AD HOC 337




(the "Company")



(the "Brotherhood")

Grievance concerning material changes at the MacMillan Hump Yard Toronto (Article 78.1)





There appeared on behalf of the Company:

A. E. Heft Manager, Labour Relations, Toronto

D. W. Coughlin Manager, Labour Relations, Montreal

J. Glower Acting Senior Operations Officer, Crew Management, Toronto

B. Maskerine District Superintendent, Toronto

And on behalf of the Union:

Cliff Hamilton General Chairman, Toronto

Dale Corfield Local Chairman, Toronto

Ted Chodkiewicz Vice Local Chairman, Toronto


A hearing in this matter was held at Montreal on August 29, l994.


This is a grievance which seeks an order requiring the Company to implement measures designed to minimize the adverse effects on locomotive engineers associated with introduction of a new Process Control System at the MacMillan Hump Yard in Toronto which resulted in the direct abolition of eight locomotive engineer positions. The provisions of the Collective Agreement invoked in support of the request are to be found in Articles 78.l and 78.4(g) of Collective Agreement 1.1, which read as follows:

Article 78.l

Prior to the introduction of run-throughs, changes or closures of home stations (including those brought about by the sale of a line), or the introduction of new technology initiated solely by the Company and having a significantly adverse effect on locomotive engineers, the Company will:

(a) Give at least l80 days' advance notice to the Brotherhood of any such proposed change, with a full description thereof and details as to the anticipated changes in working conditions; and

(b) Negotiate with the Brotherhood measures to minimize any significantly adverse effects of the proposed change on locomotive engineers but such measures shall not include changes in rates of pay.

Article 78.4(g)

(g) The decision of the arbitrator shall be confined to the issue or issues placed before him or her and shall also be limited to measures for minimizing the significantly adverse effects of the proposed change upon locomotive engineers who are affected thereby.

The parties have been unable to agree upon the Joint Statement of Issue, so that the proper approach for the Arbitrator will be to outline the background facts out of which the grievance arises and from there to set out the various measures sought by the Brotherhood and then to deal with each of these in their turn.

On July 30, l993, the Company served notice to the Brotherhood, pursuant to Article 78.l of Agreement 1.1, of its intention to implement the Process Control System at the MacMillan Hump Yard, with effect as and from January 30, l994. The Process Control System is an automated system for movement of locomotives in the Hump Yard by remote control. Through the technology duties and functions previously performed by a locomotive engineer, a yard foreman and a yard helper can now be performed by a single employee utilizing a locomotive control system referred to at the hearing as a "belt pack".

In addition to the eight positions of locomotive engineer that would be abolished as a result of introduction of the Process Control System, approximately twenty-four other positions falling under the jurisdiction of the United Transportation Union would suffer a similar fate. As part of the process eight new positions of Yard Operation Employee to be assigned to members of the United Transportation Union would be created but, in all events, the loss to the Brotherhood of eight locomotive engineer positions at the MacMillan Hump Yard subject to abolition would remain to be addressed.

Thus, in keeping with the exigencies of Article 78.l of Agreement 1.1, the Company on July 30, l993, forwarded to the Brotherhood the following letter:

30 July l993

Our file: 830l-52

Mr. C. Hamilton

General Chairman

Brotherhood of Locomotive Engineers

P.O. Box l40

Kingston, Ont.

K7L 4V5

Dear Mr. Hamilton:

As you may be aware, the Company has implemented the Process Control System and Signal Control Systems in MacMillan Yard.

In the near future a number of locomotives will be equipped to operate with the Locomotive Control System or more commonly referred to as Belt Pack Technology.

The Locomotive Control System (LCS) currently involves the remote control of unmanned locomotive by means of a belt pack only. Following testing at MacMillan Hump Yard, the belt pack operation will be ready for use on MacMillan Hump assignments. The operation of the belt pack will form part of the duties of a classification represented by another bargaining unit.

