HomeMy WebLinkAbout1998-0976.Union.99-06-17 Decision
~ ONTARIO EMPLOYES DE LA COURONNE
CROWN EMPLOYEES DE L'ONTARIO
1111 GRIEVANCE COMMISSION DE
SETTLEMENT REGLEMENT
BOARD DES GRIEFS
180 DUNDAS STREET WEST SUITE 600, TORONTO ON M5G 1Z8 TELEPHONE/TELEPHONE (416) 32/5 -1388
180, RUE DUNDAS OUEST BUREAU 600, TORONTO (ON) M5G 1Z8 FACSIMILE/TELECOPIE (41/5) 326-1396
GSB # 0976/98
OPSEU # 98Ul14
IN THE MATTER OF AN ARBITRATION
Under
THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT
Before
THE GRIEV ANCE SETTLEMENT BOARD
BETWEEN
OntarIo PublIc ServIce Employees Umon
(Umon Gnevance)
Union
- and -
The Crown m Right of Ontano
(MImstry of Fmance)
Employer
BEFORE NImal V DISSanayake VIce Chair
FOR THE RIchard Blair
UNION Counsel, Ryder WrIght BlaIr & Doyle
BarrIsters & SolICItors
FOR THE Bnan Loewen
EMPLOYER Counsel, Legal SerVIces Branch
Management Board SecretarIat
HEARING October 15 1998
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DECISION
This lS a "reasonable efforts" grlevance Following the
hearlng on October 15, 1998, at the request of the partles the
Board made the following ruling
As Jointly requested the Board provides the
followlng rulings on the basis of the evidence
and submlssions of the parties
(a) The Board concludes that the employer
did not fail to make reasonable efforts and
therefore dld not contravene Section l(a) of
Appendix 9
(b) The Board finds that under section l(b)
an employee's "service" and "seniorlty" are
treated as distinct concepts It lS
contemplated that the failure to carry over
either "service" or "seniorlty" to the new
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employer will result in the triggerlng of the
rights accorded to employees under that
section The Board concludes that the primary
purpose of seniorlty lS the provlsion of job
security to employees Where the job offers
obtained do not include any recognltion
whatsoever of seniority for purposes of layoff
or for job competitions, it cannot be said that
the employees' seniority under the existing
collective agreement has been carried over to
the new employer Therefore, the condition
precedent for the triggering of the rights
under sectlon l(b) of Appendix 9 has been
satisfied
Written reasons for the foregoing rulings
will follow in due course
!
This decision sets out the reasons for the rulings
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The Ontario Securities Commission (OSC) prlor to 1997 was
under the jurisdiction of the Minlstry of Finance (MOF) Its
employees were members of the OPS and represented by the union In
1997, the legislature enacted Blll 129 (S 0 1997 c 10) "An Act to
stimulate job growth, to reduce taxes, and to implement other
measures contained In the 1997 Budget", Royal Assent June 26, 1997
As part of this leglslation the OSC was establlshed as a Schedule
3 crown agency effective November 1, 1997 Under this act,
following a one year transition period of one year, the OSC was to
be "privatized' triggering the "reasonable efforts" provisions of
the OPS collective agreement, contained in Appendix 9 The
relevant provisions of that Appendix are as follows
The Government is aware that its restructuring
initiatives over the next two fiscal years
(1996/97, 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, 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
condltions that are as close as possible to
the then existing terms and conditions of
employment of the employees in the
bargalning unit, and where less than the
full complement of employees is offered
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positions, to ensure that offers are made on
the basis of seniority 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 Article 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
The eVldence indicates that prior to entering into reasonable
efforts negotlations, the OSC formed a Compensation Committee to
come up with a compensation strategy with the assistance and
expertise from an external consultant Parallel to this process,
the MOF regularly met with the union through the Employee Relations
Committee and MERC team and received the union's input On June
17, 1998 MOF recelved the OSC's proposal as to terms and conditions
of OPS employees affected by the restructuring MOF
representatives had several meetings with OSC representatives in
order to compare the terms and conditions proposed by the OSC wlth
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the terms and conditions that existed under the collective
agreement On July 14, 1998, MOF briefed the union about the
proposed package On July 22~ the union wrote to the MOF, setting
out what it consldered to be the major short-comings of the
proposal
Reasonable efforts negotiations between the MOF and OSC
commenced on August 8, 1998 The MOF sought changes to the
proposal with a view to obtaining terms and conditions equal to
those in the OPS collective agreement While some changes were
negotiated, the OSC would not move in some key areas While
recognizing the 100% salary guarantee offered, the MOF pointed out
that the red-circling of wages would deprive employees of future
increases which they would have had under the collective agreement
The OSC responded that any adverse impact in that regard would be
off-set by the introduction of a bonus system, the possibility of
overtime and the reduction of the work-week from 36-1/4 hours to
35 The OSC inslsted that the wage package offered was
competitive The MOF also sought recognltion of senlorlty for
purposes of promotions and layoff The OSC maintained that it was
founded upon a philosophy of merit and performance and would not
agree to recognize seniority for any purpose other than calculation
