IN THE MATTER OF AN ARBITRATION

 

 

BETWEEN

 

 

CANADIAN NATIONAL RAILWAY COMPANY

 

(the "Company")

 

 

AND

 

 

NATIONAL AUTOMOBILE, AEROSPACE, TRANSPORTATION AND GENERAL WORKERS UNION OF CANADA (CAW-CANADA)
LOCAL 100

 

(the "Union")

 

 

GRIEVANCE RE APPLICATION OF AND ENTITLEMENT TO
LUMP SUM RELOCATION BENEFITS

 

 

 

Sole Arbitrator:                               MICHEL G. PICHER

 

 

 

Appearing For The Union:

J. R. Moore-Gough                  National Representative

Bryon DeBaets                       President, Local l00

Dennis Wray                           Vice-President, Local 100

John Burns                              Vice-President, Local 100

 

 

Appearing For The Company:

Christine Joanis                      Manager, Labour Relations

Scott A. MacDougald              Manager, Labour Relations

Ron Campbell                         Human Resources Associate

 

 

 

A hearing in this matter was held in Montreal on February 15, 2002.

 


AWARD

 

            This grievance concerns a dispute between the parties with respect to the entitlement of employees to certain lump sum relocation benefits under the Employment Security and Income Maintenance Agreement (ESIMA). The nature of the dispute and the provisions in question are reflected in the Dispute and Joint Statement of Issue filed at the hearing, which reads as follows:

 

DISPUTE:

A policy grievance concerning the meaning, interpretation and application of the phrases: “actually relocate” in articles 7.6 and 7.15 of the ESIMA and “by changing their principal place of residence” in Appendix K of the ESIMA.

 

JOINT STATEMENT OF ISSUE:

The Company has advised the Union that for an employee to be eligible for lump sum relocation benefits provided for in article 7 of the ESIMA, an employee must relocate his/her principal place of residence, which includes their household including its effects and co-habiting family members. The Company has indicated that it believes that the ESIMA and also the jurisprudence do not contemplate the payment of relocation benefits when an individual employee rents or purchases living accommodation at the new work location but leaves their household and family behind at the former work location. The Company alleges that the ESIMA clearly indicates that a monthly commuting allowance under article 6.10 will be paid in instances where employees do not move their households but still transfer to the new location.

 

The Union maintains that it believes it is not necessary for the employee’s spouse or children to move with the employee in order for that individual to be eligible for lump sum relocation benefits, under the terms of article 7 of the ESIMA. It is the Union’s contention that once the employee has established a new residence at the new work location (which is more than 25 miles from the former) either rental or owned, and the employee lives in such accommodation the employee is eligible for the lump sum relocation benefits. The Union holds that the Company’s interpretation is not supported by the contract language found in articles 7.6, 7.15 and Appendix K of the ESIMA, and further the Union argues its position is supported by the language of Attachment 8 of the memorandum of agreement dated March 6th, 2001, which prohibits discrimination towards an employee based on (among other criteria) marital or family status.

 

The Union asks that the arbitrator clarify the interpretation and application of the ESIMA, regarding the payment of lump sum relocation benefits, and further direct the Company to modify its practices to conform with the contractual language.

 

The Company denies that its application is a violation of the ESIMA, and asks that the arbitrator endorse its interpretation and application.

 

            Although the dispute is forwarded on the basis of a policy grievance, the history of the dispute appears to stem from circumstances particular to an employee, Car Mechanic C. Taman of Saskatoon, Saskatchewan. As a result of notice under the provisions of article 8.1(a) of the ESIMA on May 28, 2001 Mr. Taman suffered the reduction of his position in Saskatoon. He was therefore compelled to exercise his seniority to a position in Melville, Saskatchewan as a car mechanic. On or about September 21, 2001 he purchased a house in Melville where he took up residence upon moving from Saskatoon. He did not, however, sell his home in Saskatoon, as his wife and children remained in residence there. When Mr. Taman applied for the $25,000.00 home owner lump sum relocation benefit provided under article 7.6 of the ESIMA the Company denied his application, arguing that he had not fulfilled the requirement to relocate as contemplated within the applicable provisions of the agreement. Specifically, he was considered disqualified because his wife and children did not move with him to the house which he purchased in Melville. It appears that shortly thereafter Mr. Taman and his wife obtained a legal separation, at which point the Company paid the lump sum benefit to him, on a without prejudice basis. The parties nevertheless agreed to progress their dispute of interpretation to arbitration as a policy grievance which is now properly before the Arbitrator.

