AH 573








(the “Company”)








(the “Union”)







Sole Arbitrator:                      Michel G. Picher




Appearing For The Union:

            K. Stuebing         – Counsel, Toronto

            L. Couture           – International Representative. Hawkesbury

            K. Kearn              – Sr. System General Chairman, Boston Bar

            S. Dembinski      – System General Chairman, Burlington

            P. Watt                 – Eastern General Chairman, Woodstock



Appearing For The Company:

            A. Azim                – Manager, Labour Relations, Calgary

            K. Henty               – Manager, Signals & Communications, SOSA

            M. Moran             – Labour Relations Officer, Calgary

            K. Bilson              – Counsel, Calgary

            M. Gauthier         – Manager, Signals & Communications, NOSA




A hearing in this matter was held in Montreal on Monday, 12 February 2007.




            This grievance concerns the Union’s claim that the abolishing of the position held by S&C Maintainer B. Pelto, at Sudbury, constituted a technological, operational or organizational change within the contemplation of article 1.1(a) of the Income Security Agreement (ISA). The Company denies that what transpired was an operational or organizational change and, alternatively, submits that in any event there were no adverse effects on employees by reason of the abolishment of the grievor’s position as an S&C Maintainer at Sudbury.


            The nature of the dispute is outlined within the joint statement of issue, filed at the hearing. It reads as follows:




Claim on behalf of S&C Maintainer B. Pelto for Article 4 Benefits pursuant to the Income Security Agreement (ISA).




In May of 2000, the Company issued a notice to the Brotherhood pursuant to Article 1.1(a) of the ISA and Article 10.1 of the Collective Agreement, advising of its decision to abolish a number of positions across the system, including Mr. Pelto’s.


Mr. Pelto filed a grievance on his own behalf at step one of the grievance procedure, contending that his job abolishment constituted an organizational change.


The Brotherhood progresses the grievance, contending that an article 1.1(a) notice should have been issued to Mr. Pelto in this instance, with all the rights and benefits provided thereto.


The Brotherhood contends:

1.         A notice pursuant to Article 1.1(a) of the Income Security Agreement (ISA) should have been issued by the Company, advising of the abolishment of Mr. Pelto’s position.


2.         That failing to have the notice of Mr. Pelto’s position issued pursuant to article 1.1(a) of the ISA, Mr. Pelto should still have been entitled to the benefits described in Article 1.2(c) of the ISA, i.e., benefits pursuant to Article 4 of the ISA.


The Company denies the Brotherhood’s contentions and declines the Brotherhood’s request.


            The facts pertinent to the grievance are not in substantial dispute. By reason of budget constraints imposed on management at Sudbury, the decision was made that the S&C maintainers work being performed over a given territory by some five S&C Maintainers could in fact be handled by four employees, rather than five. In the result, the position held by Mr. Pelto was abolished. The Company takes the position that the abolishment took place under article 10.1 of the collective agreement, as the adjustment did not constitute an operational or organizational change.


            In fact, Mr. Pelto continued to work as an S&C Maintainer at Sudbury, exercising his seniority to take a maintainer’s position covering territory east of Sudbury. That move resulted in a certain degree of chain bumping. Mr. Pelto bumped a less senior employee working as an S&C Maintainer out of the Sudbury East Terminal. In turn that employee exercised his seniority, displacing junior employee Steve Beaudry. Mr. Beaudry was unable to exercise his seniority to continue to hold a maintainer’s job. In the result, he was required to return to work on S&C Gangs as an S&C Wireman. That resulted in Mr. Beaudry losing the standby pay enjoyed by S&C Maintainers, being 7.5 hours a week, said at that time to be the equivalent of $8,000 over a working year.


            The bump of Mr. Beaudry into the S&C Gangs prompted a further chain of bumping which concluded in employee Ken Byrnes being placed in a position of having to bump, possibly to another location. That result was avoided, however, as Mr. Byrnes was given the option of remaining in the S&C Gangs, with the Company effectively creating an additional temporary S&C Wireman position which Mr. Byrnes elected to fill, apparently until he eventually returned to a permanent position sometime later.


            The sole issue is whether what transpired constitutes a technological, operational or organizational (TO&O) change within the meaning of article 1.1(a) of the ISA, and if so whether the change implemented had adverse impacts so as to trigger the rights and obligations contained within that agreement.


            There is no question in the case at hand of any reduction or fluctuation in traffic, or indeed of any reduction of the work which needed to be performed. In fact, at the end of day, the same number of employees at Sudbury essentially performed the same work as was previously done. The Company submits, however, that what transpired was not a TO&O change as contemplated within the ISA. Its representative submits that that is so firstly because the change was predicated on a budget constraint and, secondly, the grievor, Mr. Pelto, in fact suffered no adverse effect, continuing to work on a full time basis, albeit out of the East Terminal rather than the West Terminal at Sudbury. In fact, the Company stresses, the grievor’s earnings improved following the job abolishment, and on that basis the employer submits that the condition precedent of adverse effects is not made out.


