International Union of Operating Engineers, Local 793 v. The Corporation of the Town of Meaford, 1981 CanLII 858

0076-81-U International Union of Operating Engineers, Local 793, Complainant, v. The Corporation of the Town of Meaford, Respondent.

BEFORE: M. G. Mitchnick, Vice-Chairman, and Board Members C. G. Bourne and H. Simon.

APPEARANCES: S. B. D. Wahl for the complainant; D. Hersey for the respondent.

DECISION OF M. G. MITCHNICK, VICE-CHAIRMAN, AND BOARD MEMBER H. SIMON; September 15, 1981

1. This is a complaint under section 79 of The Labour Relations Act, alleging a violation of sections 14, 56, 58, 59, 61 and 70 of the Act. Specifically, the complaint alleges that the respondent:

"(i) failed or refused to bargain in good faith and make every reason­able effort to make a collective agreement;

(ii) participated in or interfered with the administration of a trade union, namely, the Complainant, or the representation of the employees of the Respondent by the Complainant;

(iii) sought by threat of dismissal or by any other kind of threat or by the imposition of a pecuniary or other penalty or by any other means to compel employees to refrain from becoming or refrain from con­tinuing to be or to cease to be a member of a trade union, namely the Complainant, or to exercise any other rights under the Act;

(iv) so long as a trade union, namely, the Complainant, continues to be entitled to represent the employees in the bargaining unit, bargained with its employees;

(v) sought by intimidation or coercion to compel its employees to refrain from becoming or to refrain from continuing to be or to cease to be a member of a trade union, namely the Complainant, or to refrain from exercising any other rights under the Act;

(vi) altered the rates of wages or any other term or condition of employ­ment or any right, privilege or duty of the Employer in circum­stances where notice has been given under Section 13 that no collec­tive agreement is in operation in the absence of consent of the trade union, namely, the Complainant."

2. On July 9, 1980, the applicant was certified on an interim basis as exclusive bargaining agent for the four employees of the respondent's Works Department. The main thrust of the applicant's complaint is that the respondent employer, by withholding the annual increase granted to non-union employees of the Town, and by insisting on a form of collective agreement which would leave the members of the bargaining unit continually behind the other employees, sought to convey to the employees of the Works Department that they were being penalized for electing to engage in collective bargaining, and thus intimidate them into abandoning their bargaining agent.

3. It has been the practice of the Town to apply an across-the-board percentage increase to all of its employees each year on a January 1st to December 31st basis. The amount of this increase is not determined until the budgets are completed in the late spring or early summer. The increases are then implemented at approximately the beginning of July each year, and made retroactive to January 1st. The only exception to this arrangement has been with respect to the Town's police force, whose members have been represented for a number of years by a trade union. As the terms of the policemen's collective agreement are of course subject to negotiation each year, the annual adjustment for other employees does not apply to them, but rather, their settlement terms, when reached, are applied retroactive to January 1st. The collective agreements for the members of the police force have always been on a January 1st to December 31st basis.

4. The complainant filed its application for certification for this bargaining unit on October 31, 1979. The other employees of the Town received their general increase, being 8% for 1980, around the beginning of July 1980. The increase was not applied to the members of the Works Department. Notwithstanding the application for certification, the members of the Works Department continued to attempt to bargain directly with the Town through their superintendent, Mr. Gilray, presenting a written list of their demands, according to past practice, as late as April of 1980. They were advised by Mr. Gilray that nothing could be done until the union matter was resolved one way or the other.

5. Negotiations with the Town were carried out by Mr. Bernard McMillan, the applicant's business representative for the area. Mr. McMillan, for his part, was concerned from the outset that the employees for whom the union was seeking bargaining rights would not be deprived of any of their customary wage increases. This became a more pressing concern in July of 1980, when the general increase was implemented for the Town and the members of the Works Department were excluded. The members of the Works Department began to complain to Mr. McMillan about this, and Mr. McMillan approached Mr. Fer­guson, the Chairman of the Town's negotiating committee, with a request that the 8% be implemented. Mr. Ferguson indicated to Mr. McMillan that he would get back to him with respect to this request, but apparently never did. The 8% was not implemented for the members of the Works Department, and continued to build as a sore point amongst the men.

6. A number of negotiating meetings took place between the parties over the summer, and in September of 1980 the union applied for conciliation. On October 27th the parties attended a meeting with the conciliation officer in Toronto. The Mayor of the Town testified that it was never his intention to give the Works Department any more than the 8% granted to other employees of the Town. That was the position of the Town in negotiations throughout. He testified that in his view the men had little bargaining power, as their work could readily be contracted out if necessary. In addition, the Town adopted the position that the term of the agreement had to be one year from the date of signing. The only explanation for the Town's position in this regard was given through the evidence of the Mayor, whose evidence on the matters at issue was extremely vague. The Major explained that he had little familiarity with the thinking of the Town's negotiating committee, as the directing mind of the negotiations had been Reeve Ferguson. The Mayor indicated that, for his part, he did not think that a term of January 1 to December 31, in line with the police contract, had ever been seriously considered, but also indicated no knowledge of whether the union had ever asked for that. The Mayor did testify that there had been some discussion that a contract date of October would allow the Town to use the negotiated settlement with the union each year to act as a guideline for the increases to be applied to the Town's other employees. The Mayor conceded at the same time that this strategy, in the circumstances, would have the effect of placing the Works Department a year behind the other employees of the Town with respect to the timing of their increases. At the conciliation meeting on October 27th, the TV’s for the first time offered retroactivity to January 1, 1980, in the form of a signing bonus, although the Mayor testified that there had never been any question in his mind but that the Works Department employees would be given their increase retroactively. He stated in cross-examination that he could offer no explanation as to why the Town had declined to offer retroactivity prior to the conciliation meeting of October 27th. Mr. McMillan, who was at the October 27th meeting representing the employees on his own, testified that he decided that what the Town was offering at that point was the best that he was going to be able to do for the men, and accordingly agreed to sign a memorandum of settlement that day, subject, as usual, to ratification by the members.

