Ontario Public Service Employees Union v. Family Services of Hamilton-Wentworth Inc., 1980 CanLII 927

Ontario Public Service Employees Union v. Family Services of Hamilton-Wentworth Inc.

File No.: 0140-79-R Date: 1980-02-21 Ontario Labour Relations Board

Applicant: Ontario Public Service Employees Union Respondent: Family Services of Hamilton-Wentworth Inc.

Before: N. B. Satterfield, Vice-Chairman and Board Members J. D. Bell and O. Hodges.

Appearances: Chris G. Paliare for the applicant Win. S. Challis for the respondent

Decision of the Board

[1980] OLRB Rep. February 204

1Two interim certificates were issued to the applicant by an earlier decision of the Board under section 6(la) of The Labour Relations Act. One for a unit of full-time employees and another for a unit of part-time employees and students. At the time, the parties were in dispute as to whether several classifications should be included in or excluded from both bargaining units. The parties have agreed on the disposition of all classifications, except that of employee members of the Board of Directors (of whom there were three at the date of application), as set out hereafter. The classifications of office supervisor and home economist - youth residence are agreed to be excluded from the units under section 1(3)(b) of the Act. The classifications of nursery school head teacher, senior youth care worker and co-ordinator of the Hamilton Psychiatric Hospital Living Skills Programme are agreed to be included in the unit. The Board notes the agreement of the parties that the clarity note in paragraph 5 of the Board's decision incorrectly lists the classification director, Hamilton Psychiatric Hospital Living Skills Programme, the correct classification being co-ordinator as above-referred. The Board notes further agreement of the parties that the evidence of Darlene Mosca in respect of the classification of employee members of the Board of Directors ("employee-directors") shall be representative of herself, Jan Callan and Rod Watson, the person in the classification at the date of application.

2The Board has received the report of the Labour Relations Officer who inquired into the matters in dispute and the written and oral submissions of the parties thereon. Having reviewed and considered the report and the submissions of the parties the Board finds as follows.

3The respondent is a corporation without share capital incorporated under The Corporations Act, R.S.O. 1970, c. 89, as amended. The respondent is comprised of persons who have become members by making application and paying at least two dollars in annual dues. At an annual meeting of members a Board of Directors is elected to carry out the purposes and objects of the respondent's charter which are:

"TO offer assistance to families disorganized by environmental or personality factors or other conditions for the purpose of creating and maintaining wholesome family life, to promote a sound community life, to encourage education and training for social work, and generally to develop, encourage and work for the welfare of the individual and the best interests of society in all matters affecting family and community life;"

The respondent also employs persons who perform the work required to satisfy those purposes and objectives. There is a history over at least twelve years of employees being elected to the Board of Directors and recently, prior to this application for certification, names of employees were recommended to the nominating committee of the Board of Directors by a staff (i.e. employee) association to stand for election to that board. The application for certification has raised the issue of whether employee-directors should be excluded from the bargaining unit because they exercise managerial function or are employed in a confidential capacity in matters relating to labour relations. Neither party contends that the three persons who are employee-directors exercise managerial functions or are employed in a confidential capacity in matters relating to labour relations in their role as employees. The respondent contends that, in their role as directors, they are so engaged. Consequently, the Board should find that, as employee-directors, they fall within the section 1(3)(b) exclusion. The applicant contends that neither the Board of Directors nor the employee-directors exercise managerial function. Thus it is necessary for the Board to examine the role of the Board of Directors in the management of the respondent's business and, more particularly, the role of the three employee-directors.

