©b69r 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.

©b69r VII DECISION

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 traimmen the absolute right to

work in non-essential traimmen'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 trainmnen 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 Fife 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. T|hey 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 installments

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.

-------------------------------------- Michel G. Picher -

Arbitrator