(the "Company")

- and -

(the "Association")

SOLE ARBITRATOR: Michel G. Picher

A hearing in this matter was held in Montreal on November 13 and 22, 1989.

The material facts are not in dispute. As a result of the abolition of their positions in the Moncton Main Shops the nine junior machinists were compelled to exercise their seniority in accordance with Rule 23 and Item 4 of Appendix IV of the collective agreement. Given the importance of the issue at hand it is useful to reproduce those provisions, in part:

Appendix IV contains, in part, the following:

It is common ground that there are two seniority terminals at Moncton: Moncton Main Shop and Moncton Line Points. In accordance with the provisions of Appendix IV, employees are required to displace between the two home seniority terminals at Moncton before displacing at other locations when there are reductions in staff. Under Rule 23.17(a), an employee who is laid off from his or her home seniority terminal may elect to take laid-off status at the home seniority terminal. Alternatively, within thirty calendar days he or she may displace the junior employee in the same classification within the geographic area defined in Appendix "A" of the Employment Security and Income Maintenance Plan (ESIMP). Should an employee be unable to displace a junior employee within his or her plan eligibility territory, the choice then becomes to elect laid-off status, with a right to receive supplementary unemployment benefits under article 4 of the ESIMP or, alternatively, to displace onto the larger basic seniority territory pursuant to Rule 23.17(b). In the case of Moncton, however, in accordance with item 4(a) of Appendix IV, employees at Moncton are required to displace the junior employee in their classification at the other seniority terminal in Moncton before they are entitled to exercise displacement rights elsewhere. Essentially, the scheme provided under the collective agreement contemplates a laid-off employee exercising his or her seniority against junior employees in a geographic area of wider and wider concentric circles, the outside limit of which is the Region.

An understanding of this dispute requires some appreciation of the provisions of the ESIMP. Executed in March 1, 1986, to replace a supplemental agreement of November 16, 1964 establishing a job security program, the ESIMP provides wide-ranging protections for employees adversely affected by technological, operational and organizational changes. The following articles of the ESIMP are pertinent to the resolution of this grievance:

It may further be noted that Articles 8.4 through 8.6 of the ESIMP provide for a process of negotiation between the parties for minimizing adverse effects of technological, operational and organizational changes on employees, including adjustments relating to the exercise of seniority rights. Should they be unable to agree in that regard, the plan provides for mediation through a bipartite Board of Review and further appeal to arbitration. It does not appear disputed, however, that the instant grievance is filed pursuant to Rule 29 of collective 12.32 and has been duly progressed before the Arbitrator.

The material discloses that when the grievors were required to exercise their seniority because of the abolishing of their positions, nine junior machinists at Gordon Yard in Moncton were on what the Company has termed "employment security status". As a result of an earlier article 8 notice under the ESIMP those employees, because of their limited seniority, were unable to fill any positions pursuant to articles 7.3 and 7.4 of the Plan. As a result, because they had more than eight years service and enjoyed employment security, they were not subjected to layoff. They remained attached to their home seniority terminal in Moncton but did not hold positions with an assigned shift or any regular working hours or days off. In essence, they remain idle, subject to being assigned work by the Company, while receiving wages and benefits. It appears to be common ground that they are liable to forfeit their employment security status if they decline to exercise their seniority to fill any position which might subsequently become available to them by the operation of articles 7.3 and 7.4 of the Plan.

The employees whose positions were abolished at the Moncton Main Shop are senior to the nine employees who have employment status at Gordon Yard, within the Moncton Line Points Seniority Terminal. It is agreed that that location is the first stop for displacement by employees whose positions are abolished at the Moncton Main Shop. The Union asserts that the grievors were entitled to "displace" the nine junior employees who were on employment security status at Gordon Yard. In other words, it submits that they are entitled to assume the same status, and are not required to go through the successive displacement options contained in article 7 of the ESIMP. The Union argues for a straight-forward application of the normal displacement provisions found within Rule 23 and Article 4 of Appendix IV of the collective agreement. The Company, on the other hand, maintains that it was not open to the grievor’s to gain employment security status by purportedly "bumping" the nine junior employees who were themselves protected by employment security status at Gordon Yard. It maintains that the grievors are required to exercise their seniority through the full range of options described in article 7 of the ESIMP, up to and including the requirement to take positions elsewhere on the Region if their seniority should allow. In light of the position taken by the Company, displacement to Halifax was the result for the nine grievors. The Union submits that it is unreasonable for senior employees to be required to displace to another location while junior employees remain at Moncton, without assigned work, and on full salary with employment security status.

