SHP - 380




(the "Company")




(the "Union")






Abe Rosner


Alain deMontigny





This is the arbitration of a dispute relating to the payment of bargaining unit employees who have returned from positions as supervisors upon the closure of a Company facility. The Dispute, Joint Statement of Fact and Joint Statement of Issue, filed with the arbitrator, are as follows:


A dispute between the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers & Helpers and CP Rail concerning the application of Rule 32 ("Rates of Pay") to Boilermakers M. Plante, R. Morin and R. Breton.


On March 19, 1992, Messrs. Michel Plante, Roger Morin and Robert Breton returned to the bargaining unit from the supervisory ranks, pursuant to the provisions of Wage Agreement No. 52.4, following the closure of the Angus Shops in Montreal. They have been employed as Boilermakers since that date.


The Union maintains that the three employees in question have continued to receive the same rate of pay while working as Boilermakers as they did previously while working as Supervisors. As this constitutes a higher rate of pay than that set out in Rule 32 of the collective agreement, the Union contends that the Company is in violation of said Rule. The Union requests that the compensation of the three employees be reduced to that set out in Rule 32 for Boilermakers, and that this be done retroactively to the date of the filing of the grievance, including repayment to the Company of the overpayment.

The Company denies any violation of Rule 32 of the collective agreement and denies the Union’s request.

The material before the arbitrator establishes that former supervisors Breton and Morin held supervisor positions following promotion from the boilermaker’s craft. Mr. Plante, it appears, was promoted to the rank of supervisor having worked as a blacksmith. All three held permanent supervisor positions at Angus Shops, in Montreal, which ceased operations on February 3, 1992.

The three individuals retained their seniority in the bargaining unit by the application of Rule 23.27.1 of the collective agreement which provides as follows:

23.27.1 An employee who on June 25, 1989, is filling an official or any position with the Railway which is excepted from any provision of this or any other Collective Agreement, will have his name continued on the seniority list of the group from which promoted at his home seniority terminal and will retain seniority rights and continue to accumulate seniority while so employed. The General Chairman shall be advised.

The three supervisors were released from their positions effective March 19, 1992 and thereafter exercised their right to return to the bargaining unit in conformity with Rule 23.27.3 which reads:

23.27.3 If released from such official or excepted position, the employee must within 30 days after such release, either displace the junior employee in his seniority group on his basic seniority territory or exercise his seniority to a vacancy or a newly created position at his home seniority terminal; if he fails to do so he shall forfeit his seniority. The General Chairman shall be advised.

Pursuant to an agreement made between the Company and the Union, along with a number of other unions, dated March 18, 1992, Messrs. Morin, Breton and Plante assumed positions in the bargaining unit at St. Luc Diesel Shop on March 19, 1992. From that point, apparently without the knowledge of the Union, the Company continued to pay the three individuals the same rate of salary which they had received as supervisors. They were not paid in accordance with the rates of pay for boilermakers and blacksmiths provided for in rule 32 of the collective agreement.

The Union submits that the individualized treatment of the three former supervisors is contrary to the terms of the collective agreement, and that they must be paid in accordance with the wage rates agreed therein. The Company argues that the former supervisors are to be treated as employees who fall within the terms of the collective agreement, of the Special Agreement of February 3, 1992 (the Angus Shops Special Agreement) negotiated in respect of employees affected by the closure of Angus Shops and by the terms of the Job Security Agreement between the parties. Specifically, it asserts that they are entitled to the benefits of article 8 of the Job Security Agreement, which provides for the maintenance, for a time, of basic rates of pay for employees adversely affected by a technological, operational or organizational change. On that basis, the Company submits that the individuals concerned have been paid in accordance with the agreements between the Company and the Union. Alternatively, it submits that it is entitled to maintain the rates of payment for the former supervisors in accordance with the terms and conditions contained in a management policy whereby supervisors returning to Union ranks are given maintenance of basic rates, provided that the Company does not wish to retain them within the supervisory ranks.