 

            The provisions of the ESIMA pertinent to this dispute are as follows:

 

7.6        Employees required to relocate, that is, when they must travel an additional 25 miles from their principal place of residence to their new work location, pursuant to Article 7 Section A) and who actually relocate, will be entitled to the relocation benefits pursuant to Article 6 or, in lieu, may choose a lump sum relocation benefit as follows:

 

Homeowner / Non-Homeowner (Appendix K)

 

Within the Region          $25,000    /     $14,000

Beyond the Region         $50,000    /     $29,000

 

Note 1:       These lump sums are taxable

 

Note 2:       Employees will be required to pay back one-half of the lump sum relocation benefit if they voluntarily cease their employment relationship with the Company within two years of receiving the lump sum relocation benefit.

 

7.15      Employees required to relocate pursuant to Article 7.13(c) and who actually relocate, will be entitled to the relocation benefits provided in article 6 or, in lieu, may choose a lump sum relocation benefit of $25,000.00 for homeowners, or $14,000.00 for non-homeowners.

 

Note:    Employees will be required to pay back one-half of the lump sum relocation benefit if they voluntarily cease their employment relationship with the Company within two years of receiving the lump sum relocation benefit.

 

Appendix K

 

This letter makes reference to the discussion that took place at the meeting of the Labour Adjustment Committee on March 7, 1996, concerning the details surrounding the eligibility for a relocation lump sum benefit as stipulated in article 7 of the ESIMA. As per our discussion the Company and the Union agreed that in order to be eligible to receive the relocation lump sum benefit for homeowners the following conditions apply:

 

1.         The employees must be homeowners, and;

 

2.         The employees must relocate by changing their “principal place of residence” as per CROA 1977, and;

 

3.         If the employees sell their homes at the old location or buy a home at the new location they will receive the full relocation lump sum benefit for homeowners as per article 7 of the ESIMA (for greater clarity the employees must be homeowners in accordance with paragraph 1, renters are not entitled to receive the relocation lump sum benefit for homeowners as the result of buying a home in the new location) or;

 

4.         If the employees are unable to sell their home before or immediately upon relocating to the new location and do not buy a home at the new location then they must make reasonable efforts to sell their home in the 12 month period following their relocation. Reasonable effort is defined as follows:

 

-           A fair market value must be established as per article 6.12 of the ESIMA.

-           The employees must list their home for sale.

-           Every offer the employees received on their home will be forwarded to the appropriate Company Officer who will review and notify the Labour Adjustment Committee should rejection of the offer be considered unreasonable. The Labour Adjustment Committee shall meet and review the offer to determine if rejection is unreasonable. If the Labour Adjustment Committee is unable to agree then the dispute may be referred to a third party for resolution, in accordance with article 2.6 and article. 2.7 of the ESIMA. A determination that the rejection of an offer was unreasonable in no way binds the employee to accept the offer. It shall only result in the employee no longer being governed by the provisions of this paragraph 4 and any quarterly payment due as a the result of paragraph 5 below shall cease.

 

5.         In the application of paragraph 4 above, the following will apply. Immediately upon relocating the employees will receive the relocation lump sum benefit for renters, as per article 7 of the ESIMA. The difference in the amount between the relocation lump sum benefits for renters and that for homeowners shall be paid in 4 equal quarterly instalments, over the next twelve months, provided the employees continue to make reasonable efforts to sell their homes in accordance with paragraph 4 above. If at anytime during this twelve month period the employees either sell their homes at the old location or buy homes at the new location, they will be paid any of the remaining difference between the relocation lump sum benefit for renters and that for homeowners.

