1478-00-U; 1479-00-U Canadian Union of Operating Engineers and General Workers, Applicant v. Brookfield Management Services Ltd. (BCE Place), Responding Party.

BEFORE: Christopher J. Albertyn, Vice-Chair.

APPEARANCES: T. Stephen Lavender, Zoran Grgar, Dan Bishop, Darryl Vasiliou, Tony Careri and Dan Millett for the applicant; Brian D. Mulroney, Jeffrey Mitchell, James Trak and Lynda Leroux for the responding party.

DECISION OF THE BOARD; October 25, 2000

The issues

1These matters involve an application for a declaration that the responding party (“the employer”/“the company”) has unlawfully locked-out its employees and an application concerning an unfair labour practice complaint. The two applications are related and were heard together. There are two issues:

• The unlawful lock-out complaint by the applicant union (“the union”) concerns the allegation that the employer has bargained to impasse demands it made of the union that the union and its members waive certain statutory rights.

• The unfair labour practice complaint alleges that the employer issued a final offer directly to employees in the bargaining unit with the effect of undermining the union’s status as the exclusive bargaining agent of the employees, and so constitutes a violation of section 70 of the Labour Relations Act, 1995, S.O. 1995, c.1 (“the Act”).

2In respect of the first issue, the union alleges, in the first instance, that the lock-out initiated by the employer at midnight on August 17, 2000 is unlawful because it occurred pursuant to demands that the union and its members waive certain statutory rights. The union seeks relief under section 101 of the Act. That section reads:

101. Where, on the complaint of a trade union, council of trade unions, employer or employers' organization, the Board is satisfied that an employer or employers organization called or authorized or threatened to call or authorize an unlawful lock‑out or locked out or threatened to lock out employees or that an officer, official or agent of an employer or employers' organization counselled or procured or supported or encouraged an unlawful lock‑out or threatened an unlawful lock‑out, the Board may so declare and, in addition, in its discretion, it may direct what action if any a person, employee, employer, employers' organization, trade union or council of trade unions and their officers, officials or agents shall do or refrain from doing with respect to the unlawful lock‑out or the threat of an unlawful lock‑out.

3The union has a second basis for challenging the validity of the company’s lock-out. As will become clear from the recitation, which follows, of what occurred in the bargaining between the parties, shortly before the deadline for acceptance of the employer’s impugned offer, the company withdrew the offer. It then initiated the lock-out. The union alleges that the lock‑out cannot be lawful if it is not pursuant to a lawful offer and that the absence of any offer available for acceptance at the time of the lock-out renders the lock-out unlawful.

4In respect of the second issue, the alleged unfair labour practice, the union relies upon section 70 of the Act. It reads:

70. No employer or employers' organization and no person acting on behalf of an employer or an employers' organization shall participate in or interfere with the formation, selection or administration of a trade union or the representation of employees by a trade union or contribute financial or other support to a trade union, but nothing in this section shall be deemed to deprive an employer of the employer's freedom to express views so long as the employer does not use coercion, intimidation, threats, promises or undue influence.

The facts

5On about January 21, 1997 the union was certified as the bargaining agent of the company’s employees who work at BCE Place, a large commercial property in downtown Toronto. The employer has an interest in BCE Place and administers the building. The union represents all employees of the company at BCE Place, save and except supervisors, persons above the rank of supervisor, office, clerical and security employees. There are currently 53 employees in the bargaining unit. The size of the bargaining unit fluctuates. In the summer, with students, there are about 75 employees. There are three main sections in which the employees are engaged: building operations - building operators and assistant building operators monitor the various systems in the building: ventilation, alarm, water; general maintenance - maintenance helpers are employed to effect minor repairs and maintenance in the building; the courier and loading dock – the delivery of packages to tenants, the receipt and distribution of supplies delivered to the building for use by its tenants. The largest section is that which comprises the courier and loading dock services. Most employees are engaged in those services.

6A first collective agreement was concluded in August 1997 between the parties for the period August 17, 1997 until August 16, 2000. At that stage, besides the complement of employees described above, there were some skilled trades persons.

7These applications concern events surrounding the bargaining between the parties for the renewal collective agreement anticipated to commence on August 17, 2000.

8Two witnesses testified: Mr. Robert Kitchen, counsel and the employer’s spokesperson during the bargaining between the parties, and Mr. Zoran Grgar, the union’s National Director and its spokesperson during the negotiations. For both, the recent events leading to the lock-out were relatively fresh in their memories and they were able to recall conversations and events with ease. Both presented comprehensive contemporaneous notes of their negotiations. There was remarkably little factual dispute between them as to what happened in the discussions and, to the extent there was, I explain below my finding. Both were impressive witnesses with substantial collective bargaining experience and a keen appreciation of the implications of their respective communications.