of benefits
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Following further consultatlons with a MBS Specialist, the
second round of reasonable efforts negotiations commenced on August
14, 1998 At this meeting the MOF placed the sum of $ 300,000 00
from severance savings as an inducement to enhance the OSC offer
Again, whlle some changes were agreed to, the OSC held firm on
others On August 19 and 20, 1998 the MOF met again with the union
and briefed the union on the state of the negotiations to date On
August 20th, in a letter to the MOF the union set out 6 areas of
primary concern as follows
(a) Salary Ranges - particularly the
lower range groups and the lssue of
red clrcllng,
(b) Seniority - maJor premise of any
union consldered extremely lmportant
for conslderation for the purposes
of job competition etc ,
(c) Leaves - particularly bereavement it
lS absurd that it is expected of an
individual to have to apply for
special leave because they suffer
the unfortunate circumstances of
multiple deaths in their family,
(d) Hours of work - predominate concern
i is the lack of compressed Work Week
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a system that has functioned well in
the past with minimum disruption to
the overall business operation,
(e) Dispute Resolution Mechanlsm - to
suggest that concerns can be
referred to Human Resources will
probably not be resolved,
(f) Employment Stability - mandatory
movement to available vacant
positions, minimum 6 months notice
etc ,
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The union refused to prioritize these issues, claiming that
all six were equally important to its members
The evidence lS that following this the MOF consldered the
union's concerns as well as the explanations offered by the OSC for
refusing the terms expected by the unlon They exercised Judgement
on the chances of getting concessions from the OSC on each issue
Based on all of this, MOF prioritlzed the lssues of concern
expressed by the union The MOF went back to the OSC with its
monetary offer lncreased to $ 500,000 00 but wlthout much greater
success At a further meeting with the unlon on September 22, 1998
the unlon lndicated ltS priorlty to be seniority recognition for
layoff and promotions, elimination of the wage red-clrcling,
employment stabillty, the restoration of bereavement and
compassionate leaves, the establishment of an independent dispute
resolutlon mechanism, and the compressed work week
When the MOF returned to the negotiating table, it further
increased the enhancement money to $ 790,000 00, which represented
the total savings from severance payments avoided as a result of
obtaining job offers It narrowed down the demands to the
seniority and wages issues and made an additional demand of a one
year no layoff guarantee At a subsequent meeting the MOF dropped
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its demand on the elimination of salary red-circling also and
concentrated on the seniority and no layoff guarantee issues The
OSC conceded on some other issues, but held firm on these demands
Finally, MOF took the inducement money off the table and demanded
only that all employees be entitled to enhanced severance This
was also rejected by the OSC
At thlS point MOF was dlsappointed, but consldered that it had
fulfilled its reasonable efforts obligation The final package
offered by the OSC was reviewed at an all staff meeting of the
affected OPS employees, which was also addressed by the union The
union did not agree that the employer had met its reasonable
efforts obligation and the present grievance was filed
Dlrector of Human Resources of MOF, Mr Ed Farragher, who was
the chief spokesman for the MOF negotiating team, testified that as
the reasonable efforts negotiations proceeded, the Deputy Minister
and the Asst Deputy Minister were kept apprised He agreed that
he did not request that his principals intervene In the
negotiations through ~legislative, regulatory or other means"
Ms Mary Spencer, the Transition Project Manager for the OSC,
testified that the MOF repeatedly raised the 6 issues of concern to
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the union as being extremely important She explalned the
reasonlng behind the OSC refusal to concede on each of these
issues As to wages, the OSC had decided that it would pay
competitlve wages to ltS employees Comprehenslve salary surveys
were done of many comparable organizations An outside consultant,
KPMG, was asked to reVlew every job and a compensation str2~egy was
decided upon by the OSC Board of Directors The MOF demands on
wages were repeatedly rejected because it was felt that It would
have been inconslstent wlth the compensation prlnciples adopted by
the OSC Similarly, the demand for recognition of senlorlty for
layoffs and promotions was rejected because the Board of Directors
considered that to be inconsistent with the basic philosophy
adopted by the OSC that it will be a performance or merit based
organization Without setting out the details, it suffices to
observe that Ms Spencer testified as to why the OSC refused to
concede on the issues Whether or not that reasoning is "lralid or
reasonable, the evidence is that the MOF repeatedly attempted to
get the OSC to concede on these issues but the OSC did not budge
Para 1 (a) Reasonable Efforts
The union made two attacks on the adequacy of the MOF's
reasonable efforts First, the unlon questioned the MOF's
decision to gradually drop the union's concerns It was crltical
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of the MOF for first taking the initiative to prioritize the
union's concerns when the union had stated that all of the issues
