Ontario Labour Relations Board
[1985] OLRB Rep. April 594
1066-84-U Canadian Union of United Brewery, Flour, Cereal Soft Drink and Distillery Workers, Complainant, v. Simpsons Limited, Respondent
BEFORE: S. A. Tacon, Vice-Chairman, and Board Members J. W Murray and W F. Rutherford
APPEARANCES: F. G. Posen, John Forster and Glen Tombs for the applicant; T. F. Storie, E. C. Bengert, P. Reid and J. Campbell for the respondent.
DECISION OF S. A. TACON, VICE-CHAIRMAN, AND BOARD MEMBER J. W. MURRAY; April 9, 1985
1This is a complaint filed under section 89 of the Labour Relations Act, alleging that the respondent violated sections 66(a) and (c), 70 and 79(1) and (2) by forwarding notices of termination/lay-off on July 11, 1984 to a number of employees in the bargaining unit represented by the complainant.
2At various points throughout the hearing, matters arose which were then not disputed by either party. It is appropriate to here summarize those facts upon which the parties are agreed.
(i) The complainant filed an application for certification on May 28, 1984 (Board File No. 0566-84-R); June 22nd was scheduled for the hearing.
(ii) The complainant was, in fact, certified by the Board without a vote on June 29, 1984 as bargaining agent for all employees of Simpsons Limited at 700 Lawrence Avenue West in Metropolitan Toronto, save and except supervisors, persons above the rank of supervisor, building engineer, security staff, office and clerical staff, Lawrence Avenue sales room retail staff, drivers and vehicle fleet maintenance personnel, persons regularly employed for not more than twenty-four (24) hours per week and students employed during the school vacation period.
(iii) At approximately 11:00 a.m. on July 11, 1984, a union officer, Forster, was called to meet with one Reid, a Personnel Officer of the respondent, and was given a copy of the respondent's press release (dated July 11th) regarding terminations of employees, to be effective November 3, 1984.
(iv) On that same date, all employees of the respondent nationwide received this same information concerning terminations. The terminations affected 116 (approximately) employees in the bargaining unit for which the complainant is bargaining agent.
(v) The complainant had not given the respondent notice to bargain by July 11th; such notice was given subsequently, on July 12th.
(vi) The complainant did not consent to these actions of the respondent, nor was the complainant asked to so agree.
(vii) As it turned out, the original date for the terminations was delayed, for the majority of employees in the bargaining unit, to December 15, 1984.
(viii) During cross-examination of one witness, E. Bengert (Vice-President, Personnel & Distribution), the complainant sought production of all minutes of the respondent's executive committee from early Fall, 1983 to July 11, 1984. The Board directed written submissions by specified dates. However, the minutes were made available to the complainant's counsel and the Board need not deal further with this motion. The parties agreed that there was no reference in the minutes to a union organizing campaign or to the restructuring of the respondent that Bengert testified to; there was one reference in the fall of 1983 to the respondent's economic difficulties.
(ix) Both parties agreed that there have been ongoing discussions between the parties with respect to the details of the terminations, including discussions with the Ministry of Labour (both at the federal and provincial level) and including participation on a manpower assessment committee.
3The respondent called two witnesses E. Bengert and J. Campbell (general operations manager, Lawrence Avenue facility). The complainant called no witnesses, nor was the credibility of the respondent's witnesses seriously questioned. Having assessed the testimony of the witnesses, the Board makes the following findings of fact.
4In September 1983, the respondent's executive committee commenced a series of meetings to review the company's operating results in view of substantial financial losses in recent years. Proposals were generated to reorganize the merchandising and marketing functions. A target was established to reduce the company's expense structure by 3% to 5%. To achieve this, every function and unit were examined. The criteria for reducing staff at the retail stores were twofold: an absolute ratio of wage costs to sales was set; a staff complement ratio of 40% full-time to 60% part-time was established. At the Lawrence Avenue facility, i.e., the distribution centre for all Ontario retail stores, the layoff decisions resulted from the modernization of the facility and introduction of a computer system (processes which were initiated two or three years earlier) and from a productivity comparison with a similar facility in another division of the parent firm.
5The executive committee's deliberations continued through the spring of 1984. Secrecy was maintained because of the sensitivity of the review and the nature of the proposed changes. In late April or early May 1984, the executive committee and chairman of the board decided to implement the recommendations. The actual numbers of employees to be terminated, however, was not determined until early to mid-June.
