Southern Ontario Newspaper Guild, Local 87 v. The Cambridge Reporter, 1992 CanLII 6757

Ontario Labour Relations Board

[1992] OLRB Rep. March 271

2858-91-FC Southern Ontario Newspaper Guild, Local 87, Applicant v. The Cambridge Reporter, a Division of Canadian Newspapers Company Limited, Respondent

BEFORE: Sherry Liang, Vice-Chair, and Board Members R. M. Sloan and P. V. Grasso.

APPEARANCES: L. A. Richmond, Margaret Leighton, Bill Petrie and Frances Soboda for the applicant; F. G. Hamilton, Jon C. Butler, Allan R. Weir and Christina Jonas for the respondent.

DECISION OF THE BOARD; March 26, 1992

1This is an application made pursuant to section 41 of the Labour Relations Act. On February 21, 1992, the Board issued the following endorsement:

In this application under section 41 [formerly 40a] of the Labour Relations Act, the Board hereby directs the settlement of a first collective agreement by arbitration. Our reasons for this direction will follow.

2These are our reasons for the direction. For ease of reference, the applicant will also be referred to throughout as "the union" or "the Guild". The respondent will also be referred to as "the Reporter", "the employer" or "the company".

3This application was received by the Board on November 29, 1991 and was heard over the course of 12 days concluding on February 11, 1992. The application was originally scheduled to be heard on December 10, 18 and 23. On the first day of hearing, the parties spent most of the day attempting to negotiate a settlement. This effort having failed, we convened late in the day to hear the applicant's request to schedule additional hearing days in this application for the weekend of December 21 and 22. The Board declined that request, but did set additional hearing dates for December 24 and 31, which were consented to by the parties. During the course of these hearings, further dates were scheduled as necessary.

The Evidence

4The respondent is a newspaper which is part of the Thomson Newspapers Company group of newspapers. Thomson Newspapers is one of three companies which make up the Thomson Corporation. The other two companies are Thomson Travel and Thomson Information Publishing. Each of the presidents of these three corporations reports to the president of Thomson Corporation, who in turn reports to a Board of Directors. The Thomson family holding corporation is the largest single shareholder in the Thomson Corporation, but the corporation also has shares offered through the Toronto Stock Exchange. Thomson Newspapers has annual sales of about $1.2 billion, and includes some 220 individual newspapers. Each newspaper has a publisher. At the Reporter, Jon Butler is the publisher and general manager.

5On April 27, 1990, this Board issued an interim certificate to the applicant for the following unit:

all employees of the respondent in its Cambridge Reporter Division in the City of Cambridge~ save and except publisher, advertising manager, managing editor, city editor, assistant city editor, circulation manager, accountant, lifestyles editor, sports editor, business editor, weekend extra editor, specialty magazine manager, classified supervisor, assistant circulation manager, total market coverage manager, confidential clerk, payroll clerk, persons regularly employed for not more than 24 hours per week, students employed during the school vacation period, students employed in a co-operative training programme and employees in bargaining units for which any trade union held rights as of April 5th, 1991.

6The underlined positions remained in dispute between the parties and the Board appointed a labour relations officer to inquire into the duties and responsibilities of these employees. Including the disputed positions, the bargaining unit consists of some 40-50 employees. The Guild gave notice to bargain on July 26, 1990, and the first meeting between the parties was convened on September 18. Between September 18, 1990 and November 7, 1991 the parties met on approximately 31 occasions. On the morning of November 7, 1991, negotiations broke down and following that a strike commenced, which continued through the course of this proceeding.

7Around the same time that the Guild was certified for a unit of Reporter employees, it also received an interim certificate from the Board with respect to a unit of employees at the Guelph Daily Mercury ("the Mercury"), also a division of Thomson Newspapers. The course of bargaining between the Guild and the Mercury has paralleled the bargaining between the Guild and the Reporter, with the employees at the Mercury also presently on strike.

Negotiations to July 28, 1991

8Frances Soboda and William Petrie were the spokespersons for the Guild and both gave evidence with respect to this period of the negotiations. The company's representatives were Jon Butler, who also gave evidence and Patrick Melady, an independent labour consultant. Ms. Soboda joined the Guild as a local representative on September 1, 1990. One of the major duties assigned to Ms. Soboda upon joining the Guild was the task of negotiating the first collective agreement with the Reporter. For the first six negotiation meetings with the Reporter, both Ms. Soboda and William Petrie, a long time local representative of the Guild, were present at the bargaining table. After the sixth meeting, on November 26, 1990, until the meeting of July 29, 1991, Ms. Soboda was the chief spokesperson for the Guild at the Reporter negotiations. In the final months of negotiations, Mr. Petrie became involved again as chief spokesperson for the Guild, until the strike began on November 7, 1991.

9The Guild seeks to rely on certain complaints of unfair labour practices filed against both the Reporter and the Mercury. On February 23, 1990, the Guild filed a complaint against the Mercury alleging violations of the Act, by its failure to pay bonuses under a profit sharing plan to certain employees. This complaint was settled by a Memorandum of Settlement dated May 9, 1990. In this settlement, the Mercury agreed to pay the 1990 bonus payment. On June 13, 1990, the Guild filed a complaint against the Reporter alleging failure to pay similar bonuses to employees of the Reporter. This complaint resulted in a Memorandum of Settlement dated August 27, 1990 in which the Reporter also agreed to pay employees an amount equal to their 1990 bonus payment.

10On May 31, 1990, the Guild filed further complaints against both the Reporter and the Mercury regarding the alleged failure to pay promised wage increases to employees. These complaints were scheduled to be heard together. On November 8,1990, during the hearing of these complaints, counsel for the Reporter and the Mercury read a prepared statement to the Board. Part of this statement is as follows:

When the Respondent was advised that certain of its employees in Guelph and in Cambridge had requested representation by a Union, the Respondent implemented a policy whereby the wages and benefits of the employees involved were fixed i.e. frozen at the levels and amounts then existing.

This was a conscious decision based on the Respondent's interpretation and understanding of the applicable legislation which stipulates, among other things, that neither wages nor working conditions shall be altered. This decision was also in keeping with the Respondent's past practice at other locations under similar circumstances.

The Respondent acknowledges that for a number of years it has carried on a pattern of discretionary salary reviews, performed regularly but on a variable frequency for different employees, ranging from a maximum of four times yearly to a minimum of once yearly, most commonly twice a year. Salary adjustments may include a general increase and a merit component and are both subject to an assessment of satisfactory performance on the part of the employee.

The Respondent now understands that its employees at Guelph and Cambridge and the Union have requested a reinstatement of this practice. The Respondent further understands that doing so would be in keeping with recent decisions of the Board.

The Respondent is therefore prepared to reinstate the salary review pattern. It will proceed with such a review for all employees, including the delivery of retroactive adjustments for 1990 where appropriate and will continue with such reviews in the future unless and/or until such time as a ratified collective agreement produces some different method.

11As a result of further discussions on that day, the parties agreed to adjourn the rest of the hearings. Ms. Soboda testified as to the understanding reached on November 8 between the Guild, the Reporter and the Mercury. There are some contradictions between her account and the account of Cohn Morley, who testified on behalf of the Reporter on these matters. Mr. Morley was counsel for the two newspapers at the hearings into the unfair labour practice complaints. We do not find it necessary to resolve these contradictions for the purposes of our decision. Ms. Soboda also testified that the complaints had a demoralizing effect on the union's bargaining committee and on the membership. In her mind, the length of time taken to resolve the matters demonstrated to her that Thomson Newspapers would be prepared to "push us to the wall" in any of its dealings with the Guild, and that it was hoping that the Guild would "go away". In the Guild's opinion, the process of settling the unfair labour practice complaints between the Guild and the Reporter and Mercury demonstrated a tactic on the part of Thomson Newspapers of forcing the union to spend money to litigate issues in order to send a message to the union that it would continue to conduct its business in whatever way it wished, despite the two certifications. In Mr. Butler's evidence, there was no such motive on the part of the Reporter. As publisher he took action based on his understanding of the law, then settled the complaints in good faith and in a not untimely manner.

12The Guild also relied on incidents during negotiations which in its view demonstrated the same sort of attitude on the part of Thomson Newspapers. In one of the early sessions, Jon Butler notified the Guild that certain people on the bargaining committee would be called into the office the next morning to be dealt with. Upon discussion, the issue turned out to involve one employee who had left work early to attend a meeting of the bargaining committee. After some further discussion, the issue was resolved. No action was taken with respect to the employee and the parties arrived at an understanding as to leaving work early for the purposes of bargaining. The evidence of Ms. Soboda and Mr. Petrie was that the incident was intimidating and threatening to the employees involved in bargaining. The Guild's view was that the manner in which Mr. Butler raised the issue was designed to intimidate the employees present. In Mr. Butler's evidence, he raised the issue at the bargaining meeting as a result of a complaint from one of the department heads with respect to a particular employee. He met with Ms. Soboda privately and resolved the issue in a few minutes. He saw no lasting effects from the incident on the progress of bargaining.

