SHP 262



Canadian Pacific Limited

(the "Company")



(The "Brotherhood")


SOLE ARBITRATOR: J. F. W. Weatherill



A. Rosner

R. Laroche


A. de Montigny

D. David


A hearing in this matter was held in Montreal on February 21, 1989.




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


Contracting out of General Electric traction motor repair work at Angus Shops, Montreal.


On July 14, 1988, Assistant Chief Mechanical Officer R. Bryant wrote jointly to IBEW System General Chairman R. Laroche and IAM&AW System General Chairman C. Robert, advising that commencing on August 22, 1988, all General Electric traction motors would be repaired "by the manufacturer or other traction motor repair shops", and that as a result, ten electricians would be "released from the traction motor repair area and reassigned to other functions at Angus Shops." The letter was a notice pursuant to the letter on contracting out contained in Wage Agreement No. 51.

On July 19, 1988, Mr. Laroche filed a Step II grievance alleging: 1) that the proposed contracting out was in violation of the "Letter on Contracting Out" and requesting that the plans be cancelled; 2) that the proposal amounted to an operational change, and hence required, among other things, a three-month notice period pursuant to Article 8.1 of the Job Security Agreement

On August 19, 1988, Mr. Bryant replied, stating that as no employee would be adversely affected as a result of the contracting out, no Article 8.1 notice was required. He further stated that the contracting out fell within exceptions 2, 5 and 6 as described in the Letter on Contracting Out. The matter was subsequently registered for arbitration.


The Union claims that the contracting out is prohibited by the terms of the collective agreement, and requests that: 1) the work in question be returned to the bargaining unit; and 2) those members of the bargaining unit who lose/have lost regular or overtime work opportunities as a result of the decision to contract out be duly compensated. The Union further claims that the change is operational and organizational in nature, and that the provisions of Article 8 of the Job Security Agreement are applicable.

The Company denies the Union’s contention and its requests.

The work in question is that of repairing GE traction motors, which are used to provide motive power for MLW locomotives, which comprise some 15% of the company’s fleet. Such work had, until the contracting out in question, always been performed by members of the bargaining unit. While it may be that the motors, being separable components, may be distinguished from other "specific railway work", as the company describes it, I think that the work in question may also correctly be referred to, as it is by the union, as "core work" in the bargaining unit.

The company states that the decision to contract out the work in question was made because it considered it best to deploy its work force, of which a critical element consisted of Electricians, in such a way as to ensure the completion of certain other work including various rebuilds, general overhauls and modifications, some of which involved substantial work required to be done to comply with orders of the National Transportation Agency. It does not appear that any of these could be described as "make-work" projects, and the company had to make real choices both as to the disposition of its available work force, and as to the hiring of additional staff, the working of considerable overtime or the contracting out of some work. The company states that it decided to give priority to the other work, and to contract out the work in question. No employees were laid off at the time this work was contracted out, those who had been working on the GE traction motors being assigned to other work at Angus within their classification.

The union does not believe the company’s assertion that it was merely "prioritizing" its work. It points to what appears to be a long-term reduction in work done at Angus, and to the transfer – subsequent to the contracting out in question here – of work on GM traction motors – a more substantial volume of work – to Calgary, resulting in a surplus of Electricians at Angus, although the GE traction motor work has not been brought back.

While the removal of the GE traction motor work from Angus may have fitted into some plan of the company’s, it is clear from the material before me that the company did, at the material times, have real choices to make: there was in fact extra work required to be performed, and in my view these were not circumstances in which the company was under some sort of obligation to meet the problem by means of the assignment of overtime. As well, it would seem to me unlikely that much of the other work (most of it, apparently, "specific railway work"), would, as a practical matter, lend itself to being contracted out.

The first question to be determined is whether or not the contracting out in question constituted a violation of Appendix X to the collective agreement, the "Letter on Contracting Out". The material portions of the letter are 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 work presently and normally performed by employees represented by the bargaining agent signatory to the Memorandum of Settlement dated February 19, 1986, 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

(5) the required time 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 the 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 and, in any event, no later than January 31 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 that year. In the event Union representatives are unavailable for such meetings, such unavailability will not delay the implementation of Company plans with respect to contracting out of work for that year.

In addition, the Company will advise the Union representatives involved in writing, as far in advance as practicable, of its intention to contract out work which would have a material and adverse effect on employees. Except in case of emergency, such notice will be no less than 30 days.

Such advice will contain a description of the work to be contracted out; the anticipated duration; the reasons for contracting 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.