4The full complement of the Board of Directors is 35. Normally only two are employees, but, at the time of this application, there were three because of a transitional situation. The parties do not expect that this situation will endure beyond the present term of office. It is not clear from the evidence why the respondent has employees on its board. Mosca states that the employee-directors are not on the Board of Directors as representative of the employees. She admits that there has been confusion amongst directors about the role of the employee-directors and it is reasonable to infer from her evidence that the other directors perceive them as representing the employees because the employee-directors have been asked on particular subjects to canvass employee reaction. The employee-directors volunteer to stand for election and they carry out this responsibility on their own time, not the respondent's and receive no extra consideration for being employee-directors. The Board of Directors meets ten times per year and in the two months when it does not meet, its executive committee carries out its functions subject to later ratification by the directors. Recently the respondent adopted the practice of having the Board appoint a "delegated management committee" which is a committee consisting of 21 directors who are prepared to be available on a regular basis for meetings. At least two of the three employee-directors are included in this committee. Seven of the ten directors' meetings are meetings of this committee and the three remaining ones are designated as full board meetings. The actions of the committee are ratified at the next following meeting of the full board. For all practical purposes, the committee is the Board of Directors and when reference is made herein to the functions and actions of the latter, it includes both.

5The Board of Directors relies primarily on the paid professional and administrative staff of the respondent to implement the objectives, policies and programs which it has approved. The executive director is at the head of this staff group and is responsible directly to the Board of Directors. He in turn has two executives, the director of administrative and personnel services and the director of professional services, who report to him and are responsible for the delivery of all approved programs of the respondent to the community and for the general administration of the respondent. The Board of Directors is assisted also by an extensive committee organization which is made up of two groups of committees. One group is the corporate standing committees which are concerned essentially with the ongoing administration and operation of the respondent as indicated by their names, for example: personnel; program and planning; and finance, budget and property. The other group is the service committees. These are ad hoc committees and reflect primarily the services and programs which the respondent is delivering to the community. The service committees change from time to time depending on the changes in emphasis and direction of the respondent's programs. While all committees report to the board, they maintain close liaison with the administrative and professional staff and, as will be seen later in this decision, sometimes become closely involved with the implementation of decisions of the Board of Directors. The liaison function is achieved in part by the make-up of the committees which includes one management and two non-management staff along with three directors.

6The Board of Directors and the committees reach decisions on a consensual basis or, failing consensus, by majority vote. The evidence indicates that employees are encouraged to attend the meetings even if they are not members of the board or committee and to participate in the discussions. All actions and decisions of the board are collective ones and no director has authority (except within certain narrow limits) to commit the respondent in external business matters or exercise internal managerial authority.

7It is appropriate to begin an examination of the Board of Directors functions within this organizational format with the source of its authority, the respondent's Letters Patent, which designate the Board of Directors as the Committee of Management of the Corporation. As such, the Board of Directors is empowered to make by-laws and regulations for the control, management and conduct of the affairs of the Corporation. This is in keeping with section 313(1) of The Corporations Act, supra, which requires that "The affairs of every corporation shall be managed by a Board of Directors howsoever designated". The report of the Labour Relations Officer reveals that the Board of Directors, in fulfilling its role of managing the affairs of the respondent, performs a wide range of functions which impact on all aspects of the respondent's operations and many of which directly affect or involve the respondent's employee relations.

8The Board of Directors deals regularly with the source and application of funds including:

(a) approving the operating budget and monitoring revenue and expense results under it;

(b) approving the fee for service (i.e., price) structure;

(c) deciding to cancel, modify or add programs, freeze salaries or defer filling vacant positions in order to balance expenses with revenue;

(d) approving all commercial contracts;

(e) approving all specific expenditures such as purchase of chattels, capital repairs and property maintenance.

It determines the respondent's organization and establishes the job content for senior management positions. In addition to item (c) above, some other examples of decisions which impact on the respondent's employee relations are:

(a) approving conditions for laying off staff;

(b) approving changes to employee benefits;

(c) approving individual leaves of absence:

(d) hiring and firing key staff;

(e) approving salary adjustments for all staff;

(f) allocating staff and programs to specific geographical areas or locations within the broad geographical community served by the respondent; and

(g) alternative solutions for dealing with staff workload problems.

While the respondent's written personnel policies and practices show that the Board of Directors was the final level of appeal under section VI - grievance procedure of the document setting out the policies and practices, Mosca's evidence is that the board has not been called upon to deal with any grievances during her experience.

