Ontario Nurses' Association v. Oakville Lifecare Centre, 1993 CanLII 7909

Ontario Nurses' Association v. Oakville Lifecare Centre

[1993] OLRB REP. OCTOBER 980

3445-92-U Ontario Nurses' Association, Applicant v. Oakville Lifecare Centre, Responding Party

BEFORE: Louisa M. Davie, Vice-Chair, and Board Members R. M. Sloan and R. R. Montague.

APPEARANCES: Jennifer Webster, Cindy Forster, Sue Fedun and Rose Foy for the applicant; Jean M. Butters and Stephen Picolt for the responding party.

DECISION OF THE BOARD; October 18, 1993

Introduction

1. This is an application filed pursuant to section 13 of the Hospital Labour Disputes Arbitration Act ("HLDAA"). The applicant Ontario Nurses' Association ("ONA or "the union") complains that the responding party Oakville Lifecare Centre ("Lifecare" or "the employer") has altered the hours of work of employees in the bargaining unit without its consent and contrary to section 13 of the HLDAA ("the freeze provision").

2. Lifecare disputes that it has violated the HLDAA and asserts that it has merely continued to carry on business as usual, and in so doing has responded to certain economic circumstances affecting its operations. In addition Lifecare asserts that the scheduling changes about which the union complains were set in motion before the union's certification application.

3. We note at the outset that the employer was not represented by counsel. At the commencement of the hearing the Board indicated that there was no requirement that persons appearing before the Board be represented by counsel. The Board often hears cases where one or more of the parties are not represented by counsel. The Board noted however that Board proceedings are legal proceedings and persons appearing on their own behalf do bear any risk involved with appearing on their own behalf. We indicated to the employer's representative that the Board's function is to adjudicate. It would be inconsistent with our role as adjudicators to become an advocate for, or adviser to, any party to the proceeding merely because that party was not represented by counsel. The Board did however explain the process typically followed in applications of this sort, the rights of the parties to lead viva voce and documentary evidence, to examine and cross-examine witnesses, to make submissions etc. We also indicated that if the employer's representative had any questions about the process to be followed during the course of the hearing we would attempt to answer those questions within the confines of our adjudicative role. Thereafter the hearing proceeded.

4. There is no dispute that section 13 of the HLDAA was in effect at the time Lifecare altered the hours of work of certain of its employees. It is also not disputed that the ONA filed its application for certification to represent registered nurses at Lifecare in December 1990. On February 4, 1991 it was certified on an interim basis. On February 11, 1991 the ONA sent its notice to bargain a first collective agreement to the employer. On March 20, 1991 the ONA was certified as bargaining agent for a full-time and a part-time unit of registered nurses. The alteration of hours about which the union complains was implemented in November and December 1992. This application was not filed until February 24, 1993. At that time the parties had not yet concluded their collective agreement negotiations.

5. It is also not disputed that Lifecare operates a facility which is comprised of a nursing home section consisting of 178 nursing home beds, a residential or retirement home section consisting of 22 to 24 beds, and a hospital wing consisting of 35 hospital beds. The hospital wing is directly funded by the Oakville Trafalgar Memorial Hospital ("OTMH"). The bargaining unit represented by the union is comprised of approximately 20 full-time and part-time nurses working throughout the facility.

6. The alteration of hours of certain employees about which the union complains occurred primarily as a result of a change in staffing patterns in the hospital wing of the employer, and an earlier determination by Lifecare to restructure certain job classifications within the facility. Both of these factors figured prominently in the employer's position with respect to this application and therefore require further elaboration.

7. Mr. S. Picott has been the Administrator at Oakville Lifecare since November 1991. He testified that Lifecare conducted annual negotiations with the OTMH concerning the per diem rates which the OTMH would pay to Lifecare for the 35 beds which Lifecare provided at its facility to the OTMH for occupancy by long-term care patients of the OTMH. These beds were required apparently as a result of a lack of space and ongoing renovation at the OTMH.

8. Mr. Picott conducted the 1992 per diem rate negotiations with the OTMH. He testified that in 1992 the OTMH itself faced funding restrictions. As a result it was not prepared to pay the per diem rates which Lifecare wanted. For its part Lifecare could not continue to provide the services and staff which the OTMH desired unless the per diem request was granted, or Lifecare's operating costs with respect to the hospital beds were reduced.

9. It was Mr. Picott's evidence that at this time Lifecare had determined that, as a result of Ministry of Health (MO H) changes in funding for its nursing home beds, the facility was actually receiving a greater per diem rate with respect to its nursing home beds than the per diem it was receiving from the OTMH for the 35 beds in the hospital wing. Mr. Picott testified that although it was more expensive to operate the hospital wing, Lifecare was receiving less money to provide care to the residents of this wing than the money received from other sources to provide care to the other residents. Officials at the OTMH were therefore made aware of this funding inequity.

10. It was Mr. Picott's evidence that Lifecare determined the per diem that it would require to "break even". The OTMH was not prepared to pay that rate. The ensuing negotiations between the OTMH and Lifecare resulted in an increase in the per diem rates. Mr. Picott testified however that as part of those negotiations the OTMH also "directed" Lifecare to "reduce staff and reallocate positions". It was his evidence that "essentially they [the OTMH] told us we can adjust our staffing to this [level] and they dictated to us what we can do". Mr. Picott testified "therefore we were forced to make the changes in order to stay within the box they gave us". This "box" refers to the parameters set as a result of the negotiated per diem rates and the minimum hours of RN, RNA and health care worker care which Lifecare is required to provide to the OTMH patients under the terms of its contract with the OTMH.

