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HomeMy WebLinkAboutLewis Group 14-02-26 In the Matter of a Labour Arbitration pursuant to the Ontario Labour Relations Act Between: CANADIAN BLOOD SERVICES -and- ONTARIO PUBLIC SERVICE EMPLOYEES’ UNION LOCAL 5103 Grievance 2011-5103-0012 (Lewis Group Grievance) Arbitrator: Randi H. Abramsky Appearances For the Union: Jane Letton Counsel Jennifer Fehr Counsel For the Employer: Sarah Eves Counsel Hearing: Sept. 10, 2012, Jan. 30, 2014 in Toronto, Ontario 2 AWARD This grievance concerns the interpretation and application of Article 6.10(a)(iv) of the parties’ collective agreement which states: “The total notice including pay in lieu plus severance shall not exceed seventy (70) weeks.” At issue is whether this language limits the grievors’ entitlements when the Employer’s reorganization resulted in their layoff. Facts The Employer underwent a major reorganization and relocation which resulted in the layoff of some very senior employees, including the four grievors in this case. Each of the grievors has over twenty years of service with the Employer. Each grievor was formerly notified, on February 28, 2011 that their position was expected to continue to a date in early 2012, and outlined the options available to them, which included the option of bumping, or accepting “the layoff and the associated notice and severance payment as outlined below.” There was also a third option – to accept the layoff but be placed on a recall list for full time employment or vacancies. For Ms. Loida Bernardo, one of the grievors, the document provided an estimate of her notice and severance package, as follows: Cash equivalent of Notice Period based on: 14 months (61 weeks) Payment – (61 wks x 37.5 hrs. x 23.487/hr.) = $53433 Severance as per Career Bridging Program based on: 2 weeks per yr of service = 41 weeks 3 Payment – (9 wks x 37.5 hrs x 23.487/hr.) = $8221 Total: $61654** ** Approximation before statutory deductions, i.e., income tax, E.I., C.P.P. where applicable. The total notice including pay in lieu plus severance shall not exceed seventy (70) weeks. Similar letters were sent to the other grievors, which outlined their respective options and estimated entitlements. Ms. Bernardo was subsequently notified on November 10, 2011, that her last day of work would be February 29, 2012. Per the Employer’s interpretation of the collective agreement, she received a total of 70 weeks notice and severance. The other grievors were similarly notified and were impacted by the 70 week cap. On November 1, 2011, a grievance was filed concerning the notice and severance packages, alleging a violation of Article 4.04, 6.05(e) and 6.06(a) as well as “any other articles, policies or other Acts, statutes or legislation deemed applicable.” A Step 2 meeting was held on November 29, 2011, and by letter the same date, the Employer denied the grievance. The grievance was then referred to arbitration. The relevant provisions of the collective agreement include the following: ARTICLE 4 – MANAGEMENT RIGHTS … 4.02 The parties further acknowledge that it is the exclusive function of the Employer, subject to the provisions of this Agreement, to manage and control the operations…. 4 … 4.04 These management rights shall not be exercised in a manner inconsistent with the provisions of this Agreement. ARTICLE 6 – JOB SECURITY/LAYOFF … 6.02 In the event that an employee is unable to acquire the required new or greater skills or if an employee’s position becomes redundant as a result of technological change, reorganization, reassignment of bargaining unit work or contracting out she shall be given advance notice of lay-off or pay-in-lieu of notice in accordance with Article 6.05. 6.04 Notice to Union … 6.05 Notice to Employees Notwithstanding the notice periods set out hereunder for employees, the Employer reserves the right to give notice of layoff to employees concurrently with notice to the Union as set out in Article 6.04. a) Employees with less than one (1) year, in addition to severance entitlement under Article 6.10, shall be given three (3) weeks advance notice of layoff or pay-in-lieu of notice, subject to Article 6.06, with copies sent to the Local President and OPSEU Staff Representative. b) Employees with greater than one (1) year of service but less than five (5) years of service, in addition to severance entitlement under Article 6.10, shall be given four (4) months advance notice of layoff or pay-in-lieu, subject to Article 6.06, with copies sent to the Local President and OPSEU Staff Representative. c) Employees with five (5) or more but less than ten (10) years of service, in addition to severance entitlement under Article 6.10, will be given an eight (8) months advance notice of layoff or pay-in-lieu of notice, subject to Article 6.06, with copies sent to the Local President and OPSEU Staff Representative. d) Employees with ten (10) to twenty (20) years of service, in addition to severance entitlement under Article 6.10, will be given a ten (10) month advance notice of layoff or pay-in-lieu of notice, subject to Article 6.06, with copies sent to the Local President and OPSEU Staff Representative. e) Employees with more than twenty (20) years of service, in addition to severance entitlement under Article 6.10, will be given a fourteen (14) months advance notice of layoff or pay-in-lieu of notice, subject to Article 6.06, with copies sent to the Local President and OPSEU Staff Representative. 