and CN following the Kellock Royal Commission Report of the 1950s. Additionally, it refers to the implementation of the run-throughs dealt with by the Freedman Industrial Inquiry which endorsed the concept of the sharing of cost savings among impacted employees. It further points to the principles underlying the agreements reached in the 1960s at both CN and CP for the reduction of yard crew consists and the agreement made in 1968 which paved the way for reduced passenger crew consists, with rights to certain positions in passenger service. It notes in particular that revisions to the passenger crew consist agreement made in a recent round of bargaining with VIA Rail, resulting in accelerated reducibility, comprised advantages to employees including a share in productivity gains, increased wages for reduced crew members and certain maintenance of earnings provisions.
The Union also draws to the Arbitrator’s attention the content of certain short-line crew consist reduction agreements which have been implemented in Canada. It cites recent examples of agreements governing crew reductions on B.C. Rail and the Algoma Central Railway, noting that the Algoma Central Agreement includes a premium pay for reduced crew members. Similarly, an agreement negotiated between the Union and the Essex Terminal Railway provides reduced crew members a premium of $10.56 for each shift. These examples are advanced by the Union in support of its argument that the concept of a share in productivity savings is an important feature in agreements of this kind, along with attrition rules which touch upon job security and protection dates. It notes that the most recent agreements, including Algoma Central and Essex Terminal, incorporate a form of share in productivity savings through the payment of "Lonesome Pay", a concept with precedent in the Reduced Freight Crew Agreements negotiated by the Union in railways in the United States, as well as with VIA Rail.
The Union further challenges the Company’s arguments based on competitive productivity, in particular as regards its position relative to CP Rail. It submits that a truer productivity reading is to be gained from figures respecting the ratio of tonne kilometres hauled per employee (employee meaning conductors and brakeman) in a given year. It cites, for example, that in 1966 CP Rail had 2,573 conductors and brakemen in freight service who hauled 177 billion gross tonne kilometres, for an average of 68.79 million gross tonne kilometres per employee. In comparison, CN in the same year utilized 3,253 brakemen to handle 245 gross tonne kilometres, or 75.32 million gross tonne kilometres per employee. To further question the Company’s premises with respect to productivity, it draws to the Arbitrator’s attention the fact that in the same year, according to Statistics Canada figures, the average number of cars on CP trains was 71.1 while on CN it was 77.3, with CN cars being 8.7% longer than those of CP Rail. The Union’s representatives argue that longer trains mean fewer trains operating, which may to some extent explain why CN has fewer reduced crew starts than its major competitor.
In general terms, the Union views the Company’s proposal as designed to achieve significant long-term savings to the railway in a mariner that is not commensurate with the impact on seniority rights, quality of work, job opportunities and overall earnings. which may be brought to bear on its members. The first position of the Union as noted above is that the existing rules governing the utilization of reduced crews should not be altered. It argues that these provisions were agreed to in good faith in 1978, and subsequently in 1982, and should not now be revised in a way that differs from the expectation of employees in the bargaining unit.
The Union argues that a number of factors, some of which are within the control of management, have influenced the reducibility of crews. Already mentioned is the use of longer trains: as fewer trains are operated, fewer employees are needed and more protected employees remain available to fill non-essential brakemen’s assignments. Further, the Union cites declines in business suffered by the railways, particularly in the reduction of bulk commodity traffic in 1988 and 1989. To the extent that this too resulted in fewer freight trains being run, the bidding into non-essential positions by protected employees became more frequent.
The Union also argues the impact of a number of technological and operational changes that have been introduced at various terminals across Canada, resulting in an overall reduction in work opportunities in both road and yard service. In this regard it points to some 100 jobs lost as a result of technological and operational changes in Western Canada alone, and refers generally to similar impacts in Eastern and Central Canada, including the closing of the Newfoundland Railway and terminal closures within the Great Lakes Region. The Union also reminds the Arbitrator of the effect of recent substantial cutbacks in employment opportunities at VIA Rail. Reciprocal agreements affecting CN, VIA Rail and the UTU allowed certain UTU members to return to service with CN from VIA Rail. In doing so they displaced junior employees from positions at CN. In the Union’s submissions, but for the job security aspects of the freight crew consists rules, its membership within CN would have suffered greatly as a result of the VIA Rail cutbacks.
