[1995] OLRB Rep. March 376
0084-94-U The Ottawa-Carleton Public Employees Union Local 503, Applicant v. The Ottawa Public Library Board, Responding Party
BEFORE: R. O. MacDowell, Alternate Chair, and Board Members S. C. Laing and H. Peacock.
APPEARANCES: Susan Ballantyne, Lesley Hoermann and Joan Keith for the applicant; Andrew Tremayne and Andr6 Champagne for the responding party.
DECISION OF THE BOARD; March 6, 1995
I
1This is an application under section 91 of the Labour Relations Act. The union alleges that the responding employer (sometimes referred to herein as "the Library") has contravened section 81 of the Act.
2Section 81 is commonly referred to as the "statutory freeze", and is triggered by an application for certification, or a notice to bargain for a new collective agreement. It reads as follows:
["FREEZE" ON AN APPLICATION FOR CERTIFICATION]
81.-(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(b) the application for certification by the trade union is dismissed or terminated by the Board or withdrawn by the trade union.
["FREEZE" ON GIVING NOTICE TO BARGAIN]
(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.
(3) Where notice has been given under section 54 and no collective agreement is in operation, any difference between the parties as to whether or not subsection (1) of this section was complied with may be referred to arbitration by either of the parties as if the collective agreement was still in operation and section 45 applies with necessary modifications thereto.
Both parts of section 81 may be relevant to the disposition of this case, because the "freeze on applications for certification" [81(2)] feeds into the "freeze triggered by notice to bargain" [81(1)].
3The union applied for certification on November 24, 1993. It was subsequently certified on an interim basis. On December 16, 1993 the union gave a "section 14" notice of its desire to bargain a first collective agreement. On January 21, 1994 the Board issued a final certificate formalizing the union's right to represent the employees in the bargaining unit.
4The union contends that its application for certification on November 24, 1993, triggered the "statutory freeze" under section 81(2). The union claims that as a result of that "freeze", the Library was obliged to give bargaining unit employees making less than $30,000 a year, a general wage increase of 3 per cent, effective January 1, 1994. About half of the employees in the bargaining unit fall into this category.
5The union asserts that the 3 per cent 1994 salary increase for these lower paid workers was a "promise", firmly in place when the union applied for certification in 1993. The union argues that the proposed salary increase for the following year was a "term or condition of employment", an employee "right", or an employee "privilege" which was "frozen" as at November 24, 1993, and could not be changed thereafter without the union's consent. The union asserts that the "under 30's" reasonably expected to receive this 3 per cent wage increase for 1994, and when the employer decided not to pay it, there was a breach of section 81 of the Act.
6The Library replies that there was never an unconditional undertaking to raise the wages of half the bargaining unit by 3 per cent in 1994. Nor could there have been; because the Library's ability to pay its employees, depends entirely upon funds made available for that purpose by the City of Ottawa ("the City"). The Library is the nominal employer, but the City is the effective paymaster. If salary dollars are not forthcoming from the City, because of the City's shifting budget priorities, those monies cannot be passed along to Library employees.
7In the Library's submission, the amount that Library employees can reasonably expect to receive depends entirely upon what the City - not the Library - determines is appropriate, having regard to City revenues (from taxation primarily) and City expenditures. The Library maintains that employees should be well aware of that linkage, because the situation complained about here has happened before - proposed and anticipated salary increases for 1993 (i.e. to begin in January 1993) were rescinded when the City instituted budget cuts, then passed along a share of that burden to the Library and its employees.
8The Library acknowledges that until the summer of 1993, its employees may have anticipated, a 3 per cent across the board increase in calendar 1994. Even after August 1993, the "under 30's" may still have hoped for such increase - although, by then, salaries had been frozen for all bargaining unit employees earning more than $30,000. (These dates and details will be explored below). Indeed, the Library itself had not foreclosed the possibility of a salary increase for the under 30's until late fall 1993.
9However, in the Library's submission, both the likelihood of there being a salary increase, and the Library's ability to pay it, depended, as it had in the past, upon the City's budgetary prescriptions. A 1994 salary increase was never an established "term or condition of employment", "right", or "privilege" for the "under 30's" or anyone else. Thus, when the union applied for certification in November 1993, a future salary adjustment for the under 30's in 1994 was, at best, a contingency that depended upon the City's budgetary considerations. When those budgetary considerations intruded on the Library's own budget, as it had in the previous year, a salary increase for bargaining unit members became impossible.
