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HomeMy WebLinkAbout1997-0498.Union.98-02-16EMPLOY& DE LA CCURONNE DE L’ONTARK) COMMISSION DE SETTLEMENT REGLEMENT DES GRIEFS 180 DUNDAS STREET WEST; SUIJEBOO, TORONTO ON M5G fZ8 180. RUE DUNDAS OUES7; BUREAU 600, TORONTO (ON) M5G IZB TELEPHONE/ltiL~PHONE : (416) 326-1388 FAC.SIMILE/TiL~COPIE : (416) 326-1396 GSB # 0498/97, 0768/97 OPSEU# 97UO73, 97UO64 IN THE MATTER OF AN ARBITRATION Under THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT Before TRE GRIEVANCE SETTLEMENT BOARD BETWEEN OPSEU(Union Grievance) Grievors - and - The Crown in Right of Ontario (Management Board Secretariat/ Ministry of Transportation) Employer BEFORE: R.J. ROBERTS Vice-Chair FOR THE UNION: Mr. Gavin Leeb Grievance Officer Ontario Public Service Employees Union FOR THE EMPLOYER: HEARING: Mr. Len Marvy Counsel Legal Services Branch Management Board Secretariat August 12, 1997 August 13,'1997 October 27, 1997 October 28, 1997 SUPPLEMENTAL WRITTEN SUBMISSIONS: November 7, 1997 December 2, 1997 1 AWARD I. Introduction: This case raises the question whether the employer breached its “reasonable efforts” obligation under article l(a) of Appendix 9 of the collective agreement when it chose to shift its roadway maintenance operations to the private sector using Managed Outsourcing (MO’s) and Form .4 Contracts. The union submitted that there was a breach because the employer did not give any weight to this obligation. The employer submitted that there wasn’t a breach because its “reasonable effort<’ obligation under Appendix A did not commence until after the choice was made. For reasons which follow, I conclude that the employer’s “reasonable efforts” obligation commences as soon as the decision to divest is made, and as a result ) must be given significant weight in the choice by the employer of its means of divestment. The grievances are allowed to the extent indicated in the Conclusion of this Award because the employer failed to do this when it chose M07s and Form A contracts as its means of div-cstment. II. Factual Background: On March 3 1, 1996, a number of changes to the terms of the collective agreement came - into effect. One of these changes was Appendix 9, which read, in pertinent part, as follows: 2 The Government is aware that its restructuring initiatives over the next two fiscal years (1996197, 1997/98) could have a significant effect on employees, some of whom have served for a lengthy period. Accordingly, commencing with the ratification of the collective agreement and ending on December 3 1, 1998, the Employer undertakes the following: 1. (a) The Employer will make reasonable efforts to ensure that, where there is a disposition or any other transfer of bargaining unit functions or jobs to the private or broader public sectors, employees in the bargaining unit are offered positions with the new employer on terms and conditions that are as close as possible to the then existing terms and conditions of employment of the employees in the bargaining unit . . . . This has become known as the “reasonable efforts” obligation of the employer. Where a bargaining unit function or job is shifted to the private or broader public sectors, the employer must make reasonable efforts to ensure that (1) affected bargaining unit employees are offered positions with the new employer; and, (2) the terms and conditions of employment offered to them are as close as possible to their existing terms and conditions of employment. By the time Appendix 9 came into effect, the employer herein, the Ministry of Transportation, had already decided that within the next three years it would shift to the private sector all of its roadway maintenance work. This required the transfer to the private sector of a sizeable amount of the work of its bargaining unit employees. According to the evidence, at the time of this decision, bargaining unit employees in the Northwestern Region of the employer performed 50% of its summer maintenance operations and 30-40% of its winter operations The maintenance work embraced a number of diverse functions. In the spring and early summer, it included shoulder grading, pothole filling, pavement marking, and bridge washing. 3 As the summer progressed, the focus shifted to pavement repair, guardrail maintenance and sign maintenance In the winter, sanding, salting and snowplowing came to the fore. Year-round functions included electrical maintenance, highway patrolling, emergency response, and supervising the quality of work of outside contractors. Needless to say, the short-term or seasonal nature of many of these functions required most full-time maintenance employees to switch from performing one job to another as the months passed. The Ministry struck a committee called the Models Group to decide which delivery models it would adopt for shifting roadway maintenance work to the private sector. One of the representatives on this committee was Mr. Clarke McKercher, the Regional Operations Engineer for the Northwestern Region of the employer. He testified that the Models Group investigated the feasibility of alternative models for the outsourcing of the employer’s maintenance activities. Another group, called the Contracts Group, prepared the generic tender packages for the alternatives that the Models Group finally selected. According to Mr. McKercher, the Models Group ultimately selected two privatization models for shifting the roadway maintenance work to the private sector: Area Maintenance Contracts (AMC’s) and Managed Outsourcing (MO’s). In an AMC, the employer would contract out to a general contractor all of its summer and winter maintenance work for 300 to 500- kilometre stretches of highway. The contracts would extend over three (3) to five (5) year periods. 