13After some five meetings during which the parties reviewed the union's first proposal, the company presented its own package on November 26, 1990. There is some dispute as to the positions taken at this meeting. In the Guild's evidence, the company took the position that the union's proposals were now "off the table" and that the Reporter intended to work only from the company document from that point on. Ms. Soboda stated that this announcement came as a shock to the union's bargaining committee. The effect was demoralizing, and the union saw it as another attempt by management to send a message that it intended to maintain control.

14The Reporter's evidence was that it gave no such message. There was a discussion at this meeting regarding the value of categorizing the parties' proposals into monetary versus non-monetary issues. The Guild requested that the parties caucus in order to categorize the proposals into these groups of issues. In Mr. Butler's evidence, the company only categorized its own proposals, on the understanding that each party was to deal with its own document, whereas apparently the Guild intended both parties to categorize both sets of proposals. In the respondent's position, the Guild misunderstood the company's intentions, and misread the incident to mean that the company was refusing to discuss the Guild proposals from that point onward. At this meeting, the Guild informed the company of its intention to file a request for a conciliation officer. It was the Guild's hope that at the very least, an officer would assist in getting the parties to agree on a procedure for bargaining. The company opposed this on the basis that it was premature. Ultimately, an officer was appointed. The parties met on one more occasion before meeting with the conciliation officer, wherein the company agreed to the union's demand to categorize the union's proposals into monetary and non-monetary issues.

15Upon resuming negotiations, it appears that the parties came to agreement to commence bargaining with respect to non-monetary issues. Ms. Soboda testified that this was not intended to preclude any bargaining on monetary issues before complete agreement on the non-monetary issues; rather, the intent was to try and settle as much as possible of the non-monetary language first. After November 26, 1990, Mr. Petrie left the Guild's bargaining committee, and did not become involved again until the following summer.

16Ms. Soboda also testified as to another incident in which Christina Jonas, a member of the Reporter's bargaining team and a managing editor at the newspaper, accused members of the union bargaining committee of abusing sick leave provisions. Ms. Soboda stated that a tense and loud exchange of words occurred between the two parties, and at the conclusion, the union's committee felt demoralized at what it saw as another attempt at intimidation. Ms. Jonas, who testified on behalf of the respondent, denies making such an allegation and states that if there was an exchange of words, it took place as a result of an accusation by the Guild that Mr. Butler feigned illness in leaving the meeting that evening.

17A further series of incidents testified to by Ms. Soboda concerned remarks at the bargaining table by Jon Butler or Patrick Melady concerning the presence on the union's committee of a number of employees whose status was still in dispute. Ms. Soboda testified that the remarks, which were made on four occasions, were made in a disparaging way, were perceived by the employees as threatening, and were aimed at showing these committee members that management anticipated their eventual exclusion from the bargaining unit. Mr. Butler stated he raised the issue of disputed employees on two occasions. On the first occasion, it was in response to some discussion on other matters which were also before the Labour Board. He stated that he did not have any particular purpose in raising the issue. Mr. Butler testified that Mr. Petne replied that the parties would deal with the question of exclusions at a later point, and the discussion ended there. Some months later, the company received a notice from the Board regarding new hearing dates on the exclusions issue. As a result of this, Mr. Butler raised the issue again at the bargaining table, pointing out that if the Board were to decide that some of these people were managerial, they would no longer be on the committee.

18Ms. Soboda also gave evidence on a number of the proposals. In her evidence, some of the proposals by the company were unorthodox and signaled to her an unwillingness to bargain in good faith. One example cited was a bereavement leave proposal in which the company would have discretion to require an employee to provide proof of relationship to the deceased person and proof of attendance at the funeral. This proposal, which was part of the Reporter's first proposal of November 26, 1990, was withdrawn in October of 1991. Another proposal which caused the union concern was a provision entitled "Agreements - Other & Preceding", which reads as follows:

ARTICLE 17 AGREEMENTS - OTHER & PRECEDING

17.1 The Union agrees that this Agreement constitutes the entire Agreement between the parties and that any and all previous Agreements, 5upplementary Agreements, Letter of Intent, Understandings, etc., whenever made and whether or not reduced to writing, are hereby cancelled, and that effective upon signing of this Agreement, The Reporter's obligations respecting conditions of employment, working conditions and employee benefits, are limited exclusively to those specifically stated in this Agreement.

19Ms. Soboda stated that when this was originally proposed, she found it "amazing and alarming". She felt that it was one more attempt by Thomson Newspapers to demonstrate to the employees that joining the union could only work to their detriment. Mr. Butler stated that he understood this language to have been adopted by Mr. Melady from a collective agreement imposed by the Board. The union's response to this proposal was to develop a list of employee benefits which they proposed to add to the agreement. The union's proposal, in the form of a Letter of Agreement, set out certain practices and policies on such matters as receipt of home delivery subscriptions by employees, parking practices and smoking breaks, which would continue during the life of the agreement. The company's response to this proposal was also interpreted by Ms. Soboda as demonstrating a lack of good faith in bargaining. In her evidence, the company specifically asked for a written list of such past practices to be developed by the union, and then categorically refused to consider any of the matters on the list once this was introduced at bargaining. The evidence of Mr. Butler was that most of the matters on this list were monetary in nature and the issue was thus put aside by the company until the parties reached the point of discussing monetary issues in bargaining.

20A similar incident described by Ms. Soboda concerned the Guild's line by line analysis of the company's management rights proposal. Guild had strong objections to the company's proposal on the basis of its length, breadth and detail. The proposal was contained in an article of approximately four paragraphs. It submitted a document to the company which analyzed the proposal in a very detailed way. Ms. Soboda stated that at least one bargaining session was devoted to debating the management rights proposal, the result of which was that the company agreed to make two language amendments. The changes made did not satisfy the Guild, which felt that they were minor at best. In Mr. Butler's evidence, the company felt that it was responding to what it perceived to be the Guild's major concerns with respect to this article. The management rights proposal remained a divisive issue throughout bargaining.

21Ms. Soboda testified that the dealings of the parties over the management rights proposal was typical of the course of bargaining. In her view, in many instances, the Reporter's response to thorough preparation and submissions from the Guild was cursory and dismissive. During the course of bargaining, in her evidence, the company's manner of proceeding was to constantly re-submit its proposals, or make only the most minor of changes. Mr. Butler's evidence was in stark contrast. In his view, the pattern of bargaining was that the union wanted to force the company to make counter-proposals to the company's own proposals. He testified that on any given issue, the company would give its response to an article and the union's response was to basically re-submit its original proposal and look for a further company response.

22Further, as much as Ms. Soboda objected to the content of some of the company's proposals, Mr. Butler also felt that many of the union's proposals were unrealistic and unreasonable. He stated that many of the proposals appeared to be directed to a much larger newspaper than the Reporter, and appeared to have little relation to the Reporter's actual operations. He also testified as to certain changes which were made to Guild proposals during the course of bargaining. For example, one of the issues between the parties was the time limit for referring matters to arbitration. In Mr. Butler's evidence, the Guild's position started at 90 days, changed to 60 days then 45, and then went back to 90 days again. He stated that this caused frustration amongst the company negotiators, particularly in light of the Guild's accusations that the company was not bargaining in good faith. Another example he gave concerned the negotiations over exclusions to the bargaining unit. Offers had been made by the company on this issue. In the final meetings between the parties, the Guild raised for the first time that they wished to have the position of confidential secretary included in the unit.

23The parties are agreed that very little progress was made between November 26, 1990 and September of 1991. Both parties point to the other's bargaining style and strategy as a reason for the lack of progress. In Ms. Soboda's evidence, the company's tactic in bargaining involved an insistence on negotiating the entire agreement at each meeting. In her view, just as the parties appeared close to agreement on one article, Mr. Melady insisted on moving on to another provision. This manner of proceeding made it difficult to bargain to a conclusion on any of the issues. The Guild concluded from this, from the proposals themselves, and the other incidents outlined, that the Reporter was not genuinely interested in reaching a collective agreement.

24Mr. Butler, on the other hand, stated that it was his opinion that the Guild was "looking for something to go wrong". He had concluded, for example, that the union had made its decision to go to conciliation even before receiving the company offer of November 26, 1990. In his testimony, almost from the beginning of bargaining, the union began to accuse the company negotiators of bargaining in bad faith and deliberately slowing down the process. He stated that the impression this left with him was that the union felt that "if they said it enough, someone would believe it". It was also his view that the Guild's bargaining approach hindered progress. His impression of the meetings between the end of November 1990 and July 1991 was that the union refused to cover a broader range of issues until the first four articles of the agreement had been settled. In his evidence, the company on several occasions requested that the parties deal with more proposals, in order to increase the number of issues that could be "traded off', and the union refused.

Negotiations from September 17. 1991 to November 6. 1991

25In about June of 1991, the union made a decision to re-involve Mr. Petrie in the bargaining. It was decided that Mr. Petrie would seek to persuade the company to bring Jerry Brown into the negotiations as well on behalf of the Reporter. Mr. Brown is a member of the Thomson Newspapers human resources department. The hope of the Guild was that Mr. Brown would be able to assist with the negotiations both at the Reporter and at the Mercury, which were still ongoing. Mr. Petrie had experience negotiating with Mr. Brown at The Oshawa Times, another Thomson newspaper. He met with Mr. Brown in July of 1991 and suggested that Mr. Brown and he become directly involved in the bargaining. The Thomson Newspapers human resources director as well as Mr. Butler agreed to this. Mr. Butler stated that in agreeing to Brown's involvement, he was hoping that this would break the impasse.