10Much of the background to this case is not substantially in dispute. However, before reviewing the facts, it may be useful to briefly comment on the statutory framework within which the parties' rights must be determined.
II
11The purpose of the statutory "freeze" is to maintain the pattern of the existing employment relationship, in its entirety, while the parties are bargaining for a new collective agreement. In the case of a first collective agreement, the negotiated arrangement will replace the common law relationships that went before.
12Section 81 is a bridge between the old regime of employment at will on terms prescribed unilaterally by the employer, and the new regime of collective bargaining, where the terms of employment are set through negotiations with a trade union. The freeze ensures that there will be a fixed basis from which to begin those negotiations, and prevents any unilateral alteration of the status quo which might give one party or the other an unfair advantage, either from the point of view of bargaining or propaganda (AES Data Limited, [1979] OLRB Rep. May 368 at para. 10).
13The freeze is designed to facilitate bargaining. It preserves the elements of the employment relationship that are usually the subject of bargaining, until the parties have had an opportunity to address them through a process of bilateral discussion. The freeze terminates either with the conclusion of a new collective agreement, or with the completion of the conciliation process. In the former situation, the collective agreement establishes the new "status quo". In the latter situation, the parties are free to make changes, to bargain for changes, or to oppose changes, using the full arsenal of collective bargaining weapons.
14We have used the term "freeze" in the preceding paragraphs because that is the way that section 81 is customarily described. However, the freeze metaphor is something of a misnomer. It suggests a much more static result than the Board has usually found to be permissible. As currently interpreted, the so-called "freeze" is neither totally static, nor does it totally prevent changes to the employees' position on the job. What is "frozen", the Board has said, is "business as usual".
15Section 81 is reproduced above. However, its terms present interpretive difficulties. If read too literally, they could either cancel each other out or, have a profound and paralyzing tmpact on the operation of the business, before the right to engage in collective bargaining is even finalized. In Sunnycrest Nursing Homes Limited, [1982] OLRB Rep. Feb. 261 the Board observed:
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 paralyse 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.
Accordingly, in Oakville Lifecare Centre, [1993] OLRB Rep. Oct. 980, the Board suggested a more flexible and purposive approach:
…..the Board has consistently interpreted the freeze provisions in a . . . 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".
16The fact is the "business as usual test" enunciated in cases such as Spar Aerospace Products Limited, [1978] OLRB Rep. Sept. 859 is sometimes quite difficult to apply - particularly in the contemporary business environment where volatility, changeability or "restructuring" have become the norm. Nor does a "business as usual test" capture the fundamental change occasioned by the application for certification itself - the advent of collective methods of decision-making, instead of dealing with employees on an individual basis. Thus, as the Board observed in Simpsons Limited, [1985] OLRB Rep. April 594, "business as before is a slippery concept to apply to specific fact situations", unless the employer's employment practices are embodied in a written policy manual (as in J.M. Schinder Inc., [1984] OLRB Rep. April 609).
17In Simpsons the Board noted that "business as usual" is simply not a very good guideline for analyzing "first time events", that arise as the employer tries to adapt to a changing market place. In those circumstances, the Board suggested that it might also be useful to consider whether an employee would "reasonably expect" that particular kind of business response during the freeze (see Simpsons, supra at paragraph 33). The Board then explored how contracting out, lay-offs, or other labour adjustments made by the employer during the "freeze" might (or might not) be within the "reasonable contemplation" of an informed employee and thus permitted despite section 81.
18But once again (and apart altogether from the problem of making employer-employee rights dependent upon what employees think they are) the "reasonable expectations test" is quite malleable, and cannot be linked back to the broader statutory purpose without also giving consideration to its converse: is the proposed "change" the kind of employer response that employees might reasonably expect to occur in the circumstances, and/or is it the kind of thing that the parties would expect to be - and should be - subject to bargaining prior to implementation. The reasonable expectations of employees are shaped by a variety of things, including: the past, contemporary business realities, and the promise of collective bargaining which the "freeze" is designed to foster.
