Ontario Labour Relations Board
[1995] OLRB Rep. November 1355
3383-93-U Canadian Union of Public Employees - Local 87 (Inside Unit), Applicant v. The Corporation of The City of Thunder Bay, Responding Party
BEFORE: Laura Trachuk, Vice-Chair and Board Members R. W. Pirrie and P. V. Grasso.
APPEARANCES: Bill Sumerlus, Judith M. Mongrain, Barry Chezick, Tim Mayne, Gabe Landry, Teresa Armiento and Howard Matthews for the applicant; Allen Craig and Alan Hjorth for the responding party.
DECISION OF THE BOARD; November 9, 1995
- This is an application under section 91 of the Labour Relations Act. The applicant (the alleges that the responding party (the "City") has violated section 15 of the Act.
The Facts
In June, 1993 the City had collective bargaining relationships with twelve bargaining units, including three represented by the Canadian Union of Public Employees, (CUPE). One unit is generally referred to as the "inside" unit (the applicant), another as the "outside" unit, and the third as the "animal control" unit. In the fall of 1993 the parties agreed to combine the three CUPE units.
The applicant and the City were parties to a collective agreement which expired on December 31, 1991. The parties commenced collective agreement negotiations on October 30, 1991. Subsequent meetings were held on December 11 and 12, 1991, January 9, 1992 and February 18, 1992.
On January 27, 1992, City Council passed a resolution providing for compensation increases for its employees of 1% in 1992, 2% in 1993 and 2% in 1994. This resolution was in response to the Provincial government's decision to limit increases in transfer payments to municipalities to 1% in 1992 and 2% for the subsequent two years. City Council had not passed such a resolution in the past.
The parties met for collective agreement negotiations three times in March, 1992. During the negotiation meeting on March 18, 1992 the City advised the union of the Council's resolution and that its wage proposal would therefore be 1%, 2% and 2%. The union reminded the City of its obligation to bargain and the City returned with a proposal that if certain other changes could be made to the collective agreement, the financial savings to the City could be realized as increases to bargaining unit members. The union rejected this offer on the basis that it did not wish to buy its own wage increase.
The parties met with a conciliation officer on May 20, 1992. At that meeting the City again included an offer of 1% for 1992, 2% for 1993 and 2% for 1994 in its draft agreement, but also included a 1994 COLA clause. The union rejected this offer but indicated it would agree to a two-year agreement if the City would agree to the rest of its proposals. The parties did not reach an agreement. Subsequently, the City withdrew the COLA offer as well as the offer of 2% for 1994.
The parties agreed to a hiatus in negotiations and did not meet again until February 25, 1993. At the February 25 meeting the union included a wage proposal of 1% in 1992 and 2% in 1993 in its draft agreement, but as there were other outstanding issues the parties did not reach a collective agreement. The union's business representative, Howard Matthews, testified that the union agreed to the wage proposal in return for a personal undertaking from Mr. Thom, the City Manager, that the bargaining unit members would not be laid off.
In April 1993 the province released the Expenditure Control Plan which dealt with reducing provincial spending in the public and broader public sectors. As part of the Plan, grants to municipalities were reduced by 2% of their budgets. The documents circulated to the municipalities by the Province at that time also described the government's intentions to negotiate social contracts and included some details on the expected content of those contracts, including requiring employees to take off one unpaid day of leave per month. On May 12, 1993 the Provincial government advised the City that its Expenditure Control Plan reduction would be $2,159,161.00. The communication from the Province also updated the City on the government's commitment to negotiating a social contract to further reduce the deficit.
The outside unit was also involved in collective bargaining during this period. In April 1993, it negotiated a collective agreement which contained a 1% wage increase for 1992 and 2% for 1993.
On May 10 and 11, 1993 the parties met with a conciliation officer. Again both parties' draft agreements contained wage increases of 1% and 2% but there were other issues outstanding and no collective agreement was achieved.
On June 16, the draft Social Contract Act (the S.C.A.) was announced. It indicated that the Social Contract Act was to take effect on June 14.
On June 17, 1993 the parties met with a conciliation officer and were again unable to achieve a collective agreement. Mr. Matthews testified that the City advised the union that the 1% and 2% might be off the table as a result of the announcement of the Social Contract Act and that it could therefore not sign off on wages that day. The union proposed in response that the parties include the phrase "subject to any legislative prohibition" in the collective agreement. The union's written proposal from this meeting indicates that it would accept 1% and 2%. There continued to be other issues outstanding between the parties on this date and as a result, they did not achieve a collective agreement.
The parties had a further negotiation meeting scheduled in July but the City cancelled it stating that it was studying the S.C.A.
