(the "Company")




(the "Union")


Sole Arbitrator:                        Michel G. Picher


Appearing For The Union:

Brian Stevens            President, CAW Local 103

Brian Kelly            Chief Steward, CAW Local 103

D. Larabie            Committee Person


Appearing For The Company:

Michael Restoule            Manager, Labour Relations

Ken Duquette            Labour Relations Officer


A hearing in this matter was held in Toronto on July 7, 2000.



This grievance concerns a claim by retired machinist Noël Lemieux that he was wrongfully denied a cash payout of the value of his unused vacation at the time of his retirement. The dispute is reflected in the Joint Statement of Fact and Issue which reads as follows:


On April 25, 2000, Machinist Noël Lemieux advised the Company of his intention to retire effective May 31, 2000. He directed the Company to pay out any all unused vacation to his credit on his final day of service.

Instead the Company advised Mr. Lemieux that he would be required to run out his unused vacation on the payroll prior to his retirement.

The Union filed a grievance contending that the Company was in violation of Rule 52.2(a) and any other related rules of Agreement #12 by refusing his request.

The Union requested that Mr. Lemieux be allowed to retire effective May 31 and to have all vacation to his credit paid out on that date and further, that Mr. Lemieux be made whole forthwith.

The Company denied the grievance.


The facts are not in dispute. By letter dated April 25, 2000 Mr. Lemieux gave notice to the Company’s Chief Mechanical Officer that he intended to retire, thereby ending his employment which commenced on December 8, 1969. That letter reads as follows:

This will serve as sufficient and proper notice to Ontario Northland that I will be retiring from service at the end of May. My last day of service will be May 31st and I will be effectively retired on June 1, 2000.

Could you please arrange to have the ONTC Pension Department prepare any necessary documents for my signature consistent with the above instructions.

As I have some unused periods of vacation to my credit, my plans are to have all unused vacation, calculated to May 31, 2000 paid out on my last day of active service and I ask that you relay those instructions to the Pension Department as well.

Mr. Burton responded to Mr. Lemieux by letter dated May 2, 2000, declining his request for a cash payout of his accrued vacation which, it is agreed, totalled some twenty-three days. Mr. Burton’s reply reads as follows:

Dear Mr. Lemieux

I am in receipt of your notice to retire from service from Ontario Northland. In your instructions, you have requested that you would like to have unused vacation paid out on your last date of active service. I must inform you that that request has been denied and you will be required to use up any unused portions of vacation prior to your effective retirement date.

In considering your request, it is my understanding that the provision of allowing employees to cash in vacation before leaving service has been granted in only two occasions. The first being the early retirement incentive program which was conducted in 1996 and one other occasion when special terms were agreed to during the negotiation process.

Since you have indicated that May 31st will be your last day of service, I will ask the Benefits’ Department to calculate any unused vacation to determine your actual retirement date.

If you have any further questions concerning this matter, feel free to contact me at any time.

At issue is the application of rule 52.2(a) of the collective agreement:

52.2 (a) An employee terminating employment for any reason at a time when an unused period of vacation with pay stands to his/her credit shall be allowed vacation calculated to the date of leaving the service, as provided for in Section 1, and if not granted shall be allowed pay in lieu thereof.


The Union submits that the treatment of other employees has included the payment of a lump sum for accrued vacation credits upon their leaving the service. It cites, by way of example, an employee who was discharged for disciplinary reasons, two employees who were laid off in the summer of 1999, an employee who quit, and finally one who passed away while in service with unused vacation credits. In all of those circumstances, the Union points out, the Company made lump sum cash payments to the individuals in question for their unused vacation credits.

The Union submits that the Company’s actions prejudice Mr. Lemieux in two respects. Firstly, he is denied the benefit of the lump sum payment and, secondly, as he was effectively forced to take his twenty-three unused vacation days commencing May 31, 2000, his effective date of retirement for the purposes of the Canada Pension Plan was delayed for some two months. Additionally, the Union notes that as the grievor’s vacation was otherwise scheduled to be taken later in the year, he had the disadvantage of having his vacation rescheduled involuntarily, without the benefit of working the same period at premium rates, as would happen, for example, if an employee were compelled to reschedule his or her vacation to perform emergency work.