5 6.06 a) Employees who are required to work during their notice period shall be guaranteed to receive the cash equivalent of their notice period under Article 6.05 at the time of layoff or, in place of such payment, they may elect to exercise their rights under Article 6.11. b) Employees who receive notice of layoff under Article 6.05 who are not required to work during their notice period must elect within five (5) weeks to either receive the cash equivalent of the remainder of their notice period under Article 6.05 or, in place of such payment, to exercise their rights under Article 6. In the event that such an employee displaces into a lower paying position under the provisions of Article 6, their pay rate shall be maintained at the scale for the position from which they were laid off for a period of six (6) months. 6.07 Employees who opt to receive the cash equivalent shall be deemed to be terminated and the provisions of Article 6.11 shall not apply to such employees. 6.08 The notice periods referred to in Article 6.05 includes statutory notice required under the ESA and, where required, payment shall be processed for the applicable notice period, in accordance with legislation. All employee insured staff benefits, including Pension if applicable, will continue during the statutory notice period. … 6.10 Severance Pay a) Involuntary Lay Off i) A laid off employee shall receive one (1) week of severance pay, equal to one (1) week of regular earnings, per year of service to a maximum of twenty-six (26) weeks. … iv) The total notice including pay in lieu plus severance shall not exceed seventy (70) weeks. … b) The severance payments referred to in this Article include statutory severance as required under the ESA. 6.11 Displacement … 6.13 Recall Rights … 6 In addition, the parties applied a “Career Bridging Program” for managers and employees which provides that employees enrolled in the program “are entitled to receive a severance payment of two weeks per year of service, to a maximum of 26 weeks, on their date of layoff. The provision in dispute between the parties was negotiated during the 2005 – 2008 round of collective bargaining. Mr. Rob Burwash, who participated on the Employer’s negotiating team, testified about those negotiations and the history of the notice and layoff provisions. Mr. Burwash testified that prior to the 2001-2005 collective agreement, the Employer did not have the right to layoff employees. In the 2001-2005 agreement, the Employer sought to remove that limitation and, in exchange, provided for a generous notice provision. Article 6, Job Security, was negotiated which provided that if “an employee is unable to acquire the required new or greater skills [due to technological change] or if an employee’s position becomes redundant as a result of technological change, reorganization, reassignment of bargaining unit work or contracting out she shall be given advance notice of lay-off or pay-in-lieu of notice in accordance with Article 6.03.” Article 6.03 then set out an increasing amount of notice based on seniority, which is quite similar to the amounts of notice set out in Article 6.05 of the 2005-2008 and 2008-2011 agreements. This provision, according to Mr. Burwash, was referred to as the “technological change” provision, and it was used to “buy” the right to layoff employees. The 2001-2005 agreement also provided, in Article 17, Lay- Off and Recall, procedures for layoff and, under Article 17.03, severance pay, as follows: 17.03 Except as otherwise stated under Article 6, notice of layoff or pay-in-lieu of notice shall be made on the basis of one week per year of service to a maximum of eight (8) weeks. Severance entitlement will be paid to an employee with five (5) or 7 more years of service on the basis of one (1) week for each year of service up to a maximum of twenty-six (26) weeks. Severance pay will only be paid upon termination of employment. Disputes arose between the parties when two layoffs occurred – with the Union contending that the layoff fell under the more generous Article 6 provision and the Employer asserting that it fell under Article 17. Consequently, in the 2005-2005, the Employer sought to eliminate the confusion between Articles 6 and 17 as well as to put a limit on the