The implementation of the belt pack locomotive control operation will result in the abolishment of 8 locomotive engineer positions at MacMillan Hump Yard effective 30 January l994. The employees currently assigned to these positions are outlined in Appendix A attached. As you are aware, the employees named in Appendix A may change as a result of the exercise of seniority between now and the effective date of the above change.

Please accept this letter as a "notice" pursuant to Article 78 of Agreement 1.1 respecting the change at MacMillan Hump Yard described above.

Yours truly,

(s) Manager Labour Relations"

Article 78.l of Agreement 1.1, in addition to requiring the Company to provide the Brotherhood with l80 days of advance notice of introduction of new technology having a significantly adverse effect on locomotive engineers, also requires it to negotiate and adopt measures designed to minimize such adverse effects. Where agreement is not possible, Agreement 1.1 goes on to confer upon an arbitrator jurisdiction to consider and impose measures designed to minimize the adverse effects of the proposed changes upon locomotive engineers affected. In this latter regard the only limitation is that the jurisdiction of the arbitrator will be confined to the issues placed before him and shall not include an authority to impose changes in rates of pay. The one further directive confining the arbitrator's jurisdiction is contained in Addendum 56B of Agreement 1.1, which provides that benefits to locomotive engineers affected by technology changes will not be less than the levels provided for in the VIA Special Agreements where early retirement or other special benefits are adopted as appropriate measures to deal with any particular situation.

It would appear to the Arbitrator that subject to these limitations the range of measures which he can consider and impose to minimize adverse impacts on employees will be all encompassing, extending even to measures such as retirement opportunities, deferred separation, severance or lump sum payments, retirement credits, as well as the host of factors that make up an employee's compensation and benefit package and of which he may be deprived to a greater or lesser extent by reason of the introduction of the changes. The Arbitrator would cite as authority for the correctness of this observation a passage taken from the decision of Canadian National Railway Company and United Transportation Union, June 22, l993, Michael G. Picher, Arbitrator, where in response to a Company argument that the range of issues to be arbitrated under the provision was limited to matters of wages and benefits associated with the abolished position, the arbitrator had this to say:

"There is nothing in the Company's brief before the arbitrator, save certain references to wage rates, dealt with in greater detail below, which would appear to limit the range of factors and measures which can be addressed under the provisions of article 79.l, with a view to minimizing adverse impacts on employees. At its highest, the Company's position appears to state that the Union's demands " some cases are in areas which are not contemplated by the Material Change provisions of the Collective Agreement". However, with the exception of wage rates, the Company has not identified any issue raised by the demands of the Union which it maintains would be beyond the arbitrator's jurisdiction. Whatever may have been said in negotiations, for the purposes of this arbitration I do not take the employer as asserting that measures such as early retirement opportunities, deferred separation, severance payments or lump sum payments are prohibited from discussion or consideration under the terms of article 79.l of the collective agreement, in a jurisdictional sense. Indeed, it would be difficult for the Company to take such a position, in light of the language of article 79.l which specifically contemplates that the parties may negotiate measures other than those covered by paragraphs 79.2 (relocation expenses) and 79.3 (early retirement allowance). The list of measures negotiable to minimize adverse effects is not, in any event, limited to those items listed in article 79.l(b) of the collective agreement. As prior decisions and negotiated agreements demonstrate, a wide range of mitigating measures have been considered and implemented in other cases in the past. The nature of the measures which are appropriate to any given circumstance, including the financial circumstances of the Company and the cost to it of any given demand, is a matter which may be negotiated and, if necessary, arbitrated in the circumstances of each particular case arising under the terms of article 79.l."

