Ontario Public Service Employees Union v. Royal Ottawa Health Care Group Institute of Mental Health Research, 1999 CanLII 20151

[1999] OLRB REP. JULY/AUGUST 711

3355-96-U Ontario Public Service Employees Union, Applicant v. Royal Ottawa Health Care Group Institute of Mental Health Research, Responding Party

Change in Working Conditions - Hospital Labour Disputes Arbitration Act - Unfair. Labour Practice - Union contending that Hospital contravened statutory freeze when it unilater-ally changed employee benefit package after union was certified but before first collective agreement made - Board reviewing its approach to statutory freeze cases and considering utility of "business as usual" and "reasonable expectations" tests - Board regarding it appropriate to focus on precise role that statutory freeze provision is intended to play in the regulatory frame-work once bargaining has begun - Board observing that statutory freeze intended to bolster the bargaining process, to reinforce the union's status as exclusive bargaining agent, and to provide a firm (if temporary) starting point from which bargaining will commence - Board noting that where change in question is kind of thing that affects employees as a collectivity, and it is kind of thing that employer would be obliged to bargain about (and as a matter of labour relations practice employers usually do bargain about), then it is likely to be the kind of thing that the employer cannot unilaterally implement during currency of statutory freeze - Union's application allowed

BEFORE: R. O. MacDowell, Chair.

APPEARANCES: Donald K. Eady Stacey Halberstadt, Ed Ogibowski, Marlene Rivier for the appli-cant; Russel Zinn, Catherine Thomas, Ingo Ritums for the responding party.

DECISION OF THE BOARD; July 23, 1999

I - Introduction: the statutory framework

1. This is a complaint under section 96 of the Labour Relations Act, 1995 (the "Act"). The union contends that the respondent employer (the "hospital") has contravened sections 17 and 86(1) of the Labour Relations Act, 1995, and section 13 of the Hospital Labour Disputes Arbitration Act ("HLDAA").

2. It will be convenient to look briefly at each of those sections, since this case provides an opportunity to re-examine both their contribution to the regulatory scheme, and the Board's approaches to their interpretation.

3. Section 86 of the Labour Relations Act is commonly referred to as the "statutory freeze", and reads this way:

[Freeze while bargaining is ongoing]

86. (1) Where notice has been given under section 16 or section 59 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) 14 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.

[Freeze while certification application is pending before the Board]

(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 16, in which case subsection (1) applies; or (b)the application for certification by the trade union is dismissed or terminated by the Board or withdrawn by the trade union.

(3) Where notice has been given under section 59 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 48 applies with necessary modifications thereto.

4. The present case involves the application of section 86(1) - the freeze that applies to the first stage of collective bargaining following certification.

5. Once a trade union has obtained certification as the employees' bargaining agent, the section 86(1) "freeze" is triggered by the union's "notice to bargain" (see section 16 of the Act reproduced below). The freeze continues until the bargaining parties have completed the conciliation process and are in a position to strike or lock out in support of their bargaining positions.

6. In the ordinary course, the section 86(1) freeze is temporary. It arises at the beginning of the bargaining process and disappears when the parties press their negotiations to the stage where economic sanctions are permitted (a few weeks after certification if the parties really get down to the business of bargaining). The timing of the section 86(1) freeze is therefore largely in the hands of the parties - although the parties may choose not to press the bargaining through the conciliation stage, so that the

freeze will remain in place while they are sorting things out at the bargaining table.

7. Section 13 is a parallel freeze provision in the HLDAA, and reads as follows:

8. Despite subsection 86(1) of the Labour Relations Act, where notice has been given under section 16 or 59 of that Act by or to a trade union that is the bargaining agent for a bargaining unit of hospital employees to which this Act applies to or by the employer of such employees and no collective agreement is in operation, no such employer shall, except with the Consent of the trade union, alter the rates of wages or any other term or condition of employment or any right, privilege or duty of the employer, the trade union or the employees, and no such trade union shall, except with the consent of the employer, alter any term or condition of employment or any right, privilege or duty of the employer, the trade union or the employees, until the right of the trade union to represent the employees has been terminated.

(emphasis added)

8. Section 13 of the HLDAA pertains to "hospitals", where there is no right to strike or lock-out. The "section 13 freeze" is also triggered by the notice to bargain. However, unlike the situation under section 86(1), the freeze under the HLDAA does not terminate with the completion of conciliation. Instead, the HLDAA freeze continues until a new collective agreement is settled through negotiations or is imposed by interest arbitration.

9. The HLDAA freeze is temporary as well. But as a practical matter, the HLDAA freeze will likely continue for a longer period of time, and the parties will have less ability to bring it to an early end.

10. HLDAA contains tight statutory time limits, designed to move the parties quickly through the arbitration process to an arbitrated agreement (if the parties are unable to reach settlement through negotiations). In practice, though, parties seldom demand compliance with those time limits, with the result that the bargaining process - and the freeze - are extended by tacit agreement.

11. Section 17 of the Labour Relations Act is the statutory "duty to bargain in good faith", which, like the freeze, comes into play when the union gives the employer a "notice to bargain":

[Notice to bargain]

16. Following certification or the voluntaiy recognition by the employer of the trade union as bargaining agent for the employees in the bargaining unit, the trade union shall give the employer written notice of its desire to bargain with a view to making a collective agreement.

[Compulsory bargaining obligation]

17. The parties shall meet within 15 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.

The compulsory bargaining duty has two related components: an obligation to bargain "in good faith"; and a related obligation to "make every reasonable effort to make a collective agreement".

12. Collective bargaining legislation is designed to bring the parties to the bargaining table, where they will present their proposals, articulate supporting arguments and search for common ground which can serve as the basis for a collective agreement. From this perspective, section 17 is the comerstone of that statutory policy. It reinforces the employer's obligation to recognize the union as the employees' bargaining agent, and it fosters rational discussion between the parties, with a view to making a collective agreement.

13. The purpose of the compulsory bargaining duty is to prompt the union and the employer to conclude a collective agreement. However, the content of the bargaining duty is determined, at least in part, by the definition of "collective agreement" - the ultimate object of the bargaining process. The term "collective agreement" is defined this way:

14. (1) In this Act,

"collective agreement" means an agreement in writing between an employer or an employers' organization, on the one hand, and a trade union that, or a council of trade unions that, represents employees of the employer or employees of members of the employers' organization, on the other hand, containing provisions respecting terms or conditions of employment or the rights, privileges or duties of the employer, the employers' organization, the trade union or the employees, and includes a provincial agreement and does not include a project agreement under section 163.1

(emphasis added)

14. The definition of "collective agreement" indicates not only what the parties typically bargain about, but, also, what the parties are obliged to bargain about, pursuant to section 17 of the Act.

15. There is no doubt that employee wages and benefits are central to the collective bargaining process. Indeed, the collective determination of these matters is what "collective bargaining" is all about - and distinguishes a collective bargaining regime from one in which these items are dictated by the employer unilaterally, or are arrived at by some process of "negotiation" with individual employees.

