SHP 313

IN THE MATTER OF AN ARBITRATION

BETWEEN

CANADIAN NATIONAL RAILWAY COMPANY

AND

International Association of Machinists and Aerospace Workers

GRIEVANCE RE REQUEST FOR A NOTICE UNDER ARTICLE 8.1 OF THE EMPLOYMENT SECURITY AND INCOME MAINTENANCE PLAN AT HALIFAX, NOVA SCOTIA ON November 11, 1988.

 

 

SOLE ARBITRATOR: M. G. Picher

 

 

There appeared on behalf of the Union:

A. Rosner Executive Secretary, CCRSU

L. Biniaris System General Chairman, IAM & AW

R. Hay Atlantic Region General Chairman, IAM & AW

J. Belliveau Local Chairman, Local Lodge 594, Moncton, IAM & AW

 

 

There appeared on behalf of the Company:

S. A. MacDougald Manager, Labour Relations, Montreal

B. Laidlaw Labour Relations Officer, Montreal

J. R. Ivany Program Supervisor Operations, Moncton

 

A hearing in this matter was held in Montreal on July 5, 1990.

 

AWARD

The Dispute and Joint Statement of Fact filed at the hearing are as follows:

DISPUTE

Claim by the Union that it ought to have received a notice pursuant to Article 8.1 of the Employment Security and Income Maintenance Agreement (The Plan) in connection with the abolishment of 3 Machinist positions at Halifax, Nova Scotia, pursuant to a transfer of passenger-related work from CN to VIA Rail Canada Inc. on November 11, 1988.

JOINT STATEMENT OF FACT

On November 11, 1988, at their own shop facility, VIA took over the passenger maintenance activities which the Company had previously performed at Halifax. On the same date, 23 Machinist positions at the Company's Motive Power Shop at Halifax were abolished and 33 Machinist positions were established at VIA Rail, Halifax.

The Union contends that the abolishment of these 23 Machinist positions was a Technological, Operational or Organizational change and therefore requests that the Company agree that a notice should have been served to the Union pursuant to Article 8.1 of The Plan and that any benefits which would have flowed from such a notice be applied retroactively to the date of the change. The Union agrees that this issuance of a notice under the Special Agreement was appropriate under the circumstances.

The Company contends that the 23 Machinist positions were abolished as a result of the transfer of passenger-related work to VIA specifically covered by Article J.2 and Appendix "B" of the Special Agreement, and that Article 8.1 of The Plan does not apply to this passenger-related change. The Company disagrees with the Union's contentions and has declined the request of the Union. A copy of the Joint Statement is included in Exhibit S.

To the facts related above certain additional information may be added. It is common ground that a number of the machinists employed in the Halifax shops were craftsmen who had been required to exercise their seniority to move from Moncton to Halifax on the closing of the Moncton Main Shops in 1986. When the article J notice issued in respect of the transfer of shopcraft work from CN to VIA on November 11, 1988 a number of the 23 machinists whose positions in CN were abolished declined to transfer into the service of VIA, in consequence of which they became laid off. It does not appear disputed that, as VIA required 33 machinists, by transfecting to VIA all 23 of the machinists affected at Halifax could have secured employment, with all of the protection of the Special Agreement, as well as the Union's collective agreement with VIA, including its Employment Security Income Maintenance Agreement. It seems, however, that for a number of reasons, including a degree of uncertainty, a number of them declined to accept the transfer. As a result, at the time of hearing, some 13 employees remained laid-off from the CN Shops at Halifax.

It is common ground that 11 machinists continued to be employed by the Company at Halifax. It appears, however, that contemporaneous with the transfer of employees to VIA, and the consequent abolition of 23 positions changes were made in the work performed at the Halifax shops. Traditionally two kinds of work were performed there: firstly, the minimal inspection and maintenance of locomotives on all trains coming through Halifax and, secondly, the more substantial repair and maintenance of CN locomotives, which involves more substantial types of repair and service, short of major overhauls. The shops also did a certain amount of wreck repair, on both passenger equipment and freight locomotives of various models and sizes. The more substantial maintenance work also extended to RDC or Railliner units, as well as steam generator units utilized by VIA.

