AH – 453




(the “Company”)



(the “Union”)




SOLE ARBITRATOR:                Michel G. Picher



There appeared on behalf of the Company:

D. Lanthier                                Labour Relations Officer, Edmonton

J. Torchia                                  Manager, Labour Relations, Edmonton

And on behalf of the Union:

A. Rosner                                 National Representative

D. Olshewski                             National Representative

R. Johnston                              National President, Council 4000



A hearing in this matter was held in Montreal on Saturday, November 22,1997.



This grievance concerns an allegation that the Company has violated the prohibition against contracting out. The Dispute and Joint Statement of Issue filed at the hearing are as follows:


Alleged violation of article 35 of agreement 5.1 when the Company contracted out work to T&L Fuel Services at Melville, Saskatchewan.


Effective August 1,1995, the Company issued the Union a notice to abolish the position of one Fuel Plant Operator in Melville, pursuant to article 8 of the ESIMA. The notice was subsequently extended to December 1,1995.

As a result of a new fuelling facility at Melville, T&L Fuel Services began unloading Fuel Cars at Melville.

The Union contends a violation of article 35 of agreement 5.1, when the Company contracted out the work.

The Union requests that the contracted out work be restored forthwith to the bargaining unit and that any employee who lost work or work opportunities as a result thereof be made whole.

For The Union:                                                     For The Company:

(signed) A. Rosner                                               (signed) J. Torchia

National Representative                                    Manager, Labour Relations

The record discloses that part of the Company’s operation at Melville, Saskatchewan has always involved the unloading of diesel fuel from tank cars into storage tanks. For a number of years there were two storage tank locations, on either side of the car shop, approximately one and one-half miles apart. One bargaining unit employee, classified as a labourer, was assigned on a full time basis as a Fuel Plant Operator. The responsibility of the employee was, on average, to unload some two tank cars per day at the west end storage location and three at the east end.

On May 1,1995 the Company served an article 8.1 notice to the Union which reads, in part, as follows:

As a result of the new fuelling facility at Melville and a central fuel unloading location with high capacity pumps the requirement of a full time Fuel Plant Operator will no longer be required.

It is common ground that the above notice was given following the construction of a new single facility for handling the unloading of fuel, apparently located near the prior location of the west end storage facility. As a result of the notice, the position of the incumbent Fuel Plant Operator, Mr. P.C. Neill, was abolished effective August 1, 1995. The abolishment of his position, and the article 8 notice, were subsequently delayed, pursuant to a further notice, issued on July 24, 1995, indicating that the effective date of implementation would be December 1, 1995.

The record discloses that in the fall of 1995 the Company sought tenders for the unloading of the fuel at the new fuel facility, from outside contractors. It does not appear disputed that the contract was awarded to T&L Fuel Services Ltd., apparently at a contract price of $21.00 per hour. Meanwhile, pursuant to the article 8 process, the Company negotiated and paid for an early retirement package for one employee. Further, from November 23, 1995 the work of unloading the fuel tank cars at Melville was performed by the contractor.

While there is some dispute as between the parties, it appears that the work in question is performed by one employee of the contractor, generally on a daily basis from Monday to Friday, and occasionally on weekends. It is common ground that the work in question consists of something less than a full time job, although the parties are in dispute as to the precise hours involved. By the Company’s reckoning, the contractor performs the unloading of the tank cars more quickly that the former Fuel Plant Operator, largely by reason of the higher speed equipment and the ability to unload several cars simultaneously. By its estimate the workload of the contractor is in the order of 25% of the workload performed by the Fuel Plant Operator. The Union questions that estimate, suggesting that the contractor’s employee also does incidental maintenance and snow removal tasks previously performed by the Fuel Plant Operator. While the Union does not have extensive evidence with respect to the contractor’s operations, based on documentary information which it did obtain it estimates that the contractor’s employee spends from 56% to 84% of a full time employee’s working hours in the unloading of the tank cars, apart from any incidental functions performed.

There is no doubt that what has transpired is a contracting out. The issue is whether it is permissible under the terms of collective agreement. It is also not disputed that the Company failed entirely to provide to the Union any notice of the contracting out, as required by articles 35.3 and 35.4 of the collective agreement.

The prohibition against contracting out is provided in article 35.1 of the collective agreement which reads, in part, as follows:

35.1        Effective February 3, 1988, work presently and normally performed by employees who are subject to the provisions of this collective agreement will not be contracted out except:

(d)           where the nature or volume of work is such that it does not justify the capital or operating expenditure involved;

The position of the Company before the Arbitrator is that the exception contained in sub- paragraph (d) of article 35.1 applies in the case at hand. It asserts that the remaining work did not justify the operating expenditure which would have been involved establishing a part-time Fuel Plant Operator position.

The Arbitrator has much difficulty with the case as presented by the Company. It does not appear disputed that the Company employs some sixteen bargaining unit employees at Melville, in labourers’ and engine watchmen’s positions. Before the Arbitrator it has made no attempt to adduce evidence which would establish that it would be impossible or impracticable for one or more of those employees to be assigned, on a daily basis, to perform the reduced volume of Fuel Plant Operator work, in addition to other productive work, as part of their regular full time duties. Boards of arbitration have long recognized that it once it is established that a contracting out has occurred, the onus is upon the Company to justify the exception which it asserts. That onus is normally discharged by objective evidence which gives substance to the exception invoked. In a prior award between VIA Rail Canada Inc. and the International Association of Machinists and Aerospace Workers, an unreported award of Arbitrator Harvey Frumkin dated June 11,1993, the following comments appear at p.10:

Furthermore, where there is a contracting out of work which may, but for the exceptional provisions set out in Section 24.1, be assigned to bargaining unit members, it will be for the Company to demonstrate in concrete fashion that the contracting out is justified in terms of the exceptions. Mere assertions that any of the exceptions apply will not be sufficient. If for example there is lack of equipment, the equipment lacking must be described together with an indication of what will be involved in acquiring same and the consequences in terms of cost and inconvenience. Again, if the Company invokes unavailability of staff or resources and resulting inconvenience, absent a contracting out, it must supply supporting evidence. The same may be said where the Company invokes any other of the exceptions. These observations are important because in this case the evidence simply does not permit for a determination of what consequences, if any, would have resulted had the Company planned for the execution of the assignment by its own personnel.

