AH630
IN THE MATTER OF AN ARBITRATION
BETWEEN:
CANADIAN NATIONAL RAILWAY COMPANY
(the “Company”)
-and-
TEAMSTERS CANADA RAIL CONFERENCE
(CN CENTRAL – CTY/LE)
(the “Union”)
RE: THE COMPANY’S NOTICE OF MATERIAL CHANGE WITH RESPECT TO GO CREWING
ARBITRATOR: MICHEL G. PICHER
APPEARANCES FOR THE COMPANY:
Myfanwy Marshall - Senior Manager, Labour Relations
Donald Gagné - Senior Manager, Labour Relations
Nizam Hasham - Counsel
Douglas Van Cauwenberg - Director, Labour Relations
APPEARANCES FOR THE UNION:
Michael A. Church - Counsel
James Robbins - General Chairman TCRC CTY
Paul Vickers - General Chairman TCRC LE
Paul Boucher - Arbitration Representative
John McDonnell - Locomotive Engineer
A hearing in this matter was held in Ottawa, Ontario
on February 8, 2013.
AWARD
This arbitration comes on pursuant to the provisions of article 79 of collective agreement 4.16 which governs conductors and article 78 of collective agreement 1.1 which governs locomotive engineers. On January 25, 2008 both groups received a Material Change Notice from Canadian National Railway (the “Company”) advising that the employment of their members in Go Train service in the Greater Toronto region would be discontinued. Go Train position abolishments for both locomotive engineers and conductors were implemented on a phased basis. The abolishment of conductor assignments occurred in two stages on May 30 and August 4, 2008. Locomotive engineer positions were abolished in several stages on May 30, August 4, 2008 and January 30, 31 and April 3, 2009. The abolishments came about by reason of the Company`s failure to bid on Go Train service, a service since taken over by Bombardier Transportation Canada Inc.. By the Company`s account, 62 locomotive engineer positions and 82 conductor positions were ultimately abolished.
It is common ground that as of the present all but six of the employees affected by the abolishments at Toronto North and Toronto South have returned to service with Canadian National (CN). In accordance with the provisions of Schedule A to an agreement negotiated between the Company and Bombardier, and subsequently adopted as a part of an agreement between the Union and the Company, some employees remained in Go Train service, eventually becoming employees of Bombardier. It appears that that arrangement gave to locomotive engineers who would be eligible to retire on or before December 31, 2010 the opportunity to continue in Go Train service in accordance with the terms of Schedule A. The Company states that some 23 locomotive engineers remained in Go Train service with Bombardier under the provisions of Schedule A, which are said to have expired on December 31, 2010. The Arbitrator is advised that of the original number, some six employees continue to be employed at Bombardier at the present time.
In accordance with the material change provisions of the respective collective agreements governing locomotive engineers and conductors, the parties attempted to negotiate provisions which would minimize the adverse impact of the material change on the employees affected. When those efforts were unsuccessful, a Board of Review was established, as provided by article 78.3(b) of collective agreement 1.1 and article 79.3(b) of collective agreement 4.16. Through the Board of Review the parties appear to have been able to resolve relocation and severance issues and also appear to have agreed in principle upon a maintenance of earnings protection for the employees affected. Two issues, therefore, remain outstanding: firstly, the Union`s demand for early retirement credits and, secondly, its allegation of alleged violations of the terms of Schedule A. That is reflected in the following Joint Statement of Issue and Dispute filed at the hearing:
JOINT STATEMENT OF ISSUE
Dispute
On January 25, 2008, CN issued a material change notice to the TCRC CTY, (Article 79, paragraph 79.2 of the 4.16 Agreement) and the TCRC, (Article 78, paragraph 78.2 of the 1.1 Agreement). The Company and Union engaged in the negotiation process to address the adverse effects as outlined in the respective collective agreements. The parties failed to reach a complete mutual agreement on all measures to minimize the significant adverse effects of the change in crewing of Go Train. The Board of Review process has been completed with the outstanding issues as follows:
Issue to Dispute
TCRC (Agreement 1.1) and TCRC CTY (Agreement 4.16)
1. The Company has failed to provide “early retirement pension credits” as a means to minimize the significant adverse effects of the material change. The Unions are seeking early retirement credits based on one credit for each position lost.