19We do not think that it would serve much purpose to explore the Board's many cases in this area. It is difficult to distil a set of unifying principles that support an unequivocal result in each new fact situation - a dilemma that is underlined in this particular case by the fact that both parties' rely upon the same cases, and each party asserts that its preferred result reflects the correct application of the "tests" emerging from those cases: "business as usual", or what an informed employee would "reasonably expect" in the circumstances.
20It suffices to say that we prefer the flexible approach to section 81 enunciated by the panel in Ottawa Life Care, supra. We think we are obliged to give content to the words "rates of wages or any other term or condition of employment", "any right", and "privilege", in a way that is faithful to both the statutory purpose, and the collective bargaining context under review. That context includes: the existing pattern or the employment relationship; whether proposed changes are reasonably foreseeable; whether such change if implemented would unduly disrupt, vitiate or distort the bargaining process; whether (having regard to the scheme of the Act) changes of this kind "ought" to be subject to collective determination rather than unilateral action; and so on. Considerations such as these help the Board decide how "deep" the freeze actually is in a particular case, and whether the proposed change is consistent with the regime of reciprocal collective bargaining rights that the statute regulates and that the freeze is designed to facilitate.
21With these observations, then, we return to the facts of this particular case.
III
22The Library is a public agency controlled by the City of Ottawa. The City appoints the
11 Trustees that make up the Library's Board of Trustees. One of those trustees is a city counselor.
23The City provides 87 per cent of the Library's funding, and, for budgetary purposes, treats the Library as a City "department". The Library has no taxing powers and few independent sources of revenue. For practical purposes, the Library's spending is dictated by what the City will provide for or approve. Despite an "independent" Board of Trustees, the Library is a creature of the City.
24The Library employs approximately 200 full-time and part-time workers, and a further
200 or so "casuals". The utilization of casual employees varies from month to month. Employee
salaries make up about 65 per cent of the Library's operating budget, which, as noted, is approved
and funded by the City.
25The employees' terms and conditions of employment are prescribed in an "Employee Handbook". That handbook sets out their salaries, employment benefits, vacation entitlement and so on. It includes job classifications with associated salary levels, together with a wage progression through which employees move, over time, as they get more experienced in a particular job. An employee advancing through the salary grid can anticipate a salary increase of about 5 per cent per year of experience.
26The Employee Handbook is the only document specifying the employees' terms and conditions of employment. It makes no provision for "across the board" salary increases on an annual basis or otherwise - although such increases have been granted by the Library from time to time. The parties describe such across the board increases as "COLA" adjustments, and for ease of reference we will adopt that label here.
27At the time of this complaint, about one-half of the bargaining unit employees earned less than $30,000 per year. By contrast, we were told that none of the City's permanent employees earned less than $30,000. We were told that the only group of City employees who might be in this low income category, are "casuals", whose annual earnings fluctuate, and cannot be reliably predicted or determined by the City until the end of the calendar year.
28The salaries of Library employees are not the same as those of City workers (i.e. a Library clerk may not be paid the same amount as a City clerk doing the same kind of job), but salary increases or benefit changes for Library employees are influenced by what the City is doing for its own work force. Library employees expect that improvements for City workers will ultimately be passed along to them too. And, of course, that is hardly surprising when the City controls the Library Board, provides the lion's share of its funds, and treats the Library as City "department".
29Salary movements for Library workers tend to follow the precedent set by the City for its own employees. However, City employees are represented by Local 503 of the Canadian Union of Public Employees ("CUPE"). Any changes in the terms and conditions of employment for City workers follow a collective bargaining timetable, determined by the length of the prevailing CUPE collective agreement (i.e. 1 - perhaps 3 years depending upon what the parties negotiated in the last round of bargaining). Accordingly, the situation of Library employees is assessed by the Library in light of both the cycle and outcome of the collective bargaining in which City employees are engaged from time to time.
30It is important to appreciate, however, that the position of Library workers neither perfectly matches nor perfectly "tracks" that of comparable City employees. There is a difference in overall salary scales to which we have already referred, and across the board salary increases (COLA) do not necessarily move in tandem or by the same amount - even though the City and the Library both try to maintain comparability and similar treatment.
