BETWEEN:

(the "Company")

AND

(The "Union")

SOLE ARBITRATOR: Michel G. Picher

There appeared on behalf of the Company:

Doug Fisher – Manager, Labour Relations

Katya Laviolette – System Labour Relations, Officer

And on behalf of the Union:

J. R. Moore-Gough – President, Local 100

Abe Rosner – National Representative, CAW

A hearing in this matter was held in Toronto on May 9, 1996.

This arbitration flows from a disagreement between the parties with respect to the implementation of the decision of the Mediation-Arbitration Commission, appointed by the Minister of Labour pursuant to the Maintenance of Railway Operations Act, 1997, chaired by Mr. Justice George W. Adams, dated June 14, 1995. Specifically, the parties are disagreed as to the rights and obligations of an employee in relation to holding work with another employer at his or her home location as a means of protecting employment security status. The Union maintains that that opportunity must be available before the employee is compelled to take work elsewhere on the system, while the Company maintains that system-wide obligations are to be exhausted prior to an employee availing himself or herself of the possibility of working for another employer at his or her home location. The issues are reflected in the dispute and joint statement of issue, signed jointly by the parties and filed at the hearing, which read as follows:

[page 2]

Article 3.2(a) provides that "prior to an employee being required to fill a permanent vacancy or displace beyond the Region pursuant to Article 3.1, the LAC will meet and review whether any alternatives are available.

At a meeting of the LAC on March 7, 1996 concerning the closure of the Montreal and Moncton Diesel shops, the matter of outside employment was raised by the Union. Both Article 3 and Article 4 of the CP-RCTC Agreement provide entitlements and obligations for employees to take work at outside employers under the terms of the ESIMA, as approved by the LAC.

At the meeting the Company stated that it would not agree to employees taking work with outside employers at anytime when the Company had unfilled positions elsewhere on the System. The Company proposed that if an employee was working for an outside employer under the terms of the ESIMA and a position became vacant the employee would be expected to leave the outside work and accept the Company’s recall to the unfilled position at the away-from-home terminal. If the employee refused the recall, the Company indicated that the employee would then be treated as if he/she had forfeited Employment Security status.

The Union contends that the employees’ obligations with respect to Employment Security provide employees with the right, after exhausting their seniority in the bargaining unit at their home location, to take work with an outside employer, at the home location before being required to accept any work at an away-from home terminal, including the basic seniority territory and beyond. With regards to the employees’ obligations to be eligible for Enhanced SUB and Alternative Options under Article 4 of the CP RCTC Agreement, the Union contends that employees after exhausting seniority on their basic seniority territory or being able to or required to fill vacancies in other bargaining units, non-scheduled, or management positions at the home location, are entitled to take work at an outside employer at the home location.

The Union further argues that once employees have accepted work at an outside employer, in accordance with the ESIMA, those employees are entitled to remain working for the outside employer until such time as the employee is recalled to work within their own bargaining unit in accordance with Article 23.24 of Collective Agreement 12.35. Furthermore, the Union contends that the Company, due to operational requirements at away-from- home locations or basic seniority territories, cannot deny, or attempt to cause the LAC to deny, employees the right to accept work with an outside employer at the home location. The Union believes that the LAC must approve reasonable outside work at the employee’s home location, if requested and that the ability to accept outside work at the home location is paramount to an employee’s obligation to exhaust his seniority outside of the home terminal.

[page 3]

The Company argues that its position is reasonable, and is in accordance with the CP - RCTC Agreement. The Company denies any violation of the ESIMA.

It is not disputed that the governing language of the Adams award is found at page 59 of the Commission’s report. There, dealing with the specific dispute between the Company and the instant Union representing Shopcraft employees, the Commission declared as follows:

As is evident from the foregoing, the Commission adopted as its standard and pattern, the agreement reached voluntarily between CP Rail and the Rail Traffic Controllers union as the terms of the ESIMA which would bind these parties. In the arbitrator’s view , the words "shall be as set out" leave no doubt that the Commission intended a duplication of the provisions of the CP/RCTC agreement for the purposes of the ESIMA between CN and the CAW shopcraft bargaining unit.

The record discloses that CP Rail and the Railway Canada Traffic Controllers voluntarily reached an agreement with respect to the terms of their income security plan on March 12, 1995. The Memorandum of Settlement then executed contains the following provision to govern the obligations of an employee to be eligible for employment security benefits:

[page 4]

The principles of Article 3.1 are that, after exercising bargaining unit seniority rights and before going to the basic seniority territory, an employee will have the right to accept, at the location, permanent vacancies in other bargaining units, non-scheduled or management positions or work outside of CP Rail as determined by the Labour Adjustment Committee.