There is little real conflict between the parties as to the obligations of an employee who has achieved employment security and whose regular job assignment is abolished. He or she is deemed "affected" by a notice of change issued pursuant to Article 8.1 of the Plan and must exercise seniority rights in accordance with the terms of the collective agreement. The complexity of the displacement provisions which operate both under the collective agreement and the Employment Security and Income Maintenance Plan need not be examined in detail for the purposes of this Award. By way of background, however, they are usefully described in the following excerpt from the brief filed by the Company:

1. Article 7.1 of The Plan provides employees with "Employment Security" when they have completed 8 years of Cumulative Compensated Service (C.C.S.) with the Company. C.C.S. is a term defined at the beginning of The Plan.
2. Article 7.2 of The Plan provides that employees having "Employment Security" will not be subjected to a layoff as the result of a change introduced through the application of Article 8.1 of The Plan.
3. Article 7.3 of The Plan requires employees affected by an Article 8 notice to exercise maximum seniority rights within all classifications equal or lower than their present classification under their own collective agreement, within their basic seniority territory, in order to retain their entitlements to "Employment Security". An employee with Employment Security who remains unable to obtain a position is then covered by Article 7.4 of The Plan.
4. Article 7.4 of The Plan provides employees, who cannot obtain any position on their basic seniority territory pursuant to Article 7.3, the right and obligation to seek unfilled permanent vacancies in other bargaining units within and outside of their own union on the same basic seniority territory, before being required to exercise seniority rights beyond their basic seniority territory to the Region. The specific sequence in which this must occur is clearly defined in Article 7.4.
5. Should no permanent vacancies covered by Article 7.4 be available within the geographic area of their basic seniority territory the employees are then required to take other positions within the entire Region in the specific sequence defined within Article 7.4.
6. As long as no position is available under the terms of Articles 7.3 and 7.4 the employee remains protected against layoff by virtue of Article 7.2 and the employee then draws the benefits of "Employment Security". However, failure to follow any steps of the required procedure causes the employee to forfeit "Employment Security" as stipulated in Article 7.6 and the employee then assumes laid off status which has its own specific benefits.
7. While receiving the benefits of Employment Security, employees do not have positions with an assigned shift, assigned working hours and assigned days off.

The instant dispute turns on the status of employees who have, after the application of all of the displacement provisions described above, been unable to obtain any position or job with an assigned shift and working hours. It is common ground that those employees, insofar as they retain "employment security status" remain at the same location, drawing full salary and benefits. In the same manner as employees who are at work, they are subject to all terms of the collective agreement, including the deduction of union dues, and have the benefit of whatever increases in salary or improvements in benefits may accrue from year to year, indefinitely so long as they retain employment security status. Individuals in that position are plainly not laid off, as is reflected by the language of article 7.2 of the ESIMP. There would, moreover, appear to be nothing to prevent the Company from requiring the employees in question to attend at work on such days and for such hours, however irregular and sporadic they may be, as actual work might become available for them to perform. They are, in other words, employees who remain at the disposal of the employer, and may be called to work on an "as needed" basis. In the Arbitrator’s view the junior employees who are on employment security status at Gordon Yard can be said, in a general sense, to retain positions of employment which are plainly to be distinguished from the situation of employees on layoff.

The issue raised by this grievance is whether employees who do not hold a regular position or job assignment, and to have the protections of employment security, can be displaced by senior employees under Rule 23. Before turning to the provisions of that rule, however, it is useful to consider the general view of displacement rights as reflected in the arbitral jurisprudence. Collective agreements in Canada normally contain provisions whereby employees whose jobs are abolished may exercise seniority rights to displace junior employees out of their positions, causing a ripple effect whereby junior employees, rather than senior employees become the first to feel the full impact of reductions in jobs. The process as it is generally known is well described in the following passage from Brown and Beatty in Canadian Labour Arbitration (3rd ed.) at p.6-22:

As is evident from the foregoing passage the normal expectation is that employees exercising their seniority do so in respect of jobs or positions among the active workforce which itself remains unaffected by the reduction in work. While it is common to speak of one employee displacing another, it is arguably more accurate to say that bumping generally involves a senior employee claiming the job or position of a junior employee, as a result of which the latter is displaced and must, in turn, exercise his or her seniority rights to claim an alternate position or face layoff, as the case may be. By the same token, it is not normal to speak in terms of displacement among employees who do not themselves hold active positions or jobs on an employer’s payroll. When a senior employee joins other junior employees on layoff he or she is not said to bump or displace the junior employees on the recall list, even though the senior may have a prior right of recall. Generally speaking, therefore, the words bumping and displacement are normally associated with an employee’s right, usually on the basis of seniority, to claim a job or position within an employer’s active workforce.

