GSB#1479/02

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

Professional Engineers, Government of Ontario (Policy Grievance & Lysiak)

Grievor

• and -

The Crown in Right of Ontario (Ministry of Municipal Affairs and Housing)

Employer

BEFORE

Marilyn A. Nairn

Vice-Chair

FOR THE UNION

Larry Robbins Labour Consultant

FOR THE EMPLOYER

David Strang Counsel Management Board Secretariat

HEARING

January 28, 2003.

AWARD

This award deals with a policy grievance filed on July 15, 2002 and an individual grievance brought by the Professional Engineers, Government of Ontario ("PEGO”) on behalf of Mr. Lysiak dated July 26, 2002. The grievances are in respect of individuals employed by the Crown at the Ministry of Municipal Affairs and Housing (the “employer”). Three members of PEGO were affected and remedies are being sought on behalf of two of those individuals. Mr. Lysiak and Mr. Levesque are both engineers responsible for the design, construction, and maintenance of mechanical and electrical systems for the former Ontario Housing Corporation. Both individuals were hired in 1987.

The grievances arise from the employer's decision to divest itself of social housing functions and to transfer those functions to municipalities and regional local governments across Ontario. They allege that the employer failed to comply with its obligations to make reasonable efforts in respect of continuing employment, in particular, that the employer failed to comply with the requirements of paragraph 5(1)(a) of Appendix “A” of the collective agreement. PEGO asserts that these employees ought to have been offered jobs with the new employer at, among other things, no less than 85% of their then salary, and that the employer failed in its obligation to ensure that such an offer was made. PEGO argues as a subsidiary issue that the employer failed to meet its “reasonable efforts” obligation in other respects, but this award, by the agreement of the parties, is limited to the argument on its primary position.

It is the position of the employer that paragraph 5(1)(a) does not apply in the circumstances as it contains a deeming provision only in those circumstances where the transfer is by a request for proposal (“RFP’) or tender. That did not occur here. The employer acknowledges that it is caught by paragraph 1 of Appendix “A”, but asserts that if the matter proceeds, its position will be that it has met that obligation in the case of these employees.

The relevant provisions of the collective agreement provide:

APPENDIX A: EMPLOYMENT STABILITY

The Government of Ontario is aware that its restructuring initiatives over the next three years could have a significant effect on employees, some of whom have served for a lengthy period. Accordingly, the Employer undertakes the following:

1. 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 sector, employees in the bargaining unit are offered positions with the new employer on terms and conditions that are as close as possible to the then existing terms and conditions of employment of the employees in the bargaining unit, and, where less than the full complement of employees is offered positions, to ensure that offers are made on the basis of seniority.

2. 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 45 (Termination Payments).

3. The employee must elect whether or not to accept employment with the new Employer within five (5) working days of receiving an offer. In default of election, the employee shall be deemed to have accepted the offer.

4. Where an operation or part thereof is being disposed of, and the Employer has determined that an opportunity for tendering or bidding is warranted, employees shall be given the opportunity to submit a tender or bid on the same basis as others.

5. The obligations of the employer concerning reasonable efforts and employee bidding set out in paragraphs 1 through 4 shall be deemed to have been satisfied provided that: (emphasis in original)

(1) (a) In respect of the transfers of bargaining unit jobs or functions as a result of transfers listed in schedule "A" to this memorandum the Employer shall include in all the Requests for Proposal (RFP) or tenders, relating to those transfers a mandatory requirement that proponents must commit in their proposals to make job offers to all of the classified PEGO employees who will be declared surplus as a result of the disposition or transfer of their jobs under the RFP or tender. Such job offers shall be at a salary of at least 85% of the respective employee's salary at the time of the RFP or tender and recognize the service in the Ontario Public Service of each employee for the purposes of qualification for vacation, benefits entitlements and other terms of employment except for pension to the extent that they are provided in the proponent's workplace. Job offers shall not include any probationary period. Proposals that do not satisfy the above mandatory requirement will be disqualified. Upon the inclusion of the foresaid terms in an RFP or tender in respect of a project listed in schedule "A" the Employer will be deemed to have satisfied all the requirements of this Appendix A in relation to the transfer of bargaining unit jobs or functions under the RFP or tender.