 

In addition it was agreed that employees electing to receive lump sum relocation benefits as per article 7 of the ESIMA, either homeowners or renters, may elect, at their option, to have any amount (the initial payment or the quarterly payments) paid in two instalments over a period of 13 months from the initial date of relocation. No interest shall be paid on any amount so deferred. It is also understood that employees who opt for the relocation lump sum benefit will not be entitled to the “commuting allowance” under article 6 of the ESIMA.

 

Please note that this interpretation of the application of the lump sum relocation benefit does not supersede any of the provisions found in article 6 or article 7 of the ESIMA, rather it serves to clarify the application of the relocation lump sum benefit.

 

            The Union submits that there are only two criteria necessary for an employee to be eligible for the lump sum relocation benefits, based on the foregoing provisions. Firstly, the employee must be required to travel an additional twenty-five miles or more from their existing principal place of residence to their new work location. Secondly, the employee must actually relocate from their prior place of residence, as contemplated within the decision of the Canadian Railway Office of Arbitration in CROA 1977. In the submission of the Union’s representative when those conditions are met and, as in the case of Mr. Taman, the employee purchases a home, or sells his or her home in the prior location, he or she becomes eligible for the $25,000 lump sum payment for homeowners provided under article 7.15 of the ESIMA.

 

            CROA 1977, an award between the Company and the Brotherhood of Maintenance of Way Employees which issued on December 15, 1989, concerned the interpretation of the word “relocate” then found in article 7.7 of the ESIMA, in relation to a change in an employee’s work location. Article 7.7 as it then was consisted of provisions whereby an employee could not be compelled to relocate if he or she had twenty years of continuous service and was within five years of qualifying for early retirement, or, secondly, if he or she had been required to relocate under the ESIMA sometime within the preceding five years. Those provisions, handed down by Arbitrator Larson, came to be generally known “Larson protection”. In that case the arbitrator rejected the submission of the Brotherhood to the effect that a mere change of work location constituted relocation for the purposes of Larson protection. In that award the arbitrator reasoned, in part, as follows:

 

Article 6 of The Plan deals broadly with "relocation expenses" and covers such benefits as moving expenses, allowances for incidental expenses, transportation expenses for travel from an employee's former location to his new location and, among other things, leave to seek accommodation in the new location. There are, moreover, provisions for loss on the sale of an employee's home and for the moving of a mobile home residence. The entire scheme and thrust of the article, read in conjunction with Article 7, addresses the circumstances of an employee who is required to relocate in the sense of changing his principal place of residence. An employee who elects to keep his original place of residence may nevertheless work in another location and receive, pursuant to Article 6.10 of The Plan, a monthly cash allowance, payable for a maximum of twelve months. In the Arbitrator's view a person in that circumstance is not one who can, by a fair construction of the words of The Plan, be deemed to have "been required to relocate" within the meaning of Article 7.7.

 

            The Union’s representative stresses the history of the negotiation of appendix K of the ESIMA in 1996. He relates that at that time a number of employees from Moncton and Montreal were being forced to relocate to Toronto as a result of job abolishments. The Company initially took the position that it would require that an employee both sell his or her home at the existing location and acquire a home at the new location to be eligible for the lump sum relocation benefit. The Union disagreed. It stressed that some employees did not wish to sell their existing homes because of weak market conditions, or because the home might have been in their family for generations, or they might wish to return to that home for their retirement or, alternatively, that in some situations their spouse, perhaps because of work or family obligations, could not move to the new location and would remain in the original home. In light of that discussion, the Union explains, the parties then framed the language of appendix K in alternative terms, agreeing that for an employee to be eligible for the lump sum homeowners relocation benefit a homeowner would be required to either buy a home at the new location or sell the home at the old location, or at a minimum make reasonable efforts to do so. The Union’s representative stresses that there was no requirement within the language of that provision for the employee’s spouse to move to the new location.