TCRC (Agreement 1.1)
2. The Union asserts that the company has violated the provisions of the Schedule “A”, in respect to the seniority standings of the Schedule “A” employees at Bombardier and in respect to the filing of grievances on behalf of those Schedule “A” employees. In addition the Union asserts that Schedule “A” employees who desired to remain with Bombardier upon retirement with CN were required to sign a continuing employment contract with Bombardier, that was in conflict with the terms of Schedule “A”.
The parties agree that the above issues are properly before the Arbitrator, as per Article 79, paragraph 79.4(g) of the 4.16 Agreement and Article 78, paragraph 78.4(g) of the 1.1 Agreement.
DECISION
I turn to consider the issues in dispute, dealing firstly with the question of early retirement credits. The Union`s position is that early retirement credits should be issued to correspond with the 144 positions which were abolished. The Company submits that no early retirement credits should issue, as in fact the employees affected by the job abolishments have all found well remunerated employment, either by remaining in Go Train service as employees of Bombardier or as employees who returned to freight service with CN, at various locations in the central region, with maintenance of earnings protection. The Company stresses that the purpose of early retirement credits in the face of job abolishments is to accelerate the departure of senior employees, thereby freeing up work opportunities for more junior employees who would otherwise face layoff. The Company emphasizes that there have been in fact no layoffs either directly or indirectly caused by the Company’s decision to no longer involve itself in providing running trades employees for Go Train service in the Greater Toronto area.
The Company’s representatives stress that while there may have been brief and temporary layoffs in the shakeout process, in fact there were no permanent layoffs caused by the material change that is the subject of this Award. Indeed, its representatives note that at the time of the implementation of the Go Train material change the Company was in fact faced with the need to hire employees, so that in fact employees returning from Go Train service could easily be absorbed into the Company’s freight service workforce. The Company notes that in 2008 in the Central Region 177 new running trades employees were hired and that while the 2008 recession resulted in no hiring in 2009, a further 152 running trades employees, including 24 in Toronto, were hired in 2010. Substantially more hiring continued in 2011 and 2012, totally a further 247 running trades freight employees newly hired. Additionally, the Company stresses that it experienced a high rate of attrition, having lost some 934 running trades employees, including 521 employees having left Ontario terminals in the period between 2008 and 2012. Very simply, there have been no permanent layoffs of any employees with more than two years of service from May of 2008 onwards.
The Company notes that the Union’s request would in fact be for a total 179 credits, when allowance is made for a 25 percent additional factor for the spare board. That, it asserts, would represent a cost of close to 27 million dollars to the Company, a cost it maintains has no basis in logic or in fact. While the Company acknowledges that some employees did experience short term layoffs at the Toronto terminals, particularly in 2008 and 2009, it stresses that those layoffs were entirely related to the downturn in business associated with the recession which then asserted itself, and were in no way caused by the material change relating to the termination of the Company’s involvement in Go Train service in Greater Toronto.
The Company draws to the Arbitrator’s attention the principles expressed by Arbitrator Frumkin in his decision in AH 337, which dealt with the issue of early retirement credits in respect of the abolishment of some eight locomotive positions at MacMillan Hump Yard in Toronto in 1993:
Retirement or severance incentives will, and should, be resorted to to offset adverse effects upon employees due to introduction of technological change where such adverse effects take the form of wholesale reduction of personnel resulting in chronic employee surpluses and diminished work opportunities for these employees. The mechanism of retirement and severance incentives to address adverse effects must be viewed as an extreme measure and should not be resorted to where other measures are available to address the adverse effects upon an employee brought upon through change. On this point the Arbitrator would agree fully with the view expressed by Arbitrator Picher in a number of his decisions where he refused to impose upon the Company a requirement that it grant early retirement or a severance incentive to employees whose positions had been abolished through implementation of changes in the nature of those envisaged in Article 78 of Agreement 1.1, but who would not thereby suffer from decreased work opportunities that might operate to render them, for the most part, inactive.