The Company’s representative submits that there has never been any lump sum payment of unused vacation credits at the time an employee opts to retire. The Company concedes that in the circumstance of a discharge, a layoff, a quit or the demise of an employee in active service the practice has been to provide a lump sum cash payment for vacation credits. That, it submits, is inevitable as it is then impossible for the employee to take vacation in any of those circumstances. In the case of retirement, however, the Company confirms that it has been the universal practice, as elsewhere in the railway industry, to pay out vacation credits as part of payroll prior to an employee retiring.

As explained by the Company’s representative, typically a retiring employee will notify the Company of the day which he or she wishes to be their last day at work. Assuming adequate notice, the Company then advises the employee that they will have any outstanding vacation credits scheduled as actual vacation prior to the date which the employee has determined to be the final date of service. In that scenario the employee is treated as being at work until such time as his or her vacation is exhausted, at which time their retirement becomes effective. The Union’s representative notes that the practice so described was acknowledged in CROA 2092 where the arbitrator commented:

In the instant case, it is common ground that the grievor could not have proceeded to take his retirement without first exhausting his pre-retirement vacation.

The Company’s representative affirms that the foregoing passage, and the practice of the employer, is consistent with the proper interpretation of Rule 52.2(a), the language of which contemplates a granting option in the Company, and not in the employee.

According to the Company’s representative only two exceptions to the general rule have occurred within memory. One involved the cash payout of accrued vacation credits as a retirement incentive during job reductions in 1996. The second involved a material change agreement negotiated with the United Transportation Union, whereby vacation credits lump sum payments were included as an incentive for retirements to minimize adverse impacts on employees.

I turn to consider the competing submissions of the parties. It is clear from the letter of Mr. Lemieux dated April 25, 2000 that he intended his last day of service to be May 31st, 2000. The Arbitrator can find nothing in the collective agreement which would then have prevented the Company from scheduling his unused vacation credits prior to May 31st. It is common ground, however, that as a practical matter that could not be done between April 25 and May 31, 2000, as the grievor had fully twenty-three working days vacation credit due to him. Clearly, if the normal course had been followed the grievor would have given sufficient notice and the Company would have worked out with him the scheduling of pre-retirement vacation which presumably could have been timed to expire on May 31st.

The real issue is whether the grievor could insist upon a cash payment of his unused vacation credit, as he seeks to do through this grievance. In my view the language of article 52.2(a) simply does not allow that in the circumstance of a retirement. In approaching this issue it is useful to advert to the separate language of rule 52.2(b) which reads as follows:

52.2. (b) An employee who is laid off shall be paid for any vacation due at the beginning of the current calendar year and not previously taken, and, if not subsequently recalled to service during such year shall upon application, be allowed pay in lieu of any vacation due at the beginning of the following calendar year.

As can be seen from the foregoing provision, the parties adverted to the circumstance in which an employee might be entitled to pay in lieu of vacation upon the suspension of active service. They expressly did so in the circumstance of an employee who is laid off. There is no similar language in the collective agreement dealing with an employee who terminates his or her employment, by retirement or otherwise. What the language of rule 52.2(a) contemplates, in my view quite clearly, is that when an employee terminates his or her employment, the employee “… shall be allowed vacation calculated from the date of leaving the service”. In the Arbitrator’s view that language contemplates that an employee is to continue to accrue vacation entitlement until his or her departure from employment. Significantly, however, the rule also addresses the entitlement to pay in lieu of vacation. That entitlement only arises if actual vacation is “not granted”. The evidence before the Arbitrator confirms that the practice which has applied, apparently without exception, has been to grant to all retiring employees vacation in the full amount of their accrued entitlement prior to their assuming retired status.

Moreover, from a purposive point of view, the long-standing practice is not unreasonable. If the Union’s position should obtain, by giving short notice of retirement an employee with a substantial amount of accrued vacation credits could leave the service and immediately receive the pyramided benefit of a lump sum for his or her vacation credit at the same as he or she is drawing pension. Considering the long-standing presumption against pyramiding which operates in the interpretation of collective agreements generally, the Arbitrator would require clear and unequivocal language within the terms of the collective agreement to support a conclusion that the parties would have intended such a result. I can see no such language in the agreement before me.

For all of the foregoing reasons the grievance must be dismissed.

Dated at Toronto, this 19th day of July 2000.