4 In an MO, the employer would act as its own general contractor. Its District Offices would tender out to subcontractors small contracts for short-term work, like snowplowing or pothole filling. Ministry staff at the patrol sites in each District would continue to patrol the highways to provide quality control supervision to the subcontractors. The subcontracts would not be multi-year contracts like AMC’s. Many would only last for a few weeks. None would provide continuous work for more than one year. It seems that an MO was something like a longer Form A contract, which was well- known to the employer’s management. Mr. McKercher explained that the employer used Form A contracts in an administrative procedure for dealing with very short-term work that was difficult to pre-identify, such as repair to a culvert that unexpectedly collapsed. When this happened, the employer would tender out a Form A contract for the short-term work involved in making the necessary repair. Upon cross-examination, Mr. McKercher agreed that the choice of these two privatization models was driven by a single objective: to get the work privatized in a way that would maximize cost savings to the employer. He said that the “reasonable efforts” obligation of the employer was discussed in the Models Group, but this did not drive the choice that was made. As to requests for proposals for AMC’s, it was decided by the Models Group that the “reasonable efforts” obligation of the employer could be satisfied by including within them the ill-fated bid incentive called the Human Resources Factor (HRF). The HW was later found to 5 be an unreasonable means of satisfying the “reasonable efforts” obligation in Re Union Grievance andMinistry of Transportation (1997), G.S.B. No. 1344196 (Kaplan, June 9, 1997) aff ‘d upon J.R. by Div. Ct. (Dec. 1, 1997). With respect to the MO’s, Mr. McKercher stated that in the discussions within the Models Group, it was recognized that most would be unlikely to generate any full-time job offers to affected members of the bargaining unit. Their discontinuous or intermittent nature, short term and low dollar value likely would preclude this. According to Mr. McKercher, the only MO’s that stood even a chance of generating full-time job offers were those that dealt with the work of a particular group, such as electricians. As a result, the Models Group decided that generally, requests for proposals on MO’s would not contain any bid incentive to induce job offers to affected members of the bargaining unit. The only exceptions to this were to be MO’s for the work of groups such as electricians. The latter would include the HRF. Instead, it was decided to take the following steps with respect to MO’s : (1) The package of materials that the employer sent to each interested subcontractor -- the employer called them “proponents” -- would include a form letter notifying the proponents of the employer’s “reasonable efforts” obligations. The form letter gave notice that if the proponent were awarded the contract, it would be provided with “a listing, by seniority of the number of [affected] employees, their salary, their positions and their work location.” According to the form letter, a management representative would then contact the proponent “to 6 explore opportunities for offers of employment and the associated terms and working conditions for affected MT0 employees.” (2) Affected employees would be notified via another form letter of the above efforts by the employer on their behalf. The form letter concluded with an expression of confidence “that the skills, qualifications and dedication of MT0 employees will prove to be an asset to the organizations of the successful bidders.” (3) Responsible management of the employer would be provided with a script to go through in a telephone interview with the successful bidder after the MO was awarded. The script suggested posing two initial questions to the successful bidder -- whether it intended to increase its workforce as a result of being awarded the contract, and would it be making job offers to MT0 employees. If the answers to these questions were “no”, the manager was to ask the successful bidder what the barriers to hiring were. If the successful bidder answered “yes”, the manager was to go on to determine how many job offers were to be made and whether they qualified as “good” job offers within the meaning of Appendix 9 of the collective agreement. When Mr. McKercher