[1991] OLRB Rep. January 50
2164-90-FC United Food and Commercial Workers International Union, Local 175, Applicant v. Kraus Carpet Mills Limited, Respondent
BEFORE: Janice Johnston, Vice-Chair, and Board Members J. Lear and C. McDonald.
APPEARANCES: Frank Luce, Julia Noble and Michael Duden for the applicant; Carl Peterson and Richard Busch for the respondent.
DECISION OF THE BOARD; January 15, 1991
File No. 2164-90-FC is an application for a direction that a first collective agreement be settled by arbitration pursuant to section 40a of the Labour Relations Act ("the Act").
In a unanimous decision dated December 12, 1990 the Board issued the following ruling:
File No. 2164-90-FC deals with an application under section 40a of the Labour Relations Act for a direction that a first collective agreement be settled by arbitration.
Having regard to the agreed facts, evidence and submissions of the parties, the Board, pursuant to section 40a(2) of the Labour Relations Act, hereby directs the settlement of a first collective agreement between the applicant and the respondent by arbitration. Our reasons for this decision will issue at a later date.
Our reasons for that decision are contained herein.
Many of the facts in this case are not in dispute. The United Food and Commercial Workers International Union, Local 175 ("the union" or "the applicant") obtained bargaining rights for the part-time employees of Kraus Carpet Mills Limited ("the employer" or "the respondent") by way of a certificate issued by the Board on February 20, 1990. They gave notice to bargain to the employer in March and the union requested the appointment of a conciliation officer in April. The parties met and negotiated on May 30, 1990, July 4, 1990, July 18, 1990 and August 21, 1990. In addition there were relevant telephone conversations between the parties on October 17, 1990 and October 22, 1990. The parties then met one last time on October 31, 1990.
The Respondent employs approximately 200 full-time employees, who have been represented by the union since 1984, and 7 part-time employees who have been represented by the union since February. The negotiations for a first collective agreement for the part-time workers are the subject matter of this application.
By way of background information the Board also heard that Kraus Carpet has two sister companies. "Strudex", which manufactures the fibre which is incorporated in the carpet manufactured by Kraus, employs 200 full-time employees who are represented by the union and six part-time employees who are non-union. "Spinning Mills" employs 18 full-time workers who are represented by a different local of the union and does not employ any part-time workers.
The applicant in this case alleged a breach of section 40a and requested that the Board order the settlement of the first collective agreement by arbitration. 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.
Section 40a sets out a series of conditions which must be met before the Board can direct the settlement of a first collective agreement by arbitration. The first of these is the requirement for the Minister to release either a notice that it is not considered advisable to appoint a conciliation board or to release the report of the conciliation board. In this case the Minister issued his decision not to appoint a board of conciliation on August 27, 1990. The second condition which must be met is contained in section 40a(2) and is that "the process of collective bargaining has been unsuccessful". This was not in dispute before us. Counsel for the respondent conceded that this condition had been met. Section 40a(2) then sets out reasons for the lack of bargaining success. The applicant did not contend that this case falls within the ambit of section 40a(2)(a), (c) or (d) but instead focused its argument on 40a(2)(b). Counsel for the employer conceded that the respondent had in fact been "uncompromising" within the meaning of section 40a(2)(b). Thus, the only issue which the Board had to decide was whether the employer had reasonable justification for its "uncompromising" position and, if not, whether the uncompromising nature of the bargaining position adopted by the respondent without reasonable justification was the cause of bargaining being unsuccessful.
In order to understand the justification put forward by the employer for its bargaining position, it is necessary to review some additional facts. As noted earlier, negotiations between the parties were conducted between May and October of 1990. Although the evidence called with respect to these negotiations was brief and quite sketchy, it clearly confirmed the respondent's concession that it adopted an uncompromising position with regard to the issue of benefits. In this particular case the term "benefits" refers to the Dental Plan, Pension Plan, and Health and Welfare Plan as currently in place in the full-time collective agreement. From the outset of the bargaining process which took place between the parties, the respondent refused to consider the union's request for any benefits whatsoever for the part-time employees.