On July 27 the union was informed during social contract negotiations that the previous wage offer of 1% and 2% was no longer available. It was the union's position that the 1% and 2% should still be available and credited towards its contribution to the social contract target.
On August 3,1993 City Council passed another resolution providing that funds budgeted for estimated wage increases for the years 1992 and 1993 were not to be used either for unsettled contract negotiations or to reduce target requirements under the Social Contract Act.
The City and the union did not arrive at a local agreement under the Social Contract Act and therefore the City posted a Social Contract Program under Part VII (the "failsafe" provisions) of the Act. This program provided for involuntary unpaid days off for all employees making over $30,000.00 per year. At the hearing the union articulated this in terms of a monetary figure which represented the bargaining unit's "required contribution" to the social contract reductions. According to the union, its "contribution" was approximately equivalent to the amount the City saved by withdrawing the offer of 1% and 2%. Explained another way, the inside unit's members' wages were being reduced (through unpaid days off) from their pre June 14 salaries. If the 1% and 2% increase was included as part of their salaries, the cost of the social contract reductions would have been diminished for them. As the outside unit had concluded a collective agreement prior to June 14, its members' wages were reduced from their increased salaries, resulting in a smaller net loss.
The union requested in writing that the City meet for collective agreement negotiations during the fall of 1993 but the City did not answer the letter and did not meet. The witnesses for the City claimed that they did not wish to meet because they had limited time and were already meeting with CUPE about so many other things including the fall-out of their agreement to combine the three CUPE bargaining units and social contract issues. They also said that they did not see any point in meeting if the union was insisting upon wage increases that were no longer available.
In November, 1993, Mr. Matthews contacted the City and indicated that the union would like to meet to discuss increases for the employees making under $30,000.00 per year. This group is referred to in the social contract context as "LICOs" (low-income cut-offs). The City's bargaining committee then went to City Council for a mandate to bargain increases for the LICOs and a resolution was passed allowing them to do so. The parties therefore met again for collective agreement negotiations on December 7,1993. At that meeting the City submitted a "Proposal to Settle", understood to be a final offer, of 1% and 2% for those employees making under $30,000.00. The union was not completely satisfied with respect to who would be covered by this provision and rejected the offer. The union also wanted the 1% and 2% to apply to all of the employees in the bargaining unit although its implementation for those making more than $30,000.00 would be delayed until March 1996. The parties failed to reach a collective agreement at that meeting.
The City and the animal control unit, all the members of which make less than $30,000, reached a collective agreement on December 9,1993 for 1992-1993 which included a 2% wage increase.
On February 21, 1994 the parties negotiated an agreement on all outstanding items except wages. The parties have also negotiated a collective agreement for the combined unit for 1993 to 1996.
The City Treasurer, Paul Milligan, and one of the members of the negotiation team, Alan Hjorth, testified for the City. The responding party, unlike many other municipalities in the province, has been in a very healthy financial position and has had a budget surplus since at least 1987. Mr. Milligan testified that when the 1993 budget was approved by Council on January 25, 1993 there was a budget surplus from 1992 which was even higher than usual although the budget still included a mill rate increase of 1.1%. When Council approved the 1993 budget it charged its administration to reduce its expenditures in 1993 and find a further surplus for future years. It appears that the 1993 City Council had a cautious approach to fiscal matters as does Mr. Milligan, who wished the City to set aside considerable sums to be available in case the City lost some outstanding law suits, to deal with potential future landfill problems, to fund municipal elections, or to "stabilize" future mill rate increases. Council chose to eliminate future mill rate increases. However, as a result of the Expenditure Reduction Program and the Social Contract Act, by July, 1993, the City was facing a shortfall of its expected revenue of approximately four million dollars. Nevertheless, by the end of 1993, the City had still achieved a budget surplus of 4.4 million. At the end of 1994 it was in a budget surplus position of 3.7 million. It projects that it may no longer have a budget surplus by the end of 1996. Mr. Milligan testified that he personally attended the social contract meetings with the unions in July 1993 and explained the City's fiscal situation as described above.
Submissions of the Parties
The union argued that the City did not bargain in good faith for several reasons. It claimed that the City did not send people to the bargaining table who could make decisions with respect to wages because City Council was making those determinations by resolution. It also argued that the City withdrew a wage offer which had been accepted by the union and refused to discuss its reasons. It submitted further that the City refused to meet to bargain wages in the fall of 1993. It was apparent that the union's real concern was that the City was relying on the S.C.A. to justify its refusal to negotiate retroactive wage increases which it could obviously afford. The union asked the Board to consider the following decisions: DeVilbiss (Canada) Limited, [1976] OLRB Rep. March 49; Fotomat Canada Limited, [1981] OLRB Rep. Feb. 145; Austin Airways Limited [1980] 3 Can. LRBR 393; Canadian Industries Limited, [1976] OLRB Rep. May 199; Sparton of Canada Limited, [1985] OLRB Rep. Sept. 1420; Wilson Automotive (Belleville) Ltd., [1980] OLRB Rep. July 1136.
