The Canadian Union of Public Employees and its Local 3501 v. The Boys' Home, 1992 CanLII 6731

The Canadian Union of Public Employees and its Local 3501 v. The Boys' Home

[1992] OLRB Rep. April 409

2104-91-FC The Canadian Union of Public Employees and its Local 3501, Appli­cant v. The Boys' Home, Respondent

BEFORE: M. A. Nairn, Vice-Chair, and Board Members W. N. Fraser and B. L. Armstrong.

APPEARANCES: Dana Randall, Ian Thompson, and Joanne Lloyd for the applicant; Robert Budd and Maria Bertoni for the respondent.

DECISION OF THE BOARD; April 7, 1992

1By decision given orally and confirmed in writing on January 9, 1992 we directed the arbitration of the first collective agreement between these parties. We now provide our reasons for that direction.

2The evidence and submissions of the parties were heard over six days of hearing. We do not intend to review all of the evidence but will review the chronology of events and summarize those matters relevant to our conclusion. Prior to commencing the hearing the parties agreed to waive the time limits in this matter.

3At the outset of the hearing the respondent (the "employer" or the "Home") requested an adjournment in order that it could retain other counsel. The applicant (the "trade union" or "C.U.P.E.") opposed the request. Counsel appearing for the respondent had been its spokesper­son in the negotiations for the first collective agreement and anticipated being in the position of both witness and counsel. The panel denied the request for the adjournment. While we were not entirely sanguine about the idea that counsel might also appear as a witness, we noted that the Board often conducts hearings in which a party is unrepresented and gives evidence and makes submissions on their own behalf. We were satisfied that the respondent had sufficient opportunity to retain and instruct other counsel if it had chosen to do so. Notice to the respondent ran from at least the date of the service of the application on the respondent. In addition, where counsel acts as a spokesperson in negotiations on behalf of a client they are, or should be aware, that they run the risk of putting themselves in the position of being a potential witness in a subsequent proceeding. The amount of notice must also be balanced against the expedited time frame set out in the legisla­tion for the resolution of these disputes.

4In the course of the hearing we were asked to make a ruling with respect to the admissi­bility of certain evidence. The applicant filed a section 91 [formerly section 89] complaint in August, 1991 alleging various matters. The respondent objected to any evidence being called con­cerning that complaint, in that the complaint had not been consolidated with the hearing of the application under section 41. We ruled that the evidence arising from the section 91 complaint was admissible. The applicant had identified and pleaded the section 91 complaint in. support of its application under section 41. The evidence was relevant regarding the course of conduct engaged in by the parties over their negotiations. Although in the circumstances the section 91 complaint itself was not before the panel there was no basis for excluding relevant evidence as it related to the section 41 application. On that basis we heard evidence concerning matters referred to in the section 91 complaint filed under Board File No. 1580-91-U.

5The respondent is a social service agency funded by the Ministry of Community and Social Services (the "Ministry"). It offers residential and some non-residential programs primarily for male young offenders. On October 4, 1990 the applicant was granted an interim certificate as bargaining agent for all full-time employees of the respondent with the exception of office and cler­ical staff. The bargaining unit is comprised of those counsellors, child care workers, and others employed to provide the direct service to the client base. Notice to bargain was served on the respondent on October 25, 1990.

6The first bargaining session was January 17, 1991. Between the date of sending the notice to bargain and this meeting the parties were having discussions on a variety of matters, including certain scheduling issues, implementation of the respondent's first lay-off (which included the position held by the local union president), and merit increases and the effect of the freeze provisions under the Act. The respondent retained counsel to represent it in these matters and in the negotiations for the first collective agreement. A section 91 complaint was filed in late 1990 which was subsequently resolved by the parties.

7On January 17, 1991 the union tabled its proposals for a complete collective agreement. Discussions were briefly side-tracked by the presence of the local president who was no longer employed at the Home. It appears that the respondent expressed some concern that her presence might impede negotiations. While this issue was not pressed, the union representative did not respond favourably. The applicant reviewed its proposals. The parties set February 13 as their next negotiating session at which time the employer was to respond.

8On February 13, 1991 the parties met. There were brief discussions concerning the then outstanding section 91 complaint. The respondent tabled its proposals. They also comprised a com­plete collective agreement and made no reference to the applicant's proposals. Having reviewed that document briefly it was apparent to the parties that they were some considerable distance apart. They could not agree on which document to work from. Ms. Lloyd, the union spokesperson, may have made reference to a collective agreement between C.U.P.E. and Clifton House, another social service agency (the "Clifton House agreement"). In any event, that document was not tabled and nothing more was accomplished. Following this negotiating session Ms. Lloyd went into hospital.

9While Ms. Lloyd was on sick leave, negotiations did not continue. However the parties were engaged in dealing with each other on a number of other issues. The applicant had raised concerns about practices in the Home, had contacted the Ministry, and subsequently contacted the Home's Board of Directors concerning the state of collective bargaining. The applicant applied for conciliation in April 1991 notwithstanding the only real negotiations had been an exchange of pro­posals. On May 10, 1991 the parties met. The applicant tabled the Clifton House collective agree­ment. We have no doubt that at this stage of the negotiations there was considerable animosity between the parties. The respondent was angry about the manner in which the applicant was rais­ing issues in the press, the nature of some of the applicant's proposals and wondered about the applicant's concern for the clientele. The applicant was of the view that the respondent was attempting to intimidate it by laying-off the union president and tabling proposals in negotiations which were less than the status quo enjoyed by the employees in the bargaining unit. The tabling of the Clifton House collective agreement however was recognition by the applicant that its original proposals were, in Ms. Lloyd's own words, a "wish-list". It was her view that the Clifton House agreement, as an existing document, might better serve as a basis for attempting to find some com­mon ground between the parties. The applicant was clearly also of the view that the respondent's original proposals represented a similar kind of employer "wish-list". The respondent maintained throughout negotiations and before the panel that its proposals could not be so characterized.