31Any COLA granted to Library employees in a given year is determined by the Library towards the end of the previous year, when the Library is constructing its next year's budget. However, the annual budget exercise undertaken by the Library (in conjunction with the City) does not necessarily correspond to the City/CUPE collective bargaining cycle, and because of that there have been years when the Library has had to establish its budget and decide what to pay its employees in the coming year, before the City employees have settled their collective agreement for that year. In those situations, the Library Board has made its own judgement of where the settlement point was likely to be, and drafted its budget accordingly. The result, though, is that in some years the Library employees got an across the board salary increase ("COLA") that was different from that received by City workers. However, where that happened, the Library employees would typically receive additional consideration, or "catch-up", in the following year.
32According to Gilles Frappier, the chief librarian, the operative principle was parity, even though the Library was not always able to achieve it. The Library salaries did not necessarily move in "lock step" with the settlements negotiated by CUPE for City employees, but the Library did try to mimic these movements. As he put it "we try to achieve parity of percentages through the guidelines that we obtain from the City... the direction is from the City down, not from us up ". It is the City that sets the agenda for both salaries and other items of operating expenditure; and it is the City that provides the funds to meet the Library's various expenditures.
33This linkage to City benchmarks, and City budget considerations, can be illustrated by what happened in November 1992 - the year preceding the union's application for certification.
34In November 1992, the Library was engaged in a budget making exercise much like that undertaken the following year, (when the union applied for certification). The 1992 budget making process involved a projection of the Library's 1993 operating expenditures, which were then forwarded to the City for review and approval. The City's review was undertaken in conjunction with the City's assessment of its anticipated tax revenues and expenditure priorities.
35Mr. Frappier recalls that in 1992, the Library's proposed budget for 1993 included a 3
per cent across the board increase for its employees. Those employees could therefore expect to
begin receiving that increase in January 1993. This 3 per cent COLA for 1993 was built into the salary portion of the Library budget that was forwarded to the City for consideration in the fall of
36Mr. Frappier's evidence on the events of 1992 is confirmed by that of Lesley Hoermann, who was then an executive member of the Ottawa Public Library Employees' Association ("OPLEA"). OPLEA was an organization of Library employees that engaged in informal consultation with the Library on matters of interest to employees - including wages and working conditions. However, there was no formal "collective bargaining". It was not until late 1993 that OPLEA changed its name, affiliated with CUPE, applied for certification, and formalized the collective bargaining relationship.
37The salary increases proposed in the 1992 budget submission and planned for 1993, did not materialize, because of the financial difficulties that the City was then experiencing. Those problems prompted the City to review its own financial commitments, to revise its own budget, and to impose reductions on "departments" like the Library. In the result, the Library rescinded the planned salary increase for its own employees.
38On November 19, 1992, Mr. Frappier issued a memo to Library employees informing them of the impact of the City's financial constraints on the Library's own budget. It reads as follows:
I would like to bring you up-to-date on recent Board decisions relating to our operating estimates. For the year 1993, the Library faces a 4% reduction and after several hours of discussions, we are now in a position to present estimates that will not require closing branches or services. The Board has made a commitment to guarantee job security. Therefore, no permanent employee will be laid off. Also, salary increments will be awarded in 1993 as usual. However, in order to have job security, it was necessary to give up cost of living increases in 1993. For fiscal year 1994, the City has promised a 3% increase if the cost of living remains below 4%. If higher than 4%, this offer will be renegotiated.
The Board has also requested management to complete our market survey in order to determine the relativity of our salaries with outside organizations. It is hoped that this study will be completed early in 1993. We will share this information with you when available. If appropriate, the Board will seek funds from the City to make necessary adjustments.
The Board has also approved three days of paid leave at Christmas 1992 and 1993. All non-public service employees will take this leave on December 29, 30 and 31. Although in some areas, skeleton staff may have to keep the service open. As the Library will be open to the public on December 29, 30 and 31, public service employees will have up to March 1993 to take this paid leave. This should be negotiated with your respective staff head. The paid leave for Christmas 1993 will be dealt with next year.
You will also be happy to learn that the Board has agreed to the topping up of maternity leave benefits as per OPLEA's request. The Board has also approved the implementation of an Employee Assistance Program for staff and families. More details to follow shortly.
