HomeMy WebLinkAbout1998-0320.Union.98-08-25 Decision
ONTARIO EMPLOYES DE LA COURONNE
( CROWN EMPLOYEES DE L'ONTARIO
111111 GRIEVANCE COMMISSION DE
SETTLEMENT REGLEMENT
BOARD DES GRIEFS
180 DUNDAS STREET WEST SUITE 600, TORONTO ON M5G 1Z8 TELEPHONE/TELEPHONE (416) 326-1388
180, RUE DUNDAS OUEST BUREAU 600, TORONTO (ON) M5G 1Z8 FACS/MILE/TELECOPIE (416) 326-1396
GSB # 0320/98
OPSEU 98U073
IN THE MA TIER OF AN ARBITRA nON
Under
THE CROWN EMPLOYEES COLLECI1VE BARGAINING ACT
Before
THE GRIEVANCE SETTLEMENT BOARD
BETWEEN
OPSEU (Umon Gnevance)
Grievor
- and -
The Crown III Right of OntarIo
(Mimstry of TransportatIOn)
Employer
BEFORE N Dlssanayake Vice-Charr
FOR THE Gavm Leeb
UNION Gnevance Officer
Ontano Public SefVlce Employees Umon
FOR THE Malliha Wilson
EMPLOYER Counsel, Legal SefVlces Branch
Management Board Secretanat
HEARING August 13, 1998
2
DECISION
This is yet another "reasonable efforts" case, but very different
from any of the prevlous cases dealt with by the Board in that the
reasonable efforts lssue is being raised at a point when the
privatizatiorr process has proceeded further along than in any prevlous
case Some factual background lS required to put the grlevance into
context
The Ministry of Transportation issued 6 area malntenance contracts
with a view to privatizing certain work hitherto performed by OPS
employees, work such as road patrol, road surface and shoulder
maintenance, drainage and vegetation management A Request For
Proposals (RFP) was issued on May 27, 1998 According to the employer's
understanding of its obligations as gleaned from previous "reasonable
efforts" decislons of the Grievance Settlement Board, the employer
included three parts in the Human Resources Factor (HRF) of the RFP,
namely, Mandatory Requirements, Rated Requirements and the Human
resources Incentive Fund
Any proposal that did not meet each of the mandatory requirements
was to be disqualified The mandatory requlrements were The proponent
was required to make job offers to all OPS employees affected by the
privatization, such job offers had to include at least 85% of each
employee's current OPS salary, Each employe~'s service with the OPS had
to be recognized for purposes of vacation and benefits, and a job offer
could not include any probationary perlod
3
The Rated Requirements were designed to give proponents points for
offering certain specified terms and condltions For example, any offer
of salary In excess of 85% of the employee's current OPS salary would
earn a proponent a number of points to a maximum of 25 Similarly a
proponent could receive up to 15 points for offering group benefits such
as Basic Life, Short Term Sickness Plan, Long Terms Insurance Plan,
Health and Dental Plans etc
It lS to be noted that the HRIF stage of the HRF came into play
after the successful proponent had been selected based on the Mandatory
and Rated Requirements It lS envisaged that the Mlnistry would have
at its disposal a sum of money equal to the amount it would save by not
having to pay enhanced severance pay to the OPS employees affected by
the RFP The Ministry was to enter lnto negotiations with the
successful proponent, uSlng these funds to enhance salary and/or other
terms and conditions of employment and/or to obtain recognition of
seniorit./, in order to fulfill its "reasonable efforts" obligation
Pursuant to this RFP the Ministry selected a company called
Integrated Maintenance and Operatlons Services Incorporated (IMOS) as
the successful proponent IMOS consisted of 6 shareholder companles,
which had a combined workforce of between 3500 to 4000 employees 41
Ministry employees were included In the RFP as affected employees
However, subsequently 2 were removed The r,emalnlng 39 employees were
.