16. As will be seen, there is an overlap between the language of the collective agreement definition and the language of section 86(1). Both statutory provisions refer to "terms and conditions of employment, rights, privileges and duties" of the employer, the trade union and the employees. Those are the things that one ultimately finds embodied in a collective agreement as a result of collective bargaining; and those are the things that section 86(1) maintains in place (for a period of time at least) while that bargaining process is ongoing.

17. The parallel language is no accident: the freeze "catches" the things that are the subject of bargaining, and the consent required to initiate change (i.e. avoid the freeze) is obtained from a party with the statutory duty to bargain about them. The freeze and the bargaining process are interrelated.

18. It will also be noted that the section 86(2) freeze [pre-certificationi and the section 86(1) freeze [post-certification] are a little different. Section 86(( 1) mentions union rights, while section 86(2) does not. Accordingly, once the union has acquired bargaining rights, it becomes a more prominent part of the statutory formula: its "rights, privileges and duties" cannot be altered without its consent.

19. In summary, the notice to bargain that triggers the various freeze provisions, also triggers the mutual duty to bargain in good faith. The freeze and bargaining obligations arise together and proceed in tandem. They are linked both operationally and in time - a theme to which I will return later.

20. Finally, for completeness, I should also mention section 73 of the Act, which provides:

21. (1) No employer, employers' organization or person acting on behalf of an employer or an employers' organization shall, so long as a trade union continues to be entitied to represent the employees in a bargaining unit, bargain with or enter into a collective agreement with any person or another trade union or a council of trade unions on behalf of or purporting, designed or intended to be binding upon the employees in the bargaining unit or any of them.

22. Section 73 arises on certification and prohibits an employer from bargaining directly with its employees. It reverses the situation which obtains at common law and confirms what the Supreme Court of Canada said some 40 years ago in Syndicat Catholique des Employes de Magasins de Quebec Inc. v. La Compaignie Paquet Ltee. 1959 CanLII 51 (SCC), 1959] S.C.R. 206 at 212:

The union is by virtue of its incorporation under the Professional Syndicats 'Act and its certification under the Labour Relations Act, the representative of all employees in the bargaining unit for the purpose of negotiating a collective agreement. There is no room left for private negotiation between employer and employee. Certainly to the extent of the matters covered by the collective agreement, freedom of contract between master and individual servant is abrogated. The collective agreement tells the employer on what terms he must in the future conduct his master and servant relations.

22. Section 73 confirms the union's status as the employees' "exclusive bargaining agent", and reinforces the employer's obligation to bargain with the union - and no one else. Once the union has acquired bargaining rights, the employer is no longer free to deal with its employees as it did before. In this respect, the post-certification situation is different from what it was at common law, and is also different from what it was while the union's certification application is pending before the Board.

II - What this complaint is about: the union's allegations and the hospital's reply

23. The union contends that the hospital contravened both the HLDAA and the Labour Relations Act when the hospital unilaterally changed the employee benefit package, during the currency of the statutory freeze. In the union's submission, such unilateral change in benefits compromises the collective bargaining process and is expressly prohibited by the freeze provisions of two statutes. It is a breach of both section 17, and the freeze provisions.

24. The union asserts that such unilateral changes are the very "mischief' to which the freeze provisions are directed: they bypass the employees' bargaining agent; they amount to a form of direct dealings with employees; and they represent a repudiation of the employer's obligation to bargain with the union about such items. The union argues that such changes amount to dealing with the bargaining unit, as a group, but unilaterally and outside the collective bargaining framework - here to the detriment of numerous employees who rely upon such benefits. In the union's submission, this is the very antithesis of what the statute contemplates - both in process and result.

25. The union seeks reinstatement of the old benefit package, and compensation for any employee who has been adversely affected by the employer's conduct.

26. The hospital concedes that it altered the employees' benefit package while the freeze was still in place. The hospital also admits that it acted unilaterally and without the union's consent. However, the hospital denies that it breached the relevant legislation.

27. The hospital maintains that it was acting bona fide, in response to serious budgetary pressures, and that, in the circumstances; it fairly concluded that reducing benefits was a way of realizing savings, without impairing other employee entitlements and without impinging upon patient care. In the hospital's submission, it was merely carrying on "business as usual" - making modifications to employee benefits as it had done in the past, and in accordance with its own assessment of the situation.

28. The hospital says that it was entitled to proceed unilaterally. It needed to save money, and reducing benefits was the most appropriate way of doing so. In the hospital's submission, it was not obliged to seek the union's consent for these changes.

29. That, in a nutshell, is what the dispute is about. However, before looking at the statutory framework in a little more detail, it may be helpful to sketch in some further background.

III - Some further background

30. The hospital runs a health care facility in Ottawa, with a budget of around $50 million. OPSEU is a trade union with a broad membership in the public sector. OPSEU is one of a number of trade unions that represents hospital employees.

31. In May, 1996, OPSEU was certified as the exclusive bargaining agent for a grouping of paramedical employees working for the respondent hospital. However, OPSEU is not the only union representing employees in this workplace. There are already a number of other bargaining units represented by other trade unions (for example, the Ontario Nurses' Association and the Service Employees' International Union).

32. The hospital is no stranger to collective bargaining. It is a party to a number of collective agreements.

33. Following certification, OPSEU gave the hospital notice of the union's desire to bargain a first collective agreement. However, the bargaining environment was a difficult one, because the hospital was facing budgetary pressures as a result of new funding guidelines from the Ministry of Health. Moreover, by the Fall of 1996, the hospital was forecasting a deficit in the neighborhood of 3.5 million dollars - something which the hospital obviously wanted to avoid.

34. The hospital concluded that it would have to effect cost reductions in order to avoid the potential deficit. Wage and benefit costs were an obvious target for consideration. There was little appetite for contracting out or layoffs - techniques which the hospital had used before - because of the impact on employees and on patient care. So the hospital turned its attention to salary and benefits costs - particularly for "non-union" employees, whose terms and conditions of employment were not fixed by collective agreement.

35. Benefits are provided through an outside insurance carner. Every year that carrier produces a projection of premium costs, based upon a variety of factors, including census information, trends in the hospital sector, and local experience. These projections are typically available in the Fall, and inform the hospital about the likely cost in the coming year. Changes to the benefit plan, if any, can come into effect on April 1 of each calendar year.

36. In the Fall of 1996 (i .e. while the hospital was engaged in bargaining with OPSEU for a first collective agreement), the hospital learned from its insurance carrier that, under its existing benefit package, it might expect an increase in costs of as much as 15 per cent. Senior management found that unacceptable, and directed the Human Resources Department to reduce that figure by two-thirds. The idea was to save the hospital money by increasing the cost to employees and/or reducing their benefit coverage. The objective was to generate a saving of about $88,000.00.

37. For present purposes, it is unnecessary to examine the details of the changes that the hospital introduced. It suffices to say that the hospital saved money by reducing coverage and increasing employee costs under the Drug, Dental and LTD Plan - which is to say: by capping benefits, putting in deductibles, reducing the level or categories of coverage, and so on. These changes were made effective on June 1, 1997 and were applicable to both non-union employees and to the newly-unionized OPSEU group. The hospital made no distinction.