The Union also notes the displacement impact of abolishments of yardmaster and engineer positions within CN’s system generally. As such employees exercise their acquired seniority rights to return to trainmen’s positions, they displace into the bargaining unit, impacting negatively on the job security of existing members. To the extent that non-essential positions are absolutely reduced, the Union submits that such "bumping back" into the bargaining unit by yardmen and locomotive engineers will have still greater adverse impact on job security.
The Union further questions the legitimacy of the Company’s proposal in light of what it terms under-utilization of reduced crews under existing rules. In particular, it points to the fact that the Company frequently opts to operate with a full crew, rather than with a reduced crew, because the rules permit a full crew to work eleven hours before becoming eligible to book rest, while reduced crews may take rest after a shorter tour of ten hours on duty. Additionally, the Union argues that by allowing locomotive engineers to earn mileage beyond the maximum contemplated in the regulations, the Company knowingly reduces the frequency of opportunities for trainmen qualified as engineers to work in that capacity, thereby promoting the greater likelihood of protected trainmen being compelled to fill reducible positions. The Union further raises the effect of what it characterizes as underlying restrictive policies of the Company with respect to leaves and time off. It argues that to the extent that the Company has limited the opportunities to take voluntary leaves, without pay, or in some instances leaves to temporary vacancies at VIA Rail, it has indirectly contributed to protected employees being available to bid onto non-essential positions. It cites the similar effect of a restrictive policy of the Company with respect to the computation of trainmen’s vacation days.
The Union does not oppose all aspects of the Company’s proposals. Specifically, it has no objection to the Company having the right to offer more early retirement opportunities to its members on a voluntary basis. It submits that that measure, combined with an adjustment in management policies in the areas reviewed above would, standing alone, achieve an acceleration in the reduction of non-essential brakemen’s positions.
The alternative position of the Union is that if there is to be modification of the reduced freight crew agreement, any changes should ensure that four conditions are included:
1. Job security protection.
2. Retirement opportunities.
3. Share of the productivity savings.
4. Work rule improvements.
By job security protection the Union means provisions whereby the employees are guaranteed that there will be no loss of earnings as a result of a modification of the reduced freight crew consist agreement. Specifically, it maintains that reducible positions in freight service should remain accessible in the event of any further impacts on the workforce such as external events like VIA Rail reductions, terminal closures, pool car or crew reductions and the like. Additionally, in the Union’s view, the existing number of positions in road service should remain available to employees in yard service who may be negatively impacted by job reductions. The Union also proposes that provision be made for ensuring that reducible positions are given to employees whose capacity to work is reduced due to illness or injury.
While the fundamental position of the Union is that any modification of the rule should result in no employee being laid off, it tables an alternative. It maintains that in the event that an unprotected employee is laid off as a result of changes in the Reduced Freight Crew Agreement, wage protection must be provided to the laid-off employee. It would calculate wage protection based upon 80 percent of an employee’s previous year’s earnings. Additionally, in the case of employees who are not laid off but whose work opportunities are reduced, the Union proposes an earnings protection formula, based upon the previous 52 weeks’ earnings, or a guarantee of 3,800 miles per month, whichever is greater. Further the Union seeks the establishment of a new employee protection date. It would apply to all employees, guaranteeing their entitlement to work in freight service, as a conductor or trainman, until retirement, resignation or any other means of separation from service.
The Union submits that any retirement opportunities made available should be generous in number. It proposes that the average number of reducible positions be calculated on each district, with credits for spare board relief. It notes that in the previous reduced freight crew agreements a factor of 25 percent of the number of reducible positions has been included as representing the spare board. In the Union’s view 33.3 percent would be a more realistic factor.
