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HomeMy WebLinkAbout1984-0047.Union.85-01-08, GRIEVANCE ;EH;bEMENT .- . IN THE MATTER OF AN ARBITRATION Under THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT Before THE GRIEVANCE SETTLEMENT BOARD Between: OPSEU (Union Grievance) and The Crown in Right of Ontario (Ministry of Community and Social Services) Crievor Before: .~i;. For the Grieior: For the Employer: Hearing: June 19, 1985and July 16, 1985 Y.~ P. M. Draper Pi Craven H. Roberts Vice-Chairman Member Member Employer I. Thomas CoumeI Jack, Harris, Anand Barristers Cc Solicitors 0. Bowlby Coum el Hicks Morley Hamilton Stewart Stori’e Barristers & Solicitors -, - i 7% DECISION This is a union policy grievance in which the Union grieves the removal from the bargaining unit (in labour relations parlance the contracting out) by the Employer of certain’ work to do with the delivery of welfare. benefits formerly performed by employees in the bargaining unit. ‘The Union submits that the means by which the contracting out was accomplished, being the delegation of various powers and duties.to non-bargaining unir persons, were illegal and that the illegality constitutks a violation of the collective agreement between the parties. The Union’s position calls for the interpretation of the powers ,of delegation of the Minister under Section 5 of the ,Ministry of Community and Social Services Act and of the Director of the Income Maintenance Branch of the Ministry under Section 3 of the Family Benefits Act. It is not argued by the Unim that the contracting out was done for any purpose related to collective bargaining. -. In response, the Employer submits that contracting out is reserved 10 the Employer as one of its exclusive managerial functions under Section 18 (1) (a) of. the Crown Employees Collective Bargaining Act (the Act) and that the Board is . therefore without jurisdiction to entertain the grievance, For reasons which follow, we have concluded that we lack jurisdiction in the matter. -2- - . . We note,. for the record, that the Divisional Court, in a decision dated Januarj 19, 1985, found (in effect) that the Union did not have the requisite standing,to challenge before the Court the decisions of the Employer to make the delegations in question.. We note, as well, that the Ontario Public Service Labour Relations Tribunal has ruled (File T/19/84) that contracting out is~ among the Employer’s exclusive.managerial functions under Section 18 (1) (a) of the Act and that.it may be the subject of collective bargaining only to the extent that the Union may negotiate with the Employer fcr provisions intended to deal with its effects on employees in the bargaining unit. It seems to us beyond question that the Union must establish its right to grieve under the collective agreement, there being no source of additional union rights of grievance as is the case for employees under Section 18 (2) of the Act. It is equally clear that there is no express provision in the collective agreement prohibiting or restricting the right of the Employer to contract out. Article 1 of the collective agreement recognizes the Union as the exclusive collective bargaining agent fcr a bargaining unit consisting of (to paraphrase) all public servants who are employees for the purposes of the Act. The Union argues~ that by virtue of the recognition provision the grievance comes within the scope of the collective agreement and consequently it is entitled to challenge the delegations that resulted in the transfer of work from members to non- members of the bargaining unit. In effect, the Board is asked to find in Article 1 an implicit restriction on the Employer’s right to contract out. _. .~ The weight of arbitral jurisprudence supports the view that a union recognition provision does not per preclude contracting out by an employer. See Palmer, Collective Agreement Arbitration in Canada at pp. 4X-452. Such a provision does’not guarantee that the original kin& of work, numbers of jots, and complements of e,mployees will continue unchanged during the term of the. collective agreement. While the words describing the bargaining unit remain, its component parts are not fixed in their original state fw all time. Recognitiwr of a union relates to the work and jobs which, and the employees who, consititute the bargaining unit from time to time. A recognition provision;“.by itself, thus cannot support a challenge to the fact of contracting out. That seems to us to make an end of it. We do not see : - how the provision can nevertheless be invoked to challenge the mechanics of contracting out which is itself unassailable by the Union. We adopt the reasoning of the ~Tribunal in the decision already mentioned and find that the Employer was exercising an exclusive managerial functim in respect of the contracting out that is the subject of the grievance. In the result, we find that we lack jurisdiction to entertain the grievance. This’proceeding is therefore terminated. DATED at Toronto, Ontario this 8th day of Januar,y , 1985. @j$L.k%- I&Q& P. M. Draper, Vice-Chairman “P. Craven” (dissent attached) P. Craven, Member H. Roberts, Member V ,,1 7 RE: GSB 47/84 (Union Grievance) DISSENT In this matter the Union alleges that the Employer has unlawfully