[1990] OLRB Rep. January 58
1473-89-FC Local 2693, IWA-Canada, Applicant v. MacMillan Bloedel Building Materials Limited, Respondent
BEFORE: Robert Herman, Vice-Chair, and Board Members C. McDonald and R. W. Pirrie.
APPEARANCES: W. Dubinsky and W. McIntyre for the applicant; G. L. Firman and R. A. Dines for the respondent.
DECISION OF R. HERMAN, VICE-CHAIR, AND BOARD MEMBER C. McDONALD: January 9, 1990
This is an application under section 40a of the Labour Relations Act for a direction to settle a first contract by arbitration.
Section 40a(2) of the Act reads as follows:
(2) The Board shall consider and make its decision on an application under subsection (1) within thirty days of receiving the application and it shall direct the settlement of a first collective agreement by arbitration where, irrespective of whether section 15 has been contravened, it appears to the Board that the process of collective bargaining has been unsuccessful because of,
(a) the refusal of the employer to recognize the bargaining authority of the trade union;
(b) the uncompromising nature of any bargaining position adopted by the respondent without reasonable justification;
(c) the failure of the respondent to make reasonable or expeditious efforts to conclude a collective agreement; or
(d) any other reason the Board considers relevant.
The applicant relies solely upon the provisions of subsection (2)(b), asserting that the uncompromising nature of the bargaining position adopted by the respondent, without reasonable justification, has caused the process of collective bargaining to be unsuccessful.
It asserts that the respondent's refusal to agree to the same benefits received by employees prior to the certification of the applicant, and the respondent's refusal to put anything in a collective agreement which provides benefits higher than provided in comparable collective agreements, constitute uncompromising bargaining positions without reasonable justification.
The applicant called as its sole witness Wilf McIntyre, one of its negotiators and the first Vice-President of the applicant Local. The respondent called as its sole witness Al Dines, the Manager of Employee Relations for the Marketing Group of the respondent, and as such the individual who was responsible for all labour relations matters with respect to employees in the Marketing Group, including the employees in the instant bargaining unit. Mr. Dines flew in from Vancouver to personally conduct negotiations for the employer.
The bargaining unit in question consists of approximately three employees who staff and operate a Distribution Centre, distributing a variety of lumber products on a wholesale basis to retail lumber yards in northern Ontario. Many of the retail lumber yard customers of the employer have their own bargaining relationship with the applicant Local.
For many years the applicant had tried unsuccessfully to organize the operations of the respondent in northern Ontario. One reason for this difficulty was the high level of benefits enjoyed by the employees of MacMillan Bloedel. Since 1974, the salary and benefits of Distribution Centre employees had been comparable to the benefits received by the employees of a wafer-board plant operated by the respondent in the same location. These benefits were considerably greater and more varied than benefits received by unionized employees in that area of the province and were set out in what the parties colloquially referred to as the "Red Book", a booklet provided to all employees setting out the full range of benefit plans and services provided. In April, 1988, the Distribution Centre physically moved away from the waferboard plant location, but the respondent continued to pay its employees benefits and salaried wages linked to the benefits of the waferboard plant employees. In November 1988, the waferboard plant permanently closed. The applicant was then able to successfully organize the employees of the respondent, in the Distribution Centre, and it was granted a certificate with respect to them in January, 1989.
Negotiations for a first collective agreement commenced and the parties were able to reach agreement on a number of non-monetary, non-benefit issues. It became apparent however that with respect to benefits the parties were significantly apart. The company initially took the position that it would not provide benefits at the level previously provided, as described in the Red Book, but rather would only provide the level of benefits found in collective agreements in the comparable employment community, which benefits were of a significantly lower level. The company's position was also that it would never sign or put into a collective agreement any benefits that were greater than community standards, for to do so would enable the union to "wave the collective agreement in its face". The union's initial position was that the employees should receive the same level of benefits they had received prior to the certification of the union.
Neither party moved from these positions through the first three negotiating sessions. Conciliation was applied for after the conclusion of the third negotiating session on May 8, 1989, when the union told the employer it would be applying for conciliation forthwith. The company at that time felt conciliation was premature, as it felt the parties had been making steady progress on matters other than benefits. When Mr. Dines protested that conciliation was premature, Fred Miron, the President of the applicant union, advised him that the union "didn't have time to spend on such a small collective agreement, and if the company was unwilling to meet the union's demands, then it could forget it."
Conciliation began at the fourth bargaining session, on June 22nd, 1989 and, for reasons we will come to later, the company offered to grandfather or red circle current employees and new employees hired by January 1, 1990, so that these employees would continue to receive the Red Book benefits and also any increase in wages or benefits subsequently negotiated. The company thus proposed a two-tiered system of benefits, with only employees hired after January 1 receiving less than the currently received Red Book benefits. The union continued to insist on the maintenance of current benefit levels (the Red Book) but offered to freeze those benefits until the rest of the community caught up.
