SHP 156



Canadian Pacific Limited

(the "Company")



(the "Union")


SOLE ARBITRATOR: J. F. W. Weatherill



There appeared on behalf of the Union:

J. W. Asprey

A. Rosner



And on behalf of the Company:

F. B. Reynolds

D. J. David

D. A. Lypka



A hearing in this matter was held at Montreal on June 22, 1984.




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


On October 29, 1983, pursuant to the provisions of Article VIII of the Job Security Agreement and the Company’s letter on contracting out dated March 26, 1982, the Company served notice to the Union of its intention to abolish four positions of Bunkhouse Attendants at each of the locations at Brandon, Broadview and Swift Current effective January 31, 1984, and to contract out the maintenance of those bunkhouses effective February 1, 1984.


It is the position of the Union that the provisions of Appendix "D" (Contracting Out Letter) were violated when the Company advised the Union that it would contract out four positions at each of the locations at Brandon, Broadview and Swift Current.

The following provisions of Appendix "D" to the collective agreement are material to the instant case:

… it is agreed that work presently and normally performed by employees represented by the Canadian Council of Railway Shopcraft Employees and Allied Workers … 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 work is such that it does not justify the capital or operating expenditure involved; or

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 …

In the instant case, the company gave notice to the union on October 29, 1983, that the four positions of Bunkhouse Attendant at the company bunkhouses at each of the points referred to would be abolished effective February 1, 1984, and that the duties previously performed by the employees would then be contracted-out. In my view, the notice given was sufficient, and there was no violation of the letter of understanding in that regard. In this respect, regard may be had to what was said in the HV6 Injector case, involving the same parties (February 8, 1982).

There is no doubt that the work performed by the incumbent Bunkhouse Attendants at the locations in question was work "presently and normally performed by employees" within the meaning of the letter of understanding. This is so notwithstanding that at other locations the company has contracted-out similar work apparently without objection being taken by the bargaining agent involved. The union in the instant case is entitled to rely on the provisions of the collective agreement, and there is no suggestion of any circumstances which would estop it from doing so.

The work involved is that of changing bed linen, making beds, sweeping and washing floors, fixtures, walls and windows, emptying garbage, replenishing paper supplies, mowing lawns and shovelling snow. In addition the Bunkhouse Attendants may be available to perform some other functions relating to railway operation, and it appears that they may do so to some extent.

There can be no doubt that the work in question is of a sort which cannot be contracted out unless it comes within one or more of the exceptions set out in the letter of understanding. The employees concerned were adversely affected, and it is not suggested that the union was not entitled to grieve on their behalf pursuant to the provisions of the letter of understanding set out above.

It is the company’s position that the matter comes within exception number (4), in that the nature or volume of work is such that it does not justify the capital or operating expenditure involved. There is no question of any significant capital expenditure being required. The company simply determined, no doubt correctly, that it could have essentially the same work performed at considerably less cost if it replaced its own employees by outside contractors. It may be that the contractors would be in a position to take advantage of any efficiencies arising out of their servicing a broader market, or it may be that their wage scales were different. In any event, there is no doubt the company could save money by contracting-out this work. The question is whether or not, by reason of that, the company has brought itself within exception (4) to the prohibition against contracting-out.

The letter of understanding states that it is written "in accordance with the provisions as set out on Page 49" of the award of the Arbitrator, the Honourable Emmett M. Hall, dated December 9, 1974, concerning the contracting-out of work. In his award, Mr. Justice Hall indicated that the right of management to contract out work was not absolute, and that long-service employees also have rights which must be respected. Noting that "Perhaps the contracting out of building cleaning and maintenance is a developing and increasing commercial practice that cannot be denied the Railways", he went on to say that "… the cleaning and maintenance of railway cars and equipment as an example, is in another category". Mr. Justice Hall was addressing himself particularly to a problem of the shopcrafts; the employees in question here are not craftsmen, but they are performing a traditional aspect of railway work, and they are certainly entitled to the general protection of the letter of understanding which was prompted by the Hall award.

In CROA case no. 1035, it was held (although the case also went on the ground that it had not been shown that any employees had not been able to hold work as a result of the contracting out, so as to be entitled to grieve), that the cost to the company of having certain track-removal work performed by its own forces would be substantially more than the cost of contracting it out, and that "the nature or volume of the work would not justify an expense of that order". That case involved a particular track-removal operation. The instant case involves the continuing operation of bunkhouses and the substitution, on their very jobs, of the employees of outside contractors for the railway employees who have performed the work for years.

In the Crane Wheels case between the same parties (February 8, 1982), it was said that it was apparent that exception (4) to the general rule against contracting-out did not contemplate a simple cost comparison. Indeed, it may be said that a provision prohibiting the employer from contracting out except where it could save money by doing so would not generally be regarded as a very meaningful provision.

In the instant case, the "nature or volume" of the work at the locations in question would appear to have justified the operational expenditure involved for many years. There were no new or special considerations involved beyond the realization that persons other than the company’s own employees could be arranged for to do the work more cheaply. Such is not, in my view, a case coming within the contemplation of exception (4) to the general prohibition of contracting-out set out in the letter of understanding.

For the foregoing reasons, the grievance is allowed. While it may be beyond the scope of my jurisdiction to direct the company to terminate its contracts with outside contractors in respect of the work in question, it is in any event a sufficient and proper award to declare that the contracting-out in question was in violation of the letter of understanding and as well, to award that the employees affected be compensated for any loss of earnings attributable to the contracting-out, for the period during which such losses may continue. I so award, and I remain seized of the matter for the purpose of determining any issue which may arise with respect to the relief awarded.

DATED AT TORONTO, this 10th day of July, 1984.

(signed) J. F. W. Weatherill