to be transferred to a company known as Miller Maintenance, one of SlX
companles in the IMOS Group The existing Miller workforce was not
unionized
4
Following the announcement of the successful proponent, the unlon
filed a grlevance dated May 31, 1998 alleging that the Ministry had
violated Appendix 9 of the collective agreement with regard to the 6
Area Maintenance contracts "Minutes of Settlement and Release" were
executed on June 26, 1998 with regards to this grlevance The relevant
portion reads
The parties agree to resolve all matters arislng out the
grievance referred to by GSB #0320/98 and OPSEU #98U073 on a
without prejudice and precedent basis as follows
1 The Ministry will be permitted to close its call for
tenders/RFP's, evaluate, announce the preferred
bidder and begln implementation wlth regard to the
following Area Maintenance Contracts These AMC's
will close on the dates specified below
(a) AMC 98-01 July 8th, 1998
(b) AMC 98-02 July 8th, 1998
(c) AMC 98-03 July 8th, 1998
(d) AMC 98-04 July 8 th 1998
,
(e) AMC 98-05 July 22, 1998
(f) AMC 98-06 July 22, 1998
2 OPSEU agrees that the mandatory criteria and the HRF
evaluation criteria lncluded In the AMC's are
sufficient to meet the Ministry's reasonable efforts
obligations up to that part of the process and
releases the Ministry from all liability in relation
thereto
3 The parties agree that the Ministry remains
obligated to negotiate with regard to the HRIF as
stlpulated in the RFP Therefore, the parties agree
to the following process in relations thereto
Wlth regard to AMC's (a) to (d) , OPSEU will
be provided with a 5 day period between
August 10 and 31, 1998 withln which to
review the efforts that the Ministry has
undertaken In relation to the HRIF If
OPSEU has any concerns with r.egard to the
Ministry's efforts In relation thereto,
OPSEU may refer the matter to
mediation/arbitration within that 5 day tlme
period and the manner must be dealt with and
completed within this time frame
1
5
with regard to AMC's (a) and (f) , OPSEU will
be provided with a 5 day period between
August 24 and September 11,m 1998 within
which to reVlew the efforts that the
Ministry has undertaken in relatlon to the
HRIF If OPSEU has any concerns with regard
to the Ministry's efforts in relatlon
thereto, OPSEU may refer the matter to
mediation/arbitratlon within that 5 day tlme
period and the matter must be dealt with and
completed within this time frame
Subsequently on July 27, 1998, the Ministry entered into HRIF
negotiations and came to an agreement with IMOS as to terms and
conditions of employment for the 39 Ministry employees who were being
made job offers On August 10, 1998 the union was provided a copy of
the agreed to terms and conditions which were eAecuted on August 9 The
union did have concerns about the "reasonable effortsN on the part the
Ministry and those concerns were referred to the GSB pursuant to Para
3 of the Minutes I was seized with the union's concerns as they
related to 4 of the 6 Area Maintenance Contracts
When the Board convened on Thursday August 13, 1998, the parties
agreed to a Med-Arb process I spent the morning attempting to mediate
a settlement but was not successful The arbitratlon hearing commenced
at 2 00 P m At the urging of the parties, I agreed that a decision
would be issued no later than Monday August 17, 1998 A "bottom-lineN
decision dismissing the grlevance was issued on August 17, 1998 wlth
written reasons to follow This decisic;m sets out those written
=
reasons
6
The union submitted that 1t had a "fundamental concern", as well as
"lesser concerns" about the employer's efforts with regard to its
obligation under Appendix 9 of the collective agreement The relevant
portions of that appendix are as follows
The Government is aware that its restructuring initlatlves over
the nex~ two fiscal years (1996/97, 1997/98) could have a
significant effect on employee, some of whom have served for
a lengthy period Accordingly, corrnnenc1ng with the
ratification of the collect1ve agreement and ending on December
31, 1998, the Employer undertakes the following
1 (a) The Employer will make reasonable efforts to
ensure that, where there 1S a disposition or any
other transfer of bargalning unit functions or jobs
to the private or broader public sectors, employees
ln the bargaining unit are offered posltions with
the new, employer on terms and conditions that are
as close as posslble to the then ehisting terms and
conditions of employment of the employees 1n the
bargaining unit, and, where less than the full
complement of employees 1S offered positlons, to
ensure that offers are made on the baS1S of
senlority When an employee has been transferred to
