International Union, United Automobile, Aerospace & Agricultural Implement Workers of America and Local 636 v. Thomas Built Buses of Canada Limited, 1980 CanLII 2799

Ontario Labour Relations Board

[1980] OLRB Rep. June 912

1603-79-U International Union, United Automobile, Aerospace & Agricultural Implement Workers of America and Local 636, Complainant, v. Thomas Built Buses of Canada Limited, Respondent.

BEFORE: Pamela C. Picher, Vice-Chairman and Board Members C. G. Bourne and H. Simon.

APPEARANCES: L. MacLean, Q. C., Lorne Charlick, Gary Roberts, C4ff Binns and Jack Dunne for the complainant; T. F. Stone and Larry Bannon for the respondent.

DECISION OF THE BOARD:

1. The United Automobile, Aerospace & Agricultural Implement Workers of America and its Local 636 have complained to the Labour Relations Board that the grievors have been dealt with by the respondent, Thomas Built Buses of Canada Limited, contrary to the provisions of sections 37, 42 and 56 of The Labour Relations Act.

2. By a decision dated February 8, 1980 the Board held that it would not defer to the jurisdiction of a board of arbitration that had been constituted to hear a grievance arising out of the facts which form the basis of the union's complaint before this Board. Those facts were set out in paragraphs 4 through 7 of that decision:

"4. It is common ground between the parties that a two day work interruption occurred at the respondent's plant commencing on October 3, 1979. Although the union denies liability for the work interruption, the company took steps to invoke article 5.06 of the collective agreement in effect between the parties which reads as follows:

'The Union and the employees agree that in return for such Union security they must accept the liability for any violation of the 'no strike' provisions of this Agreement.

Accordingly, it is agreed that in the event of any violation of the 'no strike' clause of this Agreement by the Union and/or the employees, or a group of employees, the Company may at its discretion file with the Union a statement as to the appropriate penalty in the form of a cancellation of dues deduction and/or in the form of loss of seniority or a fine upon the employees. In the event that the parties are unable to agree upon the disposition of the matter, then either party may submit the dispute to a Board of Arbitration and the parties shall be bound by its decision.'

The company has not submitted a grievance against the union claiming damages for the work interruption. Instead, on October 4th, the company sent the union the following statement pursuant to article 5.06 of the agreement:

'October 4, 1979.

Mr. Vein Eaton,

Chairman of Thomas Brand, Local 636,

AND

Mr. Lorne Charlick,

International Representative U.A.W.

STATEMENT BY THE COMPANY PURSUANT TO

SECTION 5.06 RE THE ILLEGAL STRIKE

Pursuant to section 5.06 of the Collective Agreement and arising out of the illegal strike commencing on or about October 3, 1979, the Company herewith files a statement as to the appropriate penalty for breach of Article 4 of the Collective Agreement.

(1) For each day the strike continues commencing October 3, 1979, one month's Union dues shall be withheld and not forwarded to the Financial Secretary of the Local as referred to in Section 5.04.

(2) Each employee participating in the illegal strike commencing on or about October 3, 1979 or thereafter shall be subject to a fine in the amount of one day's pay, at base rate, for each day or part thereof on which they participated. Such deductions, to be made at a time determined by the Company following the conclusion of the illegal strike.

This statement is filed pursuant to Section 5.06 of the Collective

Agreement. It in no way precludes the Company's position with respect to discipline up to and including discharge of employees for their participation in the illegal strike.

Larry Bannon,

Vice-President & General Manager.'

5. Approximately 67 employees out of approximately 90 in the bargaining unit participated in the work stoppage. On October 5th the company gave a written warning to approximately 15 of the employees and notified the other 52 that they would be subject to a two-day suspension with loss of pay. Counsel for the complainant stated that the union considered that the above noted discipline administered to the employees who participated in the work interruption was a substitute for the fines proposed in the company's letter of October 4th. We note that at the hearing, however, counsel for the employer indicated that the company still intended to impose the fines.

6. In response to what the union viewed as the only outstanding penalty proposed in the company's October 4th letter filed pursuant to article 5.06 of the agreement, the union, in a letter to the company dated October 9, 1979, requested the company to withdraw its intention to withhold union dues. The union indicated that its letter should be viewed as a grievance lodged pursuant to the terms of the collective agreement.

7. In a letter which the parties agree should be dated October 26, 1979, the company informed the U.A.W. and its Local 636 of its decision to implement its previously announced intention to withhold union dues:

'This is to advise you that further to our letter of Oct. 4, 1979 and pursuant to Article 5.06 of the Collective Agreement we are withholding [sic] Union dues for the months of October and November 1979.

