Ontario Labour Relations Board
[1994 OLRB Rep. March 326
3608-93-M Milk and Bread Drivers, Dairy Employees Caterers and Allied Employees, Local Union No. 647, Applicant v. William Neilson Ltd., Responding Party
BEFORE: Lee Shouldice, Vice-Chair, and Board Members J. A. Ronson and R. R. Montague.
APPEARANCES: N. L. Jesin and P. Powers for the applicant; Doug Gilbert, John Mastoras, Ralph Robinson, Carl Taylor, Peter Newhouse and Barry Cooper for the responding party.
DECISION OF LEE SHOULDICE, VICE CHAIR, AND BOARD MEMBER, J. A. RONSON; March 10, 1994
1This is an application for an interim order filed pursuant to section 92.1 of the Labour Relations Act, which by oral decision dated January 25, 1994 was denied (Board Member Montague dissenting). These are the reasons for that denial.
2This matter relates to Board File 3607-93-U ("the main application") in which the applicant ("the union") alleges that the responding party ("the employer") has violated sections 15, 65 and 67 of the Act. In the main application the union has, amongst other things, sought the permanent reinstatement with full compensation of twenty-eight bargaining unit employees laid off as a result of the employer's decision to contract out certain warehousing functions previously performed by those bargaining unit employees. In this interim application, the union seeks interim reinstatement of the twenty-eight laid off employees pending the determination of the main application on its merits.
3At the core of the dispute between the parties is the union's allegation that the employer, during the last round of collective agreement negotiations, made certain representations to the union regarding the possible subcontracting of warehousing functions to third parties. The union alleges that the employer has now acted contrary to those representations. On the basis of the written declarations filed with the Board, there appears to be no dispute that during the last round of collective agreement negotiations the employer raised the possibility of contracting out warehousing tasks in order to reduce the overall costs of its warehousing operations. What is in dispute between the parties is whether this issue was resolved at all and, if so, the terms upon which it was resolved. The union alleges that it responded to this employer proposal during negotiations by agreeing to a number of monetary concessions, which concessions led the employer to abandon its position on the contracting out of warehouse operations. In contrast to the union's allegations, the employer states that, failing an agreement during negotiations on an incentive-based wage structure, it communicated to the union that it would proceed to subcontract the warehousing work, and that the union's chief spokesperson responded that the employer "had to do what it had to do". The negotiations were concluded between the parties on June 14, 1993, when a Memorandum of Agreement was reached by the union and the employer.
4On January 4, 1994, the employer's Vice-President of National Accounts and Administration advised the applicant's President that the employer would announce, on January 14, 1994, the layoff of approximately twenty-eight employees performing warehousing functions, and that this work would be contracted out to a third party. In fact, these layoffs have now occurred, effective January 14, 1994, and effective January 17, 1994 a third party, Tibbett & Britten Group Canada Inc. ("T.B.G.C.") commenced warehousing operations for the employer. By application for interim order dated January 21, 1994, the applicant asks the Board to rescind these layoffs pending the determination of the main application on its merits.
The Law
5Section 92.1(1) of the Labour Relations Act, which governs the issuance of interim orders by the Board, reads as follows:
92.1-(1) On application in a pending or intended proceeding, the Board may grant such interim orders, including interim relief, as it considers appropriate on such terms as the Board considers appropriate.
Although Board jurisprudence dealing with the application of section 92.1 of the Act is still in its infancy, a review of Board decisions to date permits the identification of a number of fundamental principles and factors which the Board will apply and consider when seized with an application brought for an interim order.
6First, and most importantly, a two-part test to determine whether an interim order should issue has been established by the Board. The first branch of the test requires the Board to be satisfied, on the basis of the written declarations before it, that an "arguable case" for the remedies requested in the main application has been made out by the applicant. As was pointed out by the Board in Loeb Highland [1993] OLRB Rep. Mar. 197 at paragraph 26:
……we find it most appropriate to set out as one requirement in a test for interim relief that the main application must reflect an arguable case. By this we mean that if the applicant's assertions can be established, there is at least an arguable breach of the Act, or an arguable case for a remedy within the parameters of some provision of the Act.
It is noteworthy to observe that the assessment made by the Board as to whether an "arguable case" exists for a remedy in the main application is one made by reference to the one or more declarations filed by the applicant. Consistent with the principle that interim orders should be granted in an expeditious manner, the Board's Rules of Procedure do not allow for cross-examination on the declarations filed by the parties. Accordingly, the Board is not in a position to make factual determinations in situations where the declarations of the parties disclose contradictory factual allegations. As a result, the Board will consider the first hand factual allegations made in the declaration(s) filed by the applicant. The Board assesses whether the facts described by the declarants make out at the very least an arguable case that a breach of the Act may have been committed.
