Ontario Labour Relations Board

[1991] OLRB Rep. November 1320

1441-91-FC International Leather Goods Plastics and Novelty Workers' Union, Local 8, Applicant v. Root Chemical Company Inc., Respondent

BEFORE: Robert D. Howe, Vice-Chair, and Board Members J. Lear and K. S. Davies.

APPEARANCES: David Matheson, Alfred Sartorelli, Roman Stoykewych, and Andrew McKenzie for the applicant; Robert Budd and Terry Reid for the respondent.

DECISION OF THE BOARD; November 29, 1991

1. In a decision dated November 8, 1991, the Board wrote as follows regarding this appli­cation under section 40a of the Labour Relations Act:

For reasons which will be provided at a later date, the Board, pursuant to section 40a of the Labour Relations Act, hereby directs the settlement of a first collective agreement between the applicant and the respondent by arbitration.

The purpose of this decision is to provide our reasons for issuing that direction. (For ease of expo­sition, the applicant and the respondent are also referred to as the "Union" and the "Company" in this decision).

2. This matter was initially scheduled to be heard on August 8, 9, 12, and 14, 1991. How­ever, the first two of those four hearing days were adjourned on the joint request of the parties, in order to permit them to narrow the issues in dispute in the application. Thus, the hearing did not commence until August 12. The continuation of hearing scheduled for August 14 was adjourned at the request of the respondent, due to the unavailability of its General Manager, Terry Reid, who was Company counsel's advisor and the sole witness who testified in these proceedings. That adjournment request was not opposed by the Union. Since the September and October continua­tion dates offered by the Board were not useable by the parties due to prior commitments, the hearing resumed on November 1 and concluded on November 7.

3. Section 40a of the Act provides, in part, as follows:

40a.-(l) Where the parties are unable to effect a first collective agreement and the Minister has released a notice that it is not considered advisable to appoint a conciliation board or the Minis­ter has released the report on a conciliation board, either party may apply to the Board to direct the settlement of a first collective agreement by arbitration.

(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.

4. The Union initially relied upon both parts (b) and (c) of section 40a(2) in support of the application. However, through the aforementioned issue-narrowing discussions, the parties agreed as follows:

(1) bargaining has in fact broken down for no other reason than the posi­tions taken by the parties;

(2) all of the allegations with respect to conduct in the pleadings are no longer relevant as pleadings qua conduct;

(3) the core issues were thoroughly canvassed in bargaining and, in par­ticular, in sessions on June 6 and 13, 1991; and

(4) the only outstanding issue is the reasonableness of the employer's bargaining position.

5. By letter dated May 29, 1991, the Deputy Minister of Labour informed the parties that the Minister had decided not to appoint a conciliation board. It is clear from the foregoing agree­ment of the parties, and from the evidence adduced before the Board, that the process of collective bargaining has been unsuccessful. The issue remaining in dispute between the parties is whether the cause of that lack of success was "the uncompromising nature of any bargaining position adopted by the respondent without reasonable justification", i.e., whether the case falls within the purview of section 40a(2)(b).

6. In commenting on the proper interpretation to be given to the word "reasonable" in that provision, the Board wrote as follows in Formula Plastics, [1987] OLRB Rep. May 702:

7. But was the employer's position taken without reasonable justification? Much depends on our interpretation of "reasonable" in this regard. Obviously the employer in this matter did have reasons for taking this position in the sense that it hoped to achieve a contract provision of benefit to itself. However, in our view, "reasonable" must mean something more than simply a rational relationship between a bargaining position and a party's self-interest. This test is so minimal that it would make the relief provided by section 40a(2)(b) virtually inaccessible, a result which we find inconsistent with the remedial nature of this provision. Reviewing the sec­tion as a whole, and having regard to the Board's analysis in Nepean Roof Truss, supra, and Juvenile Detention Centre (Niagara), [1987] OLRB Rep. Jan. 66, we find it difficult to conclude that the legislation was designed to do no more than ensure that parties were looking after their own interests in a logical way.

8. Rather, in our view, the word "reasonable" imports an objective element into our consider­ation of the respondent's justification for its position. It is not simply a matter of whether the justification is reasonable from the respondent's point of view, or even from the applicant's. The legislation draws us into an unavoidable assessment of whether a given proposal or position is reasonable in objective terms, a task which to some extent takes the Board into uncharted waters.