(b) The Employer shall determine the PEGO employees whose work will be directly transferred by the RFP or tender prior to the release of an RFP or tender and this determination shall be final for purposes of the requirement to require job offers in subsection (1).

(c) The parties may add transfers to schedule 'A' by mutual agreement only.

(2) In respect of the disposition or transfer of bargaining unit jobs or functions not listed in schedule "A", the Employer's obligations under Appendix A will be satisfied by the Employer offering the prospective new employer an incentive, equal to the amount that would be payable as enhanced severance pay to a classified employee in order to either secure or improve a job offer for that employee.

(3) Classified employees declared surplus as a result of the disposition or transfer of bargaining unit jobs or functions to the private or broader public sector will have the right to turn down any job offer under Appendix A and exercise their rights prescribed by paragraphs "6" to "9" of Appendix A and Article 14, excluding 14.5 of the Collective Agreement.

(4)[sic] The employer shall include in the RFP or tender the statement that employees may bid on the same basis as others. The forgoing [sic] will be deemed to satisfy all the Employer's obligations in respect of employee bidding under Appendix A.

Schedule A

Labour - Material Testing Laboratory

Municipal Affairs and Housing - Social Housing

The hearing proceeded on the basis of agreed facts. There is no dispute that Schedule A to this Appendix refers to and includes Municipal Affairs and Housing, Social Housing. There is also no dispute that there has been a disposition or transfer of bargaining unit functions or jobs, so as to trigger the operation of Appendix “A”. A considerable number of employees represented by other unions were affected by the transfer.

The union was advised on June 5, 2002 that the three affected employees would receive a formal notice of lay-off on June 27, 2002. None of these employees were offered a position at a new employer on any terms. Mr. Levesque took his payment in lieu option and Mr. Lysiak worked through his notice period hoping to be redeployed. To date, those efforts have been unsuccessful.

There was no evidence of the parties’ negotiations. The parties did refer to earlier collective agreements to show the introduction and development of Appendix “A”. The provisions at issue are essentially the same as those found in the predecessor collective agreement (1999-2000). The 1996-1998 collective agreement contained only paragraphs 1 through 4. However, negotiations toward the end of that collective agreement in early 1998 resulted in the addition of paragraph 5. There is no dispute that paragraph 5(1) provides better security to those employees coming within those areas identified in Schedule A to the Appendix. The listings in Schedule A have become progressively shorter over each collective agreement. There is also no dispute that paragraph 5 is exclusive to the PEGO collective agreement and is not found in other OPS collective agreements where the obligations of the employer essentially reflect the language in paragraph 1 of Appendix “A”.

On March 6, 2001 a representative of Management Board Secretariat (“MBS”) wrote to the President of PEGO, noting that the transfer of social housing was listed on Schedule A of Appendix “A” to the collective agreement. That letter goes on to state:

Schedule "A" describes transfers through requests for proposals or tenders and is not compatible with negotiated transfers such as the devolution of social housing. We are writing to formally request your agreement to remove this transfer from schedule "A" and deal with it under paragraph 5 (2) of Appendix "A" instead.

The union responded, advising that it would not agree to remove the transfer of social housing from Schedule A. That letter notes that it was important for PEGO to “have as many of the subject areas for divestment listed in Schedule "A" as possible, as the Reasonable Efforts protection in paragraph 5(1) is superior to that in 5(2)”. The union recommended that the matter be dealt with at the bargaining table. There is no evidence of any further discussions. The collective agreement in issue was subsequently signed on October 29, 2001 without any amendment to the language of paragraphs 1-5.

The divestment of social housing functions did not take place pursuant to a request for proposal or tender process. The transfer occurred by operation of law pursuant to the provisions of the Social Housing Reform Act, 2000, S.O. 2000, c.27. The Bill passed third reading on December 12, 2000, prior to the letter being sent from MBS to PEGO. That statute was enacted specifically to deal with the magnitude of issues arising from the complex transfer, from the Ontario Housing Corporation, the Crown, (including as represented by the Minister of Municipal Affairs and the Minister of Housing) to the various local authorities, of the real estate and other assets and the liabilities and other responsibilities associated with providing and maintaining social housing. Section 34(1) of the legislation provides authority to the Lieutenant Governor in Council to make “transfer orders” “transferring employees…of a local housing authority” to the new employer. That provision does not provide authority to deal with Ministry staff who may be affected. It was suggested by the employer in argument that employees of Ontario Housing Corporation were protected by the statute in that they were transferred to the new employers, whereas Ministry staff were not. However no evidence of any regulations or transfer orders made pursuant to this section was filed. Section 52 of the statute provides detailed provisions that take effect in respect of transferred employees.