7The second branch of the test requires the Board, by reference to the written declarations of the parties, to consider the relative harms which may result from granting or not granting the interim order sought. The Board in Morrison Meat Packers Ltd., [1993] OLRB Rep. Apr. 358, described this branch of the test as follows (at paragraph 18):
There must be some danger of possible significant harm to the applicant before the Board will grant the relief being sought. Furthermore, that harm must be more significant than the possible harm which may result to the responding party if the order sought is granted.
In Tate Andale Canada lnc., [1993] OLRB Rep. Oct. 1019, the Board described the assessment to be made in the following terms (at paragraph 55):
…..it is necessary to consider what "harm" may occur if an interim order is not granted, and what "harm" may occur if it is granted; moreover, that assessment should be made from a labour relations perspective, having regard to the scheme and purpose of the Act, of which section 92.1 is a part. In our view, the interests to be considered include those of the employer, the union, the aggrieved employees, and other employees in the work place who might be effected [sic] by the conduct under review.
8As noted above, Board jurisprudence dealing with the application of section 92.1 of the Act is still in its infancy. It is, accordingly, fair to say that the full range of the types or nature of the potential harms relevant for the purposes of the balancing of relative harms has not yet been determined by the Board, if it ever could be exhaustively determined. As has been noted many times before, each and every interim relief application is dependent upon the particular facts before the Board. That being so, Board decisions to date do identify some common threads which weave through interim order applications. It is clear, for example, that the power to grant interim orders should not be exercised by the Board if the harm to be avoided is purely or predominantly financial in nature. See, for example, Morrison Meat Packers Limited, supra, at paragraph 23; Price Club Canada Inc., [1993] OLRB Rep. July 635 at paragraph 16; Bryan Forde [1993] OLRB Rep. Dec. 1296 at paragraph 35; and Fort Erie Duty Free Shoppe Inc., [1993] OLRB Rep. Dec. 1307 at paragraph 24.
9Board jurisprudence has also identified as a factor to be considered in the weighing of relative harms the effect of any delay in the bringing of the application for interim relief. Once again it is important to recognize that the effect of a delay by the applicant in the launching of an interim relief application will be considered by the Board on the particular facts before it. It is both unnecessary and unwise for the Board to set any arbitrary time frame within which an application for interim relief need be brought, as even a short delay may (or may not) be significant to the Board's decision in any particular case. We endorse, however, the observation of the Board in Morrison Meat Packers Limited, supra, at paragraph 19:
…..However, given the emphasis placed on expedition in both the statute and the rules (the present matter came on for hearing within five days of the filing of the application), the Board will expect applications under section 92.1 to be filed in extremely close proximity of the events giving rise to the application. An applicant who delays undermines its own ability to convince the Board of any urgent or pressing need for interim relief. Perhaps more important, however, as the passage of time between the events giving rise to the request and its determination increases so too does the Board's ability to quickly intervene decrease. Furthermore, and at least to the extent that granting an interim order interferes with an employer's management of its enterprise, the length of time during which an employer's action has been implemented may easily impact on the harm consequent from any Board order effectively undoing that measure, even on an interim basis.
See, as well, Bryan Forde, supra, at paragraph 36.
The Parties' Positions
10At the outset of the hearing, the Board asked counsel to address only the issue of the balance of harm should the interim relief be granted. In light of our conclusion on this arm of the test for the granting of interim relief, it was unnecessary for the Board to hear submissions from the parties with respect to the issue of "arguable case".
11The declaration filed in support of this application, executed by the union's chief spokesperson during collective agreement negotiations, contained no description of the harm which would occur if the interim order were not granted, as is required by Rule 86 of the Board's Rules of Procedure. The applicant did, however, make in its written representations the bald submission that both the applicant and its members would suffer "irreparable harm" should the employees not be reinstated pending the outcome of the main application. In light of this submission, the Board invited counsel for the applicant to initially address the issue of the balance of harm.
12Counsel described the harm suffered by the union and its members as that which results from the "loss of jobs". Counsel stated that he could not accurately anticipate how many hearing days it would take to complete the hearing of the main application and suggested that it could take as long as six calendar months before a decision on the merits was issued by the Board. Counsel argued that during that time period, the laid off employees would be without income, and that the suffering that these employees would go through as a result of being unemployed would not be capable of being remedied should the laid off employees not be temporarily reinstated by the Board.
