SHP 331



Ontario Northland Railway


National Automobile Aerospace and Agricultural Implement Workers Union of Canada


International Association of Machinists and Aerospace Workers





There appeared on behalf of the UnionS:

Brian Stevens President, Local 103, National Automobile Aerospace and Agricultural Implement Workers Union of Canada

Michael Pilon Vice-President, Local 103, National Automobile Aerospace and Agricultural Implement Workers Union of Canada

R.S. Barker Regional Chairman, Lodge 413, International Association of Machinists and Aerospace Workers


There appeared on behalf of the Company:

M. J. Restoule Labour Relations Assistant


A hearing in this matter was held in North Bay, Ontario on November 5, 1990.



The Dispute and Statement of Fact and Issue tabled by the Company at the hearing is as follows:


The serving of notice under Article 8.1 of the Employment Security and Income Maintenance Agreement.

Statement of Fact and Issue:

At a meeting between Company officers and representatives of the Brotherhood Railway Carmen of Canada and International Association of Machinists and Aerospace Workers held on December 12, 1989, the Unions were advised of the numbers of positions in the Car Department and the Motive Power Department that would be abolished as a result of the loss of rail traffic caused by the decision of Dofasco Incorporated to close its two mines at Temagami and Kirkland Lake. At the meeting the Company advised the Unions that it would not issue formal notice under Article 8.1 of the Employment Security and Income Maintenance Plan.

The Brotherhood did not agree with the Company's position and maintained throughout the grievance procedure that notice under Article 8.1 was required.

The Company does not agree and has declined to issue the notice.


The material facts are not in dispute. For a number of years the Company has operated ore train service to Dofasco mine locations known as the Sherman and Adams Mines located near Temagami and Kirkland Lake respectively. The service was important to the Company, constituting some 50 percent of its freight tonnage. The decision announced by Dofasco that it would close its two mines effective March 31, 1990 meant a substantial loss in freight revenues to the Company, in consequence of which it found itself obligated to eliminate some 120 management and union positions. Among those were some 10 positions in the Carmen's Union and eight in the bargaining unit of the Machinists.

The sole issue is whether the abolishing of these positions was a result of operational or organizational change within the meaning of article 8.1 of the Employment Security Income Maintenance Plan (ESIMP), or was a result of a fluctuation in traffic, an exception provided in article 8.7 of the Plan.

The pertinent provisions of the ESIMP are as follows:

Article 8 Technological, Operational and Organizational Changes

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.


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 fluctuation of traffic or normal seasonal staff adjustments.

In fairness to the parties, it should be noted that while the Company did not apply the terms of article 8.1 of the ESIMP to the employees affected, in fact it did institute discussions which resulted in the offering of a generous package of early retirement benefits which, it is not disputed, were equal to or better than the benefits which might have obtained under the terms of the ESIMP. The Union maintains, however, that it was nevertheless entitled to notice under article 8.1, and that the Company's position, which it submits is in error, deprived it of the opportunity to negotiate fully on behalf of its members and to obtain sufficient information to protect their interests.

A number of prior arbitral awards have considered the question of whether the abolition of positions constitutes an operational change. It has been found, for example, in Canadian Railway Office of Arbitration Case No. 271 that when a customer, on whose behalf the Company maintained an entire classification of employees, ceased using the Company's services, the abolition of the classification constituted an operational change, and not merely the result of fluctuations in traffic or a general decline in business activity. In that case the decision of the Bank of Canada to cease rail currency shipments, which utilized train messengers, caused that classification of employees to be abolished. Arbitrator Weatherill found that what occurred constituted an operational change because, in part: "There was a stop to a certain sort of business, and accordingly, the Company stopped using a certain classification of employee". A similar result was found in CROA 286.