contracted out work that is reserved to members of the bargaining unit. While the Union seeks to bring the matter within the four corners of the Collective Agreement by referring. to Article 1 (Recognition), the illegality consists not in the breach of some express provision forbidding contracting out, buti in the alleged contravention of statutory provisions which are said by the Uni:on to require that the work in question be performed by members of its bat-gaining unit. This grievance raises some unusual and complex questions about the rights of the parties and the jurisdiction of this Board. Before 1982, the province operated a two-tiered social welfa.re system. Short-term social benefits were administered by municipalities under the General Welfare Assistance Act. Longer- term benefits were administered by the provincial I'linistry of Community and Social Services under the Family Benefits Act. .~~ Beginning in 1982, the government undertook to rationalize service delivery in the social welfare field. It entered into "integration projects" with seven municipalities, whereby municipal social benefits workers take on a mixed caseload comprising both general welfare and family benefits cases. In two other municipalities it entered into "functionally integrated .,. =2!= _- :, ;]elivery system" (FIDS) projects, whereby municipal workers take applications for family benefits, but provincial workers cirry the family benefits cases after the application stage. The Union _.~. led evidence showing that family benefits work formerly performed by members of its bargaining unit is currently being performed by munic,ipal employees. The Union takes the position that the Family Benefits Act prohibits municipal workers from taking family benefits applications or carrying a,family benefits caseload, SO that the integratioh'and FIDS projects are unlawful. .It seeks relief from this Board. The majority has determined tha~t it lacks jurisdiction to entertain the grievance because in deciding to contract out the work the Employer was exercising an exclusive managerial func'tion. The majority rejects the Union's submissions abo'ut the effect of the recognition clause, saying that the weight of arbitral jurisprudence is to the effect that a prohibition against contracting out cannot be read into a recognition provision: The weight of arbitral jurisprudence supports the view that a Union recognition provision .does not per se preclude contracting out by an Employer. See Palmer, Collective Aereement Arbitration in Canada, at pp. 450- 2. Such a provision does not guarantee that the original kinds of work, numbers of jobs, and complements of employees will continue unchanged during the term of the collective agreement. While the words describing the =3= bargaining unit remain, its~component parts are not fixed in their original state for all time. Recognition of a union relates to the work and jobs which, and the employees who, are present in the bargaining unit from time to time. A recognition provision, by~itself, thus cannot support a challenge to the fact of contracting out. That seems to us to make an end of'~it. We do not see how it can nevertheless be invoked to challenge then'.' mechanics of contracting out which is itself unassailzble by the Union. In my respectful opinion the majority has construed the prevailing jurisprudence wrongly in the circumstances. MOreOVe,?, in characterizing contracting out as "una&zsailable" the majority has prejudged the very issue in dispute. I shall argue below th2.t tl~de jul~~ispru;cllic in question cannot and was never- intind'id to determine the issue where the bargaining unit is designated by ~..i the legislature, or where the work in question is assigned by the legislature to a particular class of employees. I shall argue that the delegation of family benefits work to municipal employees under the integration and F,IDS projects does not fall within the exclusive functions of the Employer, set out in s. 16 (1) of the Crown Emplovees Collective Bargaining Act, and that this Board's jurisdiction is not thereby barred. 1 . The BargaininK Unit and Recognition In the private sector, a distinction has developed between the bargaining unit for the purpose of certification, which is a matter to be determined by the Labour Relations Board.on the i .; submissions-of the parties, and the.bargaitiing unit for the .~ purpose of the collective agreement, which is a matter between '~. the parties. -No such distinction is possible under the Crown .' Employees Collective BarRaining Act, where the scope of the bargaining unit is designated by statute rather than negotiated between the part:ies. The words of the recognition clause demonstrate that the parties clearly understand.the bargaining unit to be determined by the legislation rather than by their agreement: .