Finally, starting with fiscal year 1993, the Board will no longer pay an allowance in lieu of OHIP. The Board feels that since the provinces of Quebec and Ontario now have a health tax on payroll, it is unfair to continue to pay Quebec residents this allowance. This should not be seen as withdrawl [sic] of a benefit but rather as an adjustment since the rationale for this payment no longer exists.
I hope the above will clarify the situation and will contribute to create a better work environment for all of us. Thank you for your patience, support and understanding during this most difficult time.
39As will be seen, the City's fiscal difficulties in 1992 prompted budget cuts, which, in turn, had an impact in 1993 on both City employees, and on employees in the Library "department". Employees would continue to move through the existing wage progression and would not face lay-offs; there were minor improvements to their position, and an indication that the situation might be favourably reconsidered in 1994. There was also some prospect of a general salary revision, if the proposed market survey determined that Library salaries were "out-of-line" with comparable outside organizations. But the memo makes it perfectly plain that salary adjustments for Library employees are dependent upon the City providing the necessary money. Likewise, the memo makes it clear that the employees would not be getting the anticipated 3 per cent increase in 1993 because the City has not made the funds available. And there were other revisions to employee benefits which the Library decided to impose unilaterally.
40We might observe, at this point, that the situation in November 1992 - one year prior to the certification application - illustrates both the dilemma discussed in Sunnycrest, and the difficulty of constructing a "business as usual" test that is consistent with the "freeze" metaphor.
41The events of November 1992 would suggest that, for this particular group of Library employees, "business as usual" includes adaptation to changes in the broader City organization of which they are a part by means of wage cuts, lay-offs or the revision of benefits. The pattern of their employment relationship could be and was unilaterally altered by the Library, without prior notice, in response to externally imposed fiscal signals. And whatever the employees' hopes or expectations might have been prior to 1992, it must have been evident thereafter that the Library would respond as necessary to the fiscal constraints imposed upon it, and that any economic improvement for Library workers was ultimately dependent upon the Library receiving the necessary monies from the City. Library workers could hope and reasonably expect to follow the pattern established for City employees - but only so long as the City provided the necessary funds to do so.
42The 1992 budget crunch was not the only event restricting the Library employees' economic prospects. In the summer of 1993, the Province of Ontario imposed its own program of financial restraint, in the form of the so-called Social Contract.
43The Social Contract required public sector institutions to achieve wage savings in a variety of ways, including wage freezes, time off without pay, etc. The burden of the Social Contract cut-backs was supposed to fall upon employees making more than $30,000 per year. However, the "Municipal Framework Agreement" negotiated under the Social Contract legislation contemplates that groups of municipal employees may be treated in the same way regardless of their income. Special treatment for "under 30's" could be balanced with "equal treatment" for everyone.
44In the summer of 1993, the Library began revising its expenditures to meet the requirements of the Social Contract. At first, OPLEA was not directly involved, since it had never established its status as a trade union, nor engaged in formal collective bargaining. For that reason, OPLEA members were initially included in a "non-bargaining unit plan" proposed unilaterally by their employer. Later on, though, OPLEA was drawn into discussions with Library officials, and later still, OPLEA was granted status as an employee bargaining agent by the officials administering the Social Contract scheme (although, at that point, it had not sought or been granted certification as employee collective bargaining agent under the Labour Relations Act).
45The Board heard quite a bit of evidence about the Social Contract discussions, which, by all accounts, were undertaken in haste, and marked by considerable confusion about what the provincial guidelines required, and how they could be met. And (perhaps not surprisingly given that confusion) the Library and OPLEA later differed about what had actually been agreed upon. In particular, there was a dispute about whether "excluding" the "under 30's" from the impact of the local social contract agreement was total - meaning that unlike municipal workers or other Library employees, the under 30's would have no days off, would continue to receive experience increases, and could still receive an annual COLA increase of 3 per cent (OPLEA's interpretation); or whether the "exclusion" for "under 30's" was "partial" - meaning that the under 30's would continue to receive any experience (progression) increments and would not have to take unpaid leave, but would not automatically receive the 3 per cent across the board increase that the Library had previously hoped to provide in 1994 for all of its workers (the Library's interpretation).
