[1991] OLRB Rep. January 7
1872-90-FA Teamsters Local Union 419, Applicant v. Arrow Games Inc., Respondent
BEFORE: M. A. Nairn, Vice-Chair, and Board Members J. Lear and P. V. Grasso.
APPEARANCES: Dave Watson and Bob McGibbon for the Complainant; R. M. Parry, Steven Wilson, Jack Proudman and Peter Cobbold for the Respondent.
DECISION OF THE BOARD; January 14, 1991
Having regard to the Minutes of Settlement filed by the parties in Board File No. 3079-89-U, and to the provisions of section 40a of the Labour Relations Act (the "Act"), we hereby direct the settlement by arbitration of the first collective agreement between the parties. Pursuant to section 40a(3) of the Act the parties are agreed that the Board arbitrate that settlement.
There are two outstanding matters that arise in the context of Board File No. 1872-90-FA and pursuant to the parties' Minutes of Settlement. The first is the settlement of the first collective agreement between the parties (the "interest dispute"). The second concerns a dispute between the parties with respect to the legal effect, and remedy if any, of the employer's action in reducing hours of work. It is alleged by the applicant that the employer violated section 79 of the Act and that compensation is owing to the employees involved. The respondent employer disputes this assertion. This decision deals only with the settlement of the first collective agreement. A decision with respect to the allegation of a violation of section 79 will issue in due course.
Counsel for the parties convened before the panel to deal with certain procedural questions. It was agreed that the respondent would proceed first. Prior to the hearing the parties exchanged and filed written briefs. Upon convening the hearing each party advised the panel that it would not be calling any viva voce evidence.
The items agreed to between the parties were filed and appear as Appendix 12 at tab 12 of the respondent employer's brief, save and except Appendix B and certain portions of Article 8. Articles 8.01 and 8.05 as set out in Appendix 12 of the employer's brief constitute agreed-to language between the parties. Articles 8.02, 8.03 and 8.04 are in dispute between the parties. In addition, the parties are in dispute with respect to Appendix B, which is the wage schedule to be attached to and will form part of the collective agreement. The parties are also in dispute with respect to payment of retroactivity.
The parties are agreed that the collective agreement will be effective for a period of two years from the date of this award.
We note that the parties have been successful in negotiating the substantial portion of their collective agreement and in essence those matters remaining in dispute relate to the level of wages to be paid.
As the Board has done in previous interest arbitrations pursuant to section 40a of the Act, we do not intend to give detailed reasons for our award. We are dealing with a bargaining unit of eleven employees and there are six classifications of employees covered by the collective agreement. In five of those classifications there is currently only one individual employed. In the processor classification there are currently six employees.
The employer engages in the processing and distribution of custom bingo supplies. Flat stock is shipped from the employer's U.S. parent company. The flat stock is "pulled", collated, cut, glued, cut again, and then wrapped, packaged and shipped.
The company has been in operation in Mississauga since May 1, 1988. The company's parent operations comprise three locations in the United States., with more than four hundred hourly employees. The majority are employed at the parent company's head office in Cleveland.
The employer's wage proposal incorporates a number of different elements. It proposes to institute a grid providing for increments at six month intervals to a maximum rate achieved at an eighteen-month service level. The employer's proposal also seeks to introduce a merit payment to be paid at the sole discretion of the employer. In addition, it seeks to retain the right to "maintain, amend, eliminate, or reinstate any existing incentive program at its sole discretion" (the "T.E.A.M. program"). Finally, in determining rates of pay, the employer proposes a wage increase of a minimum $.25 per hour to each employee, in year one, provided such increase does not exceed its wage rate proposal including merit pay. In the second year of the collective agreement, the employer proposes a minimum increase of $.20 per hour on the same basis.
The union's wage proposal contemplates no grid. It provides for a single rate in each classification for each of the two years of the collective agreement.
The focus of the employer's submission with respect to wage rates was that the level of productivity in the Mississauga plant was below its expectation. Consequently, each of the features of its wage proposal attempted to address in various ways the issue of productivity of the employees.
The issue of productivity is of concern to any employer in the management of its business. However, how productivity is defined and then secondly, how it is measured in any particular operation is obviously variable. Counsel for the employer makes the point that the employer has set a level of productivity in expectation of its desired rate of return at this plant in circumstances where it can produce the same product elsewhere. Obviously, a union, the employees, and an employer run a risk if a company determines to operate at a particular level of production and that level is not forthcoming. However, in our view, that does not address the issue before us. The employer's proposal seeks to incorporate in the employees' hour1ly wage rate a considerable factor based on its desired level of production. Notwithstanding that this plant is largely a manual operation, we simply are not persuaded that the employer's approach is appropriate at this time and in the context of a legislated first collective agreement. Firstly, we have no information as to the nature of the production or operation at the U.S. plant from which the desired level of productivity has been determined. We cannot compare the nature of that operation, its equipment, its size, its workforce or its structure with this plant. We cannot be satisfied that the proposals are ones which address issues specific to this plant.