7. Following the conciliation meeting and the signing of the memorandum of settle­ment, the first individual from either negotiating committee to arrive back in Meaford was Mr. Ferguson. The evidence is that Mr. Ferguson regularly drives a school bus for the Town, and that it is not unusual for him to stop into the coffee shop and chat with the employees in the Works Department about matters of a social nature. On this day, however, Mr. Ferguson did not confine himself to "social" matters, but rather went directly to the coffee shop upon arriving in Meaford, and began discussing with the employees the fact that a memorandum of settlement had just been signed. The memorandum of settlement of course obtained for the members of the Works Department the same 1980 increase granted to other employees of the Town, but locked them into that increase until October 1981. The only direct evidence of what was said by Mr. Ferguson came from Mr. Merrifield, who was summonsed by the complainant as a witness, and ultimately was declared by the Board to be hostile. Following the Board's ruling, Mr. Merrifield appeared to the Board to be making a sincere attempt to be accurate in his evidence, but appeared to have some difficulty in following certain questions. Portions of his testimony leave no doubt that Mr. Ferguson told the employees they would receive the 8% increase whether they ratified the memorandum of settlement or not. Other points in his testimony were, however, less clear in this regard. Had the Board been called upon to weigh Mr. Merrifield's evidence on this point against that of another credible witness, the Board may not have made a finding of fact against the respondent on the basis of Mr. Merrifield's evidence alone. The fact is, however, that even though this incident was central to the complainant's case against the Town, and indicated as such by the Board, from the outset, Mr. Ferguson was not called by the respondent to testify. Considering Mr. Merrifield's evidence as a whole, the Board concludes that the employees in that discussion were in fact told by Mr. Ferguson that they would receive the 8% increase whether they ratified the contract or not.

8. When Mr. McMillan arrived in Meaford later on that same day, he convened a subsequently, a second motion was considered by Council and passed, in the following form: meeting which was attended by three of the four Works Department employees. Mr. McMillan explained to the men that he had signed the memorandum of settlement because it was his view that he was not going to be able to get any more for them, and indicated further that he could give no assurance that they would even receive the 8% if they turned the contract down. Mr. McMillan was advised by the employees present that they had no interest in accepting the proposed contract, and that they had concluded that they could "do better without the union". The men indicated that they would poll the fourth member of the Works Department, who was not at the meeting, and let Mr. McMillan know his views as well. Mr. McMillan testified that at the time he was pleased that the men had the courage to turn down the contract as they did, because, as he explained, he "did not like to see men's noses rubbed in the dirt". Mr. Merrifield testified that he and the other men felt that they were actually in a worse position under the proposed contract than the other members of the Town, since an October contract date would mean that the other employees in the Town would get their increase every year several months sooner. He testified that it was the view of the employees that the union would simply "drop out of the situation" if the employees refused to accept the contract.

9. The union was, in fact, strangely silent for some time following the rejection of the contract. Mr. McMillan testified that he advised the conciliation officer at once of the contract rejection, but that he was unsuccessful in repeated attempts to make contact with the solicitor handling the negotiations for the Town. Mr. McMillan did not suggest in his evidence that he ever left a message which was unreturned by the Town solicitor, and the Board has serious doubts about the efforts which Mr. McMillan put into contacting the Town at this point. Mr. McMillan did report the outcome of the negotiations back to his superiors at this stage, and acknowledged that they were considerably displeased with some of the language he had reluctantly agreed to include in the proposed collective agreement. This involved, in particular, the language with respect to "Management Rights" and "No Strike". A "no-board" report was issued by the Minister of Labour dated November 18, 1980, thereby establishing a strike deadline of early December. There was, however, apparently no talk of a strike amongst the employees in the bargaining unit.

10. In the meantime the Town was of the view, according to the Mayor, that once the memorandum of settlement had been signed, it was appropriate to go ahead and implement the agreed-upon increase. A motion to do so was put before the Town Council at a meeting of November 3, 1980. The initial resolution, put forward by Mr. Ferguson, stated as follows:

"Moved by Mr. Elmer Ferguson Seconded by Mr. Alfred Willis

WHEREAS a representative of the International Union of Operating Engineers, Local 793, a Conciliator appointed by the Minister of Labour and the Chairman of the Public Works Committee signed a Memo Agreement on the 27th day of October, 1980 regarding back wages for the employees covered by the Agreement, NOW THEREFORE be it resolved that the employees Jack Webster, Stewart Merrified and Bev Parkin receive 8% of their gross earnings of 1979, retroactive to January 1st, 1980, subject to Union approval as well as the approval of the Municipal Solicitor."

The discussion in voting on this motion was conducted in camera. The motion was defeated.

"Moved by Mr. Elmer Ferguson Seconded by Mr. Alfred Willis

That the Works Department employees, namely Jack Webster, Stewart

Marrifield and Bev Parkin be granted an 8% increase of their 1979 wages for the year 1980, subject to the Town's solicitor approval.

— Carried."

As can be seen, all reference to the union was removed in the second motion. The Mayor was asked on cross-examination whether, subsequent to the passing of this motion, legal counsel was in fact consulted prior to implementing the increase, and the Mayor testified only that he assumed that this was done, but that he himself took no part in the matter. In any event, the increase was implemented and reflected in the paycheques of the members of the bargaining unit, apparently in late December (and probably outside the section 70 "freeze period").

11. On December 17, 1980, the government mediator, Mr. Hopper, advised the parties that he would convene a meeting in Owen Sound on January 12, 1981. On January 5, 1981, counsel for the Town wrote the following letter to Mr. McMillan, the applicant's business representative:

"We act as counsel for the above noted Corporation and write to clarify its position with respect to the recently negotiated collective agreement with your Union dated October 27, 1980.

The collective agreement was valid in all respects save that it required ratification by the respective parties. We have been advised that the Union has been unable to have the agreement ratified and that indeed no employee in the bargaining unit is prepared to authorize its execution by your Union. This understandably places the Corporation in a difficult position.

We have reviewed the Constitution of your Union to determine whether it would have any status to sign such a collective agreement notwith­standing the unanimous rejection by the employees. On our reading of your Constitution, ratification by the membership is necessary and it would appear therefore that your Union has no jurisdiction to sign this agreement until ratification is achieved.

We are advised that the Corporation remains willing to execute the agreement as soon as these objections have been resolved. If you do not agree with our interpretation of the situation or the law, we would encourage you to bring the matter before the Ontario Labour Relations Board for resolution.