With the assistance of the conciliation officer on June 22nd, the parties were able to negotiate an agreement with respect to some benefits, including provisions concerning jury duty, bereavement leave, and statutory holidays. But none of these three were benefits covered by the Red Book, and the successful negotiation of these items does not suggest that the parties were able to negotiate benefits of the kind encompassed by the Red Book. There was one other benefit item which the parties were able to negotiate on June 22nd, and it was a benefit covered by the Red Book, a medical, surgical, hospital, and drug care plan (Article 18:01 as agreed to by the parties). The evidence on this point however, indicates that the employer's proposal was agreed to by the union because it provided benefits comparable to those contained in the Red Book. This agreement reflects only the employer's willingness on this single benefit to negotiate a clause which continued the current benefit. On all the other categories of benefits encompassed by the Red Book, the employer remained unwilling to negotiate any benefit at a level previously and currently provided, and the union continued to insist on maintaining the existing benefits and in opposing any two-tiered benefits. The union did not propose specific language for any of these benefits, as it felt the parties remained apart on the essential principle, whether current levels of benefits must be maintained. The benefits over which the parties thus remained apart in principle included vacations with pay, weekly indemnity, group life and accidental death and dismemberment, dental plan, pension plan, homeowners, automobile and marine insurance, travel accident insurance, the retirement plan, share purchase plan, and registered retirement savings plans.
Mr. Dines testified as to the company's four justifications for its bargaining position. First, the company was concerned with respect to its other collective agreements with the applicant union. The company was aware of the applicant's bargaining strategy of pattern bargaining, by establishing a particular collective agreement with high benefits and then "forcing it down the [throat of the] other partner." The company felt very strongly that it would be faced with the Red Book benefit levels in future negotiations in other bargaining units that had to date been receiving lower standards of benefits.
Second, the company was concerned about the potential possibility of the applicant union organizing its other non-union branches, by presenting a published collective agreement with the high level of benefits contained in the Red Book.
Third, the company was concerned about its own customers, the retail lumber yards, who had their own collective agreements with the applicant union. The company feared that its retail customers would be faced in their own forthcoming negotiations with a published collective agreement with the respondent which contained high levels of benefits. This might place its customers under severe pressure to increase the benefits in their own collective agreements. In turn, the company might lose these customers because they would feel the respondent had set too high a standard.
Fourth, the company was motivated by concern over the views of those companies within its peer group who were competitors, for example, Abitibi and Domtar. In this respect, Mr. Dines testified that MacMillan Bloedel was concerned that the applicant union would present high demands when negotiating with its competitors, demands based upon MacMillan Bloedel's collective agreement and the high levels contained therein, and the respondent would be seen to have set new levels of benefits for all of Northern Ontario.
Mr. Dines further testified as to why on June 22nd the company came to modify its initial proposal. Specifically, it made the offer to grandfather employees hired by January 1,1990 because "when the company examined its position, and after talking with people in the Ontario scene, there was a feeling because of some of the first contract arbitration cases, that there should not be a penalty for employees to join the union". Accordingly, he testified, the company modified its position in order to protect those employees who were currently at the Distribution Centre, so that they should not suffer. At the same time, the company could continue to negotiate a collective agreement with community standards, but only for those hired after January 1, 1990. In this way, Dines testified, the company would be able to avoid penalizing current employees, yet also avoid providing a collective agreement with benefits higher than community standards.
The June 22nd session ended with the parties still apart on the principle of whether the current levels of benefits were to be maintained for the entire bargaining unit. The fifth and final bargaining session took place on July 20th, 1989. There was no movement with respect to the fundamental dispute over the principle of the appropriate benefits. The instant application was not filed by the union until September 14, 1989, approximately two months later. There is no evidence that any interaction between the parties took place during this two month interval. The parties also agreed, in writing, to extend the time for the hearing of this application, and it was accordingly heard on November20 and 21, 1989.
There is no question that the positions of both parties were uncompromising with respect to the appropriate benefits (although both parties advised the Board that all other matters were resolvable if the benefits hurdle were crossed). Neither party budged on this core dispute, an issue both parties considered and treated as an issue of principle. The employer was not prepared to offer the current level or variety of Red Book benefits to new employees, and the union insisted on maintaining the current benefits for all employees.
The Board is satisfied that the process of collective bargaining has been unsuccessful. Although there is no specific number of sessions or steps that parties must go through in order for the Board to conclude that the process has been unsuccessful, we are satisfied in the circumstances, given the positions of the parties and the lack of any meaningful progress whatsoever with respect to the resolution of their difference in principle with respect to the appropriate level of benefits, that the process of collective bargaining has been unsuccessful. It is clear that neither party will move from its position on this central dispute, and that this disagreement effectively prevents the process of bargaining from moving forward. There is simply no reasonable likelihood that the employer (who treats this issue so seriously that it has flown its international manager in from Vancouver to personally handle the negotiations for this 3 person bargaining unit) will compromise on its position to not offer to continue current benefits for new employees. Nor will the union agree to benefits less than enjoyed before unionization, nor to a two-tiered system. Both parties remain uncompromising in their positions and bargaining is effectively at impasse.