10Little, if anything, was accomplished on May 10. The respondent advised the applicant that although it did not anticipate that the Clifton House agreement would serve any useful pur­pose, it was prepared to look at it. Ms. Lloyd did review some of the applicant's concerns with respect to the employer's proposals. As we noted, this meeting was characterized by considerable animosity.

11Prior to their first meeting in conciliation, the respondent's representative, Mr. Budd, advised Ms. Lloyd that the Clifton House agreement was not acceptable. We note that while the respondent alleges in its reply that the union was not prepared in any way to recognize the employ­er's original document and that no attempt was made to break that proposal down into smaller seg­ments and deal with individual articles in an attempt to resolve some of the issues, the same can be said with respect to the respondent's conduct in dealing with the trade union's original proposals and the subsequent tabling of the Clifton House agreement. The parties met in conciliation on June 5, 1991. The session was short and accomplished little, if anything. The applicant requested that a no-board report issue. It did, and the parties were in a legal strike or lock-out position as of July 4, 1991.

12Attempts to meet in mediation prior to the strike date were unsuccessful. Ms. Lloyd forwarded a letter to Mr. Budd dated June 27, 1991 advising the respondent that the applicant was prepared to work from both the respondent's document and the Clifton House agreement. That agreement was again rejected by the respondent as "totally inadequate" in a letter dated July 2, 1991. As of July 3, 1991 Ms. Lloyd was again on sick leave. She was replaced as spokesperson in the negotiations by Mr. Ian Thompson. We found Mr. Thompson to be a straightforward and cred­ible witness. He has both considerable training and experience in the social service field particu­larly in the area of juvenile offenders. He has engaged in collective bargaining from both the man­agement and trade union sides. Mr. Thompson brought a fresh approach to the bargaining table, seeking to reduce the existing tensions between the parties and to effectively address the substan­tive issues between them. Mr. Budd testified that Mr. Thompson had accurately reflected the par­ties' positions and movement in negotiations on July 25.

13A date for mediation was established for July 25, 1991. The parties met directly. In preparation for that meeting Mr. Thompson took the respondent's proposals and the trade union's original proposals and prepared what was referred to as the "cut and paste" document. He was extremely concerned that the parties were entering into mediation after the legal strike and lock­out date had passed with no item agreed to. He understood that the respondent found the Clifton House agreement to be unacceptable. He therefore worked from the respondent's document adopting as much of its language as he felt the applicant could, while amending other provisions using the trade union's original proposals. He also prepared and tabled a wage rate proposal. As we will review later, it subsequently became apparent that those proposed rates were less than what the employees would earn as of July 26, 1991. The panel carefully reviewed the document tabled by the applicant on July 25 and were satisfied that it represented a substantial adoption of the respondent's language and represented not only considerable movement by the applicant in the negotiations but a serious attempt to kickstart the process.

14At the meeting on July 25, 1991 Mr. Thompson tabled and reviewed this document. No notice had been provided to the respondent that the applicant's negotiating committee had changed. However at that time he reviewed the document clause by clause accepting much of the respondent's language and suggesting revisions to other language and expressing the applicant's concerns with respect to those issues. Having heard the applicant's position the respondent accepted and agreed to those matters that represented its own language. On other issues it either gave no response or re-tabled its original proposal or its proposal with some minor variation. These variations included an agreement to have three stewards instead of two, to include a clause that would require the respondent to submit the applicant's dues to its national office rather than "head office", and a willingness to accept the applicant's calculation of credit for seniority in certain cir­cumstances. The respondent indicated it had some flexibility regarding time limits in certain of its proposals, for example, the grievance procedure and Article 10.04, but it made no counter-pro­posal. The respondent also indicated that in those proposals which represented "take-backs", the respondent was prepared to move to a two-tier system. Those issues primarily involved the length of the probationary period and vacation entitlement. The respondent maintained its position of eliminating the existing employee group RRSP plan. It was also of the view that it was premature to discuss monetary issues. The applicant then made a second pass in response. It accepted more of the respondent's language and made other suggested modifications. It also withdrew certain of its proposals and retained its position on other matters. At this point Mr. Budd, on behalf of the respondent, advised the applicant that there was no point in continuing the negotiations because in the respondent's view the applicant had not been prepared to make sufficient movement. Negotia­tions, contrary to the wishes of the applicant, ended at that point.

15On July 25, in response to the applicant's concern that the respondent was proposing the elimination of the employee group RRSP, a substantial reduction in vacation entitlement, an increase in the probationary period from four to twelve months, and the elimination of existing family leave provisions, the employer proposed a two-tier system at least with respect to the proba­tionary period and vacation entitlement. Mr. Budd testified that the respondent proposed this modification on the basis that it decided to assure existing employees of their current benefits but that new employees would receive less. This reduction for new employees was justified on the basis of the Home's financial position. Mr. Budd testified that the Home was in a deficit position although no reference to any deficit was made in the course of the negotiations. The respondent was of the view that the applicant was aware of the deficit due to the fact that two layoffs had been implemented in December, 1990 in response to financial concerns. Mr. Budd's statement in evi­dence was not supported by any evidence to indicate the Home's continuing position following the implementation of the layoffs. The longer probationary period was justified on the basis that the workplace was now a union environment where reinstatement of an employee was a possibility. The applicant opposed the implementation of any two-tier system on the basis that it appeared to penalize employees following unionization.