We have advised Mr. Hopper of the contents of this letter and will in the interim agree to the interim arrangements arrived at with you concerning the recent wage increases.”

There is nothing in the evidence to indicate why the Town at this stage was pointing out to the applicant that it could not sign a collective agreement in the absence of ratification. There was, in addition, nothing in the evidence to suggest any "interim arrangements" had been made with the applicant to implement the wage increases irrespective of ratification, and of course the increases had already been implemented by this point. As counsel for the Town was engaged in other negotiations at the offices of the Ministry of Labour in Toronto on January 12th, the meeting called by Mr. Hopper in fact took place in Toronto, and lasted only a few moments. On behalf of the applicants, Mr. Redshaw attended this meeting along with Mr. McMillan. Mr. Redshaw indicated that there were four items in dispute, being wages, duration, management rights and no-strike, and stated that these four areas had to be resolved before a ratified agreement would be possible. Counsel for the Town expressed the Town's view that it had a signed memorandum, and was not prepared to improve on the deal that had been made. Counsel for the Town also asked some questions about the applicant's consti­tution and its right to sign a collective agreement in the absence of ratification, and Mr. Redshaw apparently undertook to provide Town counsel with a copy of the constitution. Apparently an issue also arose as to whether any ratification meeting had taken place at all. The meeting ended with Town counsel affirming that there was no movement on the part of the Town, but indicating that he would seek further instructions.

12. At this point, the applicant retained counsel of its own. The applicant's counsel wrote to the Town counsel on February 20, 1981, pointing out the respondent's acknowledged awareness that the employees had failed to ratify the memorandum of settlement, and submitting that "the parties are obliged to meet and continue bargaining". Applicant's counsel closed by called a negotiating meeting at its own offices for March 19th. Town counsel replied by letter of February 23rd, making reference to the meeting of January 12th. In particular, Town counsel set out his understanding of the meeting (which differs substantially from that of the applicant), as follows:

At that meeting your clients confirmed that they were unable to get any of the employees in the bargaining unit to attend a meeting in order to ratify the memorandum of settlement. They stated that they felt their consti­tution allowed them to sign the agreement notwithstanding such lack of ratification and to forward a copy.

Town counsel then went on to indicate:

We can only conclude that your clients have personally changed their minds and wish themselves to change the terms of the collective agree­ment which they have negotiated.

Applicant's counsel responded by reminding Town counsel of his earlier acknowledgement that the employees had "failed to ratify" the memorandum of settlement, and also of the fact that the memorandum was made expressly subject to ratification. Inconsequence, applicant's counsel reaffirmed the position of the applicant that, there having been no ratification, it was not in any event prepared to sign a collective agreement, and that the provisions of its constitution were accordingly irrelevant. Once again, the applicant's counsel called upon the Town to bargain. After some further clarification, it became clear that the dispute between the parties was over the question whether the terms of the memorandum of settlement had ever been placed before the employees for ratification, and on March 19, 1981 Town counsel wrote to the applicant's counsel as follows:

We have for reply your letter of March 18, 1981 in which you rather peremptorily command the Company to attend for a negotiating session in your offices on March 19th next. You may be assured that should our clients deem it advisable to have further discussion with your clients, any such meeting will take place in Meaford as has been the practice.

There appears to be a misunderstanding with respect to the position of the members of the bargaining unit on the Memorandum of Settlement dated October 27, 1980. It is our understanding that the members of the bargaining unit have refused to comment on it and indeed have refused to attend any meeting with your clients. In the result, any request by your clients now to renegotiate the Memorandum of Settlement would be simply an attempt to reverse a position already taken at the bargaining table. We consider that to be bargaining in bad faith and do not recognize any obligation on the part of our clients to be party to any such negotiation meeting.

If your clients are prepared to supply evidence showing that a proper ratification meeting has been called and that the members of the bargain­ing unit did indeed fail to ratify the settlement for reasons which should be reviewed in a further negotiation meeting, then undoubtedly our clients would be prepared to comply. Failing any such evidence and indeed in the light of comments from your clients to the contrary, our clients are not prepared to meet.

13. Applicant's counsel continued to urge that bargaining resume, and on April 9, 1981, filed the present complaint. On April27, 1981, Town counsel wrote to him the following letter:

Pursuant to his appointment as labour relations officer in the above matter Mr. Bowman is convening a meeting of the parties on Thursday, April 30th next at 10:00 a.m.

If the complainant maintains its position of refusing to sign the memo­randum of settlement and wishing to negotiate the management rights clause, no strike clause, wage rate schedule and duration, it occurs to the undersigned that this meeting might be utilized to hear your client's submission and allowing the respondent to reply thereto. Such negotia­tions would of course be without prejudice to the respondent's position that there has been no violation of the Act to date and that there is no requirement to even hold these negotiations in light of the very question­able circumstances concerning the ratification vote.

We of course have requested particulars of this alleged ratification meeting and vote and will expect those imminently.

This letter would therefore serve to put your clients on notice that they should come to the meeting scheduled for April 30th prepared to discuss the four issues apparently of concern to them and to receive at that time a final position from the respondent.

14. The meeting of April 30th began with Town Counsel again cautioning that the Town's willingness to negotiate could not be taken as an admission that the Town had failed to negotiate in good faith before. The Board notes that this is not an unusual position for counsel to take when entering upon negotiations towards a settlement in the face of outstanding litigation. For reasons which are not clear from the evidence, however, the applicant expressed concern over the pre-conditions of the respondent, and the meeting degenerated into a discussion of whether the ensuing efforts to negotiate were going to be all "on the record" or all "off the record". The result was the meeting broke off without any attempt at resolution. The Board does not have sufficient information before it to be critical of either party for this breakdown, but simply notes that as a result of the procedural wrangling between counsel, the opportunity for a comprehensive settlement at this stage was lost.