a new employer he/she will be deemed to have
resigned and no other provisions of the collective
agreement will apply except for Article 53 or 81
(Termination Pay)
(b) Where the salary of the job offered by the new
employer is less than 85% of the employee's current
salary, or if the employee's service or seniority
are not carried over to the new employer, the
employee may decline the offer In such a case, the
employee may exercise the rights prescribed by
Artlcle 24 and/or paragraphs 2 to 5 of this letter
The employee must elect whether or not to accept
employment with the new employer within three (3 )
days of receiving an offer In default of an
election, the employee shall be deemed to have
accepted the offer
Counsel for the union conceded that he,re the Ministry had gone a
.r
long way towards fulfilling its reasonable efforts obligation under the
Appendix Nevertheless, he took the position that there was a
fundamental flaw in that the Ministry did not take reasonable steps to
-
7
ensure that the OPS employees who accept job offers with IMOS have a job
guarantee for any length of time As he put it "any of these 39
employees can be terminated the day after they start" He suggested
that the Ministry should have provided a job guarantee for a minlmum
period of 6 months
The other aspect of the union's fundamental concern about job
security was that the Ministry had not obtained a guarantee that the OPS
employees hired by IMOS would continue to have year-round full time
employment He submitted that Slnce some of the OPS work transferred
to IMOS was seasonal In nature, eg The zone painting, there was the
real risk that employees performing that work may not have year round
employment
Counsel submitted that job security was of paramount importance to
these employees, both in terms of having contlnuing employment and
having year-round full-time employment He took the position that any
agreement negotiated without addressing job security could not be the
result of reasonable efforts contemplated by the collective agreement
Counsel pointed out that In the OPS these employees had an
assurance that where there lS a layoff they would receive 6 months
notice or pay in lieu of notice He contends that in order to satisfy
the reasonable efforts obligation, the Mi:nistry must, at a minimum,
obtain the 6 month notice or pay in lleu, currently enjoyed by employees
under article 20 2
8
Counsel conceded that the Ministry spent a considerable amount of
time negotiating with regard to the HRIF Howeverr he submits that the
result was questionable From that he contends that the ministry should
have used other incentives beyond the HRIF funds that had been allocated
to negotiate better terms and conditions of employment He argues that
the Ministry was not restricted to the HRIF amount when it negotiated
to enhance terms and conditions with the successful proponent, and that
if it required more money as leverage, that money should have been made
available
The "lesser concerns" the union raised had to do with short term
sickness (STIP) , Long-term disability insurance (LTD) and over-tlme
There was no STIP provided for the employees The only provision In
this regard was that when the new payroll system became operational In
the year 2000 IMOS undertook to make provision for banking of sick time
IMOS did have a LTD plan However, it provided only for 60% of the
wages, whereas the OPS plan provlded for a rate of 66-2/3% In the OPS
overtime rates were payable beyond 40 hours per week IMOS agreed to
pay overtime rates only for hours in excess of 55 hours a week
The employer's primary positlon is that job security is not a term
or condition of employment contemplated by the reasonable efforts
provision In any event, counsel submits that with the limited HRIF
funds available as leverage, there was no clout In the Ministry to
-
persuade IMOS to agree to what the union wants with regard to STD, LTD
and overtime, employer counsel submitted that the Ministry did its best
to persuade IMOS to improve the benefits, but was not successful
9
Counsel submitted that at the stage of HRIF negotiations the ministry's
clout was at its weakest as compared to the mandatory and rated
requirement stages and that all it could do was to use the HRIF money
to try to convince the proponent In this case the Ministry did so, and
was successf1.}l in improving many terms and conditions, but was not as
successful In other areas That, however, did not mean that the
Ministry did not make reasonable efforts
The Board notes that it lS important to be aware of the stage at
which the reasonable efforts obligation is under review here This lS