38. There were no benefit changes for other unionized employees. The hospital was apparently of the view that it was precluded from making such changes by subsisting collective agreements. But since there was no collective agreement with OPSEU (yet), the hospital decided that it was free to unilaterally reduce the benefits of this newly-unionized OPSEU group.

39. It should be noted that while the overall impact (and the hospital's intention) was a reduction in employee benefits, the new package also had some provisions which (or so I was told) might actually be more favoura ble for some individual employees in some particular circumstances. For the most part, though, employees faced reductions in coverage or increased costs; and, of course, those changes would necessarily bear more heavily on those individuals who needed the assistance which the benefit plan provided (persons who were disabled, for example, or in need of the drugs subsidized by the drug plan). Unlike, say, an across-the-board wage cut, the means adopted by the hospital to recoup $88,000 had a disproportional effect on particular members of the bargaining unit who depended on the benefit plan.

40. In November 1996, the hospital advised the union that it was going to change the benefit plan. The details of those changes were revealed between December 1996 and January 1997. However,

the union was neither consulted about the changes, nor did it consent to them. The union was shocked by the changes - particularly in the midst of bargaining.

41. The hospital took the position (repeated before this Board) that it was entitled to move unilaterally. The union took the position that the hospital's actions were unlawful, and undennined the process of collective bargaining. Hence, the current complaint that was filed by the union in January 1997.

42. The complaint was scheduled to come on for hearing in April 1997, then in June 1997, then in November 1998, then in January 1999. But in each case it was adjoumed for various reasons, including repeated efforts to settle the matter without litigation. A hearing finally took place in March 1999.

43. Despite the outstanding unfair labour practice complaint, the parties continued to bargain, and eventually concluded a collective agreement. The collective agreement - their first - was made effective in June 1998.

44. The parties did not resolve their differences respecting the benefit package. They left that matter to be determined by the present proceeding. In the meantime the "revised" benefit package was left in place, pending the outcome of this litigation.

45. I do not know the details of what took place at the bargaining table. I do know that at one point in the bargaining, the hospital advised the union that it would be prepared to enter into a collective agreement if the union would abandon its unfair labour practice complaint and would also agree to exclude part-time employees from the benefit coverage altogether. The hospital wanted to further revise the benefit plan, so as to exclude a number of bargaining unit members. But when the union resisted this proposal, the matter was dropped. The hospital did not try to move unilaterally.

46. It is clear, therefore, that the parties had an opportunity to bargain about benefits if they had wished to do so, but seem to have put that matter aside because of the pending proceedings before the Board.

47. No doubt the savings effected by the hospital figured indirectly into its cost structure, and thus into its economic position at the bargaining table (including its "ability to pay" whatever the union was then demanding). However, I do not know how the bargaining progressed or what the "trade-offs" were. Nor, in any event, would it be easy to predict what the ultimate "bargain" might have looked like if the hospital had been prevented from changing the benefits, and had been forced to "find" an $88,000 saving somewhere else.

48. Be that as it may, the revised benefit plan, implemented unilaterally by the hospital, has remained in effect pending the determination of this Board on the "legality" of the changes made in 1997. And because this proceeding was repeatedly adjoumed, enough time has now elapsed that the parties are back in bargaining again, with a view to concluding their next collective agreement. There is now a new round of bargaining, with a new set of reciprocal bargaining obligations (see again sections 17 and 73 and 86(1)). Among other things, the parties are again entitled - and may be obliged - to bargain about benefits; and if they are unable to agree, that issue may once again be submitted to binding interest arbitration.

49. There have been changes to the benefit plan in the past. But they have not been of the kind or magnitude of those imposed here. Nor have they been entirely unilateral, or imposed over the objections of the employees or their bargaining agents. Rather, they have been more in the nature of administrative reordering, or "adjustments" and, in one instance, the addition of a minor travel benefit.

50. The hospital identified three such changes.

51. In about 1994, the hospital introduced a "generic drug program", which specified that employees should use cheaper "generic" drugs rather than "brand name" drugs, unless their physician stipulated otherwise. That plan was intended to apply to all employees, and was accepted by all of the unions then in place - except CUPE. CUPE objected, and for its members, the plan remained the way it was. The CIJPE members were not obliged to substitute generic drugs.

52. Around the same time, the hospital introduced what it described as its "preferred provider network". The preferred provider network is a listing of local pharmacies which had the lowest dispensing fees. Employees were asked to use one of those pharmacies, and no one objected. But neither was anyone obliged to use the designated outlet, or prohibited from going elsewhere.

53. The third change was an "add on" to cover out-of- country travel.

54. The hospital concedes that the changes under review in this case were much more significant than anything that was ever done before. There was no established pattern of raising employee costs or reducing employee coverage to meet the hospital's budgetary exigencies. Indeed, that is what underlines the hospital's claim that it was acting "in good faith": the hospital maintains that it was forced to act unilaterally in the face of unexpected financial constraints and budgetary pressures. It had to avoid the deficit that its accounting staff had predicted; and it chose to reduce benefits in order to avoid layoffs

or other measures that it believed would impact adversely on employees and on patient care.

55. There is no reason to doubt the financial pressures faced by the hospital in 1996. However, it is also important to remember that hospitals have been facing funding pressures for a number of years, and like other public sector institutions, had (in 1996) only recently emerged from the so-called "social contract" constraints on salaries and benefits. Those legislated constraints were also associated with funding pressures; and it is interesting to note that they involved a variety of ways to reduce payroll costs.

56. The "social contract" demonstrated that in the face of financial pressures, there can be a number of ways to achieve cost savings (other than reducing benefits), and in a collective bargaining regime those issues were explored at the bargaining table (or in interest arbitration, where "ability to pay" is now a criterion which an arbitrator is legally obliged to consider). In this respect, the public sector was mirroring trends that had already emerged in the private sector, where "concession bar-gaining" was a common feature of the labour relations landscape. However, under the social contract, the form of those concessions was something that the parties had to bargain about.

57. With this background, then, I return to the statutory framework; and in order to see how section 86(1) fits into the regulatory mix, I think it may be helpful to say something about the other provisions as well.

IV - Discussion

58. In determining the content of section 86(1) of the Labour Relations Act, 1995 (and section 13 of HLDAA), one might begin by observing that these "freeze provisions" operate in addition to the "traditional" unfair labour practice sections, which prohibit behaviour that is motivated by anti-union animus (see especially sections 70 and 72 of the Act). Thus, if a lay-off, wage cut, benefit change (etc.) is implemented because employees have joined a trade union or are exercising their statutory rights, there is a "traditional" unfair labour practice and the Board can fashion a remedy. No resort to the freeze provisions is necessary, because an employer is already prohibited from implementing change for "anti-union reasons".

59. Similarly, the freeze provisions operate in addition to the statutory duty to bargain in good faith. Among other things, that duty requires the employer to supply wage and benefit information to facilitate bargaining (see: Royal Conservatory of Music, [1985] OLRB Rep. Nov. 1652; Forintek Canada Corp., [1986] OLRB Rep. April 453; Pine Ridge Health Unit, [1977] OLRB Rep. Feb. 65; DeVilbiss (Canada) Ltd., [1976] 2 Can. LRBR 101), and to inform the union about decisions or intended action that may impact on the employees during the life of the collective agreement (see: Westinghouse Canada Ltd. (1980), 80 CLLC ¶16,053, application for judicial review dismissed 80 CLLC ¶14,062; Consolidated Bathurst Packaging (1983), 83 CLLC ¶16,066). In our system (unlike the United States) there is no continuing obligation to "bargain" about changes in the workplace once a collective agreement is signed, so that one purpose of the bargaining duty is to identify issues that may be the subject of bargaining, during the limited period (these days, every couple of years) when the parties are obliged to bargain about them.