13Counsel indicated, in response to a question put to him by the Board, that he disagreed with the approach taken by the Board in Morrison Meat Packers Limited, supra, Price Club Canada Inc., supra, Bryan Forde, supra, and Fort Erie Duty Free Shoppe Inc., supra, that an interim order should not normally issue where the harm to be avoided is purely or predominantly financial in nature. Counsel reiterated that the suffering which these laid off employees will endure for the length of the layoff is not something which can be remedied by the Board. Counsel submitted that a distinction should be drawn by the Board between "termination" cases, where "fault" is often in the foreground, and "layoff' cases where the departure from employment is through no fault of the employees. Counsel further suggested that the extent of the layoff, in as much as twenty-eight employees were laid off, should also be a factor taken into account by the Board when assessing the balance of harm, as should the fact that the warehousing functions eliminated by the employer constitute a "core function" of the bargaining unit.
14Over the objections of counsel for the employer, a majority of the Board (Board Member Ronson dissenting) allowed counsel for the union to make brief oral representations regarding the nature of the severance package being offered to laid off employees by the employer. (Employer counsel was given the opportunity to respond to those representations). The declaration signed by the employer indicated that an enhanced severance package had been offered to employees. Union counsel indicated that this offer was, in fact, open only to Friday, January 28, 1994, and that a release in which recall rights are waived is expected of each employee accepting the package. Counsel submitted that this offer constituted harm which could not ultimately be remedied by the Board hearing the main application, insofar as those employees who accept the severance package would not, arguably, be entitled to reinstatement by the Board at a later date should the main application be successful. (Counsel for the union disputed this conclusion of law but suggested that the employer would adopt such a position should the main application be successful). At the very least, counsel submitted that this offer placed the employees between a "rock and a hard place" in terms of deciding the proper course to take.
15Employer's counsel submitted that it was a false assertion that the loss to the employees who have been laid off could not be remedied by way of a reinstatement order, back pay for the period of the layoff, and by payment of interest on the amount of the back pay, should the employer be found on the main application to have violated the Act. Counsel cited Tate Andale Canada Inc., supra, at paragraph 56, for the proposition that potential wage loss to aggrieved employees is the least significant factor to be taken into account by the Board. Counsel submitted that a greater labour relations issue must be shown by the union to warrant the interim order requested, and that on the evidence such an issue had not been established by the union. If reinstatement were ordered here, where only financial loss was established as the harm to be incurred by the laid off employees, counsel queried whether an interim order requesting the reinstatement of laid off employees could ever be resisted by an employer.
16With respect to union counsel's proposed distinction between "terminations" and "lay offs", employer's counsel submitted that the distinction drawn in fact supported the employer's position, insofar as lay offs such as the ones before this panel of the Board (where the employer's motivation is not an issue) are typically business decisions which are not reflective of poor performance or of misconduct by the employees, the latter allegations involving a "taint" which would ordinarily merit a speedy assessment of the truth of those allegations of misconduct. Counsel submitted that the termination for alleged cause of an employee, in particular a union organizer, would cry out for more urgent relief. Counsel disputed union counsel's submission that the larger the number of employees affected by a lay off, the more preferable it is for the Board to remedy the situation on an interim basis with a reinstatement order. Counsel submitted that either the harm disclosed by the facts before the Board in any one case can or cannot be remedied through monetary compensation, and that the absolute number should be of no significance to the Board in assessing whether an interim order should issue as requested.
17Counsel for the employer addressed the issue of harm from the employer's perspective. The employer's declaration, signed by the Vice-President of National Accounts and Administration, indicates that the following harm would result should an order for interim reinstatement be issued:
(a) the employer will be in violation of its contract with T.B.G.C. and will be liable for all start up costs incurred by T.B.G.C. These costs total $250,000 in equipment and real estate. As well, twenty-five employees have been hired by T.B.G.C. to perform the work;
(b) the employer has incurred expenses by removing capital assets from its facilities as a result of the decision to contract out the warehouse work. The employer also restructured the routes and earnings of other unionized employees and entered into a commercial haulage agreement to provide haulage services to the T.B.G.C. facilities; and
(c) the service disruptions will affect customer tolerance for same, which is already strained by the changes which have taken place to date.