11. The thrust of Mr. Picott's evidence was that in fact there was little "true" negotiation between the OTMH and Lifecare. The OTMH essentially directed Lifecare how it was to staff its hospital wing. In addition, although OTMH was aware Lifecare was operating within the statutory freeze period (having been advised of that fact by Mr. Picott) no accommodation for this fact was made by the OTMH. Implicit in his evidence was the suggestion that the economic circumstances were such that in order for Lifecare to remain financially viable the staffing levels would either have to be revised or the hospital wing would have to be closed. In fact the staffing levels were revised and led to the alteration of hours which forms the basis of the union's complaint.

12. At this point it is appropriate to note that Lifecare is a "for-profit" facility because this fact is relevant to both the employer's arguments in respect of economic justification, and its position that the changes were the result of "a business as usual" approach and/or an implementation of a course of conduct initiated and communicated to employees in the bargaining unit before the freeze period.

13. As a "for-profit" operation, Lifecare (as is the case with any other business) must operate within the parameters established by its "income received" and "expenses" or "operating costs" amounts. In this regard Mr. Picott testified that Lifecare's income comes from three sources - the OTMH (for the hospital wing), the MOH which dictates the per diem rates to be paid by the 178 nursing home bed residents, and the rates paid by the other residents occupying the residential or retirement wing. The maximum per diem rates which Lifecare can charge this latter group however are also legislated by the government.

14. Mr. Picott testified that the "government's inability to give us proper per diem increases" caused Lifecare to review its staffing with a view to reducing costs in order to stay "financially viable". In late 1990 and early 1991 a plan involving the restructuring of staffing levels in a manner that would still meet the MOH guidelines was devised by Lifecare. As a result certain positions which had been designated as "RN positions" were now to be designated as "R.N.A. positions".

15. At the time of this review however there was a market place shortage of qualified R.N.A.'s. As a result the newly designated R.N.A. positions continued to be filled by qualified R.N.'s paid the applicable R.N. rates and the restructuring plan was not in fact implemented.

16. One of the R.N.'s affected by the alteration of hours was Ms. T. Cox. It is Lifecare's assertion that Ms. Cox's position was designated as an R.N.A. position in late 1990 prior to the union's certification. That R.N.A. position falls within the employer's SEIU bargaining unit. As a result the employer asserts that any alteration of Ms. Cox's hours does not impact upon the ONA's bargaining unit and cannot be a violation of section 13 of the HLDAA.

17. Ms. Cox's testimony confirmed at least a portion of Mr. Picott's evidence. Ms. Cox testified that at a meeting in December 1990 the employees were advised that there would be staffing changes "effective immediately" and that Lifecare would be changing "as many R.N. positions to R.N.A. positions as possible". She was subsequently advised however that the changes could not be put into effect because Lifecare "didn't have any present staff to fill the positions". Ms. Cox also testified that she subsequently received a letter from Lifecare to the effect that the employees "were to maintain their present positions until further notice".

18. Thus, although Ms. Cox was aware that her position was not to be designated as a R.N. position any longer, she maintained that the proposed changes were never put into effect as R.N.'s, R.N.A.'s and graduate nurses continued to hold that position until November 1992 when the staffing patterns at the facility were altered with a consequent loss of hours for certain employees.

THE EFFECT OF THE CHANGES

19. In November 1992 as a result of both Lifecare's agreement with the OTMH and the redesignation of certain positions, an R.N.A. commenced to work the night shift at the hospital wing. An R.N. had previously filled that night shift position. The fact that an R.N.A. was now filling that night shift position had what can best be described as a "domino" effect. The R.N. who had worked on that shift was reassigned to another part of the facility referred to as the third floor unit. This transfer did not result in any loss of hours for that R.N. and there is no complaint that this transfer violated the freeze provisions of the HLDAA. We note however that the union characterizes this event as a "contracting out" of the R.N. night shift position. The employer disputes this characterization.

20. As a result of this R.N.'s transfer the hours of work of the R.N.'s on the third floor unit were affected. Two of the employees on whose behalf the ONA has filed this application (Maria Parker and Anne Adair) had been job sharing a full-time R.N. position on this third floor unit such that each worked seven shifts in a two week pay period. With the transfer of the R.N. from the hospital wing to the third floor unit the schedules of these job sharers changed so that each was now scheduled to work only five shifts in a two week period. Moreover not all of these shifts were on the third floor. Some shifts were to be worked on the second floor south west wing (2SW).

21. As a result of this fact the shifts of Ms. Cox, the R.N. on 2SW, were affected. Prior to the staffing changes Ms. Cox had job shared a position on 2SW with the result that she had regularly worked every Tuesday, Wednesday and Thursday night shift. (As noted, the employer claims this position is an R.N.A. position. The trade union disputes this.) When Ms. Adair and Ms. Parker started to work some shifts on 2SW, Ms. Cox's schedule was changed so that she only worked every Wednesday and Thursday night shift.

22. It is these scheduling changes and the consequent loss of hours for some employees about which the ONA complains. As a result it seeks a declaration that the employer has violated section 13 of the HLDAA, compensation for the three nurses who have lost hours of work, and an order directing the employer to restore the work schedules of Mesdames Cox, Adair, and Parker to their pre-November 1992 levels.