26From September of 1991 to the day the negotiations broke off, Mr. Petrie and Mr. Brown were the chief spokespersons for the union and the company respectively. Ms. Soboda was still present at the bargaining table, although a few key meetings between the parties in the early morning of November 7 did not involve her. Mr. Melady was no longer at the bargaining table for the company.

27From September of 1991, when Mr. Petrie and Mr. Brown became involved in bargaining, until negotiations were discontinued, greater progress was made, with agreement on a number of provisions reached. However, the union was concerned that some of the most important issues remained outstanding. Some of these were union security, management rights, "Agreements -Other and Preceding" and wages. The union was concerned that on the issue of wages, the employer had not yet submitted a proposal that might let the union know the extent of the differences between the parties. Mr. Petrie asked Mr. Brown for a monetary proposal. The response from Mr. Brown was that the parties would not be getting to the issue of wages until near the end of bargaining. As a result of its perception that bargaining was once again slowing down, the union decided to request a no-Board report. Mr. Petrie informed Mr. Brown of this, stating that once this was done and deadlines set, things would inevitably move faster. Again, Mr. Petrie asked for the company's wage proposal. Mr. Brown responded that the company would be tabling its wage proposal at further bargaining meetings scheduled between the parties. The no-Board report was issued on October 21. Mr. Petrie testified that in further discussions with Mr. Brown at this time, Mr. Brown stated that the way he saw it was that if things were to break down, the obstacles would probably be in the areas of wages, union security and management rights. Mr. Brown indicated his opinion that it looked as though there was a good possibility there would be a strike. He stated to Mr. Petrie that the above were the areas of possible breakdown, but he would have to check with head office to see if they wanted to risk losing the Cambridge market by taking on a strike. On October 21, 1991, a "no-Board" report was issued. A strike deadline was set for 12:01 a.m. on November 7.

November 7, 1991

28The parties had further negotiating meetings on October 23, October 28, November 1, November 4, and November 6. The union had told the company that as long as the parties were still negotiating, there would be no strike. Discussions were held through the night of November 6 and into the morning of November 7. At about 5:30 a.m. on November 7, Mr. Petrie was informed that the company had a wage proposal that it wished to present. At a meeting between Mr. Butler, the conciliation officer and Mr. Petrie, Mr. Butler presented this proposal. The proposal was explained verbally by Mr. Butler, and was also outlined in a document, the text of which is reproduced as follows:

The Cambridge salary Administration Program will contain the following elements:

A written job description for every position.

A uniform job evaluation system.

A Salary range for every position which will be adjusted annually on the first of each contract year.

semi-annual performance appraisals

semi-annual salary adjustments

Here's how it works.

Every salary range has a mid-point, a minimum, which is 80% of the midpoint and a maximum which is 120% of the mid-point.

Let's consider a hypothetical occupation which has a salary range as shown below:

Minimum mid-point maximum $400 $500 $600

Let's also assume there are four incumbents on this job.

Incumbent A is earning $425 which is 85% of the mid-point. A is relatively new in the position and is learning quickly.

Incumbent B is earning $500 per week which is 100% of the midpoint.

Incumbent C is earning $560 per week which is 112% of the mid-point.

Incumbent D is earning $400 which is 80% of the mid-point.

At the beginning of the contract year the salary range for all jobs increases 4%. Therefore, the

new salary range for our hypothetical job is as follows:

Minimum Mid-point Maximum $416 $520 $624

A is performing beyond expectations and quickly learning all the requirements of the position. During the year, A's salary will be increased to 95% of the new mid-point. These salary adjustments total $69 per week, an increase of 16%.

B is fully qualified and performing at a competent level. During the year B's salary will be increase [sic] to 100% of the new mid-point. These salary adjustments total $20 per week, an increase of 4%.

C is fully qualified and is performing at a level well beyond expectations. During the year C's salary will be raised to 115% of the new mid-point. These salary adjustments total $38 per week, an increase of 7%.

D is new in the position and has not yet made any improvement over entry-level performance.

D's salary will stay at 80% of the new mid-point. During the year, D's salary will increase $16

per week which is an increase of 4%.

In addition, the company gave the union a copy of a document titled "Job Comparison System to Measure Skill, Effort, Responsibility and Working Conditions", which contained a job evaluation system.

29Mr. Petrie and Mr. Butler gave evidence regarding this meeting which was substantially consistent. Mr. Butler indicated that the employer wished to retain discretion over wages - to ensure that wage increases were related to performance and merit. In the employer's view, the salary administration program proposed would be the process of ensuring this, and would dovetail with the employer's obligations under the Pay Equity Act. Although Mr. Butler stated that some elements were open to negotiation, he also made it clear there would be discretionary increases.

30During this meeting, Mr. Butler explained that job descriptions for each employee would be developed in discussions between an employee and his or her supervisor. They would also set goals for the employee to achieve, which would be reviewed semiannually. An employee would be evaluated every 6 months and a decision made by the employer as to whether or not the employee would get an increase and if so, how much. Mr. Butler explained that each job would be placed within a range which contained a mid-point, a minimum at 80% of the mid-point and a maximum at 120%. The company was prepared to negotiate the mid-points with the Guild. The understanding of Mr. Petrie was that the minimum and maximums, however, would be fixed at 80% and 120%. Mr. Petrie asked whether there would be a job and therefore a mid-point for each employee in the bargaining unit. The response from Mr. Butler was that everyone would have their own job description which would be used to set a mid-point. Mr. Butler also indicated that there would be no decrease in salary as a result of implementing the salary administration plan. Mr. Butler testified that it was in this meeting that he indicated the company's proposal to increase the salary ranges by 3%, 3% and 4% over the life of a three-year agreement.

31Mr. Petrie had a number of questions for Mr. Butler with respect to the proposal. Mr. Butler indicated that he did not know much about the system, and that was why Mr. Weir was present. Thus, following this meeting, there was a further discussion between Mr. Petrie and Al Weir. Again, the evidence of Mr. Petrie and Mr. Weir is substantially consistent with respect to this discussion. In this meeting, Mr. Weir explained the direction in which the corporation was moving in terms of decentralization. He described the key components of the salary administration system as being:

a) the development of job descriptions as a result of agreement between the incumbent and his or her individual supervisor;

b) the evaluation of the job as against the job evaluation system prepared by the consultant and

c) the establishment of objectives and performance criteria for individual employees by discussion and mutual agreement. Finally, the process would include an assessment after the fact as to whether these objectives had been achieved.

32At this meeting, Mr. Weir indicated areas where the union might have some involvement, such as in negotiating the elements of the job evaluation system which it had proposed. Mr. Petrie states that when he questioned him on the subject of the employer's discretion to determine the rate of pay and an employees' placement relative to the mid-point, Mr. Weir indicated that this was absolutely necessary for the newspaper. He stated that there were changes going on in the newspaper industry, and this was the "wave of the future". In Mr. Petrie's evidence, Mr. Weir told him that the company had lost too many good people over the years. It wanted to be able to keep good people, and this was one way to keep them. He stated that the company intended to implement this system at all of their papers, whether unionized or not.

33Mr. Weir understood that Mr. Petrie's primary concern with the system was the union's inability under the proposal to tell the employees in the bargaining unit what their salaries would be as a result of negotiations. In a subsequent meeting between Mr. Butler and Mr. Weir, the company concluded that the solution it would offer to that concern was an across-the-board increase of 3% in the first year for all employees.

34After both parties had meetings with their own caucus, they met again. There is some difference between Mr. Petrie and Mr. Butler as to the events of this meeting. Mr. Petrie stated that Mr. Weir gave what he understood to be the company's bottom line proposal on wages, subject to agreement on all the other outstanding issues. Mr. Weir stated that he gave no final offer at this meeting. In any event, the company offered a three year agreement. In the first year, it proposed an increase across the board of 3%. The company proposed to implement the salary administration system during the first year. Jobs would be evaluated and mid-points established. In the second and third year, the mid-point would be increased by 3% and 4%. Mr. Petrie states that his impression was that although there might be some movement on details, the concept of pay for performance was a bottom line position. Mr. Petrie stated (and this was also confirmed in the evidence of Mr. Weir) that he asked Mr. Weir specifically whether the company's bottom line was that it would have discretion over the granting of increases to employees in the bargaining unit during the life of the collective agreement, whether there be a traditional grid or some other form of grid. Mr. Weir replied that it was so. At that point, Mr. Petrie indicated that this was unacceptable to the union and the negotiations broke off. In addition to the salary administration system proposal, other outstanding issues which Mr. Petrie identified as being major contributors to the breakdown of negotiations were the company's management rights proposal the company's proposals on "Preceding and Other Agreements", union leave and overtime.