9The evidence in the Officer's report reveals the two groups of committees referred to above to have an active role in the management of the respondent. They receive, evaluate, modify and approve recommendations of administrative staff in respect of the policies, procedures and programs of the respondent and in turn recommend the particular action to the Board of Directors for final approval. A simple example is the role of the finance, budget and property committee in the preparation of the respondent's annual operating budget. The committee reviews the budget proposals for the respondent's various operational elements and the consolidated budget, where necessary directs that they be revised and, after the committee has approved them, recommends the budget proposals to the Board of Directors for its approval. In this process, the committee reviews information on current and projected staff salaries and staffing levels by program. This committee is involved also in the ongoing review of actual revenue and expense results compared with the budget. When variances show revenue shortages or surpluses exist in particular programs, the committee will review those with the administrative staff involved, decide what action should be taken and recommend that action to the Board of Directors for its approval. The process in both examples often involves other standing committees such as the program and planning committee, or the personnel committee or a service committee responsible for a particular program such as the youth residence committee. This latter committee is an example of the role played by the service committees in monitoring for the Board of Directors the operation of the respondent's programs. It determines admission criteria for the residence, reviews with the head of the residence the programs offered to the residents and takes an active part in the maintenance of the residence. Thus through these kinds of activities the committees perform an important co-ordinating function between the Board of Directors and the various administrative and program elements of the organization as well as amongst those elements. As well as providing an advisory function to the Board, the committees also advise the professional and administrative staff and other committees. The functions performed by the committees are very similar to those for which the staff specialists are commonly employed in other organizations. For example, the personnel committee develops personnel policies and procedures, reviews benefits and salary scales, work usually done by personnel specialists in larger organizations. Similarly, the finance, budget and property committee can be likened to the financial analyst.

10The approach to managing the respondent's operations involves constant consultation and inter-play between the Board of Directors, the committees, the administrative staff and employees. The Officer's report contains ample evidence of this inter-play and Mosca's evidence shows it to be a constant factor in the management of the respondent's affairs. The inter-play between the Board of Directors (or the President acting for the directors) and the administrative staff occurs either directly with the executive directors or through one of the committees. When it occurs though a committee, it may be with the executive director, one of his two subordinate executives or a program head, as in the example of the youth residence committee's dealings with the head of the youth residence. Employees individually and in groups are consulted and encouraged to participate in a wide range of matters such is search committees and other hiring procedures, task forces, reviewing and assessing changes in personnel policies and procedures and the respondent's fee for service schedule. Thus the consultation inter-play extends well beyond the Board and committee functions. This consultative approach to decision-making notwithstanding, the evidence leaves no doubt that the final decision-making authority is exercised by the Board of Directors once the consultation is finished, not only in respect of introducing, modifying or cancelling policies and programs, but also in respect of the implementation of policies and programs, as evidenced by some of the functions set out in paragraph 8 herein.

11In view of the scope of the Board of Directors functions, it is not surprising that the directors have frequent access to and utilize in the decision-making process, confidential information iii matters related to labour relations. This may take the form of salary expenses for each of the various service programs or information which shows the staffing impact of alternative action responses to an imbalance of revenue and expenses for a particular program. There is some conflict in the evidence of Mosca and John Vedell, the executive director, as to whether employee-directors have access to this kind of information or participate in the decisions related thereto. Having regard to the evidence as a whole, the Board finds on balance that the evidence supports the view that the employee-directors have abstained from participating in decisions which affect individual members of the staff or from which they would benefit personally as employees.

12It is within the context of these facts that the Board must determine if employee-directors of the respondent fall within the exclusions of section 1(3)(b) of the Act which provides as follows:

"1. (3) Subject to section 80, for the purposes of this Act, no person shall be deemed to be an employee,

(b) who, in the opinion of the Board, exercises managerial functions or is employed in a confidential capacity in matters relating to labour relations."