[page 5]

If an employee has to displace to the region or system, such employee will have the same rights as at the location after exercising bargaining unit seniority rights at the region and system.

Employees have the right to exercise their seniority rights within the bargaining unit from location, basic seniority territory, region and system in advance of 3.1(e) or (g) but are obligated to these provisions if no positions are available within the bargaining unit up to and including the system level.

The record further discloses that the parties, Canadian Pacific Limited and the Rail Canada Traffic Controllers did, subsequently, meet and arrange the order of the requirements, as contemplated in the first paragraph of the note, reproduced above. Their agreement of May 16, 1995 includes Appendix B as the Income Security Agreement. Within that document, Article 3 governs employment security and, with only minor adjustments, article 3.1 reproduces the provisions of the initial Memorandum of Settlement quoted above. The only distinction to be found in the subsequent document is the insertion of a new paragraph "e", whereby employees are to fully exhaust seniority in their own bargaining unit on their "area" prior to accepting work outside CP Rail at the location. In the result, with the insertion of the new paragraph the displacement steps run from (a) through (h). Additionally, the first paragraph of the note, being no longer operative, is removed and the final paragraph of the note makes reference to articles 3.1(f) or (h) rather than 3.1(e) or (g), as in the original, again by reason of the insertion of the additional step at paragraph (e).

[page 6]

In the result, as there is no material difference between the substance of the Memorandum of Settlement of March 12, 1995 and the eventual Memorandum of Agreement of May 16, 1995 between CP Rail and the RCTC. For the purposes of this dispute reference may be made to the original Memorandum of Settlement which, in any event, was the document tendered in evidence before the Mediation-Arbitration Commission. Indeed, it would have been the only version of that agreement properly before the Commission, as the Commission established May 3, 1995 as the deadline for the submission of the evidence in-chief and May 12, 1995 as the deadline for the filing of any evidence in rebuttal. The arbitrator is, therefore, satisfied that, in the event that there might be any dispute as to the appropriate document, the agreement reached between Canadian Pacific Limited and the Rail Canada Traffic Controllers in the form of the Memorandum of Settlement of March 12, 1995 must be preferred as the governing document.

By way of further background, it is agreed that the Company and Union had an earlier dispute with respect to whether an employee working outside pursuant to an arrangement made by the Labour Adjustment Committee would have the time expended in such work credited against his or her six-year entitlement to employment security. In a supplementary hearing convened for the purpose of resolving a number of such disputes, in August of 1995, Mr. Justice Adams ruled that the time spent by an employee working outside the Company, pursuant to the terms of the ESIMA, would not be applied to deplete or reduce his or her six-year employment security entitlement.

[page 7]

The Union submits that the language of article 3.1 of the CP/RCTC agreement is clear. It draws to the arbitrator’s attention the second paragraph of the original note, which it submits categorically establishes that an employee is to have the right to accept work at his or her location, including work outside the Company, as determined by the Labour Adjustment Committee, prior to being compelled to go to available work on the basic seniority territory or beyond, on the region or system. The Union’s representative stresses that the purpose of the arrangement, as originally conceived between CP Rail and the RCTC, is plainly to favour employees in maximizing the possibility for them remaining at their home location before being obligated to take available work in another seniority territory or another region on the system. It submits that the balance of interest struck is evident: the Company can save costs to the extent that persons with employment security can be gainfully employed with another Company at their home location rather than staying at home and collective their full wages and benefits, as had previously been their right, in exchange for the accommodation of the employee’s interest in remaining at his or her home location, and avoiding the dislocation of a move elsewhere on the system. The Union submits that this arrangement benefits the Company substantially, even if it may be required to provide some top-off in wages to protect the individual employee against any loss of earnings.

[page 8]

The Company’s representative submits that the provisions of the CP/RCTC agreement as construed by the Union produce a hardship which is inconsistent with the overall intention of the Mediation-Arbitration Commission’s award. Specifically, he adverts to the open-ended cost which might be incurred by the Company if, for example, an employee could invoke the right to work for another employer at the same location, remain in such work, perhaps for years, at expense to CN, while suffering no reduction in his or her accredited employment seniority entitlement of six years. That, in light of the August ruling of Mr. Justice Adams, produces what the Company maintains is an inappropriate financial burden not contemplated or intended by the Commission.

The Company’s representative further refers to the distinction between "obligations" and "rights" as those words apply to the declaration of the Commission whereby "employee obligations … shall be as set out in the CP and RCTC agreement". The Company argues that the use of the word "obligations" in that context should not be taken to include "rights" which may appear within article 3 of the CP/RCTC agreement. He stresses that in the instant case the parties to this agreement have never agreed upon the order of requirements, as related in the first paragraph of the note. Further, if the second paragraph is to have overriding effect, the Company’s representatives submits that it should not be interpreted as the Union would have it. In his submission, the note would operate as an indication, to the extent possible, that an employee might be accommodated where work is available at or near his or her home location. He cites the example of permanent vacancies being available in Montreal, Sennetere and Vancouver, in which case a Montreal employee would have the right to accept the Montreal position before being forced beyond his basic seniority territory to either Sennetere or Vancouver. He submits that the same principle would apply with respect to taking work outside CN.