23. Lifecare disputes that its actions are a violation of section 13 of the HLDAA. The employer argues that throughout it has conducted itself in a manner consistent with its "business as before" period. It argues that the staffing changes were prompted by the economic situation facing Lifecare, were justified in the circumstances, and were unrelated to the ONA's certification. In addition the employer submits that the staffing changes had been initiated before the union's certification and were merely implemented after the union was certified. Finally, Lifecare asserts that in any event the three employees did not suffer any damages because if they had worked all the shifts which had been offered to them they would not have suffered any reduction in hours. This latter position goes merely to the matter of the appropriate remedy if a violation is found and will be addressed below.

THE LAW

ANTI-UNION ANIMUS

24. In its complaint the union originally asserted that the employer's conduct violated sections 65, 67 and 71 of the Labour Relations Act. These allegations were not pursued at the hearing. There is neither an allegation nor any evidence that any anti-union animus motivated the conduct about which the union complains. The only issue before us revolves around the violation of the statutory freeze.

25. The freeze provisions are strict liability provisions and there need not be any improper motive or anti-union animus underlying the employer's actions in order for the Board to find that the provisions have been violated. (See, Beaver Electronics Limited, [1974] OLRB Rep. March 120; The Wellesley Hospital Hospital, [1976] OLRB Rep. July 364; Kodak Canada Limited, [1977] OLRB Rep. Aug. 517). In this case the trade union acknowledged that anti-union animus did not precipitate the alteration in the hours of work of Mesdames Cox, Adair and Parker. Indeed, the Board would go further and accept that the employer's motivation in altering the work schedules was solely for business reasons.

PURPOSE OF THE STATUTORY FREEZE

26. Section 13 of HLDAA provides:

27. 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.

28. Section 81, subsection 1 of the Labour Relations Act provides:

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.

(2) Where a trade union has applied for certification and notice thereof from the Board has been received by the employer, the employer shall not, 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 or the employees until,

(a) the trade union has given notice under section 14, in which case subsection (1) applies; or

(b) the application for certification by the trade union is dismissed or terminated by the Board or withdrawn by the trade union.

(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 ith necessary modifications thereto.

28. These statutory provisions are commonly referred to as "freeze" provisions because a strict reading and construction of the provisions would indicate that the rates of wages, term or conditions of employment, rights, privileges or duties of the employer, trade union and the employees are "frozen" when, as here, notice to bargain has been given.

29. In fact however the Board has consistently interpreted the freeze provisions in a more purposive manner and has rejected any strict, literal interpretation of the provisions which would result in a static, unchanging employment and business environment. A flexible, more purposive labour relations approach permits the Board to be more responsive to the circumstances, concerns and interests of the litigants appearing before it. For that reason the Board has developed tests such as "business as usual" and the "reasonable expectations of the employees". In applying any of these tests the Board must carefully balance what are inevitably the competing interests, rights and obligations of the parties as their relationship moves through the collective bargaining process which follows the certification of the union and the giving of notice to bargain. As noted in Sunnycrest Nursing Home Limited, [1982] OLRB Rep. Feb. 261 at paragraph 44:

The freeze provisions give rise to difficult problems of interpretation for if treated as a total prohibition on any employer actions taken in the ordinary course of business which impinged upon the employment relationship, the freeze would effectively paralyze the employer's operations during the bargaining process; while, if the pre-existing but now frozen entrepreneurial rights are given too broad an interpretation, they would render the section meaningless.

30. The purpose of the statutory freeze provisions was described in AES Data Limited, [1979] OLRB Rep. May 368 at paragraph 10 as follows:

31. The purpose of section 70 [now section 81] is to maintain the prior pattern of the employment relationship, in its entirety, while the parties are negotiating for a collective agreement. This ensures that they will have a fixed basis from which to begin negotiations, and prevents unilateral alterations in the status quo which might give one party an unfair advantage either from the point of view of bargaining or of propaganda. The status quo includes not only the existing terms and conditions of employment but also any other established benefits which the employees are accustomed to receive, and which can therefore be considered to be "privileges." It is clear that express promises, or a consistent pattern of employer conduct can give rise to such privileges and that they are caught by the statutory freeze. It should be noted, however, that section 70 also freezes the 'rights and privileges" of the employer. The section requires both parties to maintain the existing pattern of their relationship; that is, to conduct their business as before. In Spar Aerospace Products Limited, [1978] OLRB Rep. Oct. 859, the Board discussed the effect of section 70 in the following way:

The "business as before" approach does not mean that an employer cannot continue to manage its operation. What it does mean is, simply, that an employer must continue to run the operation according to the pattern established before the circumstances giving rise to the freeze have occurred, providing a clearly identifiable point of departure for bargaining and eliminating the chilling effect that a withdrawal of expected benefits would have upon the representation of the employees by a trade union. The right to manage is maintained, qualified only by the condition that the operation be managed as before. Such a condition, in our view, cannot be regarded as unduly onerous in light of the fact that it is management which is in the best position to know whether it is in fact carrying out business as before. This is an approach, moreover, that cuts both ways, in some cases preserving an entrenched employer right and in other cases preserving an established employee benefit.

[emphasis in original]

31. That concept of "business as before" was expanded on in Simpsons Limited, [1985] OLRB Rep. Apr. 594 (Tacon panel) where the Board stated:

32. That section 79 [now section 81] is intended to maintain the status quo, to provide a period of stability while the parties are establishing their collective bargaining relationship or renewing that relationship by negotiating another collective agreement, is a sentiment often affirmed by the Board. The classic exposition of the parameters imposed on employer conduct during the freeze is the business as before formula in Spar Aerospace, supra. That formula has been referred to in virtually every case which since has considered section 79. The cases also confirm that section 79 is a strict liability provision in that anti-union animus is not a relevant factor.