- Article 1 - Recognition 1.1 In accordance with The Crown Employees Collective Bargaining Act, the Ontario Public Service Employees Union is recognized as the exclusive collective bargaining agent for all public servants fither t,han persons who are not employees within the meaning of clause f of subsection 1 of Section 1 o'f The Crown Employees Collective Bat-gaining Act. Here the parties are not in a position to negotiate the shape of the bargaining unit. The bargaining unit and bargaining agent are designated by statute. The Crown Employees Collective Barpaininx Act provides in s. 3 (2) that, "The bargaining units designated in the regulations are appropriate units for ..,. collective bargaining purposes under this Act," and in s. 2 (5) that, "Every employee organization designated by the regulations shall be deemed to have been granted representation rights under this Act on the 29th day of December, 1972 in r-elation to such bargaining unit or usits as are designated by the regulations." Pursuant to these provisions, s. 11 of Regulation 232 under the ,. “A& provides as fOlloWs: 11. All public'servants other than, (a) the persons who are not employees within the meaning of clause 1 (1) (f) of the Act; and (b) the pet-sons in the classifications ~.:oi- positidns set out in column 2 of Schedule 2, are designated as a unit of employees that is an appropriate unit for collective bargaining purposes under the Act, and The Ontario Public Service Employees' Union is designated as the employee organization that shall have representation rights in relation to such bargaining unit. .: The exceptions in (a) and (b) of the~regulation are not 2. Effect of the Family Benefits Act Certain terms are defined'in the interpretation section of The Family Benefits Act. In particular: 1 . In this Act, (h) "Director" means the Director of the Income Haintenance Branch of the Ministry of Community and Social ~Services ; (i) "field worker" means a person employed as such by the Ministry of Community -and Social Services OI- any other employee of the Ministry whom the Minister designates as such; .” =6= i i Cj) '*Minister" means the Minister of Community and Social ~S~ervices; I . . . (m) "regional administrator" means a regional welfare administrator or- any other employee of the Hinistry of Community and Social Services whom the Minister designates 'as such for the purposes of this Act; . . . The powers of the Director are set out in s. 3 of .the As: 3. (1) The Director shall perform such duties and exercise such powers under this Act as are conferred OY imposed by this Act and the regulations.. (2) Where the Director is absent or there is a vacancy in the office, his powers and duties shall be exercised and performed by such civil servant as the Minister may designate. (3) The Director, with the consent in writing of the,Deputy Minister of Community and Social Services, may .~ authorize any employee or class of employee of the Ministry of Community and Social Services to exercise,and discharge any of the powers conferred or the duties imposed upon him under this Act. (4) Any decision made by a person performing duties or- exercising powers of the Director under subsection (2) OF (3) shall be deemed to be a decision of the Director for the purposes of this Act. With respect to the receipt of applications and the determination of eligibility, Section 11 of,the& provides as follows: =7= 'l-2 11. The Director shall, (a) receive applications for benefits; and (b) in accordance with this Act and the regulations, (i) determine whether any person is entitled to.or eligible to receive; a benefit, (ii) where an applicant is so entitled cr eligible, determine the amount, ,' of the alloranca or other benefit and direct provision thereof, and (iii) from time to t.ime vary the amount or- benefit .so deter-mined. The function &f "intake authority" under the Family Benefits A& is set.out in s. 18 of Regulation 318: 18 (1) In this section "intake authority" means a fielh worker or any other person designated by the Director. (2) An intake authority shall ensure that the application is filled out and completed by or on behalf of the applicant and the applicant, subject to ~subsection 17 (6), shall sign the application in the presence of the intake authority. ._ (3) The intake authority shall, immediately send the completed application and any supporting material to the Director. (4) An intake authority shall, at the request of the Director, (a) make a visit to the home of an applicant for the purpose of inquiring into the living conditions and financial and other circumstances of the applicant and any dependants of the applicant; (h) verify any statements in an application for the benefit; =8= (~1 where any child Or an applicant Or recipient iS receiving Or may receive a benefit, review the circumstances under which.the child is being cared for; Cd) review::the capacity of an applicant Or recipient to manage an allowance; (~2 make a visit to the home Of a recipient for the purpose Of ! preparing a report on any circumst,ances of the r2cipierrt that~ might affect then eligibility of the recipient for the amount of Or continuance of a benefit or any _, other matter related thereto; and (f) counsel and assist any applicant Or ? . recipient assigned to the intake authority in any matter relating to a benefit. (5j kn intake authority shall not charge any fee to or receive any remuneration from Or On behalf of any beneficiary or applicant in respect Of any duty that he performs Or service that he renders under the Act or the regulations. On the face of the& and Regulation, we may conclude the following: 1 . An "intake authority" is either: (i) a field worker; Or (ii) a person designated by the Director. 