35Mr. Petrie also recalled that in one of the conversations with Mr. Weir, Mr. Weir acknowledged that although the mid-points for jobs might increase in the second and third year of a contract, the salary of any given employee may remain the same, thus bringing that person lower in the range and as a percentage of the mid-point. As well, he recalled telling the company during these meetings that the Guild's last proposal on wages (which the company had costed as averaging a 12% increase in the first year and 7% increase in the second year) was not their absolute bottom line, although the Guild did not table any different offer during these discussions. Mr. Weir did not recall the union indicating that there was any flexibility on its wage offer. Also, although it is not clear at which meeting this was proposed, during these discussions the company made an offer that as well as 3% and 4% increases to the salary ranges in the second and third years, it would agree to corresponding increases to the total salary budgets in those years.

The Parties' Positions on the Wage Proposal

36In July of 1991, the Guild had submitted its first wage proposal, which involved the classification of jobs on a grid and annual increases for each classification. Although the parties had agreed to leave negotiations on monetary issues until the latter part of bargaining, in Ms. Soboda's evidence, the union asked the company in January and again in April for its wage proposal. Until November 7,1991, the company's proposal on wages remained the words "Pay for Performance".

37When the proposal was presented to it on November 7, the union found it had major concerns with the salary administration system. It is clear that this issue was a primary cause of the ultimate breakdown of negotiations and the commencement of the strike. Taken in conjunction with the other outstanding matters, the union felt matters had reached impasse. The union was taken aback by the late submission of what it considered to be a complex proposal. For example, Ms. Soboda testified that the job evaluation system proposed and on which the company apparently sought the Guild's agreement, was similar to other programs that she has worked with in the context of job evaluation or pay equity. From her experience in negotiating pay equity plans, she estimated that it may take months or years for parties to agree on a job evaluation system and that adjustments are usually made to the system proposed. Mr. Petrie testified that he viewed the proposal as containing not a resolution of issues, but an invitation to continue bargaining during the life of the agreement, without a mechanism to resolve disputes.

38The union also had major concerns over the substance of the proposal. Some of the concerns identified were: the union would not know an employees' job classification because the proposal provided for this to be established between an employee and his or her supervisor; there was the possibility that salaries could be decreased upon each performance appraisal (although Mr. Butler had assured them that this would not be the case, the union was concerned that this was a verbal assurance only); the setting of employees' wages was taken out of the union's capacity to negotiate; the system provided for no right of appeal in case of failure to agree on job descriptions or placements. In general, the Guild saw this proposal as leaving them in the unacceptable position of not being able to tell the employees in the unit what their salaries would be after the first year of the agreement. Both Mr. Petrie and Ms. Soboda stressed that, in their view, the issue of wages and the desire to negotiate on wages was one of the major reasons why employees had organized. Nothing in what the company presented to the union alleviated its primary concern to take increases out of the unilateral discretion of the Reporter.

39Petrie stated that in his experience, it is not unusual in the newspaper industry to have merit pay systems. He has himself negotiated such systems into first collective agreements for the Guild, and understands it to be a feature of most, if not all other Guild contracts. The merit pay systems with which the Guild is familiar allow a company to pay merit pay in its discretion over and above minimum rates of pay established in a wage grid in the collective agreement. Mr. Petrie testified that he explained his understanding to the company and indicated that the Guild would probably not have difficulty with the same type of system in this context. This is confirmed in Mr. Butler's evidence. However, Mr. Petrie also indicated that some form of wage grid was essential, with automatic progression based on service.

40Mr. Weir's evidence situated the Reporter's proposal within the framework of the Thomson Newspapers organization. As well, Mr. Weir testified as to the relationship of the newspaper and to the corporation, particularly in terms of labour relations. Mr. Weir described the publisher of each newspaper as fulfilling the role that would be that of a president in another business. Essentially, the publisher is responsible for the profit or loss of the business. Each year, the publishers develop business plans for each year in conjunction with head office. Once these plans are approved, the publisher reports to the company only on overall results. Among other things, labour relations is a matter left to individual publishers. Mr. Weir described certain changes which have taken place in Thomson Newspapers over recent years which have led to this relationship between publishers and head office. He stated that in about 1987 to 1988, the revenue from Thomson Newspapers was growing at a lesser rate than it had previously. A decision was made to install a new president, Michael Johnson, whose mandate was to revive the growth of the company. The foundation of Mr. Johnson's approach to this task was to switch the management style of the company from one that is highly centralized to one that is totally decentralized. The decision to make this move was motivated by the success of this approach at the other two companies in Thomson Corporation. Mr. Weir explained this philosophy as "putting authority and decision-making deep down in the organization". In his view, it represents a 180 degree turnaround in management style. Under this approach, the only two key elements of the business that remain centralized are the purchase of newsprint and the provision of capital.

41Mr. Weir described his own role in Thomson Newspapers Company. Until he was hired, Thomson Newspapers had a labour relations department. He was hired to create an employee relations department, whose primary function is to provide expertise and training to facilitate the decentralized management concept. Although publishers are responsible for handling labour relations at their individual newspapers, the human resource department is involved in providing counsel and advice when asked. In May and again in September of 1991, he met with Mr. Butler to provide him with information on the salary administration system which Towers, Perrins, a management consultant firm had developed for Thomson Newspapers. Mr. Weir testified that he did not have any involvement in the formulation of the Reporter's original proposals in these negotiations. Because his department did not have the staff available to negotiate the Reporter first collective agreement, (which he understood would inevitably take longer than a renewal agreement), he had advised Mr. Butler to retain the services of an outside consultant. In Mr. Weir's testimony, his department took no active role in the negotiations, though it was kept informed of the progress of the negotiations, until the summer of 1991 when he gave permission to Jerry Brown to enter the negotiations. On November 6, since Mr. Weir was the person most knowledgeable about the salary administration system, he attended at the negotiations to explain the system to the parties. He had been informed by Mr. Brown that of the remaining items, this would be the most difficult.

42Mr. Weir testified as to the development of the salary administration system by Thomson Newspapers. He stated that one of the key components of running a business in a decentralized fashion is the provision of flexibility in compensation and the provision of appropriate awards to people based on their contribution to results. The desire of the corporation is to have a system where compensation is flexible enough to award employees for the job they are doing and the quality of their effort. For these reasons, as well the company's understanding of its obligations to meet the terms of the province's pay equity legislation, Thomson Newspapers hired Towers, Perrins to design a compensation program that would address both corporate needs. This consultant worked with a representative sampling of publishers in order to develop the program. Mr. Weir identified the document provided by Mr. Butler to Mr. Petrie describing the salary administration system as a document which had been provided by his department to the publishers.

43He stated that there are also a number of Thomson newspapers experimenting with a sales commission system based on the same philosophy. The company also intends to introduce similar programs with respect to circulation, and has put into place new bonus programs for management. He stated that "eventually, everyone should have a fair degree of control over their own destiny." It was his opinion that if the company is not successful in these efforts, it will stop growing and eventually become unprofitable and disappear. He stated that "we have to do in about 5 years what the Japanese did in 25". He stated that it is important for the company's employees and the union to agree to the new system because in his opinion, the only way for the corporation to survive in the future is to have compensation structures that encourage contribution based on ability. He agreed with counsel for the applicant in cross-examination that the mandate of every manager within the Thomson Newspaper corporation is to put decentralization in effect. He also agreed that a system of pay which gives increments based on seniority runs counter to the goals of decentralization and thus to the goals of Thomson Corporation and its managers. Mr. Weir also stated that the salary administration system proposed has not yet been made part of any Thomson Newspapers collective agreement.

44Mr. Weir and Mr. Butler both explained why the wage grid proposed by the union was unacceptable to the company. Mr. Butler testified that in his view, a wage grid is counterproductive because it provides for increases based on service. The company objects to a wage grid even with a discretionary merit component. He stated that under such a system, the company is left to deal with employees through discipline and he is not of the view that discipline is a good way to motivate people. Mr. Weir described the major advantage of the salary administration system as being that nothing determines an employees' income but her or his performance on the job.

45Mr. Butler stated that in 1990, when he heard of the pay for performance concept from Thomson Newspapers, he decided to include it in his proposals to the Guild. When he made the proposal to the union in November of 1990, he did not know the specifics of this program. At that time, the system was still being completed by Thomson Newspapers. Mr. Butler confirmed that he had several meetings with Mr. Weir, in the spring and summer of 1991, in which he learned the details of the salary administration proposal. He stated that it was his own decision to incorporate the system into his proposals. In his view, it provides better incentives for employees, and fits in with two other initiatives being tried at the Reporter, involving incentive programs in advertising and circulation.

46Both Mr. Weir and Mr. Butler stated that as of November 7, the company was prepared to continue to negotiate, and that its last proposal was by no means a final offer. Both stated that they made it clear that the union's role in the system was open to negotiation. In Mr. Weir's view, there is no reason why the parties could not have reached agreement with some further discussion. He anticipated that it would not take more than a few days to reach agreement on the job evaluation system. Both Mr. Weir and Mr. Butler also made it clear that at the end of the day, the company would still insist on discretionary increases.

47Apparently, during the early part of the negotiations process with the Guild, the Reporter was also negotiating with another union representing composing room employees, the C.W.A. The renewal agreement with the C.W.A., effective from June 1, 1990 to November 30, 1992, was signed on December 4, 1990. This agreement contained a wage grid providing for across-the-board increases on June 1, 1990 and September 1, 1991. Mr. Butler stated that during the negotiations with the C.W.A., the Reporter made no proposal for "pay for performance". He acknowledged in cross-examination that the pay for performance system developed by Thomson Newspapers has not been applied at any of its newspapers to date. He also agreed with counsel for the applicant in cross-examination that the salary administration system could be categorized as "breaking new ground".

