The following joint ex parte statement of issue was filed by the United Transportation Union and Brotherhood of Locomotive Engineers at the hearing.

The instant dispute concerns the method of paying maintenance of basic earnings (MBE) by the Corporation. Maintenance of earnings protection was provided upon the establishing of the Corporation, through Special Agreements signed on July 7, 1978, involving the Unions, the Canadian National Railway Company, Canadian Pacific Limited and the Corporation. The agreements in question were negotiated pursuant to the Railway Passenger Services Adjustment Assistance Regulations. It is common ground that the Special Agreements which resulted in respect of the members of both the Brotherhood of Locomotive Engineers and the United Transportation Union contain maintenance of earnings provisions, as reflected in article E. Not surprisingly, part of the agreements reflects an understanding that an employee’s wage incumbency shall be paid only to the extent that he or she is available for service. Article E.1 provides, in part, as follows :

It is common ground that over the years both the Corporation and Canadian National Railways consistently applied a system of reducing incumbency payments for non-availability based on a series of developed interpretations. These interpretations, which still apply without change within the Canadian National Railway Company, included an understanding that employees would not have their MBE’s reduced where their non-availability was occasioned by factors such as being off for miles or being on vacation. The practice so established continued to be applied by the Corporation, without change, until January 1, 1994. At that time, prompted in part by concerns about possible abuse of the system by employees, the Corporation adopted a more restrictive interpretation of non-availability for the purposes of article E of the Special Agreements, and commenced to include factors such as absence occasioned by vacations or being off for miles as justifying a reduction in an employee’s MBE. On that basis, MBE’s payable under further Special Agreements negotiated with the Unions by the Corporation and CNR in 1987 were reduced, commencing January 1, 1994. It might be noted that the Special Agreements of 1987 are identical in language with the original Special Agreements of 1978, as regards an employee’s entitlement to maintenance of basic earnings. As Counsel stresses, the 1987 Special Agreements cannot be amended save in accordance with the provisions of article L which reads as follows :

There can be little doubt that at the time the 1987 Special Agreements were negotiated the parties were well aware of the interpretation which had been given to article E of the original Special Agreement, as regards the availability of an employee affecting his or her MBE payment. Under the operation of the original Special Agreement, and from 1987 through 1994 under the new Special Agreements, employees did not suffer any reduction of their MBE by reason of non-availability during a four week period occasioned by the taking of vacation or being off for miles.

The Arbitrator has substantial difficulty sustaining the position advanced by the Corporation in the instant case. As the record discloses, the parties to the instant grievance entered into the 1987 Special Agreements with a cleaar mutual understanding of the operation of article E, and the manner in which an MBE can be reduced for non-availability. It seems reasonable to conclude that many employees, including employees who decided to move to the service of the Corporation from service with the Canadian National Railways, relied, at least in part, on a continuing consistency in the application of the availability principles which had become mutually accepted in the administration of article E of the Special Agreements. Against that background, the Arbitrator cannot see upon what basis it can be open to the Corporation to now assert, unilaterally, a new "interpretation" of the availability requirements of article E of the Special Agreements. It must be taken, I think, to have accepted the long-established principles and practices which it previously respected, and which, apparently, continue to operate without exception within the Canadian National Railways.