Mr. Ron Springall, the Regional Director of the South West Region of the union was called to give evidence on behalf of the union. He testified that although his primary role was to oversee the negotiations being conducted within his region, he occasionally acted as chief spokesperson himself in some negotiations. He indicated he had been involved with the respondent since 1986. He attended the first negotiating meeting on May 30, 1990 and indicated that the union was seeking a part-time collective agreement with the same language as the full-time agreement. The benefit plan in place for the full-time employees is what is known as an "employer-union trusteed plan". The employer contributes to the plans on an hourly basis on behalf of each full-time employee. At the time of the hearing the employer, on behalf of full-time employees was contributing thirty cents per hour worked (up to a maximum of 40 hours per week) to the Canadian Commercial Workers Industry Pension Plan. It was contributing fifty-three cents per hour worked (up to a maximum of 40 hours per week) on behalf of full-time employees to the United Food and Commercial Workers Trusteed Benefit Plan. This latter plan provides short term and long term disability coverage including supplemental health care coverage. The employer was also contributing sixteen cents per hour worked (up to a maximum of 40 hours per week) to the United Food and Commercial Workers Trusteed Dental Plan - Ontario. The union initially took the position that it wanted parity with the full-time agreement on these benefits. In the context of first contract negotiations this demand may have initially contributed to the rigid approach adopted by the employer. The evidence of Mr. Springall is clear however that the union did not hold to this position and in fact indicated flexibility to the employer.
Mr. Springall testified that in a telephone conversation on October 22, 1990 with Mr. Richard Busch, the Personnel Manager for the respondent, he indicated that "he would need something on benefits". Mr. Busch, who testified for the respondent confirmed in cross-examination that he concluded that the union's position on benefits was negotiable at this point. Mr. Busch also conceded that the company was not prepared to move on its stance of no benefits at this time. Mr. Springall testified that in a subsequent meeting on October 31, 1990 he "tried to indicate movement by the union but the company was not going to move". Mr. Springall was not cross-examined by counsel for the employer on the meeting of October 31. Mr. Busch in his evidence gave a different version of this meeting with Mr. Springall. He testified that Mr. Springall, without mentioning their telephone conversation of October 22, 1990, reverted to the position requesting parity with the full-time employees on the issue of benefits. In cross-examination Mr. Busch indtcated that he did not "call" Mr. Springall on this, or question this change. He testified that he felt Mr. Springall had reverted to the unions original position on benefits. In analysing the respective credibility of these two witnesses the Board has utilized the usual factors in reaching its conclusions as to whose evidence to accept on this issue. The Board prefers the evidence of Mr. Springall with regard to the areas of conflict concerning the October 31, 1990 meeting.
As indicated above, the key issue to be decided is whether or not the respondent had reasonable justification for the uncompromising bargaining position it adopted regarding benefits. Mr. Busch, the only witness called by the employer, indicated that the respondent's final offer to the union did not contain anything on benefits for several reasons. Before dealing with the reasons provided we note that there is no indication in the evidence before us that these reasons, as given by Mr. Busch, were ever provided to the union prior to the hearing. During the negotiations the employer consistently refused to offer any benefits (as defined above) and there is no evidence that at that time they provided reasons for adopting that uncompromising position. The employer may have felt that they had good reasons for their position but these were not communicated to the union prior to the hearing. Mr. Busch testified that the offer did not contain anything on benefits because the respondent felt that the offer they were making was a "cadillac" collective agreement, that the benefits enjoyed by the full-time employees had been negotiated over a six-year period, and that the company had upcoming negotiations involving its sister companies, "Strudex" and "Spinning Mills", and were afraid that if they gave the union what they were asking with regard to wages and benefits (it would amount to a 60% increase), it would set an extreme precedent and one which could be used against them. In final argument counsel for the respondent also argued that the employer had offered an extremely reasonable and generous package, and that the test the Board should utilize in deciding this case is whether the employer is prepared to agree to a standard first contract. Counsel asked us to conclude that because the respondent had made, in its opinion, a reasonable offer to the part-time employees this met the test of reasonable justification in section 40a(2)(b).
Mr. Luce, on behalf of the union, argued that the employer had been uncompromising with regard to the issues of benefits and wages. In addressing the employer's contention that their proposal was a "cadillac" agreement, he emphasized that the parties have a mature bargaining relationship with regard to a full-time unit of 200. He contended that to agree to similar language, which appears to work well for the parties, for a unit of seven or eight people is not the same scenario "as if the union was coming in off the street". Mr. Luce submitted that the position taken by the company that the union was asking for a 60% increase was inaccurate. It was his position that the testimony of Mr. Springall made it clear that the union was prepared to move on this, its initial position. He argued that the employer's fear that the other full-time units at "Strudex" and "Spinning Mills" would also expect a 60% increase based on what the part-time workers at Kraus got was nonsensical in the context of their bargaining relationship. Mr. Luce stressed the need for the parties to start down the path of parity regarding wages and benefits. He argued that most of the part-time workers of the respondent were earning six dollars an hour in 1981 and were currently making seven dollars an hour, whereas the full-time workers were earning significantly more for similar work. It was his position that the part-time workers were treated like "second class citizens", and that the benefit and wage proposals of the company would reinforce this belief.
