IN THE MATTER OF AN ARBITRATION
BETWEEN:
CANADIAN NATIONAL RAILWAY COMPANY
(the “Company”)
-and-
TEAMSTERS CANADA RAIL CONFERENCE
CN WESTERN REGION
CONDUCTORS, TRAINPERSONS AND YARDPERSONS AND LOCOMOTIVE ENGINEERS
(the “Unions”)
RE: MATERIAL CHANGE NOTICE
CLOSURE OF BIGGAR, SASKATCHEWAN TERMINAL
ARBITRATOR: MICHEL G. PICHER
APPEARANCES FOR THE COMPANY:
Joe Torchia - Director, Labour Relations
Kerry Morris - Senior Manager, Labour Relations
Jamie Boychuk - General Manager, Operations
APPEARANCES FOR THE UNION:
Denis Ellickson - Counsel
Roland Hackl - General Chair, CTY Saskatoon
Bruce Willows - General Chair, LE Edmonton
Raymond Donegan - Vice-General Chair, CTY Saskatoon
Doug Finnson - Vice-President, TCRC Calgary
Hearings in this matter
were held in Toronto, Ontario on October 4, 2013 and November 22, 2013.
AWARD
The instant dispute concerns the closure of the Company’s terminal at Biggar, Saskatchewan. The Unions were advised by notice from the Company on January 11, 2013 of its intention to close its terminal at Biggar, the home terminal of some 200 employees, with the existing assignments to be relocated to Saskatoon, some 55 miles distant. The background facts and an outline of positions are reflected in the Statement of Issue filed by the Company, which reads as follows:
STATEMENT OF ISSUE:
On January 11, 2013 the Company issued Material Change Notice to the Unions advising of the decision to have CN train service run through Biggar Saskatchewan. The operational change would result in existing employees permanently home stationed at Biggar reporting for work at Saskatoon Sask. approximately 55 miles east of Biggar Sk. The TCRC-CTY union sought clarification with respect to the operational change and contemplated effects on employees. The Company responded to those requests in letters dated January 28th, March 11th 2013.
The parties met on May 16 and 17th 2013, June 13th and July 17th 2013 to discuss the operational changes and ultimately attempt to negotiate the means of minimizing significant adverse effects. An agreement could not be obtained notwithstanding our efforts in this regard. The issues that remain outstanding with respect to minimizing significant adverse effects are reflected in both parties’ proposals as set out below.
The Company maintains the following terms and conditions are sufficient to minimize significant adverse effects:
a. Relocation Benefits for home owners pursuant to Article 139 and 89 of the 4.3 and 1.2 or an optional lump sum payment of $28,000.00 in lieu of relocation benefits.
b. Relocation Benefits for non-home owners pursuant to Article 139 and 89 of the 4.3 and 1.2 or an optional lump sum payment of $7500.00 in lieu of relocation benefits.
c. Travel allowance in the amount of $5000.00 a year for a maximum of 2 years for eligible employees (must travel an additional 40 miles to get to work) who choose not to sell principal residence.
d. Maintenance of Earnings for those employees who are displaced and unable to maintain their classification at Saskatoon terminal subsequent to the Biggar terminal closure.
e. Biggar home stationed employees as of the date of notice, must protect work being transferred to Saskatoon.
The Unions is seeking the following as a means to minimize significant adverse effects:
a. Employees residing outside a 40 km radius of Saskatoon yard would received (sic) a one time all inclusive lump sum of $40,000.00 in lieu of relocation benefits or any other benefit under Article 130 and 89 of agreement 4.3 and 1.2. The benefits of Articles 139 and 89 of agreement 4.3 and 1.2 will otherwise apply to any affected employee not electing the lump sum payment.
b. Employees residing within 40 km of Saskatoon yard office is not subject to any other significant adverse effects however they will be entitled to maintenance of earnings (uncapped).
c. In addition to item #1 and #2 above, all affected employees will be offered a one time payment of $10,000.00 if they elect to transfer to Saskatoon on the date of transfer of operations. Any employee with a clearance at the home terminal of Saskatoon as of the date of transfer of operations adversely affected by the transfer shall be deemed adversely affected.
d. All employees with a clearance at the terminal of Biggar on the date of notice of material change (affected employee) is entitled to maintenance of earnings (uncapped).
e. All affected employees will be allowed to move their clearance to any terminal they can exercise their seniority to on the date of transfer of operations. Moreover, anyone displaced as a result of such exercise of seniority will be deemed adversely affected.