These funds will be held in escrow pending a decision from the board of arbitration.

It is common ground between the parties that pursuant to this letter the company declined to remit to the union dues deducted from all the employees' wages for the months of October and November 1979. In a letter dated November 24, 1979 the company informed the union that the dues withheld totalled . . . $2,385.20."

3. At the hearing convened to determine the merits of the union's complaint counsel for the company raised two preliminary matters. Following the Board's decision to take jurisdiction to hear the union s complaint, the company, without admitting a violation of The Labour Relations A ct, offered the union a sum of money equal to the amount of union dues it had withheld from the union for the months of October and November, 1979. Based on this offer the company argued that the substance of the complaint had been dissolved and asked the Board to dismiss the complaint. The union declined to accept the money as a full settlement of the complaint and requested the Board to determine the merits.

4. The Board unanimously ruled that the company's offer to pay the union the withheld dues did not dispose of the union's complaint that the company had violated The Labour Relations Act. In the absence of an admission of wrong doing in violation of the Act, the union is entitled to the opportunity to prove its allegations. Further, the union is entitled to argue, as it has, that the appropriate remedy for the violation extends beyond the mere re-payment of the withheld dues.

5. Counsel for the company further argued that the union should be restricted to its alleged violation of section 56 of the Act and should not be permitted to attempt to prove the other allegations set out in the original complaint. Counsel argued that the Board's interim determination declining to defer to arbitration addressed the union's allegations under section 56 of the Act rather than the others and that the union should, therefore, be restricted to its section 56 claim. The Board did not accept the company's argument in this regard and in a unanimous oral ruling stated that it would not restrict the complainant's case in the manner so requested. The union's allegations relating to a breach of section 56 of the Act were alone sufficient to cause the Board to decline to defer to arbitration. It was, therefore, unnecessary for the Board to consider the other alleged violations of the Act in its interim decision. The Board's focusing in its interim decision on the union's allegations under section 56 of the Act, however, cannot by itself circumscribe the scope of the complaint. The union did not express an intention to restrict itself solely to its section 56 claim and the Board has been given no cause to impose such a restriction.

6. We turn now to the merits of the complaint. Pursuant to article 5.06 the company filed with the union a statement indicating its intention to both withhold from the union one month's dues deducted from the employees for each day of the strike and impose fines on participating employees. The union immediately notified the company that it did not agree with the company's disposition of the matter. Although the union indicated to the company that it was submitting its disagreement to a board of arbitration pursuant to the terms of article 5.06, the company, on October 26, 1979, advised the union of its intention to forthwith commence implementation of its decision to withhold from the union dues it had deducted from all employees.

7. The union contends that the company's implementation of its chosen course of action under article 5.06, in the face of the union's dispute, violates section 37 of The Labour Relations Act which stipulates as follows:

"Every collective agreement shall provide for the final and binding settlement by arbitration, without stoppage of work, of all differences between the parties arising from the interpretation, application, administration or alleged violation of the agreement, including any question as to whether a matter is arbitrable."

The company, on the other hand, argues that article 5.06 anticipates that the company may implement its chosen penalty whenever it considers it to be appropriate. If the union disputes the company's action then, in the company's view, its recourse is to take the matter to arbitration. The company argues, however, that the existence of a dispute does not require it to wait for the final and binding decision of the board of arbitration before implementing its chosen penalty.

8. Whether the union is correct and article 5.06 requires that disputes over the appropriate penalty be referred to a board of arbitration for final determination prior to an implementation of the company's chosen penalty or whether the company is correct in its view that the union's disagreement cannot interfere with the original implementation of the company's chosen disposition, the Board is satisfied that there has been no violation of section 37 of The Labour Relations Act. Even if the company's interpretation contravenes article 5.06, the company does not dispute the necessity for, at one point or another, referring the disagreement to arbitration. Sooner or later arbitration is available as a mechanism to resolve the dispute. There is nothing, therefore, either in the collective agreement or the conduct of the company that is in contravention of the fundamental protection of section 37 of the Act.

9. With respect to the alleged violation of section 56 of the Act, the company contends that its failure to remit dues to the union was "a cancellation of dues deduction" within the meaning of article 5.06 of the collective agreement. The company argues that its holding of the union's dues was a course of conduct agreed to in principle by the union as an appropriate response to an unlawful work stoppage which cannot constitute a violation of section 56 of The Labour Relations Act. In support of its argument, and seeking to distinguish its actions from those of the employer in Truck Engineering Limited, [1978] OLRB Rep. Jan. 70, the company emphasized that it did not hold the deducted dues pending the union's payment of a company claim for damages for the work stoppage. Instead it held them in escrow with the intention of returning them to the employees in the event that a board of arbitration held that its actions were in accordance with article 5.06. The penalty to the union was being deprived of dues it otherwise would have received automatically.