The City denied that it had bargained in bad faith. It denied that the parties had signed off on a wage increase of 1% and 2% and asserted that it was entitled to remove its wage offer when circumstances changed as a result of the Expenditure Reduction Program and the Social Contract Act. It also argued that its decision and the reasons for it were discussed in the social contract meetings and that it was fully justified in its position that the offered wage rate should not count towards the union's social contract "target".
The City defended its failure to meet for collective agreement negotiations in the fall of 1993 on the basis that it had to deal with the social contract for ten bargaining units and that it was dealing with the ramifications of the newly combined unit. It also argued that it did not wish to meet as the parties had become polarized and there was no point in meeting until the union indicated in November that it wanted to meet about the LICOs. The City denied that it withdrew its offer of 1% and 2% and never replaced it for the non-LICO employees because it thought it was required or authorized by the Social Contract Act to do so. It claimed that it acted as it did because of the economic implications of the Social Contract Act and the Expenditure Reduction Plan which significantly reduced its expected revenues. The Board was referred to the following decisions: Aristokraft Vinyl Inc., [1985] OLRB Rep. June 799; The Toronto Jewellery Manufacturers' Association, [1979] OLRB Rep. July 719; Pine Ridge District Health Unit, [1977] OLRB Rep. Feb. 65; Indalloy, Division of Indal Limited, [1979] OLRB Rep. Jan. 35; Nordair Ltd., 85 CLLC 14,160; Board of Education for the City of Hamilton, [1993] OLRB Rep. April 308; Municipality of Casimir, Jennings and Appleby, [1978] OLRB Rep. June 507; General Wood Products, [1993] OLRB Rep. July 597.
Decision
Section 15 of the Labour Relations Act provides as follows:
The parties shall meet within fifteen days from the giving of the notice or within such further period as the parties agree upon and they shall bargain in good faith and make every reasonable effort to make a collective agreement.
Section 24(9) of the Social Contract Act, S.0. 1993, Chap. 5 proposes as follows:
24.-(9) If a collective agreement has expired before June 14, 1993 and on that date the employees that were formerly bound by it are without a collective agreement, the compensation of these employees is fixed at the amount they were receiving under the last collective agreement in force before June 14, 1993.
After carefully considering the matter, the Board does not find that the City has violated the Act. In previous decisions, the Board has found that an employer violates its duty under section 15 if its actions constitute a refusal to recognize the trade union as the representative of the employees, or if its actions are designed to avoid reaching a collective agreement. (See Devilbiss Canada Limited, supra, and Fotomat Canada Limited, supra). In these circumstances~ however, the employer manifestly recognized the union as the bargaining agent of the employees as it reached agreements with two other CUPE bargaining units during the same period of negotiations. It indicated its willingness to sign collective agreements repeatedly during negotiations with this bargaining unit and it agreed to combine the three CUPE units in the middle of the bargaining process. The evidence further disclosed that the employer was prepared to enter into a collective agreement as the parties did ultimately reach agreement on all issues except wages. The real dispute between the parties is whether it was unlawful for the City to remove its wage offer and refuse to reinstate it for non-LICO employees. However, the facts of this case must be seen in the context of the enormous upheaval caused by the Social Contract Act and other expenditure reduction legislation in 1993. In that context, the employer's actions do not amount to a violation.
Collective bargaining with an elected employer is always complicated by the blurring of roles between the organization as an elected body with political obligations and the organization's role as employer. Elected bodies sometimes (frequently, in recent years) make political decisions which relate directly to their relationships with their employees. This is the reality of collective bargaining in the public sector. In this case the City, passed a resolution stipulating wage increases then proposed that wage increase in bargaining. Any employer may make a decision with respect to how big a wage increase it is prepared to give prior to bargaining just as many unions decide prior to bargaining that they will strike over certain issues, including wage increases. The City's negotiating team could have proposed a lower increase than it was prepared to give~ thus allowing itself room to "bargain". However, such an approach would have been ridiculous in light of Council's resolution and the small size of the proposed wage increase.