because the Board has recognized that " just as much as what
constitutes reasonable efforts will vary from case to case, what steps
the employer lS reasonably requlred to take pursuant to the obligatlon
may vary during the various stages of the divestment process " Re OPSEU
& MBS - Union Grievance re Mobile Communications, 1712/97 (Dissanayake)
In this regard the Memorandum of Settlement executed by the parties to
thls grievance plays a central role The union has clearly agreed in
the minutes that the Ministry has met its reasonable efforts obligation
as far as the mandatory and the evaluatlon criteria (rated requirements)
stages are concerned (para 2 ) Para 3 sets out the remalnlng
obligation on the Ministry as "to negotiate wlth regard to the HRIF as
stipulated In the RFP" It is common ground that for the 4 contracts
under consideration, the "HRIF as stipulated In the RFP" amounted to
approximately $ 400,000 00 The Minlstry used up approximately half of
"
that amount during HRIF negotiations to obtain improvements in terms
and condltions of employment In a number of areas That left the
Ministry approximately $ 200,000 00 of HRIF money to attempt to obtaln
"
10
enhancement In other terms and conditions Having agreed In Para 3
that the employer's remaining obligation was to negotiate wlth regard
to the HRIF as stipulated in the RFP, it lS not open for the unlon to
argue that the Mlnistry should have made additional funds available if
that was what was required to persuade IMOS to agree to terms and
cc;mdi tions equal to those In the OPS There lS no question that the
employer had a continuing obligation to make reasonable efforts to
obtain terms and conditions "as close as posslble" even during the HRIF
negotiations However, in this case, the reasonableness of the
Ministry's efforts must be judged In light of the HRIF amount In the
RFP, because that was the only leverage the parties had expressly
contemplated at this stage
The end result at the conclusion of the HRIF negotiations was that
every OPS employee affected by the RFP was guaranteed a job offer The
job offers included the following On average the wage rate amounted to
approxlmately 95% of the OPS salary levels, Senlority was recognized for
purposes of benefits and layoff/recall, a salary progresslon scheme was
provided for, there was to be no probation period for OPS employees with
the new employer, a comparable vacation package was made available,
service accrual was provided during absences due to pregnancy,
compensable injury and LTD, a no discrimination/harassment policy was
provided, the IMOS hiring practices were amended to reflect article 6
of the OPS collective agreement, a LTD plan which provided benefits
within 6-2/3% of the rate currently available was provided, banking of
sick time was assured starting in 2000, a neutral dlscipline process was
provided, just cause was required for discharge, bereavement and
11
compassionate leave was made avallable, a health and safety provision
was provided, a premium holiday was granted for group benefits
The union concedes that the Ministry worked conscientiously, having
regard to previous directlons from the GSB, to obtaln these terms and
conditions However, it contends that the Ministry still fell short in
its reasonable efforts obligation wlth regard to job security, STIP, LTD
and overtlme pay
Mr Brlan Riddell, President of IMOS, testifled about the
negotiations between the Ministry and IMOS He stated that the
possibllity of glving the OPS employees a comparable 6 months notlce/pay
in lieu was considered, but was unacceptable to IMOS He testlfied that
if such a provision was extended to these 39 OPS employees, it had to
be extended to the rest of the IMOS workers That would be a financial
burden the company could not live with, particularly In Vlew of the
limited HRIF funds the Ministry was willing to make available Mr
Riddell also stated that another concern was that employees may choose
to resign early during the 6 month period IMOS felt that could leave
It In a position where It would be impossible to fulfill the terms of
its contracts He testified that if job security had been made a
mandatory requlrement, he would have had to carefully consljer whether
he was going to bid on the RFP
Mr Piddell testified that during negotia-tions the provlslon of
some form of STIP plan was discussed IMOS could not agree to it for
the same reason that it was not fair to extend such a benefit to 39 out
\
12
of a much larger workforce Extending it to the whole workforce was not
an option because it would be a prohibitive expense
with regard to LTD, the IMOS workforce currently had insurance