16Following July 25, 1991 Mr. Thompson forwarded a letter to Mr. Budd dated July 29, 1991 indicating that the applicant was interested in resuming negotiations and advising that it felt able to make further movement in a variety of identified areas. Subsequently on August 6, 1991 Mr. Thompson wrote requesting a reply to his letter of July 29. On August 13, 1991 Mr. Budd responded by advising that he would be on vacation until September 9, 1991 and at that time he would be pleased to discuss the matter further. Subsequently, notwithstanding attempts by Mr. Thompson to reschedule dates for negotiation, no further response was forthcoming from the respondent. The parties met in an attempt to resolve the second and outstanding section 91 com­plaint on September 6, 1991. Mr. Thompson was aware that Mr. Budd was negotiating and avail­able in connection with another matter involving the applicant. Unable to secure further negotiat­ing dates, on September 17, 1991 the applicant staged a one-day walk out, notice of which was provided to the Home approximately two days before. The applicant filed this application for a direction that the first collective agreement be settled by arbitration on September 24, 1992.

17On July 19, 1991 Mr. Budd had forwarded a letter to Ms. Lloyd advising the applicant

that the respondent was implementing a special salary adjustment as well as a six percent increase

across the salary grid. These rates were to be effective as of July 26, 1991. It was apparent (both to the panel and to the respondent on July 25) that Mr. Thompson was not aware of this letter on July 25, nor did the respondent advise him of its existence or its content.

18The funds for these increases came from the Ministry of Community and Social Ser­vices. The special salary adjustment was an amount stipulated to be paid directly to wage rates and represented a seven percent one-time only increase in wages. In addition, the Ministry had pro­vided the respondent with an annual budgetary increase which represented a six percent increased allocation. This amount was discretionary in the sense that it was not required to be allocated spe­cifically to wage rates, although historically it had been. Following the expiration of the freeze period on July 4, 1991 the respondent decided to implement the seven percent increase and to apply a further six percent increase to wage rates. In coming to this decision the respondent stated it took into account the outstanding issues in the negotiation.

19The respondent sought to rely on the early conduct of the applicant to support its posi­tion that this application should be dismissed. While another party's conduct is relevant to the application it will not necessarily preclude a direction. In addition, if the preconditions in section 41 are met it does not matter whether the impugned conduct was advertant or inadvertent (see Peacock Lumber Limited, 119901 OLRB Rep. May 584 and the cases cited at paragraph 31 therein). Negotiations for a first collective agreement are qualitatively different in the face of sec­tion 41. While the provision does not supplant collective bargaining it clearly attempts to motivate parties toward negotiations based on efficient, substantive communication and no longer negotia­tions based solely on the exercise of bargaining power. The risk that a party runs by simply exercis­ing overt power is the potential for concluding its first set of negotiations at interest arbitration rather than by negotiated settlement.

20There is no doubt that the applicant's conduct of its negotiations contributed to some delay. Ms. Lloyd's initial and apparently heavy-handed attitude in response to the respondent's position was not well received by the respondent. Both parties were influenced by what they per­ceived as inappropriate, improper or reckless conduct on the part of the other. These included the circumstances leading up to the filing of two section 91 complaints, the filing by the applicant of a complaint with the Ministry concerning the care being provided by the Home and the public dis­cussion of same in the media.

21With respect to the early stage of negotiations the panel was without doubt that the respondent's proposals as a package constituted a "wish-list" (as were the trade union's proposals). As a package, the proposals represented serious intrusions on bargaining unit integrity, the avail­ability of the grievance and arbitration procedures, seniority protections, and they left considerable discretionary authority to the respondent. Early posturing occurred on both sides of the bargaining table in this case and we were satisfied that to the extent that the trade union's wish-list had an adverse effect on the respondent, so too, the respondent's document had a similar effect on the trade union. The negotiations did not get off to a good start.

22However, it was also apparent that as of July 25 both parties were ostensibly of one mind. Mr. Thompson was extremely concerned that the parties were in mediation, past the strike date, without a single issue being agreed to. He had never before found himself in this situation in negotiations. Similarly, Mr. Budd testified that he was looking for substantial progress in negotia­tions on July 25, and expressed similar concerns that the parties were in a legal strike and lock-out position. This concern was enhanced for the respondent in that the applicant had given no indica­tion if or when it would engage in strike activity. The respondent was obviously concerned with maintaining services to its clientele. As it happened, when the applicant did stage a one-day walk­out, notice was provided.

23Notwithstanding the respondent's stated concern that the negotiations were at an advanced stage with little achieved, it was the respondent that brought negotiations to an end on July 25. This was justified on the basis that it "simply did not see enough movement to continue talks that day". The applicant came to that negotiating session having made substantial movement in the form of adopting much of the respondent's proposed language. The only move of any sub­stance made by the respondent was to eliminate proposed Article 8.06(b)(vii) and to move from a position of concessions to a two-tier system.