33. The interpretation of section 79 in the context of particular fact situations, however, has seldom proved simple or straightforward.

34. And, as stated in Grey Owen Sound, supra, at paragraph 22:

The Board, in Spar Aerospace Products Limited, [1978] OLRB Rep. Sept. 859, articulated a business as before rule during the freeze period. In essence, the Board decided that the legislative intent of the freeze was to maintain the prior pattern of the employment relationship in its entirety. (See paragraph 19 of the decision). One problem in a first agreement situation is that the parties are in transition from a situation of unrestricted management's rights to one in which collective bargaining will result in some shift in the balance of power as between employer and employees. It is often very difficult in such situations to ascertain what the pattern of the employment relationship was.

26. Section 79(2) freezes the wage rates, other terms and conditions of employment, rights, duties and privileges of the employees and the rights, privileges and duties of employers for the period specified. Most of the freeze cases have arisen in the context described by the above quotation from Grey Owen Sound, that is, the transition from unrestricted management rights to a collective bargaining regime wherein those management rights are limited to a greater or lesser extent. In this context, the cases have discussed on the rights of employers versus the privileges of the employees. In other words, the statute freezes employees' privileges and it is the scope given to the employees' privileges which circumscribes the otherwise unlimited reach of employer rights.

27. Before the transition to a collective bargaining relationship, then, the doctrine of management rights is so broad, so all-embracing that there need be no recourse to employer privileges in the context of section 79(2). Once the transition is complete, however, and the freeze arises when the parties are bargaining for a renewal agreement, there may well be found employer privileges. In A. N. Shaw Restorations Ltd., [1978] OLRB Rep. June 479, for example, the Board held that a union had waived certain rights under its collective agreement and could not adopt a different posture during the freeze.

28. The Board could have interpreted section 79 50 as to freeze the precise conditions extant at the time the statutory provision was triggered. The Board, though, has consistently rejected that approach as an unreasonable interpretation of the legislation. In the Board's view, such an interpretation would effectively paralyze an employer's operations for the duration of the statutory freeze, a period which could be quite lengthy. In effect, the business as before formulation in Spar Aerospace, supra, was the Board's response to too expansive a view of employee privileges. To paraphrase Spar Aerospace, the employer's right to manage its operation was maintained subject to the condition that the operation conform to the pattern established when the freeze was triggered.

29. Business as before is a slippery concept to apply to specific fact situations. The focus of the test is the pattern of operations, the employer's practice. Certainly, where the practice is accurately embodied in an employer's policy manual, the application of business as before has been relatively straightforward: J. M. Schneider Inc., [1984] OLRB Rep. Apr. 609. There have been other instances where a practice has been so well entrenched as to be beyond dispute: Spar Aerospace, supra, with respect to annual merit and annual cost of living increases. On the other hand, the increased parking fee cases illustrate the difficulty in looking for a pattern: see Oshawa General Hospital, [1985] OLRB Rep. Jan. 98, and the cases cited therein, including Humber Memorial Hospital, [1979] OLRB Rep. Aug. 764 and Ottawa General Hospital, September 1984, unreported, File No. 0965-84-U(B). Does business as before require annual adjustments to parking fees, equal increases in fees, regular adjustments, any charge to employees for parking, or, is what is frozen the actual rate in place at the time of the freeze? The cases generally reject the actual rate at the time of the freeze and uphold adjustments to rates. However, the cases reveal the difficulty of looking at a pattern or business as before to measure employees' privileges.

30. The freeze provisions catch two categories of events. There are those changes which can be measured against a pattern (however difficult to define) and the specific history of that employer's operation is relevant to assess the impact of the freeze. There are also first time events and it is with respect to that category that the business as before formulation is not always helpful in measuring the scope of employees' privileges. Some first time events have been readily rejected by the Board, where, for example, the employer has instituted parking tees for the first time during the freeze: see Scarborough Centenary Hospital, [1978] OLRB Rep. July 679; St. Joseph's Hospital, September 1984, unreported. File No. 0965-84-U(A). On the other hand, the Board has upheld an employer's right to lay-off employees during the freeze (assuming there is no anti-union animus in the decision): Simpsons, supra; Burlington Carpet Mills, supra; The Winchester Press, supra; Grey Owen Sound, supra; Deacon Brothers, supra; Airline (Malton) Credit Union, supra. This right has been confirmed even where the first instance of layoff occurred during the freeze (see Grey Owen Sound, supra; The Winchester Press, supra; and where the layoffs had occurred elsewhere in the employer's operation but not at the specific location in question (see Simpsons, supra). The respondent in the instant case cited Corporation of the Town of Petrolia, supra, for the proposition that the employer may also contract out work for the first time during the freeze.

31. Instead of concentrating on business as before, the Board considers it appropriate to assess the privileges of employees which are frozen under the statute and thereby, delimit the otherwise unrestricted rights of the employer, by focusing on the reasonable expectations of employees. The reasonable expectations approach, in the Board's opinion, responds to both categories of events caught by the freeze, integrates the Board's jurisprudence and provides the appropriate balance between employer's rights and employees' privileges in the context of the legislative provisions.

32. Reasonable expectations language has appeared in a number of decisions dealing with the freeze section. See, for example, Corporation of 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 [19791 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 reasonably 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.