With respect to the amount of the retirement separation allowance, the Union proposes that it should be no less than $80,000 per employee, with unused retirement opportunities to be carried forward until all are used. It also proposes terms that would allow the lump sum payments to be taken, at the option of the employee, for a period of up to 12 months in two instalments.
Following the precedent of the Newfoundland Railway Closure Agreement, the Union further proposes a bridging provision. It would be available to any employees fifty years of age or older to the date that they are eligible for retirement under the CN pension rules, and the separation allowance, at 80 percent of their wages. Under the terms of the Union’s position employees taking early retirement under this modified rule would maintain dental, extended health care and life insurance coverage.
As noted above, a share in the productivity savings to be realized through changes in the reduced crew rules is proposed by the Union. It maintains that the rates of pay for conductors be increased to equal the locomotive engineers’ rates, and that the brakeman’s rate be upgraded to the equivalent of conductor’s rates. This, it submits, would produce an equitable share of the productivity savings, directed to the employees who are compelled to work in reduced freight crew service. The Union further demands a reduction of the maximum mileage limitations established for pay purposes, and for yard service employees the reduction of the basic day from eight hours to six hours per shift. It also proposes a more generous formula of graduated vacation benefits.
Following the presentation of its position at the hearings, the Union offered rebuttal to the positions and arguments of the Company. While it made a number of submissions in that regard, as several of them overlap the thrust of its submission in chief, they need not be reviewed here in detail. Two of the arguments presented by the Union rebuttal, however, raised issues of substance which caused the Arbitrator to seek further clarification from the Company. The first position advanced by the Union is that the permanent elimination of reducible positions will result in a reduction in road service work opportunities, which in turn will have a displacement impact. By referring to examples at the three terminals of Garneau, Biggar and Sarnia, the Union’s representatives tabled scenarios in which they maintain the reduction in road service opportunities will force employees to move onto the spare board and ultimately displace others, causing layoffs among unprotected employees. Secondly, the Union submits that adopting the "CP Rule", whereby protected trainmen with the seniority to claim conductor’s work must do so if their filling a brakeman’s position would deprive the Company operating with a reducible crew in freight service would result in employees being laid off. By examining the fact scenario which it maintains exists at Hornepayne, the Union argues that the operation of that rule can cause a ripple effect, the result of which will be the layoff of trainmen. Additionally, by examining the potential impact of the Company’s proposals at Capreol, the Union maintains that the predictability and regularity of assignments will be disrupted, impacting negatively on the quality of working life of the employees concerned.
VI. COMPANY REPLY
The Company takes issue with the extent of the disruption which the Union suggests will occur as a result of the permanent discontinuance of non-essential positions. It stresses that the reduction in road freight assignments occasioned by the elimination of non-essential positions will be generally offset by the departure of employees from the workforce as the options of early retirement, deferred separation and resignation are taken up on a voluntary basis. With respect to the fact situation obtaining in Hornepayne, however, the Company does not deny that the operation of the "CP Rule" may cause a rationalizing of crews which could result in some non-protected employees being cut off the spare board. Effectively, then, the Company was compelled to revise its initial view that the implementation of the rules which it proposes would have no impact on the job security of any employees. The Employer remains unpersuaded, however, that the negative impacts will be as drastic as the Union suggests.
The Company submits that the numbers do not break down elsewhere as they do at Hornepayne. Additionally, it doubts that junior non-protected employees displaced from such a location would not be able to exercise their seniority to hold work at another terminal on their seniority district. It submits that the CP Rule would in fact affect only 23 positions at some ten terminals across the system, of which Hornepayne is only the most dramatic example. Moreover, to the extent that a change in the rules may have a negative impact on the job security of unprotected employees, the Company stresses that junior unprotected employees are just that. They have always been viewed as unprotected from the ultimate effects of freight crew reduction. In its view it is contrary to the underlying purpose and intention of the Reduced Freight Crew Agreement to insist that employees who were hired after the agreed protection dates should now be accorded protection from layoff by virtue of the Company’s ability to operate with reduced crews.