As at the time of the original notice the changes proposed were to be implemented by August 31, 2013, albeit the implementation date is now said to be December 6, 2013.
Collective Agreement 1.2, which governs locomotive engineers (LE), and Agreement 4.3, which pertains to conductors, trainmen and yardmen (CTY), contains provisions in Article 89 and Article 139, respectively, establishing procedures and issues to be addressed in the case of a material change, with a view to minimizing the adverse effects on employees.
The operative provisions in the Collective Agreement governing locomotive engineers are found in Article 89.1 of the locomotive engineers’ Collective Agreement. Failing agreement between the parties, the matter may proceed before a joint board of review comprised of two senior officers from each party, in accordance with Article 89.3. If the matter is not resolved at the level of the joint board of review it can be progressed to arbitration under Article 89.4 of the locomotive engineers’ Collective Agreement and Article 139.1(d) of the Collective Agreement governing the CTY.
In the instant case the parties agreed on a joint board of review for both bargaining units. While the joint board of review reached unanimous agreement on certain issues, it was unable to agree on a number of others, and the matter has therefore been progressed to arbitration in respect of both bargaining units.
The fundamental position of the Company is that the change being implemented causes no adverse effects to employees. Its representative emphasizes that the majority of employees home stationed at Biggar have residences relatively close to the Saskatoon area. By the Company’s estimate, 83 percent of the Biggar workforce in fact resides closer to Saskatoon and will have less distance to travel to and from work than was the case at Biggar. Some 17 percent would in all likelihood be required to travel either a similar or greater distance than previously. The Company stresses that there is no effective abolishment of positions or assignments, but rather the transfer of ongoing operations from Biggar to Saskatoon.
The record confirms that pursuant to the provisions of the Collective Agreement referred to above, the parties met on some four occasions in May, June and July of 2013 to negotiate the minimizing of adverse effects, apparently without success. The matter was then progressed to a joint board of review on September 26, 2013 and thereafter to mediation on October 4, 2013. Through all of those efforts the parties were unable to reach agreement on the measures to minimize adverse effects rising from the closure of the terminal at Biggar.
With respect to the possibility of employees being required to travel a longer distance, the Company proposes certain benefits to employees where it can be established that they are required to travel an additional 40 miles, beyond their present travel, to report for work at Saskatoon. In that regard, by way of example, the Company refers to the existing protections found under Article 119, Addendum 38, and 62 of Collective Agreement 4.3, as well as Addendum 47 and 72 of Collective Agreement 1.2.
Additionally, the Company offers a lump sum payment of $28,000.00 to employees who are homeowners, in lieu of relocation benefits under the Collective Agreements, so long as the employees in question sell their primary residence and relocate to Saskatoon. It notes that non-homeowners required to relocate will have access to relocation benefits as provided in Article 130 of the 4.3 Collective Agreement and Article 89 of Agreement 1.2. Additionally, the Company indicates its willingness to offer an all-inclusive lump sum payment in lieu of the relocation benefits under the Collective Agreement to non-homeowners, in the amount of $7,500.00, on condition that they relocate their primary residence to Saskatoon. Relocation benefits are conditioned upon the employee remaining at the new work location of Saskatoon for not less than a two year duration. Alternatively, for the employees who choose not to relocate, and for who the additional travel is in excess of a further 40 miles, the Company would offer a travel allowance in the amount of $5,000.00 per year, for a maximum of two years from the date of the implementation of the change.
The Company further proposes maintenance of earnings protection as contemplated in Article 139.1(b) of Agreement 4.3 and Article 89.2(c) of Agreement 1.2.
A significant part of the Company’s position is that the change being implemented does not involve job abolishments. Rather, it characterizes the change as requiring employees home stationed at Biggar to follow their work to Saskatoon, essentially a transfer of the location of assignments. This is not a circumstance, in the Company’s view, where employees can claim job abolishments and the right to apply their seniority to bid and displace into work across the western region, a consequence which the Company views as fraught with extensive disruption and negative consequences as well as substantial additional cost. In that regard the Company stresses that the instant case does not involve the large scale abolishment of work, or in fact the loss of any work, but rather a simple change in the reporting location of bargaining unit employees.
An issue of significant contention between the parties is maintenance of earnings. While the CTY Collective Agreement does not contain a specific provision with respect to maintenance of earnings, Article 89 of Collective Agreement 1.2 does. That provision reads, in part, as follows:
89.13
(a) In the application of this article, the term “basic weekly pay” is defined as follows:
1. For all employees, the “basic weekly pay” shall be one-fifty second (1/52) of the total earnings of such employee during the twenty-six full pay periods preceding his or her displacement or lay-off.