46For present purposes, we do not have to canvass the details of these discussions, nor resolve what in our view is an honest difference of opinion between parties negotiating under considerable pressure. But, it is useful to review certain aspects of these discussions, because they illustrate the relationship between the employees' expectations, and the ability of the Library to meet them without the necessary salary appropriations from the City.
47The Social Contract formula allows wage increases foregone to "count" towards savings target. One can count as "savings" money one planned to spend in the future, but decided not to spend. The City and the Library both hoped to use the 1994 wage increase in this way. Thus, by early July 1993 OPLEA was or should have been aware that the 3 per cent across the Board increase might no longer be "in the cards" because it would be "used" to make up the savings targets composed by the Social Contract.
48As a result of the Social Contract, and despite previous understandings, by July 1993 the COLA adjustment had been reduced to a "possibility". The City and the Library still hoped to provide it, but that was no longer certain. This is how the situation was described in an OPLEA memo to its members dated July 8, 1993:
Dave O'Brien, Chief Administrative Officer for the City of Ottawa, informed Mr. Frappier that the City believes it has an obligation to its employees regarding the 3 per cent pay increase negotiated for 1994, and it is currently investigating the possibility of granting this increase to staff. Mr. Frappier has been assured that any increase received by City of Ottawa employees will also be received by OPL staff.
As of July 8, 1993 the 3 per cent 1994 salary increase had become a "possibility", and OPLEA recognized that.
49On July 26, 1993 the Library Board discussed possibility of imposing compulsory unpaid leave and an across the Board salary reduction, noting that "for the years 1994, 1995 and 1996, the City intended to use the 3 per cent COLA, which had been promised to staff in 1994, together with salary increments to make up the required amount for the Social Contract". The meeting minutes indicate that the Trustees were also of the opinion that "staff members earning less than $30,000 would be excluded from the Social Contract". Mr. Frappier, who was there, testified that the reference to an "exclusion for under 30's" from the freeze on experience increments and mandatory time off - not a guarantee that the under 30's would receive a 1994 across the board salary increase. But OPLEA took these minutes to be confirmation that under 30's would continue to receive a 3 per cent across the board increase in 1994, in addition to salary increments and no time off.
50On August 5, 1993, OPLEA issued another memo to its members recording OPLEA's understanding of the Library's position at that point. This memo suggests that the 3 per cent COLA increase is even more problematic - or, at least, that that was what the Library was telling OPLEA at that point. The memo includes these observations attributed to the Library with which Mr. Frappier concurred both then, and now:
…….the legality of awarding the 3 per cent to those under $30,000 and not those over $30,000 was raised as a question. Third, with the 3 per cent COLA and the increments for staff earning under $30,000 being designated as a budgetary item, these are not safe from reconsideration during the budget deliberation.
[emphasis added]
51The emphasized portion of the memo indicates, quite clearly, that even for the "under 30's" the 3 per cent COLA was problematic. Any amount earmarked for the under 30's was still subject to City budgetary considerations. That was the position that the Library was communicating to OPLEA in early August 1993.
52Mr. Frappier testified that as early as July - August, and regardless of the Social Contract discussions, the Library had made it clear to OPLEA that any monies payable to employees were subject to the fall budgeting process, and contingent upon approval and funding from the City. The Library was worried that the 1992 budget crunch could be respected in 1993.
53This ambivalence is noted in a later OPLEA memo (September 10, 1993) that records the Library's assumption that the City would renege on its promise to make funds available for the proposed 3 per cent COLA. OPLEA did not understand why the Library thought that the City would "renege". But OPLEA does not dispute that this is what the Library warned OPLEA about at the time.
54We find, therefore, that as early as July/August (three months before the application for certification) the Library Board was indicating that the 1994 salary increase was no longer a sure thing even for the under 30's. And, consistent with that view, on September 3rd, Gilles Frappier warned a staff meeting as follows:
G. Frappier presented to HOS an overhead detailing the financial impact of the social contract, which provides for the equivalent of increments + 3% COLA for those earning more than $30K - this amount will not be paid directly to employees but instead will be sent by the City to the Province towards OPL's Social Contract obligation. In addition, those earning less than $30K are to actually receive increments + a POSSIBILITY of a 3% COLA. The overhead, based on current information, showed deficits forecast for 1993 (-$64,352), 1994 (-$55,132) and 1995 (-$55,132). Furthermore, should the City not give future budget increases, the situation will become even worse. G. Frappier reminded people that job security was not guaranteed after 1994 and that serious operating cuts may have to be considered. Copies of this overhead information will be distributed to HOS, as requested.