On what basis should the Arbitrator grant retirement credits in the case at hand? I can see none. The undisputed fact before me is that none of the employees whose Go Train jobs were abolished has effectively suffered a permanent layoff or a meaningful reduction in work or earnings. Nor is there any evidence to establish that more junior employees in the system have been indirectly affected by reason of their permanent layoff. How, then, can a case be made for removing senior employees from the workplace to make more room for junior employees when in fact no employees appear to be threatened by the likelihood of permanent layoff? Indeed, as the material filed by the Company amply demonstrates, the earnings of the affected employees since 2008 have been substantially unaffected, apart from what would appear to be the effects of the financial downturn experienced in and immediately after the 2008 recession. With the benefit of maintenance of earnings protection, the wages of the affected employees in 2011 and 2012 compared favourably with their earnings at the time of the material change in 2008.
In the Arbitrator’s view to accede to the Union’s request would be to effectively confer a gratuitous and unwarranted benefit upon the employees whose jobs were abolished, given that they obviously emerged from the job abolishments relatively unscathed from the perspective of their own earnings and job security. There is, moreover, no evidence before me of any indirect effects on other employees that would justify recourse to the granting of early retirement credits. For the foregoing reasons the Arbitrator is compelled to accept the position of the Company, and to conclude that it is not appropriate to make the granting of early retirement credits for either locomotive engineers or conductors a part of this Award.
I turn now to consider the second issue, that being the Union’s allegation of violations of the provisions of Schedule A. As noted above, Schedule A had its genesis in an agreement made between the Company and Bombardier, with a view to protecting certain employment interests of the employees who chose to remain in GO Train service under Bombardier as their new employer. The Company advises that 21 locomotive engineers made an irrevocable declaration under the terms of Schedule A that they would leave employment with CN to work at GO Train services as Bombardier employees under the provisions of Schedule A. It appears that a substantial number of those employees have since retired and that six employees of that group now remain employed at Bombardier. On March 31, 2009 a document referred to as the “Term Sheet” was executed between the Company and Bombardier Transportation Canada Inc. At the risk of oversimplification, that agreement involves the Company’s undertaking to provide locomotive engineers to Bombardier in furtherance of GO Train service in accordance with an irrevocable offer to be made by employees, in accordance with the provisions of Schedule A to the agreement. In accordance with the terms of that agreement locomotive engineers who opt to go into GO Train service with Bombardier cease to be “qualified locomotive engineers CN employees” at the time of their retirement or resignation from CN, or alternatively, at the latest on December 31, 2010.
Schedule A to the agreement provides, in part, as follows:
Schedule A
In order to facilitate the transition of the GO Operations Services from CN to Bombardier and in recognition of the modifications to the commuter train operators qualifications requirements, Bombardier seeks CN’s support in securing the services of qualified locomotive engineers (hereinafter Locomotive Engineers) to operate GO trains on behalf of Bombardier in GO Train service.
To that end the following are the principles under which CN is prepared to enter into such an arrangement with Toronto North and Toronto South employees
§ This services agreement is effective 1 June 2008 for the Barrie, Georgetowns, and Richmond Hill assignments. The Second phase will be on August 1st, 2008 for the remainder of the GO assignments, and expires 31 December 2010.
§ Qualified Locomotive Engineers in CN’s employ will be permitted to volunteer to perform service under this agreement. There will be no right of selection of individuals.
§ While employed in this capacity they will remain employees of CN Rail for purposes of pension & benefits. Individuals will be compensated by all the present applicable rules within the 1.1 Collective Agreement
§ Individuals will be governed by all work rules, policies not applicable to compensation, and procedures of Bombardier, GO Train’s service provider. (ie: Rest rules, Etc.)
§ Individuals will continue entitlement to benefits under Articles 77 (Annual Vacation), 79 (Benefit Plans), & 82.1 (Sleeping Quarters) of Agreement 2.2 while employed under this agreement
§ Day to day management of individuals under this agreement will be the responsibility of Bombardier.