In dealing with the meaning of the word "reasonable" in the context of section 40a (2)(b) the Board in Formula Plastics Inc., [1987] OLRB Rep. May 702 stated:
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.
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.
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.
[emphasis added]
We adopt the reasoning outlined above.
Mr. Busch on behalf of the employer indicated that one of the reasons why the employer did not move on the issue of benefits was because it was afraid that if it gave a sixty percent increase to the part timers at Kraus Carpet, it would set an "extreme precedent" for its upcoming negotiations with the other full-time units. We accept the union's position that this argument holds no merit in the context of this case. The full-time employees at "Strudex" and "Knitting Mills" were represented by the same union as the full-time and part-time employees of the respondent. Even if, in the context of the negotiations of a first contract, the employer gave the part-time workers a 60 percent increase, it is in our view unrealistic to assert that the full-time employees at "Strudex" and "Knitting Mills" would expect a 60 percent increase. The part timers obviously represent a "catch-up" situation whereas it appears far more likely that the full-time employees of the sister companies would expect to receive something comparable to that which the full-time employees of the respondent had received.
The employer also argued by way of justification for not offering benefits to the part-time employees that it took the full-time unit six years to negotiate their current level of benefits. On the evidence before us it is clear that while the union was seeking some benefits in the first collective agreement it was not necessarily seeking full parity with the full-time employees. It may be that the employer would have been justified in refusing to grant the part-time employees the identical level of benefits enjoyed by the full-time employees. However, that is not the factual context of this case. In this case the employer refused to consider the granting of any benefits even after the union had revised its expectations. To say that it took the full-time employees six years to negotiate their current level of benefits does not in itself provide a reasonable justification for refusing to even consider offering any benefits to the part-time employees.
The remaining justification provided by the employer at the hearing for its uncompromising position on benefits was its subjective belief that the proposal they had put forward for the contents of a collective agreement was a "cadillac" offer. Counsel for the respondent also invited us to find the proposal made by the employer to be a "cadillac" offer. This we are unable to do. The language agreed to by the employer for the part-time collective agreement to a large extent reflects the language currently in place in the full-time agreement. There are seven part-time employees and two hundred full-time employees. We accept Mr. Luce's point that we are not dealing with a scenario where the union is "coming in off the street". It is in the interest of both parties to extend the language with which they are familiar, to a part-time unit of seven people.
Therefore, we are not persuaded in the circumstances of this case that the offer made by the company could be termed a "cadillac" offer. It is not an offer of such generosity that its terms provide reasonable justification for the respondents uncompromising position in respect of benefits. Moreover, the company did not at any time offer any objective justification to the union or the Board for that uncompromising position. They did not, for example, offer any evidence as to the norm for part-time employees in their industry, or their geographic area, nor did they indicate that they could not afford to pay benefits or that their benefits would be too difficult to administer. There was no evidence (or argument) to suggest why the employer had singled out benefits as nonnegotiable. The evidence indicated that the type of benefit plans currently in place lent themselves to a gradual accrual of benefits. Accordingly, in the circumstances of this case, we are unable to conclude that the respondent has established reasonable justification for its uncompromising position on benefits.
Counsel for the respondent in final argument referred to the often quoted passage from Nepean Roof Truss Limited, [1986] OLRB Rep. July 1005 at page 1008 which states:
It is clear from these provisions that the legislature has acknowledged the significance to the collective bargaining relationship of the first contract, and has given statutory recognition to the potential difficulties that may be encountered in achieving it. This remedy does not supplant the primacy of the free bargaining process; rather, it recognizes that the negotiation of the first agreement may sometimes be thwarted by unjustified intransigence. Although this is remedial legislation and should be given a liberal construction and interpretation, the scheme of section 40a does not envision the automatically imposed settlement of a first collective agreement in all cases where the parties are unable to negotiate one. What it provides is access to this remedy where certain conditions precedent have been met. These conditions are enumerated in subsections (a) - (d) of section 40a(2).
We agree that the remedy contained in section 40a was not intended to supplant the collective bargaining process. Nor was it intended to require the respondent to compromise on each and every item put on the negotiating table by the union. However, it does require the respondent to provide reasonable justification for an uncompromising bargaining position and to communicate these reasons to the union. Benefits, as defined in this instance make up a significant component of the monetary issues and are not an inconsequential item.
- For all of the above reasons, we determined that the process of collective bargaining has been unsuccessful because of the uncompromising nature of the respondent's bargaining position on benefits. Since the respondent has not established reasonable justification for this position, the provisions of section 40a(2) required us to direct the settlement of a first collective agreement by arbitration, as we did in our decision dated December 12, 1990.