At or about the same time the Company issued the article J notice in respect of the transfer of the Railliner and steam generator work at Fairview, it also implemented other changes in the operation of the Shop. In effect, it ceased the running repair and maintenance work described above, which was done purely in relation to CN locomotive equipment. To that end the shop building itself was closed, in anticipation of its being torn down. In the result only the fighter "trip work" maintenance is done by the machinists retained on complement. Further, it appears that the diesel shop was placed under the authority of the Car Department, rather than the Motive Power Department which normally oversees functioning diesel shops. It is not substantially disputed that the eleven remaining machinists perform work different from what they did prior to the summer and fall of 1988. While they do perform some incidental functions previously done by other trades, they continue to function and be compensated as machinists for the trip work and other maintenance functions which they perform.

The Union does not dispute that it was appropriate for the Company to provide an article J notice under the Special Agreement (referred to as the "Green Book" Agreement) as regards the transfer of passenger equipment service work from the Company to VIA effective November 11, 1988. The Union maintains, however, that what occurred was not only a transfer of work from CN to VIA, but also an operational or organizational change within the meaning of article 8 of the Employment Security Income Maintenance Agreement (ESIMA) separately negotiated between the Company and the Union. That agreement provides some different protections, notably employment security in the event of a layoff, which are not to be found under the Green Book Special Agreement.

The issue of the application of the Special Agreements negotiated between a number of unions and the Company, as well as CP Rail, has been the subject of much arbitral consideration. The genesis and application of the Green Book was canvassed in an arbitration award between VIA Rail Canada Inc. and International Association of Machinists and Aerospace Workers dated December 8, 1989. In that case the Arbitrator accepted the Union's position that the Green Book did not apply in respect of the layoff of Shopcraft employees then employed by VIA Rail. In that circumstance they were found to enjoy the protections of article 8 of the Employment Security Income Maintenance Plan negotiated between VIA and the Union. In reviewing the history and purpose of the Special Agreement the following comments were made at p. 6:

The Railway Passenger Services Adjustment Assistance Regulations have their genesis in the decision taken by the Government of Canada in 1977 to rationalize passenger train service in Canada by establishing VIA Rail Canada Inc. And transferring to it all passenger services previously operated by the Canadian National Railway and the Canadian Pacific Railway. It was anticipated that the transfer of facilities, equipment and staff from CN and CP to VIA Rail would have adverse impacts on employees of CN and CP whose jobs would be affected. On July 7, 1978 a Special Agreement (known as the "Blue Book") was entered into between CN, CP and the predecessor bargaining agent of the Shopcraft unions. As it was not then contemplated that VIA Rail would be performing train equipment maintenance operations other than on a contract basis with the two other railways, that agreement made no provision for the transfer of employees from CN and CP to VIA. It did, however, provide for special assistance to the Shopcraft employees of the two railways who might be affected by the changes made in accordance with the regulations, and made allowance for employees to transfer between CN and CP where passenger related maintenance work was itself transferred between CN and CP by virtue of VIA's contracting arrangements. VIA Rail was not a party to that special agreement, as it was not contemplated that it would itself be employing Shopcraft and maintenance personnel.

In 1985 it was decided that VIA Rail should take over the repair and maintenance of its fleet. This resulted in the transfer of some 1,075 Shopcraft employees from CN to VIA at Toronto and Montreal effective June 28, 1985. Accordingly, a Memorandum of Agreement was entered into between CN, VIA Rail and the Shopcraft unions on May 14th, 1985, providing for benefits and conditions to apply to employees adversely affected by the transfer of the passenger related work from CN to VIA. It specifically addressed the transfer of employees at Toronto and Montreal as well as the less substantial work from Winnipeg and Edmonton to Toronto. That Memorandum expired on June 27, 1988. Meanwhile, in May of 1985, VIA granted voluntary recognition to the Shopcraft bargaining agents of the employees coming from CN, which shortly thereafter matured into certification by order of the Canada Labour Relations Board. Several years later on September 22, 1988 the parties jointly executed a letter of intention to negotiate a special agreement to deal with the contemplated transfer of passenger maintenance activities at Halifax and Winnipeg as well as at such other locations as might later be identified. Subsequently, on October 25, 1988 they executed a Special Agreement, the Agreement here at issue, between CN, VIA Rail and the four Shopcraft Unions. Known as the "Green Book", that Agreement is, according to Article M. 1, to have the following duration and application:

M.1 This Special Agreement shall apply to those changes in Railway Passenger Services made up to and including December 31, 1990 in accordance with Government initiatives introduced pursuant to Railway Passenger Services Adjustment Assistance Regulations.

