AWARD OF THE ARBITRATOR
This arbitration concerns a dispute as to whether employees participated in a form of programmed displacements, so as to artificially create entitlements to maintenance of earnings protections under article 78 of the collective agreement. The Company asserts that displacements in respect of the abolishment of the positions of Locomotive Engineers Pope and Ziobro, resulting from the implementation of belt pack technology, in January and September of 1996, occasioned programmed displacements, contrary to Addendum 68 to the collective agreement. The Council denies that programmed displacements occurred, and maintains that the Company has violated the collective agreement by eliminating the maintenance of earnings payment and proposing steps to recover money paid to the employees affected.
The parties filed ex parte statements of issue. The Company’s statement reads as follows:
COMPANY’S STATEMENT OF ISSUE:
As a result of LCS Belt Pack implementation, Engineers D.O. Pope and E. Ziobro’s assignments were abolished in January and September 1996 respectively. In the subsequent displacements associated with these abolishments, 39 and 15 engineers in GO Service respectively were displaced.
The Company has revoked the maintenance of earnings award to the locomotive engineers involved in the January 1996 displacement subsequent to Engineer Pope’s abolishment, and in the case of the September 1996 abolishment has refused to award any maintenance of earnings to the engineers displaced as a result of Engineer Ziobro’s abolishment.
Union Position:
The entitlement to the maintenance of earnings is provided in article 78 of the collective agreement and the Company cannot deny same or disentitle employees after they have received the benefit. The Union submits that the Company cannot recover maintenance of earnings payments already paid. The Union also asserts that the Company is estopped from doing what it purports to do here; and that it is too late to attempt to undo a situation that has existed since January 1996.
Company Position:
The Company submits that based on the evidence that it has found, it believes that a Programmed Displacement has occurred contrary to the intent and agreement of the parties reflected particularly in Addendum 68 to the collective agreement 1.1. As such Programmed Displacements tend to artificially or systematically order the sequence and manner of displacements so as to increase them and inflate the numbers of persons positioned to claim maintenance of earnings benefits, the maintenance of earnings awards in these cases are not allowed. The Company submits that, in the result, the corresponding remedy is the right to recover monies already paid.
The Council’s statement reads as follows:
COUNCIL’S STATEMENT OF ISSUE:
Employee Pope had his assignment abolished in the yard as a result of the implementation of the belt pack in January 1996. Pope exercised his right to bump and did so onto the GO Trains. As a result of the exercise of this right a number of other employees were also displaced and exercised their right to bump junior employees. All affected employees earned an incumbency and were awarded a maintenance of earnings which when the appropriate occasion arose they utilized.
The Company now purports to eliminate these maintenance of earnings and to recover monies paid to employees.
The details of the incumbencies and the impact on employees will be presented at arbitration.
Employee Ziobro had his assignment abolished in the yard as a result of the implementation of the belt pack in September 1996. Ziobro exercised his right to bump and did so onto the GO Trains. As a result of the exercise of this right a number of other employees were also displaced and exercised their right to bump junior employees. The Councils asserts that these employees are entitled to an incumbency and a maintenance of earnings as stipulated in the collective agreement.
The Council asserts that the Company has violated the collective agreement including but not limited to article 78 and such other articles as may be applicable. The Council also relies upon past practice to support its position.
In both cases the Company asserts that Addendum 68 disentitles the employees to the maintenance of earnings and the Council asserts otherwise.
The Council also asserts that the Company is estopped from doing what it purports to do here; that the Company cannot eliminate a maintenance of earnings; and that it is too late to attempt to undo a situation that has existed since January 1996.
Before dealing with the facts of the case it is useful to review the concept of “programmed displacements” as it has evolved between the parties. It appears that the problem first arose in relation to the sale of the Goderich and Exeter Subdivisions of the Company’s operations in April of 1992. In that circumstance a single locomotive engineer from Stratford displaced another locomotive engineer in Sarnia, causing a ripple displacement by seniority of a total of twenty-five Sarnia locomotive engineers. In the result, all twenty-five engineers qualified for maintenance of earnings protection. Shortly thereafter the Company detected that the engineers affected changed their work habits, dramatically increasing their booking of rest without decreasing their earnings by reason of the maintenance of earnings protection they had gained. It appears that the term “programmed” literally flows from the apparent use in that case of a computer to plot the maximal maintenance of earnings protection that could be gained from the abolishing of a single position.
What occurred at Stratford and Sarnia is plainly beyond the intention of the maintenance of earnings protections provided within article 78 of the collective agreement. Maintenance of earnings is intended to be a protection for employees who are legitimately impacted in a negative way by Company initiated changes in working conditions which have materially adverse effects on employees. Gerrymandering the bumping process to artificially create unduly inflated numbers of employees who gain the protection of maintenance of earnings is plainly beyond the original intent and purpose of the maintenance of earnings provisions of the collective agreement. In the result, following the Stratford/Sarnia experience the parties addressed the problem in negotiations in 1992, resulting in the addition of Addendum 68 to the collective agreement which reads as follows:
November 20, 1992
This is in reference to the Memorandum of Settlement dated November 20, 1992 and the revision of language in Appendix B by deletion of the words “whose earnings are adversely affected” from the Maintenance of Earnings Provisions contained in the revised Articles 89 and 78 of Agreements 1.2 and 1.1 respectively.