Employer’s liability in the case of a layoff. Under the 2001-2005 agreement, if an employee with 26 years of service was laid off due to one of the listed reasons, they would be entitled to fourteen months “advance notice of layoff or pay-in-lieu of notice” in addition to their severance entitlement under Article 17. That would amount to fourteen months of notice and 26 weeks (or six months) of severance, for a total of twenty months pay. In addition, under Article 6.04(a), “[e]mployees who are required to work during their notice period shall be guaranteed to receive the cash equivalent of their notice period under Article 6.03 at the time of layoff or, in place of such payment, they may elect to exercise their rights [to bump] under Article 17.” Consequently, employees received working notice, the “cash equivalent of their notice period” and severance pay. In 2005-2008 round of collective bargaining, the Employer first sought to eliminate the notice provisions in Article 6 entirely and have all employees fall under Article 17 – one week per year of service to a maximum of eight weeks. The Union sought, among other things, to enhance the notice provisions, increase severance pay to 8 four weeks per year of service to a maximum of eighty (80) weeks, plus a retraining allowance. The Employer subsequently made other proposals to reduce the amount of notice under Article 6 (to a maximum of four months), but also proposed an increase in severance pay to 52 weeks, for a maximum amount of 16 months, which is just over 68 weeks. There were also proposals to combine Articles 6 and 17 to eliminate disputes between parties as to which benefits were applicable. According to Mr. Burwash, as negotiations continued, the Union remained adamant that it would not reduce the notice entitlements under Article 6. Consequently, the Employer decided to take a different approach to reduce its financial liability in the event of a layoff. It left the notice entitlements under Article 6 intact, but altered its severance proposal. It proposed severance pay, for employees with more than five years of service, of one week per year of service to a maximum of 26 weeks. It also included new language, in Article 6.10(a)(iv) which stated: “The total notice plus severance shall not exceed seventy (70) weeks.” According to Mr. Burwash, the Employer explained to the Union when it presented this proposal that because the Union would not agree to change the notice formula, it was proposing a cap of 70 weeks (notice plus severance) to address the Employer’s concern about limiting its financial exposure. There was no discussion about distinguishing employees who worked during the notice and those who did not. He stated that it was “if the math got you to over 70 weeks, the cap would apply.” 9 Mr. Burwash further testified that the parties had a “clarification” discussion about Article 6.10(a)(iv) to ensure that it was clear to both sides that “total notice” included “pay-in-lieu”. The Employer then proposed as follows: “The total notice and/or pay in lieu of notice plus severance shall not exceed seventy (70) weeks.” The Union counter-proposed: “The total notice including pay in lieu plus severance shall not exceed seventy (70) weeks.” According to Mr. Burwash, there was no suggestion by the Union that its proposal meant something different – they just preferred their proposed language, and the Employer agreed to it. Mr. Burwash testified that he felt that the language was clear – that the maximum anyone would receive in regard to notice, including pay in lieu of notice, plus severance, would be 70 weeks. The parties’ negotiations led to other changes to Article 6. The parties combined Article 6 and 17; introduced a voluntary exit option; introduced a second opportunity to bump if an identified position was over 100 kilometres away; and they eliminated the five-year requirement for receipt of severance pay. No evidence was presented by the Union to rebut Mr. Burwash’s testimony. Reasons for Decision The goal of a board of arbitration in a contract interpretation case is to determine the intention of the parties – from the words used by the parties in their collective agreement. As stated in Re Brandon General Hospital and Manitoba Nurses’ Union, Local 4 (1996), 56 L.A.C. (4th) 174 (J. Chapman) at p. 183: 10 A cardinal rule of construction in determining the intention of the parties, is that one must assume that the parties intended what they have said and that the words chosen should be viewed in the normal or ordinary sense unless that would lead to some absurdity or inconsistency. The words being considered should be interpreted in the context of the section as a whole. … In this dispute, the parties’ dispute centres on whether the words “total notice including pay in lieu…” in Article 6.10(a)(iv) includes “the cash equivalent of their notice period under