15. The applicant complains of a violation of section 70 of The Labour Relations Act in connection with the respondent's treatment of the customary wage increase for the members of the bargaining unit. Section 70 provides:

70.-( 1) Where notice has been given under section 13 or section 45 and no collective agreement is in operation, no employer shall, except with the consent of the trade union, alter the rates of wages or any other term or condition of employment or any right, privilege or duty, of the employer, the trade union or the employees, and no trade union shall, except with the consent of the employer, alter any term or condition of employment or any right, privilege or duty of the employer, the trade union or the employees,

(a) until the Minister has appointed a conciliation officer or a mediator under this Act, and,

(i) seven days have elapsed after the Minister has released to the parties the report of a conciliation board or mediator, or

(ii) fourteen days have elapsed after the Minister has released to the parties a notice that he does not consider it advisable to appoint a conciliation board,

as the case may be; or

(b) until the right of the trade union to represent the employees has been terminated,

whichever occurs first.

(2) Where a trade union has applied for certification and notice thereof from the Board has been received by the employer, the employer shall not, except with the consent of the trade union, alter the rates of wages or any other term or condition of employment or any right, privilege or duty of the employer or the employees until,

(a) the trade union has given notice under section 13, in which case sub­section 1 applies; or

(b) the application for certification by the trade union is dismissed or terminated by the Board or withdrawn by the trade union.

Counsel for the complainant argues that it was a violation of the requirements of section 70, in the absence of the trade union's consent, for the respondent on the one hand to initially fail to implement the 8% increase, and then on the other hand to do so. This appears similar to the position taken before the Board in Scarborough Centenary' Hospital, [1969] OLRB Rep. Jan. 1049, where the Board noted, at paragraph 18:

. . . it would appear on the facts of this case that with respect to the implementation of the annual increase, the respondent will be damned if it does and damned if it doesn't in the view of the applicant if it acts without the applicant's consent.

Clearly, as the Board observed in that case, the respondent cannot be wrong on both counts. The question in each case is to determine whether the violation lies in granting the increase, or in not granting it, and is one which has given labour relations tribunals considerable difficulty over the years (compare, for example, the approach of the Canada Labour Relations Board in Royal Bank of Canada, 78 CLLC ¶ 16,132, with that of the same Board in Canadian Imperial Bank of Commerce, 80 CLLC ¶ 16,001). With respect to our own Board, the issue in the present case appears to have been decided by Lennox and Addington County General Hospital, [1978] OLRB Rep. Sept. 843 and Spar Aerospace Products Limited, [1978] OLRB Rep. Sept. 859.

16. The question in a case like this is whether the reference in section 70 to any alteration in the "rates of wages" means that the actual rates of wages in effect at the onset of the "freeze" period are to be maintained, or whether it is the employer's policy or practice with respect to rates of wages which must be maintained. Either interpretation is defensible in some respects, but this Board has made it clear that it is the latter view which best accords with the overall language and purpose of the statute. In Lennox and Addington, it was indisputably the employer's policy to grant across-the-board annual increases to employees in January each year. A 4% increase was approved by the Hospital Board and implemented in January 1978 for all employees except those for whom the trade union had just been certified. The Board commented as follows:

17. It was the contention of the respondent that there was no contractual obligation to pay an annual increase and that such an increase was not guaranteed but came purely ex gratia from the employer. It was argued that while it may have been a policy to give an annual increase, "policy" was not a matter falling within the ambit of sections 70 and 10 of the respective Acts.

18. We are unable to accept the contention of the respondent. While it is true that no promise of payment for 1978 was made to the employees concerned, the evidence is uncontradicted; indeed, it is that of the respondent, as already noted, that an annual increase had been given each year for the nine years preceding 1978. There can be no doubt that this policy which has been thus sustained over such a length of time established in the employees concerned a reasonable expectation of its continuation in 1978, and is thus a matter falling within the scope of sections 70 and 10 of the respective Acts (see Kiddies Toys Manufacturing Co. Ltd., 65 CLLC ¶114,040). In the present case it is clear that no indication of any intent to deny the customary increase had been communicated to the employees concerned prior to the commencement of the freeze period (Carleton University, [1978] OLRB Rep. Feb. 184).

19. The evidence of [the respondent] is that the employees in the bargaining unit would have received the annual increase that was given, in accordance with past practice, to the other employees, had it not been for the application for certification and the respondent's understanding that the increase was prohibited under sections 70 and 10 referred to above.

20. Clearly, in the normal course of events, the respondent would have given the 4% increase to the employees in the bargaining unit in ac­cordance with its long-standing policy as it did to the employees outside the bargaining unit. In deciding to alter the practice with respect to the employees in the bargaining unit, the respondent breached the provisions of section 70 of The Labour Relations Act as modified by section 10 of The Hospital Labour Disputes Arbitration Act.

This decision alone would be sufficient to dispose of the case before us, but it is useful to make reference to Spar Aerospace as well.

17. In Spar, the practice (in simple terms) was to announce a global percentage for merit increases each year, which amount was left to the discretion of department managers to allocate as they saw fit amongst the members of their department. Once again, the employer took the position that it was not required to make the global amount available for distribution amongst those employees for whom a certificate had just been issued and notice to bargain served. In reviewing its own jurisprudence, the Board concluded:

16 The approach to be one of simply requiring the employer to conduct business as before.

23. The "business as before" approach does not mean that an employer cannot continue to manage its operation. What it does mean is simply that an employer must continue to run the operation according to the pattern established before the circumstances giving rise to the freeze have occurred, providing a clearly identifiable point of departure for bargaining and eliminating the chilling effect that a withdrawal of expected benefits would have upon the representation of the employees by a trade union. The right to manage is maintained, qualified only by the condition that the operation be managed as before. Such a condition, in our view, cannot be regarded as unduly onerous in light of the fact that it is management which is in the best position to know whether it is in fact carrying out business as before. This is an approach, moreover, that cuts both ways, in some cases preserving an entrenched employer right and in other cases preserving an established employee benefit.

24 . . . [D]uring the period of the freeze, an interim legal regime is imposed by operation of section 70 as the parties move from the regime of the individual contract of employment to one governed by the terms of a collective agreement. This interim legal regime, in our view, should not place an employer in a legal straitjacket yet it should not at the same time lead to employees perceiving themselves as being penalized for engaging in collective bargaining. These two ends, in this Board's view, are best achieved by interpreting section 70 as requiring the parties to simply conduct "business as before".