6A personnel manual was prepared to guide local management through the termination process with the individual employees. The manual included information on the interview itself, termination pay, benefits, pension plan, UIC procedures, references, etc. Termination pay was calculated at the rate of one week's pay per year of service. Employees notified of their scheduled termination on November 3rd were also asked if they wished to be considered for contingent work although no guarantee as to the number of hours of such contingent work was given by the company. Employees were given time off with pay to seek employment elsewhere.
7July 11, 1984 was selected as the date for the announcement of the restructuring and terminations. Over 1600 of the approximately 14,000 full and part-time employees were terminated. Each employee received a letter with respect to the restructuring: there were two versions, one for those continuing with the company, the other for those to be terminated as of November 3, 1984. The basis for determining which employees were to be terminated was seniority.
8Bengert, in a subsequent discussion with Lumsden of the union, indicated that the decision to terminate rather than lay-off the employees was based on two considerations: the company saw no possibility of recall in the immediate or distant future; a characterization of the release of the employees as layoff would delay the severance payments, a delay considered unfair in view of the non-existent prospects for recall.
9Before dealing with the terminations at Lawrence, it is necessary to review the history of that operation. The Lawrence Avenue facility changed considerably from its opening as a warehouse in 1954 to date. These changes are sketched only very briefly. In 1961, a third floor was added to handle soft goods merchandise and a leased facility in the Terminal Building closed. In 1971-2, a fourth floor was also added; the facility now covered 750,000 square feet. When the modern Metropolitan Road facility opened in 1975, the heavy goods and workrooms (except the drapery workroom) were transferred there from Lawrence. Affected employees were transferred as well. With Campbell's appointment as general operations manager, Lawrence Avenue facility, the modernization process was begun. In 1982, the Beaumark appliance division relocated to another facility; employees in that department were given the option of transferring and some did. That same year, however, saw the transfer of the ladies fashions operations handled at the Belfield facility to Lawrence; the modern equipment and electronic data systems were also moved. The staff at Belfield moved to Lawrence and the least senior of the combined group were terminated. (See paragraph 16, infra for further details). Finally, in 1982, a productivity evaluation programme (PEP) was introduced to provide a means of assessing productivity and increase efficiency.
10The centralization of the distribution system at Lawrence continued through 1984 and encompassed such programmes as SKU marking to control inventory, Simpson's merchandising processing system (SMPS), line haul shipping of goods to Lawrence using corporate vehicles, scheduled vendor receiving and pick-ups of merchandise in a consolidated mode. Mechanization of the facility progressed throughout this period as well. The cumulative impact of the various programmes and mechanization virtually eliminated the warehousing of merchandise so that the inventory at Lawrence dropped from $19 million in 1980 to $4 million by the end of 1983 to significantly less than that figure in 1984. The third and fourth floors were closed as 250,000 square feet of space were no longer needed.
11In the fall of 1983, Campbell's proposed budget was rejected by the relevant senior executives and the executive committee determined that the distribution costs must be significantly reduced. Campbell was informed by John Stephens, general manger, distribution. (and a member of the executive committee) that the streamlining efforts were to be on a nationwide basis. Some measures were introduced as part of the ongoing cost cutting review started in 1980, e.g., a new ticketing procedure was adopted in December 1983. The standard to which Lawrence was being compared, however, was the Hudsons Bay Company distribution centre, i.e., the identical operation in the sister firm. Lawrence was found to be 58% less efficient. Campbell became aware in about December 1983 that staff reductions were possible. Campbell's staff prepared a detailed analysis of the two operations (exhibit 3) including targets for staffing to reduce the disparity in efficiency. It was this document, completed in early June 1984, which determined the precise number of employee terminations within the various processing functions performed at Lawrence. That analysis only deals with full-time staff, not contingents. The report and recommendations were approved and implemented. (Parenthetically, it should be noted that the streamlining of operations continued past the July 11th announcement. For example, the bill filling operations decreased substantially from January through August 1984. Telephone sales dwindled as volume decreased over several years and were discontinued in September 1984. Vendors were directed to ship merchandise to Lawrence on a pre-distributed basis by store in September as well.)