Counsel submitted that the union's application for interim relief constituted a direct attempt to interfere with the employer's right to manage its operations. Counsel submitted that the current collective agreement did not contain a provision limiting the employer's right to contract work out to third parties, and that the union's application, if successful, would have the effect (at least for the interim period) of giving the union that which it could not negotiate at the bargaining table. Counsel noted that numerous grievances claiming identical relief as in the main application had been brought by the applicant against the employer.
18Employer's counsel raised the issue of delay in the bringing of the interim application. Counsel argued that the union had exacerbated the harm accrued to the employer in the situation by delaying its application for interim relief. Counsel noted that the employer's declaration established that, on January 4, 1994, the applicant was advised of the employer's decision to lay off people effective January 14, 1994, and to contract out the warehousing functions as at January 17, 1994. The union's application was not filed until January 21, 1994, after the layoffs and contracting out had been effected. Counsel submitted that the union, by reason of its delay, had allowed the employer to incur significant cost liabilities and to make structural changes to the work place, both of which should militate against the granting of the interim order by the Board.
19Counsel emphasized the extensive financial liability which the employer would incur should an interim order be granted, focusing on the facts attested to in paragraph 17 above. Counsel noted that the workplace would have to be restored by the employer to its original configuration should the reinstatement order request be granted. Counsel also made submissions regarding the effect of the interim order on customer relations, submitting that significant harm would result to the employer as a result of further disruptions in customer service if the interim order requested were issued.
20Finally, employer counsel submitted, with respect to the argument regarding the nature of the severance package raised by union counsel, that the existence of the offer made by the employer did not affect the balance of harm in this application, because the employees had the option to take or to not take the enhanced severance package offered by the employer. Those employees who are satisfied to await the outcome of the main application could do so should they so choose.
Decision
21As noted above, on January 25, 1994, by way of oral decision a majority of the Board (Board Member Montague dissenting) dismissed this application for interim relief. The majority of the Board was of the view that the balance of harm in this case favoured the employer, taking into account the interests of the employer, the union, the employees laid off and the employees in the work place who would be affected by such an interim order.
22In our view, the harm identified by the union and relied upon by union counsel is harm which is predominantly if not purely financial in nature. As noted above, Board jurisprudence, which we agree with, establishes the principle that harm of this nature is normally not sufficient to warrant an interim order reinstating individuals to employment. We recognize and fully appreciate that a reinstatement order, requiring payment of full compensation and interest, can compensate the laid off employees for only the pecuniary losses which result from the temporary loss of employment and that the non-monetary effects of the layoffs, which may include strain, anxiety and the numerous other stresses of unemployment, may not be fully compensated by way of the money payments which would be ordered by the Board should the main application be successful. However, to give weight to these factors would, as suggested by counsel for the employer, have the effect in most if not all cases of requiring the interim reinstatement of all terminated or laid off employees pending the determination of the merits of a main application. In our view, should the legislature have intended such a result when enacting section 92.1 of the Act it could easily have mandated that by way of clear and unambiguous language. As well, even an interim reinstatement order would not remedy all of the stresses and anxieties of the laid off employees, as the reinstatement order is a temporary remedy and the stresses and anxieties which result from the possibility of future layoff would still remain with the employees after the Board's order took effect. We do not in any way intend to trivialize the non-monetary consequences of layoff which often occur to employees affected by the layoff. But we do not believe that in the usual case they are an appropriate factor for consideration in the context of an application for an interim order reinstating individuals to employment.
23On the facts of this case, we are not persuaded by union counsel's argument that the number of laid off employees should be a factor in determining the relative harm as between the parties. We agree with counsel for the responding party that the losses here, whether viewed individually or as a group, are losses of a financial nature which can be remedied by way of a Board Order in the main application should liability be established by the union. It is unnecessary for the Board to attempt to define what constitutes a 'large' layoff as opposed to a 'small' layoff, as such a process would require the drawing of lines in a somewhat arbitrary manner. Similarly, we are not persuaded that the characterization of the warehousing function as being "a core function" of the employer is of any relevance to our balancing of relative harms as between the parties. There is no evidence before us to suggest that the warehousing function is, in fact, a "core function" of the responding party. But, assuming that the warehousing function is a "core function", the leap from that conclusion to the conclusion that significant harm would result from the failure to reinstate the laid off warehousing employees is not evident.