Can it be said, as the Corporation asserts, that the raising of the issue by the Employer in a letter of October 24, 1991 put the Unions on notice of the Corporation’s intention to change the interpretation, and that the subsequent renegotiation of the collective agreement, without change, must be taken to have incorporated an acceptance of the Corporation’s position in respect of maintenance of earnings provisions in the future ? I do not see how it can. At most, what the record discloses is that the Corporation did apprise the Unions of its position, and that it did so at a time when the parties were in or were going into negotiations for the renewal of their collective agreements. Was it then incumbent upon the Unions to negotiate specific language in the terms of the collective agreements, or the Special Agreements, to protect against the new interpretatiton advanced by the Corporation ? Plainly not. The provisions governing maintenance of earnings remained unchanged before and after the renewal of the collective agreements. At most, the parties can be said to have emerged from the bargaining process with the same rights and obligations as they had going into it. The Union’s disagreement with the Corporation’s new interpretation was never in doubt. There was no obligation on the part of the Unions to raise the issue of the definition of "available for service" during the negotiations, merely because the Corporation had announced its intention of adopting a different interpretation. If anything, the reverse is true : in light of the long-standing practice, which the Arbitrator is satisfied represented a mutual understanding under the terms of the Special Agreements in respect of availability for the purposes of MBE’s, it was incumbent upon the Corporation to negotiate specific provisions which would reflect a change in the agreement in line with the new interpretation which it wished to see implemented. The Arbitrator is aware

of no principle of law or of collective bargaining which would suggest that if one party announces an intention to interprete a given provision in a collective agreement differently, the other is forced to negotiate new protective language at the next renewal of the agreement in question. It is entirely appropriate for the other party to simply take the position that agreement remains unchanged, and to assert that position when there has in fact been no amendment or alteration of the collective agreement upon its renewal. The Arbitrator can therefore see no basis, as the Corporation suggests, that the agreements must be taken to somehow have been amended in a manner consistent with the employer’s wish.

Nor can the Arbitrator sustain the argument that the withdrawal of a grievance in respect of the reduction of an employee’s MBE, involving Locomotive Engineer Plante, of itself amounts to acquiescence in the interpretation advanced by the Corporation. It would seem, although the details of the Plante case were not pleaded, that the grievance there concerned the reduction of an employee’s maintenance of basic earnings in circumstances where there had been clear manipulation and abuse of the maintenance of earnings provision by the employee concerned. The withdrawal of his grievance cannot, in those circumstances, be taken as a general concession on the part of the Unions with respect to the overall application of the availability provisions of article E in normal circumstances.

Moreover, the Arbitrator cannot accept the suggestion of the Corporation that what it has done is to correct a mistaken interpretation, erroneously applied over the years. The self-serving nature of that argument is obvious. What transpired over the years was the development of a mutual understanding between the parties with respect to the normal operation of the availability rules for the purposes of article E. That understanding extended beyond the Corporation and its Unions, to the operations of Canadian National Railways and its bargaining units represented by the same Unions. If the past is to be characterized properly, it must be acknowledged that there was a well-known and mutually accepted interpetation of article E which was acted upon and relied on by employers, unions and employees alike. There was no "mistake". This is therefore not a case where the Unions are required to plead an estoppel of the Corporation, as the Employer suggests.

Viewed as a whole, the case is relatively simple. By the practice of more than a decade, the Corporation agreed and undertook to accept an established interpretation of the availability rules developed within the industry for the purposes article E of the Special Agreements. It unilaterally reneged on that undertaking by its reversal of position implemented effective January 1, 1994. In so doing, it violated its agreement with the Unions. While the Arbitrator is not

without sympathy for the concerns about abuse and manipulation which may have motivated the Employer, those problems, as with the abuse by Mr. Plante, can be dealt with on a case by case basis, or by the negotiation of new terms with the Unions, whereby it is agreed to waive the prior application of article E of the Special Agreements, for the term of a given collective agreement. In other words, the operational concerns which motivate the Corporation, which may well be legitimate, can be resolved otherwise.

For all of the foregoing reasons the Arbitrator finds and determines that the Corporation violated the provision of the Special Agreements by unilaterally altering the application of the availability principles established by clear and accepted practice under the terms of article E of the Special Agreements. The Arbitrator so declares, and directs that any employees adversely impacted by the Corporation’s actions be made whole, and retains jurisdiction in the event of any dispute between the parties, in respect of any aspect of the interpretation or implementation of this award.

DATED at Toronto this 28th day of February 1995.

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Michel G. Picher - Arbitrator