Canadian Union of Public Employees Local 1605 v. Mohawk Hospital Services Inc.

[1993] OLRB REP. SEPTEMBER 873

3506-92-U Canadian Union of Public Employees Local 1605, Applicant v. Mohawk Hospital Services Inc., Responding Party

BEFORE: G. T. Surdykowski, Vice-Chair, and Board Members J. A. Rundle and C. McDonald.

APPEARANCES: B. Sheehan and J. Jarvie for the applicant; M. J. Zega, B. Belanger and M. McCombE for the responding party.

DECISION OF THE BOARD; September 8, 1993

1. This application was heard by the Board on April 13 and 14, 1993. Upon hearing the evidence and representations of the parties, the Board indicated that it would reserve its decision to afford the parties an opportunity to settle the matter between themselves (which is always pref­erable in labour relations matters), in light of what had been heard at the hearing.

2. Unfortunately, the parties have been unable to come to a settlement and have requested that the Board issue a decision.

3. The applicant trade union is the bargaining agent for employees of the responding employer Mohawk Hospital Services Inc. ("Mohawk") in two bargaining units, one consisting of full-time employees and one of part-time employees. The applicant has represented the full-time bargaining unit employees for some time (precisely how long has not been specified in the plead­ings or evidence). It has represented the part-time bargaining unit since March 19, 1992. The col­lective bargaining relationship between the parties is governed by the Hospital Labour Disputes Arbitration Act. The applicant complains that Mohawk has breached section 13 of the Hospital Labour Disputes Arbitration Act by altering the hours of work of employees in the bargaining units without its consent. Mohawk denies that it has done anything wrong.

4. Mohawk acknowledges that section 13 of the Hospital Labour Disputes Arbitration Act was in effect at all material times and that it has made scheduling changes. However, Mohawk asserts that it was entitled to make the changes and that it had legitimate economic and business reasons for doing so, particularly in the context of the delays which plague the Hospital Labour Disputes Arbitration Act collective bargaining process. Mohawk denies that it has acted in a man­ner contrary to section 13 of the Hospital Labour Disputes Arbitration Act.

5. Mohawk is a "not-for-profit operation" located in Hamilton. It was established in the early 1970's by seven local area hospitals as a cooperative venture to provide a central hospital laundry facility. Mohawk was actually incorporated as as not-for-profit corporation without share capital in the fall of 1972. With the cooperation and assistance of the Ministry of Health, deben­tures were issued to raise the necessary start-up capital. In agreement with the Ministry of Health, the founding hospitals entered into twenty year contract with Mohawk which guaranteed their laundry costs. Subsequently, other hospital "customers" were added. At the time of this proceed­ing, Mohawk had 17 major clients and several smaller ones.

6. When the original twenty year contracts expired in October 1992, Mohawk found itself fully at the mercy of the marketplace. At the same time, Mohawk's clients were under increased fiscal pressure as a result of cut-backs in government funding in the health care sector. In turn, they began to press Mohawk to reduce its charges, and some began to put their laundry service work out to tender.

7. The nature of the hospital laundry business is such that an increase in volume reduces unit costs, while a decrease in volume increases unit costs. Consequently, additions to the customer base or in volume tend to increase Mohawk's ability to compete, while a loss of customers or a reduction in volume tends to decrease its competitiveness.

8. Mohawk concluded that it could reduce its unit costs by reducing its fixed costs, thereby enhancing its ability to compete. It considered a number of cost saving measures in that respect, including, for example, closing on statutory holidays and Sundays. It also considered lay-offs but concluded that this was neither a preferred option, nor one which would necessarily enhance its competitive position. Ultimately, Mohawk concluded that it could reduce supervisory, mainte­nance, on-call, and trucking costs by changing the work schedules of its employees.

