AH – 434




(the “Company”)



(the “Council”)




SOLE ARBITRATOR:                Michel G. Picher



There appeared on behalf of the Company:

M. E. Keiran                              Manager, Labour Relations, Calgary

G. S. Seeney                            Manager, Labour Relations, Calgary


And on behalf of the Council:

Pierre Sadick                            Counsel, Toronto

Donald A. Warren                      General Chairman, UTU, Toronto

Robert S. McKenna                   General Chairman, BLE, Barrie

Louis Schillaci                           General Chairman, Calgary


A hearing in this matter was held in Toronto on Monday, 21 October 1996.



This arbitration concerns a dispute between the parties with respect to the layoff benefits which were properly payable to employees adversely affected by the Company’s decision to cease operations on four subdivisions between Smiths Falls and Cartier, near Sudbury, known as the Ottawa Valley Route: The Council claims that employees who are protected under the terms of the Conductor Only Agreement should be entitled to the greater protections of that agreement, rather than to the terms negotiated with the Company with respect to layoff benefits payable as a result of its implementation of a material change, under the terms of the collective agreement. The background to the dispute is related in the Dispute and Joint Statement of Issue filed at the hearing, which reads as follows:


The interrelation and applicability of Article 9A(7) (Supplemental Unemployment Benefit Plan) to Article 45 (Material Change in Working Conditions)


On July 4, 1996, a material change notice was properly served in respect of the leasing of Company owned rail lines on the Chalk River, North Bay, Temiscaming and Cartier Subdivisions to the Trans-Ontario Railway Company. Negotiations of measures toward minimizing the adverse effects of the material change were successfully concluded, save for one outstanding issue. The parties to this dispute have agreed to submit this issue to arbitration as provided by article 45(1)(e).

The Council contends that in as much as the Company’s initiative precipitated a “traffic decline” as contemplated by article 9A(7)(2)(a), the benefits of that article should flow to all protected employees directly or indirectly impacted by the effecting of the material change.

The Company does not agree with the Council’s interpretation or application of Article 9A(7)(2)(a).

It is common ground that the action of the Company in ceasing operations on the Ottawa Valley Route and the leasing of the territory between Smiths Falls and Cartier to a third-party shortline operator, the Trans-Ontario Railway Company, properly constitutes a material change within the meaning of article 45 of the collective agreement governing conductors, baggagemen, brakemen, car retarder operators, yardmen and switchtenders, as well as under article 32 of the collective agreement governing locomotive engineers. Pursuant to those provisions the parties were required to negotiate an agreement to minimize the adverse impacts of the material change on the employees affected. They were successful in doing so on all issues save one. The Council maintains that the layoff provisions agreed between the parties pursuant to the material change negotiations apply only to non-protected employees, that is employees who do not have a seniority date of June 18, 1990 or earlier, and who therefore do not have the benefit of the Conductor-Only Agreement. It submits that the effective closure of the Company’s operations in the Ottawa Valley constitutes a decline in traffic in territory which was and continues to be governed by the Conductor-Only Agreement. In that circumstance, it argues, the layoff benefits contained within the Conductor-Only Agreement apply for the benefit of protected employees. Specifically, it argues the application of article 9A(7) of the Conductor Only Agreement, entitled “Supplemental Unemployment Benefit Plan”. Sub-paragraph 2 of that article reads, in part, as follows:


An employee who is not disqualified under Clause 7.3 hereof shall be eligible for a benefit payment in respect of each full week of seven consecutive calendar days of lay-off (herein call “a claim week”) provided he meets all of the following requirements:

a)            He is a protected employee pursuant to this Conductor-Only Agreement and has been laid off as a result of a traffic decline resulting in reduction in pool, assigned or spareboard service.

There can be little doubt that the layoff benefit provisions of the Conductor-Only Agreement are substantially more generous than those negotiated in response to the Company’s notice of material change in respect of the closure of its Ottawa Valley operations. It is also common ground that the material change implemented by the Company had a substantial impact. The termination of operations of the Ottawa Valley Line resulted in the closure of North Bay as a terminal, as well as the elimination of the Chalk River Subdivision pool in Smiths Falls, operating between Chalk River and Smiths Falls. The positions of some eighty six running trades employees of the Company at the affected terminals are abolished, on a permanent basis.