Article 6.05 at the time of layoff”, as asserted by the Employer, or does not include that benefit, as asserted by the Union. In an earlier ruling, I held that the words “total notice including pay in lieu”, when Article 6 is considered as a whole, is reasonably susceptible to both interpretations, and the interpretation cannot be resolved strictly by reference to the language used when read in the context of Article 6. In addition, it is unclear, in applying Article 6.10(a)(iv) to very senior employees whether or not “total notice including pay in lieu” includes the “cash equivalent of their notice period under Article 6.05 at the time of layoff.” It is only very senior employees who are potentially affected by the 70 week cap contained in Article 6.10(a)(iv), if “pay in lieu” includes the “cash equivalent” benefit. Accordingly, because I concluded that the words “total notice including pay in lieu” is both patently and latently ambiguous, extrinsic evidence was admissible as an aid to the interpretation of Article 6.10(a)(iv). That evidence has now been led. Having now considered the evidence and the arguments of the parties, I am persuaded that the Employer’s interpretation was the intended meaning of Article 6.10(a)(iv). There are a number of reasons that lead me to that conclusion. 11 It is important that the 70–week cap was new language to the parties’ collective agreement, negotiated in the 2005-2008 round of collective bargaining. It did not previously exist. Before the cap, long service employees, upon a layoff covered under Article 6, would receive up to 14 months working notice, 14 months of “cash equivalent of their notice” and 6 months (26) weeks of severance pay. There is no dispute between the parties that this was a very generous monetary benefit. This generous benefit was first negotiated in the 2001-2005 round of bargaining to “buy” – in Mr. Burwash’s terminology – the right to layoff employees, which did not previously exist in the parties’ agreement. It is not surprising, then, that in the 2005-2008 negotiations, the Employer sought to reduce that benefit and made several proposals to that effect. Equally not surprisingly, the Union resisted that, and was adamant that the notice periods already set out in the collective agreement remain unchanged. This led to the Employer’s decision to approach the issue from the severance point, instead of the notice point. It proposed to cap its notice and severance liability at 70 weeks – with the proposal: “Total notice including severance shall be capped at 70- weeks.” This was later clarified to “[t]otal notice and/or pay-in-lieu of notice plus severance shall be capped at 70-weeks” and then ultimately, “[t]otal notice including pay- in-lieu plus severance shall be capped at 70-weeks.” 12 As noted, the issue is whether or not this 70-week cap includes the payment to employees under Article 6.06(a) or (b) – the “cash equivalent of their notice period under Article 6.05.” When considering that question, it is significant that the provisions of Article 6 are all interrelated. Article 6.02 states that in the event of a layoff, employees “shall be given advance notice of layoff or pay-in-lieu of notice in accordance with Article 6.05.” Article 6.05 (a) through (e) then sets out notice entitlements, based on length of service, with Article 6.05 (e) providing that an employee with “more than 21 years of service” is entitled to “fourteen (14) months advance notice of layoff or pay-in- lieu…” Articles 6.02 and 6.05, standing alone, entitle employees to either advance notice of layoff or pay in lieu of notice, but not both. It is only the addition of Article 6.06(a) and (b) that provides employees with the right to working notice and pay-in-lieu of notice, provided that the employee choses not to exercise his or her right to bump. Based on the specific context of these provisions, the fact that the parties used different language – “cash equivalent of their notice period under Article 6.05” – does not support the conclusion that the parties meant something other than pay-in-lieu of notice. The employees, under Article 6.05(a), had already received advance notice of layoff, so they could not also receive pay in lieu of notice – except for Article 6.06. Article 6.06(a) ensures that employees who, for operational reasons are required to work the notice period, do not forfeit the benefit of pay-in-lieu of notice. Article 6.06(b) provides a similar benefit to employees who are not required to work during the notice period. They 13 have a period of time to elect whether to accept the “cash equivalent of the remainder of the notice period” or to bump. There is nothing that suggests that the parties meant something other than the “pay-in-lieu” of notice set out in Article 6.05. Article 6.06 cannot be separated from Article 6.05. They are explicitly linked, which leads to