With due regard to this latitude extended him under the provisions of Article 78 of Agreement 1.1, it will now be for the Arbitrator to consider the various demands of the Brotherhood in light of the adverse impact upon affected locomotive engineers resulting from implementation of the Process Control System at the MacMillan Hump Yard. These demands are set out in the Brotherhood's Statement of Issue, as follows:

"The Brotherhood submits that the following represents the appropriate measures to minimize the adverse impact of the implementation of the PCS at the MacMillan Yard:

Item #l

(A) Ten (l0) retirement credits

(B) Early retirement credits calculated and include the following:

i) VIA 80% Formula

ii) Group life insurance paid by Company - until 65 years of age.

iii) Extend Health Care and Dental Care paid by Company - until 65 years of age.

iv) At age 65, life insurance fully paid equal to that in effect in Agreement 1.1.

(C) Should any retirement opportunities remain after the initial implementation of the Belt Pack on hump locomotives, they may be taken by other eligible employees in Yard or Road service in Toronto.

(D) The number of retirement opportunities to equal the number of assignments abolished, plus two retirement opportunities for spareboard employees.

(E) The number of unused retirement opportunities will be advertised at each change of time until used.

(F) The eight (8) employees to be affected will be identified by name prior to implementation.

Item #2

Maintenance of Earnings (Via Special Agreement)

Also, a basic weekly rate for yard employees to be calculated at a rate of 4l hours and 40 minutes per week (i.e. 8 hours and 20 minutes daily).

Item #3


Training to be paid, if required.

Item #4

Relocation benefits and appraisal procedure

As per Article 78 of Agreement 1.1

Item #5

Disputes procedure:

Disputes in relation to this settlement will be initiated at Step Three of the Grievance procedure in 1.1 Agreement.

Item #6

Letter to be provided to indicate the following:

This settlement is in relation to hump locomotives only, should there be a belt pack failure - and if manual operation of a locomotive is required, a locomotive engineer will be called."


There is no evidence before the Arbitrator that the abolition of eight positions of locomotive engineers will result in lack of work opportunities for these employees. The affected employees will be assigned to Spareboards in the Toronto area. There is every indication that there are manpower shortages across this region. All that can be said is that there will be displacements as a result of the movement of personnel which will inevitably result from the abolitions and the exercise by the locomotive engineers affected of their rights. But, dislocations of this nature can be protected against by measures other than retirement or severance incentives.

Retirement or severance incentives will, and should, be resorted to to offset adverse effects upon employees due to introduction of technological change where such adverse effects take the form of wholesale reduction of personnel resulting in chronic employee surpluses and diminished work opportunities for these employees. The mechanism of retirement and severance incentives to address adverse effects must be viewed as an extreme measure and should not be resorted to where other measures are available to address the adverse effects upon an employee brought upon through change. On this point the Arbitrator would agree fully with the view expressed by Arbitrator Picher in a number of his decisions where he refused to impose upon the Company a requirement that it grant early retirement or a severance incentive to employees whose positions had been abolished through implementation of changes in the nature of those envisaged in Article 78 of Agreement 1.1, but who would not thereby suffer from decreased work opportunities that might operate to render them, for the most part, inactive. Thus, in his decision of Canadian National Railway Company and United Transportation Union, decision of March 8, l993, Arbitrator Picher reasons:

"The Arbitrator has difficulty understanding the position of the Union with respect to the justification for separation allowances and early retirement opportunities in the case at hand. For the reasons related above, it is questionable whether any employees have indeed lost work opportunities at Vancouver, particularly in light of the fact that three members have already transferred to Saskatoon. While the providing of severance payments and early retirement opportunities may be justified where it can be shown that a material change occasions a wholesale reduction in work opportunities in a way that substantially impacts employees, that is not disclosed on the facts of the case at hand. This case is to be distinguished, for example, from the circumstances disclosed in the crew consist agreement negotiated between these same parties where substantial work opportunities otherwise available to protected employees were eliminated."