60. This is not the place to deal extensively with the statutory duty to bargain. But it is worth observing that the Board's elaboration of that duty is difficult to square with unilateral action on key collective bargaining items - before the expiry of the freeze, before any real "impasse" has been reached, and, in this case, it seems, without much "bargaining" at all. Unilateralism is the antithesis of the collective decision-making process imposed by the statute; and it would certainly be an odd regulatory scheme if an employer was obliged by section 17 of the Act to reveal information about wages and working conditions for the purpose of bargaining, and was obliged to advise the union in

advance about decisions that would significantly impact on the bargaining unit, yet remained free to implement those changes unilaterally, in the midst of bargaining, despite the freeze.

61. In any event, quite apart from section 86(1), a unilateral change in the midst of bargaining may be a breach of section 17, because in particular circumstances it may amount to a breach of the duty to bargain and a de facto failure to recognize the union. That is especially so when the change involves what may be described as "core collective bargaining issues" (wages and benefits – matters typically central to the collective bargaining exercise), or the change affects the entire bargaining unit or a significant portion of it. (See the discussion in DeVilbiss, supra, where a change in wages and benefits was found to be unlawful even after the expiry of the freeze period.) Again, no resort to section 86 is necessary, if the conduct under review is already a breach of section 17.

62. The point is: while there may be an "overlap" between the various sections of the Act, in the sense that particular behaviour can engage several provisions at once, each section makes it own contribution to the regulatory scheme, which in turn should be considered as a whole. From that perspective, the freeze captures something that the other provisions do not: bonafide business behaviour that is not motivated by anti-union considerations and may not be a breach of section 17, but is nevertheless prohibited (for a time, at least) because it undermines bargaining. The mischief to which section 86(1) is directed is an unexpected shift in the starting point or basis for bargaining, during the initial stages of that bargaining.

63. As I have noted earlier, it is no accident that the sorts of things that are covered by the freeze are the sorts of things that are bargained about and may make their way into the agreement (again compare the words of section 86(1) and the definition of "collective agreement"). Nor is it accidental that unilateral action is prohibited during a period of compulsory collective bargaining, or that the consent required to avoid the freeze must be sought and received from a bargaining party (and not, say, the employees whose terms and conditions are being changed). In this sense, the freeze (which begins with the "notice to bargain") is very much "about bargaining" and the behaviour of a "bargaining

party". To put the matter colloquially: it prevents a party from moving the goalposts in the middle of the game.

64. The freeze provisions not only add something to the legislative mix, but, lacking a requirement for "anti-union motivation", are more accurately viewed as a form of economic regulation, rather than a fault-based prohibition. A "pure freeze case" does not have the pejorative flavour of the traditional unfair labour practice sections. The freeze provisions merely tell an employer how it must conduct its business, for a time, during a particular phase of the bargaining. They stipulate that, for a time, even bonafide business decisions may be suspended while the bargaining process unfolds. In contrast to the "traditional" unfair labour practice provisions, the freeze is directed more towards facilitating bargaining, than protecting employees from "victimization" at the hands of an anti-union employer.

65. Since the freeze is there to bolster bargaining, it is hardly surprising that it is triggered by the notice to bargain (like the duty to bargain in good faith), or that the statutory language parallels the portion of the collective agreement definition indicating what parties typically bargain about ("...provisions respecting terms or conditions of employment or the rights, privileges or duties of the employer ... the trade union or the employees ..."), or that the freeze evaporates when a particular bargaining phase has been completed. The section 86(1) freeze preserves the status quo on these items, until the parties establish a new status quo through the bargaining process or acquire the right to apply economic pressure in pursuit of that objective; and, concurrently, section 17 requires the parties to diligently pursue that new status quo at the bargaining table. In the meantime: the employer is obliged to recognize the union as the employees' exclusive bargaining agent; the employer is prohibited from bargaining directly with employees (see section 73 of the Act); the employer must bargain instead with the union with the view to concluding a collective agreement; and the employer must preserve the employees' terms and conditions of employment, rights, duties and privileges until the statute permits a change (in the typical case, once the parties have completed conciliation).

66. I have emphasized the word "privileges" in the previous paragraph because, when that word is juxtaposed with the word "right", it helps to illustrate the ambit of section 86(1) - the "depth" of the freeze, as it were. In this context, a "privilege" must mean a benefit or advantage that is not a "right" - which is to say, something that employees are accustomed, and perhaps expect, to receive but that, in normal circumstances, they could not insist upon. In St. Mary's Hospital, 1119791 OLRB Rep. Aug. 795, the Board put it this way:

Section [86(2)1 preserves not only the employee's terms and conditions of employment but also privileges which, by reason of custom and practice, have become a part of the employment relationship. The term "privilege" is extremely broad and extends to all of those benefits which an employee is accustomed to receiving but to which he is not legally entitled, and which cannot, therefore, be considered a "right". In order to determine whether a particular benefit, or aspect of the employment relationship, has become a privilege, it is necessary to examine the circumstances of each particular case since privileges can arise from established custom, practice, or policy. The question is an evidentiary one for, by definition, the Board's consideration must go beyond the strictly legal incidents of the relationship ("rights") and include those aspects of the relationship which give rise to "privileges". In order to demonstrate the existence of a privilege, it is not necessary to establish a contractual right, a formal written policy or an expressed promise. It is sufficient if there is an established, and well entrenched, course of conduct which gives rise to the reasonable expectation that a benefit, previously given, will be continued.

67. A "privilege" is not a "right"; and ordinarily an employer would be entitled to revoke an employee "privilege" (like free parking). But not during the statutory freeze. During the freeze, even "privileges" must be maintained.

68. The addition of the word "privilege" to section 86(1) underlines the extent to which the business situation has changed once the union has acquired bargaining rights (albeit only for the length of the freeze). So does section 73 of the Act which prohibits individual bargaining with employees. So does section 17 which not only imposes a legal obligation to bargain with the union, but also requires the employer to supply information to facilitate bargaining and to inform the union about decisions which may impact on the bargaining unit during the life of the collective agreement (plant closure, introduction of technological change, etc.). The emphasis is upon bargaining, and, following the acquisition of bargaining "rights", the union is very much part of both the business and the bargaining equation.