The contracting out of work on the GE traction motors was indeed the contracting out of work "presently and normally performed" by members of the bargaining unit. The company, however, contends that the contracting out comes within exceptions 2, 5 and 6 of the Letter on Contracting Out. Exception 2 relates to the availability of qualified employees. I am satisfied, from the material before me, that the qualified active employees at Angus could not have performed all of the work required to be performed without quite substantial overtime being involved. There were no employees then laid off: there were employees who had been laid off from Angus but who had, in the exercise of their seniority rights, gone to work at the Cote St-Luc shops. The company was not required to increase its work force at Angus to accommodate them, and they were not affected by the contracting out. In my view, the contracting out did come within the scope of exception 2.

It is my view as well, for reasons similar to those outlined above, that this case came within exception 5. It is not necessary to elaborate on this, nor to decide whether or not the case came within exception 6 (although I consider that to be quite doubtful), given that the company is not prohibited from contracting out if it can show that the case comes within any of the exceptions set out in the letter.

For the foregoing reasons, it is my conclusion that the contracting out in question did not, at the time it was first done, constitute a violation of the collective agreement.

The second question to be determined is whether or not the company was, in the circumstances, obliged to give notice pursuant to article 8.1 of the Job Security Agreement. That article provides as follows:

The Company will not put into effect any technological, operational or organizational change of a permanent nature which will have adverse effects on employees without giving as much advance notice as possible to the General Chairman representing such employees or such other officer as may be named, by the Union concerned, to receive such notices. In any event, not less than three months’ notice shall be given, with a full description thereof and with appropriate details as to the consequent changes in working conditions and the expected number of employees who would be adversely affected.

In my view, this provision was not applicable in the instant case. The company’s contention was that if there was an organizational change, it was not one having adverse effects on employees, as none was laid off. The union contended that there were adverse effects, as the employees who had been working on the GE traction motors lost "preferred jobs", but such an argument could be made with respect to virtually any change of job assignment to one which an employee found less to his liking. In my view, it is the general interest in security of employment within a classification which is protected by article 8, and in fact that interest was not adversely affected by this particular contracting out.

Accordingly, it is my conclusion that there was no violation of the Job Security Agreement In the circumstances of this case.

Although the union contended that the company’s real intention was that the contracting out be permanent, the company did not put the matter on that basis. In this respect, it may be noted that the advice given the union on July 14, 1988 pursuant to the Letter on Contracting Out did not make any explicit statement as to the anticipated duration of the contracting out. It was simply stated that,

With the changing emphasis of priorities within the locomotive-work plan due to the large number of outstanding modifications, it has become necessary for us to deploy the existing work force to meet these requirements.

While I think the company should be taken at its word in respect of that deployment of the work force, it must also keep its contractual word, and must remember that the proper (as I find) contracting out of the GE traction motor work to meet the exigencies of the situation which has been described above does not relieve it for all time of its obligation with respect to such work under Appendix X. The work in question remains work which, as of the date on which Appendix X speaks, was "presently and normally performed" by employees in the bargaining unit, and to the extent the company requires such work to be done its obligation is, throughout the term of the collective agreement, to have that work done by such employees, except where one of the exceptions to Appendix X applies. Since the time of the grievance, other changes, which are not the subject of the instant grievance, have resulted in there being, according to the evidence, a surplus of Electricians at Angus Shops. In such circumstances, the conditions which would bring the contracting out (which apparently continues) within the scope of the exceptions to the general prohibition in Appendix X no longer obtain. While I would not consider that particular jobs which had been contracted out should be returned to Angus before completion, the work, as a general matter, should be returned there to be performed by members of the bargaining unit.

If this were not done, the conclusion to be drawn would have to be that subsequent events had shown that there had indeed been an organizational change of a permanent nature having adverse effects on employees. No proper article 8 notice having been given, the company would be liable to the employees in respect of violation of the article, having put the change into effect. In my view, however, the matter is better viewed as involving a violation of Appendix X in respect of the period following the time at which a surplus of Electricians arose. Employees who suffered loss of earnings as a result would, I think, be entitled to compensation.

The particular case before me relates to the initial contracting out of the GE traction motor work, and not to its continuation. For the reasons I have given, that particular contracting out came within exception 2 to Appendix X, and did not call for an article 8 notice. Accordingly, although I have indicated my view as to the subsequent situation, the present grievance must be dismissed.

DATED AT TORONTO, this 17th day of March, 1989.

(signed) J. F. W. Weatherill