were equally fundamental, and then for not pursuing the issues
according to the union's priority after the union had prioritized
its concerns
The major thrust, however, of the union's case lS that the MOF
falled to use a tool in this particular case which was available to
it to force the OSC to concede on the demands The union pOlnts
out that the employer is the Crown ln Rlght of Ontario It is the
crown that has the reasonable efforts obllgation Citing legal
authorlty, (the Board wlll not reVlew these authorlties because
there is no dispute about the union's assertion) the union asserts
that the OSC established pursuant to Bill 129 was a crown agency
Therefore reasonable efforts negotiations in thls case were between
the crown and an agency of the crown As counsel put it, it was
the right hand of the crown negotiating with the left hand of the
crown The obstacles set up against the crown during negotiations
were placed by an arm of the crown itself The union submits that
the employer, 1 e the crown, cannot be heard to say that, the OSC,
which itself is an agency of the crown, would not agree to its
demands That, in the union's view, was a fiction The union
submits that unlike in a case where operations are divested to a
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private entity, here the employer had clout to force the OSC to
agree to its terms, but the employer failed to exercise that clout
Counsel did not detail how exactly the employer should have
exercised that clout, but merely submitted that it had available to
It legislative and regulatory powers through the Minister, who had
signlficant powers over the OSC
There is no suggestlon that the relatlonship between the MOF
and the OSC was anything but an arms length one There lS no
allegation of collusion or other untoward actlvity The lssue In
these circumstances then is whether the obllgation in Appendix 9
required the employer, qua crown, to resort to legislatlve and/or
regulatory powers to force the OSC to concede on the demands In
the absence of any language to that effect, the Board concludes
that the obligation to make "reasonable" efforts does not
contemplate such drastic action As the Board pointed out in
Ministry of Transport and OPSEU, 1344/97 (Kaplan) at p 30,
"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"
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The Board has recognized that para l(b) of Appendix 9 does not
contemplate that all affected employees will get all of the wages
and benefits they enjoyed under the OPS collective agreement See
Ministry of Communlty and Soclal Services and OPSEU, 1859/97
(Brown) If the unlon's positlon is correct, the crown could and
should have, used its legislative and regulatory powers without
much effort to obtaln equal terms in every respect Anything short
of that would not be "reasonable efforts"
The Board does not agree The OSC was set up by the
legislature It was the prerogative of the leglslature to do so
In Ministry of Consumer and Commercial Relations and OPSEU,
559/97 (Roberts) the Board at p 14 stated as follows about the
Alcohol and Gaming Control Commission of Ontario, created by
legislation to take over certain functions of the LCBO and the
Gaming Control Commission, which were then part of the employer
This however, seems to have been the
prerogative of the legislature I accept the
submission of Ms Holmes that there was no
eVldence that when the parties negotiated
Appendix 9 of the collective agreement, the
Government of Ontario agreed to fetter its
legislative or executive power Subject to the
Constitution, the government remained free to
create AGCO until Bill 75 and vest int his new
agency the powers that it was fit to grant,
includlng its S 7 (2) power unilaterally to
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establish terms and conditions of employment
without reference to any "reasonable efforts"
obligations to the affected employees AGCO
was legally entitled to act as if it were an
outside employer, with no on-going connection
to the LLBO or the Gaming Control Commission of
MCCR
In the present case also, the evidence lS that the whole
purpose of the legislation setting up the OSC was to give it
independence from government The reasonable efforts obligation
does not envisage that the employer, as the crown, would resort to
legislative powers to win its demands during reasonable efforts
negotiations That would be drastic action, which goes way beyond
what may be viewed as "reasonable" as that term has been
interpreted in the Jurisprudence
The Board also finds that the manner in which the MOF
prioritized its demands, and gradually decreased ltS demands did
not run counter to its duty to make reasonable efforts When met
with absolute resistence, the employer was entitled to make a
judgement and reduce its demands and concentrate on issues which in
its Vlew, it had some chance of success Thus In Mlnistry of
Agriculture, Food and Rural Affairs and OPSEU, 1747/96 (Gray) at p
8 the Board observed
Maklng reasonable efforts to achieve
multiple goals in bargaining involves
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exercising judgement about how and to what
extent particular goals will be pursued The
goal of ensurlng that offers are made solely
"on the basis of seniority" may conflict with
the goal of ensuring that the greatest number
of affected employees are offered employment on
favourable terms The interests of the
government and of the new employer will also
weigh in the balance in determining what it is
reasonable for the employer to pursue in
satisfaction of its obligation under paragraph
1 (a) of Appendix 9 The obligation to make