I turn to consider the merits of the competing positions advanced by the parties. In the Arbitrator’s view the premises underlying the position and proposals advanced by the Company are, on the whole, persuasive and compelling. Firstly, it is clear, as is evidenced from the prior agreements of 1978 and 1982, that the parties long ago agreed to cross the rubicon of crew reduction. Since that time it has not been fundamentally disputed that the Company should be allowed to eliminate non-essential brakemen’s positions and move towards reduced freight crews. The contentious issue, addressed in the earlier agreements and raised in this dispute, is the method by which that end is to be achieved. Again, following the well established pattern in the industry which originated with the firemen’s agreements in the late 1950s, the parties accepted mutually that attrition should be the basic vehicle for implementing crew reduction, and that the Company should be at liberty to offer early retirement and severance opportunities as a means of accelerating that process.
At the core of the dispute before me is the impact of the Company’s obligation, under the existing agreements, to rebulletin all non-essential brakemen’s positions at each change of the timetable, which occurs twice yearly. Additionally, the ability of a protected employee whose job is abolished to claim an unfilled vacancy in a non-essential brakeman’s position adds to the "nine lives" character of the rear end brakeman’s assignment. In the Arbitrator’s view the Company’s concerns in this regard are legitimate, are motivated by sound business considerations and can be accommodated without undue prejudice to the rights of protected employees.
The issues at stake must be kept in perspective, both from the standpoint of industrial relations generally, and of the railway industry in particular. It is fair to comment that from the inception of the attrition principle applied to firemen in the railway industry, and subsequently utilized in both the reduced crew agreement governing yard service and the freight crew agreement, railway employees have been well served. Their overall treatment represents a high standard of protection for employees that is, arguably, without parallel in most industrial settings. While collective agreements in other sectors of the economy have evolved to provide job security protections in the face of technological change in the introduction of new equipment, one is hard pressed to find protections for employees more generous than those available within the railway industry.
Within the railway industry itself, moreover, there are some pattern-setting premises which are of guidance in the resolution of this dispute. In my view it is legitimate to look to the attrition formula agreed to by this same Union with respect to the employees which it represents both in CN yard service and CP freight service as a means of considering the kinds of terms which the parties to this dispute might have settled on if they had been compelled to make the freight crew reduction formula a strike or lockout issue. In my view it is difficult for the Union to assert convincingly that attrition rules which it has lived with, without apparent hardship, in its relationship with CP Rail for more than ten years are grossly unreasonable as they might apply within the operations of CN. That observation is more compelling still when one considers that the Union has in fact accepted what CN characterizes as a "true attrition" rule in the agreement which it made with CN governing the reduction of yard crews some years ago. I am satisfied that the proposals advanced by the Company, subject to some adjustments elaborated upon below, remain essentially consistent with the general understanding underlying reduced crew agreements negotiated within the industry generally, and the Reduced Freight Crew Agreements made by these same parties in 1978 and 1982.
Critical to those agreements is the safeguarding of the job security of employees who, by virtue of their vested rights at the time of the agreements, were granted protected status in respect of the impact of crew reduction. Consistent with the theme of other agreements in the industry, however, dating back to as far as the firemen’s agreement, protected status for a trainman should primarily be understood as the right to maintain work as a trainman, notwithstanding the implementation of reduced crews. It need not, in my view, go further, to guarantee to protected trainmen the absolute right to work in non-essential trainmen’s positions. It is difficult to reconcile with generally accepted concepts of attrition and job protection the notion that protected employees must necessarily retain the right to perform non-essential jobs. In the case of single job bargaining unit options such as the firemen’s, that may have been the practical effect. However, it is neither necessary not desirable in a work setting, such as that in which trainmen find themselves, where the alternative of working in essential positions remains real. Again, that principle was obviously accepted by both parties to this dispute as part of their agreement for the implementation of reduced yard crews, to the extent that non-essential positions were gradually removed from the workplace in direct proportion to the separation of protected employees.