was asked why the Models Group did not try to make hiring affected staff more attractive in the case of MO’s, he replied that the members of the Models Group did what they thought in the circumstances would be reasonably expected to secure employment. They could not think of anything else that could reasonably be done. Counsel for the union then asked whether the Models Group considered making the hiring of affected staff more attractive by giving preferential treatment to those who hired affected employees. Mr. McKercher replied that this was not discussed. Mr. McKercher responded in the same way to several further alternatives posed by counsel for the union. These alternatives included providing financial incentives; automatically 7 awarding a subcontractor an additional MO if it hired affected staff, requiring subcontractors who bid on MO’s over a certain value to hire affected staff if they were successful; and. blending MO’s for summer and winter work to provide the possibility of continuous work for affected staff. As to the latter, Mr. McKercher pointed out that a contract that blended together summer and winter work would not qualify as an h/IO. He said that it would not minimize costs and would, in essence, make the bidder a general contractor. He agreed, however, that if the employer had blended summer and winter work, it would have made it easier to secure full-time employment for affected staff. In October, 1996, Mr. McKercher said, the Models Group decided that in the first phase of downsizing, which was scheduled for the Spring of 1997, each District of the employer would shift part of its roadway maintenance work to the private sector using 1 AMC and 2 MO’s, Because the Northwestern Region had two Districts -- Thunder Bay and Sault Ste. Marie -- this meant that the Region had to tender out 2 AMC’s and 4 MO’s. Thereafter, the Northwestern Region advertised requests for proposals, i.e., tenders, on two AMC’s. These tenders closed in late January, 1997. The Region also included in its implementation plan the requisite 4 MO’s -- two for stretches of highway in the Kenora and Dryden areas of the Thunder Bay District; and, two for stretches of highway in the Bruce Mines/Echo Bay and Goulais River areas of the Sault Ste. Marie District. Potentially affected 8 staff were notified in October, 1996 that surplussing was expected to take place in May, 1997. In April. 1997, after evaluating the AMC tenders that had been received. the employer decided not to award either of the AMC’s. Mr. McKercher explained that the bids were too high. There were no savings to be realized over using the employer’s own staff. The employer did not, however, retain its own staff to perform the work involved in the AMC’s. The employer remained committed to shifting all of its roadway maintenance work to the private sector within a three-year period. To keep the first phase of downsizing on track and achieve greater efficiency, the employer decided to resort to using MO’s for contracting out the work originally contemplated by the AMC’s. Meanwhile, also in April, 1997, the Northwestern Region announced its plans for its second phase of downsizing, which was scheduled to take place in the Fall of 1997. It planned to advertise requests for tenders for two more AMC’s -- one in each of the Districts. It also planned to outsource through MO’s the maintenance of a 246 kilometre stretch of highway in the Red Lake/Ear Falls area, and a 363 kilometre stretch of highway in the Blind River/Thessalon area. Potentially affected staff were advised that the employer anticipated sending out layoff notices in early June, 1997. On May 1, 1997, the union filed the first grievance leading to this arbitration. It - complained that the employer had failed to comply with, inter alia, Appendix 9 of the collective 9 agreement in contracting out its roadway maintenance work through its AMC’s and MO’s On June 9, 1997, the Kaplan award, SU~YCC, issued. It concluded that the use of the Human Resources Factor (HRF) in requests for proposals for AMC’s fell short of satisfying the employer’s “reasonable efforts” obligation under Appendix 9. On June 12, 1997, the parties essentially agreed to freeze the tendering process for all AMC’s sought by the employer, including those of the Northwestern Region for roadway maintenance. The Northwestern Region, however, continued to proceed with outsourcing its roadway maintenance work through its MO’s, including 3 MO’s that jncorporated the HRF for purposes of satisfying the employer’s “reasonable efforts” obligation. By letter dated June 10, 1997, the employer notified the union that as a result of this outsourcing, 70 affected employees would be given surplus notices. The layoffs were formally announced on June 16, 1997. Through an administrative oversight, the employer’s letter of June 10, 1997 erroneously stated that the layoffs were due to the outsourcing of roadway maintenance operations “through Area Maintenance Contracts [AMC’s] and Managed Outsourcing [MO’s].” This led the union to conclude that the employer was in breach of the “freeze” agreement of June 12 regarding AMC’s. On June 27, 1997, the union grieved, and this grievance was consolidated with the May 1 grievance for purposes of this proceedin,. 