10. The union argues that even if the company's action could be characterized as a "cancellation of dues deduction", its conduct would be contrary to section 36a of The Labour Relations Act and, therefore, invalid notwithstanding the fact that a temporary "cancellation of dues deduction" may have been agreed to in principle by the union through the signing of the collective agreement. Section 36a(l) provides as follows:

"Except in the construction industry, where a trade union that is the bargaining agent for employees in a bargaining unit so requests, there shall be included in the collective agreement between the trade union and the employer of the employees a provision that at the written request of an employee in the bargaining unit the employer shall deduct from the wages of the employee the amount of the regular union dues payable by members of the trade union and remit the amount to the trade union."

11. The form of union security agreed to by the parties in this case is set out in article

5.04 of the collective agreement:

"As a condition of employment effective on date of ratification all current and future employees who have completed their probationary period will authorize the Company in writing to deduct from their wages an amount equal to the regular monthly Union dues as prescribed by the Constitution of the Union (See Form 1). Monies deducted in accordance with this section shall be forwarded to the Financial Secretary of Local 636 prior to the end of the month in which such deductions are made."

Through article 5.06 the union has further agreed that under certain circumstances it may be appropriate for the company to suspend the dues deduction procedure which is otherwise mandatory under the collective agreement.

12. The union argued that the deduction of dues upon the request of an employee is a minimum standard of union security provided for in The Labour Relations A ct. As a matter of public policy, the union argues, any provision in the collective agreement which has the effect of forfeiting this minimum statutory standard is null and void.

13. Section 36a of The Labour Relations Act effectively removes the issue of the voluntary check off of union dues from the bargaining table. It stipulates that union security in the form of voluntary dues check off shall be included in the collective agreement if requested by the union. The Act does not, however, suggest that this form of union security is an essential term of a collective agreement. A union may choose, for example, to negotiate a closed shop, but in return be satisfied with collecting its own dues. The section anticipates that the inclusion in the collective agreement of voluntary check off is at the sole discretion of the union. Just as the union is entitled to request it, so is it entitled not to request it, or to request it in a modified form.

14. To suggest that a union would be acting contrary to public policy by agreeing in certain instances to the temporary forfeiture of this minimum form of union security contradicts the very terms of section 36a which unequivocally provide the union with an elective right, a right which may or may not be invoked. The argument of counsel for the union would transform this elective right into a statutory duty and fly in the face of the language of the Act.

15. The Board concludes, therefore, that section 36a of The Labour Relations Act does not itself preclude the company from engaging in a "cancellation of dues deduction" as long as it's done in accordance with the terms of the collective agreement. In this instance, however, the Board is of the further opinion that the company's action of deducting union dues from all employees and holding them in escrow rather than remitting them directly to the union does not fall within the scope of "a cancellation of dues deduction" and, therefore, was not done in accordance with article 5.06.

16. "Cancell" is defined in Webster's Third New International Dictionary as follows:

"1: CANCELLATION: the act of annulling or rescinding."

"Annul and "rescind" are defined, respectively, as

''annul: la: to cause to cease to exist : reduce to nothing : blot out OBLITERATE ... b: to check effectively : to make inoperative... neutralize, cancel

rescind 1: to do away with : take away : remove... 2a: to take back:

annul, cancel"

The company in this case did not either annul or rescind the deduction of dues. Although the company interrupted the normal flow of the dues by holding them in escrow once deducted rather than remitting them to the union, the company did not engage in a "cancellation of dues deduction". The company continued to deduct dues from the employees' wages. In the Board's view, the "cancellation of dues deduction" anticipates that the employer will not deduct dues in the first place, thus setting the onus of their collection on the shoulders of the union. To cancel dues deduction requires the company not to engage in the deduction of dues in the first place. It is a contradiction to suggest that one can cancel dues deduction by continuing dues deduction.