24Proposed Article 8.06(b)(vii) was a form of deemed termination provision. It provided that the conduct set out in that sub-paragraph would constitute just cause for immediate dismissal and further, that the penalty would not be subject to review under the grievance and arbitration procedures. Sub-paragraph (vii) identified as just cause for immediate dismissal "any other con­duct which the Employer deems injurious in any regard to the Home, to one or more employees (whether or not covered by the terms of this Agreement) or one or more clients under Home care". While the applicant was opposing Article 8.06(b) in its entirety there is no doubt that this sub-paragraph was particularly offensive to it. It conceivably included such a broad range of con­duct and such a degree of discretion to the employer so as to essentially eliminate any just cause protection and further removed the right to utilize the grievance and arbitration process for review of those decisions. The movement from concessions to a two-tier system was made in the context of the respondent deciding to implement a further six percent wage increase to current employees and with the knowledge that the trade union had proposed wage rates less than that, and in the face of the applicant's opposition to the implementation of a two-tier system.

25Before the panel, the respondent relied on a collective agreement between the Chil­dren's Aid Society of the District of Parry Sound and OPSEU (the "Parry Sound agreement"). It was put forward by the respondent as representative of a norm in the social service industry, but the evidence does not warrant such a finding. In any event, that document was neither tabled dur­ing the negotiations by the respondent for the benefit of the applicant's review, nor does it reflect the proposals being maintained by the respondent on July 25. In fact the respondent acknowledged and characterized its position on July 25 as one of hard bargaining. It clearly sought to push the applicant to make further modifications. In response to these moves by the respondent, the appli­cant did make further amendments to its proposals and accepted more of the respondent's lan­guage and deleted some of its proposals. It was at that stage that the respondent called a halt to negotiations. The result was to put the applicant in precisely the position that the respondent expressly refused to be in, that is, having to bargain with itself.

26We do not see this movement by the respondent as indicative of or confirming the respondent's stated intention to make substantial progress in the negotiations at that stage. Article 8.06 (b)(vii) is so ambiguous and extreme so as to virtually eliminate any protection provided by the just cause clause that the parties were prepared to agree to. It would be naive to conclude that deleting this sub-paragraph represented any real movement by the respondent. We will discuss the movement to a two-tier proposal in the context of the respondent's position on monetary issues.

27The respondent attempted to lay the blame for the lack of progress in the negotiations at the feet of the applicant. It took the position that on July 25 Mr. Thompson was not prepared and fully informed for the negotiation and pointed to two items. We have no doubt that Mr. Thompson would have corrected those matters upon being apprised of them. Further it is apparent that the respondent made mistakes as well, for example with respect to parental leave, which were corrected during the course of negotiation.

28It was apparent to the panel that as of July 25 and subsequent to that time the respon­dent was influenced by its perception that the trade union could not mount any kind of economic sanction, and as a result concluded its position in bargaining was one of superior strength. It would appear that consciously or otherwise the respondent's approach to negotiations from July 25 onward contained a punitive element.

29The conduct of the respondent subsequent to July 25 belies its stated intention to make substantial progress in the negotiations. Up to the time of the filing of the application the respon­dent, notwithstanding repeated attempts by the applicant, had not responded for the purpose of scheduling further negotiations. This was in the context of the letter from the applicant indicating that it was prepared to make further moves.

30We were satisfied that as of the date of application the process of collective bargaining had been unsuccessful in the circumstances of this case. Notwithstanding that the parties had not engaged in extensive negotiations the process was well advanced being into mediation, their legal strike and lock-out date having passed. Little had been resolved. While certain matters were agreed to on July 25 those were circumstances where the applicant agreed to language proposed by the respondent. The respondent failed to make any real movement and then it called a halt to the negotiations. Then, for a period of two months, the respondent failed or refused to set further dates for negotiation. The respondent continued to take the position before the panel that the pro­posals it had tabled were reasonable, well within the norm, and that any failure to bargain was the responsibility of the trade union. Whereas the trade union had from at least May 10, 1991 acknowl­edged that its original proposals as a package constituted a "wish-list", the respondent made no such similar acknowledgement with respect to its proposals. Yet in evidence Mr. Budd confirmed that sentiment by acknowledging that many of the respondent's proposals represented an opening position and that there had simply been insufficient discussion concerning them. Yet the respon­dent offered no counter-proposals and provided no reasonable prospect for further discussion. Overall, we were satisfied that the process of collective bargaining had been unsuccessful between these parties. It remained to be determined whether that lack of success was as a result of one of the preconditions set out in section 41(2)(a)-(d) of the Act.