providing for benefits equal to 60% of wages and IMOS agreed to extend
the same to the 39 OPS employees It was not in a posltion to undertake
an increase the benefit level because It had to be done for all
employees Such an ongoing expense was not acceptable
Mr Riddell pointed out that Miller Maintenance was operating In
the Road Maintenance Industry covered by Regulation 325, section 15 1
under the Emolovment Standards Act, which explicltly permits employers
in road maintenance to pay overtime after 55 hours in a week That was
the province-wide industry standard, and the standard applied to the
Miller Maintenance workforce Paying overtime to the 39 OPS after 40
hours would be inconsistent with this industry standard and the
additional cost on a contlnuing basls was too much Mr Riddell
testified that for those reasons, IMOS was not willing to enhance its
overtime pay policy, although It did agree to provide for overtime
banklng once the new payroll system becomes operational in 2000
In Re OPSEU and Ministrv of Transoortation, 1344/96 (Kaplan) , the
Board dealt with a reasonable efforts case between these same parties
with regard to 3 other Area Maintenance Cont~acts In criticizing the
=
approach taken by the employer, at pp 32-33 the- Board stated
In the meantime, however, the fact of the matter lS that the
HRF did not in this case, problems in calculatlon aside, make
a difference and this must, at a very mlnlmum, lead to the
13
active reconsideration of the overall approach While the
employer asserted that it was impractical, if not impossible,
for legal and other reasons, to engage in negotiations wlth a
Proponent after a bid was successful, this is not a conclusion
that the evidence or the authorities leads me to accept
Quite clearly, there lS nothing stopping the employer from
including in its RFPs the possibility of negotlating with
successftJl Proponents In some clrcumstances, such as where,
for example, the entire amount of the enhanced severance
savings were not attrlbuted as a bid preference, there would
be room, taking the employer's case at its highest, to provide
further inducements and still avoid the penalty part of the
provision Put another way, assuming for the sake or argument,
and accepting only for the sake of argument, that the
employer's obligation to provide a flnancial incentive lS
limited to the savlngs on enhanced severance that it could
reallze, there may be cases where only a part of the enhanced
severance savlngs were glven as a bid preference and a
successful proponent identified What, one must ask, would
stop the employer from negotiating with the proponent after the
competition was closed using the balance of the amount to help
its employees find jobs and/or to lmprove the terms and
conditions of jobs which were offered? The answer to this
question, it seems to me, lS nothing In this case, an
opportunity to help employees get even better jobs was lost by
the employer's self-imposed restriction on negotiatlng with the
successful Proponent This lS yet another reason for finding
for the union
In that case, the Board did not decide whether the employer's
obligation to provide a financial incentive was limited to the savlngs
on enhanced severance Here, the union maintains that It lS not so
limited However, regardless of the extent of the Ministry's obligation
generally, In the Minutes of Settlement of this grievance the parties
have agreed to what the Ministry's remaining obligation was It was to
negotiate with regard to the HRIF "as stipulated in the RFP" It lS
~
cornmon ground that the Minlstry made available that amount stlpulated
in the PFP Therefore, there was no obligation on the Ministry to
provide anything more If the Ministry made reasonable efforts uSlng
14
that money to negotiate enhanced terms and conditions of employment, it
would have met its legal obligation
The Board agrees with the Ministry counsel that the extent of the
Ministry's clout In seeking enhancement of terms and conditions gets
progressively weaker as the divestment process moves from the Mandatory
Requirements stage, to the Rated Requirements stage and to the HRIF
negotiations stage In response to the Ministry's argument that wlth
the available HRIF funds the Ministry would have had no way of
persuadlng IMOS to provide for job security, unlon counsel submitted
that, if that was so, the Ministry should have included job security as
a mandatory requirement, because it was of such fundamental importance
to the OPS employees Whether or not that position has merit generally,
there is no room for that argument in this case in view of Para 2 of
the Mlnutes of Settlement, where the union has agreed that Ministry has