69. It is manifestly not "business as usual" - a phrase to which I will return later.

70. The purpose of the statutory freeze was discussed, more than a dozen years ago, in Forintek Canada Corp., [1986] OLRB Rep. Apr. 453 at paragraphs 38 and 39:

71. …

The purpose of the "statutory freeze" imposed by section 79 [now 86] is to maintain the prior pattern of the employment relationship in its entirety while the parties are negotiating for a collective agreement. This ensures that they will have a fixed basis from which to begin negotiations and prevents unilateral alterations in the status quo which might give one party an unfair advantage either from the point of view of bargaining or of propaganda. Reference to the purpose of section 79 is important because the application of its language to particular fact situations is not always a simple task. The status quo of an employment relationship may include the recognized prospect of

change. The interpretive problem this creates is most easily illustrated by the apparent dilemma of an employer considering whether he should or should not implement during the freeze a wage increase which he would otherwise have given because he had made a promise to do so before the events which triggered the freeze: whatever he does will alter either the wage rate or a pre-existing right to a wage increase. Another less immediately obvious tension in the statutory language is that created by the simultaneous preservation of pre-existing wage rates and other terms and conditions of employment on the one hand and pre-existing employer rights and privileges on the other. In a first contract situation, those pre-existing employer rights and privileges might be said to include the right or privilege to make unilateral changes in pre-existing wage rates and other terms and

conditions of employment, but ~f the section were interpreted as preserving all such management rights, it would be rendered meaningless: see Sunnycrest Nursing Home, supra, at paragraph 44; and, J. M. Schneider Inc., [1984] OLRB Rep. Apr. 609 at paragraph 21.

39. These and other difficulties with the literal meaning of the words of the section have led the Board to adopt a purposive "business as before" interpretation of section 79, which requires that an employer continue to run its operation according to the pattern established before the circumstances giving rise to the freeze occurred: SparAerospace Products Limited, [1978] OLRB Rep. Sept. 859. The elements of the prior pattern are ascertained from the perspective of employees - a pre-freeze decision to alter wage rates or working conditions may not be implemented uailaterally during the freeze period unless the decision was also communicated to employees before the events which triggered the freeze: Carleton University [1978] OLRB Rep. Feb. 184; Le Patro d'Ottawa, [19831 OLRB Rep. Feb. 244. Indeed, the importance of the employees' perspective to a purposive analysis of section 79 underlies the recent evolution of the "business as usual" approach into the "reasonable expectations of employees" test applied in Simpsons Limited, [1985] OLRB Rep. April 594.

(emphasis added)

71. The comment about Simpsons is a reference to the following long passage which, whatever else it does, further illustrates the difficulty of applying the "freeze" (or the "business as usual test") in particular contexts. As in Forintek, the Board in Simpsons grappled with the problem that if section 86(1) preserved some pre-collective bargaining "right" to modify the employees' terms and conditions of employment, the section would have no practical meaning. The Board tried to harmonize the competing considerations this way:

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

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

74. The freeze provisions catch two categories of events. There are those changes which can be measured against a pattern (however difficult to define) and the specific history of that employer's operation is relevant to assess the impact of the freeze. There are also first time events and it is with respect to that category that the business as before formulation is not always helpful in measuring the scope of employees' privileges. Some first time events have been readily rejected by the Board, where, for example, the employer has instituted parking fees for the first time dunng the freeze: see Scarborough Centenary Hospital, [1978] OLRB Rep. July 679; St. Joseph's Hospital, September 1984, unreported, File No. 0965-84-U(A). On the other hand, the Board has upheld an employer's right to lay off employees during the freeze (assuming there is no anti-union animus in the decision):

Simpsons, supra; Burlington Carpet Mills, supra; The Winchester Press, supra; Grey Owen Sound, supra; Deacon Brothers, supra; Airline (Malton) Credit Union, supra. This right has been confirmed even where the first instance of layoff occurred during the freeze (see Grey Owen Sound, supra; The Winchester Press, supra; and where the layoffs had occurred elsewhere in the employer's operation but not at the specific location in question (see Simpsons, supra). The respondent in the

instant case cited Corporation of the Town of Petrolia, supra, for the proposition that the employer may also contract out work for the first time during the freeze.

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

32. The reasonable expectations approach clearly incorporates the practice of the employer in managing the operation. The standard is an objective one: what would a reasonable employee

expect to constitute his or her privileges (or, benefits, to use a term often found in the jurisprudence) in the specific circumstances of that employer. The reasonable expectations test, though, must not be unduly narrow or mechanical given that some types of management decision (e.g., contracting out, work force reorganization) would not be expected to occur every day. Thus, where a pattern of contracting out is found, it is sensible to infer that an employee would reasonably expect such an occurrence during the freeze. The Board in Simpsons, supra, although the cleaning was contracted out before the company itself took over that operation, did not conclude there was such a pattern.

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

35. Finally, the lay-off cases are consonant with the reasonable expectations approach. Very few, if any, work forces are entirely static; fluctuations in the size of the staff complement and its composition are the norm. Employers are generally expected to respond to changing economic conditions through the hiring, termination and attrition of employees. It is in this sense that it is

reasonable for employees to expect an employer to respond to a significant downturn in the business with layoffs (or terminations) even where such layoffs are resorted to for the first rime during the freeze. The magnitude of the layoffs, of course, must be proportional or relative to the severity of the economic circumstances. Economic justification must be proven where relied on and there must be an absence of anti-union animus. It must also be stressed that, while the expectation of layoffs does not initially depend on the specific history of the employer's operation, there might well be specific evidence with respect to that employer which would negate the otherwise usual reasonable expectation of layoffs in response to an economic downturn.

36. The reasonable expectations approach also distinguishes between layoffs and contracting out. Where there was a pattern of contracting out, of course, there would be no violation of section 79 where work was contracted out during the freeze. However, in the Board's opinion, while an employee would reasonably expect a layoff where there was no demand, i.e., where there was an economic downturn, an employee would not reasonably expect that the work would continue to be performed for the benefit of the employer's operation but through contracting out. This is not to say that the employer does not have the right to contract out work during non-freeze periods, except as limited by a collective agreement. During the freeze, however, and unless there is a practice of contracting out, the employer's right to contract out is limited by the employees' privilege of performing the work if the work is to be performed for the benefit of the employer's operation. Contracting out is merely one of the ways an employer might otherwise increase productivity or efficiency which is caught by the freeze; reducing wages, instituting parking fees, ignoring its policy manual are other means of achieving such goals which are proscribed by the statutory provision.

37. This passage illustrates the difficulties which an employer or union may have in deciding whether a proposed change for bonafide business reasons is, or is not, "lawful" under section 86; and, while such finding may not have the same connotation as a "traditional unfair labour practice", the uncertainty, and the prospect of litigation before the Board are hardly likely to facilitate the collective bargaining process. Indeed, squabbles about the "legal right" to unilaterally change things, may, as here, distract the parties' attention from their mutual obligation to bargain about these very same collective bargaining items - leaving it for the Board to sort out in a manner that will almost certainly be ex post facto, artificial, and disconnected from the bargaining dynamic (especially these days when it may take some time to get to a hearing). In other words, the absence of a clear test (actually, the Board's reluctance to adopt a "deep freeze" interpretation) generates the very uncertainty which the freeze was designed to avoid.

38. The observations in Forintek and Simpsons are not unusual. The Board has frequently noted that it may be quite difficult to apply the so-called "tests" or "approaches" in the context of particular facts. That is especially true where the parties are in the process of negotiating a first collective agreement. As the Board said in Grey Owen Sound Joint Homes for the Aged, [1983] OLRB Rep. Apr. 522 at paragraph 22:

39. One problem in a first agreement situation is that the parties are in transition from a situation of unrestricted management's rights to one in which collective bargaining will result in some shift in the balance of power as between employer and employees. It is often very difficult in such situations to ascertain what the pattern of the employment relationship was.