And again, in Canadian National Railway Company and United Transportation Union, decision of June 22, l993 (supra):

"On the evidence, therefore, there is no shortage of work opportunities for employees adversely affected by the implementation of the process control system at the MacMillan Hump Yard. In these circumstances the arbitrator can see no rationale for establishing retirement credits, early retirement opportunities, deferred separation opportunities or severance payments, as requested by the Union. I cannot accept the argument advanced by the Union's representative, which effectively suggests that the employees who may be displaced from MacMillan Yard into other positions in Toronto should be guaranteed protection against possible future loss of work opportunities in the event that the Company should later encounter a reduction in traffic and a decline in its business activities. Operations at MacMillan Yard are vulnerable to fluctuations in traffic. The collective agreement contains protections negotiated for employees whether they work at MacMillan Yard or elsewhere, with respect to the impact of reduced traffic. I do not see upon what basis those protections should be augmented for a defined group of employees, and not for others, merely because those employees have experienced the effects of a material change in working conditions in respect of which they have had the protections of article 79.l of the collective agreement, and have been compelled to exercise their seniority to another location or operation.

Most importantly, the evidence before me does not suggest that numbers of employees, or indeed any employee, will be deprived of employment by the impact of the material change. While there will be displacements, dislocation of that kind is protected against by maintenance of earnings safeguards. The circumstances do not, however, suggest the need or justification for retirement or severance incentives."

It is no answer for the Brotherhood to say that there is no shortage of locomotive engineers in the Greater Toronto area because there exists no "deemed" shortage in terms of Article 58.2 of Agreement 1.1 since all available locomotive engineers assigned in that area have not been promoted to the locomotive engineers working list. The issue, rather, is work opportunities and whether the locomotive engineers affected will, on a chronic basis, be without work. The evidence strongly suggests that they will not.

Nor is it any answer for the Brotherhood to say that the shortages of employees to which the Company is referring are within another bargaining unit, the United Transportation Union, or that such shortages have resulted from the fact that the Company's hiring practices have changed dramatically in the last several years in that there has been a significant decrease in the numbers of employees hired. Again, the issue is availability of work opportunities for the locomotive engineers affected.

The task of the Arbitrator is to identify measures necessary to minimize adverse effects of proposed changes and it is upon such adverse effects and such employees that the Arbitrator must focus. That work opportunities that are available and will provide work for the affected employees result from shortages of employees in other bargaining units, attrition or reduction in the amount of hirings, would matter little. The all important consideration is whether the affected locomotive engineers will remain without work. As Arbitrator Picher explains in his decision of Canadian National Railway and Brotherhood of Locomotive Engineers, March 8, l993:

"In the case at hand, it is common ground that no locomotive engineers at Vancouver have in fact lost work as locomotive engineers, or the potential for earnings, as a result of the implementation of the Vancouver Intermodal Terminal. It is not disputed that that is a consequence of the fact that a substantial number of locomotive engineers at Vancouver simultaneously took advantage of early retirement opportunities under a separate and unrelated agreement. In other words, by the coincidence of events, attrition in the ranks of the locomotive engineers at Vancouver has provided ample alternative working opportunities to the employees who would otherwise be adversely affected by the reduction of positions in the Vancouver main yard.

Is attrition a factor which can be considered in assessing measures to minimize adverse effects? Clearly, it is. Article 89.l(b)(l0) clearly reflects the agreement of the parties that the "use of attrition" is a factor to be considered within the negotiations to minimize the adverse effects of a material change. The inclusion of that factor in the parties' own agreement, within the language of article 89.l, points the way to the resolution of this dispute. It would seem to the arbitrator that in a hypothetical circumstance where ten positions are abolished by virtue of a material change, while at the same time six locomotive engineers retire or quit, it might be appropriate to negotiate four early retirement opportunities as a measure to minimize the adverse effects of the material change. In the case at hand, however, the rate of attrition at Vancouver has entirely overtaken the number of positions abolished by the implementation of the Vancouver Intermodal Terminal. There has, very clearly, been no negative impact on the job security of any locomotive engineer at that location. On what purposive basis, therefore, can it be suggested that the parties would have intended the conferring of gratuitous benefits on employees who are not in fact adversely impacted by a material change? I can see none, either in the language or in the spirit of article 89.l of the collective agreement."