            The Union’s representative submits that the change in position taken by the Company is prompted by the award in CROA 2947. That dispute concerned a grievance between the Canadian Pacific Railway Company and the Brotherhood of Maintenance of Way Employees, and resulted in the arbitrator’s conclusion that under the ESIMA binding those parties for an employee to be eligible for lump sum relocation benefits he or she must relocate their household and family. He notes the rationale of that award in the following passage:

 

That is precisely the conclusion reflected in the award of the Arbitrator in CROA 2801. While that award confirms that an employee might retain the original dwelling home, or indeed leasehold apartment, and nevertheless be entitled to the payment of the lump sum, an essential condition of qualification is that the employee relocate their principal residence, which in the context of article 6 of the Job Security Agreement, means relocating their household and family. While there may obviously be various scenarios which present themselves where some members of a family may choose to remain behind in the prior location, so that certain cases may have to be examined on an individual basis, as a general rule the relocation of a household and family is fairly easily understood and recognized.

 

            The Union’s representative submits that the conclusions in both CROA 2801 and 29647 flow from the different language of the CPR-BMWE Job Security Agreement. Significant within the provisions of the CPR-BMWE Job Security Agreement is the requirement that the employee must be a householder to qualify for the lump sum relocation benefits. In that regard the Union’s representative cites the following passage from CROA 2947:

 

The Arbitrator also considers it instructive that the parties have agreed that to be eligible for the lump sum payment provided under article 6.2(b) of the JSA the employee must, as part of the eligibility requirements, be a householder, that is to say a person who owns or occupies unfurnished living accommodation. On what basis would the parties have intended that an employee who resides in the home of his or her parents, or in the home of a sibling, for example, and moves to rooming accommodation at a distant location, should have no entitlement to a lump sum payment, while a renter or home owner who maintains their household home or apartment at the original location, and similarly takes on rooming accommodation at the new location, incurring no greater costs, is nevertheless entitled to the payment of a lump sum of many thousands of dollars? The Arbitrator can see no purposive rationale for any such distinction, unless it is that the lump sum payment is to relieve against the burden of moving the individual’s household and family.

 

            On the basis of the foregoing the Union’s representative submits that the clear intention of the ESIMA, as expressly understood in the negotiations between the parties leading to the drafting of appendix K, is that if an employee relocates in the sense of changing his or her principal place of residence, and either sells their home at the old location or buys a home at the new location, they are entitled to the lump sum relocation benefit provided under article 7 of the ESIMA.

 

            The core of the Company’s submission is that the parties to this grievance renegotiated the terms of their ESIMA after the issuing of CROA 2810 and CROA 2947 and, as they made no amendments to the terms “relocate” and “relocation” within that document, they should be deemed to have accepted the interpretative approach reflected in those CROA awards with respect to the operation of their own agreement.

 

            The Company’s representative stresses the bargaining history whereby the Union, when it assumed the bargaining rights of the shopcraft employees following an application under section 18 of the Canada Labour Code, inherited language identical to that found in the Job Security Agreement of the BMWE which was interpreted in CROA 1977. Its representative maintains that following the interest arbitration award of Justice George Adams on June 14, 1995 the ESIMA which is the subject of this dispute assumed the relocation language of the CP-RCTC agreement of March 12, 1995, and that consequently the concept of relocation should be interpreted identically within the CN-CAW ESIMA. Its representative further stresses that the negotiation of Appendix K, in the form of a letter of understanding dated March 22, 1996, was clearly intended to provide clarification of articles 6 and 7 of the ESIMA, but not to supersede their provisions. In that regard he notes the following from the memorandum of agreement:

 

Please note that this interpretation of the application of the lump sum relocation benefit does not supersede any of the provisions found in article 6 or article 7 of the ESIMA, rather it serves to clarify the application of the relocation lump sum benefit.

 

            The Company’s representative further notes that on December 29, 1998 the Company and Union renegotiated the terms of their own ESIMA, partially modifying provisions inherited from the Adams award including, for example, in article 7.6 the addition of the word “principal” to the phrase “place of residence”. Additionally, under that agreement, the lump sum provisions of article 7.15 was added to allow the alternative lump sum payment of $25,000 therein provided, in lieu of the relocation benefits provided under article 6.

