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HomeMy WebLinkAboutUnion 97-04-24l '0 Bulletin 97- 10- ARB -34 >Q a5r25 Job Security - Contracting Out - Lay -off- Radonalizadon/Restructuring The Facts: In November 1996, the Hospital entered into an agreement to transfer some of its laboratory services to The Toronto Hospital (TTH) in order to reduce costs. Laboratory services at TTH are provided by Toronto Medical Laboratories Limited (TML). TML is a partnership between TTI-L which provides the laboratory and laboratory employees, and MDS Health Group Limited (MDS), a private organization which provides the managerial employees. The agreement between the Hospital and TTH will be implemented in three phases. In the first two, laboratory work will remain at the Hospital. In the third phase, some laboratory work will be performed at TTH by TTH employees who are members ofthe OPSEU bargaining unit The implementation of this phase will result in the lay -off of approximately twenty bargaining unit employees at the Hospital. The Union grieved that the third phase will violate Article 28.04 - the contracting out provision of the collective agreement. At the arbitration hearing, the parties submitted evidence regarding the bargaining history of Article 28.04. This provision was negotiated by the parties in the 1988 round of central negotiations_ At that time, the parties agreed to recommend that participating hospitals use the `Guidelines for Employee Transfer Arrangements in Hospital Service Rationalization' (Guidelines) (see Bulletin 96 -15- RAT -1) which addresses transfer issues arising out ofhospital mergers. The Collective Agreement: Article 28.04 Contracting Out The Hospital shall not contract out work performed by members of this bargaining unit if, as a result of such contracting out, a layoff of any bargaining unit employee occurs. This clause will not apply in circumstances where the Hospital no longer provides particular services as a result of the rationalization or sharing of services between Hospitals in a particular geographic district, or as a result of the withdrawal of the Hospital's license to perform such services. The Union's Position: The Union argued that the Hospital failed to establish that the proposed contracting out falls within the rationalization exception set out in Article 28.04 of the collective agreement. That exception, in the Union's view, contemplates reciprocal arrangements in which hospitals would rationalize their tasks, and share employees and work between themselves. The exception was not intended to allow the unreciprocated transfer of work from one hospital to another if lay -offs would result Moreover, the transfer of work to the private sector was never contemplated. The 1988 recommendation that hospitals adopt the Guidelines, in that these Guidelines are directed only at situations resulting in employee movement between hospitals, further suggests that Article 28.04 was not intended to address the transfer of work to a private employer. The Union expressed a further concern regarding the possibility that TTH might, in the future, enter into an arrangement with TML such that all of the work would be performed by TML employees. Bulletin 97- 10- ARB -34 (continued) The Hospital's Position: The Hospital contended that Article 28.04 provided it with the authority to rationalize its operations in order to reduce costs. There was never any agreement between the parties that would effectively limit the applicability of this provision. It was further argued that the instant circumstances fall within the rationalization exception of Article 28.04. The Hospital was rationalizing its laboratory services, and had entered into an agreement with another hospital in the same geographic area. The Board's Decision: The Board noted that, while there has already been transferring of laboratory testing between Ontario hospitals, the instant case represents the first time that such a transfer will result in the lay -off of bargaining unit employees. In the Board's view, Article 28.04 is clear and unambiguous. The Hospital is prohibited from contracting out unless it "no longer provides particular services as a result of a rationalization or sharing of services between Hospitals ". In the instant case, the Hospital will no longer provide laboratory services because of a rationalization of that work which will be performed at TfH by TTH employees. The fact that these employees will be supervised by private sector employees is of no consequence. In the Board's view, the Hospital needed to save money and, to this end, was permitted by Article 28.04 to enter into the agreement with TI'H. Finally, the Board noted that the term rationalization must be given its conventional labour relations meaning; that is, downsizing brought about by restructuring. There are no grounds on which to find that the rationalization exception is limited to sharing and other reciprocal relationships between hospitals. In a unanimous award, the Board concluded that the implementation of the third phase does not, and will not, violate the collective agreement. The grievance was dismissed. [Centenary Health Centre and Ontario Public Service Employees Union; April 24, 1997; award of 11 pages; W. Kaplan, Chair, R. Gallivan, Hospital Nominee; G. Majesky, Union Nominee] iEVT BY Hicks. iforinY ;t AL 4 -24 -97 : 3 58FM : TD TOfla - 2eth Ff- IN THE MATTER OF AN ARBITRATION BETWEEN' Centenary Health Centre - and - OPSEU (Union Policy Grievances) Before: William Kaplan, Chair Robert Gallivan, Employer !Nominee Gary Majesky, Union (Nominee Appearances For the Employer: For the Union: Wallace Kenny Hicks Morley Hamilton Stewart Storie Barristers & Solicitors David Wright Ryder Wright Blair & Doyle Barristers & Solicitors Hearings were held in this matter on April 14 & 21, 1387. 