9. For some twenty years prior to March 29, 1993, when the scheduling changes were implemented, the majority of Mohawk's full-time employees worked on a schedule of 10 hours per day for 4 days, followed by 4 days off. The exceptions to this are not significant in the context of this application. Part-time employees have never had a "schedule" as such. They have been used to supplement the full-time workforce or to replace absent full-time employees. Part-time employ­ees have always been employed on an "on-call" basis. That is, Mohawk assesses the need for part-time workers on a daily basis and calls them in as needed, solely on the basis of their availability. The details of how this on-call system operates on a day-to-day basis are not before the Board.

10. Effective March 29, 1993, Mohawk changed the hours of work by moving to a system of two, seven and a half hours per day, 5 days per week non-rotating shifts. No full-time employees have been laid-off and the scheduling change has not resulted in any loss of hours to full-time employees, although the distribution of their hours is different and this undoubtedly has had an impact on them. However, the scheduling change has resulted, or is projected to result, in a reduc­tion in supervisory, maintenance and part-time on-call expenses which Mohawk estimates will result in an annual saving of approximately $300,000.00. For part-time employees it means less work, although no part-time employees have actually been laid-off.

11. The applicant refused to consent to or participate in this scheduling change~ which is expected to be a "permanent" change, rather than a "temporary" one instituted to, for example, avoid lay-offs.

12. Mohawk did advise the applicant of its plan to change the manner in which it schedules its employees, and the reasons for it. The Board is satisfied that Mohawk acted reasonably in that respect. The Board is also satisfied that Mohawk was trying to respond to the market and economy in which it found itself in the way it perceived was most appropriate, and that no part of its motiva­tion for doing so was improper.

13. Articles 5 and 19 of the most recent collective agreement between the parties with respect to the full-time bargaining unit provide that:

ARTICLE 5- ADMINISTRATION RIGHTS

5.01 Except as specifically abridged, delegated, granted or modified by this Agreement, all the rights, powers, and authority of the Administration are retained by the Administration and remain exclusively and without limitation within the rights of the Administration.

5.2 Without limiting the generality of the foregoing, the Administration rights include:

(a) the direction of the working forces, the right to plan, direct and control the operation of the Company; the right to introduce new and improved meth­ods, facilities, equipment, the amount of supervision necessary, combining or splitting up departments, work schedules, establishment of standards of performance, the determination of the extent to which the Company will be operated and the increase or decrease in employment;

(b) the sole and exclusive jurisdiction over all operations, buildings, machinery and equipment is vested in the Company.

5.03 In addition to the Administration's rights include:

(a) the right to maintain order, discipline and efficiency and in connection therewith, to make, alter and enforce from time to time rules and regula­tions, policies and practices, to be observed by its employees and the right to discipline or dismiss employees for just cause;

(b) the right to select, hire, discipline, dismiss, transfer, assign to shifts, pro­mote, demote, classify, lay-off, recall and suspend employees and select employees for positions not covered by this Agreement;

(c) the exercise of any of these rights will not be inconsistent with the provi­sions of this Agreement, nor shall these rights be used in a manner which would deprive any present employee of his employment except through just cause.

ARTICLE 19- STANDARD HOURS OF WORK AND OVERTIME

19.01 The provisions of this Article 19 shall not be construed to be a guarantee of or limitation upon the number of hours to be worked per day or per week or otherwise.

19.02 The parties hereto recognize that there is in effect at the Company what is commonly referred to as a 'flexible working schedule". The standard day is ten (10) hours of work per day.

An employee's yearly schedule is made up of regularly scheduled days, recognized holidays, and vacation time. Any short fall between the schedule and 1950 annual paid hours is compensated for by "make-up" days worked at the standard straight time rate of pay. It is acknowledged that the number of such "make-up" days may change from year to year for any employee.

19.03 Commencing at the beginning of the new working schedule for 1988/89, an employee working on the "flexible working schedule" will be paid overtime at the rate of time and one-half (15) his standard hourly rate of pay exclusive of premiums for any hours worked on days worked over and above the total of the employee's yearly schedule and "make-up" days required in the employee's yearly schedule.

It is understood that "make-up" days will continue to be paid as noted in Article 19.02.