12The impact of the terminations at the Lawrence Avenue facility was as follows. Employees in the printing department were not affected at all as the need for that function continued unabated. Moreover, the printing department staff already had been halved in 1982. The three bargaining unit employees in the cafeteria continued, as did maintenance staff. Non bargaining unit categories, such as, personnel, contingents, delivery services were not affected. As noted in the agreed statement, some 116 employees in the bargaining unit were affected. Seniority was the basis for retaining employees; bumping by senior employees with the ability to perform the duties of other positions was permitted. Although the original date for termination was November 3, 1984, all such bargaining unit employees were given the option of staying until December 15th because of difficulties encountered in implementing another new system, the purchase order management system (POMS).
13The figure of 116 includes 13 employees in the drapery workroom. The workroom reported through the workroom manager, one Clark, but not to Campbell. The department, which manufactured drapes to customers' specifications, was not integrated or functionally related to the other operations at Lawrence and had lost money every year since 1980. On a $279,400 sales volume in 1980, $76,960 loss was recorded; in 1984, $55,600 was lost on a volume of about $94,000. The effect of the July 11th announcement was to notify all but three of the drapery workroom employees of termination; the drapery workroom function itself was closed and, in part, subcontracted. The three remaining employees comprised a skeleton staff of clericals. The decision to close the drapery workroom was taken in the spring of 1984, prior to the decision to drastically reduce the numbers of employees involved in the processing function but was dealt with in the same July 11th announcement.
14It is useful to briefly review the contingent employees place in the firm. Contingents receive the same wage rates but not the benefits of regular employees. Contingents are used regularly to respond to temporary increases in workload and are not guaranteed work. The complement of contingents numbered roughly 400 around July 11th (now slightly more). Company policy is to equally allocate available hours to contingents. The company did not attempt to project contingent hours so as to reduce contingents but retain more full-time employees. The company planned to considerably reduce the full-time complement outright, not shift those hours to contingents.
15The company has experienced layoffs and terminations in recent years, albeit not of the present magnitude. For example, in 1982 there were terminations in retail stores. In the London region, terminations resulted when some services were phased out. In 1982, the fashion merchandising function was moved from a separate facility at Belfield Road to Lawrence Avenue. The employees involved were transferred and about twenty-five employees (including twelve from Lawrence) with the least seniority in the combined staff were terminated. The terminated employees received severance pay calculated at the rate of one week's salary per year of service. All were offered employment on a contingent basis. A quite recent example of terminations at the Lawrence facility occurred in the spring of 1984 with the consolidation of the pre-retail function. Again, employees were transferred from the downtown store to Lawrence and those with the least seniority in the combined group were terminated. The affected employees were notified of their terminations in May, to take effect in July 1984. (These employees, although located at Lawrence, are not in the bargaining unit represented by the complainant.) Severance pay was calculated on the same basis as in 1982 and in the massive terminations announced in July 1984.
16Finally, both Bengert and Campbell denied that there was any anti-union animus in the decision to reduce staff or the selection of staff to be given notice of termination; the timing of the July 11th announcement and the complainant's certification was said to be coincidental.
17Counsel for the respondent submitted there was no evidence of anti-union animus given the magnitude of the terminations nationwide and the selection of a single date for the announcement. It was a matter of record that certification applications both preceded and followed the July 11th announcement. The terminations at Lawrence, it was argued, resulted from the general decision to reduce staff in the firm, a specific decision to increase productivity at that facility to a level closer to the Hudson's Bay sister operation, and ongoing programmes to modernize and streamline the Lawrence Avenue operation. Counsel contended the use of contingents was not an issue. Terminations of employees had occurred in the past; the seniority system for selection of employees to be terminated then and the treatment of those employees was consistent with the selection and treatment of employees affected by the July 11th announcement. Counsel reviewed the evidence and referred to a number of Board decisions. One group of cases dealt with section 79 of the Act in particular: Rest Haven Nursing Home, [1979] OLRB Rep. June 554; Grey Owen Sound Joint Homes for the Aged, [1983] OLRB Rep. Apr. 522; The Winchester Press Limited, [1982] OLRB Rep. Feb. 284; Corporation of the Town of