The obvious concern of employers over this approach, when applied to wages, is amply set out in the dissenting opinion of Board Member Joyce:

6. In the present case, the complainant union is requiring the employer to raise the rates of pay following certification and before negotiations on compensation takes place. One of the most critical elements in the negotiations is that of compensation, whether in the form of wages or benefits, or in other words the total compensation "package". To require an employer to increase rates of pay while the union is legally entitled to bargain the total "package" obviously places the employer at a disadvan­tage in bargaining.

Recognizing this point, the majority noted:

29. While this complaint has been brought immediately prior to the commencement of negotiations, the Board does not regard it as being in any way vexatious. The timing of the merit increase may be awkward for the respondent, creating a higher monetary point of departure for negotiations, but these increases are a factor that must be taken into account at negotiations. Employees who have just received an increase as the result of the operation of section 70 should realize that there will be less money available for any wage increases in the collective agreement.

Or, as the present case demonstrates, there may be no additional money available after the general increase is implemented. The Board must conclude, however, that the respondent, in failing to implement the customary general increase for members of the bargaining unit at the same time as for other employees of the Town, was in violation of section 70 of the Act. The Board notes, parenthetically, that the unionized members of the police force have for some years been treated on a different basis than other employees of the Town. There is no evidence before the Board, however, of the manner in which the Town dealt with the members of the police bargaining-unit at the time of initial certification, and the extent to which this created a lawful and recognized exception to the Town's normal practice regarding the customary wage increase.

18. Turning to the other grounds of complaint, the respondent in its submissions placed considerable emphasis on the argument that, as a matter of law, the acceptance by the applicant's business representative of the terms and conditions of the Town's last offer nullifies any subsequent claim by the applicant that the said terms were discriminatory or punitive, in violation of the Act. In the Board's view, each case must on this point be judged according to its own facts. There are, however, certain practical consequences of Mr. McMillan signing the memorandum which have an impact on this matter. It is somewhat unusual for a trade union s negotiator to sign a memorandum of settlement accepting the terms therein and agreeing to recommend the same to the membership, and then, several months later, allege that the terms proposed in that memorandum constituted a violation by the employer of the Act. At the very least, an explanation for signing the memorandum, now said to have embodied a violation of the Act, is required. As noted above. Mr. McMillan did in fact give evidence explaining his decision to sign the memorandum, on the basis of concluding that the Town's last offer was the best the employees were going to see, and that the best advice he could give them if they wanted their 8% increase, was to ratify the contract. The paradoxical conduct of Mr. Ferguson did not, of course, take place until after the memorandum was signed.

19. The Board accepts the bona fides of Mr. McMillan's explanation, and finds that his act of signing the memorandum at the time does not vitiate the present complaint. The fact remains, however, that the parties, certainly from the employer's point of view, had arrived at a tentative settlement, and the Board has noted in the past that it is not unusual for positions to harden following a failure to ratify. For example, in Professional Institute of Canada, [1978] OLRB Rep. Jan. 18, the Board observed at paragraph 13:

A failure to ratify thrusts the parties and in particular the negotiators into a most difficult situation. They have reached an understanding which has not met the test of ratification and in so doing have made commitments and raised expectations. They must return to the bargaining table amidst the frustration and distrust which often accompanies a rejection in attempting to negotiate a settlement. The duty to bargain in good faith and make every reasonable effort to conclude a collective agreement continues after a rejection and the Board when called upon to do so must assess the quality of the bargaining which takes place during this period. The Board however must be careful not to confuse frustration with bad faith or to draw unfavourable inferences from a fixed or inflexible response to rejection which is sometimes adopted in these circumstances.

20. On top of this, the applicant’s conduct subsequent to the rejection of the contract did little to enhance either the process of negotiations, or its claim for relief from the Board. As the Board also noted in Professional Institute of Canada, at paragraph 14:

So too a failure to ratify does not signal a fresh start to the negotiations. The good faith effort of the parties which has resulted in a signed memorandum of settlement must form the "backdrop" to the bargaining which follows a failure to ratify.

While the applicant was perfectly entitled to return to the bargaining table and use its best efforts to obtain modifications to the areas which caused the rejection, the applicant went beyond this and used the failure to ratify as an opportunity to get out from under the "Management Rights" and "No Strike" clauses to which it had agreed (and which were not even discussed with the employees). This is the antithesis of good-faith bargaining, and provided justification for the position taken by the Town's advisor in his letter of March 19th.

21. There are, however, aspects of the respondent's conduct prior to this (apart from the section 70 violation) which cause the Board concern. The section 70 violation itself may in this case be less "technical" in nature than reflective of a continuing attempt on the part of the respondent to discourage its employees from remaining with the applicant. Faced with a decision whether to withhold or grant the 8% increase to the members of the bargaining unit at the same time as the other employees of the Town, the Town elected to withhold the increase. This could have been expected to give (and did give) to these employees the appearance that they were being penalized for choosing to engage in collective bargaining, and provides a classic illustration of the concerns expressed by the Board in interpreting section 70 as it does. (See again Spar Aerospace, supra, paragraph 24.) As the weeks passed, the employees' sensitivity over their discriminatory treatment became increasingly pronounced. The impact of withholding the increase from these employees would, of course, be compounded by the Town adopting a negotiating position which, until the conciliation meeting in October, declined to grant an increase on even a retroactive basis for the period during which collective bargaining was taking place. It is conceivable that the creation of retroactivity as an issue may have been no more than a bargaining ploy, designed to be traded upon at the "eleventh hour", but no one from the Town's negotiating team came forward to say that, and Mayor Crapper, when asked, could offer no explanation whatever for the Town's position. All of these factors, combined with later events, raise a doubt whether the respondent ever did accept the lawful decision of its employees to bargain collectively, or was bargaining with a genuine intent to conclude a collective agreement.