2. A "field worker" is either: (i) a person employed as such by the Ministry; or (ii) another Ministry employee specially designated. . . =9= ‘d I :; . . 3. A "person designated by the Director" (Reg., s. 18 (1)) must be an employee of the fiinistry c&L, s. 3 (3)). It follows that the legislattire intended that only' ernplo~eeS of the Ministry qf Community and Social Services may perform the job functions in question here. Subject to the noted exclusions, these employees are public servants within'the meaning of s. 11 of Regulation 232 under The Crown Employees Collective Eiaraainina Act, and are therefore members of the bargaining unit 3. The Integration Projects Delenations The Union placed in evidence four instruments,.dated in December 1982 and January 1983, bye which the Employer delegated certain powers under the legislation. -. 1: The first is an instrument pursuant to s. 3 (3) of the Family Benefits Act authorizing "all persons employed by the Ministry of Community and Social Services as Income Maintenance Field Workers" to exercise certain powers conferred upon the Director of Income Maintenance by the A& and Regulation 318. It is signed by the Director of Income Maintenance and countersigned by the Deputy Minister. Inasmuch as this instrumerrt does not purport to authorize anyone who was not a member of the =,rJ= - ‘i -'bargaining unit to do anything, it need concern us no further. .~. 2. By the second instrument, the Minister of Community and Social Services appoints "all persons employed as Field Workers for the purposes of the General Welfare Assistance Act" in certain specified mupicipalities to exercise certain powers of the Director of Income Haintenance under the: Fami~lv Benefits Act. These include the powers in s. .ll of the latter Act. The General Welfare Assistance Act provides, in s. 1 cd), that "'field worker' means a person employed as such by the Hinistry of Community and Social Services or any other employee of the Kinistry whom the Plinister designates as such." The effect of this second instrument, therefore, would appear to Li simil&r to that oi the first: it delegates powers under the Familv Benefits Act to Ministry employees. Inasmuch as this instrument does not purport to authorize anyone who was not a member of the bargaining unit to do anything, it need concern us no further.' v 3. The ,third instrument, again over the signature of the rlinister of Community and Social Services, appoints "all persons who are appointed pursuant to section 4 (1) of the General t The Employer argued before us that "field worker" is a generic term, intended here to include municipal welfare workers generally. Inasmuch as both the Family Benefits A& and the General Welfare Assistance Act define the term specifically, this argument must be rejected. The Minister must be deemed to have meant what he said, no more and no less. =, ,= L Welfare Assistance Act, as a Hunicipal Welfare Administrator" in certain specified municipalities, to exercisq~certain powers of the Director of Income Haintenance under the Family Benefit* Act. These include the powers in s. 11 of the latter Act. The General . Welfare Assistance Act provides, in s. 4 (l>,.that "The council of a municipality may, with the, approval of the Ninister, appoint a municipal.welfare administrator." The instrument does not give Municipal Welfare Administrators the authority of the Director in s. 3 of the A&to delegate his power’s, but in any event, as we 22 have Seen, the power to delegate is limited in that the delegatea must be an employee of the Ministry. The instrument would seem to have the effect of putting the Municipal Welfare Admin+strator ir, ti,e place oi ti,e Diilectol- for receiving applications and determining eligibility. But the Welfare Administrator is neither made an "intake authority," nor empowered to delegate these functions to anyone else. Inasmuch as the Director is powerless to delegate his functions to persons other than Ministry employee*, the Administrator to whom a portion of the Director's powers are delegated by the Ninister~can have no greater pdiiers of delegation. The third instrument does transfer ! work from within the Plinistry to the municipality, hut it does not transfer the "intake authority" function, and it transfers a portion of the Director's responsibilities to a single individual in each #of the municipalit iesr with no further power-s #of delegation. This instrument, then, would not appear to have the effect of transferring family benefits work formerly performed by I provincial field workers to municipal employees. =,2= 4. .The fourth instrument, signed by the Minister, appoints "all persons employed as Supervisors for the ~ur~o*e* of the General Welfare Assistance Act" in cert$i& specified municipallties,.to exercise certain powers of the Director of Income Maintenance under the Familv Benefits Act. The powers and responsibilities assigned to Supervisors are essentially the same as those assigned to Municipal Welfare Administrators by the third instrument. The same comments apply. It should be noted, however, that neither the General Welfare Assistance Act nor the Regulation* 44l.:,and 442 under that A& appear to make any reference to "Supervisors." 