17. The Board concludes, therefore, that the company's actions do not fall within the scope of article 5.06 of the collective agreement. In Truck Engineering Limited, supra, the Board reached a similar conclusion. At p. 75 the Board said,

"Counsel for the respondent contended that the Board should not find the respondent's actions to have been in violation of the Act in that they were expressly countenanced by article 7(d) [identical to article 5.06] of the collective agreement. We are, however, unable to agree with this assessment. Although article 7(d) does provide that under certain conditions the respondent can propose a cancellation of dues deductions, a loss of seniority or a fine upon the employees, the article cannot, as claimed by respondent's counsel, reasonably be interpreted as providing for a right on the part of the respondent to deduct sums from employees' wages in the form of dues deduction and then not to forward the dues so deducted to the union. There exists a real difference between not deducting union dues and the arbitrary impounding of dues once they have been deducted

18. The Board's finding that the company's actions were not in accordance with the provisions of article 5.06 of the collective agreement because the company continued to make dues deductions from the employees' wages should not be understood as implying that, in the opinion of this Board, the company would have been acting in compliance with article 5.06 if it had simply stopped its dues deduction procedures. In the event of a violation of the "no strike" provisions of the collective agreement, article 5.06 gives the company the right to file with the union a statement as to the appropriate penalty as provided therein. Whether the company has the further right to implement its proposed disposition forthwith or whether, in the face of a dispute from the union, the company's implementation must await the final determination by a board of arbitration of the appropriateness of the proposed disposition is a matter of disagreement between the parties as indicated in paragraph 7 above. The proper timing of the implementation of the company's disposition is not a question that need be resolved by this Board in determining the union's complaint that the company has violated section 56 of The Labour Relations Act. It is an issue that would normally be determined by a board of arbitration in the course of interpreting article 5.06 of the collective agreement. Accordingly, this Board expresses no opinion on the matter.

19. We turn now to the main branch of the complaint. Was the company's failure to remit to the union dues deducted from employees for October and November 1979 a violation of section 56 of the Act? Section 56 provides as follows"

"No employer or employers' organization and no person acting on behalf of an employer or an employers' organization shall participate in or interfere with the formation, selection or administration of a trade union or the representation of employees by a trade union or contribute financial or other support to a trade union, but nothing in this section shall be deemed to deprive an employer of his freedom to express his views so long as he does not use coercion, intimidation, threats, promises or undue influence.”

20. The union contends that by depriving the union of its basic source of income, union dues, the employer interfered with the administration of the union contrary to section 56 of the Act. The union argues that the employer's interference with the administration of the trade union by withholding dues strikes at the foundation of the union's existence and its ability to represent employees. Without dues the union loses the means by which it can effectively represent employees. The union contends that the withholding of its source of income and, thereby, its ability to function properly as a trade union, undermines the viability of the union and discredits it in the eyes of employees.

21. In Truck Engineering Limited, supra, the Board dealt with an alleged violation of section 56 arising out of a similar fact situation. The collective agreement in question in Truck Engineering contained a clause identical to article 5.06. There too the company deducted dues from employees but refused to forward them to the union. In that case the company held the funds pending the payment by the union of damages suffered by the company as a result of the October 14, 1976, Day of Protest.

22. In that case at pp. 72 and 73 the Board explained that not all administrative interferences suffered by a union at the hands of a company could be properly characterized as violations of section 56:

"The result of the respondent's actions is that the complainant has not received dues from its members that it otherwise would have received. To this extent the respondent had disrupted the administration of the complainant trade union. The mere fact that an employer's actions have adversely affected a union, however, is not a sufficient basis upon which the Board can conclude that there has been a violation of section 56. The Board in interpreting section 56 recognizes that collective bargaining is essentially and adversarial process. Inherent in the process is the risk that one or both of the parties might suffer as a result of a legitimate stand taken by the other side. Goals and objectives, even those most closely held, will not always be attained. Unpalatable demands made by the other side may have to be acceded to. In bitterly contested disputes one of the parties may well suffer serious damage which could impair even its ability to continue to function. Where the adverse [effect] on either party is of this nature, arising out of a legitimate industrial relations stance adopted by the other side, the Board has been careful to characterize it in terms of "the wear and tear of collective bargaining" and not as constituting the type of interference prohibited by section 56. (See: A.A.S. Telecommunications Ltd. and Zipcal Ltd., [1976] OLRB Rep. Dec. 75 and A.N. Shaw Restoration Ltd., [1976] OLRB Rep. Sept. 504.)"

23. In determining whether the obvious interference with the administration of the trade union resulting from the company's failure to remit dues was a violation of section 56, the Board made the following observations at pp. 73 and 74:

"In this case did the respondent by checking off but then retaining union dues interfere with the administration of the complainant union contrary to section 56? The checking off of union dues is essentially an administrative procedure by which the employer first deducts from the wages otherwise owing to employees amounts equivalent to the union dues owed by the employees to the union and then forwards the funds involved in a lump sum to the union. If a check off system is not employed then the union is required to go through the time and effort of collecting the dues directly. This could be done in a variety of ways including having someone collect union dues at the work place, having members pay their dues at the union office or by having members send in their dues to the union by mail. The process of collecting dues directly from the members is particularly common in the construction industry where although collective agreements generally require that an employer hire only union members, frequently the agreement makes no provision at all for the checking off of union dues.