The cover, as well as the title page of the Green Book, states that it is:

Re: CONDITIONS AND BENEFITS TO APPLY

To employees adversely affected by the transfer of passenger related work from Canadian National Railway Company to VIA Rail Canada Inc., made in accordance with regulations established by order-in-council

The preamble to the Special Agreement further provides:

i) The purpose of this Special Agreement shall be to provide the terms, conditions and benefits for employees adversely affected as intended by Regulations 4, Subsections (a through (i); 5(1)(a) and (b); 5(2); 6(a) and (b) and 7 of the Railway Passenger Services Adjustment Assistance Regulations.

The regulations referred to in the foregoing part of the preamble relate generally to the efforts of the parties to shelter employees from adverse impacts, including retraining, providing assistance in relocation, developing separation plans for early retirement and facilitating the transfer of employees to VIA Rail Canada Inc., among other things. The entire thrust of the regulations as they were initially drafted, as well as Special Agreement or "Green Book" is to minimize the adverse affects on employees arising from the transfer of passenger related maintenance work from CN to VIA. For example, Article A.1 of the Special Agreement speaks of the options to be made available to an employee whose position is abolished or who is displaced and who is unable to hold work under various CN collective agreements or to gain work through the inter-company transfer agreement contained in Article G of the "Green Book". Article B.1 provides for the transfer of unbroken service for an employee moving from CN to VIA, and vice-versa. Other articles of the Agreement deals variously with training, relocation, maintenance of earnings for employees in downgraded positions, separation benefits as well as layoff and severance benefits.

In the same Award the Arbitrator went to consider and accept the argument of the Union that the Special Agreement applied to employees of CN and CP Rail who might be adversely impacted by changes in passenger service, and not to persons already in the employ of VIA. At p.13-14 the following comments were made:

There is consistency in the history of the evolution of the regulation and its interpretation by boards of arbitration, as well as the interpretation of the special agreements made pursuant to it. In virtually all cases the dispute concerns the right of employees impacted by reason of the rationalizing passenger services in Canada through the establishment of VIA Rail and the gradual transfer to it of a number of operations previously conducted by CN or CP, most recently, Shopcraft Maintenance. That is what the Regulation and the Special Agreement have traditionally and consistently addressed and that, in the Arbitrator's view, is what they continue to address.

The present definition of "changes" found within the Regulation would, standing alone, appear to support the position of the Corporation to the effect that the discontinuance of a railway passenger service is, in and of itself, a change which triggers the application of the Special Agreements negotiated pursuant to it. A full appreciation of the scheme of these provisions, however, does not support that view. It is not disputed that there are still employees of CN and CP working within the Shopcrafts whose jobs are substantially dedicated to servicing the needs of VIA Rail. Given that relationship, a unilateral decision by VIA to reduce railway passenger service would obviously have an adverse impact on those employees. While such a decision might not have qualified under the prior definition of "changes", the CN and CP employees concerned would nevertheless be direct victims of the overall scheme of transfer and rationalization of passenger service which commenced in 1977. Because that process continues to affect them, the regulation now defines "changes" in such a way as to afford them and the railways which employ them the fullest protection of the Special Agreements. That is the intent and purpose of the definition of "changes" now found in the Regulation. It was not intended to affect the rights of VIA Rail employees in respect of decisions taken unilaterally by VIA Rail which are unrelated to the process of transfer which the Regulation has always addressed.