It is clear from the material before the arbitrator that the Union does not advance this grievance out of ill will for the former supervisors, or out of a desire to frustrate their earnings. As its representative submits, the Union has a legitimate interest to protect, to the extent that the job security of its rank and file members may be placed in jeopardy by the actions of the Company. He notes that if Rule 32 of the collective agreement is to be applied in the manner asserted by the Company in the case at hand, with individualized rates of pay to be assured to supervisors who return to the ranks, without any loss of income, the job security of bargaining unit members may be negatively impacted in the future. The Union stresses, for example, that in light of recently announced plans of the Company to eliminate a substantial number of managerial and supervisory positions elsewhere in its system, the policy of offering maintenance of rates to supervisors returning to the bargaining unit will substantially encourage their moving in that direction, causing the displacement or lay-off of bargaining unit employees. That outcome would, arguably, be avoided, or at least minimized, if redundant supervisors were encouraged to pursue other options, such as taking layoff or early retirement. On that basis, the Union expresses the concern that the policy applied by the Company in the case at hand risks undermining the long term job security of bargaining unit members. However, it is obviously not the result of the Company’s actions which must determine their legitimacy for the purposes of this arbitration. If, upon a review of the agreements between the Company and the Union, it should appear that the actions taken by the Company are within the contemplation of the parties’ agreements, its actions must be sustained, whatever their impact.

I turn to consider the merits of the dispute. Before examining the terms of the parties’ agreements, it is useful to reflect upon certain first principles of collective bargaining. It is well established that under a collective bargaining regime, there is no place for the individualized negotiation of terms and conditions of employment between an employer and an employee who is represented by a trade union as his or her exclusive bargaining agent. That fundamental principle was expressed as follows by the Supreme Court of Canada in Le Syndicat Catholique des Employés de Magasins de Québec, Inc. v. La Compagnie Paquet Ltée., 59 CLLC 15,409 at p. 935:


The Union is, by virtue of its incorporation under the Professional Syndicates’ Act and its certification under the Labour Relations Act, the representative of all the employees in the unit for the purpose of negotiating the labour agreement. There is no room left for private negotiation between employer and employee. Certainly to the extent of the matters covered by the collective agreement, freedom of contract between master and individual servant is abrogated. The collective agreement tells the employer on what terms he must in the future conduct his master and servant relations. When this collective agreement was made, it then became the duty of the employer to modify his contracts of employment in accordance with its terms so far as the inclusion of those terms is authorized by the governing statutes. The terms of employment are defined for all employees, and whether or not they are members of the Union, they are identical for all.

(See also Re International Chemical Workers Union and Chemical Developments of Canada Ltd. (1968), 19 L.A.C. 302 (Weatherill); Re Printing Specialties and Paper Products Union, Local 512 and Union Carbide Canada Ltd. (1970), 22 L.A.C. 194 (O’Shea); and Re County of Ponoko No. 3 and CUPE Local 1855 (1976), 13 L.A.C. (2d) 199 (Laux)).

As a matter of general principle, therefore, it is not open to the Company to pay to employees working within the bargaining unit wages in excess of those provided for within the terms of the collective agreement, or any other special agreement negotiated between the Company and the Union, unless it does so with the express approval of the Union. The issue therefore becomes whether the collective agreement, the Angus shops Special Agreement or the Job Security Agreement negotiated between the Company and the Union can be said to reflect any such consent. For the reasons expressed in the La Compagnie Paquet Ltée. case, the existence of a unilateral Company policy in relation to the payment of former supervisors cannot, of itself, prevail over the governing law and labour relations policy reflected in the cases cited above.

The first position argued by the Company is that the three former supervisors are "employees" within the contemplation of the Angus Shops Special Agreement of February 3, 1992. In support of that position, it advances the definition of "eligible employee" contained in that document, which is as follows:

Eligible Employee: means an employee who has completed eight (8) years of cumulative compensated service on or before February 3, 1992, and who is entitled to Employment Security pursuant to Article 7 of the Job Security Agreement.

The Company asserts that as the three former supervisors have more than eight years of cumulative compensated service, upon exercising their seniority rights, pursuant to Rule 23.27.3 of the collective agreement, they became eligible employees as defined in the Special Agreement. The arbitrator has some difficulty with that submission. The term "employee" found within a collective agreement is generally intended to refer to those persons who fall within a defined bargaining unit, and can be said to be "employees" for the purposes of the collective agreement, or of the labour relations statute which governs that agreement. In that sense, employees are to be distinguished from supervisory or non-unionized staff who do not fall under a collective agreement or who may fall under another collective agreement (See SHP 243). From that perspective, the definition of "eligible" employee contained within the Special Agreement is best understood as a definition which differentiates between those employees in the bargaining unit who are eligible for the protections of the Special Agreement, and those employees in the bargaining unit who are not.