48Mr. Butler's evidence was that the proposal by the company involved a basic system, the implementation of which was to be worked out during the course of the agreement. He acknowledged in cross-examination that if the union had wished to negotiate specific mid-points as of November 7, 1991, the company would not have had the information to do this. The exact figure that will constitute the mid-point in each salary range will be determined during the life of the agreement by a combination of market survey and negotiation with the union. He stated that the company's intent during negotiations was not to negotiate job descriptions or evaluations or midpoints, but to have the collective agreement in place, with agreement to the system, and to have this work done later.

49At the conclusion of the evidence, counsel for the respondent sought to introduce a number of collective agreements between various unions and employers, unrelated to these parties. Counsel for the union agreed to waive formal proof of these documents, but objected to their admission on the basis of relevance. Counsel agreed to our receipt of these documents subject to argument as to their relevance as part of final argument on the case, and subject to this panel reserving on the issue of their admissibility. Ultimately, no argument was addressed to the admissibility issue and since in any event we do not rely on these documents in our reasons, we make no finding on it.

Argument

50In final argument, counsel for the applicant submits that the process of collective bargaining between the parties has been unsuccessful because of all the grounds enumerated in section 41(2) [formerly 40a(2)]. Though not limited to the issue of the employer's wage proposal, the applicant's argument focuses on this as crystallizing the issues under section 41(2). Counsel argues that the wage proposal introduced by the Reporter on November 7 was not even a proposal, but an invitation to continue bargaining forever. The proposal demonstrated that the employer intended and was prepared to sit at the table and negotiate as long as it took to ensure that no collective agreement was reached. Rather than accept the invitation to negotiate forever, Mr. Petrie got to the crux of the matter quickly and determined that there could be no collective agreement with the employer on the basis of its wage proposal, concluding that the employer had no intention of reaching a collective agreement. Counsel states that the employer's wage proposal, along with its positions on other key issues, constitute an effort to undermine the bargaining authority of the union.

51The applicant's position is that the Reporter's conduct during the settlement of the unfair labour practice complaints also demonstrates a desire to send a message to employees that Thomson Newspapers maintains undiluted authority over their working lives. The delay in settling claims over the violation of the statutory freeze was a deliberate action taken to hit employees in their pocketbooks and lay the blame on the union's certification. In the submissions of counsel, such actions are consistent with the wage proposal ultimately submitted by the Reporter, which seeks to have the union agree in a collective agreement to give total discretion to the employer to decide when, if and how much a wage increase to grant to an its employee.

52Counsel characterizes other incidents as conveying the same message. In his submission, the purpose of raising the issue of employee exclusions at the bargaining table was to drive home a message to the employees on the negotiating committee. Likewise, the statement regarding the potential discipline of an employee on the committee for leaving work early was designed to intimidate employee members on the committee. These incidents might be forgettable, in his submission, but for the way in which they parallel the essential approach of the employer during bargaining, which was to seek to maintain complete discretion in all important areas of employment and deny the collective authority of the union.

53Counsel also refers to other positions taken by the employer which have no rational justification and show only an intent to provoke and prolong the discussion. Examples relied on are the employer's position on proof of relationship and attendance at a funeral for bereavement leave purposes, and its position on overtime which the union considered to violate the Employment Standards Act (although no specific argument was addressed to this in final submissions).

54With respect to the wage proposal, the union submits that this was a proposal designed for rejection. The scheme has no place for the union and thus constitutes a refusal by the employer to recognize the bargaining authority of the union. It was made clear to the union that on one key point there was to be no further negotiation - that there was no role for the union in determining wage increases. Further, the proposal was the antithesis of making expeditious efforts. It was clear that although the employer stated that the union could have a role in negotiating mid-points~ this was not an exercise it could have or was prepared to engage in at the bargaining table. Also, the employer submitted to the union a job evaluation system which had taken it months to develop, and asked the union to agree to it at the final hour of negotiations.

55Counsel argues that the employer called its proposal a "new wave" and was unable to point to one newspaper collective agreement, whether or not at Thomson Newspapers, that has incorporated a similar system. As such, this is not a proposal which is reasonable or appropriate to maintain in first contract negotiations.

56The employer's stated justification for its wage proposal was the concern to keep good people on staff. The union states that this concern could be accommodated through wage grids which provide for merit pay over and above grid rates. The employer's insistence, it is submitted, on an agreement without a grid is uncompromising and unjustified even on its own rationale. The Board is urged to draw the conclusion that the employer's unstated desire is that it does not wish to have a collective agreement that gives a union any collective bargaining authority over wages.

57Counsel for the applicant also argues that even if the Board does not find that the facts establish the existence of the factors in section 41(2)(a),(b) and (c), it should nevertheless direct a first contract under (d). Counsel states that the timing of the tabling of such a radical and complex salary administration proposal which invited weeks if not years of further bargaining between the parties led to an inevitable breakdown of negotiations. The employer has no real room for negotiation, because its wage proposal is tied to a corporate strategy. The company's new mandate is decentralization. Decentralization and the salary administration system are fundamentally linked. The union, on the other hand, cannot agree to give the employer total discretion in setting wages. The two positions are at complete loggerheads. The corporate mandate is so antagonistic to basic collective bargaining in the industry, that it has caused the failure of collective bargaining.

58Counsel for the applicant relies on the following cases: Teamsters Local Union 419 & Crane Canada Inc., unreported, July 1, 1988 (M. G. Picher); United Food and Commercial Workers International Union, Local 174 & Wendy's Restaurants of Canada Inc. Store #365, [1991] OLRB Rep. October 1241; Crane Canada Inc., [1988] OLRB Rep. Jan. 13; Formula Plastics Inc., [1987] OLRB Rep. May 702; Co-Fo Concrete Forming Construction Limited, [1987] OLRB Rep. Oct. 1213; Nepean Roof Truss Limited, [1986] OLRB Rep. July 1005; Hiliview Farms Limited, [1990] OLRB Rep. May 564; Peacock Lumber Limited, [1990] OLRB Rep. May 584; Arrow Games Inc., [1991] OLRB Rep. Jan. 7; Kraus Carpet Mills Limited, [1991] OLRB Rep. Jan. 50; Canada Building Materials Company, [1990] OLRB Rep. Oct. 1012; MacMillan Bloedel Building Materials Limited, [1990] OLRB Rep. Jan. 58; Knob Hill Farms Limited, [1991] OLRB Rep. Apr. 521; Grant Forest Products Corporation, [1991] OLRB Rep. July 848 and Courtney and Fairbain Ltd. v. Tolaini Brothers (Hotels) Ltd. and another, [1975] 1 All ER 716 (C.A.).

59The position of the respondent is that the applicant has caused its own problems in these negotiations. The respondent submits that collective bargaining has not been unsuccessful, and that the union has decided to strike prematurely. Having struck, and failed in its efforts to force the employer to agree to its positions, the applicant should face the consequences of its own miscalculations and return to the bargaining table to complete negotiations. The respondent takes the position that the unduly long period of bargaining was of the Guild's own choosing. The Guild took uncompromising positions without reasonable justifications and failed to make reasonable and expeditious efforts to reach a collective agreement. The respondent submits that the Guild followed a pattern of bargaining which it has applied elsewhere in the past, where it engages in hard bargaining and places itself in a position to take on a strike.

60Counsel for the respondent submits that the Reporter is not an employer that is seeking to avoid a collective agreement. It has merely endeavoured to negotiate a collective agreement that reflects the operating realities of the Cambridge market. The Reporter has been a party to collective agreements with the C.W.A./I.T.U for some 90 years. Thomson Newspapers has some 200 collective agreements, including some with the Guild. The accusations by the Guild from the beginning of the bargaining process that the Reporter was not bargaining in good faith are not borne out, and in fact reflect the Guild's own strategy of aggressive bargaining.

61Counsel paints a picture of the economic circumstances in which these negotiations took place, both generally in the Canadian economy and in the newspaper industry, and particularly in the Cambridge market. Against this background, counsel submits that the union's own wage proposal is designed for rejection, in asking for 12% and 7% increases. It is a wage proposal that is unrealistic, and uncompromising.

62Counsel submits that it was the Reporter's desire throughout to reach a collective agreement. This is demonstrated by its agreement in the summer of 1991 to have Jerry Brown from Thomson Newspapers become involved in bargaining. This, it is argued, is clear evidence that Thomson Newspapers wants a collective agreement, since it was clear that bargaining was not working well up to then.

63Counsel characterizes this dispute as a wage dispute pure and simple. What is at issue, he states, is not total discretion or no discretion in setting wages, but the degree of discretion. The union is prepared to accept discretionary merit pay over and above a wage grid. The employer wishes to have greater discretion. It is submitted that the bargaining should have continued on this issue. It was the union's intractability on this issue that caused the breakdown of negotiations, since if the parties settled wages, all else would fall into line.