22. In the latter regard, it is the actions of the management committee's chairman, Mr. Ferguson, which causes the Board the greatest concern. It will be recalled that, immediately following the signing of the memorandum of settlement in Toronto on October 27th, Mr. Ferguson returned to Meaford ahead of the others and advised the employees in the bargaining unit that they would get the 8% increase whether they ratified the contract or not. Conceivably, this activity on the part of Mr. Ferguson may have been something other than a blatant attempt to thwart the consummation of a collective agreement. As noted, however, Mr. Ferguson was not called to offer any explanation of the incident. In the circumstances, the Board can only conclude that Mr. Ferguson's evidence would not have been of assistance to the respondent. Given the terms of the memorandum of settlement, it may well be that the employees would have chosen to reject the efforts of their bargaining agent without any help from Mr. Ferguson. The Board notes the demonstrated tendency of these particular employees to "ride two horses" at the same time, in an effort to see which could produce the better result for them. Nonetheless, Mr. Ferguson's intrusion into the ratification process represented a wholly unacceptable and unworthy interference in the administration of the trade union's role as bargaining agent and constitutes a clear violation of both sections 56 and 59 of The Labour Relations Act.

23. But the major impact of Mr. Ferguson's conduct is the insight it provides in retrospect of the respondent's claim to have bargaining in good faith, in accordance with the requirements of section 14 of the Act. That section provides:

The parties shall meet within fifteen days from the giving of the notice or within such further period as the parties agree upon and they shall bargain in good faith and make every reasonable effort to make a collective agreement.

There is nothing unreasonable per se in an employer adopting a position in negotiating that its unionized employees receive no larger a wage increase than its other employees. Nor is it unusual for an employer to insist that a first collective agreement be effective only from the date of settlement. The extent to which either or both of these bargaining goals can be realized depends upon the relative strength of the parties. The Board has made it clear on numerous occasions that it does not view its role under section 14 as that of an interest arbitrator between the parties, nor is it in the business of correcting an imbalance in bargaining strength. As the Board commented in Ottawa Journal, [1977] OLRB Rep. Nov. 748, at paragraph 12:

... The duty to bargain in good faith is administered by this Board in such a way as to improve and facilitate the practice and procedure of collective bargaining. This approach recognizes, however, that the results of collective bargaining are necessarily dictated by the relative economic strength of the bargaining parties. Although the Board should make every effort to restore a bargaining relationship and re-establish the dialogue between the parties to that relationship, it should not go so far as to redress any imbalance of bargaining power that might exist in a particular collective bargaining situation.

The recognition of the right of a party to pursue its own self-interest through "hard bargaining" was elaborated upon in Radio Shack, [1979] OLRB Rep. Dec. 1220, for example, at paragraph 66:

... The duty to recognize a trade union and to bargain in good faith does not require an employer to enter into any collective agreement proposed by a union. It is apparent from the structure and history of the legislation that the Legislature has assumed that the parties are best able to fashion the details of their relationship. The assumed strength of this approach is that labour and management are more likely to accept an employment relationship which they themselves create than one that is imposed on them. So too, their agreement is likely to be more accommodative of the economic and social demands that each faces. Accordingly, both parties are entitled to bargain hard for the agreement that they believe to be acceptable. This is so even if one of the parties has an overwhelming strength at the bargaining table and is able to achieve most or all of its needs. The exercise of such raw bargaining power in good faith does not offend the bargaining duty imposed by this Act. (emphasis added)

Again, this statement of principle was reiterated by the Board in Fotomat Canada, [1980] OLRB Rep. Oct. 1397, at paragraph 26, and once again with an important caveat:

... If bargaining power is defined as the ability to secure another's agree­ment on one's own terms, there is nothing in itself unlawful about either an employer or a trade union wanting its demands met and bargaining to achieve this end. The result may be perceived as unfair, unnecessary, and selfish, but the Ontario Labour Relations Board has not been given the role of interest arbitrator. See Ottawa Journal, [1977] OLRB Rep. June 309 at p. 323, para. 57. The Board has, however, said it will scrutinize the first contract relationships that come before it to sort out hard bargaining from unlawful conduct. An employer cannot use his raw bargaining power for the objective of operating without a trade union.

(emphasis added)

24. The Board in fulfilling this scrutinizing function may be faced with the task of distinguishing what purports to be "hard" bargaining, from what is in reality "surface" bargaining; that is, a course of conduct giving the appearance of bargaining, but with no real intent of bargaining into a collective agreement. This, of course, represents a denial of the primary tenet of the duty to bargain in good faith, the duty to recognize the status of the trade union as exclusive bargaining agent (see Fotomat Canada Limited, supra, paragraph 25; DeVilbiss (Canada) Limited, [1976] OLRB Rep. March 49). As observed in the Daily Times case, [1978] OLRB Rep. July 604, at paragraph 15:

The union claims that the company's wage offer and the inflexible position adopted by it on the issue of union security constitute a form of "surface bargaining". "Surface bargaining" is a term which describes a going through the motions, or a preserving of the surface indications of bargaining without the intent of concluding a collective agreement. It constitutes a subtle but effective refusal to recognize the trade union. It is important, in the context of free collective bargaining, however, to draw the distinction between "surface bargaining" and hard bargaining. The parties to collective bargaining are expected to act in their individual self interest and in so doing are entitled to take firm positions which may be unacceptable to the other side. The Act allows for the use of economic sanctions to resolve these bargaining impasses. Consequently, the mere tendering of a proposal which is unacceptable or even "predictably unacceptable" is not sufficient, standing alone, to allow the Board to draw an inference of "surface bargaining". This inference can only be drawn from the totality of the evidence including, but not restricted to, the adoption of an inflexible position on issues central to the negotiations. It is only when the conduct of the parties on the whole demonstrates that one side has no intention of concluding a collective agreement, notwithstanding its preservation of the outward manifestations of bargaining, that a finding of "surface" bargaining can be made.

(emphasis added)

See also Goldcraft Printers Ltd., [1980] OLRB Rep. April 448, at paragraph 21.