34. The reasonable expectations approach also integrates those cases which affirm the right of the employer to implement programmes during the freeze where such programs have been adopted prior to the freeze and communicated (expressly or implicitly) to the employees prior to the onset of the freeze: Le Patro d'Ottawa, [1983] OLRB Rep. Feb. 244. The Board considers that the upholding of the right to contract out during the freeze period in Corporation of the Town of Petrolia, supra, does not establish an unrestricted right of the employer to contract out work during the freeze but, rather, recognizes that the employer in that case had embarked on a programme leading to the contracting out well in advance of the freeze and that the employees would reasonably have been aware of his programme in the circumstances (see par. 20, in particular).

35. Finally, the lay-off cases are consonant with the reasonable expectations approach. Very few, if any, work forces are entirely static; fluctuations in the size of the staff complement and its composition are the norm. Employers are generally expected to respond to changing economic conditions through the hiring, termination and attrition of employees. It is in this sense that it is reasonable for employees to expect an employer to respond to a significant downturn in the business with layoffs (or terminations) even where such layoffs are resorted to for the first time during the freeze. The magnitude of the layoffs, of course, must be proportional or relative to the severity of the economic circumstances. Economic justification must be proven where relied on and there must be an absence of anti-union animus.

36. Both the "business as usual" and "reasonable expectations" tests may at times be difficult to apply. The tests however enable the Board to properly consider and balance the rights and privileges of the employer as circumscribed by the rights and privileges of the employees and their bargaining agent. Thus in this case there is no doubt that the events and circumstances of November and December 1992 "changed" the business and employment environment at Lifecare. The issue however is whether this "change" was merely business as usual (justified by the economic circumstances facing the employer), and whether the change was consistent with the reasonable expectations of the employees concerning their continued terms or conditions of employment, privileges or duties during the freeze period. What then is the result if we apply these tests to the facts and circumstances before us?

BUSINESS AS USUAL AND ECONOMIC JUSTIFICATION

33. Throughout the presentation of its case the employer's representative argued that Lifecare was merely conducting its business "as before" or "as usual". Reference to this concept was made in both the opening statements and in final argument.

34. There was however no evidence presented before this Board to support that assertion. We heard no evidence about whether or under what circumstances Lifecare had made previous alterations to its staffing levels, the hours of work of its employees, the work schedules of its employees etc. Thus we have no evidence upon which we can make any determination as to whether the employer's actions and conduct were in fact the "usual" way in which it did or would respond to the circumstances which Lifecare faced in the fall of 1992. The employer's only witness became the administrator of this facility in November 1991, while the freeze was in effect, and after the trade union had been certified. He did not or could not testify as to how the employer conducted its operations in Oakville prior to that time.

35. We have no evidence about Lifecare's practices before the freeze period with respect to either changes in staffing, reductions in hours of work or changes to the work schedules of staff. There is no evidence before us as to how Lifecare managed its operations before the onset of the freeze. Under these circumstances we reject the employer's position that Lifecare's staffing changes, the changes to the schedules, and the reduction of hours of work for some employees were merely the exercise of managements rights in a manner "as usual" or "as before". We do not accept that the changes which took place were consistent with Lifecare's managerial practices before the onset of the freeze.

36. Lifecare also submitted that there was economic justification for its actions. It asserted that the economic conditions facing it were such that the changes to staffing and the schedules of hours had to be made if Lifecare was to continue to be a financially viable operation. In addition the employer argued that the changes were directly related to third party funding and as such were beyond the control of Lifecare.

37. We accept that employers can and must be able to respond to changes in economic conditions during a freeze period subject to the caveat that its response must be "as before". At times that response may lead to a "first time event" as referred to in Simpsons Limited, supra. We also agree that it is reasonable for employees and trade unions alike to expect that an employer faced with significant economic difficulties will respond appropriately to ensure its continued financial viability. In this regard an employer's response may very well include a reduction in hours or changes to work schedules. The rights and privileges of the employees and the trade union which are ' 'frozen'' when notice to bargain is given cannot be interpreted so expansively as to eliminate the employer's rights to effectively manage its operations in the face of changing economic circumstances (see, Simpsons Limited, (Tacon panel), sup ra.

38. There is however little concrete evidence before the Board to substantiate the employer's economic justification arguments. Rather the evidence points to a finding that what Lifecare did during the freeze and without the union's consent was to introduce a new means of operations to reduce costs.

39. Lifecare linked the staffing and scheduling changes to the OTMH funding of the hospital wing. The evidence discloses however that the per diem rates paid by the OTMH were actually increased during the freeze period as a result of Mr. Picott's negotiations. There was thus no decrease in funding to justify staffing changes. There is also no evidence of any downturn in the "business" of Lifecare such as a decrease in the number of residents in the hospital wing. ln any event the total amount of money received from the OTMH is not dependent on the actual occupancy rate in the hospital wing and does not vary with the actual number of patients in the wing. There is no evidence that the number of nursing home residents or retirement wing residents decreased and prompted staffing changes. Nor is there any evidence or suggestion that the staffing reorganization and the alterations to the work schedules of the employees was the result of a change in job functions. Rather these changes were the result of the decision to assign those job functions to a different group of employees.

40. In this case the staffing changes and the consequent alteration to the employees' schedules and loss of hours of work for some employees was not simply an adjustment in the number of staff required to carry out the employer's operation. Rather the changes arose because of Lifecare's decision to carry on its business in a different manner than before. Whereas before Lifecare had staffed the hospital wing night shift with a qualified R. N., the employer elected during the freeze, and without the consent of the union, to staff that shift with an R.N.A. The same work continued to be performed for the same residents, and for the benefit of the employer's operations, but with different employees. The elimination of the night shift R.N. position was not the result of an economic downturn or a lack of demand for the work performed. It was the result of the employer's decision to change its operations and reduce its operating costs by having the available work performed by its other employees.