It should be noted that under the new arrangement, the lessor, Trans-Ontario Railway, assumes the responsibility of carrying CPR traffic in both directions between Smiths Falls and Cartier. In the result, the third party shortline will carry both its own local traffic and the Company’s mainline traffic, in accordance with the running rights negotiated between the Company and the Trans-Ontario Railway Company.

The Company maintains that this is not a circumstance which gives rise to the operation of the layoff benefits provision of the Conductor Only Agreement which, it submits, must be triggered by a decline in traffic. It stresses that under the arrangement with the Trans-Ontario Railway, CPR traffic continues to move as before between Smiths Falls and Cartier, save that it is now handled by the shortline operator. It notes, further, that a number of CPR employees at North Bay and Smiths Falls have opted to enter the service of the Trans-Ontario Railway, as a means of minimizing their own dislocation.

The Company’s spokesperson submits that the position advanced by the Council is inconsistent with the very documents which regulate the relations between the parties. Noting that it is common ground that the material change provisions of the collective agreement properly apply to the effective closure of a substantial segment of the Company’s operations, as occurred in the case at hand, he stresses that by the clear wording of the collective agreements, the provisions of the material change articles have no application where the changes result from a decline in business or fluctuations in traffic. In this regard he points to the provisions of article 45 1(1) of the collective agreement governing conductors, baggagemen, brakemen, car retarder operators, yardmen and switchtenders provides as follow:

1 (1)        This article does not apply in respect of changes brought about by normal application of the collective agreement, changes resulting from a decline in business activity, fluctuations in traffic, traditional reassignment of work or other normal changes inherent in the nature of the work in which the employees are engaged.

The Company’s representative also points to what he submits is the intention of the layoff benefits provision of the Conductor Only Agreement, as reflected in article 9A(6)(a) which provides as follows:

a)            The parties agree that it is their intent that Supplemental Unemployment Benefits be paid only for temporary periods resulting from shortage of work (the specific duration being set out in the provisions of the Agreement). Employees in receipt of SUB continue their employment relationship with the Company, retain their seniority rights, and are required to accept temporary or permanent assignments as provided in this Agreement or become disentitled to SUB.

(emphasis added)

He submits that the language of the foregoing provision reflects the understanding of the parties that the extraordinary layoff benefits provided for in the Conductor-Only Agreement were negotiated in contemplation of temporary shortages of work, a circumstance which he submits is to be distinguished from the case at hand, where the Company has permanently ceased all operations on the Ottawa Valley mainline.

I turn to consider the merits of this dispute. At the outset, it should be stressed that any board of arbitration must strive to give separate collective agreement provisions negotiated by parties a meaning which is rational, consistent and complementary to the purpose reflected within the agreed language. How, then, can the provisions of the Conductor-Only Agreement relating to declines in traffic be rationalized with the material change provisions found within article 45 of the collective agreement governing conductors, baggagemen, brakemen, car retarder operators, yardmen and switchtenders?

In the Arbitrator’s view it is difficult to conclude, as the Council argues in this case, that both agreements in fact operate in tandem. As noted above, the language of article 45 of the collective agreement governing material change is categorical: there is no obligation to provide a material change notice, and the provisions of that agreement do not come into play where the changes implemented result from “… a decline in business activity, fluctuations in traffic,”. However, the very position of the Council before me rests on the basis that the closure of the Company’s Ottawa Valley operations, as a result of the effective transfer of its business to the Trans-Ontario Railway, constitutes a decline in traffic which gives rise to the protections of the layoff provisions of the Conductor-Only Agreement.