reasonable efforts may not only permit but
require that the employer moderate what it
seeks with respect to the application of
seniority in order to advance other legitimate
interests, including the affected employees'
interest in achieving the other goals set out
in the provision
The Board concludes that the manner in which the employer
compromised on some issues with the hope that it will create a more
realistic chance of making headway on other issues was a reasonable
one
For all those reasons the Board flnds that the employer did
not contravene the reasonable efforts obllgation
Para l(b) - Carryover of senlorlty
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The Board next turns to the union's submissions based on para
l(b) It is common ground that the job offers obtained for the
bargaining unit employees did not include recognition of seniority
for anything other than calculation of benefits such as vacation
and severance pay Specifically, the employer's repeated attempts
to get the OSC to recognize seniority for purposes of layoffs and
job competitions falled The dispute between the parties lS
whether as a result, para l(b) was triggered, allowing the
employees to decline the job offer and make an election to take the
surplus rights
The relevant portlon of para l(b) entltles an employee to
decline the job offer "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 current salary, or if the employee's current
salary, or if the employee's current salary, or lf the employee's
service or seniority are not carried over to the new employer "
The employer reads the words "service" and "senlority" in this
provision to be synonymous Counsel submitted that the OSC was a
non-union shop and that the concept of seniority was foreign to and
inconsistent with non-union shops
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The Board disagrees It may well be that most non-union shops
do not recognize seniority That is a function of the lack of
bargaining power of the unorganized employees to obtain that
benefit There is nothing inherently inconsistent with recognition
of seniority in a non-union shop It is just that most non-union
employers prefer not to fetter their discretion by recognizing
seniority and there is little the non-union employees can do about
it Here the union has negotiated Appendix 6 with the employer,
wherein the employer has agreed that certain consequences would
flow, If it is not able to obtain job offers of a particular
nature An employee is entitled to decline a Job off if the job
offer (a) is less than 85% of his/her current salary or (b) if the
employee's service or seniority are not carried over On any
reasonable reading it is clear that under (b) the consequences are
triggered if either "service" or "seniority" are not carried over
These are sophisticated parties They must be taken to be
cognizant of the distinction in an employment context between
serVlce and seniority Seniority is one of the keys to job
security in any collective agreement It is simply not reasonable
to conclude that by using the words service and seniority
disjunctively, they intended to mean the same thing
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This distinction between service and seniority as separate
issues was recognized by the Board in Ministry of Consumer 7
commercial Relations & OPSEU, 559/97 (Roberts) At p 19-20 the
Board stated
I accept the stipulation of the parties that
the preclse terms of this provision have
nothlng to do with "reasonable efforts" under
article 1 (a) What seem to be relevant,
however, are the categories that the parties
focussed upon when t h.e y decided what was a
"good offer" l e , an offer that could not be
declined ( 1) salary, (2 ) service and (3 )
seniority In this context, salary must be
taken as including money wages and wage
progresslon, as well as equlvalents such as
benefits, lieu time, vacation entitlement,
holiday pay, parental leave and the like
I am convinced that the same categories of
employee protection -- salary, service and
seniority -- were uppermost in the parties'
minds when they negotiated the "reasonable
efforts" provisions of article l(a) of Appendix
9 of the agreement It seems to me that these
were the categories of protection that, above
all else, the employer agreed to make
reasonable efforts to bring as close as
possible to those currently afforded to
affected employees
In that case, the union had argued that the employer did no
bargaining at all but merely accepted the new employer's assertions
that seniority would only be recognized for purposes of entitlement
to vacations and benefits, and that thereby the employer had failed
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to meet its reasonable efforts obligation under para l(a) In
upholding the union's position, at p 28 Vice-chair Roberts held
As to seniority, I agree with Mr Leeb
that the employer made no effort at all The
employer should have proposed to AGCO the full
range of seniority protection established in
the collective agreement It should not have
simply accepted AGCO's position that it would
recognize seniority for very limited purposes
Most importantly, it should have determlned
whether it was reasonably able to provide
incentives suited to induce AGCO to adopt the
collective agreement seniority projections in
whole or in part
The Board concludes that in the present case, seniority of
employees was not carried over to the new employer and that as a
result para 1 (b) entitled employees to decline the job offers
Dated this 17th Day of June 1999, at Hamilton, Ontario
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Nimal V Dissanayake
Vlce-Chair