19.04 An employee will at his request and in lieu of 19.03 be paid overtime at the rate of time and one-half (1.5) his standard hourly rate of pay exclusive of premiums for each hour worked in excess of ten (10) straight time hours in the day except and by authority of the President when an employee is requested to work overtime in excess of the regularly scheduled hours on a rec­ognized Holiday such employee wilt be paid twice his standard hourly rate of pay exclusive of premiums for each hour or part of an hour worked beyond his regularly scheduled working hours.

19.05 For those not working a "flexible working schedule", as defined in Article 19.02, the stan­dard hours of work will be an average of thirty-seven and one-half (37.5) hours per week consisting of seven and one-half (7.5) hours per shifts exclusive of one-half (1/2) hour unpaid meal period.

19.06 Effective on date of signing of the Agreement, a shift premium of forty-five cents ($0.45) per hour will be paid for each scheduled hour worked before 6:00 a.m. or after 6:00 p.m.

Shift premiums shall not be paid if the employee's hours of work before 6:00 am. or after 6:00 p.m. are overtime.

19.07 Employees shall be permitted a fifteen (15) minute paid rest period in both the first half and the second half of their shift.

[emphasis added]

The parties are still negotiating a first collective agreement with respect to the part-time unit.

14. Section 13 of the Hospital Labour Dispute Arbitration Act provides that:

13. Notwithstanding subsection 81(1) of the Labour Relations Act, where notice has been given under section 14 or 54 of that Act by or to a trade union that is the bargaining agent for a bar­gaining unit of hospital employees to which this Act applies to or by the employer of such employees and no collective agreement is in operation, no such employer shall, except with the consent of the trade union, alter the rates of wages or any other term or condition of employ­ment or any right, privilege or duty of the employer, the trade union or the employees, and no such trade union shall, except with the consent of the employer, alter any term or condition of employment or any right, privilege or duty of the employer, the trade union or the employees, until the right of the trade union to represent the employees has been terminated.

Section 81(1) of the Labour Relations Act is an analogous provision. It provides that:

81.-(1) Where notice has been given under section 14 or section 54 and no collective agreement is in operation, no employer shall, except with the consent of the trade union, alter the rates of wages or any other term or condition of employment or any right, privilege or duty, of the employer, the trade union or the employees and no trade union shall, except with the consent of the employer, alter any term or condition of employment or any right, privilege or duty of the employer, the trade union or the employees,

(a) until the Minister has appointed a conciliation officer or a mediator under this Act, and,

(i) seven days have elapsed after the Minister has released to the parties the report of a conciliation board or mediator, or

(ii) fourteen days have elapsed after the Minister has released to the parties a notice that he or she does not consider it advisable to

appoint a conciliation board,

as the case may be; or

(b) until the right of the trade union to represent the employees has been terminated.

whichever occurs first.

Section 81(3) of the Labour Relations Act provides that:

(3) Where notice has been given under section 54 and no collective agreement is in operation, any difference between the parties as to whether or not subsection (1) of this section was com­plied with may be referred to arbitration by either of the parties as if the collective agreement was still in operation and section 45 applies with necessary modifications thereto.

15. Section 13 of the Hospital Labour Disputes Arbitration Act and section 81 of the Labour Relations Act are strict liability provisions in that an employer or trade union need not be improp­erly motivated for its actions to be in breach of either of them (see Beaver Electronics Ltd., [1974] OLRB Rep. March 120; The Wellesley Hospital, [1976] OLRB Rep. July 364; Kodak Canada Ltd., [1977] OLRB Rep. Aug. 517).

16. Commonly referred to as "freeze" provisions, section 13 of the Hospital Labour Dis­putes Arbitration Act and section 81(1) of the Labour Relations Act prohibit both an employer and the trade union which represents that employer's employees from altering anything which affects the employment of those employees where (as in this case) an appropriate notice to bargain has been given, unless its collective bargaining partner consents. The purpose of these provisions is to provide a stable point of departure for collective bargaining, thereby facilitating the collective bar­gaining process, by maintaining the working conditions and circumstances in place when the freeze is triggered. This serves to provide a fixed, though not necessarily static, basis for collective bar­gaining and operates to preclude the unilateral alteration of any bargainable aspect of the employ­ment status quo which might give one party an advantage in negotiations.

