SHP 117




(the "Company")


Canadian Council of Railway Shopcraft Employees and Allied Workers

(the "Union")




SOLE ARBITRATOR: J. F. W. Weatherill



There appeared on behalf of the Company:

M. M. Yorston



And on behalf of the Union:

J. W. Asprey

A. Manocchio



A hearing in this matter was held at Montreal on January 14, 1982.




The Joint Statement of Fact and Joint Statement of Issue in this matter are as follows:


At Ogden Shops, the Company discontinued repairs to HV-6 injector parts No. 5228310 on the grounds that the quantity was limited.


It is the position of the Union that in so doing, the Company violated the provisions of the Letter of Understanding dated April 28, 1978, governing the contracting out of work.

It is the position of the Company that the cost of repairs is higher than the cost of purchasing from an outside supplier and, therefore, exception (4) to the Letter of Understanding would apply, and further, that inasmuch as there were no employees laid-off as a result of the "contracting out", pursuant to the final paragraph of the Letter of Understanding there is no grievance under the Collective Agreement and, therefore, the matter is not arbitrable.

The Letter of Understanding with respect to contracting-out is as follows:

This has reference to the award of the Arbitrator, the Honourable Emmett M. Hall, dated December 9, 1974, concerning the contracting out of work.

In accordance with the provisions as set out on Page 49 of the above-mentioned award, it is agreed that in the period to December 31, 1978, work presently and normally performed by employees represented by the Associated Non-Operating Railway Unions and the Railway Employees’ Department, Division No. 4 signatory to the Memorandum, of Settlement dated February 21, 1978, will not be contracted out except:

(1) when technical or managerial skills are not available from within the Railway, or

(2) where sufficient employees, qualified to perform the work, are not available from the active or laid-off employees; or

(3) when essential equipment or facilities are not available and cannot be made available from Railway-owned property at the time and place required; or

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

(5) the required the of completion of the work cannot be met with the skills, personnel or equipment available on the property; or

(6) where the nature or volume of work is such that undesirable fluctuations in employment would automatically result.

The conditions set forth above will not apply in emergencies, to items normally obtained from manufacturers or suppliers nor to the performance of warranty work.

It is further agreed that at a mutually convenient time at the beginning of each year representatives of the Union will meet with the designated officers to discuss the Company’s plans with respect to contracting out of work for the year. In addition, the Company will advise the Union representatives involved, in writing, as far in advance as is practicable of its intention to contract out work which would have a material and adverse effect on employees.

Such advice will contain a description of the work to be contracted out; the anticipated duration; the reasons for contacting out and, if possible, the date the contract is to commence. If the General Chairman, or equivalent, requests a meeting to discuss matters relating to the contracting out of work specified in the above notice, the appropriate Company representative will promptly meet with him for that purpose.

Should a General Chairman, or equivalent, request information respecting contracting out which has not been covered by a notice of intent it will be supplied to him promptly. If he requests a meeting to discuss such contracting, it will be arranged at a mutually acceptable time and place.

Where a Union contends that the Railway has contracted out work contrary to the foregoing and this results in an employee being unable to hold work, the Union may progress a grievance in respect of such employee by using the grievance procedure which would apply if this were a grievance under the collective agreement. Such grievance shall commence at (*), the union officer submitting the facts on which the Union relies to support its contention. Any such grievance must be submitted within 30 days from the alleged non-compliance.

In the instant case, the work which was contracted-out was work which had normally been performed by members of the Machinists’ bargaining unit. The effect of the Letter of Understanding, then, is that such work will not be contracted-out unless it comes within one of the six exceptions listed in the second paragraph of the Letter. In the instant case, it is not suggested that exceptions (1) to (3) or (5) or (6) apply. From the material before me, however, it does appear that this case comes within exception (4). A comparison of the unit cost of repairs to injectors during 1980, when they were repaired by the company, was very substantially greater than the unit contracted cost in 1981. This so even when the "overhead" cost factor is completely discounted. Since it appears that, if the company were to continue this work, new equipment would have to be purchased, it is clear that the work did not justify the "in-house" expenditure. The contracting-out of this work, therefore, comes within the exceptions to the general prohibitions set out in the Letter.

It would appear that the company did not discuss with the union its plans for the contracting-out of this work. At least, this was not done at a meeting at the beginning of the year, as contemplated by the fourth paragraph of the agreement. In my view, however, while the company does have an obligation to meet with the union and discuss plans for contracting-out, it is not a necessary condition of any particular contracting-out that it have been discussed in this way. The company is not limited, in contracting-out work, to those matters which may have been planned and discussed at the beginning of the year.

Further, since grievances involving alleged violations of the Letter of Understanding may only be brought where the contracting-out of work has resulted in an employee being unable to hold work, and since it has not been shown that anyone has been laid off, or has remained laid off because of this contracting-out, it must be concluded that the matter is not arbitrable in any event.

For all of the foregoing reasons, therefore, the grievance must be dismissed.

DATED AT TORONTO, this 8th day of February, 1982.

(signed) J. F. W. Weatherill