40. Nor, as the Board also observed in Forintek, are the words of section 86(1) easy to interpret because (on the surface at least) the employer's "rights" are frozen too. But what exactly are those "rights" (presumably rooted in property and the common law of master and servant), and how do they "fit" in a statutory collective bargaining regime - given the specific statutory provisions to which I have already referred? For if those frozen employer "rights" were said to encompass some pre-collective bargaining ability to unilaterally change wages, benefits and working conditions, then section 86(1) would be virtually meaningless. Moreover, if the employer retained complete freedom of action to carry on "business as usual", subject only to OTHER unfair labour practice provisions, why is section 86(1) necessary at all? What does it add? And why has the Legislature carefully distinguished the pre-collective bargaining regime (section 86(2)) and the regimen that must be maintained once bargaining rights have been obtained and bargaining process has begun (see again sections 17, 73 and 86(1))?

41. On the surface, the words of section 86(1) produce a conundrum. If the employer's frozen "rights" completely eclipse the frozen terms and conditions of employees, the section is robbed of much meaning and purpose. On the other hand, a "deep freeze" would significantly inhibit entrepreneurial initiative during the early stages of bargaining, and might restrict an employer's ability to respond to pressures in the market.

42. This interpretative dilemma has been canvassed more recently in Ottawa Public Library Board, [1995] OLRB Rep. Mar. 376, in a long passage to which we might usefully refer:

43. The 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.

44. Section 81 [now 86] 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).

45. The 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.

14. We have used the term "freeze" in the preceding paragraphs because that is the way that [section 86] 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".

15. Section 81 [now 86] 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 Impact 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".

16. The 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. Schneider Inc., [1984] OLRB Rep. April 609).

17. In 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 [now 86].

18. But 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, andlor 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.

19. We do not think that it would serve much purpose to explore the Board's many cases in this area. It is difficult to distill 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.

20. It suffices to say that we prefer the flexible approach to section 81 [now 86] 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.

77. The problem with the so-called "business as usual" "test~~ is not simply that it is a "slippery concept" - to use the words of the Board in Simpsons. The difficulty is that, in too many cases, this phrase has been wrenched from the very special facts of the Spar case where the "test" originated, and generalized in a way that can be quite misleading to employers and trade unions alike. "Business as usual" has been taken as the "answer~~ or "end of the enquiry" rather than an "approach" or aid to interpreting difficult language in a particular context.

78. Spar was a case about annual salary increases distributed to employees on an individual basis, and it is worthwhile noting that Spar does not explore the relationship between section 86 and the statutory bargaining duty, says nothing at all about section 73 of the Act, and seems to suggest that the section 86(1) freeze and the 86(2) freeze are essentially the same - despite the different statutory language, and the very different legislative context once the union has acquired bargaining rights. Moreover, since what was at issue in Spar was the employer's right to unilaterally set aside a wage fund then distribute that fund to employees, individually, it is not at all clear how that exercise squares with the employer's duty to bargain about wages and refrain from dealing with employees individually. Yet neither of these other statutory provisions is mentioned in Spar, nor is it obvious why this kind of wage increase is any different from any other wage increase that an employer might be inclined to give. Given sections 73 and 17 of the Act, there is certainly something curious about a ruling which requires employers to set aside a wage fund and deal with employees on an individual basis in respect of wage

increases, while the union is bargaining about wages too. The likely impact on wage bargaining is obvious - and it is the very impact that the freeze is designed to avoid.

79. This is not to say that Spar is necessarily "wrong" on its particular facts - which included a process of individual annual merit increases that was initiated before the union had acquired bargaining rights, and which the union demanded that the employer continue thereafter. However, the "business as usual" benchmark is much easier to understand and apply to the situation under section 86(2) (before bargaining rights are acquired) than the situation under section 86(1); and, as later cases amply demonstrate, "business as usual" does not always yield an unequivocal result in a fluid business situation (perhaps untypical at the time that Spar was decided, but much more common today).

80. When the words of section 86(1) are read in conjunction with its purpose, and in conjunction with the related provisions of the Act, (especially sections 17 and 73), it is quite evident that an employer cannot carry on "business as before". Once certification is granted, a new legal regime is introduced; and once notice to bargain is given, the employer must not ignore the union or act unilaterally as it might have done in a pre-collective bargaining regime. Indeed, if the employer really does try to carry on "business as before", purportedly exercising managerial "rights" and "prerogatives" derived from the common law of master and servant, it may well collide with the requirements of the

statute: to refrain from dealing with employees individually in respect of their terms and conditions of employment; to recognize the union as the employees' exclusive bargaining agent; to bargain in good faith with the union; to make every reasonable effort to make a collective agreement (stipulating "terms and conditions of employment, etc."); and to preserve the status quo for bargaining unit employees during the first phase of bargaining, unless the union consents to a change. Since neither the union nor these statutory requirements were part of the pre-collective bargaining regime, it is quite misleading for

an employer to look exclusively to that regime for guidelines on how it should conduct itself in the course of bargaining (unless the employer preserves all of its pre-collective bargaining prerogatives - n which case, as I have already noted, section 86(1) is totally meaningless).

81. Nor, for the same reason, do the "reasonable expectations of employees" provide an unfailing guideline for what can or cannot be changed during the currency of the statutory phrase. The fact is, that test is just as "slippery" as "business as usual" - not least because it is not at all clear how such "employee expectations" might be ascertained. It is of necessity a Board construct, applied in particular circumstances to give expression to the competing policy considerations underlying the ambiguous language of section 86(1). It is a way of rationalizing competing interests, when the statute itself does not point unambiguously to a particular result (and thus, in result, strongly resembles the exercise of a policy-based discretion).

82. Recent experience also shows that in the face of market or financial pressures, employers can adopt a variety of responses: wage cuts; reductions in hours; lay-offs; rotating days off; contracting out; introducing technological change; two-tiered wage structures for old and new employees; early retirements; and so on. When faced with financial or market pressures, there are many ways in which employers can effect cost savings; and, today, one cannot say, with any degree of assurance, which route an employer will choose. Nor in practice (i.e. leaving aside section 86 for a moment) are employers (even unionized ones) necessarily constrained by what they did before - especially when the precipitating circumstances may not be precisely parallel, and the entire economic scene is shifting in response to "globalization" and public sector restructuring. These days, it is a lot more difficult to pin down what "business as usual" actually entails or how change will impinge upon employees.

83. So what would employees, today, "reasonably expect" when an employer is faced with external buffeting which would require some response, yet the newly-certified union is in the midst of bargaining? Does the Board's construction of those expectations generate a reliable benchmark for decision-making? And, if the employer has adopted a variety of different means to contain costs in the past, should employees now "expect" any unilateral alteration of their rates of wages or terms and conditions of employment that the employer considers appropriate and in its own interest?