9. This is so, in part, because reasonableness is a relative concept; what is reasonable depends largely, if not entirely, upon the context in which such an examination is to be made. In consid­ering section 40a(2)(b), such a context will include both the general landscape of labour rela­tions and the specific labour relationship between the parties. In many cases such an assessment will also require the weighing and balancing of the opposing interests of the parties which they seek to pursue by way of their negotiating positions.

10. Moreover, while the Board has had occasion to scrutinize negotiations in the past, notably in the course of determining bad faith bargaining complaints, the nature of our inquiry under sec­tion 40a is significantly different. The jurisprudence developed under section 15 reflects a con­scious intention to avoid reviewing the fairness or reasonableness of negotiating proposals as an exercise in itself (see for example, Canada Trustco, [1984] OLRB Rep. Oct. 1356). Rather, the Board's interest on a section 15 inquiry centers on whether a manifestly unreasonable proposal indicates the presence of bad faith on the part of a party, or a failure to make every reasonable effort to make a collective agreement. To the extent that section 40a requires us to examine the intrinsic reasonableness of a negotiating position, it represents a departure from the jurispru­dence which has evolved under section 15.

11. The variety and social authority of the competing interests involved, together with the com­plex dynamics of the collective bargaining process make this task a difficult one. It requires a delicate assessment of the many differing factors which may be operating in and upon a given labour relationship, an assessment which must be approached from a perspective closely attuned to the practices and climate of labour relations at any particular point in time. Indeed, it is fair to say that this is a provision which will require the Board to draw heavily on its own expertise in labour relations.

See also Grant Forest Products Corporation, [1991] OLRB Rep. July 848; Kraus Carpet Mills

Limited, [1991] OLRB Rep. Jan. 50; Venture Industries Canada Ltd., [1990] OLRB Rep. Aug.

904; and Alma College, [1987] OLRB Rep. Dec. 1453.

7. With those principles in mind, we now turn to the material facts of the instant case. The respondent manufactures and packages windshield anti-freeze and swimming pool chemicals. Its windshield anti-freeze work is largely concentrated in the period from September to January, while its pool chemicals work commences in late December, peaks in February or March, and then falls off very quickly. Although (in the words of Mr. Reid) the plant "essentially goes dead" from April to August, the Company generally retains four or five employees to have a "core of consistency". The seasonal nature of the Company's production requirements gives rise to substantial fluctua­tions in its personnel needs at different times of the year. During its windshield anti-freeze produc­tion season, and to a lesser extent during the pool chemical production season, that core group of four to six full-time employees is supplemented by ten to fifteen seasonal employees, who are hired in September or October and generally remain with the respondent for four or five months before a shortage of work resulting from the seasonal nature of the Company's operations necessitates their layoff. The Company's core group of employees is also augmented by personnel obtained from employment agencies (referred to in this decision as "agency personnel"). Agency personnel are used primarily during periods of peak demand, in order to attain the high production levels required to meet customers' "just in time" delivery requirements. However, they are also used to some extent during most other times of the year to supplement the respondent's workforce. Thus, on a typical day during its busy season, the respondent will have four to six "core" employees and ten to fifteen seasonal employees at work in the bargaining unit, and will also be utilizing three to twelve agency personnel.

8. On December 12, 1990, the Board (differently constituted) certified the Union as the bargaining agent of "all employees of Root Chemical Company Inc., in the Town of Vaughan, save and except forepersons, persons above the rank of foreperson, office and sales staff, persons regularly employed for not more than twenty-four hours per week and students employed during the school vacation period." By letter dated January 4, 1991, the Union gave the Company written notice of its desire to bargain with a view to making a collective agreement. On February 6, 1991, it sent the respondent a copy of its proposal for a collective agreement. That proposal contained a number of provisions regarding seniority rights and job security, including a requirement that lay­offs and recalls be governed by seniority (provided that the senior employee had the ability to per­form the available work), and a provision under which laid off employees would retain their

seniority rights for eighteen months. Under the Union proposal, the laid off employee's seniority rights would be lost if the employee was recalled to work by registered letter mailed to the employ­ee's last known address on the records of the Company and failed to notify the Company of accep­tance of the recall within five days, or failed to return to work within ten working days of receipt of notice of recall (subject to waiver or extension in the event of a postal strike).