As a result of our extensive discussions, the parties agreed that the purpose of the Maintenance of Earnings provisions in the agreement was to protect the earnings of locomotive engineers who suffered a financial loss from a material change in working conditions, and not to provide an umbrella under which employees earnings would be protected despite a change in work habits or as a result of programmed displacements.
In order to resolve the issue, the parties agreed to make certain modifications to article 89 and 78 of agreements 1.2 and 1.1 respectively, including the removal of the language “and whose earnings are adversely affected thereby” from the aforementioned provisions. In return, the Brotherhood gave its assurance in two areas:
1.) It would discourage programmed displacements
2.) It did not support significant changes in work patterns by employees in a manner or as a means to increase Maintenance of Earnings payments.
The Brotherhood indicated it would advise its membership of the aforementioned.
In the instant case the Company alleges two separate incidents of what it maintains are programmed displacements. The first concerns the sequence of displacements occasioned by the impact of the introduction of the LCS belt pack technology, which utilizes automated locomotives, on Locomotive Engineer D.O. Pope at MacMillan Yard, Toronto. It is common ground that effective January 18, 1996 Mr. Pope’s position of the 2300 hour West Control assignment at MacMillan Yard was abolished. On the same date Mr. Pope made a declaration to a GO Train assignment, displacing Locomotive Engineer W.D. Downey. This resulted in a chain bump sequence whereby locomotive engineers each displaced the next junior employee in GO service, subject to only a few exceptions, including two employees who already were awarded incumbencies. In the result, the chain bumping process displaced a total of thirty-nine locomotive engineers. In fact, the displacement was a paper transaction and had no real impact. Only three days after displacing Locomotive Engineer Downey, Locomotive Engineer Pope was awarded a district job bulletin for Train 331, and he never worked the GO Train assignment into which he had displaced. In the result Locomotive Engineer Downey was able to bid successfully back onto his own original assignment, and in fact suffered no real adverse impact, with similar effects for others in the chain.
The second sequence of events concerned the impact of the LCS belt pack technology on Locomotive Engineer E.J. Ziobro. Effective September 14, 1996 Locomotive Engineer Ziobro’s position on the 1600 hour West Control assignment at MacMillan Yard was abolished by reason of the introduction of belt pack technology. Locomotive Engineer Ziobro declared that he would displace Locomotive Engineer T.E. Chodkiewicz on a Go Train assignment. The ensuing chain bumping resulted in a total of fifteen locomotive engineers being displaced in GO service, thereby gaining maintenance of earnings protection. However, on the same day, September 14, 1996 Locomotive Engineer Chodkiewicz also successfully bid a district job bulletin advertising the 2100 hour yard assignment at Oakville, Ontario, an assignment awarded to him the following day, September 15, 1996. Like Locomotive Engineer Pope, Locomotive Engineer Ziobro never actually assumed GO Transit service. This caused the creation of a vacancy which allowed Locomotive Engineer Chodkiewicz to successfully apply for and be awarded his original assignment, again with maintenance of earnings protection, with similar results for others.
The evidence discloses that the Company did not become suspicious of the two displacement patterns until September of 1996, following the Ziobro chain of displacements. In meetings on October 24 and November 25, 1996 the Company advised the Council that it viewed the two displacements as being programmed, contrary to the understanding in Addendum 68. It therefore announced that maintenance of earnings protection would not be awarded to employees within the Ziobro chain of displacement. Additionally, it revoked the maintenance of earnings then being paid to employees involved in the Pope displacement. Although it has not yet done so, the Company has indicated to the employees within the Pope displacement that it intends to establish a method for the recovery of the maintenance of earnings monies already paid to them. It appears that no action has yet been taken in that regard, however.
The Company submits that the Ziobro displacement chart discloses, on its face, what must be inferred to be a deliberate programmed displacement. Its Counsel notes that in the election of displacements expressed by the employees in that circumstance, all of the persons who were not displaced already had a previous maintenance of earnings incumbency, or worked in the less central location of Stouffville. Similarly, with respect to the Pope displacements, subject to only one exception, all of the omissions either had a previous incumbency or, in one case, worked in Stouffville, which involved a degree of geographic inconvenience. In both cases, because Mr. Pope and Mr. Ziobro never occupied the positions to which they displaced, the subsequent locomotive engineers displaced had the opportunity to bid back to their original positions, and did so. In the result, none of the employees concerned experienced any real financial loss or diminished opportunity for earnings occasioned by a material change. The Company asserts that on these facts the purpose and intent of the maintenance of earnings provisions is subverted and abused, in a manner not intended by the parties.