[page 9]

The Company’s representative further submits that there should be some correlation between the extent of the right enjoyed by the employee and the commensurate obligation which goes with that right. In this regard, he submits that the Union’s position is incongruous, and would result in employees who opt for the lesser protections of article 4 of the ESIMA, which provides for enhanced supplementary unemployment benefits (SUB), and various early retirement, bridging and severance packages, as well as educational leave, requiring the employee to exhaust seniority on their basic seniority territory. He submits that in that circumstance it is incongruous that the employee might arguably have a greater burden of displacement away from the home location than is borne by the employee who elects to protect employment security under article 3 and could avoid having to move by obtaining placement in a position with another employer at his or her home location.

I turn to consider the merits of the dispute. While the arbitrator has some appreciation of the concerns voiced by the Company, it is trite to say that a board of arbitration is bound by the clear language of a collective agreement provision which it is compelled to interpret. I have no jurisdiction to alter or amend the clear terms of the award of the Mediation-Arbitration Committee chaired by Mr. Justice Adams. The award of the Commission which he chaired makes it plain that the obligations to be borne by employees who wish to remain eligible for employment security are as found in the CP and RCTC agreement. On the date the Commission made that declaration, June 14, 1995, an agreement had been reached between CP Rail and the RCTC with respect to the obligations in question. Significantly, the parties to that agreement agreed, apparently, for the first time within the railway industry, to an arrangement whereby employees might hold work with another employer at their home location, with a top-up of their salary provided by the railway, as a means of preserving their employment security rights.

[page 10]

The arbitrator has substantial difficulty with the Company’s characterization of the availability of that new right to the employee, under the language of Article 3 of the CP/RCTC agreement. Firstly, it may be noted that at the arbitration hearing, the Company urged upon the arbitrator that the final version of the CP/RCTC agreement, dated May 16, 1995 is the document intended by the Mediation-Arbitration Commission to be binding on the parties to this dispute. If that position is accepted, however, the document appears without the first paragraph of the note, and to all appearances, without any further involvement of the parties in negotiating the order of the obligations of the employees listed within article 3.1. In other words, if that document is taken at face value, the issue of the order of obligations would appear to be finally resolved.

As noted above, however, the arbitrator is inclined to reject the Company’s position. It would seem to be that the decision of the Commission must be interpreted in light of the documents which were properly before it as of the closure of evidence. In that regard, the CP/RCTC agreement of March 12, 1995 would appear to be the proper document to refer to for the purposes of the Commission’s award.

[page 11]

In the arbitrator’s view, even if the parties to this dispute have been unable to resolve the order of obligations, the second paragraph of the note in the original version of article 3.1 of the CP/RCTC agreement is controlling of the outcome of this dispute. That paragraph which, it may be noted, is found unchanged in the later version of the agreement dated May 16, 1995, is explicit in providing that "… before going to the basic seniority territory, an employee will have the right to accept, at the location, … work outside CP Rail as determined by the Labour Adjustment Committee". In the arbitrator’s view, the foregoing words are susceptible of only one intellectually honest interpretation, namely that the parties to that agreement, for whatever reasons may have prompted them, did agree that employees impacted by a technological, operational or organizational change, whose jobs are thereby abolished, have the right, through the L.A.C., to retain an available position and work outside the Company, at their location, before being compelled to exercise onto the basic seniority territory and, by implication, beyond, within the region or system. That reading is further supported by the first sentence of the next paragraph, which begins: "If an employee has to displace to the region or system …". Clearly, under the language of that article, the obligation to displace to the region or system arises only if the employee is unable to find work at his or her home location, including work outside the railway company, as arranged by the Labour Adjustment Committee.

[page 12]

There is nothing in the final paragraph of the note to derogate from the intention of the second paragraph of the original version of the note, as interpreted above. That paragraph plainly gives to the employee the ability to choose to take other work at their location, on their basic seniority territory, on the region or system-wide within their own bargaining unit before being compelled to take work in other bargaining units, non- scheduled or management positions or work with another employer. It preserves to employees a right, in priority, to continue to work within their original bargaining unit whether at their location, on their basic seniority territory, within their region or anywhere in the Company’s system. The terms of Article 3.1 of the CP/RCTC collective agreement tend to give to the employee the opportunity to maximize two interests. First, in accordance with the final paragraph of the note, the employee has every ability to protect his or her status as an employee within the bargaining unit, up to and including the system level, before being compelled to take a position under another union, or a position which is either not unionized or is managerial. Likewise, the employee enjoys the right to take a bargaining unit position on a system-wide basis, before being compelled to accept work with another employer at the home location. Alternatively, the article affords the employee a maximizing of the ability to remain at his or her location, even if to do so involves taking another position with the Company outside the bargaining unit, or going to work for another employer at their home location, subject to the appropriate approval of the Labour Adjustment Committee.