As the provisions of section 40a(2) illustrate, the process of collective bargaining must have been unsuccessful because of one of the enumerated reasons. In the instant case, the applicant asserts the cause of the impasse as the uncompromising nature of the bargaining position adopted by the respondent without reasonable justification. We adopt the view taken by the Board in Formula Plastics [1987] OLRB Rep. May 702, as to the approach the Board ought to take in assessing the reasonableness of the respondent's justifications. Can we say that the justifications provided by the employer for its bargaining position with respect to benefits are reasonable? And if not, did this cause bargaining to be unsuccessful?
The financial burden to the company of continuing to pay current benefits to Distribution Centre employees was not the justification for its position. And the company was not being asked to justify why it was refusing to agree to a proposal to provide increases in benefits after employees were organized. That scenario is not before us. Rather, the company took the position that it would not continue to pay the existing level of benefits that employees had been receiving for the fifteen years before they were organized.
As Mr. Dines testified, the company took this position for several reasons. The company felt that if it gave organized workers the benefit levels that unorganized employees had received, then it would be pressured to provide similar higher levels in its other collective agreements with the applicant, the applicant would be able to organize elsewhere in the company, the customers who bargained with the applicant would leave the company, and competitors of the company would have to pay similar benefits to their unionized workers. The objection was not per se to paying such high levels of benefits, for the company had always paid this level to its (unorganized) employees. Nor (for example) had the company previously been concerned that the high levels of benefits it paid might put pressure on its competitors to pay similar high levels. It was only concerned that it not pay its unionized employees these high benefits. The objection was to continuing to pay such levels to employees because they were now organized. These justifications, looked at in context, are designed to send a message that unionizing will cost employees the benefits they had received prior to becoming organized. Although current employees and those hired before January 1, 1990 would continue to receive the current benefits, a two-tiered system as proposed by the employer would clearly foment dissension within the bargaining unit and with the bargaining agent. It is a proposal which will likely lead to a decertification application, for under it new employees will receive less benefits only because the union represents them. Two-tiered systems are not inherently unreasonable, and many negotiations consider such proposals. What makes the instant proposal unreasonable is the context in which it is proferred and the justifications or reasons behind it. The employer's bargaining position is also designed to discourage other employees who might want representation, and unions who might seek to organize them. It tells them that the response to unionization is a reduction in benefits. It is qualitatively no different a message than threatening to lay off employees or close the business only because employees have organized or are contemplating so doing. This bargaining position is not reasonably justified for purposes of section 40a(2)(b) of the Act. It is not reasonable to take a position of reducing current benefits when one of the main reasons for doing so is only because a union now represents employees.
We are therefore satisfied that the process of collective bargaining has been unsuccessful and that the uncompromising nature of the bargaining position adopted by the respondent was without reasonable justification. We have also carefully considered whether the necessary causal connection is to be found between the bargaining position of the respondent and the impasse that collective bargaining has reached. We have some concerns about the union's conduct and we have assessed whether the union was only "going through the motions" of negotiating, and was really attempting to use a first contract application to supplant the negotiating process and to avoid the expense of protracted negotiations for a three person bargaining unit. However as noted, in our view there is no reasonable possibility either party will abandon the principle behind their respective bargaining positions, and we remain satisfied that bargaining has been and will continue to be unsuccessful because of the nature of the company's proposal and the company's justifications for
it.
- For the above reasons, we therefore direct the settlement of the parties' first collective agreement by arbitration.
DECISION OF BOARD MEMBER ROSS W. PIRRIE; January 9, 1990
I dissent from the majority's decision as set out above.
Section 40a(2)(b) of the Act, on which the applicant relies, speaks to "the uncompromising nature of any bargaining position adopted by the respondent...". It should be noted that, with the exception of Article XI - NO STRIKE - NO LOCK-OUT, all of the provisions thus far agreed to by the parties in bargaining this first collective agreement represent compromises by the employer. True, on the benefit or "red book" provisions the company has to date refused to agree to the unions uncompromising demand that the essence of the "red book" provisions be incorporated in the collective agreement. In this regard it is, in my view, significant that the employer did in fact agree to grandfather the existing employees, ie. they compromised their original position of only being prepared to agree to a community level of benefits for all employees. I cannot agree that the respondent has been uncompromising in its bargaining position in general, or specifically with regard to benefits. To the contrary, it is in my view that it is the union which has adopted and displayed throughout negotiations an uncompromising posture vis-a-vis the benefit issue, ie. we will agree only to the "red book" provisions and nothing else.
I do not agree that a case can be made for a first collective agreement direction under section 40a(2)(b).