64Counsel for the respondent lays the blame for the prolonged negotiations at the feet of the applicant. The interim certificate for this bargaining unit was issued by the Board on April 27, 1990. Not until July 26 did the union send a notice to bargain, and only in September were its proposals finalized for the purpose of submission to the respondent. Counsel argues that the proposals of the union are built around building high expectations so that it can be seen as making major moves without really making much progress overall. Further, the Guild insisted on bargaining on the first four provisions, while the Reporter wished to begin with any issue that would be simple to resolve. The Guild's approach, which included one of the major areas of disagreement, union security, led to endless dialogue for many months. Counsel characterizes the union's reliance on incidents at the bargaining table as an attempt to turn minor issues into major ones. Counsel also points to the union's change of position on the referral of grievances to arbitration as indicating lack of good faith.

65In counsel's submission, the evidence given by Ms. Soboda demonstrated for the Board why bargaining accomplished so little until September of 1991. He characterizes her as argumentative, and self-serving in her evidence. Counsel identifies inconsistencies between her evidence and that of Mr. Petrie, and between different parts of her own testimony. In general, he describes her evidence as an attempt to create disputes where none had been present previously, in an effort to search for circumstances to support this application. Counsel accuses Ms. Soboda of holding a double standard. Where the Guild changed a position, or made clerical mistakes in the submission of proposals, she wants the 'company to accept these as bona fide. On the other hand, she imputes malice to every move made by the company.

66In the submission of counsel, the union simply gave up too soon. He argues that the purpose of section 41(2) is not to supplant free collective bargaining in general, but only where the circumstances identified in that section are shown to exist. If there has been unjustified intransigence in these negotiations, it has been that of the Guild. Counsel contrasts this case with the facts of Grant Forest Products Corporation, supra. Here, he submits, there has been no final offer. There is room to negotiate, and the union knew it. Counsel also relies on Sumner Press Ltd., [1991] OLRB Rep. Oct. 1207 as reflecting the fact that the Board has to be sensitive to the economic circumstances that drive bargaining proposals. He states that the conclusion of the Board in that case that the Guild's focus in bargaining was the building of a case for litigation is exactly replicated in the Guild's conduct in the present case.

67With respect to the Guild's reliance on section 41(2)(d), counsel for the respondent states that the union's submissions under that provision are no different from its submissions under subsection (c). The respondent cannot be blamed for the timing of its wage proposal, since the parties had agreed that monetary issues would be bargained at the end of negotiations, when other matters had been settled.

68In addition to those cases mentioned, counsel for the respondent also relies on: Nepean Roof Truss Limited, [1986] OLRB Rep. July 1005; Teledyne Industries Canada Limited, [1986] OLRB Rep. Oct. 1441; Juvenile Detention (Niagara) Inc., [1987] OLRB Rep. Jan. 66; Formula Plastics Inc., [1987] OLRB Rep. May 702; Alma College, [1987] OLRB Rep. Dec. 1453; Grant Forest Products Corporation, [1991] OLRB Rep. July 848; The Citizen (A Division of Southam Press Limited), [1979] 2 Can. LRBR 251; and Sumner Press Ltd., [1991] OLRB Rep. Oct. 1207.

69In reply argument, counsel for the union states that the respondent's reliance on economic circumstances is irrelevant for the purposes of this case. The negotiations did not break down over the amount of the increase sought by the Guild. The parties did not negotiate that issue because the employer did not make an offer which could be compared to that of the Guild. The issue, in his submission, was not about money but about how it was to be given. He agrees with counsel for the respondent that there is a "new Thomson" in place. Counsel states that this is precisely the reason why no further negotiations were possible. The employer took an intransigent position based on a new Thomson philosophy from which it could not deviate.

70Further, counsel submits that the materials filed by the respondent supported the union's position. The academic articles demonstrate that pay for performance is a concept which is principally relevant to the non-union sector, rather than to collective bargaining relationships. The collective agreements submitted by the respondent provide for wage grids except for the one imposed by the Canada Labour Relations Board in Union of Bank Employees (Ontario), Local 2104, Canadian Labour Congress and Canadian Imperial Bank of Commerce (1986) 65 di 1, which counsel urged is not a relevant precedent for this Board. Counsel also distinguished Sumner Press Ltd. on the basis that it was a case brought under section 15 of the Act and thus different in legal framework.

71The Board reserved its decision at the conclusion of the hearing. Upon some reflection on the issues raised in this application, we invited the parties to make further submissions in writing on the interpretation and applicability of section 41(2)(d) of the Act in this matter, having regard to the discussion of this provision in Juvenile Detention (Niagara) Inc., supra and Placer Dome Inc. [1991] OLRB Rep. March 357, and the applicant's submissions at the hearing. Submissions from the applicant were received on February 18. Among other things, the applicant states:

It is the position of the Union that the facts upon which the Board may rely as constituting "any other reason relevant" for the purposes of Section 41 could also support a finding under 5ec-tions 41(2)(a), (b) and (c). Thus, the Board may find that the Employer's wage proposal supports a finding that the Respondent has failed to make reasonable or expeditious efforts to conclude a collective agreement and also that the Employer's conduct falls within Section 41(2)(d) as a relevant reason for the Board to conclude "that the process of collective bargaining has been unsuccessful".

It is open, as well, for the Board to conclude the conduct of the Employer, while not constituting conduct falling within Section 41(2)(a), (b) and (c), nevertheless establishes reasons which are relevant in determining that the process of collective bargaining has been unsuccessful.

The Wage Proposal

It is the submission of the Union that both the timing of the tabling of the Employer's "wage proposal", and the unprecedented nature of that proposal in the collective bargaining context were such as to inevitably render the process of collective bargaining unsuccessful. The Employer's wage proposal left completely unresolved and subject to negotiation at some future date during the currency of the collective agreement essential components of the wage proposal, including the job description system, the job evaluation system, the wage ranges for each job, and the performance appraisal system. Negotiations in respect of these items were to take place only after the collective agreement was executed and, as a result, at a time when economic sanctions would be unlawful. Thus, none of these key components of the wage proposal were intended to be resolved through normal collective bargaining. The Union submits that the Employer's proposal, including the method proposed for resolving outstanding issues, created an irredeemable breakdown in collective bargaining, or "logjam", which resulted in the process of collective bargaining being unsuccessful and which should be remedied by a direction under Section 41.

In Placer Dome Inc., [1991] O.L.R.B. Rep. Mar. 357, the Board directed the settlement of a first collective agreement by arbitration relying in part on Section 41(2)(d). In that case, the Board at paragraph 40 quoted this statement from Professor weiler:

…….Certification does give the trade union a license to bargain for the unit. It imposes a corresponding obligation on the employer to sit down at the table with the union and make a sincere effort to reach agreement about terms and conditions of employment. But the law does not, as it cannot, tell the employer that it must settle the contract on the union's terms, any more than the employer can oblige the union to agree to the employer's terms. A system of free collective bargaining means that the law, through its agencies such as the labour board, has no right to evaluate the proposals made by either side or to tell them what concessions they must make. If the parties are truly free to agree, they must also be legally entitled to disagree. The assumption of our system is that when they do reach such an impasse, an economic test of strength must take place to break the logjam. It is the strike that determines which side will find it more painful to disagree, which party will be forced to make the major moves toward compromise.

[emphasis added]

Professor Weiler's comments are made outside of the context of Section 41 of the Ontario Labour Relations Act and prior to its introduction. Section 41 of the Act contemplates that in certain circumstances an economic test of strength need not take place where collective bargaining has been unsuccessful. Section 41 of the Act allows the Board to break logjams between the parties for any reason the Board considers relevant. The use of Section 41 to break a logjam where the parties are unlikely to do so through the process of collective bargaining has been specifically recognized by the Board in Placer Dome itself. It is submitted that in the instant case it is also appropriate for the Board to exercise its discretion under Section 41(2)(d) and break the logjam given that the Employer's proposal by its terms does not resolve outstanding differences through the collective bargaining process but outside the process, and that, as a result, the collective bargaining process to date has been unsuccessful. Under the Employer's proposal, the Union is required to sign a collective agreement in the "blind faith" that the parties will agree to its critical components without access to the normal dispute resolution mechanisms. Not only is the Union being asked to agree to "breakthrough" language and an unprecedented system for determining wages and wage increases in a first collective agreement, it is also being asked to accept a "breakthrough" process totally outside the normal collective bargaining process for settling wages, the most critical concern of unions in collective bargaining. This is of particular concern where the Employer has through its prior conduct violated the Act, on its own admission, in determining compensation payable to employees.

In the Placer Dome, decision, the Board found that the collective bargaining process was placed in a "straitjacket" by the Employer's insistence in giving consideration to the Dona Lake Agreement, an "externality" to the collective bargaining process. As a result of the fact that the normal process of collective bargaining to resolve disputes could not effect an agreement, the Board found that the collective bargaining process was not likely to succeed, and required the Board's intervention under Section 41(2)(d). In the case at bar, the Employer itself has created a collective bargaining straitjacket by rejecting the normal collective bargaining processes and by asking the Union to agree to not settle any wage rates at the time of executing the collective agreement, but rather to discuss these issues during the first year of the agreement to determine the wage rates in the second and third year, and leave the awarding of increases solely to the discretion of the Employer. The Employer's own position rejects normal collective bargaining as a method for resolving a bargaining impasse and has made the settlement of issues in dispute impossible to reach through the procedures contemplated under the Act, including both bargaining and economic sanctions. As a result, this Board must supply the dispute resolution mechanism, which is totally absent from the Employer's proposal through a direction under Section 41.