§ Individuals will continue to accumulate cumulative compensated service in accordance with the provisions of Article 88 of Agreement 1.1 while employed under this agreement
§ Individuals will continue to be governed by the provisions of Article 71 (Investigation – Discipline) of Collective Agreement 1.1
§ Resolution of disputes in the application of this agreement will be subject to the provisions of Article 73 (Grievance Procedure & Final Settlement of Disputes). Claims for compensation will remain with CN and will continue to be submitted through CATS.
§ Engineers will not be permitted to flow back to CN. Those electing service under this agreement will be required to sign an irrevocable application for retirement or resignation from the service of CN Rail with an effective date not later than the expiration of this agreement. Upon retirement/resignation from CN Rail or at the expiration of the term of this Schedule A (whichever comes first) individuals will cease entitlements to all provisions of this Schedule A.
§ Individuals electing to remain as employees of Bombardier after the expiration date of this agreement will maintain a service date of August 1st, 2008 on the seniority list. There are 18 employees at Bombardier that will rank higher on the seniority list from August 1st, 2008 until December 31st, 2010 at which time 15 other Bombardier employees will be placed behind the original 18 and ahead of prior CN employees with a date of August 1st, 2008. This will make employees electing to work under the terms and conditions of this agreement number 19 and up on the Bombardier seniority list from August 1st to December 31, 2010, and number 34 and up after December 31, 2010.
It is common ground that since the execution of Schedule A the employees who irrevocably opted to go into GO Train service under Bombardier, originally some 20 in number, all of whom were within two years of their eligibility to retire, did not ultimately receive the seniority protections anticipated within the terms of Schedule A. According to the Union’s submission, as the employees in question were required to become employees represented by the Amalgamated Transit Union (ATU) their relative seniority was not in fact respected for such purposes as bidding assignments and vacation schedules. The Company does not appear to dispute the fact that Bombardier has not continued to honour the terms of Schedule A, at least beyond December 31, 2010. Indeed, it appears agreed that its legal department has made strong written overtures to Bombardier with respect to its obligations under Schedule A and the impact of Bombardier’s disregard of those obligations on the former CN employees. Before me, however, both parties acknowledge that CN is powerless to enforce the provisions of Schedule A and that the Union in fact has no privity of contractual relationship with Bombardier, and itself is incapable of enforcing the terms of Schedule A as against Bombardier.
The Union argues, however, that the placing of these former CN employees into the precarious position whereby their seniority might in fact be qualified or relatively reduced at the hands of another union and employer is a consequence which can and should be addressed under the terms of the material change provisions of the parties’ own collective agreement. In other words, the Union argues that an order by this Arbitrator directing the payment of commensurate compensation to the employees so affected is an appropriate measure to attenuate this particular adverse impact.
As a matter of principle, I agree. The Company knew, or should have known, that placing the employees in question in a position of forfeiting their CN employment, with no contractual privity between their Union at CN and their new employer, Bombardier, would leave them vulnerable in the event that Bombardier should not honour the provisions of Schedule A beyond December 31, 2010. As is evident from the Company’s own efforts to secure ongoing protection for the affected employees, I consider it safe to conclude that both the Union and the Company expected the terms of Schedule A to protect the former CN employees on an ongoing basis and that their relative seniority rights would to that extent be respected.
In my view the rather novel situation raised in this Award, involving as it does another employer not privy to these proceedings, does present a situation of adverse impact, in the operation of seniority rights, of a kind which is properly addressed and protected under the material change provisions of article 79 of collective agreement 4.16 and article 78 of collective agreement 1.1. I therefore accept the position of the Union and find and declare that the parties should meet to discuss a form of monetary compensation to the employees who have been adversely affected in the manner described above with respect to the application of their seniority rights while in continuing GO Train service with Bombardier.
Should the parties be unable to agree on such compensation as it should apply to the various employees affected, I retain jurisdiction to deal with the matter, as indeed I retain jurisdiction with respect to any other unresolved issues.
Dated at Ottawa, Ontario this 21st day of February, 2013.
__________________________
Michel G. Picher
Arbitrator