It is clear, however, that the decision of a given customer, even an important one, to reduce or cease operations does not, of itself, constitute the basis on which to conclude that there has been an operational or organizational change within the contemplation of article 8.1 of the ESIMP. In CROA 1634, an arbitration between the Canadian National Railway Company and Brotherhood of Maintenance of Way Employees, the Union claimed that the abolishing of some 112 positions on the Great Lakes Region constituted an operational or organizational change within thesimilar terms of article 8.1 of the ESIMP which governed those parties. The Company pleaded the exception of article 8.7, which is identical in language to the terms of the agreement before me. In that case the facts disclosed that substantial reductions in grain shipments, as well as in ores, metals, minerals, machinery and manufactured goods varied between 29 percent and 8 percent, resulting in a substantial decline in traffic. In dismissing the grievance in that case the Arbitrator made the following comments:

There appears to be little doubt that the Company's action, involving a reduction by approximately 3% of its unionized labour force, was taken as a response to the hard economic realities of the day. The Company's representatives stated to the media at the time that the 6% decline in freight, without any apparent prospect for improvement, gave rise to its action, which was prompted chiefly by dramatic reductions in the shipment of wheat and other agricultural products.

The primary issue becomes whether the circumstances cited by the Company amount to "changes brought about by fluctuation of traffic" within the meaning of Article 8.7 of the Employment Security and Income Maintenance Plan. If it does not, the employees laid off must be compensated for the Company's failure to provide them with the three months' notice contemplated in Article 8.1 of the Plan.

It might be argued that the concept of fluctuations of traffic could refer to predictable short term changes of a relatively finite duration, such as the temporary condition resulting from a grain handlers' strike. However, many years of interpretation of the Employment Security and Income Maintenance Plan by prior boards of arbitration within this office have led to a broader definition. In CROA case #228 five clerical positions were abolished as a result of a curtailment of operations in passenger service between Edmonton and Calgary. The Arbitrator concluded that the actions of the Company were the result of a reduction in passenger traffic between those two points for a period of several years leading up to the Company's decision. That virtually permanent decline in traffic was found to fall within the meaning of a "fluctuation of traffic" then found in Clause 5 of Article 8 of the Plan.

Similarly in CROA case #272, this Office concluded that a general decline in business activity giving rise to a reduction in operations constitutes a fluctuation as contemplated in the Plan. In those circumstances, it was found that the Company was exempted from the obligation to serve a technological, operational or organizational change notice on the Union or the employees affected. Similar interpretations followed in CROA case #423, case #689, and case #316.

How do the principles reviewed above apply to the facts of this case? In the Arbitrator's view what has transpired is a change brought about by a fluctuation of traffic. While the loss of freight volume is substantial as a percentage of the Company's overall business, whether what occurred is or is not a fluctuation cannot depend on whether it was large or small. As noted in CROA 277, a general decline in business activity giving rise to a reduction in operations amounts to a fluctuation within the terms of article 8.7. That, in my view, is what transpired in relation to the discontinuance of the Dofasco ore train service.

The facts of this case are, moreover, to be distinguished from those of CROA 271. It cannot be said that the cancellation of the ore trains has resulted in the Company ceasing to use a certain classification of employees. On the contrary, employees in the Carmen and Machinists trades, includIng helpers, performed work in respect of ore trains substantially similar to that which they perform in relation to other types of trains and train equipment The evidence does not disclose, for example, that a particular shop or department has been discontinued because of the cancellation of the ore trains, or that any particular classification of employees in either the Carmens' or Machinists' bargaining unit has been abolished. Rather, the material before the Arbitrator discloses that there has been a general application of a reduction in forces among these trades because of an overall reduction in the volume of work available. What is disclosed, therefore, is a reduction of work because of a decline in business within the contemplation of the phrase "fluctuation of traffic" within article 8.7 of the ESIMP, and not an operational or organizational change within the meaning of article 8.1 of the Plan.

For the foregoing reasons the grievance must be dismissed.

DATED at Toronto this 9th day of November, 1990.

(sgd) M. G. Picher