That conclusion is further supported when regard is had to article 1 of the Special Agreement, which more specifically addresses the issue of entitlement. Article 1.1 of the Agreement provides as follows:


1.1 Unless otherwise provided to the contrary, the benefits and other conditions contained in this Special Agreement will only be available to Eligible Employees holding a permanent position on the day preceding the Atlantic Region Mechanical Reductions, and who meet one of the criteria identified in Article 1.2 herein, and are within the geographic area of the former Atlantic Region.

NOTE: An employee absent from the workforce on the day preceding the Atlantic Region Mechanical Reductions due to annual vacation, illness, a work related injury for which he is receiving Workers’ Compensation payments or authorized leave of absence will be deemed to be holding a permanent position on the aforesaid day. Such an employee, if eligible, may only claim a benefit pursuant to the Special Agreement upon completion of the period of absence in the usual manner. (emphasis added)

In the Arbitrator’s view, it is plain from the foregoing provision that the three former supervisors cannot be said to be entitled to the benefits and conditions contained in the Special Agreement. Absent any contrary representations, it must be concluded that the Atlantic Region mechanical reductions, the chief component of which was the closure of the Angus Shops, occurred on February 3, 1992. On the day preceding the reductions, the three former supervisors still held their supervisory positions, and indeed continued to do so until March 19, 1992. Even if they could be said to be "eligible employees", which I have found not to be the case, they were not, in the arbitrator’s view, "… eligible employees holding a permanent position on the day preceding the mechanical reductions" as contemplated in article 1 of the Special Agreement. Absent any other indication in the language of the Special Agreement, or of any other document before me, I am compelled to conclude that the reference to a permanent position within the entitlement provision of article 1.1 of the Special Agreement refers to a bargaining unit position held by an eligible employee on the date in question. On that basis, the former supervisors do not qualify as employees for the purposes of the Angus Shops Special Agreement.

That conclusion is further supported by the language of an additional agreement made between the Company and the Union dated March 18, 1992. That agreement, made with a number of other Shopcraft unions, was intended to address a number of specific problems arising from the Angus Shop closure. Paragraph 4 of the agreement specifically addresses the circumstances of supervisors reverting to bargaining unit positions, and provides as follows:

This deals with the situation where an individual was in a supervisory position on February 3, 1992. It is agreed that he has a right to exercise his seniority back into the ranks and take one of the benefits provided for in the Special Agreement. In the circumstance of Employment Security it is not necessary that such an employee have sufficient seniority to hold a position, providing that such is available. (emphasis added)

It does not appear disputed that the foregoing provision was negotiated, in part, because it appeared to the parties that there might not be sufficient positions available for supervisors to exercise their seniority back into the bargaining unit following the Angus Shop closure. The Special Agreement provides for a number of benefits, including a separation plan, a bridging plan, a severance plan, relocation, training, financial and re-employment counselling. Obviously, if the position of the Company were correct, it would have been unnecessary to negotiate specific language with the Union to provide for the right of former supervisors to elect to take one of the benefits provided for in the Special Agreement. In the arbitrator’s view, the language of paragraph 4 of the agreement of March 18, 1992 must, on balance, be taken as evidence that the parties did not contemplate that, without such a specific agreement, the terms of the Angus Special Agreement would apply to persons who held supervisory functions outside the bargaining unit on February 2, 1992, the day preceding the Angus Shops closure.

Nor can the arbitrator find within the terms of the Job Security Agreement any provision which would sustain the position of the Company with respect to the entitlement of the former supervisors to maintenance of basic rates. The maintenance of basic rates is dealt with in the terms of article 8.9 of the Job Security Agreement which provides, in part, as follows:

Maintenance of Basic Rates

8.9 An employee whose rate of pay is reduced by $2.00 or more per week, by reason of being displaced due to a Technological, Operational or Organizational change, will continue to be paid at the basic weekly or hourly rate applicable to the position permanently held at the time of the change providing that, in the exercise of seniority, he

(a) first accepts the highest-rated position at his location to which his seniority and qualifications entitle him; or

(b) if no position is available at his location, he accepts the highest-rated position on his Basic Seniority Territory to which his seniority and qualifications entitle him. The maintenance of basic rates, and four-week guarantees, if applicable, will continue until:

(i) the dollar value of the incumbency above the prevailing job rate has been maintained for a period of three years, and thereafter until subsequent general wage increases applied on the basic rate of the position he is holding erase the incumbency differential; or

(ii) the employee fails to apply for a position, the basic rate of which is higher by an amount of $2.00 per week or more than the basic rate of the position which he is presently holding and for which he is qualified at the location where he is employed; or

(iii) the employee’s services are terminated by discharge, resignation, death or retirement.