 

            The Company’s representative argues, in part, that the renegotiation of the ESIMA on December 29, 1998, which involved the modification of the Adams language, must be viewed as significant. In that regard he notes, as indicated above, the insertion of the word “principal” to qualify the phrase “place of residence”. He argues that the language so adopted, incorporating the phrase “principal place of residence” must be taken as importing the understanding that for an employee to relocate his or her principal place of residence, that must include moving his or her household, including the effects of the household and co-habiting family members.

 

            The Arbitrator has some difficulty with the arguments so advanced by the Company. Firstly, it is important to understand that while the language of the ESIMA and parallel language within the Job Security Agreement of the BMWE and CP Rail may have some common historical antecedents, they are nevertheless agreements particular to the specific parties and must, at all times, be interpreted and applied in a manner consistent with the understanding of the parties themselves. In that regard it should be stressed that the arbitrator recognized in CROA 2801, where the grievance of the BMWE was successful, that the BMWE was not itself bound to agreements and understandings of interpretation reached with other unions in bargaining to which it was not privy. While this Arbitrator recognizes the principle that collective agreements are to be interpreted in light of arbitral awards outstanding at the time of renegotiation, as a general rule that principle is more properly applied when the parties to the prior arbitration and the subsequent renegotiation of the collective agreement are one and the same.

 

            In the instant case the suggestion that the insertion of the phrase “principal place of residence” in 1998 was a significant departure is less than persuasive in light of the bargaining history of these parties. A careful examination of the record discloses that when appendix K was negotiated in 1996 the parties then adopted the phrase “principal place of residence”, with express reference to CROA 1977, as part of the provisions of paragraph 2 of their letter of understanding. There was, in other words, an understood adoption of that language within the framework of the understanding explained, without challenge or contradiction by the Company, in the context of the Moncton and Montreal layoffs related by the Union’s representative. In other words, in 1996 the parties knew and understood that an individual would be eligible for the lump sum relocation payment notwithstanding that all or part of his or her family might remain in the family home at the prior location. It does not appear disputed that for a number of years thereafter the Company did apply the provisions of the ESIMA in a manner consistent with the interpretation now argued by the Union. There was, in other words, nothing within the parties’ own practice which would support the interpretation now advanced by the Company, apparently based on arbitration awards concerning another company and union, to the effect that the concept of relocation must include moving one’s family.

 

            In the face of the evidence, the history of the provisions which bind these parties and the language of the ESIMA I am bound to conclude, on the balance of probabilities, that the instant parties never intended to depart from the well-established practice and understanding, whereby an employee homeowner who relocated and purchased a home at the new location was entitled to elect the option of the lump sum relocation benefit, notwithstanding that he or she might retain the prior residence as a dwelling for one or more members of the employee’s immediate family. On that basis the Arbitrator must sustain the interpretation advanced by the Union in the instant dispute.

 

            Alternatively, if I were of the view that the strict language of the provisions of the ESIMA must be construed to support the interpretation of the Company, this would, it appears to me, be a circumstance which would trigger the application of the doctrine of estoppel, given the obviously contrary application of these provisions by the Company over the years, and the apparent reliance of the Union on the expected continuation of that practice. In that circumstance the Company’s new and strict interpretation of the language could not be imposed during the currency of the collective agreement in effect at the time of its change of position. As indicated above, however, I do not consider it necessary to rest this award on that basis, as I am satisfied that the interpretation of the provisions of the ESIMA advanced by the Union is correct.

 

            For all of the foregoing reasons the grievance is allowed. The Arbitrator sustains the interpretation of the Union and directs the Company not to deny lump sum relocation benefits to employees on the basis of their household effects, their spouse and/or family failing to move to the new location with them.

 

            I retain jurisdiction in the event of any dispute between the parties concerning the interpretation or implementation of this award.

 

 

 

Dated at Toronto, March 15, 2002

 

 

_________________________________________

MICHEL G. PICHER

ARBITRATOR