0 At the hearing, it became clear that none of the 70 employees referred to in the employer’s letter was affected by outsourcing via AMC’s. This resolved the grievance to the satisfaction of the union 10 One other grievance was consolidated with the May 1 grievance for purposes of this proceeding. On June 25, 1997, the union essentially grieved that the Northwestern Region of the employer breached Appendix 9 of the collective agreement by resorting to the use of Form A contracts when it found that the bids on its MO’s were too high to provide any cost savings to the employer. The Maintenance Engineers for the Thunder Bay and Sault Ste. Marie Districts confirmed in their evidence that this had been done. Mr. Bob van Veen, the Maintenance Engineer for the Sault Ste. Marie District, testified that when the prices bid for MO’s were higher that what it would have cost the District to perform the work itself, the District broke the work up into smaller units and contracted it out via Form A contracts. When asked why the District did not retain affected staff to perform the work, Mr. van Veen responded in the same way as the employer did, according to Mr. McKercher, upon deciding to use MO’s when the bids on AMC’s were too high. He said that it was more efficient to contract the work out. Mr. Richard Bruneau, the Maintenance Engineer for the Thunder Bay District, testified to a similar use of Form A contracts, In cross-examination, counsel for the union noted that the Thunder Bay District had let out two separate Form A contracts for guiderail repair work in the Kenora area. He asked whether these involved significant work. Mr. Bruneau replied that they -- ., did. Each of the two subcontractors fielded five-man crews for a period of 5 - 6 weeks. 11 Counsel then asked Mr. Bruneau whether he’d considered a process whereby the only people who were allowed to bid on Form A contracts like these were those who hired affected staff to do the work. Mr. Bruneau replied that he had not. Upon reexamination, Mr. Bruneau added that this would have been contrary to the employer’s tendering philosophy and practices. III. The Submissions of the Parties: (a) The Submission of the Employer: Counsel for the employer, Mr. Marvey, agreed to make his submissions first, so long as it was acknowledged that the burden of persuasion in the matter rested with the union. Counsel for the union, Mr. Leeb, acknowledged that this was the case. In his submissions, Mr. Marvey suggested that there were two issues to be decided: (1) The threshold issue: Whether Appendix 9 of the collective agreement limited in any way the right of management to choose the method of disposition of its operations; and, (2) If not, whether the employer fulfilled its “reasonable efforts” obligation under Appendix 9 after choosing to dispose of its roadway maintenance operations through Managed Outsourcing (MO’s). On the second issue, Mr. Marvey indicated that the position of the employer was that: (i) I Because of the nature of MO’s, no reasonable efforts could have generated “good” job offers to 12 affected employees within the meaning of Appendix 9; (ii) if there were reasonable efforts that could have been made, the employer made them; and, (iii) If there were reasonable efforts that the employer did not make, the union had failed to prove that they would have resulted in “good” job offers to affected employees. Turning to the first issue, Mr. Marvey noted that under article l(a) of Appendix 9, the “reasonable efforts” obligation of the employer only arose “where there is a disposition or any other transfer of bargaining unit functions or jobs to the private or broader public sectors.” The provision did not say that the employer will choose the disposition that will give employees the greatest possible chance to be offered “good” jobs. It also did not say that the employer will only dispose of bargaining unit work in a way that will ensure affected employees jobs as close as possible to their existing jobs. These things, it was submitted, were not bargained for. As a result, Mr. Marvey submitted, the management right of the employer to contract out was not constrained by Appendix 9. The employer remained free to contract out bargaining unit functions for good faith business purposes, such as improving efficiency. The employer’s “reasonable efforts” obligation under Appendix 9 only commenced once the employer had decided upon the means of contracting out that best suited its legitimate business purposes. This, it was submitted, was where a “disposition” occurred within the meaning of article l(a) of Appendix 9. As to this proposition, considerable reliance was placed upon the “Garages” case: Re 13 Union Grievance and Ministry of Transportation (1997), G.S.B. No. 1344Al96 (0. V. Gray). In that case, the employer closed some of its garages and contracted out certain vehicle repair work that had been performed by mechanics in the bargaining unit. The contracting-out