41. Lifecare has not satisfied the evidentiary burden placed upon it if it wishes to avail itself of an economic justification argument. Lifecare presented no evidence about its actual expenses and operating costs, revenues received, profit or loss position, to provide some context within which its economic justification assertions can be measured and assessed. Neither did it present any evidence about what Mr. Picott characterized as the per diem it required to "break even". The evidence we do have is both that the OTMH rates were increased, and that the work continued to be performed by other employees.

42. The entirety of the evidence indicates that Lifecare determined that in order to maintain what it viewed as a "financially viable" position it would have to somehow reduce operating expenses. Staffing changes and a reduction of hours for some employees was the means Lifecare chose to attain that goal. In substance however that conduct is not much different than other conduct proscribed by the statutory freeze such as the unilateral reduction of the hourly rates of employees during the freeze by an employer who determined a need to reduce operating costs.

43. In balancing the interests of the parties in the circumstances of this case, and given the insufficiency of the evidence as it relates to economic justification, we are of the view that it is not unduly onerous to require this employer to wait either until the expiration of the freeze period or until it obtains the consent of the trade union before it makes fundamental changes to its staffing levels and employee work schedules in an effort to reduce costs. Experience has shown that the process of collective agreement negotiations and interest arbitration set out in the HLDAA is inevitably a long slow process which often takes in excess of two years to conclude. That is certainly true of the circumstances before us where more than two years elapsed between the giving of notice to bargain and the settlement of the collective agreement terms. Given such a lengthy period of time during which the freeze is in effect it is particularly important that the trade union and the employer work together to resolve issues such as these. With the consent of the trade union during bargaining, or as a result of agreed upon collective agreement terms, Lifecare may well be able to make the staffing and scheduling changes which it maintains are necessary in order for it to continue to be financially viable. To unilaterally do so during the freeze period and without the consent of the trade union however violates section 13 of the HLDAA.

IMPLEMENTATION OF CHANGES DETERMINED AND ANNOUNCED PRIOR TO THE FREEZE

44. The decisions of the Board affirm the right of an employer to implement changes notwithstanding the statutory freeze provisions if the changes were initiated or adopted prior to the freeze. The changes must have also have been communicated to the employees before the onset of the freeze. (See for example, Le Patro d'Ottawa, [1983] OLRB Rep. Feb. 244, Carleton University, [1978] OLRB Rep. Feb. 184, Ottawa General Hospital, [1981] OLRB Rep. Oct. 1461).

45. We agree with that approach. Contrary to the assertions of the employer however we find that such an approach has no application to the case before us. In our view the intervening events and the length of time which elapsed between the time the changes were decided upon and announced and the time when the changes actually occurred are significant factors which detract from the employer's position that it was merely carrying through with changes initiated and communicated prior to the union's certification.

46. Lifecare did communicate planned staffing changes to the employees sometime in December 1990 prior to the union's certification. The evidence indicates however that those changes were not implemented. Although Lifecare intended and announced that it would change the designation of certain R.N. positions to R.N.A. positions, a shortage of qualified available R.N.A.'s prevented it from going ahead with that plan. Ms. Cox's evidence indicates that employees were advised shortly after the planned staff restructuring was announced that the status quo would be maintained until further notice. As a result R.N.'s continued to fill "designated" R.N.A. positions and continued to be paid applicable R.N. rates until the changes which gave rise to this complaint were made in December 1992. In addition the evidence indicates that the December 1992 changes were made primarily as a result of the negotiations with the OTMH and were not merely the implementation for the predetermined December 1990 plan. In these circumstances we do not accept that the changes which occurred nearly two years after the staff restructuring plans were first announced fall within the scope or intent of the Board's jurisprudence as it relates to the implementation of decisions made prior to the onset of the freeze.

47. If there had been some suggestion that some or part of the staff restructuring plans had actually been implemented within that two year period the Board may not have viewed the two year hiatus as so significant. Certainly we do not mean to suggest that changes initiated and announced to employees prior to the freeze must be immediately acted upon. The circumstances may be such that immediate action or implementation is impossible or inappropriate. Similarly if there had been evidence that after the onset of the freeze Lifecare re-iterated its position that it continued to intend to effect the previously announced changes but was unable to do so because of a shortage of RNA's we might have viewed the matter differently. Where as here however nothing was done to re-affirm the planned changes and nothing was done in reliance of the restructuring plans for nearly two years, it is neither "business as usual" nor within the "reasonable expectations" of the employees and the trade union to implement the changes during the freeze, when the parties are bargaining for a collective agreement, and without notice to the union.

REASONABLE EXPECTATIONS OF THE EMPLOYEES

48. There was some suggestion in the employer's position and particularly in its cross-examination of Ms. Cox that the employees could not expect to continue to enjoy their very favourable job sharing arrangements ad infinitum. Although not specifically articulated in its final submissions, it appeared to be Lifecare's position that the job sharers directly affected by the changes to staffing and scheduling did not and could not have any reasonable expectation that their work schedules and hours of work would remain static. It could therefore not be a violation of the statutory freeze provisions to alter those work schedules. For its part, the trade union specifically took the position that it was within the reasonable expectation of the employees that their work schedules, notwithstanding their uniqueness, would not be unilaterally altered by the employer during the freeze. For these reasons we find it appropriate to address the "reasonable expectation of employees" issues notwithstanding the fact that we have up to this point dealt with this application of the basis of the "business as before" test.