31We were satisfied that the pre-condition in section 41(2)(c) had been met by virtue of the respondent's position on monetary issues. In negotiations, the respondent took the position that it preferred to deal with non-monetary issues first and monetary issues in terms of total com­pensation. Apart from wage rates other cost issues on the table included (not exhaustive) vacation entitlement, health and welfare benefits, holiday pay, certain leaves of absence and hours of work and overtime. Mr. Budd testified that "only a fool would negotiate (wage rates) in the absence of other monetary issues". Yet knowing that the parties had a number of monetary issues outstand­ing, the respondent chose to pass on a six percent increase in wage rates with absolutely no consul­tation or discussion with the trade union. Certainly on July 25, when it became apparent that the applicant's wage request was less than what the respondent had been prepared to pay, the folly of the respondent's actions was apparent. We simply cannot understand why the respondent chose not to contact the trade union to advise that it was in a position to discuss all the monetary issues in dispute. The fact that the parties were now outside the freeze period does not change the nature of the duty to bargain nor the preconditions in section 41. Remaining silent on July 25 with the knowledge of the then current rates and taking the position that it was premature to discuss monetary issues amounted in our view to a violation of the respondent's duty to bargain in good faith under section 15 of the Act. While that was not the issue before us, we were satisfied that it repre­sented a failure to make reasonable or expeditious efforts to conclude a collective agreement. (It may well be difficult to conceive of circumstances that violate section 15 which would not also meet the pre-conditions in section 41(2)(a) or (c)). While purporting to seek to deal with monetary issues as a package, the respondent implemented a decision to increase wage rates only, to both its and the applicant's potential detriment. We are hard pressed to find any explanation for this approach except one that seeks to undermine the credibility of the applicant in the eyes of the employees in the bargaining unit. This conclusion is substantiated by Mr. Budd's evidence that the respondent waited for some time to pass after the strike deadline noting that no strike activity had taken place, before deciding to implement the wage increase. It was apparent that the respondent was of the view (however determined) that the applicant could not mount any economic pressure against it.

32In the context of the overall circumstances, particularly the respondent's action in end­ing negotiations on July 25, its position of silence with respect to the implementation of the wage increases and delaying discussion of monetary issues on July 25, and its failure to respond to the applicant for the purpose of establishing further negotiating sessions, we were left with no doubt that collective bargaining had been unsuccessful because of the respondent's failure to make rea­sonable or expeditious efforts to conclude a collective agreement in accordance with section 41(2)(c).

33The applicant reviewed a number of proposals of the respondent which it claimed were uncompromising and taken without reasonable justification within the meaning of section 41(2)(b). We note that during the course of negotiations the respondent provided little, if any, justification for its proposals but responded essentially by indicating agreement or re-submitting its original lan­guage. We intend to review a number of these provisions. We note that although the respondent indicated at the hearing that it was flexible about a number of its proposals, that flexibility was not identified to the applicant during negotiations. The respondent tabled its proposals on February 13, 1991 and virtually all of them remained on the bargaining table without serious modification as of the date of application. The bargaining position of the respondent was uncompromising.

34The interpretation of "without reasonable justification" in section 41(2)(b) was dis­cussed in Formula Plastics Inc. [1987] OLRB Rep. May 702 as follows:

24. 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.

25. 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.

26. 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.

27. 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 revolved under section 15.

28. 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 form a perspeciive 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.

35Proposed Article 5.01 is a management rights clause. Article 5.01(f) of that proposal provided:

It is expressly understood and agreed that a breach of any of the Employer's rules or of any of the provisions of this Agreement, shall be conclusively deemed to be sufficient cause for disci­pline or dismissal of an employee, provided that nothing herein shall prevent an employee who has successfully completed the probationary period from going through the grievance procedure to determine whether or not such breach actually took place;

The applicant understood this provision to limit the availability of the grievance and arbitration provisions. The respondent argued that the provision would not limit access to the grievance and arbitration protection in that it did not provide specific penalties and therefore section 45(9) of the Act (the jurisdiction of an arbitrator to modify penalty in appropriate circumstances) remained available. In the face of that intention and the applicant's concern regarding any potential limita­tion it would have been an easy matter for the respondent to propose to eliminate the words "to determine whether or not such breach actually took place". That would make it clear to any employee unaware of section 45(9) of the Act (and to the union and any board of arbitration) that the right to grieve was not limited solely to whether or not a breach of employer rules or provision of the agreement had taken place, but that there was some further discretion in the arbitrator to modify penalty in appropriate circumstances. We note this because the respondent justified its pro­posal on the basis that employees ought to be aware that breaches of rules or of the agreement would constitute cause for discipline or discharge. On that rationale the: e is no need for the latter phrasing.

36Article 7 of the respondent's proposals provided a no strike or lock-out provision. Arti­cles 7.01, 7.02, and 7.03 all prohibit strike activity or the authorization, encouragement, etc. of strike activity. The applicant objected to the broad nature of the definition given to strike activity in these proposals. The respondent proposed in each clause the words prohibiting "strike, sit­down, slow-down" or "any work stoppage, picketing or collective activity which will interfere in any way with the Employer's operations" (emphasis added). The applicant was particularly concerned about the underlined portion of the proposal. It queried both the nature of any collective activity and in whose opinion did it constitute interference. The applicant provided the example of employ­ees wearing buttons to work supporting various lobbying action. The respondent agreed that such activity might or might not be covered. The applicant was concerned that the clause was too broad and ambiguous, particularly in the context of proposed Article 7.06. Article 7.06 stipulated that any employee who engaged in any activity covered by the earlier sub-paragraphs may be subject to discharge or other penalty and that such disciplinary action could not be the subject of review under the grievance and arbitration provisions in the collective agreement. The respondent was of the view that Article 7.06 limited only the review of penalty and justified the lack of arbitral review on the basis of the nature of the agency. It provided no example or identified no particular interest that would distinguish it from other workplaces. Nor did the respondent address the broad defini­tion of activity covered except to agree that it potentially covered a range of activity that would not fall within the usual definition of strike activity.

