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Limits of individual bargaining with employees tested before federal Board, Ontario Court of Appeal

In workplaces governed by collective agreements, what are the limits on an employer’s ability to bypass the bargaining agent and deal directly with employees? This was the issue in two recent cases argued before the Ontario Court of Appeal and the Canada Industrial Relations Board (CIRB).

LOYALIST COLLEGE v. O.P.S.E.U

In Loyalist College of Applied Arts and Technology v. Ontario Public Service Employees Union (March 6, 2003), the termination of a probationary teacher was at issue. The teacher had been hired on the condition that she obtain a Master’s Degree in her field of study. The teacher’s union had not been consulted about the imposition of this condition. When the teacher failed to fulfill the condition placed on her employment, she was terminated during her probation, despite having received "very favourable" evaluations.

The union successfully grieved the termination, with the majority of a board of arbitration holding that the condition on the teacher’s hiring was invalid because the law prohibited a unionized employer and an employee from negotiating a condition of employment. Alternatively, the majority concluded that the condition was invalid because it conflicted with the collective agreement. Central to the majority’s conclusions were section 52 of the Colleges Collective Bargaining Act and Article 1.01 of the collective agreement, both of which provide that the union is "the exclusive bargaining agent" for all employees covered by the collective agreement. The majority reasoned that, because of those provisions, "[t]he union alone, to the exclusion of the individual employee, has the legal authority to negotiate terms and conditions of employment on behalf of everyone in the bargaining unit".

The College’s application for judicial review was dismissed by the Divisional Court. The College then appealed to the Ontario Court of Appeal.

COURT OF APPEAL: CONDITION INVALID, GOES TO "CORE OF EMPLOYMENT"

A unanimous panel of the Ontario Court of Appeal dismissed the College’s appeal, agreeing with the arbitration board both that the condition was invalid and that it conflicted with the collective agreement.

The College had asserted that, because the collective agreement was silent about the requirement for teachers to do graduate work, it could legally negotiate this term with the teacher. For support, it pointed to the fact that, in the major Supreme Court of Canada cases dealing with the exclusive right of unions to negotiate terms and conditions of employment, there was no express prohibition of individual bargaining of employment conditions not covered in the collective agreement.

The Court rejected this argument, noting that the Supreme Court had emphasized "the sanctity of the collective bargaining regime and the role of the union as the representative of all employees in the bargaining unit". While the Court acknowledged that there was some room for individual bargaining of minor terms or terms that are outside the scope of the agreement, it found that this was not the case here:

"In the case before us, the condition of [the teacher’s] hiring was not sanctioned by the collective agreement and was not ancillary to the routine administration of the agreement. Nor, in my view, was it a term outside the scope of the agreement that might be individually bargained. Instead, it was a term that went to the core of [the teacher’s] continued employment. Based on the Supreme Court of Canada's case law, the Board correctly held that the condition of [the teacher’s] employment was invalid."

Nor did the Court accept the argument that the condition was valid as an exercise of management rights. While the College’s right to manage gave it the authority to impose its will on a broad range of matters not expressly dealt with in the collective agreement, the right could not support the imposition of a condition of employment, the breach of which could result in dismissal.

CONDITION CONFLICTS WITH AGREEMENT

The College also argued that the arbitration board had erred in finding that the condition imposed on the teacher conflicted with the collective agreement. It claimed that, because the collective agreement did not expressly deal with a requirement to do graduate work or pursue professional development, such a requirement could not be in conflict with the agreement.

The Court rejected this argument, and held that the arbitration board’s conclusion was reasonable. The board had examined Article 27.02C, a provision dealing with probationary employees, and found that its purpose was to provide a period during which the teacher’s progress and performance could be assessed and corrected as needed. The board held that the hiring condition, which allowed the College to terminate the teacher no matter how well she performed, was essentially in conflict with Article 27.02C. The Court agreed:

"The Board's finding of a conflict between the condition and the collective agreement makes good sense. The Board viewed Article 27.02C in the light of labour arbitrators' understanding of the traditional purpose of a probationary period: to assess the employee's on the job performance. Under clause 27.02C a probationary employee received progress reports at four month intervals, which were intended to allow the employee to redress any shortcomings in his or her job performance. That, in substance, was the deal made by the College and OPSEU. Although not expressly contradicting Article 27.02C, the hiring condition implicitly conflicted with it and with its purposes. This condition added to and, thus, undermined the deal made between the College and OPSEU."

Accordingly, the College’s appeal was dismissed. Leave to Appeal to the Supreme Court of Canada was denied on November 20, 2003.

C.E.P. v. BELL CANADA

In Communications, Energy and Paperworkers Union of Canada v. Bell Canada (January 22, 2003), a case heard by the CIRB, the dispute arose following a decision in 2001 by the employer to lay off over 100 of its employees. When it advised the union of the layoffs, the employer also indicated that it intended to offer selected employees a voluntary severance package (VSP), and that the conditions for eligibility and payments were not negotiable. The union responded that the employer was obliged to negotiate the terms of the VSP directly with the union. When the employer refused, the union filed an unfair labour practice complaint with the Board.