49. The statutory provisions and the Board's jurisprudence refer to terms or conditions of employment and the rights and "privileges" of the employees. A privilege is essentially a benefit received by employees to which they have no legal claim. In St. Mary's Hospital, [1979] OLRB Rep. Aug. 795 the Board stated at paragraph 10:

"Section 70(2) [now section 80(2)] preserves not only the employees' terms and conditions of employment, but also privileges which, by reason of custom and practice, have become a part of the employment relationship. The term 'privilege' is extremely broad and extends to all of those benefits which an employee is accustomed to receiving but to which he is not legally entitled, and which cannot, therefore, be considered a 'right.' In order to determine whether a particular benefit, or aspect of the employment relationship, has become a privilege, it is necessary to examine the circumstances of each particular case since privileges can arise from established custom, practice, or policy. The question is an evidentiary one for, by definition, the Board's consideration must be beyond the strictly legal incidents of the relationship ('rights') and include those aspects of the relationship which give rise to 'privileges."'

50. This case involves a "privilege" of the employees. In the circumstances before us, the employees may not have had a legal right to insist on working only specific shifts (i.e. Ms. Cox's only Tuesday, Wednesday, Thursday nights shifts schedule). Their unique job sharing arrangements and schedules however were in our view a "privilege" or a benefit within the meaning of the HLDAA. A "privilege" may be personal to a particular employee. Thus, the Board has found that the discharge of an employee who refused to work on Saturdays violates the statutory freeze where the employee had enjoyed "a personal privilege absolving her from the normal requirement to work Saturday shifts". (See, Cloverleaf Hotel, [1981] OLRB Rep. June 630).

51. In the instant case we find that the employer's past conduct with respect to the work schedules of the individual job sharing employees named in the complaint gave rise to a reasonable expectation on the part of those employees that their existing scheduling "privileges" or "benefits" would continue during the freeze. Their job sharing arrangements had been continued for some time notwithstanding the employer's intended staff restructuring plans. There was no reduction in the amount of available work. In addition, the employees could reasonably expect that this privilege would not be unilaterally altered without notice to, or the consent of, their newly certified bargaining agent while the employer and the trade union were negotiating a collective agreement. The reasonable expectation of the employees would be that as staffing, hours of work, work schedules etc. are fundamental issues for bargaining these matters would be discussed with their bargaining agent and would not be unilaterally altered.

52. For all of these reasons we have determined that Lifecare violated section 13 of the HLDAA when it altered the hours or work of Mesdames Cox, Adair and Parker.

THE REMEDY

53. This brings us then to the issue of the appropriate remedy. In this regard it is important to emphasize that approximately two weeks before this matter was heard by the Board the parties had completed their collective bargaining negotiations and had concluded a collective agreement subject only to ratification. Indeed their collective agreement was settled without recourse to interest arbitration on the morning of the scheduled interest arbitration hearing.

54. The successful completion of the collective bargaining process and the existence of the collective agreement is a significant factor in determining the appropriate remedy in this instance.

55. Once again we look to the purpose of the freeze provisions. The freeze provisions are a legislative mechanism which provides a fixed and stable point of departure for collective bargaining. Providing such a fixed point facilitates the collective bargaining process. It also ensures that neither party gains an unfair advantage in collective bargaining. Finally, the freeze also prevents either party from resorting to alterations in their collective bargaining relationship which may violate the spirit and intent of a legislative scheme which seeks to promote a period of some stabilization and tranquillity during which the parties can negotiate without recourse to economic sanctions or, in this instance, interest arbitration. Until sections 13 of the HLDAA and section 81 of the OLRA are exhausted therefore neither party should be able to unilaterally alter the collective bargaining relationship. Thus, in Kodak Canada, supra the Board referred to these provisions stating that "all legal incidents of the collective bargaining relationship are maintained" [emphasis added]. In Simpsons, supra, the Board also referred to the collective bargaining relationship and commented that the freeze defines the parameters within which the transition from unfettered managements rights to co-operative collective bargaining occurs. (See also AES Data Limited, supra Simpsons Limited, [19851 OLRB Rep. March 469, (Springate panel), Arrow Games Inc., [1991] OLRB Rep. Feb. 157, Rest Haven Nursing Home, [1979] OLRB Rep. June 554, Spar Aerospace Products Limited, supra, Molsons Brewery Limited, [1977] OLRB Rep. Aug. 526, Windsor Airline Limousine Services Limited, [1980] OLRB Rep. July 1147 and the cases cited therein.)

56. To this we would add that the requirement that an employer obtain the consent of the trade union before altering the rates of wages or any other term or condition of employment compels the employer to recognize the authority of the trade union to bargain on behalf of the employees. It necessitates communication between the parties and in that way encourages the joint resolution of issues facing both parties. In our view it is not a coincidence that the statutorily imposed duty to bargain in good faith and the freeze provisions are both triggered by the notice to bargain and generally both terminate upon the conclusion of the collective agreement. As a matter of sound labour relations policy that communicative purpose should also be considered when remedies for a breach of the freeze provisions are considered.