9. The Company tabled its proposal for a collective agreement at a bargaining session held on April 15, 1991. The following provisions formed part of that proposal:

ARTICLE 10-SENIORITY

10.04 Loss of Seniority and Employment Rights

An employee shall loose [sic] all service and seniority and shall be deemed to have terminated if he:

(b) has been laid off for one (1) calendar month:

(h) fails upon being notified of a recall to signify his intention to return within three (3) calendar days after he has received a notice of recall and fails to report to work within seven (7) calendar days after he has received the notice of recall or such further period of time as may be agreed upon by the parties. It is the employee's responsibility to ensure that his home address and telephone number are current at all times. If the employee fails to do this, the Employer will not be responsible for failure to notify.

10. On June 6, 1991, the Union revised its position on Article 10.04(b) to eight months which, although ten months less than its original position, would still afford seasonal employees recall rights for the next season. Despite that substantial reduction, the Company remained inflex­ible concerning the "one calendar month" period proposed by it. The Company's only movement in respect of Article 10.04(b) was an offer to add the following sentence after the words "has been laid off for one (1) calendar month": "However, if the employee is subsequently rehired within six (6) months of the date of termination in accordance with this provision~ the employee will maintain the seniority standing the employee enjoyed as of the date of termination pursuant to this provi­sion". (That offer was made by the Company on June 6, 1991, and was subsequently incorporated into the "proposed collective agreement that the respondent is prepared to execute" which, in accordance with the Board's Practice Note No. 18, forms part of the respondent's reply.)

11. In seeking to justify the respondent's position regarding Article 10.04(b), Mr. Reid sug­gested that it would be too administratively burdensome for the Company to recall seasonal employees because "the entire front office only runs with three or four people, so our ability to manage our administrative function is fairly thin." He also told the Board that the Company's pro­posal was based on its past experience that only a few seasonal employees return to work for the Company the following year. However, he acknowledged in cross-examination that the Company has in its office a computer network that consists of "four big p.c.'s", and also acknowledged that the Company already has on file all of the information that would be needed to implement the recall system proposed by the Union. During his testimony before the Board, Mr. Reid further indicated that at times the Company has gone to considerable lengths to rehire some of its seasonal employees; in attempting to counter the Union's suggestion that he views Company personnel as "disposable employees", he told the Board:

We need to have people in the plant who know the job in terms of productiv­ity.... We go through a fair amount of trials and tribulations in September retraining, re-emphasizing how to run the equipment. So trained employees are of value to us. We had two [seasonal employees] come back this year. We went after them - chased them down to Trinidad and Tobago. Seasonal employees are of value to us, and very productive when they do the job right.

12. Having duly considered all of the evidence, the able submissions of counsel, and the principles set forth in the Board's previous decisions regarding section 40a(2)(b), we are unani­mously of the view that, in the instant case, the process of collective bargaining was unsuccessful because of the uncompromising nature of the bargaining position adopted by the respondent in respect of job security and recall rights, without reasonable justification, as exemplified by its posi­tion concerning Article 10.04(b). The insubstantial justification offered by the respondent falls far short of reasonably justifying the Company's uncompromising position regarding the one-month period specified in that provision, the obvious effect of which is to deny any meaningful recall rights to its seasonal employees, who from September to January or February constitute a majority of employees in the bargaining unit, and who will invariably be laid off for more than one month when the respondent's plant "goes dead" from April to August.

13. The Board is not persuaded that sending recall notices by registered mail to the Compa­ny's seasonal employees from the previous year constitutes an undue administrative burden, partic­ularly in the context of a business which has the benefit of a fairly sophisticated computer system. Moreover, the Company's purported reliance on past experience in this regard is also quite hollow, as the Company has never previously sent out recall notices to seasonal employees, and has no actual knowledge of how seasonal employees would respond to such notices where, by accepting recall, they would retain their seniority and other collective agreement rights. When considered in the context of the Company's other proposals (many of which seek to retain for management a largely unfettered discretion in respect of hiring, discharging, laying off, and recalling employees), the Company's position regarding Article 10.04(b) appears to us to reflect an inability or unwilling­ness on the part of the respondent to recognize that, as a result of the applicant's certification, it cannot reasonably expect to continue to operate its business in precisely the same manner as it has previously done, without regard for meaningful seniority rights and other elements of job security which have come to be among the hallmarks of successful collective bargaining.

14. In view of the conclusion that we have reached in respect of the respondent's position regarding Article 10.04(b), it is unnecessary to comment on the other Company proposals that were addressed in evidence and argument, apart from noting that our silence concerning those pro­posals is not to be construed as implicitly indicating that the Company had reasonable justification for all of them.

15. Thus, for the foregoing reasons, the Board directed the settlement of a first collective agreement between the applicant and the respondent by arbitration, pursuant to section 40a of the Labour Relations Act.