84. More to the point: is this focus on "employee expectations" congruent with the language and collective bargaining purpose of section 86(1)? For having just voted in favor of trade union representation, would those same employees not reasonably expect that these sorts of issues (especially wages and benefits) would be bargained about by their trade union - which is to say, that the particular way in which savings were to be effected would reflect their input at the bargaining table? Or are the rights of employees in a collective bargaining regime to be determined by what employees think the employer might have done in other pre-collective bargaining circumstances?

85. It is also worth mentioning (at the risk of stating the obvious) that section 86(1) says nothing about "employee expectations" (as opposed to "rights" or "privileges"), nor does it use the phrase "business as usual". These are but the Board's way of describing some of the interests that might have to be considered when construing elastic language (and, in practice, the Board's way of relieving employers from the "deep freeze" which a superficial reading of the statute might otherwise impose - freezing employee "duties" for example). They are phrases that illuminate the exercise of interpretation and infuse it with policy content - recognizing the need to balance interests in a way that is congruent with the "rights" and "prerogatives" of the parties, and with the overall statutory scheme. They are an aid to interpretation, not a legal prescription of result - as the many cases amply illustrate.

86. This is not to say that one should jettison these approaches, for each of them contains an element of truth - a lens through which one can examine the facts of a particular case. They help to frame the problem and provide a starting point for analysis, (for example, if there is a debate about whether there really has been any "change" at all, it may be very helpful to ask whether the employeris or is not merely carrying on "business as usual"). And "business as usual" may be a very helpful rule of thumb to describe the employer's obligations while a certification case is before the Board, and before the union has acquired bargaining rights.

87. But as any tour through the Board's jurisprudence will reveal, in today's world neither of these approaches provides a litmus test for predicting the results in particular cases; and the phrase "business as usual" is downright misleading - especially in first agreement situations. It is necessary, therefore, to refine and supplement the Board's interpretive arsenal - not to discard the established approaches, but rather to add an additional one.

88. In my view, and in light of experience, these traditional views have to be augmented by another perspective that is more in tune with the precise role that section 86(1) is to play in the regulatory framework, once bargaining has begun. The language of section 86 has to be read as the Board did in Ottawa Public Library, supra, with these statutory purposes clearly in mind: bolstering the bargaining process; reinforcing the status of the union as the employees' bargaining agent (hencethe distinction between the section 86(1) and 86(2) freezes); and providing a firm (if temporary) starting point from which bargaining will take off.

89. From that perspective it is necessary to pay particular attention to how the proposed change in employment conditions relates to bargaining. Is it the kind of thing that would typically be the subject of collective bargaining? And would changes of this kind, if implemented unilaterally in these circumstances, unduly disrupt, vitiate, or distort that bargaining process (what the freeze is designed to avoid whether or not the changes would also be a breach of section 17)? Is it the kind of thing about which the employer would normally be required to bargain by virtue of section 17? Because if the answer to these questions is "yes", it is the kind of thing that probably falls within the ambit of section 86(1) and "should" be frozen (at least for a time) while that bargaining process proceeds ("should" because while the words themselves are open to altemative interpretations, policy and purpose point in favour of that one).

90. It is also useful to consider whether the employer action is broadly based and treats employees as a collectivity (as a "collective" agreement does); or, altematively, whether it is something intrinsic to an individual employee's situation (reclassifying an individual as opposed to introducing a new classification system; granting a promotion as opposed to creating a new process for promotions; disciplining an employee for misconduct as opposed to publishing a new scheme of workplace rules enforceable by discipline, etc.). For even in a collective bargaining regime, there is considerable scope for unilateral action impacting on employees and unaccompanied by any individual interaction that could be construed as "bargaining" with the employee(s).

91. If the change in question is the kind of thing that affects employees as a collectivity and it is the kind of thing that the employer would be obliged to bargain about (per section 17), and it is the kind of thing that, as a matter of labour relations practice, employers typically do bargain about, then it is likely to be the kind of thing that the employer cannot implement unilaterally during the currency of the statutory freeze. In other words, it is the kind of change to employee "terms and conditions of employment rights, privileges or duties" that requires the consent of the bargaining agent.

92. Conversely, (and subject to section 73) there is nothing inimical to collective bargaining if an employer carries on business as before in respect of individual hiring, firing, promotions, demotions, work assignment and so on - the daily stuff of individual employer-employee interactions, that in large measure, are unrelated to the collective bargaining process, and are typically presented to employees as a fait accompli.

93. It seems to me that the answer to questions such as these, may provide a better guideline to the Board's actual interpretation of section 86(1), than asking whether the employer is carrying on "business as usual", or whether the changes are ones that employees might reasonably expect to be implemented unilaterally; because, unlike these other formulations, these questions require the Board to consider how the words of section 86(1) apply or relate to the bargaining process - the actual subject of regulation. At the very least, the answer to these questions helps to illuminate the purposive approach which the Board applies in respect of section 86(1), and thus fills out the picture painted by the "reasonable expectations" considerations in Simpsons, and the "business as usual" analysis in Spar.

94. Does this approach tie the employers hands, unduly fetter entrepreneurial initiative, or prevent the employer from responding to market and non-market economic pressures - the concern expressed in Spar? The answer in most cases is: not much and not for long - unless the party seeking change chooses to tolerate the restriction, in light of other economic and collective bargaining calculations. For established collective bargaining relationships, it means no more than carrying onunder the terms of the prior collective agreement - what the union has already bargained (see Molson 's Brewery, [1977] OLRB Rep. Aug. 526). For a new collective bargaining relationship, it means only that the parties are obliged to get on with the bargaining, and if really pressed to effect change, to seek the required consent or put themselves in the position where they can resort to economic sanctions and the freeze, simultaneously, disappears.

95. Now, no doubt, the freeze is a spur to bargaining. It is an adjunct to the statutory duty to bargain found in section 17, and reinforces the requirement to deal only through the union when changing the employment terms for workers in the bargaining unit. But the freeze is, at best, a temporary "veto" for the union (or employer); and even hospitals can, if they wish, move more quickly into an arbitration forum - where, today, the law requires an arbitrator to take into account "ability to pay". The fact that, in practice, the first contract freeze may last for quite a while, shows only that, most of the time, there is no pressing need to act unilaterally, and that parties do work out these issues at the bargaining table - as they are obliged to do under section 17.

96. Finally, when the Board is dealing with situations where there is no anti-union animus (that is, a form of pure economic regulation), it is well to remember the relationship between any alleged breach of section 86 and the Board's discretion to fashion a remedy - if any (see the language in section 96(4) of the Act). As in all cases to which section 96 applies, a contravention also raises remedial issues: what should the Board do to rectify the situation, in light of the circumstances and the overallthrust of the regulatory scheme?

97. Section 86(1) is designed to preserve the status quo to facilitate bargaining. It was not intended to preserve features of the relationship that the union was not able to secure through the bargaining process. To put the matter another way: the freeze preserves the status quo pending the application of reasoned discussion or the exercise of bargaining power; but it is not a substitute for bargaining power or an escape hatch from the union's obligation to bargain. Nor is it a "penalty provision" or an instrument to exact an unfair tactical advantage. Accordingly, where the employer has not acted unilaterally, has recognized the union, has accepted its obligation to bargain about matters affecting the employees, has fairly raised a proposed change at the bargaining table so that the union can bargain about it, and where, in addition, the employer really is in a situation where business exigencies demand immediate action, the Board may well take all of that into account when fashioning a remedy for any breach of the Act.