was made on an ad hoc basis, As the need arose for a particular type of repair, the employer would select an appropriate service provider from a list of those who had made standing offers to the employer. This made it virtually impossible to obtain from any of the service providers on the list “good” job offers for the Ministry mechanics who were laid off as a result of the garage closures. The union argued therein that under Appendix 14 (now Appendix 9) the employer was obligated to contract out the repair work in a way that encouraged the service providers to hire laid-off Ministry mechanics. The employer submitted that it was within its exclusive management rights to choose the means by which it disposed of its vehicle repair work. It was only after the choice was made that its “reasonable efforts” obligation arose under Appendix 9. After considering the evidence and arguments of the parties, Vice Chair Gray dismissed the grievance. It was submitted by Mr. Marvey that this case stood for the proposition that, as a matter of exercising its exclusive management rights, the employer was entitled to choose to contract out in such a way that “reasonable efforts” could not be made to generate “good” job offers to -. affected employees. In the course of this submission, considerable emphasis was placed upon the following observation by Vice Chair Gray: “I do not think that one can start with the premise that for any occurrence to which the ‘disposition’ language bears application there must be some 14 corresponding effort that paragraph 1 of Appendix 9 obliges the employer to make.” Id., at 12. It was further submitted that the exercise of the employer’s exclusive management rights was only reviewable for bad faith. Reference was made to Sisters of St. Joseph of the Diocese of London in Ontario, Operating St. Joseph’s Hospital, Chatham v. Service Employees ’ Union, Local 2 10, 97 CLLC 143,636 (Ont. C.A.). In that case, the Ontario Court of Appeal upheld the quashing of an arbitration award that ruled against an employer because it could not provide “relevent and convincing, or cogent” reasons for exercising its management rights to fill a vacancy with an RN rather than an RNA. The court stated, in pertinent part: The managers of the hospital are experts in their field, just as the Board is expert in its field. Given the clear management rights clause in this case, and given no allegation of bad faith, the Board should not have made its own management decisions and imposed them on the hospital. . ..[T]he Board was acting in excess of its jurisdiction. . . . Id.. at 143,639. In the absence of an allegation of bad faith, the court said, the board exceeded its jurisdiction when it reviewed the exercise of an exclusive management right. In the present case, Mr. Marvey submitted, the,exercise of management’s exclusive right to choose the means by which it disposed of its roadway maintenence work was similarly i j unreviewable. The union did not make any allegation of bad faith or improper motive in making 15 this decision. The management rights clause in the present collective agreement was at least as strong at that in St. Joseph’s Hospital, supra. In light of this, Mr. Marvey urged, the Board was without jurisdiction and the grievances herein should be dismissed. (b) The Submissions of the Union: Upon the first issue, Mr. Leeb submitted that the management right of the employer to contract out was constrained by its “reasonable efforts” obligation under article 1 (a) of Appendix 9. In fact, he said, the issue had already been decided by the Grievance Settlement Board in Re Union C;rievance and Management Board Secretariat (1997), G.S.B. No. 2294196 (Kaplan). In that case, the union grieved a policy under which the government proposed to contract out its requirements for translation services. Apparently, translators who were currently employed by the government were invited to bid on these services so long as they accepted that, as a matter of government policy, successful bidders would have to resign before commencing their contracts and would not be entitled to the benefit of the surplus provisions of the collective agreement, including enhanced severance. The union claimed, inter alia, that the imposition of these conditions breached the employer’s “reasonable efforts” obligation under Appendix 14 (now Appendix 9) of the collective agreement. The employer claimed that the Board did not have jurisdiction because the conditions were imposed in the exercise of its exclusive management rights. 