The instant case raises the apparently unprecedented question of whether employees who do not have jobs, but who enjoy employment security protection in the form of continuing wages and benefits, can themselves be "displaced" by senior employees whose jobs are abolished. The issue is one of concern to the Union to the extent that the Company’s interpretation of the Employment Security Provisions results in senior employees being required to relocate to claim active positions while junior employees who are not actively at work retain full wages and benefits at their home terminal. The income security system so administered gives what the Union views as an apparently greater protection to the junior employee over the senior. This the Union views as counter to the most fundamental precepts of seniority.

As understandable as the Union’s position may be, it is the terms of the parties’ agreement, and the intention of the document which they have fashioned, which must determine the outcome. A review of the terms of both the Employment Security and Income Maintenance Plan and the collective agreement leaves the Arbitrator in substantial doubt with respect to the merits of the Union’s position. The triggering article in respect of employment security rights is article 8.1 of the ESIMP. It is under that provision that the Company issues a notice of operational or organizational change which will adversely affect employees. It in turn brings to bear the operation of Article 7.3. It requires an employee affected by the notice "... to exercise his maximum seniority right(s), ... in accordance with the terms of the collective agreement ...". Article 7.4 of the Plan then speaks in respect of an employee "... unable to hold a position on his basic seniority territory..." being required to exercise a number of options "... provided he is qualified or can be qualified in a reasonable period of time to fill the position involved ...". Article 7.4 goes on to describe a number of options available to the affected employee, including the possibility of filling a number of vacancies within the Company. The Article includes the note that the Company undertakes to make "such positions" available to the employee. Importantly, Article 7.6 provides that an employee who does not comply with the requirements of Article 7 of the ESIMP will lose his or her employment security. Lastly, there is a clear indication that the parties contemplated that there would be certain anomalies touching seniority emerging with respect to the implementation of the system of displacement established under the ESIMP. Article 7.8 which bears repeating, specifically provides as follows:

The foregoing provision indicates, in the Arbitrator’s view, that the parties were aware that the operation of the provisions of Article 7 of the ESIMP could produce anomalous results out of keeping with normal seniority rules, by reason of which they expressly allowed for the negotiation of revised seniority rules to enhance employment opportunities for employees under the Plan.

Apart from the ESIMP, the terms of the collective agreement are also crafted in anticipation of employees exercising displacement rights in respect of active jobs. Rule 23.14 of the collective agreement provides, in part, as follows:

While Rules 23.17 and 23.18 generally describe the pecking order of displacement through the exercise of seniority in terms of senior employees displacing junior employees, the overall intention of the rule is that senior employees assume active jobs or positions by the exercise of their rights. That is reflected in the language of Rule 23.29 which, speaks more directly in terms of positions being claimed:

In the Arbitrator’s view the provisions of the ESIMP, as well as of the collective agreement reviewed above are generally more consistent with the concept of displacement advanced by the Company, than with the position of the Union. Employees in the position of the nine junior employees at Moncton, albeit they enjoy employment security protection, do not hold jobs or positions as those terms are understood within the collective agreement. They have no assigned shift, department or supervisor and cannot point to any set of qualifications, job description or other bundle of regular obligations associated with a job or position. By all practical standards they are persons without a job who have an obligation to perform such odd assignments as may present themselves from time to time, and who must abide by the rules of the Employment Security and Income Maintenance Plan, who nevertheless continue to receive full wages and benefits. They are, needless to say, in that unique position because they do not have sufficient seniority to displace into an active bargaining unit position. That would remain the case even if they were notionally "displaced" by the grievors in this case. The effect would be that twice as many employees at Moncton would assume employment security status. The curious result would be that the grievors, who have the seniority to claim positions outside Moncton in accordance with Rule 23, will not be required to do so, and will remain inactive at their home terminal. That, in the Arbitrator’s view, is not what is contemplated either by the Employment Security and Income Maintenance Plan or, by extension, the provisions of Rule 23 of the collective agreement.

The underlying expectation of these documents is that, in keeping with generally accepted practice under Canadian collective agreements, senior employees are provided the opportunity to remain in active employment longer than their junior counterparts, and that in exchange for that right they are under an obligation to exercise their seniority rights in respect of a widening circle of positions or vacancies for which they are qualified. As the provisions above reflect, qualification is an important component in the displacement process under the collective agreement and the ESIMP. Needless to say, qualification has little bearing on the displacement of persons who are themselves performing no regularly assigned work.

On the whole, while the Arbitrator may understand the concerns which motivate the grievance, the more compelling conclusion is that employees who assume employment security status by reason of the abolition of their regular positions are not employees who can be displaced within the meaning of Article 7 of the Employment Security Income Maintenance Plan or of Rule 23 of the collective agreement. Any perceived anomalies which may result from the application of these provisions are subject to correction through bargaining and not through grievance arbitration.

For the foregoing the grievance must be dismissed.

DATED at Toronto this 7th day of December, 1989.

Arbitrator