NOTE 1: When computing “basic weekly pay”, any pay period during which an employee is absent for seven consecutive days or more because of bona fide injury, sickness in respect of which an employee is in receipt of weekly indemnity benefits, authorized leave of absence or laid off together with the earnings of an employee in that pay period, shall be subtracted from the twenty-six (26) pay periods and total earnings. In such circumstances “basic weekly pay” shall be calculated on a pro-rated basis by dividing the remaining earnings by the remaining number of pay periods.
NOTE 2: The amount of basic weekly pay for an employee in road service will in no case exceed $1,600.00.
(b) The basic weekly pay of employees whose positions are abolished or who are displaced shall be maintained by payment to such employees of the difference between their actual earnings in a four-week period and four times their basic weekly pay. Such difference shall be known as an employee’s incumbency. In the event an employee’s actual earnings in a four-week period exceeds four times his or her basic weekly pay, no incumbency shall be payable. An incumbency for the purpose of maintaining employees’ earnings, shall be payable provided …
The Company disagrees with the position of the Union, which is to provide uncapped maintenance of earnings for all employees home stationed at Biggar. The Company stresses that the change here under examination involves no job reductions or job losses. Its representative stresses that the change in itself does not contemplate or reveal any negative impact with respect to the earnings of employees who will simply continue to perform the same work, albeit out of a different reporting location. The Company agrees that should any employee transferred to Saskatoon find himself or herself unable to hold the same classification that that employee held in Biggar, maintenance of earnings would be accorded. With respect to the fundamental purpose of maintenance of earnings the Company refers the Arbitrator to the Award in AH-441, an Award between these same parties concerning belt pack implementation dated June 13, 1997 where the following quotation is found:
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.
The Company’s fundamental position is that there is no adverse impact on employees, save possibly in respect of additional travel distances, in relation to the transfer of assignments from Biggar to Saskatoon. While the Company’s representative notes that Collective Agreement 4.3 does not have a maintenance of earnings provision, he indicates the Company’s willingness to administer maintenance of earnings for employees under that Collective Agreement where it can be demonstrated that upon their move to Saskatoon they were unable to hold the classification which they held in Biggar.
The Company questions the position of the Union with respect to its proposed lump sum payment of $40,000.00 in lieu of relocation benefits for employees residing outside a 40 mile radius of Saskatoon. It submits that the Unions’ proposal would in fact bestow a substantial financial benefit on a number of employees who in fact will travel a shorter distance than they previously did to report for work. While it appears that the initial position of $40,000.00 has been reduced to $25,000.00, the Company nevertheless maintains that, given that relocation benefits under the Collective Agreement are available to the employees in question, there is no basis for the granting of a substantial lump sum payment. In its view the offering of a $28,000.00 lump sum to employees who in fact relocate to Saskatoon is consistent with prior agreements and reasonable in the circumstances.
With respect to the issue of maintenance of earnings, the fundamental position of the Company is that there is no indication that any employees will suffer adverse or negative impacts in their earnings by reason of the relocation of their assignments. The Company acknowledges that it would be willing to allow maintenance of earnings protection to an employee who is in fact unable to hold a classification by reason of the transfer of assignments from Biggar to Saskatoon.
The Unions have tabled in evidence a draft memorandum of agreement which, they submit, is consistent with provisions and protections either negotiated between the parties or directed by arbitration in previous comparable situations. Part of the Unions’ submission to the Arbitrator is that the Company has not provided sufficient information with respect to the details of the material change being implemented, the new operations being proposed and the adverse impacts likely to result. Noting that the instant case concerns what it characterizes as one of the largest proposed material change cases in recent history, its counsel argues that what the Company proposes is a form of maximizing its own flexibility in a manner which results in protections to the employees substantially inferior to those found in past agreements and arbitration awards. On July 17, 2013 the Unions made a number of proposals. Among them, is uncapped maintenance of earnings for employees with a clearance at the terminal of Biggar, the right to exercise seniority to displace to any terminal, a $10,000.00 payment for employees transferring to Saskatoon or adversely effected at Saskatoon and, for employees residing outside a 40 kilometre radius of the yard office of Saskatoon, to receive a lump sum benefit of $40,000.00 in lieu of relocation benefits. The benefits contemplated by the Unions also include extended run guarantees and maintenance of earnings protection over a 48 month period, in addition to other protections. Additionally, the Unions have requested that employees with traffic coordinator seniority be allowed the option to relinquish their traffic coordinator seniority or to undergo refresher training to requalify as traffic coordinators.