16 Vice Chair Kaplan implicitly rejected the jurisdictional challenge of the employer and concluded that the grievance should be aliowed. He indicated that, in his view, the policy imposed by,the employer breached, inter alia, Appendix 9. He said: First of all, the employer, in Appendix 14 [now Appendix 91, makes it very clear that its restructuring initiatives could have a significant effect on employees, many of whom have served for a lengthy period. As a result of this recognition, the employer committed itself to making reasonable efforts to ensure that where there is a disposition or transfer of bargaining unit functions that employees in the bargaining unit obtain employment. In this case, the most direct effect of the contested policy is not to assist the employees in obtaining employment but to deprive them of the rights provided for in the collective agreement that have been negotiated on their behalf. This, surely, cannot constitute a “reasonable effort.” And this reason alone would have been a sufficient one for finding for the union. . . . Id,, at 6. Mr. Leeb urged that the implicit rejection of the employer’s jurisdictional challenge and the striking down of the employer’s policy on the ground that it was not a “reasonable effort” clearly demonstrated that the Grievance Settlement Board had already established that the management right of the employer to contract out was constrained by its “reasonable efforts” obligation under Appendix 9. Reference was also made to another decision of Vice Chair Kaplan, Re Union Grievance and Ministry of Community & Social Services (1997), G.S.B. Nos. 2779196; 0141/97 (Kaplan). That case addressed the reasonableness of the efforts of the employer when it decided to close down several facilities for the developmentally disabled. In the course of rendering the decision of the Board, the learned Vice Chair said, “itis my view that the reasonable efforts obligation 17 begins as soon as the decision to divest is made.” Zd., at 19. This, it was submitted, further demonstrated the established position of the Grievance Settlement Board that the phrase “where there is a disposition or any other transfer of bargaining unit functions,” as used in article l(a) of Appendix 9, meant “as soon as the decision to divest is made” so as to invoke the employer’s reasonable efforts obligation at the earliest possible moment. Turning to the merits of the management rights argument of the employer, Mr. Leeb further submitted that even if the employer were correct in saying that its “reasonable efforts” obligation under Appendix 9 did not arise until after it chose the means of divestment, it still was barred from exercising its management rights to choose a means that would undermine the rights of employees under Appendix 9. The exclusive management rights of the employer, it was submitted, cannot be exercised in a manner that would undermine and nullify important employee rights that were negotiated into the collective agreement. In support of this contention, Mr. Leeb referred to Municipality of Metropolitan Toronto v. Canadian Union of Public Employees, Local 43 (1990), 69 D.L.R. (4th) 268 (Ont. C.A.). In that case, the court upheld an arbitration award that concluded that the exclusive management right of the employer to classify employees had to be exercised reasonably to avoid seriously affecting seniority rights under the collective agreement. 18 The court said: In other words, it is not patently unreasonable for an arbitrator to oblige management to exercise its discretion reasonably, where to do so unreasonably would be to create a conflict with or undermine the rights conferred by some other provision of the collective agreement. . . . [I]t does not seem patently unreasonable to view the collective agreement in a holistic manner, where even management rights may be circumscribed to avoid negating or unduly limiting the scope of other provisions. . . . Id., at 285-86. If the employer’s position on management rights were allowed to prevail in this case, Mr. Leeb submitted, it would undermine and nuliify a very important protection for employees that the parties negotiated as part of an agreement to end the 1996 strike As to the question whether, in any event: the employer satisfied its “reasonable efforts” obligation in the case of its MO’s and its later use of Form A contracts, Mr. Leeb noted that even the employer’s witnesses agreed that the short term, seasonal or intermittent nature, and low dollar value of these contracts virtually guaranteed that no reasonable efforts could generate “good” job offers to any of the affected employees. In fact. the evidence was uncontradicted that not one “good” job offer resulted from the efforts that the employer did make. Mr. Leeb also noted that the employer did not even follow the Guidelines ofkkmcrgement Board of Cabinet on the Transfer of Employees With Their Jobs or Function.These guidelines, he submitted, indicated at the relevant time that there were only two ways of satisfying the employer’s “reasonable efforts” obligation in tender cases: use of the HRF; or, negotiation with the new employer. Here, he stressed, the HRF was used to a minimal degree. In the vast majority 19 of the MO’s there wasn’t even any negotiation. All that the employer did was to notify bidders of its reasonable efforts obligation and make brief telephone inquiries of the successful bidder after the MO had already been awarded. Citing Re Rupert und Ministry of Correctional Services (1985), G.S.B. No. 372/84, at 18 (Gorsky), Mr. Leeb submitted that failure of the employer to follow its own direction indicated that the employer behaved in an unreasonable