While, as related above, maintenance work on passenger equipment was generally transferred from CN and CP Rail shops into the newly established shops of VIA Rail Canada Inc., some passenger maintenance service continued to be performed by employees of CN and CP Rail at various locations in Canada. The Special Agreement remained available to protect those employees who might be negatively impacted by changes in passenger service. In an Award dated April 17, 1990 respecting a grievance between Canadian Pacific Limited and the Brotherhood Carmen of Canada, it was found that an article J notice was appropriate to carmen laid off at Victoria, B.C. and Havelock, Ontario by virtue of the reduction of passenger services at that location following the elimination of certain VIA routes. The Arbitrator concluded that what transpired was not a technological, operational or organizational change within the meaning of article 8 of the Job Security Agreement then in issue. At pp.10-12 of that Award the Arbitrator rejected the Union's contention that an article 8 notice should have issued, reasoning as follows:

8.1 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 considering the application of the foregoing provision it is instructive to have regard to the definition of technological, operational or organizational changes included within the terms of the Job Security Agreement itself, which is as follows:

(1) "Technological, Operational and Organizational Changes" means as follows:

"Technological": the introduction by the employer into his work, undertaking or business of equipment or material of a different nature or kind than that previously utilized by him in the operation of the work, undertaking or business; or

"Operational or Organizational": a change in the manner, method, procedure or organizational structure lay which the employer carries on the work, undertaking or business not directly related to the introduction of equipment or material provided that any such change is not brought about by:

(i) a permanent decrease in the volume of traffic outside of the control of the company; or

(ii) a normal reassignment of duties arising out of the nature of the work in which the employee is engaged; or

(iii) a normal seasonal staff adjustment.

Any permanent shutdown or permanent partial shutdown of an operation, facility or installation, shall be considered as a Technological, Operational or Organizational change. Any permanent Company-initiated changes (excluding changes which are brought about by general economic conditions) which result from the reduction or elimination of excess plant capacity shall be considered as Technological, Operational or Organizational changes.

As the foregoing provisions indicate, technological, operational and organizational changes are intended to mean changes which are, generally speaking, within the control or discretion of the Company. Changes which are a result of external economic conditions which are outside the control of the Company are not deemed technological, operational or organizational changes for the purposes of the Job Security Agreement.

What does the instant case reveal? For reasons beyond the control of the Company, Via Rail Canada Inc. decided to cancel its passenger operations between Victoria and Courtenay, B.C. as well as between Toronto and Havelock, Ontario. As a result of that decision the Company, CP Rail, was no longer called upon to provide carmen's services for passenger equipment at Victoria and Havelock. It is the resulting less of work which gave rise to the notice under the Special Agreement which is the subject of this grievance. In the Arbitrator's view that notice should not have issued under the terms of the Job Security Agreement because it did not constitute a technological, operational and organizational change implemented by CP Rail, as contemplated by the terms of the Job Security Agreement.

For these reasons I cannot sustain the alternative position of the Brotherhood that it was entitled to receive notice under the terms of the Job Security Agreement in the circumstances.

This case does not, of course, concern the impact of the reduction or elimination of passenger rail services at Halifax. It is common ground, however, that following the transfer of shopcraft work from CN to VIA at that location the VIA shops were closed as a result of the ensuing cut-back in passenger services. It may be emphasized, however, that for the reasons stated in the Award between VIA Rail Canada Inc. and the Union dated December 8, 1989, shopcraft employees who transferred from CN to VIA, retained the fill protections of the ESIMA negotiated between the Union and VIA. Those protections came into effect insofar as the reductions in passenger organizational changes instituted by VIA Rail Canada Inc.

It is not disputed that in the instant case an article J notice was appropriate. The sole issue to be resolved is whether a separate notice under article 8 of the ESIMA should have issued in respect of the transfer of the maintenance of passenger equipment at Halifax. There can be no doubt that the transfer of the passenger maintenance work from CN to VIA meant a change within CN insofar as work which it previously did would no longer be available to it. However, the mere fact of change resulting in the abolition of jobs does not, of itself, establish that what has occurred is an operational or organizational change within the meaning of the ESIMA. The meaning of operational and organizational change is articulated in article 8.7 of the ESIMA which is as follows:

8.7 The terms operational and organizational change shall not include normal reassignment of duties arising out of the nature of the work in which the employees are engaged nor to changes brought about by fluctuations of traffic or normal seasonal staff adjustments. Any permanent shutdown or permanent partial shutdown of an operation, facility or installation, shall be considered as a Technological, Operational or Organizational change. Any permanent Company-initiated changes,(excluding changes which are brought about by general economic conditions) which result from the reduction or elimination of excess plant capacity shall also be considered as Technological, Operational or Organizational changes.