Further, the proposed merit system is completely discretionary to the employer. Notwithstanding an acknowledgement by counsel for the employer that any such merit program would have to be implemented and administered fairly with respect to the employees, there is nothing in the employer's proposal to indicate when it might be paid, whether the amounts indicated constitute maximums but not minimums, and there are no criteria set out that link the payment of the merit system to any issue of productivity. Similarly, the productivity bonus plan is at the sole discretion of the employer to implement or eliminate at any time. This is a plan that has been adopted from the parent company (which does not appear to be unionized) and its terms have not been made the subject of negotiation with this trade union.
In support of its proposals, the employer advances the argument that the employees would, through the implementation of the merit payment and the T.E.A.M. program, earn more money than the union is seeking. This assumes that the level of productivity set is attainable, reasonable, attributable to the employees, and that the payments will be made. However, absent the implementation of both the merit and the T.E.A.M. plan the parties' wage proposals are not widely divergent. In fact, in three of the six classifications, the rates proposed by each party (absent the merit and incentive payments) are the same.
Finally, we note that contrary to the employer's assertion, its proposal is not a simple one. In order to determine any particular employee's rate of pay one could not simply look to the wage schedule. It would be necessary to make a number of calculations taking into account a variety of factors. In the context of a legislated first collective agreement, we prefer to take a more conventional approach to issues of compensation. These are proposals that in the circumstances are more properly left to subsequent negotiations.
The union opposes the implementation of a grid. The employer seeks to implement a grid both in response to its stated productivity concerns and as a means to reconcile rates within classifications. In reviewing the agreed-to language in Appendix 12, we note that the parties have agreed to a probationary period for employees of ninety days in the bargaining unit. It also appears that the employer has some discretion with respect to the continuation of the employment of a probationary employee. These provisions provide the employer with considerable opportunity to review the performance of individual employees in order to determine whether they will meet the requirements of the job. In that regard we accept that there is a review of productivity during the probationary period. In reviewing the various job duties of employees in the bargaining unit, we are also of the view that during a ninety day probationary period the employer would be able to determine whether or not the employee is meeting the employer's expectation with respect to productivity. Therefore, we are prepared to award a grid comprised of a start rate with an increment upon completion of the probationary period.
We would also make the following comments. The adjudication of an interest dispute between two parties is, in our view, a qualitatively different type of adjudication from other proceedings under the Act. The function of an adjudicator in an interest dispute is to, in essence, complete the process of negotiations that has up to that point, failed between the parties themselves. Obviously, the award of an interest arbitration board is final and binding upon the parties. However, there appears to be no particular onus attributable to either party in the context of an interest dispute. (Nor is there any particular magic in which party proceeds first. In this case it made sense, and the parties agreed, that the employer proceed first because of the outstanding section 89 allegation.) Both parties are putting forward proposals which they seek to have the Board adopt and incorporate into its award which will form the actual terms and conditions of employment for the employees in the bargaining unit. In interest disputes before the Board pursuant to section 40a of the Act, the Board has a broad discretion to determine those issues that remain in dispute between the parties. The result is the completion of the negotiating process and the creation of the collective agreement between the parties.
The means by which parties generally seek to persuade an interest arbitration board is by way of material contained in written briefs. A real issue is the question of the weight to be attributed to that material. A failure to substantiate through the use of background information, of statistics, or other supporting documentation by either party may well limit the value of any assertion made to the adjudicator.
For example, it is unlikely that a panel will accord much weight to an employer's bald assertion that it is unable to pay higher wages. Where an interest arbitration arises between parties in the private sector (whether on consent or pursuant to section 40a) and the employer relies on an inability to pay argument, it can expect to have to explain and justify its financial proposal. Information not exchanged through the negotiation process for strategic or other reasons may well be required in order to satisfy an interest arbitration board of the impact of a proposal on both parties and whether its adoption seems appropriate in all the circumstances. In the absence of such specific information, a board is compelled to refer to other more generalized factors in coming to its decision. The amount of information and supporting documentation provided is balanced of course with the expedited time frame available under section 40a for the determination of the issues.
Having regard therefore to all of the above, our award with respect to the items in dispute is as follows:
Article 8 - Wages
[8.01 Agreed to item - Article 8.01]
Appendix 12 (employer brief).]