manner.. Moreover, Mr. Leeb noted, when the HRF was cast into doubt by the Kaplan award? supra, the employer continued to tender the MO’s that relied on the HRF factor to satisfy the employer’s reasonable efforts obligations. The only contracts that were “frozen” after the Kaplan award were the AMC’s. Continuing to tender these MO’s after the Kaplan award, it was submitted, was a patent breach of the employer’s reasonable efforts obligation. Mr. Leeb also made other submissions upon the issue of reasonable efforts; however in light of the conclusion reached in this case, it does not appear to be necessary to recite them. (3) The Reply of the Employer: In reply, Mr. Marvey essentially reiterated the employer’s position that under a proper interpretation of the collective agreement, management had the absolute right to dispose of its operations for good faith business purposes. Its “reasonable efforts” obligation under Appendix 9 did not commence until after this disposition. To conclude otherwise, he submitted, the Board would have to impute that Appendix 9 required the employer to dispose of the privatized I . ’ 3. I : i_ 20 operations in a reasonable manner. He suggested that this would be a tremendous leap in the interpretation of Appendix 9, and would involve the Board in a forbidden alteration of the collective agreement. IV. Consideration of the Issues: At the conclusion of the submissions, I requested counsel for additional authorities on the reviewability of management rights. I am grateful to both counsel that they more than complied with my request and provided me with several additional authorities by December 2, 1997. These authorities included, for my information, no doubt, the decision of the Divisional Court upholding the award of Vice Chair Kaplan in G.S.B. No. 1344/96, supra, which invalidated the use of the HFW as a means of satisfying the employer’s “reasonable efforts” obligation. I requested these additional authorities because my initial impresssion was that this case might have to be decided upon the slippery slope of management rights. After careful study of the evidence and argument of the parties, however, I find that this is not so. The case turns on the proper interpretation of the vague phrase, “where there is a disposition or any other transfer:‘. as used in article l(a) of Appendix 9 of the agreement. Does it mean “after the means of disposition or transfer is chosen,” as contended by the employer ? Or does it mean “once the decision to dispose-of or transfer is made,” as contended by the union? As a matter of construction, I find that the latter is the most appropriate interpretation of the phrase. 21 In my opinion, it seems inconceivable that, in the context of settling a bitter and prolonged strike, the parties intended to negotiate an important protection for employees that could easily.be turned into a nullity by the employer. Yet that would be the result if the interpretation proffered by the employer were to prevail. The facts of the present case bear this out: In early 1996, the employer made its decision to shift its roadway maintenance operations to the private sector over the next three years. There were several ways in which it could accomplish this transfer. That was why the Models Group was struck: to come up with the most appropriate models for reaching this goal. It came up with AMC’s and MO’s. Everyone agreed that AMC’s, being long-term, continuous and of high dollar value, had the potential for satisfying the employer’s “reasonable efforts” obligation. They also recognized that MO’s;being just the opposite in nature, lacked that potential. There was little doubt that if the employer shifted its operations via MO’s, it essentially would nullify the hard-won “reasonable efforts” protection for employees in Appendix 9. Yet it went forward with a mix of AMC’s and MO’s. As Mr. McKercher testified, this decision was “driven by” the goal of maximizing cost savings to the employer. No weight was given to the employer’s “reasonable efforts” obligation. When the bids for the Northwestern Region’s first two AMC’s came in too high, the employer shredded them into smaller bits and tendered them out as MO’s. This destroyed any potential these AMC’s might have had for satisfying the employer’s “reasonable efforts” obligations. Yet, according to the interpretation of Appendix 9 proffered by the employer, that - 22 was alright because its “reasonable efforts” obligation under the AMC’s disappeared when it abandoned them. It did not reappear until after the employer had “re-chosen” to shred the AMC’s into MO’s. By then, of course, its “reasonable efforts” obligation essentially had been nullified by virtue of its choice. There was even more post-choice shredding performed by the employer. When the bids for certain MO’s in the Northwestern Region came in too high, the employer shredded them into even smaller bits and tendered them out as Form A contracts. This surely extinguished any glimmer of hope that might have remained for the survival of even minimal “reasonable efforts” protection under Appendix 9. I do not think that the