316 205 1390 :m 2' SE.T BY Hicks. Miirl�y et df.. 4-24 -97 : 3'59P1f ; TD TOWER - 29-Lh F1— q ?16 201 1390:* 3111 Introduction This case concerns the alleged violation of the fallowing provision of the collective agreement: The Hospitai shall not contract out work performed by members of this bargaining unit if, as a result of such contracting out, a layoff of any bargaining unit employee occurs. This clause id not apply in circumstances were the Hospital no longer provides particular services as a result of the rationalization of sharing of services between Hospitals in a particular geographic district, or as a result of the withdrawal of the Hospital's license to perform such services. The background facts are not in dispute_ The Background Facts er "Centenary ") is a hospital located in th e Centenary Health Centre (hereaft City of Scarborough. in the fall of 1995, Centenary retained the services of a consulting firm to assist it in identifying cost savings made necessary as a result of announced funding cutbacks. The provision of laboratory services was identified as an area in which savings could be realized and, in the result, Centenary held meetings with other area hospitals, and two private laboratories, in order to determine what joint efforts andlor Ultimately, these discussions were partnerships, if any, might be initiated not fruitful. However, Centenary also had an affiliation with the Toronto i- lospital, a hospital located in downtown Toronto, and in November 1996, reement with the Toronto Hospital to have the Centenary entered into an ag Toronto Hospital perform some of Centenary's laboratory services. SENT BY :Hicks- Morley G? AL 4 -24 -97 : 4 00?M : TD TOWER - 291h FI- 3 416 205 13SO:m 1!1 For its part, the Toronto Hospital (also referred to as `TTH' j has entered into an equal partnership with MDS Health Group Limited (hereafter "MDS', a private sector organization. These partners have established a new company, Toronto Medical Laboratories limited (hereafter "TML "). This company was created to provide laboratory services to the Toronto Hospital. In brief, following a review of its laboratory operations, the Toronto Hospital decided, among other things, to automate and to introduce new technologies. After considering the matter, it decided that rather than purchase new equipment - it had no money for major capital expenditures it would enter into an agreement with MDS and establish TML. The Toronto Hospital would continue to provide the laboratory - licensed to it - and the laboratory employees, except managerial employees who would be provided by MDS. MDS will, in part, earn money based on realized cost savings. The agreement that Centenary entered into with the Toronto Hospital provides for its implementation in three phases. Under Phase 1 and Phase 2, laboratory work will remain at Centenary managed by a Laboratory Manager supplied by TTH employed by TML. Neither Phase 1 nor Phase 2 are of concern to this case. What the union objects to is Phase 3. Pursuant to Phase 3, certain laboratory activities - not all of them - will be performed at the Toronto Hospital by TTH employees who are also members of OPSEU and who work pursuant to a collective agreement between TTH and OPSEU _ The implementation of Phase 3 will, however, result in approximately 20 layoffs at Centenary. From what the local union has been told, this nitiative has been taken solely to save money. Centenary has the people and the capacity to perform all of the testy scheduled for transfer. and 's*_= license remains fully in place. SFNT SY :Hicks. liorl =y 2t AL 4-24 -97 : 4 00Pk : TD TOWER - 291h Fl- 0 416 205 1330i# 5;1 Bargaining History f the bargaining history behind Article The Board heard soma evidence o 28.04. Mr, Robert Pick, a charge technician employed by the grey Bruce Regional Health Centre, a union activist, and along -time member of the central bargaining team, testified about the introduction, in 1968, of this provision dealing with contracting out. Suffice it to say, that the union, in that set of negotiations, sought to introduce language prohibiting contracting out. Various proposals were traded back and forth, and the management team made it clear that it would not accept an outright bar. Eventually, Article 28.04 was agreed to. Mr. Pick testified that in agreeing to this provision it was his view, and that of the union bargaining team, that it allowed for the reorganization of work between hospitals by providing a basis for hospitals to rationalize their tasks and to share employees and work amongst themselves. What it did not provide for, he testified, was for the unreciprecated transfer of work from one hospital to another if layoffs would result While Mr. Pick had his views about the meaning of the word "rationalization," he agreed that there was no significant discussion, if any, about that at the bargaining table. And while a number of sorts of circumstances in which the provision might be applied were discussed at the bargaining table, Mr. Pick agreed that this discussion, and the range of possible circumstances, was not exhaustive. still, the