The Arbitrator has some difficulty understanding how the Council can have it both ways. Surely, by any normal linguistic understanding, the concept of a decline in traffic would be encompassed by the combined phrases “decline in business activity, fluctuations in traffic”. Consequently, if there has been a decline in traffic occasioning the loss of work, the material change provisions of the collective agreement would appear to have no application. It is, of course, possible that the parties might have intended the phrase “traffic decline” appearing within article 9A(7)(2)(a) of the Conductor-Only Agreement to describe something different in nature from the reduction in business and fluctuations in traffic contemplated within article 45 of the collective agreement. However, in the Arbitrator’s view, it would require clear and unequivocal language within one or other of the agreements, if not both, to justify the conclusion that some different understanding of the meaning of a reduction in traffic was intended as between these two agreements. I can find no such language, nor is any referred to me by the parties. On balance, I am compelled to conclude that no meaningful difference was intended.

In the Arbitrator’s view there can be little doubt that both the collective agreement provisions in respect of layoff benefits, apart from material change, and the layoff benefits found within the Conductor-Only Agreement can operate side by side in the same situation, where there is a true situation of a reduction in traffic in respect of ongoing Company operations. In that circumstance employees who are not protected by the Conductor Only Agreement would have their layoff rights, and benefits, under the collective agreement, whereas protected employees would have the greater benefits of the Supplemental Unemployment Benefit Plan negotiated within the Conductor Only Agreement. Significantly, however, the latter scheme is, on its face, intended to deal with temporary shortages of work within the Company’s operations. That, as noted by the Company’s representative, is amply reflected in the language of article 9A(6)(a) of the Conductor-Only Agreement, reproduced above. The lease held by the shortline operator contains an option to purchase the line outright at the end of its term. However else it may be characterized, the Company’s surrender or transfer of its operations on its Ottawa Valley mainline to the Trans-Ontario Railway Company cannot he described as being for a temporary period.

In addition, the Arbitrator has some difficulty in squaring the facts of the case at hand to the language of article 9A(7)(2)(a) of the Conductor-Only Agreement. There is no evidence placed before me to suggest that the Company’s decision to cease operations on the Ottawa Valley route was the result of a traffic decline. It would appear from the material before me that the traffic which pre-existed continues to flow, although it is now entirely handled by a newly installed shortline operator. Bearing in mind that the parties to the instant agreement are sophisticated in the drafting of collective agreements and related documents, they should be presumed to well know the difference between a decline in traffic and entire abandonment, closure or transfer of an operation. Moreover, when the circumstances are examined from a purposive point of view, it is difficult to see any relative hardship suffered by the employees who are protected under the Conductor-Only Agreement. It is common ground that if, for example, protected employees lose their work and face layoff by reason of the closure of a terminal or the implementation of a run- through, where no decline in traffic is involved, they cannot invoke the greater protections of the Conductor-Only Agreement. On what basis, therefore, can they do so in the face of the facts at hand, which, in the Arbitrator’s view, are of the very same nature, involving in fact the closure of pools at two terminals?

When regard is had to the language of the Conductor-Only Agreement, construed in the context of the collective agreement itself, and in particular the language of article 45 which governs material change, the Arbitrator can find no compelling basis on which to sustain the position of the Council in this case. Specifically, I cannot find, on the balance of probabilities, that what transpired in respect of the closure of the Company’s operation on the Ottawa Valley mainline between Smiths Falls and Sudbury can fairly be characterized as resulting from a decline in traffic, in the sense contemplated by article 9A(7)(2)(a) of the Conductor-Only Agreement. I must, therefore, conclude that the interpretation advanced by the Company is the correct one, and declare that the layoff benefit provisions of the Conductor-Only Agreement have no application as regards the closure of operations implemented by the Company, in accordance with a proper notice of material change in working conditions pursuant to article 45 of the collective agreement, governing the termination of operations on the Ottawa Valley route. In the result, the layoff provisions specifically negotiated within the memorandum of agreement between the Company and the Council, dated September 7,1996 are the only layoff provisions which apply.

This matter is remitted back to the parties for implementation in accordance with the foregoing interpretation. I retain seized in the event of any dispute with respect to the interpretation or implementation of this award.

Dated at Toronto, this 24th day of October 1996