The material establishes that both before and after November 11, 1988 the Company maintained locomotive service operations at Halifax. With the notice issued under article J of the Special Agreement it ceased to perform service on passenger equipment at that location. It continued, however, to service freight equipment at Halifax. As noted above, the servicing of freight locomotives has undergone a change. The running repairs of CN locomotives previously performed at that location are no longer done. Insofar as freight work is concerned, Halifax has therefore been reduced to a centre providing only "trip work" rather than the fuller range of running repairs and maintenance. I am satisfied that that change would constitute an operational or organizational change within the meaning of the ESIMA insofar as it would represent a shutdown or partial shutdown of an operation. However, what the evidence before me does not disclose, is that this aspect of the changes implemented at Halifax has adversely impacted on any employees. Specifically, there is no evidence before me to prove that any employee at Halifax has lost employment or employment opportunities because of the reduction of freight service work previously performed at Halifax. The unrebutted position of the company is that the work in question would previously have been done by 11 machinists, all of whom have been retained on complement.

The thrust of the Union's grievance is that the transfer of passenger equipment work to VIA is itself an operational or organizational change within the meaning of article 8 of the ESIMA. I find myself unable to sustain that submission. The parties before the Arbitrator are signatories of both the Special Agreement and the ESIMA. In my view these documents should, as a general matter, be interpreted as a rational and complementary whole. Without necessarily rejecting or sustaining the Union's position that some circumstances may fall under both agreements, I cannot find that that would be so in the instant case. CN and VIA are separate legal entities and have been so recognized by the Union itself, insofar as it has negotiated separate because of the sometimes interconnected activities of these two Crown corporations, an initiative of VIA must be viewed as an initiative of CN for the purposes of establishing an operational or organizational change by the latter company.

In this case what has transpired, in essence, is that CN lost the maintenance contract of the chief consumer of its Shopcraft services at Halifax. Notwithstanding what may have been said in CROA 286 and 271, with the greatest respect, I cannot conclude that the loss of a customer, however major, of itself constitutes an operational or organizational change within the meaning of article 8 of the ESIMA. If that loss standing alone resulted in the permanent shutdown or permanent partial shutdown of an operation, facility or installation, the provision of article 8 of the ESIMA would operate. A careful examination of the facts in the instant case, however, does not sustain such a conclusion. The 23 machinists' positions lost at Halifax are clearly traceable to the elimination of the passenger equipment service work. That fact stands on its own, and is causally unrelated to the changes in freight locomotive equipment service work which were being implemented simultaneously.

The employees who were affected by the article J notice issued by the Company, on whose behalf this grievance is brought, had a choice. They could have transferred to VIA, in which case their employment security would have been guaranteed under the terms of the ESIMA negotiated between VIA and the Union. Alternatively, as they did, they could take layoff, retaining their seniority and rights of recall within CN. Their motives for making either choice cannot have any bearing on their substantive rights. With respect to those who elected to remain within CN, and to take layoff, they can only succeed in claiming employment security under the ESIMA negotiated with CN if it can be established that they are adversely affected by an operational or organizational change implemented by the Company. For the reasons related above, that is not established on the evidence before me. On the material before me I must conclude, on the balance of probabilities, that the number of freight service work opportunities has remained constant at Halifax, notwithstanding the elimination of running maintenance work at that location. To that extent, therefore, no adverse effects are shown as regards the employees who elected to take layoff rather than transfer to service with VIA following the article J notice.

For the foregoing reasons the Arbitrator cannot sustain the position of the Union that the abolishment of the 23 machinist positions in respect of the article J notice of November 11, 1988 constituted a technological, operational or organizational change implemented by CN within the meaning of article 8 of ESIMA. For these reasons the grievance must be dismissed.

DATED at Toronto this 19th day of July, 1990.

(sgd) M. G. Picher

Arbitrator