17. It is apparent from the opening words of section 13 of the Hospital Labour Disputes Arbitration Act that it not only prevails over section 81(1) of the Labour Relations Act but that sec­tion 13 replaces section 81(1) where the parties are governed by the Hospital Labour Disputes Arbitration Act. However, section 81(3) (like section 81(2), which is not applicable in this case) of the Labour Relations Act continues to apply to parties governed by the Hospital Labour Disputes Arbitration Act. Among other things, this provides for the arbitration of disputes concerning an alleged breach of section 13 (as an alternative to an application at this Board) and for the arbitra­tion of grievances with respect to disputes which arose either before or after the expired collective agreement which preceded the freeze period (Hamilton Civic Hospital, [1983] OLRB Rep. March 371).

18. Although the "freeze" label has stuck, it may be somewhat of a misnomer. The words of section 13 of the Hospital Labour Disputes Arbitration Act and section 81(1) of the Labour Rela­tions Act might be read to mean that there can be no change in anything which affects employment during the specified period. However, the Board has interpreted these provisions as operating to preserve the pattern of employment which exists when they come into effect, rather than specific terms, conditions or other circumstances of employment. Consequently, both the employer and the trade union continue to be entitled to operate within the parameters of the established pattern.

19. To put it in a way more applicable to this case, the Board has interpreted the "freeze" provisions in a manner which recognizes an employer's right to continue to manage its operations in accordance with the pattern of rights, privileges and duties which touch upon the employment relationships governed by its collective bargaining relationship with a trade union. For example, it is clear from the Board's jurisprudence that the statutory freeze, whether under the Hospital Labour Disputes Arbitration Act or the Labour Relations Act, preserves the rights which could have been exercised under the most recently expired collective agreement (see Women's College Hospital, [19811 OLRB Rep. May 597, for example), particularly in response to changes in market conditions or operational requirements (see, Molsons Brewery (Ontario) Limited, Toronto, [1977] OLRB Rep. Aug. 526; AES Data Limited, [1979] OLRB Rep. May 368). This was described in Spar Aerospace Products Limited, [1978] OLRB Rep. Sept. 859 as a "business as before" approach to the statutory freeze. As the Board's subsequent jurisprudence demonstrates, this is not always an easy test to apply. Nor does it always lead to an obvious result. For example, the Board has found that the "freeze" provisions do not necessarily preclude first-time events (see, Grey Owen Sound Home for the Aged, [1983] OLRB Rep. April 522 where lay-offs occurred for the first time during the freeze; Corporation of the Town of Petrolia, [1981] OLRB Rep. March 261 where work was contracted out for the first time during the freeze). In an attempt to clarify the "business as before" approach, and to accommodate first-time events and delays in the collective bargaining process, the Board developed the "reasonable expectations" test. Although reasonable expecta­tions language appeared in earlier decisions, the first express articulation of this test appears in Simpsons Limited, [1985] OLRB Rep. Apr. 594, where the Board explained (at paragraphs 32 and 33) that:

32. Reasonable expectations language has appeared in a number of decisions dealing with the freeze section. See, for example, Corporation of the the Town of Petrolia, supra; Scarborough Centenary Hospital, supra; Oshawa General Hospital, York-Finch Hospital, supra; St. Mary's Hospital, [1979] OLRB Rep. Aug. 795 (Decision omitted from [1979] OLRB Rep. March); AES Data Limited, [1979] OLRB Rep. May 368. In the latter case, for example, the Board found that the employer was entitled to re-assign job functions since the employees could not reasonably expect to continue performing their jobs, in exactly the same way despite changes in the mode of production and market conditions. Thus, in the Board's view, the reasonable expectations of employees as the appropriate measure of the employees' privileges which are protected by the freeze is a common thread running through the earlier decisions. In the instant case, the Board is expressly articulating the test.