The important question is whether a party's representatives at the table have the authority to make a deal. If the bargaining representatives do not have that authority, the Board has found that the responding party is failing to recognize the union and avoiding a collective agreement. However, the authority to make a deal is often, as here, subject to ratification and the bargaining agents can only undertake to recommend it. Mr. Hjorth was at the negotiating table in 1993 although he was not the head negotiator at the time. He testified that the City's team did have the authority to make a deal with the union but that they would always have to take it back to Council, just as the union would have'to take it back to the membership. In such circumstances, it made sense for the City's negotiating team to try to comply with the wage increases Council wanted to see. He testified however that the team might have varied its wage offer if a significant event had occurred such as a strike vote. However, no one ever sought a no Board report. In any case, the City's bargaining team did vary its offer on three occasions, both with and without Council approval. In June 1992 it offered a COLA clause for 1994, in July, 1993 it withdrew the wage offer completely and then in December, 1993 it offered a wage increase for the LICOs.
The Board also does not find that the City violated the Act by withdrawing its wage offer in June 1993 and refusing to reinstate it for non-LICO employees. The union argued that 1% and 2% was an agreed upon item and therefore the City violated the Act by reneging on it. It does not appear that the wage increase was an agreed upon item because the parties were exchanging complete draft collective agreement proposals. The implication of such an approach is that the collective agreement is a package and the items it contains are only agreed if the whole package is accepted.
Even if the wage increase was an agreed upon item, and the Board acknowledges that there was some evidence that there was a quid pro quo in the form of a personal undertaking from the City Manager, the City was entitled to withdraw that proposal because circumstances had changed. It is not for this Board to decide whether or not it is contrary to the Social Contract Act to negotiate wage increases even if they are not payable. But it is not a violation of the Labour Relations Act for the City to decide not to do so. The City decided not to diminish its social contract savings by agreeing to a retroactive wage increase as the union claimed that it should. The Social Contract Act clearly contemplates that salaries of workers in the public and broader public sectors will be frozen at the levels they were at on June 14, 1993, the effective date of the Act. The union is hoping, we understand, to take an order from this Board directing that the proposed wage increase be included in the collective agreement to the office of the Social Contract Adjudicator to have its members' contribution re-evaluated. Such an order from this Board would appear, however, to be inconsistent with the Social Contract Act as we would, in effect, be ordering a retroactive wage increase. We would be putting the parties in the position they would have been in if they had signed a collective agreement before June 14. This situation is different from the one which this Board faced in 1976 in Canadian Industries, supra. The legislation in issue at that time provided that parties to a collective agreement could jointly apply for an exemption to the legislated wage increase restrictions and therefore left wages as an issue for bargaining. In that case, the Board found that the responding party was relying on the legislation to refuse to bargain wages; it was not faced, as here, with the knowledge that its expected revenues would be significantly reduced. In light of the City's extraordinary fiscal health in 1992 and 1993 in spite of the revenue reduction, its decision not to agree to this retroactive wage increase may have been perceived by the employees as unfair. However, it was not a violation of the Act.
The Treasurer testified that he did explain the City's fiscal concerns to the union during social contract negotiation meetings. The union argued, however, that the City had to deal with it with respect to this matter in collective bargaining negotiations, not social contract meetings. The Board disagrees. Social contract negotiations perforce must be about wages and, in a unionized context, the parties must discuss the effect of such negotiations on collective agreements. It would therefore be both onerous and confusing for the parties to have the same discussions in different meetings with different titles. What is important is that the parties did discuss the matter and the City explained its position. It is not surprising that the union was dissatisfied that the City wished to maintain a budget surplus to fund potential legal liabilities or to eliminate mill rate increases rather than reduce its members' social contract contribution, but the City is entitled to maintain those priorities if it has the bargaining power to do so.
The union also appeared to be alleging that the City violated the Act by refusing to negotiate wage increases which would take effect in 1996. Even if the Social Contract Act allows parties to negotiate increases which would take effect when the Act comes to an end in 1996, it is not a violation of the Labour Relations Act to refuse to do so. The City's obligation is to bargain for a collective agreement which would end when the new combined unit collective agreement begins. Refusing to negotiate terms for some later period cannot be described as an attempt to avoid a collective agreement.
The Board is troubled by the City's failure to meet to negotiate the collective agreement from September to November 1993 or to even respond to the union's letter and, in other circumstances such actions might be a breach of the Act. However, the City did agree to meet in December and tabled a wage proposal for the LICO employees. Furthermore, the parties have subsequently agreed upon everything except wage increases for non-LICO employees. In these circumstances, there would be a minimal labour relations purpose served in declaring a violation of the Act relating to the failure to meet during that brief period.
For all of the above reasons, the Board hereby dismisses this application.