            With respect, the Arbitrator cannot accept the Company’s characterization of what transpired. Most fundamentally, the issue is not whether the grievor was himself adversely affected, for the purposes of determining the need to give the proper notice under article 1.1(a) of the ISA. Notice of a TO&O change must be given if the change is of an operational or organization nature which will have “… adverse effects on employees holding Permanent Positions …”. The position of the Company would effectively amend the article to reduce the inquiry into whether there are adverse effects on the employee whose job is abolished. That is simply not the nature of the exercise under article 1.1(a) of the ISA. The provisions of the ISA are in fact predicated upon the recognition that a TO&O change has a widespread effect and that protection should extend so as to minimize the adverse impacts on any and all employees who might be affected. I do not construe the joint statement of issue as presenting any more narrow question to be determined.


            The first question in the case at hand is to determine whether there was a TO&O change. I am satisfied that there was. Previous awards within the railway industry have made it clear that the abolishing of positions in the wake of budgetary constraints can constitute operational or organizational change. Indeed, decisions as to reducing budgets and the consequent reorganization of the workforce are an intrinsic prerogative of management which can be at the heart of an operational or organizational change. (See, e.g., AH 265.)


            It is also well established that the abolishment of a single position can, of itself, constitute an operational or organizational change. For example, in CROA 3447 the abolishment of a single foreman’s position at a butt welding plant was found to constitute an operational or organizational change. In the analysis of that case the Arbitrator dealt with the issue of whether the change constituted a normal reassignment of duties arising out of the nature of the work, an exception to the definition of an operational or organizational change. In that regard he commented, in part, as follows:


This is not a case, for example, of the relocation of work from one place to another which eliminates the need for a given position or, for another example, an adjustment in employee complement by reason of the abolishment of a train or some other part of the Company’s enterprise. In the case at hand there is simply no change whatsoever in the plant or the work it performs, save that the Company has determined that it can do without a first line supervisor in the relatively small operation at Surrey. That is clearly an organizational or operational change, and cannot be fairly be characterized as a normal reassignment of duties inherent in the nature of the work of the production and maintenance foreman, or of the work performed generally within the butt welding plant.


            In the Arbitrator’s view the above reasoning applies four-square to the case at hand. In this case, to achieve budgetary efficiencies, the Company decided to do with one less S&C Maintainer working out of the Sudbury West Terminal. That was achieved by abolishing the grievor’s position, a change which triggered a sequence of job displacements terminating in the creation of a temporary position for Mr. Byrnes, a measure which apparently finally avoided the cost of re-locating an employee to another terminal.


            The question then becomes whether there were material adverse effects upon the employees, as contemplated within the ISA. The Arbitrator is compelled to conclude that the Union has discharged its onus of proof in that regard. It is not disputed that by reason of the abolishment of Mr. Pelto’s position and the subsequent chain of bumping which occurred, Steve Beaudry ceased to be able to hold an S&C Maintainer’s job, and was compelled to return to work as an S&C Wireman. There is no dispute that the impact of that on Mr. Beaudry was the loss of some $8,000 in wages annually. In the Arbitrator’s view that is not an inconsequential or incidental effect, and it must be clearly seen as being adverse. By way of comparison, in AH 57, where two jobs were abolished and two employees found themselves with reduced wages, it was found that the conditions of an operational and organizational change, including adverse effects, were made out.


            The jurisprudence is clear that not all impacts, as for example the obligation to take less attractive shift or tour of duty, are considered adverse impacts for the purposes of triggering the protections of the ISA. On the other hand, when serious wage consequences are demonstrated, such impacts are made out. As the Arbitrator commented in CROA 2284:


The cases generally reflect the understanding of the parties that a material change in working conditions within the meaning of article 8 of the Job Security Agreement must, as a general matter, be such as to generally impact the employment security of the persons affected. Such adverse impacts as the abolishment of positions, the requirement of employees to exercise their seniority rights to lesser paid positions, or to relocate are typical of the impacts considered in the reported cases. …


            On the facts of the case at hand the Arbitrator is compelled to conclude, having particular regard to the substantial reduction in wages suffered by Mr. Beaudry, that the abolishment of the grievor’s position did constitute an operational or organizational change which had materially adverse impacts upon the employees. In that circumstance the Company was obligated to provide notice under the provisions of article 1.1(a) of the ISA, something which it failed to do as regards the abolishment of Mr. Pelto’s position.


            The Union further made submissions with respect to whether the creation of a temporary position for Mr. Byrnes was a violation of the collective agreement. The Arbitrator would make no finding with respect to that allegation, if only because it is not an issue which is raised within the four corners of the joint statement of issue, the document from which the Arbitrator draws his jurisdiction. Alternatively, if it were necessary to rule on this issue, the Union pointed to nothing in the collective agreement which would prevent the Company from offering to Mr. Byrnes a temporary position, it being understood that Mr. Byrnes himself remained at all times free to exercise his seniority to bump into a permanent position. In other words, he was not deprived of the ability to continue to hold a permanent position.


            Nor does the Arbitrator make any assumptions with respect to the appropriate remedial adjustments which should be negotiated, or failing agreement, arbitrated in respect of the abolishment of Mr. Pelto’s position. That is an entirely separate matter which the parties are bound to first consider together.


            For the foregoing reasons the grievance is allowed. The Arbitrator finds and declares that the Company violated the provisions of article 1.1(a) of the ISA by failing to give notice under that provision to the Union with respect to the abolishment of the position of S&C Maintainer B. Pelto at Sudbury. I remit the matter to the parties and retain jurisdiction with respect to this matter in the event of any dispute between the parties concerning the interpretation or implementation of this award.



Dated at Ottawa this 15th day of February 2007.



(original signed by) MICHEL G. PICHER