On the whole, therefore, the Arbitrator can see no basis for imposing measures under the heading of retirement or severance incentives in the nature of those requested under Item #l of the Brotherhood's claim.


The Company has offered to maintain the basic rates of eligible locomotive engineers affected. While the proposal offered by the Company establishes very precise eligibility requirements, these do not appear to be an issue in the present case.

As for the Brotherhood demand, it must be noted that the affected employees are yard employees and as such enjoy established basic weekly rates of pay. This basic weekly rate is calculated using a standard formula based on the individual's daily rate of pay, including any applicable shift differential.

The only variation to which the affected employees will be subject is that, whereas presently there is incorporated within their eight hour daily work shift two ten minute periods for preparation and inspection, the affected employees who will be assigned to positions within the United Transportation Union will only benefit from corresponding periods of ten minutes and five minutes respectively. The adverse effect identified, therefore, is the five minute differential each day.

The Company, however, at the hearing indicated its preparedness to accede to the Brotherhood's demand to the extent of five minutes of paid time per work shift in the case of employees so affected. The Company's offer in this regard, which the Arbitrator considers appropriate in the circumstances, is therefore adopted as part of the award.

So too does the Arbitrator consider the position put forward by the Company in paragraph 33 of its Brief to deal with the possibility of the so-called "ripple effect" to be reasonable, where it states:

"Another area of concern with respect to the maintenance of earnings agreement is in consideration of allowing maintenance of earnings to the "ripple effect" and this can best be lighted by example. As a result of a previous Material Change, one employee displaced into a home terminal and a "programmed" displacement took place. This one individual and subsequent displacements were sequenced into seniority order displacements and this resulted in all employees except one becoming eligible for maintenance of earnings. In all, twenty-five employees became entitled to a maintenance of earnings as a result of displacements. In consideration, the Company is prepared to offer the maintenance of earnings agreement which does address "ripple effect" concerns. (The Company's offer is attached as Appendix "7")."

The Arbitrator accordingly adopts the proposal for maintenance of earnings presented by the Company in Appendix "7" of its Brief as part of the award. There is nothing unusual in the proposal which has been applied in the past in similar situations involving the same bargaining unit. In the final analysis, affected employees, including those affected as a result of the "ripple effect" will see their basic weekly rates maintained, a factor which will go a long way to addressing and compensating for the concerns raised by the Brotherhood.

Those concerns of the Brotherhood which the Company's proposal may not adequately address are difficult, if not impossible, to quantify. While it may be true that the proposal does not take into account the realities of scheduling on the railway or the intricacies and consequences of bidding on runs based on seniority, it is difficult to imagine how concerns of such a nature might be adequately addressed. For one thing, the rights and priorities that may be compromised are, to an extent, subjective and depend very much upon unpredictable choices and situations that will present themselves from time to time. Wherever there is movement of personnel there will be consequences, some good and some bad. But where these are not susceptible of precise definition, they can hardly be addressed with any degree of precision. Article 78.l of Agreement 1.1 would seem to acknowledge as much when it describes its design as being intended to minimize significantly adverse effects.


The Company's proposal is set out in paragraph 36 of its Brief, as follows:

"With respect to the Union's request for familiarization trips if required, the Company has reviewed this matter and is prepared to offer the following in settlement which we believe will satisfy the Union's concerns in this area:

Locomotive Engineers that are required to exercise seniority and who are not familiar with the territory associated with that terminal will be provided with paid familiarization trips or a pilot will be provided as locally arranged. In no case will the maximum number of paid familiarization trips exceed a total of 3 round trips. Employees requiring familiarization on the territory that they are unfamiliar with will be compensated on the same basis as the working employee over the territory not familiar."

The request of the Brotherhood, on the other hand, is imprecise so that the Arbitrator cannot say that the Company's proposal is unreasonable or that it does not go a long way toward satisfying the Brotherhood's demand under this heading. In point of fact, it was the Company's contention that its proposal satisfies such demand. It will accordingly be adopted as part of the award.