Petrolia, [1981] OLRB Rep. Mar. 261; Spar Aerospace Products Limited, [1978] OLRB Rep. Sept. 859; Deacon Brothers Limited, 111979] OLRB Rep. Oct. 931; Beaver Electronics Limited, [1974] OLRB Rep. Mar. 120; Airline (Malton) Credit Union. [1981] OLRB Rep. Aug. 1055; Burlington Carpet Mills Canada Ltd., [1980] OLRB Rep. Oct. 1361. The other group primarily involved alleged violations of sections 66, 64 and 70: Tillotson-Sekisui Plastics Limited, [1979] OLRB Rep. Oct. 1027; Starplex Scientific Division of Canadian Medical Laboratories Limited, 111981] OLRB Rep. Mar. 346; Alumimart Products Limited, [1982] OLRB Rep. Mar. 309; Trimarine (Canada) Ltd., [1982] OLRB Rep. Jan. 126; Wilco-Canada Inc., [1983] OLRB Rep. June 989; Superior Glove Works Limited, [1979] OLRB Rep. July 714; Global Demolition Ltd., [1983] OLRB Rep. Sept. 1457. The Board need not outline counsel's analysis of each of the above cases. It is sufficient to summarize counsel's position. Firstly, there was no breach of section 66(a) or (c) given that there was no evidence the company had any knowledge of individual employee's union membership and in view of the evidence as to the seniority-based system for selecting employees to be notified of termination. Secondly, counsel argued the cases confirmed the right of an employee to carry on business as usual, including implementing terminations, lay-offs and subcontracting where there was economic justification for such decisions. Counsel asserted the respondent company had demonstrated such economic justification and was continuing business as before. Specifically, with reference to the drapery workroom, counsel distinguished Rest Haven, supra, on the grounds the workroom did not constitute a classification, three clerical staff did remain, and a new classification of employees was not established to perform the work previously done within the bargaining unit.
18Counsel for the complainant did not assert that the manner in which employees were selected for lay-off was contrary to the respondent's position that lay-offs were determined by seniority. Counsel also acknowledged that participation in union organizing activities had not been a factor in the selection of individual employees for lay-off. However, counsel submitted that the respondent had not satisfied the onus of showing that the economic justification constituted the sole reason for the termination. The Board was asked to draw an inference from the union organizing generally in the industry and the complainant's certification application that the proferred reasons were not the exclusive reasons. With respect to the alleged violation of section 79, counsel reviewed a number of the cases cited by the respondent, including Beaver Electronics, supra, Spar Aerospace, supra; Rest Haven, supra, Airline (Malton) Credit Union, and additionally referred to Scarborough Centenary Hospital, [1978] OLRB Rep. Oct. 949; Windsor Airline Limousine Services, [1980] OLRB Rep. July 1147; Carleton University, [1978] OLRB Rep. Feb. 184. Counsel argued the July 11th terminations at Lawrence did not constitute business as before because of the magnitude of the terminations and because the rationales for the earlier terminations (e.g., Belfield facility relocation to Lawrence) were different from the rationales offered as justification of the contested terminations. Furthermore, as the classification of the drapery workroom employees had been eradicated, the reasoning in Rest Haven, supra, was applicable. Counsel also asserted that the caselaw permitted changes during the freeze period which implemented or crystallized staff reduction programmes only where the employer had notified employees of the planned changes prior to the onset of the freeze. As such notice had not been given, that line of cases was not relevant. In summary, counsel stated the respondent's action had decimated the bargaining unit and seriously affected the complainant's right to bargain in an open and free relationship, in contravention of section 79 of the Act. Counsel submitted the Board should restore the security of the employees enjoyed pre-July 11th, declare that the July 11th announcement violated section 79 and order compensation for the affected employees.
19The Board has carefully considered the cases cited by counsel. The Board has also reviewed the recent decision in Simpsons Limited [1985] OLRB Rep. Mar. 469. That case, which had not yet issued when the hearing was completed in the instant complaint, involved the same respondent but a different complainant (Retail, Wholesale & Department Store Union, AFL-CIO-CLC) and, as here, concerned the respondent's July 11th announcement of massive terminations. The Retail, Wholesale & Department Store Union represented employees at the respondent's retail store in Oakville. That case, which proceeded on the basis of an agreed statement of facts, alleged contravention of sections 64 and 79 of the Act but did not assert the respondent's decision involved anti-union animus. In brief, the respondent was not found to have violated section 79 with respect to the layoff of the sales staff or receiving employees but a contravention of 79 was found in the layoff of the cleaners, whose work was contracted out, and the alterations staff, whose work was centralized at the downtown location. The respondent was not found to have violated section 64. This Board will refer to the Simpsons decision in further detail below.