purpose of the provision, in Mr. Pick's view, was to prevent layoffs, not to provide a mechanism for hospitals to save money by transferring work to other hospitals, or to the. private sector even n narrnersria wi #h another hospital. the union Mr. Pick tested, would rave ceen coocsed to that as the bargaining committee strerigry rest that SENT BY :Hicks. Mori -2y =t AL 4 -24 -97 : 4 01Pit ; TD TOR'ER - 29-Lh Fl- 416 205 1390:t 6 /1: 5 hospital work should be kept in the hospital sector. In addition to agreeing to Article 28.04, the parties agreed in their 1988 negotiations to recommend to participating hospitals that they make use of Service Rationalization/Employee Transfer Guidelines (hereafter the "Guidelines "). These Guidelines, which were introduced into evidence, are primarily concerned with transfer issues arising out of hospital mergers and amalgamations. Mr. Pick testified that this was an important topic of conversation between the parties when they negotiated Article 28.04_ Union Argument In the union's submission, Centenary was obliged to establish that the contracting out it proposed to undertake fell within the exception provided for in Article 28.04. And in the union's view, Centenary failed to meet its evidentiary burden. Referring to the evidence of bargaining history, union counsel argued that what Article 28.04 envisaged was reciprocal arrangements in which hospitals would rationalize their operations and reorganize work between themselves. The dictionary definition of the word rationalization was, counsel suggested, instructive and supportive of the union's case for the word meant to bring in accord with reason. What the provision in question did not provide for, counsel argued, was the unreciprocated transfer of work and consequent layoffs of employees in order to save money. And what was never contemplated, counsel suggested, was for the work in question to go to the private sector. -he negotiating history, counsel argued, was extremeiv instructive. Not only did the evidence of Mr. pick establish the purpose of the provision, that SF_N7 SY Hicks. Verify at ;L : 4 -24-97 : 4 :01?3l : TD T04{ER - 29th FI- N 416 205 1390:# 7/L evidence was reinforced by the agreement of the parties that identified the Guidelines and recommended that they be circulated and adopted. These Guidelines do not deal with situations like the one now before us; they were, quite consistent with Mr. Pick's evidence, directed at hospital mergers and amalgamations which raise the possibility of employee movement between hospitals and the labour law and labour relations issues which would then inevitably arise. in the union's submission, clauses like Article 28.04 must be narrowly read for the mischief they were directed at curing was contracting out. If Centenary's position was upheld, that would, in the union's view, gut the provision and thereby render meaningless the bargain reached by the parties. Moreover, there were other reasons to be concerned about this arrangement. In the future, what would prevent the Toronto Hospital from entering into an arrangement with TML that would provide that all of the work was be performed by TML employees? Should that situation come to pass, employees at Centenary would no longer be in a position to grieve as this further contracting out would not result in any layoffs. Put semewhat differently, the employer should not be allowed to achieve indirectly a result - contracting out work to the private sector - that it was unable, in bargaining, to achieve directly. Counsel asked that the grievances be allowed and that the Board issue an appropriate declaration to that effect. Employer Argument in Centenary's view, Article 28.04 explicitly provided it with the authority M rationalize its operations in order tc save *ropey in the manner set out in tnis case. White the employer argued that no extrinsic evidence was SENT BY Hicks. Morley et AL 4-24 -07 : 4 =02FM TD TOliER - 28ih F1— 7 416 205 1390;= 8 /h necessary, what evidence there was, counsel suggested, showed that there was never any agreement between the parties as to a narrow range of circumstances in which Article 28.04 would have applicability_ What there was was acknowledgement, in Mr. Fick's evidence, that some possible circumstances were discussed but not all of them. Turning to the relevant portions of Article 28.04, counsel began by observing that there was no dispute in this case that the hospitals involved were in the same geographic area. Likewise, the parties were agreed that Centenary's license to perform the services had not been withdrawn. Therefore, the only matter to be determined was whether the no- layoff bar applied because of a rationalization or sharing of services between hospitals_ In this case, counsel argued, the facts clearly established that Centenary was rationalizing its services, and had entered into an arrangement with another hospital in order to do so. The case could be, and counsel suggested, should be decided on this basis. There were other reasons, however, that Centenary advanced in support of its request that the grievances be dismissed. The term "rationalizing" must be, counsel suggested, given its ordinary labour relations meaning, and that meant downsizing, in this case, Centenary identified ways in which to save money, they could rationalize by transferring some of their laboratory work to the Toronto Hospital, and this was explicitly permitted, in management's view, by the