Before the Board, the union argued that the employer’s actions amounted to a negotiation of the terms and conditions of employment directly with employees without consulting the union or obtaining its approval. It pointed out that the VSP had been offered to selected employees only and that, in return for accepting the enhanced separation package, the targeted employees were required, without the benefit of the union’s advice, to give up all claims they may have had under the collective agreement as well as the right to grieve. The employer had an incentive to do this, the union argued, because the layoff provisions in the collective agreement represented a considerable cost for the employer. The VSP was a term and condition of employment, the union concluded, and, by negotiating it directly with the employees, the employer had undermined the union’s role as exclusive bargaining agent.

Bell argued that the VSP had previously been offered without union objection, and that the voluntary nature of the program meant that it did not have to be negotiated with the union. It claimed that, because the incentives offered involved changes to the vesting and timing of the pension and because these matters were outside the terms of the collective agreement, the employer was free to negotiate the VSP directly with employees. Further, Bell characterized the severance packages as post-employment contracts and argued that, because pre-employment contracts outside the collective agreement have been recognized as valid, the same should apply to these voluntary exit contracts.

BOARD: COLLECTIVE AGREEMENT "SIDESTEPPED" BY VSP

The Board ruled in the union’s favour. It expressed the view that the test for determining whether the employer’s offer interfered with the union’s representation rights was whether the VSP constituted terms and conditions of employment that affected those that had been negotiated under the collective agreement. In this case, the Board held, the answer was yes:

"[B]y offering the proposed VSP, Bell is negotiating terms and conditions of employment directly with employees. The payment of severance allowance to an employee in exchange for a resignation in itself alters the existing terms and conditions of employment of that employee. In looking at the purpose and nature of the VSP, one is driven to the conclusion that it amounts to a material alteration in the terms and conditions of employment of the affected employees."

The Board noted that, just because the collective agreement did not include provisions dealing with VSPs, the employer did not have the right to deal directly with employees on this issue. In analyzing the offer of the VSP, the Board stated, it is necessary to "go to the heart of the change that would result in the employment relationship in light of the collective agreement as a whole". In this case, Bell was proposing to reduce its workforce by between 100 and 120 employees by inducing employees to resign in return for enhanced separation packages. Yet the collective agreement included a broad array of workforce reduction provisions:

"[I]n the face of the detailed and sophisticated staff reduction procedures negotiated by the parties, can it be concluded that the collective agreement anticipates that the employer may sidestep those procedures and delicate balancing of interests contained therein by unilaterally implementing a VSP? The exhaustive manner in which the parties have dealt with the issue of workforce reduction leads the Board to conclude otherwise."

In rendering its decision, the Board declined to follow another recent decision of the CIRB, Council of Atlantic Telecommunications Unions v. Aliant Telecom Inc.. In that case, the union had complained that a "selected retirement program" (SRP) unilaterally introduced by the employer breached both its representation rights and the prohibition on changing terms and conditions of employment during the statutory freeze period.

The CIRB in Aliant had held that, because the union had not placed the SRP on the bargaining table, the SRP could not be a term or condition of employment normally subject to collective bargaining, and that the employer was therefore within its rights to offer the SRP directly to employees. Noting that the analysis in Aliant had been influenced by the statutory freeze, the Board declined to follow what it referred to as a "subjective approach" as to what constitutes a term or condition of employment. The Board stated that it based its decision on a broader view of the test for what constitutes terms and conditions of employment – one based on the effects that the offer of the VSP had on the legal framework of the relationship between the employees and the employer.

In the result, the Board granted a declaration that the employer’s offer of the VSP constituted interference with the union’s representation rights.

In Our View

The Board in C.E.P. v. Bell Canada also rejected the employer’s arguments that the union should be precluded from objecting to the VSP, because it had acquiesced to similar programs in the past. In dismissing this argument, the Board noted that, in the past, the union had either expressly agreed to the programs, or had agreed that such programs were an appropriate way of dealing with previous staff reductions. In this case, however, the union had clearly indicated its opposition to the unilateral implementation of the program and, as a result, the employer was obliged to negotiate it with the union. This means that employers should not rely on past acquiescence by unions when considering such initiatives.

Nor, as the Loyalist College case makes clear, should employers rely on the fact that there may be no specific term in the collective agreement covering the program being offered or the condition of employment being imposed. If the program or condition has a demonstrable impact on the workings of other collective agreement provisions, it will likely be viewed as a term or condition of employment that is the subject of bargaining and, therefore, a matter that must be negotiated with the bargaining agent. In this regard, even if a particular matter is not expressly covered by the collective agreement, employers should carefully consider the implicit impact of the proposed term on the working of the collective agreement as a whole.

For further information, please contact J.D. Sharp at (613) 940-2739 or Jock Climie at (613) 940-2742.