4. The flinisterial Power The second, third and fourth delegations were all issued over the Minister's signature, and pursuant to s. 5 of the flinistrv of Communitv and Social Services Act, whi<J provide*: ..~, 5. Where, under this or any other Act, a power is conferred or a duty is imposed upon the Hinister or upon another officer or an employee of the Ministry, such power or duty may be exercised and discharged by any other person or class of persons whom the Ninister appoints in writing, subject to such : limitation*, restriction*, : conditions and L requirements as the llinister may set out in his appointment. It was argued before us that this power of appointment entitled the Minister to assign the functions of receiving =,3=, applications and determining eligibility under the Familv Benefits Act to persons other than members of the bargaining unit. The power provided by this section is, of course,.a very broad power, although I doubt that the legislature intended it tc \ sweep aside the specific provisions about appointment set out in the Family Benefits.Act and other legislation. Nevertheless, i,t is not necessary for the determination of this matter that we weigh this provision against the more specific provisions in the latter Act. For as we have already seen, the instruments of delegation do not purport, on their face, to have the effect the Employer apparently takes th.am.to have. None of the instruments delegates the "intake authority" functions to anyone outside the employ of the Ninistry. The third and fourth instruments delegate the functions of receiving applications and determining eligibility to municipally-employed managers in the general welfare system, but not to welfare ~workers. The second instrument, upon which the Employer apparently relies in~transferring these functio,ns from its own em.ployees to employees of the municipalities, fails in terms to accomplish that purpose, for the delegatees~ are themselves defined in the statutes referred to as Ninistry employees. Accordingly, whether or not s. 5 of the Ministry of Communitv and Social Services Act empowers the Minister to transfer these functions from Ministry employees to municipal employees, the instruments produced before us do not have this 'effect. Where the legislature has determined that Certain fUnCtionS are to be performed by a particular class of persons, and where the flinister has not clearly and lawfully empowered others to perform those functions, the~performance of the functions by other than the authorized class must surely be unlawful. . . 5. The FIDS Designations The Union 'placed in evidence a series of letters written by the Director of Income Claintenance to municipal employees. All are dated in January, lP84, and have the same text: I hereby designate you as an Intake Authority for the purpose of The Family Benefits Act, ., R.S.O. 1980, c. 151 and the Regulation thereunder, with effect from the first day of February, 1984 until such date as the Director may determine. The de~signation is pursuant to Subsection 1 of Section 18 of Regulation 318 of Revised Regulations of Ontario 1980, made under T& Family Benefits Act. j As we have seen, the Director's power of designation under the A& and Regulation is restricted to ninistry employees. The purported designations to municipal employees in these letters must therefore be unlawful. 6. Jurisdiction of the Grievance Settlement Board =, 5= V I have made out the case that the Family Benefits Act requires that "intake," the receipt of applications~and the determination of eligibility be performed by Ministry emp~o,yees. Leaving aside the managerial and related exclusions, these ~employees are members of_the bargaining unit for which the Union is the exclusive bargaining agent. I have sketched the argument that if, as is alleged, the Employer has transferred these functions to municipal welfare uorkers, it has done so .~ .ufilawfully. The Employer argues that this Board lacks jurisdiction to determine the grievance in these circumstances ;* Ihere are three branches to the Employer's argument, rjhictr i shall consider seriatim. First, the Employer argues that contracting out of work is an exclusive management right that is excluded from the jurisdiction of this Board. Second, the Employer argues that there is no express limitatidn in the collective agreement upon which a grievance may be founded. u Third, the-Employer argues that then recognition provision in the collective agreement does not imply a limitation on contracting out. The Cr&n Employees Collective Bargaining Act provides, in s. 18: (1) Every collective agreement shall be deemed to provide that it is the exclusive function of the Employer to manage, which function, without limiting the generality of : f the foregoing, includes the right to determine, ,a) employment, appointment, complement, organization, assignment, discipline, dismissal, suspension, work methods and procedures, kinds and locations of equipment and classification of positions; and (b);met-it system, training and development,, appraisal and superannuation, the governing principles of which are subject to review by the Employer with the bargaining agent, and such matters will not be the subject.of collective bargaining nor come within the jurisdiction of a.board. I accept the majority's finding that this provision bars the parties from including a prohibition against contracting out i".