Nor can the Arbitrator ascribe much weight to the position of the Union which would seek to gain absolute job security for all employees, including non- protected employees who were hired subsequent to the reduced freight crew agreements of 1978 and 1982. Part of the bargain made in those agreements is that employees then employed had gained protected status by virtue of rights vested by their prior service, before reduced crews were implemented. Employees hired after those dates came into the workplace knowing that the rules had changed, and that they could have no moral or legal claim either to work in non-essential positions or to be generally sheltered from the adverse impacts of the gradual implementation of reduced crews by the process of attrition. While, as noted below, the Arbitrator accepts that there may be some means of cushioning the blow to non-protected employees who may be impacted by these changes, the number of whom would appear to be small in any event, it would depart from the foundation of the parties’ prior agreements to now grant to those employees what would be tantamount to a fully protected status.
In summary I adopt the following principles for the purposes of this Award:
Employees enjoying the status of protected freight employee "A" and protected freight employee "B" shall retain their protected status, to the extent that they are guaranteed not to lose their employment as trainmen by the implementation of reduced crews, to the extent contemplated in the Reduced Freight Crew Agreements of 1978 and 1982.
All non-essential brakemen’s positions not filled as of the last change of timetable preceding the date of this Award, consequent upon no applications having been received from protected employees, are to be declared permanently discontinued. Thereafter, such discontinued positions may only be filled where it is necessary to do so to avoid the layoff of a protected employee at his or her home station.
The Company shall offer separation opportunities, on a terminal-by-terminal basis, equal to the number of non-essential positions remaining in effect at the terminal, including voluntary early retirement, voluntary deferred separation and voluntary severance in exchange for a lump sum payment. The number of early retirement opportunities available may be increased by twenty-five percent (25%) to offset the loss of work opportunities for protected freight employees, if any, on the road or joint spare board at such terminal.
The above separation opportunities to be made available at each terminal will be distributed on the basis of seniority, with first preference to employees eligible for early retirement, next preference to employees eligible for deferred separation, next to employees electing voluntary resignation.
For each separation opportunity accepted by protected freight employees under the above procedure, a non-essential brakeman’s position shall be permanently discontinued at the terminal in question. A position so discontinued will, however, be available to be filled by a protected employee who would otherwise be unable to hold work at that location.
Protected employees are to be guaranteed protection against any layoff by virtue of the implementation of reduced crews.
The Company shall offer separation opportunities to protected employees in two 90-day windows of opportunity. The first 90-day period shall commence 30 days after this Award. The second 90-day period shall commence on a date to be mutually agreed upon by the parties, on the understanding that such date is to be established so as to allow employees in yard service the opportunity to bid into road assignments, thereby making themselves eligible, subject only to their seniority, to elect such separation opportunities as may then still be available.
The Arbitrator makes no ruling at this point with respect to the Company’s entitlement to offer separation opportunities to locomotive engineers which would give rise to the permanent promotion of protected trainmen and the consequent permanent discontinuance of an equivalent number of non-essential positions, on a terminal-by-terminal basis. The utility of that device cannot be determined until the two windows of opportunity for separation have expired. It is only then that the merits of the Company’s position will be ripe for assessment and the Arbitrator retains full jurisdiction to determine the appropriateness of implementing the Company’s proposal in that regard in light of the fuller knowledge then available. That issue, and the issue of forfeiture of protected trainman’s status in exchange for a lump sum payment, may be activated for consideration by notice to the Arbitrator from either party within 30 days of the expiry of the second 90-day period allowed for the election of separation opportunities.
A rule analogous to the "CP Rule" shall be adopted whereby a protected trainman whose seniority entitles him or her to a conductor’s position shall not be permitted to fill a brakeman’s position if to do so would deprive the Company of operating a reduced crew in freight service. The junior protected conductor not holding a conductor’s position or temporary vacancy shall be required to fill a conductor’s position or temporary vacancy under those circumstances. The Arbitrator accepts the principles and the wording in respect of this issue reflected in the third document tabled by the Company, and reproduced above. However, no protected employee is to be forced out of his or her home terminal by the operation of this rule.