met its reasonable efforts obligations as far as the Mandatory and Rated
Requirements were concerned
The Board also agrees that there is no term of employment currently
enJoyed by OPS employees, wherein they are guaranteed contlnulng
employment or full-time year round employment for any length of time
If legitimate buslness reasons require a reduction of the workforce the
employer lS entitled exercise its management rlghts Its obllgation
lS to follow the process specified In 'the collective agreement,
--
specifically article 20 To that extent, the right to notice of layoff
and pay in lieu of notice lS a term of employment whlch came wlthin the
reasonable efforts obligatlon
15
The evidence is that the Ministry had at its disposal approximately
$ 200,000 00 left in the HRIF The issue of the SlX month notice of
layoff was raised at the HRIF negotiatlons For reasons elaborated
during hls testimony, Mr Riddell would not agree to provide for that
term His primary concern was the cost, which in his Vlew far exceeded
any amount the Ministry had to offer He was concerned about the ripple
effect - how he could avoid extending the same terms to the existlng
workforce of 3500-4000 He was concerned about setting a precedent
within the IMOS group of companles Whether or not Mr Riddell's
concerns were well-founded lS not the issue The lssue lS, was there
something the Ministry could have reasonably done to persuade Mr
Riddell and IMOS, given the amount of HRIF funds it had in reserve? The
union did not point to anything the Ministry could have done at this
stage of the process The Board is satisfied, having regard to the
clout the employer had at this stage and the limlted HRIF funds at lts
disposal, that the Ministry has not breached its reasonable efforts
obligations
The same considerations are applicable with regard to STIP, LTD and
overtime pay In regard to STIP, the unlon suggested that If a term
providing beneflts on an indefinite basis was not attainable, the
Ministry could have allocated a bank of sick days to each of the 39 OPS
employees on a one-time basis to the extent that the remaining $
--
200,000 00 In the HRIF fund allowed Mr Riddell agreed that the
Ministry did not make such a suggestion He indicated that if ...... was
lL-
suggested, he would have considered it However, does the fact that the
..
16
Ministry did not make that suggestion constitute a failure to make
reasonable efforts within the meaning of Appendix 9? I do not thlnk so
The STIP benefit presently enjoyed by OPS employees under article 44 lS
for sick pay at 100% of regular salary for the first 6 days of absence
and at 75% fer an additional 124 days of absence It lS a contlnuing
benefit The union's suggestion lS a creative one whlch would have
provided the employees some benefits for a very llmited perlod, whlch
lS obviously better than no beneflts In those clrcumstances the fact
that the Ministry did not think about the creative solution as the unlon
did cannot be held to be a breach of the employer's reasonable efforts
obligation There is no evidence before the Board as to what
opportunity, if any, the union had to make suggestions to the Minlstry
as to how the HRIF may be used during negotiatlons There lS no
indication that the unlon made the suggestion it now makes to the
employer at any tlme prior to the flling of the grlevance In Re OPSEU
v. MOT (suora) at p 30, Vice-Chair Kaplan stated as follows as to what
the reasonable efforts obligation means
I am In complete agreement with employer counsel that
reasonable efforts does not mean "all efforts" It does not
mean "efforts to the point of undue hardship" It does not
mean "every effort" What it means is efforts that are
reasonable in the circumstances all things considered What
is reasonable in the circumstances will, obviously, depend
on the facts of particular cases
In my view, to find a breach because the employer did not consider
a novel and creative solution the union was 9ble to come up with, would
be to hold the Ministry to a higher standar-(j of "all efforts" or "every
effort" That lS not what lS contemplated by "reasonable efforts"
.
"
17
The Board is satisfied that the Ministry made reasonable efforts
during the HRIF negotiations stage considering the partlcular
circumstances it faced Using the funds available, the Mlnistry was
able to enhance a number of terms and conditions In some others it was
not as successful That was not indicative of a fallure to make
reasonable efforts
This grlevance lS hereby dlsmissed
r~Ov
Dated this ;r(th day of August 1998 at Hamilton, Ontario
~
Nimal V Dissanayake
Vice Chairperson
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