~" their collective agreement. I also agree that the effect of decisions by the Ontario Public Service Labour Relations tribunal is, to permit the parties to negotiate provisions which may moderate the adverse effects of contracting out on employees, but to disallow proposed provisions which would limit the Employer's right to contract out work. And of course, I agree that there is no provision in the collective agreement expressly~prohibiting contracting out. In my submission, though, "one of these considerations relieves this Board of jurisdiction over the 2 The reference to "the jurisdiction of a board" at the end of s. 18 (1) is clearly a reference to an interest arbitration boar-d, and not to the Grievance Settlement Board. The interpretation section, in s. 1 Cc), defines "board" as "a board of arbitration established under this Act," and by 9. 10 such a board is empowered to determine matters in dispute =17= The Union does not claim to have negotiated a Provision against contracting out, which the Employer has~'violated. It argues instead that in the special and unusual circumstances of this case, it may seek a, remedy through a grievance founded in ~ the recognition provision where the Employer contracts out,~,work in violation of the statute. Section 18 (1) of the Crowns Emplovees Collective BarRaining Act does not deny us jurisdiction in this matter, nor does it provide that it is an unreviewable management function to violate the Family Benefits Act. The remaining issue may properi'y b& stated in these narrow terms: 1s a grievance alleging that the Employer violated the recognition provision of the collective agreement by assigning family benefits work to municipal employees, contrary to the Familv Benefits Act, arbitrable before this Board? "within the scope of collective bargaining under this Act," which is clearly consonant with the provision in s. 18 (1). This Board, on the .other hand, is consistently referred to as the Grievance Settlement Board throughout the A&, and unlike interest arbitration boards we are given jurisdiction to determine disputes over some.at least of the matters set out in s. 18 (1) -- see s:l8 (2). Moreover, the Grievance, Settlement Board is given some~.powers of a board of arbitration (s. 19 (2)) but these do not include the powers in s. 10 that are limited by "the scope of collective bargaining." 1,. =, *= ; . .7. Contractinn Out and Recognition It is a well-known proposition in labour arbitration that a prohibition against contracting out is not ~to be read into the, recognition provision of a cdl;.eFtive agreement. AS authority for the .propositioti, the Employer supplied the Board with four decisions. They deserve close consideration. -. In B.0.A.C.3 the termination of an entire bargaining unit due to the contracticg out of work was upheld in the absence of express language forbidding contracting out. Arbitrator Lande expressed himself in these terms: The Employer who signs a collective agreement sets out the conditions under'which the employees shall work for him when there is uork. He is not bound to provide work. He only gives up such of his pouer.s as he expressly assigns in the contract, retaining all of his inherent, pristine rights. Unless the contract has a prohibition to subcontract, as many labour contracts do, this right has not been removed from the Employer. Many contracts also provide for ~*successor obligations," that is, the Employer undertakes that its successor in a contract will assume all of the obligations of the original labour contract. Barring the f'orrg:oiqg, management has the inherent right to contract out.. (291-Z) . . . 3 Re United Automobile Workers & B.O.A.C. 10 LAC 286 (1960) Lande. =, 9= .’ v . It should be pointed,out that in the exercise of its rights to contract out, the Employer must be ,in good faith and be actuated by sound business principles. (292-3) Similarly in Cooper h Beattvq the termination bf an entire~ bargaining unit due to contrac,ting out was sustained where the contracting out was for "sound busin.ess reasons" and there was nc provision in the agreement preventing'contr,acting out. In Dare Foods5 a board of arbitration followed Russelst&l (to be discussed presently) and determined that in the absence of an explicit collective agreement restriction on contracting out, or a clause "imposing a restriction b,y clear or necessary implication," a restriction on contracting out is not to be read into a recognition provision. Ads in the other cases referred to, this board considered whether the contracting out ~was in good faith. In dismissing the grievance, the majority of the board stated: We wish to make it clear that we are not of the,~view that where (as here) there is an agreement that is silent on contracting out, a company may contract out bargaining unit Re International Brotherhood of Bookbinders, Local 20. and the Council of Printine. Industries of Ontario on behalf of Cooper & Beattv Ltd. 20 LAC 365 (1969) Brown.. Re United Brewer-v Workers, Local 173. and Dare Foods Ltd. 20 LAC 166 (1969) Adell. work without BRY restriction. In . . r Russelsteel, Professor Arthurs perhaps goes too far in