DECLARATORY RELIEF

57. With these purposes in mind an appropriate remedy can be fashioned. The trade union seeks a declaration that the employer has violated the HLDAA freeze provisions. We agree that such declaratory relief is appropriate. Certainly, matters such as scheduling, hours of work, job sharing opportunities, contracting out etc. are fundamental issues for bargaining. The employer's actions in this instance were undertaken without prior consent, communication or discussion with the trade union. Yet these actions would necessarily affect the collective bargaining relationship between the parties. The conduct did not maintain the "legal incidents of the collective bargaining relationship". Rather it altered the status quo or the fixed point of departure with respect to issues that go to the heart of collective agreement negotiations. Lifecare's failure to discuss the alterations and staffing level changes with the union before implementation was contrary to the communicative purposes implicit in the freeze provisions. In the result the statutory provisions and the intent and purposes which underlie them was breached. Accordingly, we declare that Lifecare has violated section 13 of the HLDAA.

RESTORATION OF THE SCHEDULES

58. The trade union's request that the pre-November 1992 work schedules of Mesdames Cox, Adair and Parker be restored however is much more problematic given the fact that the parties have successfully concluded their collective bargaining and have negotiated a collective agreement. That collective agreement deals with the very matters such as scheduling, hours of work, contracting out, shift changes etc. raised in this complaint.

59. As the parties have been able to successfully negotiate their collective agreement any disruption to the collective bargaining relationship which was or could have been caused by the unilateral actions of the employer has been remedied. The successful completion of the collective bargaining process also tends to indicate that the communicative purpose underlying the freeze provisions has been met and that the parties have indeed discussed the many issues facing each of them which may now require joint rather than unilateral resolution. There is no evidence that the trade union was disadvantaged in bargaining as a result of the employer's violation of the freeze. Moreover, with the conclusion of the collective agreement the parties have themselves established and defined the terms and conditions of employment and the rights, privileges or duties of the employer, the trade union and the employees in their ongoing relationship. Through the provision of the grievance and arbitration procedure they have also established a mechanism by which issues and disputes with respect to those matters are to be resolved.

60. In the absence of any evidence that the union was disadvantaged or prejudiced in its bargaining as a result of the freeze violation, we do not consider it appropriate to order the employer to restore the schedules of Mesdames Cox, Adair and Parker to their pre-November 1992 levels. In the circumstances any restoration of their schedules would in any event at best be a "nominal" restoration as the various rights of the employer, trade union and the employees with respect to the hours of work of these employees is a matter now governed by the collective agreement. Any continuing issues or disputes with respect to their scheduling is now also governed by the collective agreement.

COMPENSATORY RELIEF

61. Finally, we turn to the matter of compensatory damages for the three individual employees directly affected by the employer's breach of the statutory freeze.

62. The declaratory relief which we have already made is an insufficient remedy for the damages suffered by the employees. In addition, although the individual rights of the employees can now be found in the language of the collective agreement, until that collective agreement was negotiated these employees had no opportunity to grieve and arbitrate the issues surrounding the employer's unilateral alteration of their hours of work. In this regard their "loss" is personal and direct and the various policy considerations which caused us not to order a restoration of the work schedules as requested by the trade union do not apply.

63. Lifecare asserts that none of the employees suffered any damage because each was given the opportunity to work additional hours but refused. Lifecare submits that if the employees had not refused the extra shifts offered to them, over a period of time they would have worked an amount of hours roughly equivalent to the hours worked before the changes were made to their work schedules. Lifecare tendered certain documents and calculations which it had made to support this assertion.

64: The documentation relied upon by Lifecare to make the comparison however is inaccurate and incomplete. In his cross-examination Mr. Picott himself admitted to a number of errors and inconsistencies. In addition, the calculations are based on the comparison of the 27 week period which preceded November 9th with the 27 week period which followed that date. No reasonable explanation was given however for choosing the November 9th date when the actual implementation of the changed schedules did not occur until at least November 30th. The November 9th date is arbitrary and yet materially affects the total hours comparison which the employer urges upon us. The 27 week period preceding November 9th was a period during which each of these three employees took some vacation time, yet no allowance is made for that fact in the comparison which the employer desires us to make. Finally, the employer characterizes certain shifts as "refused" by the employees. The evidence however does not support that. On particular days the schedules may indicate the employees who are "not available". There is no evidence however about who made such a notation, when it was made or why it was made. As Mr. Picott admitted there is nothing to indicate that these employees were ever called or otherwise offered shifts which they then refused. Ms. Cox's and Ms. Adair's evidence is to the contrary.

65. For all of these reasons we do not accept the employer's submissions that the employees did not suffer any loss. We do accept the suggestion that compensation should not be based solely on the fact that the employees did not work particular shifts. In this case compensatory relief is not to be a windfall but rather to compensate for lost opportunities. Thus the fact that hours were worked on a different day or on a different shift must be considered in any award of damages.

66. We have therefore determined that Mesdames Cox, Parker and Adair are to be compensated according to the following formula: from November 30, 1992 to the day of the signing of the collective agreement, for any pay period in which these employees worked less than the total number of hours that they normally would have worked in a pay period prior to November 30, 1992 they are to receive compensation based on the difference between the total number of hours actually worked and the total number of hours they normally would have worked prior to November 30, 1992. To assist the parties in making their calculations we note that the evidence indicates that prior to November 30, 1992 Ms. Cox normally would have worked 45 hours per pay period while Ms. Adair and Ms. Parker normally worked 52.5 hours in a pay period.

67. We note however that in her evidence Ms. Cox admitted that for the Christmas period in 1992 she was unavailable to work Wednesday, December 23 and Thursday, December 24 (days which she would normally have worked before the alteration of the schedules). Ms. Cox's loss for that pay period must take that fact into account.

68. We will remain seized in the event the parties are unable to agree upon the amount of damages owing to these individual employees.