the inference that when the parties referred to the “cash equivalent of their notice period under Article 6.05” they were referring to the pay-in-lieu of notice set out in Article 6.05 – not some other benefit or “bonus”, as the Union asserts. Different words were used in Article 6.06 because the employees were already provided advance notice of layoff under Article 6.05. In addition, when the words “cash equivalent of their notice period” are “viewed in the normal or ordinary sense” they mean the same as “pay-in-lieu of notice.” The Employer argued that the words “cash equivalent of their notice period” is the very definition of “pay in lieu of notice”. I agree that is the common understanding of pay-in- lieu. Consequently, I am persuaded that when the parties’ negotiated the 70-week cap on “total notice including pay in lieu”, plus severance, they intended to include the payments made under Article 6.06. The Union asserts, however, that this interpretation leads to an absurd result because it means that senior employees are denied their full entitlement to severance pay under Article 6.10, and because less senior employees are entitled to greater severance than more senior employees. It cites to Re Toronto District School Board and C.U.P.E., 14 Local 4400 (Black Grievance) (2011), 205 L.A.C. (4th) 8 (Luborsky) and Re Complex Services Inc. (c.o.b. Niagara Casino) and OPSEU, Local 278 (Pension Contributions Grievance) [2011] O.L.A.A. No. 321 (Davie). It submits that senior employees, under the Employer’s interpretation, can never receive their full severance entitlement under Article 6.10(a)(i), which renders the provision meaningless. The Employer does not dispute that very senior employees will not be granted their otherwise full entitlement to severance pay, or that less senior employees are given more severance than their more senior counterparts, but disputes that this leads to an absurd result when the employees’ overall entitlements are considered. In its submission, though the more senior employees receive less severance, their total notice/severance entitlement is still greater. In support, it cites to Re Kitchener Frame Ltd. and CAW- Canada, Local 1451 (Severance Pay Entitlement Grievance) [2009] O.L.A.A. No. 300 (Knopf); Re U.F.C.W., LOCAL 1000A and Loblaws Supermarkets Ltd., unreported decision of Kevin Whitaker (Nov. 27, 2009). The Employer further submits that under the Union’s interpretation the cap negotiated by the parties has no application whatsoever, and would effectively read this provision out of the collective agreement. It submits that such an interpretation would violate basic rules of interpretation, since all words used must be presumed to have some meaning and effect. In support, it cites to Re Toronto School Board and C.U.P.E., Local 4400 (Unit D)(Black)(2011), 205 L.A.C. (4th) 8 (Luborsky). 15 It is a basic rule of construction that all words in a collective agreement must be given meaning and effect, and I agree that the Union’s interpretation would wholly negate the 70-week cap negotiated by the parties. The 70-week cap was proposed by the Employer to place a limit on the total amount of notice and severance due to employees in the event of a layoff. “Total notice” was clarified to include “pay-in-lieu” and total notice plus severance was capped at 70-weeks. It was designed to prevent employees from receiving more than 70-weeks of combined pay-in-lieu plus severance. The Union suggested no examples in regard to when the cap would apply, if it did not apply in this case. Article 6.06 covers employees who are required to work the notice period as well as those who are not – in other words, everyone affected by a layoff. Consequently, if the provision does not apply to cap the grievors’ entitlement in this case, there is no evidence that it would ever apply, which would improperly render the provision meaningless. The bargaining history clearly demonstrates that the parties did not negotiate a meaningless provision in Article 6.10(a)(iv). It is true that the consequence of this cap is that senior employees – those with more than 21 years of service - who are required to work during their notice period – receive 14 months of pay for the “cash equivalent of their notice period under Article 6.05” but only nine weeks of severance - for a total of 70 weeks notice and severance. A less senior employee – with 20 years of service – will receive 10 months of pay for the “cash equivalent of their notice period under Article 6.05” and twenty (20) weeks of severance – for a total of 61 weeks. However, given that the total compensation (notice 16 plus severance) is greater for the senior employees than the less senior employees, I cannot conclude that this is an absurd result. The fact that the more senior employees are provided greater compensation than less senior employees distinguishes this case