saying that, given such an agreement,, there is a "strong probability than an arbitrator would not find~any implicit limitation owmanagement's right to contract out :' Many Canadian and American arbitration cases acknowledge that there are implicit limits beyond which a company may not go. see Wallen, "How Issues of Subcontracting~and Plant Removal are Handled by Arbitrators" (1966), 19 Ind. & L.R. Rev., 265 at pp 266-7: "It is axiomatic that a contracting party is not privileged to engage in a course of conduct designed to nullify its agreement . . . A labor contract may not guarantee job security or hold out a promise that a13 the work to be done for the.Employer will be done by people under its coverage. But it would be worthy of scant respect if it tier, construed to be a promise to recognize the Union and to apply its standards only if the Employer, in his sole discretion, decides to have the work done by Union members and not by others. This would be akin to saying that the Employer's undertaking to meet the contract's terms ,involves no real commitment whereas the Union's undertaking to abide by its terms is enforceable." It will be seen that the thrust of these decisions is to permit contracting out where it is done in good faith and there '1s no express prohibition in the collective agreement. The Employer also supplied the decision of this Board in Whitehead et ~1.6, where this Board's-jurisdiction to entertain 6 File #198/82, 199182, 200/82, 201/82, 202/82 (Roberts). grievances alleging impropriety in the Employer's exercise of its exclusive management functions was considered. The function in question was that of allocating employees to work schedules, which the Boat-d found to be an exclusive management right. The Board-found that "unless fettered by the Collective Agreement the Employer- is free unilaterally" to perform this function, "so long as it acts in good faith and does not jeopardize the integrity of : the bargaining unit." (9) 8. The Reasonin? in Russelsteel The leading authority for the proposition that contracting out is pirmitte:.. i, tki absence of specific language to the contrary, notwithstanding the recognition provision, is of course Russelstee27, decided by Professor Arthurs~ (as he then was). in 1966. This was a case of four truck drivers who lost their job3 when their Employer contracted out its trucking to an independent firm. The collective agreementcontained no express prohibition of contracting out. The grievance cited the recognition clause and a provision stipulating that non-members of the bargaining unit were not to perform bargaining unit work. It was, as Prof. Arthurs put it, .a classic case of contracting out. 7 He United Steelworkers of America and Russelsteel Ltd. 17 LAC 253 (1966). =22= U r‘ . At the time, the arbitral jurispridence about contracting out was divided between two quite. fundamentally different theories of.~ the collective agreement. On the one side were those arbitrators who adopted a strict "residual rights" theory, holding that management retained its unilateral common law rights in all respects except those that were expressly "surrendered" in the agreement. (The B.O.A.C. deci.sion quoted above is a~ case in point.) 0h"the other~side were those, admittedly fewer in number, who followed Professor Laskin (as he then was) in his 'viei; that rights and obligations under collective bargaining were wholly distinct from the common law presumptions of master and servant. Prof~. Arthurs refused to enter this debate. He expressly .,~. i took no position on the reserved rights controversy (259). Opting for "pragmatic and realistic solutions" rather~than "over-broad philosophical considerations," he urged that the very fact that a substantial majority of arbitrators had permitted contracting out L. in the absence of express language prohibiting it created a presumption that the parties, in negotiating their agreement, were *'aware, as a practical matter, of the need'to specifically prohibit contracting out if they are to persuade an arbitrator of their intention to do SO.- (257) The operative principle was the "climate" of collective bargaining -- the context of expectations and assumptions that participants in the process were entitled to hold about each other. In essence, Prof. Arthur-s said that arbitrators would give effect to the expectations that the parties were entitled to hold. In the circumstances,.the contracting out of the truck drivers' work was not prohibited because-the Employer was entitled to rely upon the presumption that arbitrators would not find a" intention to prohibit it in the absence of express language in the agreement. That presumption was less a matter of law than of collective bargaining experience. In saying this, Prof. Arthur-s expressly limited his findings to the interpretation of the particular agreement before him (259) and acknowledged that bad faith cases might call for a different approach (260). 9. Application to the Present Case I stated above that in my opinion the majority of this Board applied the existing jurisprudence wrongly. I think the following: considerations must be taken into account in determining the jurisdictional question. 