These exclusions serve to draw a line between those persons who are not entitled to bargain collectively under the protective umbrella of the Act and those persons who are. The importance and purpose of this distinction has been commented on by the Board many times and recently it stated as follows in Chrysler Canada Limited, [1976] OLRB Rep. Aug. 396:

"The identification of management is fundamental to the scheme of collective bargaining as set out in the Labour Relations Act. What is contemplated is an arm's length relationship between the employees represented by a bargaining agent, on the one side, and the employer acting through management on the other side. The Act attempts to create a balance of power between these two sides by insulating one from the other. Employees, therefore, are protected from management interference and domination by the prohibitions against employer interference with trade union and employee rights. Management, by the same token, is protected by excluding from collective bargaining either persons exercising managerial functions, or persons employed in a confidential capacity in matters relating to labour relations. Collective bargaining rights, therefore, are not universal, but must be qualified by the need to preserve a countervailing force on the employer side."

There are two competing precautions inherent in applying the section 1(3)(b) exclusions: the need, on the one hand, to shield the employer from potential conflicts of interest and the trade union from management interference (as is evident from the Board's comments in Chrysler, supra); and on the other hand, the awareness that persons who are captured by these exclusions are denied access to the collective bargaining process. In our case we are dealing with persons whom the parties acknowledge are not excluded from the Act by reason of their duties and responsibilities as employees of the respondent, but who would be excluded only if this Board finds that, as employee-directors, they:

(a) exercise managerial function, or

(b) are employed in a confidential capacity in matters relating to labour relations.

13The facts demonstrate that the Board of Directors is clearly fulfilling the obligation placed or it by the respondent's articles of incorporation and by section 313(1) of The Corporations Act, supra, to manage the affairs of corporation. While the Board relies primarily on the respondent's paid professional and administrative staff to implement the approved policies and programs for the achievement of the corporation's objectives, the Board of Directors has retained to itself some significant management responsibility. Most of the activities set out in paragraph 8 are ones which are usually part and parcel of the implementation role of management. Moreover the close supervision given by the Board of Directors to the professional and administrative staff, directly and through the board's committees, is akin to that exercised by a chief executive officer in a more typical corporate organization. Consequently we must conclude that the Board of Directors collectively exercises managerial function. Within this format, however, the respondent has encouraged staff, both management and non-management, to participate in and contribute to the policy setting and decision-making apparatus of the organization by:

(a) the use of staff on committees of the Board of Directors;

(b) the participation in pre-decision deliberations of the Board of Directors of staff who are not directors,

(c) the involvement of staff in search committees, the assessment of job candidates and task forces;

(d) the consulting of staff on matters relating to conditions of employment; and

(e) the election of staff on the Board of Directors.

All of this demonstrates a clear and purposeful effort of the respondent to install throughout the organization a consultative approach to decision-making. Thus, even though the Board of Directors deserves to itself the ultimate decisions on matters of policy, programs and some implementation actions, these decisions frequently are made only after the significant participation of all levels of the organization.

14It is clear that the Board is dealing in this case with a situation containing some special features. The respondent, whatever the source of its original inspiration, has seen fit to follow a participative and consultative approach to the management of its affairs. The applicant, at least to the extent that it is maintaining that the employee-directors should not be excluded from the bargaining unit, is not opposed to this system of management and gives no indication that having bargaining unit employees serve on the Board of Directors under these circumstances is a threat to the applicant's exclusive bargaining rights for the non-management staff. How do we apply to this situation the Board's traditional tests for identifying whether a person is employed in a confidential capacity or exercises managerial function, tests which have evolved out of labour relations in the industrial context? The Board, having regard for the constantly evolving nature of labour relations, has found it necessary to be cautious in applying its tests in a new or different context; to not apply them in a mechanical fashion and to deal with each situation on its own facts. In this respect see, for example, the Board's comments at paragraph 9 and 10 of its recent decision in Spar Aerospace Products Ltd, [1979] OLRB Rep. July 700 in which the Board was called upon for the first time to deter: nine the managerial exclusion in a scientific and professional engineering setting. There is, in our view, additional reason for caution in this case. At a time when much attention is being focused by governments and participants in and observers of the industrial relations scene on techniques for modifying some of the negative influences of the adversarial aspects of the collective bargaining process, it seems appropriate to the Board that it should be judicious in the application of its criteria for exclusions to the status of the employee-directors in this case so as not to disturb the existing style of management.