In the application of (ii) above, an employee who fails to apply for a higher-rated position, for which he is qualified, will be considered a s occupying such position and his incumbency shall be reduced correspondingly. In the case of a temporary vacancy, his incumbency will be reduced only for the duration of that temporary vacancy.

When the foregoing provision of the Job Security Agreement is read in its entirety, it is difficult to relate it in a logical fashion to the submission of the Company that supervisors can be said to be employees within the contemplation of article 8.9. Firstly, in the arbitrator’s view, it is significant that the Union has no privity, or indeed knowledge with respect to the wage rates paid to the three former supervisors, either as supervisors, or since their return to the bargaining unit. In the result, the Union is without any independent ability to know or to verify the incumbency rates to be paid to the former supervisors by the supposed operation of article 8.9 of the Job Security Agreement. It follows that it would also be unable to verify or enforce the appropriate reduction of the incumbency held by the former supervisors, should they fail to protect the highest rated position which their seniority and qualifications can obtain, in conformity with paragraphs (a) and (b) of article 8.9. It is difficult to conclude that the parties would have intended such a result.

Secondly, the position of the Company appears somewhat inconsistent with the intention which underlies article 8.9 of the Job Security Agreement. Simply put, that provision contemplates that an employee displaced downward by a technological, operational or organizational change has the benefit of a two-way bargain. On the one hand, the Company undertakes to maintain his or her basic incumbency rate while, on the other hand, the employee undertakes to at all times to hold the highest rated position which his or her seniority and qualification can obtain. Under that arrangement, the employee would naturally be compelled to gravitate back to a position equivalent to that from which he or she was originally displaced, should such a position become available. This would be done by the exercise of seniority. However, it would appear that a former supervisor could not claim a newly vacant supervisory position by the exercise of seniority, as such a position would plainly fall outside the bargaining unit, and outside the purview of article 8.9 of the Job Security Agreement. In my view, the underlying expectation of article 8.9 is that the employee who has the benefit of rate protection should, as a protection to the employer, be capable of returning, by the exercise of seniority, to the level of position which corresponds to the protected rate. That would not be possible in the case of persons who, like the three former supervisors who are the subject of this grievance, would hold an incumbency rate which is above any rate to be found within the collective agreement.

A corollary to this analysis is that if the Company is correct in its approach, and the logic of the Job Security Agreement is applied, a bargaining unit employee in the position of the former supervisors would, arguably, be compelled to apply for any vacant supervisory position which might become available in the future, notwithstanding that it would be outside the bargaining unit. Presumably the failure to apply for such a position could be asserted as a basis for treating the employees’ incumbency rate as forfeit. In the arbitrator’s view, with the possible exception of protecting employment security, the prospect of an employee being compelled to apply for a position outside his or her bargaining unit, under pain of forfeiting a collective agreement right or protection, is extremely problematic. It is not an outcome which should, I think, be contemplated absent the clearest of language in a collective agreement, or in some other agreement between the employer and the Union. Indeed, where such provision is made in article 7 of the Job Security Agreement relating to an employee’s obligation to take a position outside the bargaining unit to protect his or her employment security, it is clearly articulated. No such provision can be found to govern the obligation of former supervisors to bid back to their protected rate.

The arbitrator has been directed to no provision of the collective agreement which would categorically sustain the right of the company to pay bargaining units employees rates in excess of those contained in Rule 32 of the collective agreement, or to pay incumbency rates on a basis other than contemplated within article 8.9 of the Job Security Agreement. Its submission in rebuttal asserts that other unions have not objected to its practice of rate protecting former shopcraft supervisors. While there is no evidence of such a practice before me, even if it were established, it can be no answer to the instant grievance. The Union with carriage of this grievance has, it would seem, never agreed to such a practice, and by this grievance it clearly objects to it. For the reasons related above, I am satisfied that neither the Job Security Agreement nor the Angus Shops Special Agreement can be interpreted as providing incumbency rate protection for former supervisors who exercise their rights under Rule 23 of the collective agreement to return to the ranks of the bargaining unit.

For the foregoing reasons the grievance must be allowed. The arbitrator finds and declares that the salary treatment of Messrs. R. Morin, R. Breton and M. Plante is in violation of Rule 32 of the collective agreement. The Company is directed to adjust their wages forthwith to conform to the terms of Rule 32 from the date of this award onwards. In light of the position taken by the Union, no order shall issue with respect to the reimbursement of funds already paid to the employees concerned.

DATED at Toronto this 5th day of May, 1993.