37The respondent in Article 8.06(b) proposed a specific penalty clause for certain con­duct. That penalty was immediate dismissal and the clause provided that the penalty would not be subject to review under the grievance and arbitration procedures in the agreement. The proposal set out seven separate actions constituting just cause for dismissal. During the negotiations the employer deleted the sub-paragraph (vii) as referred to in paragraph 23 of this decision. The union was opposed to the specific penalty clause generally but specifically gave examples where it felt it was ambiguous and inappropriate. Sub-paragraph (iii) provided immediate dismissal for falsifica­tion of employer records. Mr. Thompson testified that rules of charting are often inconsistent and there is considerable discretion in determining what may be characterized as an incident and sub­ject to charting. He also felt it was relevant whether an action was deliberate or unintentional. These concerns went to sub-paragraph (iv) as well, which identified a breach of confidentiality as conduct subject to immediate dismissal. While the respondent agreed that there was considerable ambiguity in the interpretation of conduct it noted that that interpretation was still subject to the grievance and arbitration procedures. Once found however, that conduct was subject to dismissal. To the extent that the respondent relied on the Parry Sound agreement we note that the sub-para­graphs in that collective agreement are more limited then those proposed by the respondent.

38The applicant was also of the view that even if certain conduct was found to be inappro­priate it should not necessarily warrant immediate dismissal as opposed to some lesser form of pen­alty. Sub-paragraph (ii) provided for immediate dismissal for inter alia, the use of alcohol while on duty. The applicant gave an example where a current employee had been found to have had a beer with lunch while on working time and a warning letter had been issued. The applicant felt that this proposal was more onerous than current practice and eliminated useful flexibility. The respondent did not address that concern.

39The respondent's proposed Article 10.04 is a provision whereby employees lose all ser­vice and seniority and are deemed terminated in certain identified circumstances. While the appli­cant was prepared to agree to some form of deemed termination provision it took issue with the particular circumstances proposed. Article 10.04(b) provided that an employee who had been laid-off for two calendar months would lose all service and seniority and be deemed terminated. On July 25 Mr. Thompson countered by amending two calendar months to twenty-four months. Sub­sequently Mr. Thompson further amended that proposal to eighteen months. Ms. Lloyd on behalf of the applicant had earlier proposed twelve months. This was not known to Mr. Thompson nor ts it apparent that Mr. Budd identified that clearly to Mr. Thompson on July 25. On July 25 however, the respondent apparently concluded that it had no incentive to move off its position of two months in light of what it felt was an inappropriate position taken by the applicant. We accept Mr. Thompson's evidence that had he been aware at the time of the applicant's earlier position he would have corrected the proposal. Apart from Mr. Thompson's mistake, the respondent provided no justification for proposing that employees who had been laid-off for two calendar months should automatically lose all service and seniority and be deemed terminated.

40With respect to the remaining sub-paragraphs of Article 10.04 the respondent testified that it was flexible on its time frames and referred to the Parry Sound agreement. However it made no such movement during negotiations, notwithstanding that some of what the applicant was pro­posing on July 25 could be found in the Parry Sound agreement. For example, the applicant was proposing there be allowance for reasonable explanations for absences prior to a deemed termina­tion taking effect. The respondent agreed that its proposed Article 10.04(c) would have the effect that, if an employee were absent on sick leave for a period of two calendar months they would lose all service and seniority and be deemed terminated. The respondent further acknowledged that under proposed Article 10.04(d) it would be possible for a person on two days sick leave to lose all service and seniority and be deemed terminated where that employee had not obtained written advanced approval for the absence from the employer. Article 10.04(e) was to the same effect but referenced four days cumulative absence over a period of nine months. It was apparent that the respondent did not intend these results and acknowledged that it was an opening position. How­ever no alteration to the proposal was ever made. Proposed Article 10.04(g) provided that an employee would lose all service and seniority and be deemed terminated if they refused "to con­tinue to work or return to work during an emergency or for reasons of security or safety as deter­mined by the employer". The respondent indicated that these matters were separate, that is, an emergency was something separate from security or safety and that there was no intention on the part of the respondent to oust any jurisdiction or right of an employee under the Occupational Health and Safety Act. That legislation provides most employees with a right to refuse what they believe to be unsafe work, which refusal triggers a mechanism for dealing with the safety concern. Further, that legislation prohibits an employer from penalizing an employee in any way for exercis­ing that right. The comparable provision in the Parry Sound agreement is Article 10.04(f) which provides that an employee shall lose all service and seniority and be deemed terminated if they refuse "to continue to work or return to work during an emergency as determined by the employer unless a reason acceptable to the employer is provided". Obviously, the breadth of conduct cov­ered in Article 10.04 as a whole further and substantially reduces the opportunity to utilize the grievance and arbitration provisions of the collective agreement and section 45(9)of the Act. The respondent acknowledged that these were opening positions but argued that no useful negotiations occurred with respect to this provision. Yet the applicant countered twice to this proposal, receiv­ing no response.

41In Article 11.02 the respondent proposed that in determining lay-offs the factors of "skill, ability, experience, qualifications, education, suitability, competence, efficiency and conti­nuity of care" were to be considered and where relatively equal seniority would then govern. The proposal went on to stipulate that a Board of Arbitration "shall not substitute its judgement for the judgement of the employer as to the relative equality of the factors". The applicant was primarily opposed to the decision as to employees' relative equality resting in the sole judgement of the employer and not being subject to arbitral review. It was also concerned about the subjective nature of many of the stated factors. The applicant indicated it was prepared to accept a relative ability clause provided it gave some recognition to seniority rights. The applicant's concern regard­ing greater recognition of seniority rights was enhanced by virtue of the fact that the respondent's position in Article 10.04(b) was that anyone who had been laid-off for a period of two months would lose all service, seniority and would be deemed terminated. The employer's justification for both the criteria and the requirement of employer discretion was that it wanted to retain the best people in circumstances of a lay-off and that it was necessary to rely on certain intangible qualities of assessment given the nature of the service.