72In response, the respondent submits, among other things, as follows:

The Applicant has repeated in its written Submissions the same arguments it advanced at the Hearings in this matter; namely that the timing and content of the Employer wage proposal may support a finding under sub paragraph (d) as well as sub paragraph (c) of section 41(2) of the Labour Relations Act. while we agree with the Applicant that it is employer conduct that is to be assessed under sub-paragraph (d) of section 41(2), the facts do not support a finding in this case that the Employer's wage proposal is the reason that the "process of the collective bargaining has been unsuccessful".

Argument

The Employer's submission is that no impasse in collective bargaining was ever reached. The Employer's position was not final nor "bottom line". It invited more Union involvement in the wage administration systems being proposed. The Union, even though it admits it had further bargaining flexibility, broke off negotiations without either exploring the Employer's offer or advancing new proposals of its own. The parties were not at an impasse and, as Mr. Weir testified, he was sure with more discussion the parties would get an agreement.

With respect to the Niagara Detention decision, we respectfully rely on the fact that no impasse was reached in the collective bargaining process and on this ground the application was not granted. This element of impasse is necessary under any sub-paragraph of Section 41(2). In any event, all of the facts relied on by the Applicant fall under sub-paragraphs (a) to (c) concerning which the Board already has full oral submissions of the parties with obviously no need for further repetition in writing.

As to the Placer Dome decision, there is no external influences such as a "Dona Lake Agreement" that constrained either party at the bargaining table in this case. There are no externalities that "put the collective bargaining process in a strait jacket and mire bargaining parties in a web of conflicting claims". The Employer's bargaining position on wages relied on by the Union as the reason for the bargaining process being unsuccessful falls under sub-paragraph (c) and not under sub-paragraph (d).

Decision of the Board

73Sections 41(1) and (2) read as follows:

41.-(1) 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.

74We have concluded that the facts of this case merit a direction by the Board of first contract arbitration under section 41(2) and accordingly directed on February 21, 1992. If for no other reason, we find that there are compelling circumstances that led to the failure of the process of collective bargaining which warrant a direction by the Board under section 41(2)(d).

75Has the process of collective bargaining been unsuccessful between these parties? The parties have had some 31 negotiating meetings. In efforts to improve the process of bargaining, the parties have made changes to their own spokespersons, and have used conciliation services. Among the materials filed by the respondent are lists which show the articles still outstanding. These show that there are just about as many issues which remain outstanding after more than a year of very intense bargaining, as have been settled. Further, of 224 proposals by both parties, which include articles and sub-articles, 87 have been agreed, and 86 remain outstanding. Included amongst outstanding issues are provisions relating to union security, management rights, compensation for overtime, preceding and other agreements, and wages.

76As the strike deadline approached, the parties were engaged in round-the-clock bargaining. Some progress was made during this time, but the entire process became irreparably unhinged upon the presentation of the respondent's wage offer, at 5:30 a.m. on November 7. We cannot determine whether success in reaching an agreement on wage issues would have led all other outstanding matters to fall into place, as was Mr. Butler's view. In any event, it is clear to us that when the parties separated on November 7, they were still in disagreement over many issues, and in particular, had an unmistakable difference on the wages issue. We accept the evidence of Mr. Petrie that he specifically asked Mr. Weir if the employer's bottom line position on wages included total employer discretion to determine wage increases during the life of the collective agreement, and that the response he received was that it did. Mr. Weir agreed that this is the company's proposal, and this characterization is consistent with the testimony of both Mr. Weir and Mr. Butler as to the company's justifications for its proposal. Although it is clear that the company has offered some flexibility on certain aspects of its proposal, such as the opportunity for the union to negotiate mid-points with the company during the life of the agreement, the key element of discretionary increases was non-negotiable, and this was unacceptable to the union.

77We thus conclude that the process of collective bargaining has been unsuccessful between the parties. We are also satisfied that the reasons for the lack of success relate to section 41(2)(d) of the Act. Although this subsection has not often been applied, it was discussed in Placer Dome Inc. where the Board directed arbitration pursuant to section 41(2)(a) and (d). In this case Placer Dome Inc., a mining company, had entered into an agreement involving a local Indian band, a tribal council, the government of Canada and the government of Ontario with respect to the development of a mine located in the vicinity of certain Indian lands. Among the terms of this agreement (the Dona Lake Agreement) were employment guarantees and training opportunities for native workers. Subsequent to this, the United Steelworkers of America was certified as the bargaining agent for a unit of the company's employees. During the course of bargaining, it became clear that the company found itself in a potential conflict between its obligations under the Dona Lake Agreement, which contained provisions regarding the employment of native persons, and its obligations under the collective agreement it was negotiating with the union. Its response was to take the position during bargaining that the Dona Lake Agreement would have to be recognized by the union as taking precedence with respect to the terms and conditions for native workers over any provision in a subsequently negotiated collective agreement. In effect, the company was refusing to bargain with the union over the terms and conditions of employment of native workers in the bargaining unit.

78The Board found in Placer Dome Inc. that the employer's bargaining stance amounted to a refusal to recognize the union's bargaining authority within the meaning of section 41(2)(a) of the Act. Further, the Board stated:

47. In addition, it is our view that the array of third party, community, and government interests evident in this case so overshadows, burdens, and impedes the bilateral bargaining process envisaged by the Labour Relations Act that it constitutes the kind of circumstance which would warrant the exercise of our discretion under section 40a now 41(d). These externalities put the collective bargaining process in a strait-jacket and mire the bargaining parties in a web of conflicting claims from which they are unlikely to be able to extricate themselves through any of the normal collective bargaining processes, including the use of economic sanctions. In our view, this is not a case of the kind described by Professor Weiler above, where resort to raw bargaining power either should, or is likely to, result in successful collective bargaining and a sensible compromise. In these unique circumstances, the bargaining process has been frustrated, and it is appropriate for the Board to step in to "break the log jam".

79We find the comments of the Board in Placer Dome Inc. apt in the context of the present case. The Labour Relations Act is a regime governing employment relations which embodies aspects of both statutory limitations and obligations and freedom of contract. The Act encourages the practice and procedure of collective bargaining and provides for mechanisms whereby a trade union acquires, in the words of Professor Weiler (see paragraph 71 above), a "license" to bargain on behalf of a unit of employees. Once a union acquires such a license, the law imposes an obligation on the parties to negotiate in good faith and make every reasonable effort to conclude a collective agreement. Historically, as described by Professor Weiler, the assumption of the system has been that when the parties reach an impasse, an economic test of strength is used to break the impasse. Section 41 introduces an exception or variation to that assumption. As stated by this Board elsewhere, section 41 introduces a "unique facilitative tool into the traditional bargaining process in Ontario" in which the legislature has specifically acknowledged the significance to the collective bargaining relationship of the first contract: see Nepean Roof Truss, supra, paras. 15-16. The provisions of section 41 give recognition to the fact that there are circumstances where the purposes of the statute are not advanced or realized through reliance on economic sanctions alone in a first contract situation.

80Further, in applying section 41, the Board has stated that this provision represents a departure from the Board's previous jurisprudence under section 15. To the extent that a consideration of section 41(2)(b) requires the Board to examine the intrinsic reasonableness of a negotiating position, for example, it takes the Board into an area of scrutiny which goes beyond the traditional ambit of section 15: see Formula Plastics Inc., supra, para. 27. Also, to the extent that the application of section 41 is not contingent on a finding of bad faith or anti-union animus, it represents a broadening of what was the focus of the Board's investigations under section 15. As stated in Formula Plastics Inc.:

39. We note particularly that the provisions of 40a [now 41] (2)(b) are not necessarily predicated on any egregious conduct on the part of an employer. There is no requirement of bad faith or anti-union animus (although these factors may be relevant) and a direction to settle a first contract by arbitration is not a penalty visited upon an employer. Rather, section 40a as a whole represents the identification of a series of situations in which the Legislature has determined that a malfunctioning labour relationship requires a special mechanism to repair or strengthen it. Indeed, it may well be that some of the provisions of section 40a will apply even where the respondent's conduct stems from ignorance, inexperience or ineptitude. Thus a finding that the conditions of section 40a(2)(b) have been met does not necessarily carry with it the same stigma that might attach to a finding tha a party has violated the Act, and is not inconsistent with the Board's dismissal of the section 15 complaint in the circumstances of this case.