15Turning first to the question of whether the employee-directors are employed in a confidential capacity in matters relating to labour relations, it is true that the Board of Directors regularly makes decisions about such matters. The employee-directors, however, have excluded themselves or have been excluded by the Chairman of the Board from participating in some such decisions. The evidence indicates also that they do not usually receive the confidential information relevant to those decisions. If this is not always the case and they do sometimes come into possession of confidential information on labour relations matters, would this be sufficient in all the circumstances of this case to apply the confidential exclusion? We think not. The Board has consistently held that, in order for a person to be ''employed in a confidential capacity in matters relating to labour relations'' he must have a regular, material involvement in such matters and not merely be exposed to the confidential information in some incidental manner. Furthermore, in the absence of a need for the person to have the information because of the job in which he is employed, the mere coming into possession of the information is not sufficient to create the conflict of interest contemplated by section 1(3)(b). (In this respect see the Board's comments in York University, [1975] OLRB Rep. Dec. 945 at p. 951). This is particularly so in this case where the potential for acquisition of confidential information is not related to the jobs which the employee-directors are engaged to do and where it is fully within the control of the respondent to protect itself against the disclosure of confidential information to the employee-directors if it believes it might be adversely affected by that disclosure. We conclude therefore that the employee-directors are not captured by the confidential exclusion.

16The question as to whether the employee-directors exercise managerial function raises an important issue for the Board in its application of section 1(3)(b). The problem which commonly faces the Board when it is dealing with managerial function is to determine what is the lowest level in the organization at which managerial function is exercised. In this case we are examining the participation of employees in their role as directors at the highest level of a corporation at which managerial function may be exercised. Furthermore, the examination is taking place, as noted above, in a milieu where the respondent has promoted the involvement of employees generally in the decision making process. The persons in question are part of that involvement in their primary roles as employees. They are also part of it in their secondary role as directors. It is agreed that they do not exercise managerial function in their primary role, but can it be said that the functions which they fulfil in their secondary role constitute the exercise of managerial authority within the meaning of section 1(3)(b)?

17In seeking the answer to that question, it is useful to consider generally the following comments of the Board in Caledon Hydro-Electric Commission, [1979] OLRB Rep. Oct. 924, in which it was considering the application of its "effective recommendation" test for managerial function.

"Modern corporations encourage the free flow of information and ideas from subordinates to superiors. Consultation, and involvement in the decision making process, improves communication in both directions, clarifies the employer's problems and objectives, increases employee morale and makes optimum use of employee ingenuity and creativity. 'Participatory management styles' have become a prevalent technique in large organizations for reducing employee alienation, and increasing commitment to the goals of the employer. (See generally P. Blumberg, Industrial Democracy: The Sociology of Participation, Constable, London, 1968.) In small organizations consultation is inevitable because of the small number of individuals who must work together effectively if the goals of the organization are to be accomplished. One should not conclude, however, that the existence of consultation and an apparent 'democratization' of decision making means that managerial authority has begun to percolate downwards...." [emphasis added]

That very caution finds meaning in a decision of the Board in Carleton University, [1975] OLRB Rep. June 500. The Board was faced with determining whether, in a bargaining unit of academic staff and librarians, departmental chairmen who report to faculty deans were the first level of supervision. Deans were agreed to be managerial. After examining the collegial nature of the decision-making process in the academic setting of a university and how that process operated at the departmental level within that setting, the Board found that the decisions on important matters such as hiring, tenure, promotion and dismissal were made collectively by all academic members of a department. It concluded, therefore, that the chairmen did not perform functions sufficiently different from their faculty colleagues to warrant excluding the departmental chairmen from the bargaining unit. Thus the fact that the university organization encouraged collective decision-making by those persons who would be affected by the decision (i.e. faculty members of the department including their chairman) did not make them managers. The Board came to a similar conclusion in University of Windsor, [1977] OLRB Rep. May 300 and in the process also rejected the proposition that faculty were by definition managerial because of their participation in the group decision-making process.