24In contrast to the harm identified by the trade union, the employer has, in our view, established that significant harm will accrue to its detriment should the interim order request be granted by the Board. The employer has attested to its potential liability for breach of contract with T.B.G.C., in an amount in excess of $250,000, should it be required to retract its current arrangements. Just as important are the various costs, inconveniences and expenses which have been incurred by the employer to transform its workplace to one which reflects the contracting out of warehouse functions, including the alteration of the routes and earnings of other employees. Should the applicant be successful on this motion, these expenses may well have to be duplicated in order to reconfigure the workplace to the "pre-contracting out" structure pending the determination of the main application. That is, should the interim order be granted as requested, the employer will nonetheless be required to maintain a warehousing function. This would require the employer to choose between one of two options - either maintain the current contracting out arrangements and continue to pay the laid off employees to perform little or no work (incurring sheer economic losses which could never be recovered, even if the application is dismissed in its entirety), or return the warehousing function to its own premises and incur the full costs of so doing. Should the main application be unsuccessful, the employer, in order to effect a contracting out of the work, would be required to incur similar costs once again assuming that T.B.G.C. (or some other contractor) was still willing to perform the work for the employer. Either option, in our view, constitutes significant harm. Although the harm is primarily financial in nature, these out-of-pocket costs could never be recovered by the employer if the main application were decided in its favour, which distinguishes these losses from the financial harm incurred by the laid off employees should the applicant be successful in the main application.
25Linked to the above factors is what we believe to have been an excessive delay in the bringing of this application for interim relief. There is, in the usual case, an inverse relationship between the length of time taken to apply for interim relief and the ability of the Board to fashion an effective interim remedy. This case is no exception. It is not evident from the materials before the Board whether the contractual agreement between the employer and T.B.G.C. had been in force prior to January 4, 1994, the date that the employer advised the applicant of its desire to contract out the warehousing work. Common sense would suggest that the obligations between the employer and T.B.G.C. were in effect before that time. If that were the case, some of the "harm" pleaded by the employer as that which would result from the granting of the interim order requested may well have been urged upon us even if this application for interim relief had been filed with the Board immediately after notice of the proposed contracting out had been given to the Union on January 4, 1994. However, the unfortunate fact in the case before us is that the union waited for seventeen days after being advised of the effective date of the contracting out of the warehousing work before applying for interim relief. During the seventeen day period, the twenty-eight employees were laid off, and the structural changes to the workplace were effected. The potential harm to the employer of an interim order of the nature requested by the union was effectively permitted to grow significantly by reason of the union's delay. Once the promised layoffs and subcontracting were effected, with all of the attendant costs and alterations of the physical layout of the workplace, it is far more difficult for the Board to conclude, on the facts of this case, that the balance of harm rested anywhere but with the employer.
26Finally, we deal with union counsel's argument that the time limit imposed by the employer on the ability of the laid off employees to accept the enhanced settlement package offered to them constituted harm of an irreparable nature. In our view, no true "irreparable" harm accrues to the laid off employees from the mere tendering of such an enhanced severance package by the employer. Without a doubt, the availability of such a severance package will require the laid off employees to make some difficult choices. These individuals are, however, in no worse a position than any laid off employee who is offered a severance package with enhanced payments in exchange for a release waiving all recall rights. It would seem somewhat odd to put the employer in a significantly worse position for the purposes of an interim order application because it offered to provide enhanced severance and termination benefits to employees over and above those which must be paid pursuant to the collective agreement or the Employment Standards Act. Ultimately, it is up to the individual employee (taking guidance from the union, should he or she so desire) to determine whether he or she will accept the employer's enhanced severance package. Counsel for the Union during argument expressed the view that any release document executed by a laid off employee would be of no force or effect for the purpose of any remedial relief which may be ordered by the Board should the main application be successful. The remedial authority granted to the Board by virtue of section 91(4) of the Labour Relations Act, and in particular by section 91(4)(b) and section 91(4)(c) of the Act, would appear broad enough to permit the reinstatement of these laid off employees to employment by the Board should a violation of sections 15, 65 and/or 67 be proved, irrespective of whether a release document waiving recall rights was executed by the employees.
27For the above reasons, we dismissed this application on January 25, 1994.
DECISION OF BOARD MEMBER R. R. MONTAGUE; March 10, 1994
I dissent from the decision of the majority in that on the basis of written declarations before me, an arguable case for the remedies requested in the main application has been made out by the applicant. There has been in my opinion significant harm done to the applicant, far more than purely financial in nature, but harm causing human suffering which no amount of money can buy. This is further aggravated by the responding party's declaration signed by the employer indicating that an enhanced severance package had been offered to the employees when in fact it was only open until Friday, January 28, 1994, and that a release in which recall rights are waived was expected by each employee accepting the package.
For these reasons, I would have granted interim relief.