81In Crane Canada Inc., supra, a board of arbitration directed to settle the first agreement between the parties had this to say about the provisions for direction of first agreements:

In an ideal world of collective bargaining there should be no need for the statutory arbitration of first collective agreements. Realities, however, have dictated otherwise. Notwithstanding the stated legislative policy to encourage collective bargaining between employers and trade unions, a policy which, it should be emphasized, has been generally successful in Ontario, the labour relations climate has from time-to-time been marred by a minority of disputes in which the parties, by inadvertence or design, have been unable to achieve a first collective agreement following the certification of a union. Some of these disputes have achieved great notoriety, attracting media attention to intense picket line disputes while others have all but completely escaped public notice. In either case the result is the same: the failure of the process of employee representation by a trade union to result in a collective agreement mutually acceptable to the parties. If the policy of the Labour Relations Act is to be realized, the certification of a union should be the first step in a process that culminates in the execution of a collective agreement that brings to employees a measure of certainty in the knowledge of their contractual rights and dignity in the knowledge that they can be enforced. While the Labour Relations Act does not require an employer to be overjoyed with the prospect of union representation for a group of its employ. ees, the employer is nevertheless legally bound to recognize the union as their freely chosen sole bargaining agent and to bargain in good faith, making every reasonable effort to conclude a collective agreement.

While the Labour Relations Act does not mandate that the execution of a collective agreement be guaranteed in every case where a union is certified, the obligations and procedures which are established within the Act are plainly fashioned to facilitate and encourage that outcome. The Act contemplat s that a prescribed process is to be followed in an effort to achieve the making of a first collective agreement and its subsequent renewal in the form of successive agreements thereafter. It is not the failure to make the collective agreement, but the breakdown of the collective bargaining process, which is the rationale for the first agreement arbitration provision in the Act ……..

Section 40a [now 41] of the Labour Relations Act addresses situations where the respondent has violated the Act. It is significant, however, that it does not limit its application to those circumstances. The section might be applied, for example, where earlier unfair labour practices occurred during a certification campaign, with adverse effects on the union's ability to bargain even after certification has been achieved. The fact that no violation of the Act takes place at the bargaining stage does not foreclose the Labour Board's ability to remedy the ongoing impact of earlier events. Or, alternatively, circumstances may obtain in which neither party has engaged in unlawful conduct nor exhibited bad faith, but where they have nevertheless been unable to come to grips with the issues that divide them. Essentially, section 40(a) is intended to apply in those circumstances where the normally contemplated processes of collective bargaining have broken down. Where that is established, on the basis of any of the reasons articulated within the section, the Labour Relations Board may direct the arbitration of a first collective agreement.

82We find the circumstances of this case to represent the type of "malfunctioning labour relationship" and breakdown of the collective bargaining process identified by the boards above which warrants the direction of first contract arbitration. It is clear to us on the evidence that the parties are in a "logjam". Despite exhaustive negotiations and a prolonged strike, they have been unable to arrive at a collective agreement. This is not a case where free collective bargaining has been successful, but where it has failed to achieve an agreement. On the evidence in this case, we find that this is so because the parties have been unable to disentangle themselves from pressures, limitations and agendas which are not derived from the collective bargaining process itself. The bargaining between the parties has from the beginning of the process been informed and affected by these other factors.

83The evidence of Mr. Weir was candid and informative. From his testimony, the Board learned about the "new" Thomson Newspapers, which is devoted to implementing a decentralist organizational strategy. Ironically, at the same time that this strategy appears to give Thomson Newspapers publishers independence to pursue the "bottom line", it also provides them with specific direction as to changes to be implemented to employment policies in order to comply with this decentralist program. Mr. Weir described how the "pay for performance" concept derives from the decentralist goals of the company and how it is linked to other corporate initiatives in the areas of incentive pay and bonus programs. Mr. Weir and Mr. Butler both testified that labour relations is an area which Thomson Newspapers leaves to individual publishers to determine. However, it is also clear from their evidence that the relationship between pay for performance and the new corporate mandate of Thomson Newspapers is so explicit and direct that it is unlikely Mr. Butler would have refused to incorporate it into the Reporter's proposals during bargaining. We find that, whether implicitly or explicitly, the implementation of pay for performance as part of an overall Thomson Newspapers strategy imposed limitations on the Reporter's bargaining proposals. We are reinforced in our conclusion by the fact that Mr. Butler decided to adopt the Thomson Newspapers pay for performance system as part of the Reporter's bargaining proposals at a time when Thomson Newspapers was only in the process of developing the system, and at a time months before he actually became familiar with its details. In other words, Mr. Butler became committed to the system, and worried about the details later.

84As much as the Reporter found itself ideologically bound to its position on pay for performance, the Guild was also unable to agree to any wage proposal which did not contain, at a minimum, a wage grid with classifications and automatic increases. As both Mr. Petrie and Ms. Soboda testified, one of the primary reasons that they understood motivated employees to organize the unit was the desire to have some say over wages. Further, although the respondent maintains that the bargaining at the Mercury and the bargaining at the Reporter were totally independent, there is no doubt that one had an influence on the other. Certainly, in the Guild's perception, the two sets of negotiations brought them to the table with the same opponent, Thomson Newspapers. Rightly or wrongly, the Guild assumed that the entire bargaining agenda of the Reporter was controlled by Thomson Newspapers.

85Whether or not the Guild's assumption was correct, it affected from the beginning the way in which the Guild viewed the negotiations. From their experience in bargaining with newspapers owned by Thomson Newspapers, the Guild's negotiators have adopted a view of Thomson Newspapers as a hard bargainer with a dislike of unions. In this case, the parties went from interim certification, to unfair labour practice complaints, to negotiations. From the beginning, therefore, the Guild took aggressive bargaining positions. Its negotiators were convinced that they were facing not just one newspaper, but the whole Thomson corporation. Particularly on the issue of wages, they could not be seen as giving in to the Reporter because it would be the thin edge of the wedge for all of the other Thomson Newspapers with which the Guild had agreements. In retrospect, the Guild was at least partially right about Thomson Newspapers being in the background, when it came to the crucial issue of wages. Well before this, however, the effect of these assumptions was to give the negotiations a certain cast and tone from which the parties were unable to extricate themselves.

86We have sketched out above some of the factors which we see as having contributed to these parties' inability, over prolonged negotiations, to come to grips with the issues which divide them. The evidence we have set out earlier in this decision also illustrates the great divide between the parties on a whole range of issues and events. The result of all of this is what we see as a logjam. The differences between the parties have become magnified by an obvious breakdown of trust over the course of the 31 bargaining meetings. Further the parties arrive at some of the issues with strongly held principles. The dispute over wages, for instance, may at first glance seem minor, when one considers that the Guild has negotiated and was prepared to agree to a form of discretionary merit pay over and above a wage grid. However, it is clear that to the parties themselves, they represent differing philosophies of compensation. The company states that it objects to a wage grid, even with a merit pay component, because it fails to motivate employees, and leaves the employer with the unsatisfactory route of using discipline as a form of negative motivation. The union states that it cannot agree to discretionary wage increases based on performance appraisals because this leaves employees at the mercy of their supervisors and ultimately, the publisher. Although the issue was not crystallized until the final day of bargaining, it was canvassed in three separate meetings on November 7. At the conclusion of those, it is apparent that the wage issue is one on which the parties have staked out definite, intractable and opposite positions, for all of the various reasons outlined above. It is also significant that other areas which remain in dispute are management rights and union security, important provisions which define the parties' relationship and roles.

87In this context, we consider that the parties have become enmeshed in a dispute in which a variety of factors have skewed positions taken and distorted the bargaining process. It is a case where resort to the statutorily mandated mechanisms for assisting parties in negotiations, such as conciliation and mediation, have failed to achieve a result. An economic test of strength through resort to a strike has clearly also failed to break the logjam. As in Placer Dome Inc., we do not see this case as one where continued reliance on raw bargaining power is likely to result in successful collective bargaining and a sensible compromise. The collective bargaining process has broken down, and the mechanisms which are available to the parties to help repair the process or resolve the dispute have not worked. We find it useful to refer to the functions of a first collective agreement. In Crane Canada Inc., supra, the board of arbitration convened to settle the first collective agreement pursuant to a Board direction described the first agreement in the following way:

…….The object of the exercise is not to penalize or reward the conduct of either party. Rather, it is to establish a collective agreement on such terms as will give employees and employer alike the experience of a period of not less than two years during which they may assess for themselves the value of having terms and conditions of employment negotiated and enforced through the representative services of at trade union. An important dimension is the opportunity for the employer to experience first-hand what it is like to conduct its employment relations on a day-to-day basis under a collective agreement that involves the participation - and often the assistance - of a trade union. The object of first agreement arbitration is to fashion a collective agreement whose terms will, insofar as possible, foster a relationship of enhanced trust between trade union and employer while providing the union a fair opportunity to demonstrate both to the employees it represents and to management the viability of collective bargaining as the basis for positive employment relations in the future.

88In the circumstances of this case, where the normal collective bargaining processes have failed so thoroughly, we find it appropriate, without the necessity of attributing or assigning "fault" to any party to step in to direct arbitration of a first collective agreement which will give the parties some time to build a collective bargaining relationship. If faced with the choice of either stepping in, or allowing the parties to continue with a stand-off from which, in our view, they are unlikely to disentangle themselves, we choose in this case to step in. We emphasize that we are not suggesting that every situation where the parties have bargained to impasse will result in a direction under section 41(2)(d). There is a tangle of circumstances in this case, developing over the course of lengthy negotiations and a strike, which has resulted in a logjam which we see as warranting the Board's intervention. Because of our findings under section 41(2)(d), it is unnecessary for us to express our views with respect to the applicability of sections 41(2)(a), (b) and (c).