42In Article 12.04 (job posting provisions) essentially the same factors were proposed to assess candidates for vacancies within the bargaining unit. Similarly to Article 11.02, it provided that the assessment was in the sole judgement of the employer and not subject to arbitrable review. It also proposed that the employer "shall be the sole judge of the overall requirements for the position". The applicant indicated it could not agree to such a provision in that it allowed for too much subjectivity and the potential for manipulating job requirements. The applicant expressed the same concern regarding what it saw as a dilution of any seniority principle. It was prepared to accept a relative ability clause subject to arbitrable review. In Article 12.03 the respon­dent proposed that it not be prevented in filling vacancies from considering applicants from outside the bargaining unit. The applicant opposed this on the basis that it would undermine the integrity of the bargaining unit and the benefit of any seniority protection of persons within the bargaining unit. To the extent that any justification was provided for Article 12.03, the respondent indicated it was not unusual to want to consider part-time employees for full-time vacancies as well. However the provision is much broader than that and no such limitation was identified or discussed in nego­tiations. Taking Article 12 as a whole, there was no justification provided by the respondent for requiring a job posting provision which would allow it, in its sole discretion, to consider any person for any vacancy in the bargaining unit and assess that applicant on the basis of criteria determined solely by it in circumstances where none of those decisions would be subject to the grievance and arbitration provisions. It seriously undermines any seniority benefit arising from collective bargain­ing and effectively eliminates any opportunity on the part of the bargaining agent to protect tts members from arbitrary or unfair employer treatment through the grievance and arbitration pro­cess.

43That proposal, taken with the proposals in Articles 5.01(f), 7.01 - 7.06, 8.06(b), 10.04 and the restrictions on arbitral review in Articles 11.02 and 12.04 all point to a conclusion that the respondent was attempting to minimize if not eliminate the availability of the arbitration process with respect to penalties or outcomes assessed by the employer in an attempt to foreclose review of the employer's decisions. Limiting the scope of arbitral review seriously weakens or eliminates any protection afforded by a just cause clause. Both more standard grievance and arbitration collective agreement provisions and the protection provided by section 45(9) exist to provide employees with some protection against arbitrary decision-making on the part of an employer. The grievance and arbitration process is a fundamental benefit inherent in collective bargaining. That is evidenced by the mere fact that the Act mandates that there be included in every collective agreement a form of grievance and arbitration process to provide for the resolution of disputes by a neutral third party. While it is contemplated that parties' can contract out of section 45(9) there was no justification provided by this employer for such an extensive limit on the arbitral power to review both employer decision-making and penalty. The mere assertion by the respondent that it is different by virtue of the fact that it is a social service agency providing care to young offenders provides no jus­tification. There is nothing in the evidence that would warrant such a departure for this workplace.

44Proposed Articles 2 (see paragraphs 47-49 of this decision), 10.01, 10.04, 11.02, 12.03, 12.04, 13.01 and 13.06 all seek to limit the accumulation or recognition of seniority for employees in the bargaining unit. Under Article 12 the respondent wants to be able to consider any applicant for any vacancy and be able to make its assessment of their abilities in its sole discretion with no opportunity for arbitral review. The result is that any recognition of seniority exists only if the employer chooses to recognize it. The same can be said for proposed Article 11.02.

45In Formula Plastics Inc., supra, the Board commented on the nature of these protec­tions within a collective bargaining regime:

31. Laskin, J. A. noted in Regina v. Arthurs, Exp. Port Arthur Shipbuilding (1967), 1967 CanLII 30 (ON CA), 62 DLR (2d) 342, [1967] 2 OR. 49, 67 CLLC ¶14,024 that the employment security provided by seniority and discharge provisions in a collective agreement is essential to the distinction between the common law and a regime of collective bargaining:

It is sometimes forgotten that collective bargaining and the collective agreement have given the individual worker security of continuing employment, depending by and large only on his seniority in relation to the employer's production needs (in terms of numbers of workers and their skills) and on his good behaviour which avoids giving just or proper grounds for discharge. What are generically called seniority and discharge clauses represent the employees' charter of employment security; and it is reinforced by removing from the employer, not his initiative in acting against an employee, but his previously unreviewable right to rid himself of employees, even if it cost money damages to do so.

32. The Board has commented on the importance of this kind of security in another context in Swing Stage Limited, [1983] OLRB Rep. Nov. 1920:

33. Discharge is the ultimate sanction in collective bargaining. Through it an employee forfeits not only his livelihood but also valuable accrued rights including seniority and benefits, acquired sometimes over years of service. For this reason the law in some jurisdictions gives discharged employees an absolute right to have their termination reviewed at arbitration. (See Division V.7 (Unjust Dismissal) Section 61.5 of the Canada Labour Code, R.5.C. 1970, C. L-1, amended S.C. 1977-78, C.27, applicable to employees not covered by a collective agreement). Some maintain that the duty of fair representation should be interpreted as requiring a union to carry the grievance of any discharged employee to arbitration (see Weiler, P. Reconcilable Differences, (1980) pp. 137 ff.). In Brenda Haley [1980] 3 Can. LRBR 501; (1980), 41 di 295, [1981] 2 Can. LRBR 121; 41 di 311 (Plenary Board Review), however, the Canada Labour Relations Board declined to adopt Professor Weiler's view.