All trainmen employed under collective agreements 4.16 and 4.3 as of the date of this Award are to enjoy protected status in the event of any further reduction in crew size beyond the limits of the existing freight crew agreement. Such protection shall be based on the same principles of attrition and job reduction as are adopted in this Award.
The Company shall offer a lump sum payment of $60,000 to protected freight employees who are eligible for early retirement and voluntarily elect to do so. Such employees shall, on the basis of seniority, have the first right to elect early retirement, and shall have group life insurance, extended health care benefits and dental plan benefits maintained until age 65, with premiums fully paid by the Company. At age 65 the employee shall be entitled to a paid-up life insurance policy equivalent to that provided under the terms of the collective agreement in effect at that time.
The Company shall offer a voluntary deferred separation plan to protected employees who are at least 50 years of age and within five years of eligibility for early retirement under the Company’s pension rules. Employees so qualified may, on the basis of seniority, elect deferred separation for any such separation opportunities at their terminal which have not been exhausted by protected freight employees eligible for early retirement. Employees voluntarily electing a deferred separation shall be entitled to bi-weekly payments of 65 percent of their basic weekly salary, such payments to be computed on the basis of increases to their basic weekly salary at the time of leaving active service, until eligible for early retirement. They shall, moreover, be entitled to a lump sum payment upon retirement equivalent to 30 to 40 weeks’ salary, based on the formula advanced by the Company, depending on length of service. For such employees group life insurance, extended health care benefits and dental plan benefits shall be maintained until age 65, with premiums fully paid by the Company. At age 65 the protected employee will be entitled to a paid-up life insurance policy equivalent to that provided under the terms of the collective agreement in effect at that time.
The Company shall offer a lump sum severance payment of $50,000 to protected employees not eligible for early retirement or the deferred separation plan who are willing to elect to sever their employment relationship. Such severance opportunities shall be offered on a terminal-by-terminal basis to be applied against any separation opportunities unused by protected freight employees eligible for early retirement or deferred separation.
All lump sum payments provided in this Award shall be payable, at the option of the employee, in two instalments over a thirteen month period.
The Company shall provide a maintenance of earnings plan for all protected employees whose earnings would be otherwise adversely affected by the implementation of reduced crews. The plan shall be similar in principle and often the same protections as the maintenance of earnings plan presently in effect in respect of the Hump Yard Improvement Program at Symington Yard, save that the three year period referred to at Article IV(3) (at p.14) of that agreement shall be five years.
The Company shall provide layoff benefits to any, non-protected employees who find themselves unable to hold work because of the implementation of the reduced freight crew agreement, as amended by this Award. The layoff benefits shall be provided on the same basis as established in the precedent of the agreement governing the closure of the Company’s Newfoundland Railway operations and in prior agreements governing the reduction of the work force of non-operating employees. In the event that there are any material differences in the Newfoundland and non-operating employees’ layoff agreements, non-protected employees affected by this Award shall have the benefit of the layoff agreement most advantageous to the employee.
The Arbitrator does not deem it appropriate to alter the amount of the lump sum payments which the Company has proposed to offer in exchange for separation opportunities and the forfeiture of protected status. As it is the Company which seeks to accelerate the reduction of crews, and protected employees are under no compulsion to accept the lump sum payment offered, it is appropriate to allow the Employer to remain the best judge of what constitutes a fair incentive. If it is wrong in its assessment it will pay the price in a slower process of crew reduction. For the purposes of clarity, however, nothing in this Award should be taken as limiting the Company’s freedom to increase the lump sum payments, should it deem it appropriate to do so, provided that any greater amount of payment is made available to all employees within the category affected.
As agreed at the hearing, the Arbitrator does not propose to now provide any final wording for the amendment of the Reduced Freight Crew Agreements, but rather provides to the parties the foregoing general directives which, it is hoped, will allow them to agree upon the appropriate language. Should they be unable to do so, however, I retain jurisdiction to write the precise terms of the amendments, and to resolve any further dispute that may be outstanding with respect to the interpretation or implementation of this Award.
DATED at Toronto this 29th day of June, 1990.
(signed) MICHEL G. PICHER