20This Board intends to first deal with the alleged violation of sections 66(a) and (c) of the Act. This allegation triggers the reverse onus provision in section 89(5). As set out in the often-cited decision in Barrie Examiner, [1975] OLRB Rep. Oct. 745, the employer must establish that the reasons given for discharge are the only reasons and that these reasons are not tainted by any anti-union motive. The Board is satisfied on the evidence that the real reason for the terminations was the explanation offered, economic justification, and that there was no anti-union motive involved whatsoever. Both Bengaert and Campbell denied such anti-union animus. While an employer might be expected to deny such an improper motive, the denial in the instant case is supported by the circumstances. The testimony of Bengaert and Campbell was not shaken on cross-examination with respect to the grounds for the decision. There was evidence of economic justification warranting terminations in the form of the annual report, direct testimony and the detailed productivity analysis comparing Lawrence and its counterpart in Hudson's Bay Company. There is nothing to indicate the respondent knew which employees were union members, let alone used union activity or affiliation as a basis for the terminations. There is considerable evidence that the selection of individuals proceeded on the basis of established company practice, namely, to utilize seniority and permit bumping by more senior employees capable of performing duties in other classifications. In fact, counsel for the complainant did not assert that the manner in which employees were selected was contrary to seniority and conceded that participation in union organizing activities had not been a factor in the selection process. The respondent acknowledged that the terminations did not affect individuals employed as contingents. Counsel for the complainant suggested that the respondent should have made at least some effort to preserve full-time positions by reducing the complement of contingents. Such a move would no doubt have been welcomed by bargaining unit employees, although certainly not by contingents. (The Board would note that the distinction between full-time, bargaining unit employees and contingents is blurred given the Board's definition of full-time employees and the varying hours worked by contingents. There was little evidence on the point. Campbell's guess that the average time worked by contingents was twenty-four hours per week is dead-on the Board's definition.) However, the Board is not prepared to infer anti-union animus on the part of the employer solely from its decision to cut full-time regular staff rather than reduce its complement of contingents. There may be other instances in which such a decision, in different circumstances, may well warrant an inference of anti-union animus. The Board, however, does not find such an improper motive implicit in that decision in these circumstances. The complaint, therefore, insofar as it alleges violation of section 66 is dismissed.
21The Board next turns to the alleged contravention of section 79. Section 79 reads:
79.-(l) Where notice has been given under section 14 or section 53 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 14, in which case subsection (I) applies; or
(b) the application for certification by the trade union is dismissed or terminated by the Board or withdrawn by the trade union.
22The parties did not dispute the following chronology: certification application filed May 28, 1984; certification granted June 29, 1984; termination announcement July 11, 1984; notice to bargain July 12, 1984. There is no doubt that the July 11th announcement fell within the period caught by the section 79(2) freeze. The issue before the Board, of course, is what was frozen. It is useful to recapitulate the impact of July 11th on the bargaining unit: some categories (e.g., printing department) were unaffected; over 100 employees in the processing function were given notice of termination; thirteen of sixteen employees in the drapery workroom were given notice and that function was partially contracted out.
23That section 79 is intended to maintain the status quo, to provide a period of stability while the parties are establishing their collective bargaining relationship or renewing that relationship by negotiating another collective agreement, is a sentiment often affirmed by the Board. The classic exposition of the parameters imposed on employer conduct during the freeze is the business as before formula in Spar Aerospace, supra. That formula has been referred to in virtually every case which since has considered section 79. The cases also confirm that section 79 is a strict liability provision in that anti-union animus is not a relevant factor.
24The interpretation of section 79 in the context of particular fact situations, however, has seldom proven simple or straightforward. The Board in Simpsons, supra, referred to a passage in Sunnycrest Nursing Home Limited, [1982] OLRB Rep. Feb. 261 which it is appropriate to repeat here:
The freeze provisions give rise to difficult problems of interpretation for if treated as a total prohibition on any employer actions taken in the ordinary course of business which impinged upon the employment relationship, the freeze would effectively paralyze the employer's operations during the bargaining process; while, if the pre-existing but now frozen entrepreneurial rights are given too broad an interpretation, they would render the section meaningless.
25And, as stated in Grey Owen Sound, supra, at paragraph 22:
The Board, in Spar Aerospace Products Limited, 11978] OLRB Rep. Sept. 859, articulated a business as before rule during the freeze period. In essence, the Board decided that the legislative intent of the freeze was to maintain the prior pattern of the employment relationship in its entirety. (See paragraph 19 of the decision). One problem in a first agreement situation is that the parties are in transition from a situation of unrestricted management's rights to one in which collective bargaining will result in some shift in the balance of power as between employer and employees. It is often very difficult in such situations to ascertain what the pattern of the employment relationship was.