The Company's proposal is contained in paragraph 37 of its Brief, which is to the following effect:

"With respect to Item 6 Relocation Benefits, for those employees who are required to relocate, the Company originally advised the Union that due to the shortage in the Toronto area, it was argued that no employees would be required to relocate in order to hold work. The Company finds no requirement to provide relocation expenses for an employee who is not required to relocate to hold work, as contemplated by Article 78.2 (Relocation Expenses). While the Company is convinced that no employee will be required to relocate in order to hold work, we are prepared to provide relocation benefits to "A locomotive engineer required to relocate as a consequence of this change and unable to hold work at his location will be governed and provided the benefits of the provisions of Article 78.8 and 78.9 of the Collective Agreement". We believe that this also will satisfy the Union's concerns with respect to relocation benefits."

In effect, the Company is offering to provide relocation benefits to all affected employees who must relocate. In such cases Agreement 1.1, for its part, does provide for the modalities that will find application in cases of relocation. There is nothing to suggest that these provisions do not adequately address adverse effects of material changes implemented at the MacMillan Hump Yard that may result from relocation of affected employees. The Company's proposal, therefore, is adopted as part of the award under this heading.


The Company's proposal upon the matter of Dispute Procedure is contained in paragraph 40 of its Brief, which reads as follows:

"With respect to Item 8, re a request for a dispute procedure, the Company is prepared to offer the following:

"Any dispute respecting the interpretation, application or alleged violation of this award may be progressed as provided by Article 73 of Agreement 1.1 at Step 3 of the grievance procedure"

We believe the above will satisfy the Union's request."

The Brotherhood does not seem to take issue with the proposal which provides for access to a grievance and arbitration procedure to resolve disputes in relation to implementation and application of the award, as has been requested by the Brotherhood. The Company's proposal, therefore, is adopted as part of the award.


The Company's proposal is set out in paragraph 39 of its Brief, as follows:

"With regard to Item 7 concerning a letter of commitment from the Company in the event of a hump locomotive consist failure, the Company is now prepared to provide assurances that a B.L.E. employee will be called if the consist is to be operated in a manual operation. A copy of the proposed letter is attached as Appendix "8". We believe this also addresses the Union's concerns on this matter."

In effect, the Brotherhood is insisting that in the case of belt pack failure, that is, where the Process Control System is rendered inoperative, that manual operation of a locomotive that may be required as a consequence be assigned to locomotive engineers, members of the Brotherhood. The Company's proposal accedes to such a request, so that the Brotherhood demand under this heading would appear to have been satisfied and the proposal of the Company is accordingly adopted as part of the award.





The Arbitrator believes that it has addressed above all of the items of claim set out in the Brotherhood's Statement of Issue. It will, nonetheless, be appropriate to comment upon a further item raised by the Brotherhood in its Brief wherein it claims a right to share in productivity gains brought on by introduction of the Process Control System at the MacMillan Hump Yard.

It may well be, as the Brotherhood pretends, that there will be productivity gains as a result of the implementation of the Process Control System and that these gains may even be substantial. The Arbitrator, however, would have no jurisdiction to require that these gains be shared. As the Arbitrator has stated, his task is to address and impose measures to offset adverse effects that will result from the change to the extent that there are adverse effects and that such effects require addressing. The productivity gains resulting from technological change will be of assistance to the Company in meeting its obligations to make provision in the manner envisaged in Article 78.l of Agreement 1.1. But to say that such productivity gains are to be shared or to be taken into account beyond what Agreement 1.1 at Article 78.l requires, is quite another thing. To be sure, savings, as the Brotherhood contends, should go toward protecting employees directly affected by technological changes introduced, but only to the extent that the Company under the applicable Collective Agreement is required to provide such protection.

The Arbitrator retains jurisdiction for purposes of adjudicating upon any dispute which may arise between the parties with respect to the interpretation or implementation of the present award.

MONTREAL, September 23rd, 1994




DATED AT TORONTO, this 29th day of May, 1981.