98. This is not to say that employers are free to breach section 86(1) with impunity. Nor should this reference to remedial discretion be taken as an invitation to employers to disregard their statutory obligations. It is merely worth noting that in crafting a remedy for any breach of the Act that does occur, the Board may take into account all of the circumstances of the case before it, in light of the purpose that the statutory provision was designed to achieve.

V - Decision

99. However, whatever "test" might be applied, I do not think that the hospital's position can be sustained in this case.

100. In the instant case, there is no firmly established pattern of changing benefits in the way that the hospital has done here. In this sense, it was clearly not "business as usual" (insofar as that phrase has any independent meaning in the public sector and in the shadow of the "social contract"). Nor can one conclude that these changes would have been within the reasonable "expectation" of employees. On the contrary, the reasonable expectation of employees would be that the union would bargain about such matters, articulating the employees' interest and making whatever trade-offs were necessary.

101. Moreover, from a purposive perspective, what has happened here is, in my view, the very mischief which section 86(1) was designed to avoid: the employer has shifted the status quo for the collectivity of employees in the bargaining unit, in respect of a group of issues that are customarily central to the bargaining process itself. The hospital has tinkered with the benefit package in a way that is unprecedented in its own organization, and is normally the subject of collective bargaining.

102. Not to put too fine a point on it: wages and benefits are what bargaining is all about. If unilateral changes to employee benefits are not caught by section 86(1), then the section truly is meaningless; for on that test, the employer would have carte blanche to change just about anything in response to economic exigencies (as It had in the pre-collective bargaining regime). In my view, that is not a sensible reading of the language of section 86(1) in the circumstances of this case.

103. To be clear: I do not doubt that the hospital acted "bona fide", in the sense that it truly believed that these changes were necessary to meet its budgetary constraints. It was not motivated by anti-union animus. Indeed, the changes that were ultimately implemented might well have been a better solution than the alternatives (layoffs for example), even from an employee perspective. I accept that the hospital did take the employees' interests into account: it chose not to do what it had done before (layoffs, contracting out) because of the impact on employees, as well as the impact on patient care.

104. However, that is not the point. Section 86 delays such unilateral exercise of business self-interest unless and until the parties have bargained about such matters, and have either reached agreement or proceeded to the prescribed method for dispute resolution. In a collective bargaining regime, it is the employer and the union together who must address changes in wages and benefits - with the union articulating the employees' position in respect of any trade-offs that may be required. And, if the parties cannot agree, they must seek third-party assistance, then move to the point where economic sanctions can be invoked.

105. Once the union has been certified and bargaining has begun, the statutory scheme substitutes bilateral bargaining for unilateral employer decision-making, and designates the union as the instrument for articulating, on behalf of employees, the desired balance of employee interests (i.e. the "trade-off' between wage cuts, benefits reductions, layoffs, and so on). That is the union's "right" and its "obligation" (see sections 17 and 74). In that context, the hospital was no more entitled to act unilaterally in respect of the OPSEU bargaining unit than it was in respect of the other bargaining units represented by other trade unions - where, it will be recalled, no changes were implemented. The hospital was not entitled to treat the OPSEU unit like a group of non-union employees. In this respect, section 86(1) imposes the same fetter (albeit a temporary one) that the hospital recognized in connection with the other bargaining units.

106. I find therefore that the reduction in benefits contravened section 86(1) of the Labour Relations Act. To reiterate, that section reads, in part, as follows:

Where notice has been given under section 16 ... 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 employees.

107. In my view, once the provisions of section 86(1) are triggered, there is, in the circumstances of this case, no employer "right" (if such ever existed), to unilaterally alter the employees' benefit package.

108. The words of section 86(1) are mirrored in section 13 of the HLDAA and, in my view, also fairly capture what happened here. There was therefore a breach of section 13 of the HLDAA as well.

109. Since the parties' argument did not really focus on the alleged section 17 breach, I make no declaration in that regard.

110. There remains the question of remedy.

VI- Remedy

111. As I have indicated already, the Board has a broad discretion to fashion a remedy that is fair to both the statutory scheme (its values and purposes) and the context under review.

112. It is here that the real difficulty lies, given the way that events in this case have unfolded.

113. The statutory freeze is an adjunct to bargaining. It preserves the existing features of the employment relationship while the parties bargain about them, and embody the result in a collective agreement. But here the parties have completed the bargaining process to which the freeze relates, have signed a collective agreement, and are now in their next round of bargaining - where, among other things, the parties may be obliged to bargain about benefits, and to balance benefit and wage demands. What has happened here, therefore, has not only distorted the original bargaining process, but has actually channeled the parties away from bargaining and into litigation - yet, as things have unfolded, not litigation that can easily restore the balance as a more timely remedy might have done.

114. How does the Board now rectify the situation, and, two years later, put the union and the employees in the position they would have been in had there been no change in the benefit package? How does the Board "factor in" the bargaining dynamic?

115. There is something to be said for the union's position that the benefit package should be restored retrospectively, as if it had been in place all along, with the hospital "footing the bill" for any employees whose benefit payout was less than it "should have been". This reflects the normal remedial inclination to "put the parties in the position that they would have been in had there been no breach of the Act". But when the situation (including its legal and bargaining dimensions) is considered as a whole, it is not so clear how that might best be done now that the bargaining to which the freeze related is long over, or what impact it would have, today, on the current round of bargaining.

116. The reality is that if the parties are now required to "rewrite history" on an employee-by-employee basis, they will find themselves in a difficult and time-consuming exercise of individual calculations, which cannot but detract from their current obligation to bargain their next collective agreement. That task will inevitably be intertwined - in effect if not in process - with the current round of bargaining: the parties' current positions; the hospital's current ability to pay, and so on. It is a remedy which will impact on, and possibly impede, the current round of bargaining. And to put the matter colloquially: an expensive remedial order in respect of past conduct ultimately comes from the same "pocket" that pays existing wages and benefits, because a direction from the Board will not change the overall financial envelope within which the hospital must operate - just as it would not have done so if the case had been concluded in 1997 prior to the signing of the collective agreement.

117. If that is so, (and again recognizing the bargaining focus of section 86), the best interim solution may be to make no remedy at all at this time; but simply declare that the employer has breached section 86(1) of the Act and section 13 of the HLDAA and refer the matter back to the parties for one last effort to sort the situation out between themselves.

118. The Board will, if necessary, make such remedial order as it considers appropriate in light of the breach of the Act, if the parties are still unable to effect a settlement. But, in my view, the parties should be given one last chance to settle this matter between themselves, now that it has been affirmatively determined that the employer's conduct was in breach of the relevant legislation.

119. With this in mind, the Board reappoints a Labour Relations Officer to meet with the parties, and endeavor, once again, to effect a settlement.

120. The Board will remain seized with respect to the remedial issue in the event that the parties are still not able to reach a settlement; and, in that regard, the Board may seek further submissions, if in its opinion, it is necessary to do so.