26Section 79(2) freezes the wage rates, other terms and conditions of employment, rights, duties and privileges of the employees and the rights, privileges and duties of employers for the period specified. Most of the freeze cases have arisen in the context described by the above quotation from Grey Owen Sound, that is, the transition from unrestricted management rights to a collective bargaining regime wherein those management rights are limited to a greater or lesser extent. In this context, the cases have discussed on the rights of employer versus the privileges of the employees. In other words, the statute freezes employees' privileges and it is the scope given to the employees' privileges which circumscribes the otherwise unlimited reach of employer rights.
27Before the transition to a collective bargaining relationship, then, the doctrine of management rights is so broad, so all-embracing that there need be no recourse to employer privileges in the context of section 79(2). Once the transition is complete, however, and the freeze arises when the parties are bargaining for a renewal agreement, there may well be found employer privileges. In A. N. Shaw Restorations Ltd., [1978] OLRB Rep. June 479, for example, the Board held that a union had waived certain rights under its collective agreement and could not adopt a different posture during the freeze.
28The Board could have interpreted section 79 so as to freeze the precise conditions extant at the time the statutory provision was triggered. The Board, though, has consistently rejected that approach as an unreasonable interpretation of the legislation. In the Board's view, such an interpretation would effectively paralyze an employer's operations for the duration of the statutory freeze, a period which could be quite lengthy. In effect, the business as before formulation in Spar Aerospace, supra, was the Board's response to too expansive a view of employee privileges. To paraphrase Spar Aerospace, the employer's right to manage its operation was maintained subject to the condition that the operation conform to the pattern established when the freeze was triggered.
29Business as before is a slippery concept to apply to specific fact situations. The focus of the test is the pattern of operations, the employer's practice. Certainly, where the practice is accurately embodied in an employer's policy manual, the application of business as before has been relatively straightforward: J. M. Schneider Inc., [1984] OLRB Rep. Apr. 609. There have been other instances where a practice has been so well entrenched as to be beyond dispute: Spar Aerospace, supra, with respect to annual merit and annual cost of living increases. On the other hand, the increased parking fee cases illustrate the difficulty in looking for a pattern: see Oshawa General Hospital, [1985] OLRB Rep. Jan. 98, and the cases cited therein, including Humber Memorial Hospital, [1979] OLRB Rep. Aug. 764 and Ottawa General Hospital, September 1984, unreported, File No. 0965-84-U(B). Does business as before require annual adjustments to parking fees, equal increases in fees, regular adjustments, any charge to employees for parking, or, is what is frozen the actual rate in place at the time of the freeze? The cases generally reject the actual rate at the time of the freeze and uphold adjustments to rates. However, the cases reveal the difficulty of looking at a pattern or business as before to measure employees' privileges.
30The freeze provisions catch two categories of events. There are those changes which can be measured against a pattern (however difficult to define) and the specific history of that employer's operation is relevant to assess the impact of the freeze. There are also first time events and it is with respect to that category that the business as before formulation is not always helpful in measuring the scope of employees' privileges. Some first time events have been readily rejected by the Board, where, for example, the employer has instituted parking fees for the first time during the freeze: see Scarborough Cententary Hospital, [1978] OLRB Rep. July 679; St. Joseph's Hospital, September 1984, unreported, File No. 0965-84-U(A). On the other hand, the Board has upheld an employer's right to lay-off employees during the freeze (assuming there is no anti-union animus in the decision): Simpsons, supra; Burlington Carpet Mills, supra; The Winchester Press, supra; Grey Owen Sound, supra; Deacon Brothers, supra; Airline (Malton) Credit Union, supra. This right has been confirmed even where the first instance of layoff occurred during the freeze (see Grey Owen Sound, supra; The Winchester Press, supra; and where the layoffs had occurred elsewhere in the employer's operation but not at the specific location in question (see Simpsons, supra). The respondent in the instant case cited Corporation of the Town of Petrolia, supra, for the proposition that the employer may also contract out work for the first time during the freeze.
31Instead of concentrating on business as before, the Board considers it appropriate to assess the privileges of employees which are frozen under the statute and thereby, delimit the otherwise unrestricted rights of the employer, by focussing on the reasonable expectations of employees. The reasonable expectations approach, in the Board's opinion, responds to both categories of events caught by the freeze, integrates the Board's jurisprudence and provides the appropriate balance between employer's rights and employees' privileges in the context of the legislative provisions.