25. In the present case, it would be difficult to infer an attempt to avoid a collective agreement simply from the conduct of the Town prior to October 27, 1980 (notwithstanding the violation of section 70 of the Act). The Town's offer was clearly an embarrassment to the applicant trade union, but one which appeared simply to reflect the bargaining strengths of the parties. But if the Town had in fact been bargaining with the intention of making a collective agreement, albeit on its own terms, why would the chairman of the Town's negotiating committee, immediately following the acceptance of these terms by the applicant, return to Meaford and attempt to scuttle the contract through employee rejection? In the absence of any other credible explanation, the Board is forced to conclude that the Town had felt all along that its position on the extent and timing of the wage increase would be sufficient to avoid a collective agreement with the applicant. Or, as the Board put it in Radio Shack, supra, at paragraph 88, the respondent, in other words, apparently believed that "hard bargaining" itself would be sufficient to preclude the execution of a collective agreement. This clearly is a violation of section 14. When the applicant accepted the respondent's offer, Mr. Ferguson apparently concluded that the only way to head off a collective agreement was to get to the employees and discourage ratification. It should be mentioned that Mayor Crapper in his evidence stated that Mr. Ferguson had no authority from him to speak to any employees about the settlement on October 27th. In view of the position of Mr. Ferguson, however, as both Reeve of the Town and Chairman of its negotiating committee, as well as the "directing mind" of the employer's bargaining position, it cannot be seriously contended that this dissociation by the Mayor constitutes any form of a defence for the Town.

26. This scenario also places in a more suspicious light the respondent's interest in the constitutional authority of the applicant to sign a collective agreement without ratification. While the applicant's representatives appear to have confused the situation with their responses to Town counsel at the meeting of January 12th, it is curious that the respondent, even in its letter of January 5th, was taking the apparently unprovoked position that: "On our reading of your constitution, ratification by the membership is necessary and it would appear therefore that your Union has no jurisdiction to sign this agreement until ratification is achieved". It appears that subsequently confusion arose over the fact that the fourth member of the Department was still to be polled by the others, and the parties began speaking at cross-purposes when discussing the question of ratification. It is difficult to draw clear inferences with respect to the intentions of either party at that stage. Whatever lay behind the confusion, and without ruling on whether an employer would ever be entitled to demand proof of the authority of a certified bargaining agent to sign a collective agreement, the Board notes that the respondent by the time of its letter of March 19, 1981, knew clearly that the applicant had no intention of signing a collective agreement in the absence of ratification, and that the respondent indicated it was prepared to meet and bargain on the true areas of employee discontent, once it was satisfied that the contract had in fact been voted on and rejected. At least as of that point then, the issue of the applicant's authority to sign a collective agreement ceased to be a factor in these negotiations.

27. The violation by the respondent of section 14, evidenced earlier, remains however, and it is the responsibility of the Board to fashion an appropriate remedy. In this regard, counsel for the applicant seeks an order that:

The respondent bargain in good faith and make every reasonable effort to make a collective agreement and in particular:

(i) bargain a wage rate schedule reflecting a percentage wage rate increase not less than the percentage wage rate increase customarily implemented or to be implemented with respect to non-bargaining unit employees for the period January 1st, 1981 to December3lst, 1981; and

(ii) bargain a duration provision that does not have the effect of locking the bargaining unit employees into a percentage wage rate increase equal to or less than the percentage wage rate increase customarily implemented or to be implemented with respect to non-bargaining unit employees operative for the time period January 1st, 1981 to December 31st, 1981, for any period of time beyond December 31st, 1981.

28. The applicant's request for relief in effect seeks to ensure that the members of the bargaining unit will be treated at least as favourably as non-union employees with respect to both the size and the timing of wage increases. To that extent, it is asking the Board to intervene in the substantive results of bargaining in a way that the Board has often expressed its reluctance to do. See, for example, Wilson Automotive, [1980] OLRB Rep. July 1136, paragraph 7, ff. What makes this case even more difficult is that there is nothing in the bargaining position of the respondent which on its surface, and standing along, is either unusual or surprising, given the lack of bargaining clout of the applicant. Had the evidence supported a finding of hard bargaining and nothing more, the Board would have no cause to intervene. But once again, the Board's principle of voluntarism assumes lawful motives. As the Board noted in Wilson Automotive, supra:

As a general proposition, a party is free to take whatever position best satisfies its self interest providing it maintains the intention of concluding a collective agreement.

(emphasis added)

29. As the Board has discussed, the conduct of Mr. Ferguson following the signing of the memorandum of settlement colours everything that had gone before (cf. Fotomat Canada Ltd., [1980] OLRB Rep. Oct. 1397). The Board has concluded that the respondent in arriving at its October 27th position was engaging in surface bargaining and was in fundamental violation of the duty imposed by section 14 of the Act. Rather than seeking to enter into a collective agreement on its own terms, the respondent's proposals must be taken to have been designed, through discrimination and intimidation, to have caused the employees in the unit to abandon the applicant as their bargaining agent, in violation of both sections 58 and 61 of the Act as well. Those sections provide:

30. No employer, employers' organization or person acting on behalf of an employers' organization,

(a) shall refuse to employ or to continue to employ a person, or discriminate against a person in regard to employment or any term or condition of employment because the person was or is a member of a trade union or was or is exercising any other rights under this Act;

(b) shall impose any condition in a contract of employment or propose the imposition of any condition in a contract of employment that seeks to restrain an employee or a person seeking employment from becoming a member of a trade union or exercising any other rights under this Act; or

(c) shall seek by threat of dismissal, or by any other kind of threat, or by the imposition of a pecuniary or other penalty, or by any other means to compel an employee to become or refrain from becoming or to continue to be or to cease to be a member or officer or representative of a trade union or to cease to exercise any other rights under this Act.

61. No person, trade union or employers' organization shall seek by intimidation or coercion to compel any person to become or refrain from becoming or to continue to be or to cease to be a member of a trade union or of an employers' organization or to refrain from exercising any other rights under this Act or from performing any obligations under this Act.

62. The violations of the Act herein lie in the insistence on monetary proposals which discriminate against members of the bargaining unit not in their amount, but in the timing of their effective date. The purpose of this position having been found to be unlawful, the respondent will be directed to move off it. As the Board observed in Radio Shack, [1979] OLRB Rep. Dec. 1220, in paragraph 117:

Once having breached the Act, offending parties should not be surprised to find that to establish a bona fides intent they may be required to act temporarily in ways that the Board does not demand of others.