Where a dues check off system is employed, the employer acts essentially as a collector of moneys due and owing from the employees to the union. The employees have earned the full amount of the wages from which the dues are deducted, but on the basis of the terms of a collective agreement and individually signed authorizations the employer deducts from the wages owing amounts equivalent to the sums owed by the employees to the union. In so doing the employer does not personally become entitled to the money in that he is acting merely as an agent for the collection and transmission of the dues to the union. (See Re United Steelworkers of America and Brooks Manufacturing Co. Ltd. (1969), 1969 CanLII 1497 (ON LA), 20 L.A.C. 298 [Weiler].) The employer possesses no authority to do anything with the money so obtained other than to forward it to the union. This point was expressed as follows by an American court when faced with an employer who had checked off union dues from employee wages but had failed to remit them to the union involved. (Robertson v. Eastern Airlines Inc. 50 L.C. Para. 19,380 [N.Y. Sup. Ct. — Dec. 9, 1964]):

'Without challenging [the] defendant's motives for continuing the check off system subsequent to the June 23, 1962 date, the court discerns no basis in the statute or in precedents to sustain the defendant's unilateral decision to establish a new check off system, one in which the employer deducts the dues and retains them in escrow, trust or like status in accordance with its rationale. This gratuitous assumption of authority and responsibility by the employer will not be countenanced by the court. The authority of the employer in operating the check off system was for a limited purpose, i.e. to forward such dues to the plaintiff union.'"

The Board thereupon concluded that the company's conduct was a violation of article 56 of the Act. At pp. 74 and 75 the Board said,

"As distinct from the situation where an employer fails to make any dues deductions, in the instant case the respondent continued to check off union dues from employee wages. This is thus not a case where employees could simply turn to an alternative procedure for paying their dues. Having deducted the money in the form of dues payments, the respondent failed to fulfill its responsibility of forwarding the sums to the complainant union in accordance with the terms of the employee authorizations. In doing so we are of the view that it directly interfered with the flow of union dues to the complainant from those of its members employed by the respondent, and that this unilateral action constituted a form of direct interference with the administration of the complainant contrary to section 56 of the Act. What we have here is the unilateral impounding of union dues and not a mere failure to deduct union dues from employee wages. ...

As an alternative submission, counsel for the respondent contended that the respondent had believed that article 7(d) gave it the authority to do what it did, and thus at most all that was involved was a misinterpretation of a collective agreement. Counsel submitted in this regard that the Board should not find an employer to be in breach of The Labour Relations Act merely because it had misinterpreted a clause in a collective agreement. As a general principle we agree with this proposition. Disputes which center around differing interpretations of the provisions of a collective agreement are generally best left to the grievance-arbitration procedures provided for in the collective agreement itself. However, this does not mean that an employer can misinterpret a collective agreement in such a way as to come into conflict with some substantive provision of the Act and then point to the collective agreement as a shield for his actions. The substantive rights of employers, employees and trade unions as set forth in the Act do not cease to operate upon the signing of a collective agreement. Thus the fact that the respondent may well have felt that it was acting in accordance with the terms of the collective agreement is not a sufficient defence to a violation of the Act."

24. Consistent with the Board's decision in Truck Engineering, this panel of the Board is also of the view that the company's failure to turn over to the union dues deducted from the employees constitutes a violation of section 56. The Board concludes that this course of conduct was not within what reasonably may have been considered by the company to have been within the scope of article 5.06. In this regard we note that article 5.06 was negotiated into the collective agreement between the parties to this complaint after the Board's decision in Truck Engineering, wherein the Board had already held that failing to remit deducted dues was not "a cancellation of dues deduction". The company's conduct falls outside what might properly be characterized as the "wear and tear of collective bargaining" and fundamentally jeopardized the union's ability to effectively function as a bargaining agent. It is precisely this type of interference that is proscribed by section 56 of the Act.

25. The Board is satisfied that the company's failure to remit to the union deducted from the employees for the months of October and November 1979 constitutes an unfair labour practice in violation of section 56 of the Act. The Board therefore orders that the company, forthwith, pay the union a sum equal to the union dues withheld by it for October and November 1979. Additionally, following the Board's decision in Hallowel House Limited, [1980] OLRB Rep. Jan. 35, the Board orders that the company pay interest on the sum referred to above in accordance with the principle set out in the Hallowel House decision.

26. The Board remains seized of the case in the event that a dispute arises over the implementation of this award.