The union argues that paragraph 5(1)(a) is triggered by the transfer of bargaining unit functions or jobs listed in Schedule A. It argues that if restricted to situations where there is an RFP/tender process the entitlements under paragraph 5 are meaningless, as the transfer of a Schedule A entity would then fall under neither paragraphs 5(1) nor 5(2). It points out that paragraph 5 does not say that it applies only if there is an RFP/tender. The union argues that an interpretation that would render the provision meaningless at the complete discretion of the employer (should it merely chose not to hold a competitive process) would be unreasonable and that the better view is one that interprets the provision as a mandatory requirement which merely assumes that the employer will use an RFP/tender process to bring it about. If the employer view of paragraph 5(1) is correct, the union argues, there would be another provision dealing with the direct transfer of a Schedule A entity. Alternatively, there would be an inclusion in paragraph 5(2) to cover those situations where the transfer was not caught by Schedule A and where the transfer was not by way of RFP/tender. Finally the union argues, paragraphs 5(1) and (2) were intended to “cover the waterfront” so that the parties would not have to fall back on paragraph 1; to avoid having to review in detail any efforts made by the employer.

The employer argues that paragraph 5(1)(a) is specific to situations where there is an RFP/tender process and is consistent with the need for clarity in the RFP or tender document. Potential bidders need be aware of the requirements of the tender and if the tender document or RFP fails to clearly disclose the level of potential obligation on the bidder, then difficulties may ensue between the employer and the bidders. That, asserts the employer, drives the need for the deeming provision. It argues that in paragraph 5(1)(a) the union got a good offer of continued employment on a mandatory basis and the employer got certainty for purposes of drafting the RFP/tender. However it argues that the notion of making RFPs/tenders mandatory is not found in the language nor can it be assumed that this specific obligation under paragraph 5(1)(a) arises where there has been no RFP/tender just because the entity transferred is found on Schedule A.

DECISION

The task is to determine the parties’ intention by interpreting the language of Appendix “A”. Paragraph 1 creates an obligation on the employer to make reasonable efforts in the described circumstances. If paragraph 5 were to provide a complete code regarding the employer’s reasonable efforts obligations, paragraph 1 would arguably be redundant. It is an accepted principle of interpretation that all words have meaning. More to the point, paragraph 5, on its own, does not create any obligation on the part of the employer to make reasonable efforts. It identifies what constitutes reasonable efforts in particular circumstances. Its opening words refer to the basic obligation created by paragraph 1.

Paragraph 1 existed in the predecessor collective agreement and created the obligation on the employer to make reasonable efforts in the event of a disposition or other transfer of bargaining unit functions or jobs to the private or broader public sector. As both parties noted, that type of language has been found to create a substantial onus on the employer. (See for example, Crown in Right of Ontario (MBS) v. OPSEU (Union Grievance), decision of Vice-Chair Petryshen, May 19, 1998, GSB# 1196/97 or Crown in Right of Ontario v. OPSEU (Union Grievance), decision of Vice-Chair Roberts, May 26, 1998, GSB# 0559/97).

The union argues that paragraph 5(1)(a) supports a conclusion that the parties assumed that all transfers of functions or jobs listed in Schedule A would occur as a result of an RFP or tender. (the reference to the words “in all the Requests for Proposal or tenders”). However the union did not go so far as to say that the employer was required by this language to use a competitive process. Nor is it the case that the parties can be said to have understood that all transfers would occur by way of RFP or tender, given the wording of paragraph 3. It uses the conjunctive “and” to refer to a decision by the employer to create an opportunity to tender or bid in respect of a disposition. That language requires two things. One, that there be a disposition and two, that the employer determine that a tender opportunity is warranted. It is necessarily implicit in that language that there may be a disposition without an RFP/tender process.