8.02 The wage schedule in Appendix B will be effective from January 14, 1991. Employees will be paid during their probationary period at the start rate. Upon completion of their probationary period, employees will advance to the next level of pay within their classification.
[8.03 Agreed to item - Article 8.05 of]
[Appendix 12 (employer brief).]
Appendix B
Hourly rate:
Effective Effective January 14, 1991 January 14, 1992 Start Upon Completion Start Upon Completion Rate of Probationary Rate of Probationary
Period Period
Cutter 8.50 9.35 8.85 9.70 Driver 8.85 9.75 9.45 10.35 Shipper/Receiver 9.55 10.50 9.95 10.90 Material Handler 7.15 7.85 7.50 8.20 Processor 6.80 7.45 7.25 7.90 Lead Hand 8.55 9.40 8.90 9.75
Employees are to be placed on the grid in accordance with their current length of service. For purposes of clarity, we note that the probationary period is ninety days in the bargaining unit. Therefore, employees who change classifications (excluding situations covered by Article 12.02 of the agreed-to items regarding temporary transfers) and who have already completed their probationary period will immediately move to the top level of the grid of the new classification.
On the issue of retroactivity, the employer proposes a lump sum 'signing bonus' to each employee in the bargaining unit. The union seeks full retroactivity on wages paid back to the date of the notice to bargain, November 28, 1989. We note that while two employees have only recently been hired, eight employees have not had wage increases for periods ranging between fifteen and nineteen months. One employee received an increase in January 1990.
Due to the small size of the bargaining unit we have, in this case, been able to consider likely and reasonable expectations of the employees as well as the cost to the employer of a retroactivity payment. In the circumstances of this case, balancing the various seniority dates of the employees, the various dates of their last wage increases, the fact that this is a first collective agreement and recognition of the negotiating process itself, we award a retroactive payment as follows. Employees shall be paid a lump-sum amount of $350.00 each or a retroactive payment calculated as though the wage rate effective the date of this award took effect one year after the date of the employee's last wage increase, whichever is greater. However, in no case shall the amount payable exceed $650.00.
For purposes of clarity we provide the following two examples. An employee whose last wage increase was May 14, 1989 is entitled to $350.00 or a retroactive wage payment calculated on the basis of hours paid from May 14, 1990 to the date of this award, whichever is greater. An employee hired within the year prior to the date of this award will be entitled to a lump sum payment of $350.00. We note that in no case would this result in a payment that would be retroactive to a date prior to the date of the notice to bargain.
We direct that the collective agreement contain the items agreed to as referred to in paragraph 6 of this decision and our award with respect to the items in dispute. Should the parties have any dispute with respect to the preparation of the actual document we will remain seized in order to ensure that the collective agreement is prepared by the parties forthwith.
ADDENDUM OF BOARD MEMBER J. LEAR; January 14, 1991
I would simply add the following comments. The employer expects a 4.1 case per hour production level, a level that has been met at one of its three U.S. parent operations. In comparing that figure with the average output of this plant over the course of its operation there appears to be a shortfall of some 40 per cent. If the expectation is reasonable, I am hard-pressed to accept that the employer has not been able to determine with some considerable specificity the reasons for that lack of production and further that it has not undertaken action to change those factors. It has been a concern to the employer throughout its time of operation in Mississauga.
In my view, a production incentive scheme is at its most efficient when applied to a unit whose members are able to produce at a rate which cannot be adversely affected by the rate of production of any other part of the operation. In such a situation, the unit is self-regulating and poor individual performers are not long tolerated within it by the other members. Where the scheme is applied comprehensively to the whole operation, the total rate of production is dictated by the rate of the lowest performing unit. In this situation, failure by management to identify and correct problem areas may in fact result in a 'disincentive' situation, where workers in a well-performing unit lose heart and slack off as, in spite of their best efforts, they are not earning bonus due to poor performance in other parts of the operation.
A production incentive scheme should be designed specifically for the operation to which it relates. Even where identical items are produced from two separate locations, there are almost certainly differences. Some of these may be due to availability of better or more experienced labour, the state of the local employment market, layout of the production run, unidentified production bottlenecks, more or less mechanization, 'doubling up' of some mechanical operations and distribution of the work force, the environmental appeal of the workplace, quantity of orders on the books and the relationship between management and workers. Because of these variable factors, any incentive scheme should be tailored to local conditions. Also, the point at which production output is gauged is important. Some recognition of "work-in progress" may be required.
Also, in attempting to plan and implement a production-related incentive scheme, it is vital to involve the workers and their union representative(s) at an early stage in the planning to ensure full co-operation and the greatest chance of success. It is often the person on the shop floor who has the best knowledge of problem areas in the production process.