In my view the above stated principles apply four-square to the case at hand. Before the Arbitrator the Company provided no real information with respect to the duties, shift structure, and physical location of the bargaining unit employees available to it at Melville. There is, very simply, no evidence to form the basis for a determination that the work in question, even if it is in fact only 25% of the previous work of the Fuel Plant Operator, cannot in fact be performed by reorganizing the work of one or more of the existing bargaining unit employees on location, with or without overtime. In other words, it is not clear that the work could not continue to be performed by bargaining unit employees.

Nor does the fact that the work in question might not, of itself, constitute work to occupy a bargaining unit employee on a full time basis change the merits of the case insofar as the violation of the prohibition against contracting out is concerned. Prior arbitration awards have clearly established that the contracting out of work which amounts to less than a full time position is nevertheless a violation of the prohibition against contracting out, in recognition that the fundamental purpose of the prohibition is to protect the integrity of bargaining unit work. (See, e.g., CROA 713, 1596, 1812, and 1948, and see also Canadian Pacific Limited and Canadian Council of Railway Shopcraft Employees and Allied Workers, SHP-118, an unreported decision of Arbitrator Weatherill concerning the repair of crane wheels at Angus Shops, dated February 8, 1982 and Canadian Pacific Limited and the Canadian Council of Railway Shopcraft Employees and Allied Workers, an unreported award of Arbitrator Weatherill in respect of a grievance concerning the contracting out of work at Brandon, Broadview and Swift Current, dated July I0,1984.)

Finally, the Company’s assertion that what was involved in the case at hand was a technological change, while entirely correct, is neither here nor there for determining whether there has been a violation of the prohibition against contracting out. While the notice provisions of article 8, and the protections which ensue in the event of a technological, operational or organizational change may apply when the work opportunities of employees are negatively impacted by a technological change, such a change is not, of itself, an opportunity to avoid the prohibitions against contracting out which the Company has undertaken contractually to respect. That is plainly reflected in the decision of this arbitrator in an award between Canadian National Railway Company and the National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada), Local 100 concerning the contracting out of oil lab work, a decision which issued in July of 1996. In that case the Company maintained, in part, that the evolution of new technologies in oil testing justified the contracting out of the work which had been previously been performed by bargaining unit employees. At p. 8 of that award the following appears:

Nor can the Arbitrator accept the argument of the Company that, by reason of technological advances and the introduction of computer and laser technology, the work performed by the employees involved cannot be said to be work “presently and normally performed” by employees, in a sense contemplated by rule 52.1 of the collective agreement. Firstly, I have some difficulty with the argument of the Company that the work there protected is work as may have existed on February 3, 1988. It would appear to the Arbitrator that a straight-forward reading of the article suggests that the phrase “presently and normally” is intended to have an ongoing meaning referable to the present as it might exist at any point during the term of a collective agreement, and not as it may have existed on the day the contracting out rule became effective. I find it unnecessary to rest this part of my decision on that reasoning, however. More fundamentally, even if it were necessary to characterize the work of the employees as work such as existed on February 3, 1988, that work plainly continues to be done. The introduction of new equipment, methods, tools or technology does not change the fundamental nature of the work which, in this case, is the ongoing testing of locomotive oil for viscosity, water content, impurities and other properties which have consistently been monitored for many years. While the methods and sophistication of the work may have changed, the tasks to be performed has not, and it cannot be said that the tasks in questions are other than “work presently and normally performed by employees” who are members of the bargaining unit.

In conclusion, the material before the Arbitrator amply demonstrates that the work of the Fuel Plant Operator, in relation to the unloading of fuel tank cars, has for many years been work “presently and normally performed by employees” of the bargaining unit within the meaning of article 35.1 of the collective agreement. It is not denied that the work was contracted out. For the reasons touched upon above, there is no evidence upon which the Arbitrator can responsibly conclude that the reduced volume of work now being performed could not be accomplished by the reassignment of existing bargaining unit employees at Melville. Absent any evidence to justify the exception within sub-paragraph (d) pleaded by the Company, the grievance must be allowed.

The Arbitrator therefore finds and declares that the Company has violated article 35 of the collective agreement by contracting out work of the bargaining unit to T&L Fuel Services. The Company is directed forthwith to cease and desist from contracting out, and to assign the work in question to the bargaining unit. The Arbitrator also declares that the Company did violate the notice provisions of article 35.2, 35.3. 35.4 and 35.5 of the collective agreement, to the extent that the contracting out has either prevented overtime opportunities for active employees or the recall of laid off employees at Melville. The Arbitrator further directs that the Union be made whole with respect to any lost union dues, with interest, and that any employee who can be shown to have lost work opportunities be made whole, also with interest. In the circumstances, however, it appears to the Arbitrator that any remedy in respect of the payment of monetary compensation should take into account the payment of monies by the Company in respect of any retirement opportunity negotiated pursuant to article 8 of the collective agreement.

The Arbitrator remains seized of this matter in the event of any dispute between the parties with respect to the interpretation or implementation of this award.

Dated at Toronto, November 26,1997