32Reasonable expectations language has appeared in a number of decisions dealing with the freeze section. See, for example, Corporation of the Town of Petrolia, supra; Scarborough Centenary Hospital, supra; Oshawa General Hospital, York-Finch Hospital, supra; St. Mary's Hospital, 1119791 OLRB Rep. Aug. 795 (Decision omitted from [1979] OLRB Rep. March); AES Data Limited [1979] OLRB Rep. May 368. In the latter case, for example, the Board found that the employer was entitled to re-assign job functions since the employees could not reasonably expect to continue performing their jobs in exactly the same way despite changes in the mode of production and market conditions. Thus, in the Board's view, the reasonable expectations of employees as the appropriate measure of the employees' privileges which are protected by the freeze is a common thread running through the earlier decisions. In the instant case, the Board is expressly articulating the test.
33The reasonable expectations approach clearly incorporates the practice of the employer in managing the operation. The standard is an objective one: what would a reasonable employee expect to constitute his or her privileges (or, benefits, to use a term often found in the jurisprudence) in the specific circumstances of that employer. The reasonable expectations test, though, must not be unduly narrow or mechanical given that some types of management decision (e.g., contracting out, workforce reorganization) would not be expected to occur everyday. Thus, where a pattern of contracting out is found, it is sensible to infer that an employee would reasonable expect such an occurrence during the freeze. The Board in Simpsons, supra, although the cleaning was contracted out before the company itself took over that operation, did not conclude there was such a pattern.
34The reasonable expectations approach also integrates those cases which affirm the right of the employer to implement programmes during the freeze where such programs have been adopted prior to the freeze and communicated (expressly or implicitly) to the employees prior to the onset of the freeze: Le Patro d'Ottawa, [1983] OLRB Rep. Feb. 244. The Board considers that the upholding of the right to contract out during the freeze period in Corporation of the Town of Petrolia, supra, does not establish an unrestricted right of the employer to contract out work during the freeze but, rather, recognizes that the employer in that case had embarked on a programme leading to the contracting out well in advance of the freeze and that the employees would reasonably have been aware of his programme in the circumstances (see par. 20, in particular).
35Finally, the lay-off cases are consonant with the reasonable expectations approach. Very few, if any, work forces are entirely static; fluctuations in the size of the staff complement and its composition are the norm. Employers are generally expected to respond to changing economic conditions through the hiring, termination and attrition of employees. It is in this sense that it is reasonable for employees to expect an employer to respond to a significant downturn in the business with layoffs (or terminations) even where such layoffs are resorted to for the first time during the freeze. The magnitude of the layoffs, of course, must be proportional or relative to the severity of the economic circumstances. Economic justification must be proven where relied on and there must be an absence of anti-union animus. It must also be stressed that, while the expectation of layoffs does not initially depend on the specific history of the employer's operation, there might well be specific evidence with respect to that employer which would negate the otherwise usual reasonable expectation of layoffs in response to an economic downturn.
36The reasonable expectations approach also distinguishes between layoffs and contracting out. Where there was a pattern of contracting out, of course, there would be no violation of section 79 where work was contracted out during the freeze. However, in the Board's opinion, while an employee would reasonable expect a layoff where there was no demand, i.e., where there was an economic downturn, an employee would not reasonably expect that the work would continue to be performed for the benefit of the employer's operation but through contracting out. This is not to say that the employer does not have the right to contract out work during non-freeze periods, except as limited by a collective agreement. During the freeze, however, and unless there is a practice of contracting out, the employer's right to contract out is limited by the employees' privilege of performing the work if the work is to be performed for the benefit of the employer's operation. Contracting out is merely one of the ways an employer might otherwise increase productivity or efficiency which is caught by the freeze; reducing wages, instituting parking fees, ignoring its policy manual are other means of achieving such goals which are proscribed by the statutory provision.