parties intended to let the employer choose and re-choose its means of disposition like this without giving any weight to its “reasonable efforts” obligation. As was observed by Vice Chair Kaplan in G.S.B. No. 1344/96, supra, “[tlhis [reasonable efforts] obligation is an extremely important one, and it is one that cannot be’taken lightly.” Id.. at 29. The parties could not have intended it to be a chimera, a fanciful illusion of protection that the employer could extinguish in a moment under the rubric of efficiency. I am convinced that the vague phrase in Appendix 9, “where there is a disposition or other transfer” properly construed, means “once the decision to dispose-of or transfer is made.” This is the same conclusion that Vice Chair Kaplan reached in G.S.B. Nos. 2779/96; 0141/97, supra, where he said, “[i]t is my view that the reasonable efforts obligation begins as 23 soon as the decision to divest is made.” Id., at 19. It seems to me that it is also the conclusion that the learned Vice chair reached in G.S.B. No. 2294/96, supra, at 6, where he implicitly rejected the employer’s challenge to jurisdiction based upon a claim of exclusive exercise of its management rights. I do not regard the decision of Vice Chair Gray in the “Garages” case, G.S.B. No. 1344A/96, supra, as being at odds with this conclusion. That was a case of impossibility. Vice Chair Gray concluded that once the decision to close some of the employer’s garages was made, it was impossible to make any “reasonabletiforts.” It was impossible to determine whether the work that was contracted out “would not have been contracted out anyway if the garages had remained open.” Id., at 11. It was likewise impossible to pre-identify the employees who might be affected by the contracting out. In view of this impossibility, the learned Vice Chair concluded, “there were no ‘reasonable efforts’ of the sort contemplated by Appendix 14 [now Appendix 91 that the employer could have made in the circumstances.” Id., at 1.5. I also note that Vice Chair Gray did not accept the employer’s interpretation of when its “reasonable efforts” obligation arose. In that case, as here, the employer took the position that “it is only after the form of a transaction is determined that the question arises whether reasonable efforts are required under Appendix 9.” Id., at 5. The learned Vice Chair side-stepped this issue, finding that at the time of the employer’s decision, the committee struck by the employer to review its garage operations “had considered Appendix 14 [now Appendix 93 and, particularly, had considered whether there were any ‘reasonable efforts’ that the ministry could possibly 24 make.” Id., at 8 (emphasis in original). He then proceeded to revieti the matter on this basis. Here, there was no impossibility. At the time of the decision to divest there were several different ways in which it could have been accomplished. That was why the Models Committee was struck: to select the most appropriate ways in which to shift roadway maintenance operations to the private sector. The decision of the committee, however, was “driven” by only one consideration: cost-effectiveness or efficiency. No weight was given to the employer’s “reasonable efforts” obligation under Appendix 9. The same thing happened when the employer decided to shred AMC’s into MO’s, and later, MO’s into Form A contracts. This was a breach of the employer’s “reasonable efforts” obligation. The employer’s “reasonable efforts” obligation under Appendix 9 is a very important protection for the members of the bargaining unit. In choosing which way to divest, the employer cannot ignore it. The employer must give it significant weight in determining the choice it makes. Other considerations, such as cost effectiveness or efficiency, may also be given significant weight but they cannot be permitted to extinguish or marginalize the “reasonable efforts” obligation. IV. Conclusion: The grievances are allowed to the following extent: 25 A declaration is hereby entered that in choosing and re-choosing its means of divesting its roadway maintenance operations without giving significant weight to its “reasonable efforts” obligation under Appendix 9, the employer breached the collective agreement. This declaration extends to all roadway maintenance operations that the employer sought to shift to the private sector as a result of its privatization initiative. It does not extend to those operations that the employer traditionally contracted out before the effective date of Appendix 9. The employer and the union are directed to meet forthwith to discuss how best to divest the employer’s roadway maintenance operations while giving significant weight to the employer’s “reasonable efforts” obligation. The parties may, if they wish, request the assistance of a mediator. The Board will retain jurisdiction pending this determination. The matter is remitted to the parties in this posture for the determination of any further remedies. Once again, the Board will retain jurisdiction pending this determination. Dated at Toronto, Ontario, this 16th day of February, 1998.