[emphasis added]
The Library was telling its management personnel, the same thing that it was telling OPLEA: the 3 per cent COLA increase for the under 30's was no longer guaranteed, and the situation would become worse if the City decided to cut its budget further.
55OPLEA thought otherwise because of the 11th hour discussions preceding the Social Contract deadline of August 10, 1993. In the course of those discussions, there was a common understanding that the under 30's should be protected from the brunt of the Social Contract cutbacks. However, as we have already noted, the parties were not ad idem about the extent of that protection.
56The Library anticipated protecting the under 30's from having to take unpaid leave and from any loss of their salary increments based on experience. At the same time, the Library continued to believe that its ability to pay either increments or the 3 per cent COLA was contingent upon City funding (see the OPLEA memo of August 5th mentioned above). By contrast, OPLEA believed that the Social Contract discussions had resulted in total immunity for the under 30's, with the result that they would still receive a 3 per cent annual increase in 1994.
57The Social Contract discussions broke down about midnight on August 9th, the day before the deadline. Early the following morning, the parties resolved their differences by adopting, without discussion, the terms of the local social contract agreement that had just been reached between the City and CUPE Local 503. The Library simply "borrowed" the plan that the City had concluded with CUPE, on the theory that if it was acceptable to the City, it must be appropriate for the Library too.
58Each party believed that those terms reflected its own understanding of the situation. However, there was no actual discussion of what the Social Contract terms might mean for the under 30's. Ms. Hoermann regarded those terms as a guarantee of a 3 per cent raise in 1994. Mr. Frappier regarded that raise as a continuing possibility, that was still subject, as before, to the budgeting exercise that was to take place later in the fall. But it does not appear that either party focused specifically on the issue of the treatment of under 30's in 1994, nor did the Library seek clarification from the City of the meaning of the plan whose terms it was purportedly "borrowing".
59How does the "borrowed" City/CUPE Social Contract plan actually deal with under 30's? Are the City's under 30's to get a salary increase beginning in January 1994 (OPLEA's current claim against the Library)? The situation is somewhat ambiguous because as we have already noted, the City does not have regular employees in this salary category.
60The parties are agreed that, if called to testify, Mr. Carter, a union official, would recount his discussion during the City/CUPE Social Contract discussions with Joe Potter a City official. This is what Mr. Carter would say:
Mr. Carter will say that Joe Potter, spokesperson for the City in the local agreement negotiations, specifically agreed that the City will pay the 3% wage increase, and'or any applicable increments to all employees in the "under 30" category. However the parties have also agreed that it is difficult to predict with any accuracy the annual earnings of employees within this category. As a result, the parties have agreed to wait until the end of the year, when it will be clear how much these employees have earned. At that point, if there are any employees in the "under 30" category, the City will pay them their 3% and/or their increments, to bring their earnings up to a maximum of $30,000.
Any payments to the City's under 30's would have to await an assessment of the situation at the end of 1994.
61There were no similar discussions between OPLEA and the Library, nor any express undertaking about how the under 30's would be treated, nor even an express indication that the Library would treat its under 30's, the way the City dealt with its own under 30's. And the comparison is a little artificial in any event because the City may have no under 30's; and if it does, they will not get a salary adjustment until the end of 1994. Finally, there is no reason to doubt the Library's general situation (underlined by the experience of the previous year): the Library can only pay in salary, sums that the City provides and authorizes.
62In the course of this proceeding, we heard no direct evidence from City officials. There is, therefore, no direct evidence that the City, as funding agency for the Library, ever considered the Library's Social Contract discussions, or ever turned its mind to the economic treatment of under 30's, or ever considered the number of under 30's on the Library employment rolls. However, in late fall of 1993 the City did impose budget restrictions (as it had done in the past) which had an impact on the Library's work force.