The Board notes as well that the respondent has seen fit in the past to grant collective agreements on a January 1st to December 31st basis in dealing with the unionized members of its police force. The respondent's present offer to the applicant being an 8% increase from October 1980 to October 1981, and, in effect, retroactivity to January 1, 1980, is unacceptable, in that it leaves the employees in the bargaining unit with the uncertainty of having to again bargain for retroactivity to achieve parity in succeeding contracts, as well as the dissatisfaction in any event of having to wait longer for their increase than other employees. The respondent, by its demonstrated unlawful purpose in these negotiations, has disentitled itself from maintaining that position. The extent of the Board's intervention will be to direct the respondent to eliminate the discriminatory aspects of its financial offer. The final form which any proposed collective agreement for this bargaining unit is to take, however, will, subject only to the Board's direction, remain a matter for bargaining between the parties.

31. The applicant claims damages as well for its negotiating and legal costs resulting from the improper actions of the respondent. The Board in Radio Shack, [1979] OLRB Rep. Dec. 1220, has set out its reasons for resisting awards of legal costs on the matters coming before it, and the Board does not consider the present case an appropriate one to venture outside those principles. On the question of negotiating costs, the Board notes that the time taken to arrive at a final monetary position from the Town was not excessive, and that the bargaining process beyond that point (October 27th, 1980) was distorted by the applicant's own attempts to renege without justification on some of the language items contained in the memorandum of settlement. On the whole, the Board views the applicant's abnormal negotiating costs, if any, as attributable more to the applicant's own lack of bargaining strength and its attempts to renege on language items following rejection of the contract, than on any of the violations of the Act found to have been committed by the respondent. It must be borne in mind that the applicant at no time after October 27th has been seeking an opportunity to enter into a collective agreement on the terms set out in the memorandum of settlement. To the extent that Mr. Ferguson's intervention may have caused a rejection by the employees of the contract, the applicant has not suggested it is displeased with that result. Rather, it has been seeking a further opportunity to bargain. Hopefully with the litigation now complete, the parties can return more fruitfully to the point they were at when they met with the Board's officer on April 30th, when they almost sat down to bargain.

32. The Board accordingly directs:

33. that the parties meet to continue bargaining at the earliest possible opportunity, and that they bargain in good faith and make every reasonable effort to make a collective agreement;

34. that the respondent, upon the resumption of bargaining, immediately table a monetary position which will not discriminate against the members of the bargaining unit, in comparison with the non-unionized employees of the respondent, either in terms of the amount of the financial package offered, or the effective date of any increases there under;

35. that the respondent forthwith pay to the applicant for distribution to the members of the bargaining unit damages for the violation of section 70 of the Act, being interest in accordance with the Board's policy set out in Practice Note No. 13 on the monies wrongfully withheld from the date the non-unionized employees of the Town received their annual increase to the date the said increase was implemented for the members of the bargaining unit;

36. that the respondent cease and desist from interfering in the administration of the applicant in its role as exclusive bargaining agent for employees of the respondent, and from seeking in any way to bargain directly with any or all of those employees; and

37. that the respondent post a notice, signed by the Mayor of the Town and by the chairman of the Town's negotiating committee, in the form attached as Appendix A hereto, for sixty consecutive working days, in an area or areas of the Town's premises where such notice is likely to come to the attention of the members of the applicant's bargaining unit.

DECISION OF BOARD MEMBER, C. G. BOURNE;

1. I concur in the findings of the panel, with the exception of the section 70 complaint, which deals with the Town's withholding of the 8% retroactive pay increase from the Works Department.

2. The majority finding in this regard follows Board practice, with which I cannot agree. Free collective bargaining calls for negotiation of all matters in dispute, and any gratuitous augmentation of wages simply establishes a floor which distorts the entire course of subsequent negotiations. This principle has been already expressed by Board Member Joyce, in Spar Aerospace Products Limited, [1978] OLRB Rep. Sept. 859, cited in the majority report.

Appendix "A"

The Labour Relations Act

NOTICE TO EMPLOYEES

Posted by Order of the Ontario Labour Relations Board

WE HAVE POSTED THIS NOTICE IN COMPLIANCE WITH AN ORDER OF THE ONTARIO LABOUR RELATIONS BOARD, FOLLOWING A SERIES OF HEARINGS BEFORE THE BOARD, THE ONTARIO LABOUR RELATIONS BOARD FOUND THAT THE TOWN, IN DEALING WITH THE INTERNATIONAL UNION OF OPERATING ENGINEERS AND THE WORKS DEPARTMENT EMPLOYEES WHICH IT REPRESENTS, HAS COMMITTED UNFAIR LABOUR PRACTICES IN VIOLATION OF SECTIONS 14, 56, 58, 59, 61 AND 70 OF THE LABOUR RELATIONS ACT,

IN ACCORDANCE WITH THE BOARD'S ORDER WE WILL:

1. RETURN TO THE BARGAINING TABLE FORTHWITH AND MAKE EVERY REASONABLE EFFORT TO MAKE A COLLECTIVE AGREEMENT;

2. CEASE AND DESIST FROM PROPOSING TERMS AND CONDITIONS OF EMPLOYMENT FOR THE EMPLOYEES OF THE WORKS UEPARTMENT WHICH DISCRIMINATE AGAINST THEM IN COMPARISON WITH THE EMPLOYEES OF THE TOWN NOT REPRESENTED BY A TRADE UNION;

3. FORTHWITH PAY TO THE INTERNATIONAL UNION OF OPERATING ENGINEERS FOR DISTRIBUTION TO THE EMPLOYEES OF THE WORKS DEPARTMENT DAMAGES FOR THE PERIOD OF TIME THAT THE 1980 GENERAL INCREASE WAS UNLAWFULLY WITHHELD FROM THESE EMPLOYEES; AND

4. CEASE AND DESIST FROM INTERFERING IN THE ADMINISTRATION OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS IN ITS ROLE AS EXCLUSIVE BARGAINING AGENT FOR THE EMPLOYEES IN THE WORKS DEPARTMENT, AND FROM SEEKING IN ANY WAY TO BARGAIN DIRECTLY WITH THE EMPLOYEES WHICH THE TRADE UNION REPRESENTS.

THE CORPORATION OF THE TOWN OF MEAFORD

PER:

MAYOR

CHAIRMAN, BARGAINING COMMITTEE

This is an official notice of the Board and must not be removed or defaced.

This notice must remain posted for 60 consecutive working days.

DATED this 15TH day of SEPTEMBER . 1981