34. For these reasons, discharge has sometimes been referred to as "industrial capital punish­ment . As one labour commentator notes (Weiler, P. Reconcilable Differences), (1980) p.l³⁸);

At several points on earlier pages, I have touched on the reasons why the protection against unjust dismissal is perhaps the critical job interest provided by the collective agreement. Especially in the case of the long service employee, being fired as a result of an immediate contretemps with his employer can have a devastating impact on his life. Not only is it difficult for older workers to find another job of any kind, but it is just about impossible to replace the benefits and amenities that are associated with lengthy seniority. It is for precisely that reason that the arbitration process has devel­oped a broad remedial authority which requires that employees be given credit for their earlier service records, that employers follow systems of progressive discipline, that they be sparing in the use of discharge instead of suspension (even for serious offences such as deliberate insubordination, a physical altercation with the foreman, or dishonesty). That body of industrial jurisprudence which has civilized the use of management's ultimate authority over workers is at the heart of the case for collective bargaining.

[emphasis added]

Whether or not these proposals, taken individually, could be said to have been taken without rea­sonable justification, there was no reasonable justification for the totality.

46The respondent's proposal on July 25 to provide a two-tier system in those matters involving compensation (for example vacation entitlement) was also in our view taken without rea­sonable justification. The respondent was aware that the applicant felt that a two-tier system repre­sented a penalty being imposed on employees hired after the introduction of collective bargaining in the workplace. Nor was the applicant prepared to accept a compensation package that treated employees differently solely on that basis while performing the same work. The respondent had the opportunity to address that concern on learning of the increase to its funding. It chose not to and maintained its position with the sole justification that it was attempting to save money. That cannot stand as a reasonable justification in circumstances where it has unilaterally decided to increase wage rates.

47Article 2.03 of the respondent's proposals provided that part-time employees who worked temporarily as full-time relief would not be covered under the terms of the collective agreement. The provision defines "temporarily" as a continuous period not exceeding twelve months, which period may be extended by agreement of the parties. The justification provided by the respondent for this proposal was to encourage part-time employees to fill-in for full-time vacancies. It commented that the Employment Standards Act now provides for nine months paren­tal leave and therefore it felt twelve months reflected and included that example. The applicant objected to the proposal on the basis that it saw no reason that employees performing full-time work would not be covered by the collective agreement although the applicant was prepared to acknowledge for example, a three month limitation which would be consistent with the opportu­nity to participate in health and welfare benefits. The respondent did not address why employees performing full-time work should not be covered by the collective agreement. Nor did it suggest how or why part-time employees might be encouraged to fill temporary vacancies when they would not be covered by the collective agreement and receive none of its benefits. We note that the job posting proposals leave the determination of the existence of a vacancy within the bargaining unit to the sole discretion of the employer. This would appear to leave the creation of temporary work to the sole discretion of the employer as well.

48Proposed Article 2.04 stipulated that:

It is agreed that persons engaged on a temporary basis, either directly or through an agent, to replace employees absent due to vacation, illness/disability, or any other absence during which the employer determines an outside replacement to be necessary, will not be covered under the terms of this Collective Agreement.

The applicant was prepared to agree to a modified version of this proposal that eliminated the ref­erence to any other absence determined by the employer. The respondent maintained its position on this proposal. At the hearing the respondent justified its position by stating that in its view tem­porary employees were just that, temporary, and did not fall within the confines of the collective agreement. The bargaining unit is described as all employees working on a full-time basis (exclud­ing office and clerical). We have no hesitation in concluding that this proposal seeks to amend the recognition clause and as such is an issue that could not be pressed to impasse in the negotiations. In the context of considering the application for a direction under section 41 the respondent has provided no justification for its position. It has merely commented that in its view temporary employees do not fall within the ambit of the collective agreement. Parties may very well seek to negotiate limits on the rights and benefits enjoyed by temporary employees. Amending the scope of the bargaining unit is a different issue. Proposed Articles 2.03 and 2.04 must be read together. There simply has been no justification provided for the differing treatment of one employee engaged full-time on a "temporary" basis for a period of up to one year from a "permanent" full-time employee performing the same work. The distinction between "persons engaged on a tempo­rary basis" in Article 2.04 and "contract employees" referred to in Article 2.02 of the proposals is also not apparent. The respondent's proposed Article 2.02 would have contract employees covered by certain provisions of the collective agreement.

49These proposals in Article 2 exist in a context where it is also proposed that it be in the employer's sole discretion to determine when a vacancy exists, how any available work is to be filled, and with whom. At their extreme, these proposals would allow an employer to fill vacancies with any applicant (including persons from outside the bargaining unit), describe them as temporary for up to one year, ignore the collective agreement and then repeat that process again to a point where no one would be covered by the terms of the collective agreement.

50In our view, the respondent's position on monetary issues, its attempt to so limit the opportunity for arbitral review of employer decisions, the attempt to undermine the just cause pro­tection and recognition of seniority, and its proposals in Article 2, represent an underlying refusal to recognize the bargaining authority of the trade union within the meaning of section 41(2)(a). Although dealing with section 41(2)(b) [formerly section 40a(2)(b)] the comments of the Board in Root Chemical Company Inc., [1991] OLRB Rep. Nov 1320, at paragraph 13 apply equally in this case:

13... 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 to be among the hallmarks of suc­cessful collective bargaining.

51For all of those reasons, we directed the settlement of the first collective agreement by arbitration.