33. The reasonable expectations approach clearly incorporates the practice of the employer in managing the operation. The standard is an objective one: what would a reasonable employee expect to constitute his or her privileges (or, benefits, to use a term often found in the jurispru­dence) in the specific circumstances of that employer. The reasonable expectations test, though, must not be unduly narrow or mechanical given that some types of management decision (e.g., contracting out, workforce reorganization) would not be expected to occur everyday. Thus, where a pattern of contracting out is found, it is sensible to infer that an employee would rea­sonable expect such an occurrence during the freeze. The Board in Simpsons, supra, although the cleaning was contracted out before the company itself took over that operation, did not con­clude there was such a pattern. See also Royal Ottawa Health Care Groups, [1992] OLRB Rep. Nov. 1222).

20. In the result, the Board has taken a flexible, purposive labour relations approach to the statutory freeze under both the Hospital Labour Disputes Arbitration Act and the Labour Relations Act. It could be argued that the statutory freeze contemplates a deeper or more static freeze, but the Board's approach recognizes that employment relationships tend to reflect the dynamic nature of business activity, and is more responsive to the variety of situations and collective bargaining relationships which are presented to the Board. In that respect, we note that the Canada Labour Relations Board tried and subsequently rejected the static freeze approach in favour of a "business as usual" approach (see Bank of Nova Scotia (Sherbrooke and Rock Forest, Quebec) (1982), 42 di 398, 82 CLLC ¶16,158; aff'd sub nom. Bank of Nova Scotia v Retail Clerks Int'l Union (1982), 83 CLLC ¶14,007 (Fed C.A.); Bank of Nova Scotia, Toronto, Ontario [1982] 2 Can L.R.B.R. 21 (CLRB)). The "business as usual" approach has also been applied to the statutory freeze legisla­tion in British Columbia, Nova Scotia, Newfoundland, and in the United States by the National Labour Relations Board. Further, the operative words of section 81(1) of the Labour Relations Act, which are the same as in section 13 of the Hospital Labour Disputes Arbitration Act and sug­gest that the same approach is appropriate, have emerged intact from the recent comprehensive review and revision of the Labour Relations Act. Since the Legislature must be taken to be aware of the Board's "freeze" jurisprudence, it evidently approves of the "business as usual/reasonable expectations" approach.

21. In a first collective agreement situation (that is, after a trade union acquires bargaining rights but before the first agreement is in place), the pattern of employment relevant for statutory freeze purposes is established by the employer's direct dealings with the employees. Subsequently, as collective agreements are negotiated and the collective bargaining relationship matures, the col­lective bargaining partners establish the relevant pattern of employment through their dealings with each other. The limits on what an employer (or trade union) is entitled to or must do during a freeze period subsequent to a first collective agreement depend primarily upon what the parties have negotiated before (as set out in the collective agreements between them - particularly the most recent one), and how they have conducted themselves under previous collective agreements and during previous negotiations.

22. We have already alluded to the delays endemic in the collective bargaining process under the Hospital Labour Disputes Arbitration Act. It is not uncommon for it to take years to con­clude a collective agreement through that process and for a collective agreement so concluded to be near expiry or even already expired by the time it is finalized. Unlike the freeze under the Labour Relations Act, a Hospital Labour Disputes Arbitration Act freeze cannot be brought to an end before a new collective agreement is finalized, unless the trade union's right to represent the employees in question has been terminated. In these circumstances, it is even more important for an employer and trade union subject to a Hospital Labour Disputes Arbitration Act freeze to be able to operate within the pattern of employment established prior to the onset of the freeze in these circumstances, and suggests that a dynamic approach to the freeze is appropriate.