In the Unions’ submission the instant material change is comparable to a number of prior material changes which, it argues, should yield comparable protections for the employees affected. In that regard reference is made to the memorandum of agreement respecting the closure of Hanna and Mirror, Alberta, dated July 25, 1990, as well as the sale of lines at such locations as The Pas and Prince Albert in 1997, Hay River in 1998, the closure of the home terminal of Grand Prairie in 1999, the establishment of a new extended run involving Kamloops and McBride in 2010. Reference is also made to the transfer of work from Calgary to Edmonton and Calgary to Saskatoon and related agreements of March 30, 2012 as well as the Award of this Arbitrator concerning changes in respect of the Prairie North Line (PNL) operation dated July 17, 2008.
I turn to consider the submissions of the parties. In doing so, I must state that I am less than persuaded by the position of the Unions with respect to the lack of detail provided by the Company with respect to its proposal. There can be little doubt that, very simply, existing assignments are being relocated from Biggar to Saskatoon, with the employees being compelled to follow their assignments. I must agree with the Company that what has transpired does not involve the abolishment of positions or any circumstance which would give rise to a right on the part of employees at Biggar to exercise their seniority to displace to other locations on the system. There might, however, be a residual concern as to the quality of work available to the Biggar employees when they enter a larger pool of employees at Saskatoon, which might include additional persons senior to them.
As a first matter, I note that certain issues were agreed to as part of the report of the Board of Review Committee dated October 3, 2013.
As a general matter I must agree with the Unions that certain of the positions taken by the Company are less than consistent with the protections provided to employees under prior and similar circumstances, notably the agreed lump sum payment of $18,000.00 which was established in relation to the displacement of employees’ home terminal at Rainy River who were required to travel some 60 miles to report to work at Fort Frances, as reflected in CROA&DR 3534 in December of 2005. I must agree with the Unions that the facts of that case are substantially similar to the instant case, and that a corresponding all-inclusive lump sum payment of $25,000.00 for future travel expenses is not unreasonable in these circumstances.
The parties are disagreed as to whether maintenance of earnings should be capped or uncapped for the purposes of this Award. In addressing this issue I consider it significant that within the terms of Collective Agreement 1.2, in Article 89.13(a), the parties have expressly agreed that in the administration of the maintenance of earnings provision found there: “The amount of basic weekly pay for an employee in road service will in no case exceed $1,600.00.” On what basis can an arbitrator responsibly disregard that qualification in dealing with maintenance of earnings in the circumstances of the transfer of assignments from Biggar to Saskatoon? I can see none. I am therefore satisfied that it is appropriate to limit the calculation of basic weekly pay to the maximum found within the provisions of Collective Agreement 1.2. While I appreciate that there is no maintenance of earnings provision found in Collective Agreement 4.3, I consider it appropriate to apply the same standard to both bargaining units.
On the basis of the foregoing I hereby direct as follows:
Those employees with a permanent clearance in Biggar as of January 11, 2013, residing beyond a 40 mile radius of the Saskatoon yard office and chose not to relocate to Saskatoon, shall be entitled to a one time, all-inclusive lump sum payment of $25,000 to offset future travel expenses.
Those employees with a permanent clearance in Biggar as of January 11, 2013, residing beyond a 40 mile radius of the Saskatoon yard office who chose to relocate shall be entitled to the relocation benefits provided in Article 139 of Agreement 4.3 or Article 89 of Agreement 1.2, or, at their option, a one time, all-inclusive lump sum payment of $25,000.
Any employee with a permanent clearance in Biggar or Saskatoon with more than 24 months cumulative compensated service at the date of closure shall, for a period of two years following the implementation of this agreement, be guaranteed no less that 1/52 of their earnings for each week of the 26 pay periods preceding the transfer of operations for a period of 24 months. Such payments to be limited to a maximum basic weekly pay of $1,600.
Those employees with a permanent clearance in Biggar as of January 11, 2013 who hold traffic coordinator seniority shall have, on the date of closure, the option of relinquishing such seniority after one year, or requesting refresher training, which shall be provided in accordance with Agreement 4.2.
I retain jurisdiction in the event of any dispute between the parties concerning the interpretation or implementation of this Award.
Dated at Ottawa, Ontario this 12th day of December, 2013.
_______________________________________
Michel G. Picher
Arbitrator