[page 13]

Moreover, the arbitrator cannot find, on the basis of the language presented, that the Company could purport to exercise a right of veto as a partner in the Labour Adjustment Committee, to effectively nullify the ability of employees to obtain work outside the Company at their location, where it is otherwise appropriate to do so, as a means of forcing them to relocate. I can see nothing in the language or scheme of article 3.1 of the CP/RCTC agreement which would suggest that the Company could exercise such a right, forcing employees to accept work elsewhere on their region, or indeed within another region on the system, because vacancies might exist in those locations and it is therefore more efficient and economical for the Company to do so. If that had been Mr. Justice Adams’ intention, he would clearly have said so.

In coming to these conclusions, I must reject the suggestion of the Company’s representative that the use of the word "obligation" by the Commission was somehow intended to suggest that the employees could enjoy no rights under the provisions of the CP/RCTC provisions adopted for reference by the Commission. Clearly, those provisions must be read as a whole and, even by the Company’s own submissions, the explanatory note cannot be disregarded. In the arbitrator’s view, the second paragraph of the note is clear and categorical in its purpose: it is plainly intended as a qualification on the obligations listed in paragraphs (a) through (g) of article 3.1. I cannot imagine on what basis the Commission would have intended that the instant parties should be governed by the employee obligations found in the CP and RCTC agreement, without incorporating the definitions and qualifications to those obligations found within that document. Moreover, in interpreting that agreement, and the intentions of the Adams Commission in respect of it, it is imperative to recall that it was a voluntarily negotiated arrangement which sought to fairly balance the interests of employer and union in moving away from the inefficiencies and inequities of the original employment security system. It was not, however, intended as a wholesale abolishment of such rights as employees might have to maximize their opportunities for continuing to work at their home locations.

[page 14]

Further, when the issue is examined from a purposive point of view, the arbitrator is not persuaded that the hypothetical horribles raised by the Company will necessarily be unduly burdensome. Firstly, the availability of appropriate alternate employment with other employers at a given location is itself a threshold requirement implicit in the operation of article 3 of the ESIMA. It is far from clear how many employees may, in fact, be able to satisfy reasonable criteria for approval by a Labour Adjustment Committee acting in good faith. It is also not clear to what extent the Company’s obligation to top-up wages in that circumstance will necessarily be burdensome, a factor obviously depending on the wages earned in the service of the outside employer which can fairly be considered by the LAC. Finally, while it may, of course, be preferable for the Company to be able to force employees to move to job vacancies elsewhere on the system, a right which may still be exercised if appropriate outside employment cannot be found, the obligation to top-up the wages of employees who work for other employers at their home location is a substantial improvement in the lot of the Company, as compared with its historic open-ended obligation to provide full employment security payments, potentially for the entire working life of an adversely affected employee, notwithstanding that he or she might, nevertheless, work for an outside employer – a practice which became relatively common, generally referred to as "double dipping". There is, even in this interpretation of the operative provision of the Adams Commission award, a substantial gain to the Company.

[page 15]

For all of the foregoing reasons, the grievance is allowed. The arbitrator finds and declares that the position of the Company, which would require employees to displace to vacant positions elsewhere on the system before being able to avail themselves of the possibility of taking work with another employer at their home location, subject to the reasonable and good faith approval of the Labour Adjustment Committee, is incorrect. I am satisfied that the Union is correct in its interpretation and that once employees have been placed in work at an outside employer, by approval of the Labour Adjustment Committee, they may continue to hold such work until such time as they are properly recalled to work in accordance with Article 23.20.24 of the collective agreement. It is implicit in all of the foregoing that in making or approving the placement of employees with other employers, the Labour Adjustment Committee must act reasonably and fairly, and in a manner consistent with the language of article 3.1 of the CP/RCTC agreement. Specifically, it cannot invoke unfilled vacancies elsewhere on the system as a reason to refuse approval of available options for appropriate alternate employment with other employers. Any understanding to the contrary could only be arrived at by mutual agreement of the parties.

The arbitrator retains jurisdiction in the event of any dispute between the parties having regard to the interpretation or implementation of this award.

DATED at Toronto this 22nd day of May, 1996.