23. The positions of the parties in this case reflect the approach often taken by parties in "freeze" cases. Both parties submitted that the disposition of this application should turn on the provisions of the most recent expired full-time collective agreement. Although both parties formu­lated their positions in terms of what employees could reasonably have expected in light of the pro­visions of that collective agreement, the real focus of the dispute between them was whether Mohawk was entitled to make the scheduling change it had implemented pursuant to the recently expired full-time collective agreement. Consequently, the applicant submitted that the collective agreement established the "10 hours per day, 4 days on, 4 days off' work schedule as the standard working day which Mohawk could not change to another standard working day without its consent, and that employees would reasonably have expected that work schedule to remain in place during the freeze. Mohawk submitted that the collective agreement contemplated the possibility of pre­cisely the scheduling change it had made, and that it was therefore entitled to make the change as a reasonable response to the economic and business exigency which it faced.

24. The applicant referred the Board to a number of arbitration decisions in support of its position. These decisions, and the arbitral jurisprudence in general, stand for the rather trite prop­osition that where an employer retains a broad power to "direct its working forces", it is entitled to alter the working hours, shifts or schedules of employees, except to the extent that its right to do so is limited by clear language in a collective agreement, or a previous practice or representation which has induced the union to refrain from enforcing an applicable right in that respect. The arbi­tral jurisprudence is less clear with respect to collective agreement language like "normal", "regu­lar" or "standard" to describe hours of work. What an employer can or cannot do in the face of this kind of language depends on the specific wording of the collective agreement taken as a whole, and the collective bargaining context.

25. In this case, there is nothing in the evidence which suggests that there was any represen­tation or discussion regarding the manner in which the Article 19, "standard hours of work and overtime" provision is to be applied or interpreted. The Board is satisfied that the most recently expired full-time collective agreement between the parties does indeed represent the bargained pattern of employment to which the section 13 Hospital Labour Disputes Arbitration Act statutory freeze applies. That expired collective agreement contains a broad management rights clause (Arti­cle 5) which provides the context within which Article 19 must be read. Article 19 stipulates that nothing in it is intended to establish any limits with respect to the number of hours which can or must be worked by employees, other than on an annual basis. Further, while it recognizes the "10 hours per day, 4 days on, 4 days off' schedule previously in effect, Article 19 also specifically con­templates that there may be employees scheduled to work five, 7½ hour days per week; that is, the schedule which the applicant complains about herein. Nor does Article 19 place any limit on the number of employees which can be put on this second "standard hours of work" schedule, or when or for how long employees can be scheduled in that way.

26. In the face of Articles 5,19.1 and 19.5, Article 19.2 does not, either standing alone or in conjunction with the previous long-standing scheduling practice preclude the scheduling change complained of herein. Taken as a whole, Article 19 specifies two possible "standard" work sched­ules, without limitation as to when or in what manner or circumstances they may be implemented by Mohawk. In all the circumstances, including the provisions of the most recent collective agree­ment between the parties and the fact that some employees (albeit few in number) have previously been regularly scheduled in accordance with Article 19.5, in the context of the current economtc circumstances, the scheduling change implemented by Mohawk was within the reasonable expecta­tions of all concerned, notwithstanding the previous scheduling practice. There is no suggestion in the evidence that such a change was not contemplated.

27. Board is satisfied that Mohawk had the right to make the scheduling change complained of herein and that there was nothing which limited its right to do so. The Board is therefore satisfied that Mohawk has not breached section 13 of the Hospital Labour Disputes Arbitration Act as alleged by the applicant with respect to the full-time bargaining unit employees.

28. Part-time employees have never had guarantees of any kind in terms of the hours of work or how these might be scheduled. The on-call scheduling has always been at the complete dis­cretion of Mohawk. To the extent that there was a pattern to the scheduling of part-time employ­ees, it mirrored that of full-time employees. (Indeed that was the way both parties approached the case.) In that respect, Mohawk is not scheduling part-time employees any differently now than before. The fact that the part-time employees have selected the applicant as the bargaining agent gives them no greater right or privileges with respect to scheduling than they had before. The Board is satisfied that there has been no breach of section 13 of the Hospital Labour Disputes Arbi­tration Act with respect to part-time employees either.

29. In the result, this application is dismissed.