collective agreement. There was no evidence of anv bad faith on the employer's part, and while the union may have its ong= erm concerns that the employer was attempting to it achieve a result that was otherwise prohibited to it there was no evidence to SENT BY= Hicks. Morley ei AL 4 -24 -97 : 4 =02Pii TD TOWER - 29ih Fi- 416 205 1390 ;_� 9/12 8 support that submission. Presumably, counsel observed any concerns about future collective agreement breaches could be grieved by Toronto Hospital employees. In the meantime, counsel noted, members of OPSEU at Toronto Hospital had not raised any concerns about the matter before us. It was also noteworthy, in the employer's submission, that Centenary's agreement was with the Toronto Hospital, not with TML. Counsel concluded his submissions by asking that the grievances be dismissed. Decision Having carefully considered the evidence and arguments of the parties, we are of the view that the grievances must be dismissed. The evidence clearly establishes that there has already been transferring of laboratory testing between various Ontario hospitals. What makes this case unique, and important, is that it represents the first time that the transfer of laboratory testing will result in the layoff of bargaining unit employees in the transferring hospital. There is no dispute - between the parties that members of the bargaining unit are being laid off. The only real issue between them, therefore, is whether the layoffs are caught by the exception in Article 28.04; most narrowly, whether the circumstances set out above constitute a rationalization or sharing of services between hospitals. As noted above, we heard some evidence of bargaining history. Ultimately, that evidence does not persuade us that the clause should be given the limited reading that the union suggests. What is clear is that the parties -lever agreed to specific circumstances in which the clause would be aooiied. + ney discussed some nyoothetcals, and their agreement wits SEVT BY Hicks. :Morley ei AL 4 -24 -57 : 4 :02PJI : TD TOWER - 29th Fl— 416 206 1380:-410/ EO respect to the Guidelines undoubtedly indicates the general direction of their discussions. However, there is other evidence indicating that the discussions were wide- ranging and that for its part, the Ontario Hospital Association never agreed to the limited interpretation of the provision now being put forward by the union. Mr. Pick's notes of March 7, 1988 demonstrate as much. Moreover, while the Guidelines, as just noted, may indicate a general understanding about circumstances in which the contracting out language might be applied, they are just guidelines and, on their very face they state that they do not address the particulars of every case. They certainly do not prohibit layoffs arising out of rationalizations. Very simply, in our view, Article 28.04 is clear and unambiguous. While there is a general prohibition on contracting out, that prohibition does not apply where a hospital no longer provides particular services as a result of a rationalization or sharing of services between hospitals. In this case, Centenary will no longer provide the particular services because of a rationalization of that work which will now be performed by another hospitai. The employer did not dispute that a contract between Centenary and a private laboratory which resulted in layoffs would constitute a breach of Article 28.04, and one of the employer witnesses conceded as much. That is not, however, this case. This case is about some of Centenary's laboratory work being performed at the Toronto Hospital by Toronto Hospital employees; employees who are members of OPSEU. The fact that the work has been transferred to a hospital and is being performed by hospital employees who are being orovided by the orivate sector is of no SF_,N7 BY :Hicks. Morley et AL 4 -24 -67 - 4:03P1f : TD TOSSER - 29th Fl- 10 416 203 1380 :m11 /1 consequence to the exercise of rights under Article 28.04, or to the proper interpretation of that provision. There is no evidence in this case of any bad faith underlying the rationalization: had there been, that would be another matter. What evidence there is is to the effect that Centenary needed to save money, and figured out, through this rationalization of some of its laboratory testing, a way in which to do so, It entered into an agreement with the Toronto Hospital for Toronto Hospital employees to do the work, and we find that such an agreement, this rationalization, is permitted under Article 28.04. Finally, and for whatever this additional observation is worth, we are of the view that term rationalization must be given its conventional labour relations meaning, and that is downsizing brought about by restructuring. There is simply no basis to find that the provision is limited to sharing and other reciprocal relationships between hospitals_ While sharing or reciprocal relationships between hospitals would be permitted under the exception to this provision, the exception is not limited to that narrow range of circumstances. Accordingly and for the foregoing reasons, we conclude that the implementation of Phase 3 does not and will not violate the collective agreement, and we so declare. SENT BY Hicks. Morley et 9L 4 -24 -K : 4:03PM : TD TOWER - 29th F1- 416 203 1390:m12/1. 11 DATED at Toronto this 24th day of April 1997- William Kaplan, Chair "Robert Gallivan" Robert Gallivan, Employer Nominee "Gary Majesky" Gary Majesky, Union Nominee