from Re Complex Services Inc., supra. In that case, the employer asserted that it did not have to make pension contributions for the time that an employee was on paid vacation. The effect of that position was that senior employees, who received more vacation time than junior employees, would receive less pension contributions than the junior employees. The Board of Arbitration allowed the grievance, finding that vacation pay was “earned” by employees and therefore fell within the words “regular hourly pay earned” in terms of pension contributions. In so ruling the Board also stated, at par. 27: Finally, we agree that the Employer’s interpretation does lead to the absurd result that senior employees receive less pension contributions than junior employees. Although a board of arbitration does not have jurisdiction to relieve against an ill considered bargain agreed upon by the parties, absurd results of this nature should be avoided unless the language of the collective agreement clearly intends such a result. That clear language is not present in this case. In the instant case, although senior employees may receive less severance pay if laid off, they still receive more total compensation when notice and severance are considered together. In addition, even if it could be considered an “absurd” result, the language capping “total notice including pay in lieu” plus severance is the type of “clear language” required. 17 The decision in Re Toronto District School Board, supra, is also distinguishable. In that case, at issue was the employer’s denial of a discretionary educational allowance because the course work was not required for the grievor’s current position, as opposed to some future promotional opportunity. The arbitrator determined that since the collective agreement, in a separate provision, required the employer to pay for training required for a position, imposing the same standard as a pre-condition for the discretionary educational allowance “rendered the provision meaningless.” He held at par. 36, that “such a result would negate any practical value of article V.2 for the majority of bargaining unit members, which in applying the canons of contract interpretation…is unlikely to have been the intention of the parties in crafting that provision.” In this case, there is no evidence that the Employer’s interpretation of Article 6.10(a)(ii) would render the severance provision meaningless for a majority of bargaining unit members. It is only those employees with 21 or more years of service who are impacted by the 70-week cap, and they still receive some benefit from the provision. For all other employees, Article 6.10(a)(i) provides a significant benefit. It is not unusual for parties to combine notice and severance entitlements in a single collective agreement provision, or to cap them. In Re U.F.C.W., Local 175 and BFI Canada Inc., unreported decision of Arbitrator Hayes dated Feb. 5, 2013, the parties agreement provided that in the event of a permanent closure, “the Company will pay two (2) weeks per year of service (including notice-whether worked or paid in lieu – and severance) to any employee at the time of closure…[to] a maximum of forty-four (44) 18 weeks of regularly scheduled hours.” The Union asserted that this language required that employees be given two weeks notice pay for every year of service and two weeks of severance pay for every year of service to a maximum of forty-four weeks. The Employer submitted that employees were entitled to two weeks pay for every year of service to a maximum of forty-four weeks. The arbitrator dismissed the grievance, concluding at par 21 that “the intention of [the agreement] is that affected employees will receive two weeks per year service to a maximum of forty-four weeks” and “[t]hat this amount is intended to comprise both severance and notice entitlements….” He found “nothing illegal about achieving such an intention nor is the result, which is in some respects superior to that available under the Employment Standards Act, in any way absurd.” In my view, the parties here, likewise, combined notice and severance pay in Article 6 – and placed a 70-week cap on combined notice and severance entitlements. The 70-week cap does not – and was not meant to – denigrate the substantial service provided to the Employer by the grievors. Their seniority is recognized by the greater overall notice/severance benefits provided under the collective agreement. For all the foregoing reasons, however, I conclude that, on balance, the “cash equivalent of their notice under Article 6.05” was intended to be included within the 70-week cap set out in Article 6.10(a)(iv). Conclusion: For all of the reasons set out above, the grievance must be dismissed. 19 Issued this 26th day of February 2014. /s/ Randi H. Abramsky ____________________________________ Randi H. Abramsky, Arbitrator