The Council submits that the burden of proof is upon the Company, and that it does not have sufficient direct evidence from which the Arbitrator can conclude that the Pope and Ziobro situations in fact involved programmed displacement. The Arbitrator cannot subscribe to that approach. Obviously, it is unlikely that there would be an admission on the part of any employee that he or she was involved in an orchestrated scheme to maximize displacements to bring the greatest possible number of employees under the umbrella of maintenance of earnings protection. In such a case, the issue plainly becomes whether the objective facts are such as to sustain a reasonable inference, based on the balance of probabilities, that what transpired was in fact programmed displacement.
A significant part of the Company’s proof is statistical. It has plotted a review of displacements associated with belt pack reductions in the Toronto South terminal. Twenty-six such displacements were examined. Of that number, twenty-two involved 6 displacements or less. The thirty-nine displacements associated with the Pope abolishment, and the fifteen displacements flowing from Ziobro’s displacement are clearly well in excess of the norm, as reflected in the following displacement chart:
|
|
It may be noted that discounting the Pope and Ziobro displacements, the average number of employees affected by all other displacements is 2.8.
The Company also points to other facts in support of its argument that orchestrated displacements were implemented. In the Pope case it notes that Mr. Pope was never qualified on GO equipment, and had every expectation of successfully bidding on the advertised bulletin on train 331, which was known to him prior to the abolishment of his position. Further, it is noted that Mr. Pope lives in Mansfield, and that an actual displacement to Georgetown would have been highly impractical for him. The Company further stresses the sequential order of displacement and the rapidity of the decisions made by the employees as communicated to the Company. Similarly, in the Ziobro case, the Company notes the sequential order of displacements, the fact that Locomotive Engineer Ziobro appears to have never previously worked in GO service, and that he also had knowledge of a previously assigned bulletin on which he had every reason to believe he could bid successfully. The Company further refers to the quick decisions made by employees, and to one instance where an employee apparently called the crew dispatcher prematurely, indicating that he believed that he had been bumped when in fact he had not yet been displaced.
No plausible explanation for these unusual events is advanced by the employees involved. On the whole of the evidence the Arbitrator is satisfied, on the balance of probabilities, that there was programmed bumping in both circumstances. In so finding the Arbitrator stresses that there is no evidence from which to conclude, nor any suggestion, that the Brotherhood was instrumental or indeed involved in the programmed displacements. The fact remains, however, that, as reflected in the language of Addendum 68, the programmed displacements which I am satisfied did occur clearly fall outside the contemplation of article 78 of collective agreement 1.1. In the circumstances, the Company was justified in declining maintenance of earnings payments in the case of the Ziobro displacements, and in terminating the payments relating to the Pope displacements which occurred in January of 1996.
The Arbitrator is not persuaded, however, that it would be equitable or appropriate to direct the payment back to the Company of the maintenance of earnings paid to the employees between January of 1996 and the point at which those payments were discontinued. It is significant, I think, that the Company knew, or reasonably should have known, the pattern of displacements in the Pope situation some ten months prior to its decision to act. While I am satisfied that the Company is entitled to proceed to rectify an error or irregularity, it knew, or reasonably should have known, for some time that the pattern of displacements in relation to the abolishment of Mr. Pope’s position revealed a scheme of programmed displacement. For reasons which it best appreciates, the Company took no action, and indeed did not advert to the situation until well into the fall of 1996. In the circumstances the Arbitrator is satisfied that it would be inequitable to direct the recovery of the funds paid to the employees by the Company. As argued by Counsel for the Council, employees could well have gained the impression that the Pope displacements were accepted by the employer as being regular. In all likelihood, they would have relied on the funds received in the payment of family and personal expenditures incurred. It does not appear disputed that they did so to the extent that they may have booked rest which they otherwise would not. Just as an employee who is wrongfully discharged cannot sit back and fail to mitigate the financial loss he or she has incurred by not seeking other employment, an employer cannot expect the recovery of monies paid in error where its inaction is so extensive as to suggest to the employees affected that they can order their personal affairs and expenditures in reliance on the Company’s apparent acceptance of their situation (see CROA 2095). I am satisfied that, on the particular facts disclosed, the doctrine of laches should apply to prevent the recovery of the funds by the Company. That is not to say, however, that the Company was not entitled to correct its error in failing to recognize the programmed displacements, as indeed it did, by directing the discontinuance of maintenance of earnings payments to employees notionally displaced by the abolishment of Mr. Pope’s position at MacMillan Yard.
For the foregoing reasons the grievance must be dismissed, save for the direction that by virtue of its apparent acceptance of the situation over many months, the Company is not entitled to recover the monies paid in the form of maintenance of earnings payments to employee affected by the Pope chain of displacements. I retain jurisdiction in the event of any dispute between the parties having regard to the interpretation or implementation of this award.
Dated at Toronto, this 13th day of June 1997
(signed) MICHEL G.
PICHER
ARBITRATOR