The union’s argument that the parties assumed all dispositions would go by way of RFP/transfer and that the mandatory obligation flows even if that assumption proves to be incorrect, rests entirely on the use of the word “all” in the first sentence of paragraph 5(1)(a). Had the phrase read “in any Request for Proposal” it would leave open the implicit conclusion that not all transfers listed in Schedule A would necessarily be dealt with by RFP/tender. Is the use of that word sufficient to adopt the union’s argument? I am not so persuaded. Firstly, it is not the only reasonable reading of that phrase. The reference to “all”, may also be read as “all” the RFPs or tenders that may arise relating to a transfer of a Schedule A listing. Secondly, and perhaps more instructive, on a review of paragraphs 5(1)(a) and 5(1)(b) there are also two references to “an RFP or tender” in circumstances where one would, on the union’s argument, expect the reference to be to “the RFP or tender”.

In addition it would be inappropriate to read paragraph 5 in isolation from the rest of Appendix “A”. As noted, it is paragraph 1, not paragraph 5, which creates the obligation. The highlighted preamble to paragraph 5 states that the employer’s obligation to make reasonable efforts is deemed to have been satisfied in certain circumstances. However paragraph 5 contains not only deeming provisions. Paragraph 5(3) confirms that employees may turn down an offer from a new employer and exercise other rights under Appendix A and most of Article 14 of the collective agreement. This flows with paragraph 3 of Appendix “A”. Paragraph 5(3) comes into play when the employee chooses to remain within the OPS and exercise his/her rights as an employee subject to lay-off. It bears little on whether the employer has satisfied its reasonable efforts obligation, which contemplates a transfer to a new employer. It is also independent of any Schedule A or RFP/tender issue. Paragraph 5(4) is directly referable to paragraph 4 of Appendix “A”. If the employer includes a statement on an RFP or tender that employees may bid on the same basis as others, its reasonable efforts obligation under paragraph 4 is deemed to have been satisfied. However, as noted earlier, that presupposes that the employer has decided that an RFP/tender process is warranted.

An interpretation that the mandatory obligation in paragraph 5(1)(a) only arises in circumstances of an RFP/tender process does not render the paragraph meaningless. It provides extra value to the union in circumstances where there is an RFP/tender process. In the absence of the RFP/tender process, the employer remains subject to the obligation in paragraph 1 which, the union acknowledges, has given rise to a substantial burden on the employer to make reasonable efforts to ensure that where there is a disposition, employees are offered positions with the new employer.

Thus, having regard to the clear language of Appendix “A”, I find that the requirements of paragraph 5(1)(a) do not arise in circumstances where the transfer occurs by means other than an RFP or tender.

However even if one were to conclude that paragraph 5(1)(a) is ambiguous then the available extrinsic evidence supports the employer’s interpretation of Appendix “A”. The union argues that the employer recognized that it had a problem when it wrote the March, 2001 letter. However that letter is more consistent with a conclusion that MBS believed that paragraph 5(1)(a) did not apply in the circumstances and that it was seeking to otherwise limit its obligation to that spelled out in paragraph 5(2). The obligation in paragraph 5(2) is potentially less onerous and certainly clearer than the undefined obligation set out in paragraph 1 of Appendix “A”. PEGO’s response did not take issue with the proposition that “Schedule A describes transfers through RFPs/tenders” and the language of the collective agreement continued in the same form after this exchange.

Thus, in the circumstances giving rise to these grievances, where the transfer of the social housing functions or jobs did not occur pursuant to an RFP or tender process, I find that the employer was not required to ensure that the three individuals affected were offered a position with the new employer on the terms set out in paragraph 5(1)(a) of Appendix “A” to the collective agreement. The union’s argument on that point fails.

The employer is however, by its own admission, still subject to the reasonable efforts obligation set out in paragraph 1 of Appendix “A”. These matters are hereby remitted to the parties to determine whether or not there are any remaining issues in dispute. The union is to advise the Registrar should these matters require rescheduling.

Dated at Toronto, Ontario this 11th day of February, 2003.