18While the situation in our case is not the same as the university environment, it is somewhat analogous. Decisions, including decisions of the Board of Directors are made only after canvassing and giving account to the views of employees. As in Carleton, prolific use is made of committees in the decision-making process and for providing liaison between inter-dependent groups in the organization. The analogy appears to end with the role of the employee-directors in the process. In Carleton, issues are decided collectively at the faculty (i.e. employee) level, or, in other words, the decision-making process has been brought to the employees. In our case the employees (who are employee-directors) have been elevated to where the decisions are made by the board. We think this distinction is more apparent than real and is just a different technique for involving employees in the decision-making process and as: in Carleton, it does not per se make them managers.

19Bearing in mind that we are dealing with the secondary function of these persons and not the primary one and it is only in respect of the secondary one that they have responsibilities which might distinguish them from their fellow employees; furthermore, since all the decisions of' the Board of Directors are collective ones and no director has individual authority to comrriit the respondent in external business matters or exercise internal managerial authority, this Board cannot conclude that the employee-directors are called upon to exercise the kind of independent decision-making authority which demonstrates that they exercise managerial authority within the meaning of section 1(3)(b). The Board is satisfied, in the circumstances of this case, that the applicant and the respondent are each in a position to protect its own interest should either one see the employee-directors as posing a 'conflict of interest' risk if they are included in the bargaining unit. It is open to the applicant to bargain any protection which it deems necessary and for the respondent to control the information made available to the employee-directors and to require them to abstain from participating in discussions and/or decisions where it deems such participation to be adverse to its collective bargaining relationship with the applicant. Moreover, should the collective bargaining relationship between the parties develop in a manner which is incompatible with placing employees on the Board of Directors, the respondent could terminate the arrangement.

20For all of the above reasons and having regard to all of the facts in this case, particularly:

a) the nature of the respondent's "business", its organization and the composition of its work force;

b) the respondent's established practice of seeking some employee representation on its Board of Directors;

c) the involvement of employees in the decision-making process by means of the respondent's participatory and consultative style of management; and

d) the applicant's acceptance of the employee-directors as being appropriate for inclusion in the bargaining unit,

we find that the employee-directors are properly included in the bargaining unit. We want it to be clear, however, that in reaching this decision on the facts and circumstances existing at this time, we do not consider this to be a case for devising per se rules. At another time, with different facts, a different conclusion could result. Even in this case, further development of this participative managerial process within the collective bargaining relationship may cause either party to ask for re-examination of the status of employee-directors.

21Before concluding this decision, the Board notes with approval the statement of the respondent made through counsel in its written submissions and repeated in the hearing that it intended to continue this commendable practice of having employee representatives on its Board of Directors regardless of the outcome of this Board's decision. That attitude speaks well for the prospect of the parties being able to fashion an approach to their collective bargaining relationship which will preserve that practice and enhance the collective bargaining relationship.

22In summary, having regard to the agreement of the parties, the Board finds that the positions of office supervisor and home economist - youth residence are excluded from the bargaining unit and the following positions are included in it: nursery school head teacher; senior youth care worker; and, co-ordinator of the Hamilton Psychiatric Hospital Living Skills Programme. The Board further finds that employee-directors are included in the bargaining units. Thus the composition of both bargaining units is finally resolved.

23The Board finds, accordingly, that all employees of the respondent at Hamilton, Ontario, save and except director, persons above the rank of director, secretary to the executive director, office supervisor, home economist - youth residence, persons regularly employed for not more than twenty-four hours per week and students employed during the school vacation period, constitute a unit of employees of the respondent appropriate for collective bargaining and comprise bargaining unit #1.

24The Board further finds that all employees of the respondent at Hamilton, Ontario, who are regularly employed for not more than twenty-four hours per week and students employed during the school vacation period, save and except director, persons above the rank of directors, secretary to the executive director, office supervisor and home economist - youth residence, constitute a unit of employees of the respondent appropriate for collective bargaining and comprise bargaining unit #2.

25For purposes of clarity the term director appearing in the exclusions in both units describes:

director of professional services,

director of administrative and personnel services,

director of counselling,

director of family life program,

director of living skills program,

director of credit counselling,

director of youth residence,

co-o dinator of the Hamilton

Psychiatric Hospital Living

Skills Programme.

26Formal certificates will now issue to the applicant.