63From May until October 1993 (and quite apart from Social Contract discussions) the Library was working on its 1994 operating budget, which was to be submitted to the City for its approval or revision, as had been done in the past. As late as July 1993, the Library still anticipated that the City's budgetary needs could be met by a modest tax increase. Among other things, such tax increase, levied by the City would fund the Library's request for the 3 per cent COLA that its employees were expecting to receive in 1994. Later, the likelihood of a tax increase receded and the Library's expectations were reduced accordingly - hence the equivocation and talk of "possibilities" and warnings about budget review to which we have already referred.
64From the Library's perspective, it was by no means clear that the Library's funding request would be approved in its entirety. And, as it turned out, it was not. The cut-backs foreseen by Mr. Frappier in September, came to pass in mid-December.
65On September 17, 1993, the City advised its various "departments" including the Library, that in order to meet the City's targeted mill rate, departments were to draft options to reduce their budgets. This departmental "input" was to be received by the City by October 29, 1993. These departmental budgets were then reviewed by City officials, revised in the manner that such officials considered necessary, and incorporated into an overall City budget. That City budget was compiled, printed, and was eventually approved by City Council on December 13, 14 and 15, 1993.
66The result for the Library was a reduction in its salary budget, making it impossible to pay the 3% COLA to the one half of its work force earning under $30,000. As Mr. Frappier put it “….the 3 per cent isn't a pot of money that exists somewhere. . . the Library can't pay money that it doesn't have.. .". For whatever reasons, the City did not provide the funding necessary to support a wage increase for Library workers - although, as we have already noted, there is no evidence that the City was actually aware of, or took into account, the potential impact on the Library's "under 30's".
67There is no evidence that the Library has ever paid more in salaries than the City has funded. Nor has the Library ever had to try to find "salary dollars" in other parts of its operating budget. The Library has paid what the City prescribes; and where the City has changed its funding priorities - as in 1992 - the Library has responded accordingly.
IV
68When one considers the situation as a whole, we are satisfied that whatever approach one takes to the interpretation of section 81, this application must fail.
69"Business as usual" for this employer, means responding to budget constraints imposed through the municipal structure of which the Library is an integral part (a department) - as happened in 1992. It has never meant paying more than the City has funded, or looking for "salary dollars" in other parts of its operating budget. Nor by the fall of 1993 would a reasonable employee conclude that a 3 per cent salary increase was an unequivocal undertaking, that would be forthcoming automatically, regardless of external or overall budgetary considerations. It is doubtful whether an informed Library employee could ever expect such unequivocal undertaking, given the events of the previous year. But, in any event, these particular employees were given ample indication that the COLA increase was not a "sure thing", but was contingent upon City approval and funding.
70Turning to the words of the statute, it is difficult to construe this employee expectation as a settled "term or condition of employment" or an established "employee right", or a well entrenched "privilege" of the same order as those recorded in the employees' handbook. And as we have already noted, even established benefits had been unilaterally rescinded or modified by the Library the year before; moreover the alleged linkage to the City's under 30's (if there is any) is equivocal, and would seem to involve a decision by the City to defer consideration of their situation until the end of 1994.
71Finally, from a purely collective bargaining perspective, an across the board 3 per cent wage increase for half the bargaining unit is the kind of thing that one would expect to be the subject of collective bargaining - particularly if meeting this union demand might require adjustment to other aspects of the Library's overall budget or salary budget. Paying the under 30's more, might require paying the over 30's less, or considering lay-offs, closures or some of the other responses that had been contemplated by the Library over the previous two years and Mr. Frappier was worried about in his communication to staff in September. But again, these are the sorts of things that one would expect to be the subject of collective bargaining.
72This is not to say that the under 30's do not "deserve" a salary adjustment, or that an increase might not ultimately be forthcoming - particularly, if the City does intend to give special consideration to low wage workers within its organization. However, that outcome will be the result of collective bargaining - reflecting whatever trade offs are made within or between budget categories, whatever pressures or persuasion the union can bring to bear on the Library or the City, and perhaps the inclination of an interest arbitrator should "first contract arbitration" be sought under section 41 of the Act. However, in our view, that result for the "under 30's" does not flow from section 81 of the Act.
73For the foregoing reasons, this application is dismissed.