1 . The rule in Russelsteel, underlying the current approach to this issue, is not that contracting out is permitted in the absence of express language to the contrary. The rule is that arbitrators will give effect to the expectations that parties to . collective bargaining are entitled to hold. Russelsteel does not decide the substantive issue of contracting out: instead, it offers a rule of construction or interpretation. =24= ; . f 2. The private sector jurisprudence is founded on the assumption that the parties are.free to negotiate rhatever language they please. If the absence of specific Language forbidding contracting out means that contracting out is: permitted, it is not because of some theoreti~cal "residual right" ,.,. but because the parties' decision not to include such language in their agreement raises the presumption that they did not intend to restrict contracting out. 3. Where the parties have no choice in the matter (as here) the presumption does not arise. Here the legislature has decreed that certain matters inciuding complement, organization and assignment are not to be the subjects of collective bargaining. The absence of language in the collective agreement in such circumstances can give rise to no presumption about the intention of the parti~es. 4. Whether one considers the reserved rights cases, the cases that follow Russelsteel, or this Board's own jurisprudence about exclusive management functions (e.g. Whitehead et al., above), there is a consensus that the Employer must be in good ~faith in exercising its discretion. -This consensus flows from general contractual principles rather than from any special considerations about contracting out. I note that the majority neglects to consider this factor. .._,~ 5. Here, unlike in the private sect~~,~-.t,h~;~.parties are not free to renegotiate the definition of the bargaining unit. This presumably is the foundation of Vice-Chairman Robert's view, expressed in Whitehead et al., that in exercising its exclusive functions the Employer must not "jeopardize the integrity of the bargaining unit." 10. Conclusions As suggested earlier, I believe that on analysis the question of the Board's jurisdiction to determine the grievance resolves ~itself into the question Hhethrr in the special circumstances of.~this case the recognition provi basis for the grievance. There are, in my view, barriers to arbitrability. sion can be the no other The analysis reveals three distinct grounds' for th& grievance in the recognition provision. First, I agree with Vice-Chairman Roberts that in exercising its exclusive functions the Employer may not jeopardize the integrity of the bargaining unit. Inasmuch as the bargaining unit consists of public servants, an attempt by the Employer to transfer work that the legislature has reserved to public servants to others who are not public servants jeopardizes the integrity of the bargaining unit. Complaints about violations of ; =26= 4 the integrity of the bargaining unit are properly founded in the i ,T :r recognition provision. Second, fol&G:ng the reasoning in Russelsteel, I would give z. effect to the expectations that parties to collective bargaining are entitled to hold. It ought to be beyond dispute that. the parties are entitled to expect one another to obey the law. In my view, this presumption is a stronger presumption than the presumption that if the parties intended to restrict contracting out they would have said so explicitly, and in any event; k-1 have argued, the latter presumption does not arise where the parties are forbidden to negotiate such a provision. Since I an morally certain that in stipulating the exclusive management functions in 5. 18 (1) of the Crown Employees Collective Baraainina Act the legislature did not intend to give the Employer the right to flout the law, I would be prepared in the circumstances to read a provision against unlawful contracting out into the recognition provision of the collective agreement. Indeed, such a provision is a necessary implication in all the circumstances. Third, Russelsteel aside, I submit that unlawful conduct is prima facie in bad faith. The recognition provision of a collective agreement is a provision whereby the Employer engages tqo deal in good faith with the bargaining agent as representative of the employees in the bargai,ning unit. A grievance alleging that contracting out is in bad faith, is appropriately grounded + the recognition p&vision. d For all these reasons, I ,.,ould have ruled the grievance to be arbitrable. The Board reserved its decision on the preliminary objection to arbitrability and proceeded-to hear the merits as the9 bore on the question whether the Emploier had acted unlawfully,in .assigning the family benefits work, to municipal employees. The Union reserved the right to introduce evidence going to the quantum of damages pending our'decision on the merits. As indicated above, I am satisfied on the evidence that the Employer acted unlawfully in assigning the family benefits work to municipal employees. In so doing, I am satisfied that the Employer was in violation of its obligations to the Union under the,recognition provision of the collective agreement. Accordingly, I would have sustained the grievance and required ._ the parities to make their submissions as to remedy. (Professor) Paul Craven, flember