37The Board, then, must assess the reasonable expectations of the bargaining unit employees at Lawrence. A programme to modernize and centralize the facility had commenced as far back as 1980. Various functions had been consolidated (e.g., the Belfield move) during that time. Technology was being introduced to increase efficiency. The Board need not reiterate all the changes (see paragraphs 10 and 11, supra). Moreover, some layoffs had occurred at Lawrence as a result of the consolidations and at other of the respondent's locations in recent times. The economic difficulties of the firm were not secret. In the circumstances, the employees could reasonably have expected layoffs. To be sure, few likely actually anticipated the magnitude of the terminations (the terms lay off and termination are interchangeable in these circumstances). The respondent, however, demonstrated that the scale of the terminations was related to the economic conditions. The Board would particularly note the productivity comparison submitted as exhibit 3. Thus, the Board finds that the terminations of individuals employed in the processing functions not to be a violation of section 79.
38For the reasons set out above, however, the Board finds that the contracting out of the drapery workroom functions does violate section 79. Admittedly, the drapery workroom had lost money for some time. In the circumstances, the Board would have upheld a decision to scale-down or, if a reduction was not an economically feasible alternative, even close down that part of the operation to reassess the situation (see: Trimarine (Canada) Ltd., supra). What the respondent, in the Board's opinion, could not do during the freeze was to introduce a new means of responding to economic difficulties, i.e., to close the department and contract out that work (at least in part). In the Board's view, it is the introduction of a new means to continue to have the work performed (which is outside the employees' reasonable expectations) which violates section 79, not the elimination of a classification. The Board considers that it was the continued performance of the same functions but through a new system (i.e., the elimination of one classification) which resulted in the breach of the freeze provision in Rest Haven Nursing Home, supra.
39That the drapery workroom function was contracted out (albeit on a lesser scale than when performed by the respondent) only emerged at the close of the hearing when the Board was so advised by counsel for the respondent. The Board was given no details of the scope of the subcontract, the numbers of employees who would not have been terminated if the continuing functions were still performed in-house etc. It may be that the parties are able to resolve those questions without the necessity of a further hearing on this matter. The Board has found that the contracting out, as admitted by the respondent, violates section 79; this violation, however, as flows from the termination of only those employees who would have been required to perform those functions which were contracted out. The selection of employees, once the appropriate number was determined, would be in accordance with the respondent's practice in respect of the other terminations resulting from the July 11th announcement (and consistent with its practice in earlier terminations).
40In summary, the complaint with respect to the alleged violation of section 66 is dismissed. The complaint alleging breach of section 79(2) of the Act in the termination of employees in the processing function is likewise dismissed. The complaint regarding section 79(2) insofar as it relates to the termination of those employees in the drapery workroom is upheld to the extent that such employees would have been needed to perform the functions contracted out, as discussed in the preceding paragraph. As requested by counsel, the Board leaves the question of the appropriate remedy (within the stated parameters) to the parties. The Board, however, will remain seized in the event counsel are unable to resolve the matter.
PARTIAL DISSENT OF BOARD MEMBER W. F. RUTHERFORD;
The facts outlined in the majority decision are a correct statement of the evidence presented. I disagree only with a portion of the decision based on that evidence.
When newly organized employees choose a bargaining agent they have notified the company that they have legally selected an agent to represent them in discussions on wages and working conditions including the hope of arriving at a negotiated contract.
I accept that the union submitted contract amendments on July 12th one day after the company had notified the employees of a major lay off, and thereby technically the company can argue that the union was outside the freeze period contemplated in section 79(1) of the Labour Relations Act.
1 suggest that the company knew the employees chosen bargaining agent and had an obligation to discuss with that agent their proposals of the major lay off contemplated at 700 Lawrence Avenue before publicly releasing the lay off notice.
This type of discussion is important to the employees involved and the bargaining agent, especially when the newly organized group of 254 full-time employees were to be reduced by 116 people, almost a 50% reduction.
The over 400 part-time employees known as contingents are paid at the same rates of pay as the full-time employees but without employee benefits. The contingents, however, would not suffer any lay offs and were in fact increased when the lay off was completed.
My opinion is that the company violated section 66(a) and (c) and section 70 of the Labour Relations Act by ignoring the bargaining agent at Lawrence Avenue until the public release of the contemplated lay off.
The action of Simpson management in dealing with the lay off at Lawrence Avenue would suggest anti-union animus. It would appear they were giving a message to employees that joining a union would not benefit them, thereby attempting to chill any further union organization at their facilities.
When employees have not had previous experience with union their perceptions of the duties, responsibilities and rights of unions during an organizational drive is important. The company took advantage of that employee perception by ignoring the union so that the union would not be party to lay off discussions.
I would have found the company in violation of section 66(a) and (c) and section 70 of the Labour Relations Act.