9Before describing the bargaining for the 2000 renewal agreement, it is necessary to give some account of the parties’ relationship during the course of their first collective agreement: 1997 to 2000. One issue, contracting out, has dominated their relationship. In the negotiations leading up to the conclusion of the 1997-2000 collective agreement two issues remained outstanding until the very end of negotiations: job security (including limits to contracting out) and wages. The collective agreement was concluded when those two items were resolved at 2:00 a.m. on the eve of a strike deadline. The compromise reached by the parties in the 1997 negotiations as regards job security and contracting out was agreement upon the following provisions in the 1997-2000 collective agreement:

ARTICLE 5 – MANAGEMENT RIGHTS

5.01 Except as specifically limited by any provision of this Agreement, the Union acknowledges that it is the sole and exclusive right of the Employer to exercise the regular and customary functions of management including, but not limited to, the right to:

(g) Subcontract work into or out of its operations, determine the services to be provided, the schedule of service, production and assignment of work, and the size and composition of the workforce.

The Employer agrees that it will not exercise its rights in a manner inconsistent with the provisions of this Agreement.

ARTICLE 23 – BARGAINING UNIT WORK

23.01 The Employer recognizes the value of its employees’ job security. Accordingly, in the event that the Employer contemplates contracting out bargaining unit work that would result in the termination of less than five bargaining unit employees, the Employer shall invite the Union to meet with them to discuss viable alternatives prior to making a final decision. The minimum notice period would be two (2) months. In the event that the action would result in the termination of five or more employees, the Employer agrees to immediately notify the Union and provide the Union with four (4) months notice in advance of the implementation of the contracting out, during which time the parties shall meet to discuss viable alternatives to any such contracting out or alternative placements for the affected employees.

The employer agrees to carry out its obligations under this article in good faith and further agrees to give the Union’s alternatives due consideration prior to making a final decision.

10Shortly after the conclusion of the 1997-2000 collective agreement the employer gave notice to the union of its intention to contract out shredding work and what was known as the special services. The company provides services to the tenants of BCE Place, among which is the shredding of documents. The work of the special services unit was of a general nature, e.g. putting up pictures, moving furniture, odd jobs of various sorts. The proposed contracting out involved three positions. The company did not anticipate that the employees occupying the positions would be laid off. The expectation was that they would be able to bump into other positions, particularly in the loading dock.

11Despite the notice of the contracting out of the shredder and special services positions, the contracting out did not occur. The employees occupying those positions continued to perform their usual work. There was consequently no dispute between the parties on the matter.

12The second encounter between the parties concerning contracting out involved the employer’s intention to dispense with the services of the skilled trades persons: a carpenter, an electrician, a plumber-fitter, a mechanic and painters, and to contract out their work. Early in 1998 the company began to engage the services of outside contractors to do some of the work done by the tradespeople. The union objected, claiming the work belonged to bargaining unit employees, specifically the skilled trades persons. Discussions ensued between the parties, without resolution. In September 1998 the company gave notice that it would contract out all of the skilled trades work. The eight employees affected would be allowed to bump others in the bargaining unit into lay-off, or themselves be laid off. The union objected to the layoff of the skilled trades persons and filed a grievance. No agreement could be reached between the parties. The company put the affected employees on notice in February 1999. Four of them bumped into other positions, and four were laid off. The grievance concerning the layoff is pending, due to come before Arbitrator Mitchnick.

13A second grievance was filed regarding the layoff of the skilled trades persons and the contracting out of their work. That concerns the adequacy of the information provided to the union for the consultation over alternatives to the layoff, contemplated under Article 23.01 of the 1997-2000 collective agreement. That grievance, with several others, described below, is due to be heard by Arbitrator Keller.

14On February 15, 1999 the company gave notice that it was contemplating contracting out its courier and loading dock operations. Those operations involve the substantial majority of the employees in the bargaining unit. Contracting out those operations would more than decimate the bargaining unit. There were lengthy consultations between the parties on the matter. The union required additional information in order to be put in a position to be able to engage meaningfully in dialogue concerning alternatives to the proposed contracting out. No resolution was reached as to what information was adequate. A grievance was filed by the union on about April 11, 1999 alleging that insufficient information had been provided.

15Further notice of the proposed contracting out was given to the union on September 3, 1999. That notice set out in detail the employer’s business reasons for why it wanted to contract out the loading dock and courier services. I will not repeat them, suffice to say that they contain several economic grounds why it made sense for the company to do so. The parties met to discuss alternatives. No agreement was reached. On November 15, 1999, the company informed the union that it had entered into a contract with Pitney Bowes Management Services Ltd. to provide the courier and loading dock services, with effect from December 20, 1999. 37 notices were given to the employees who were to be laid-off on that date as a consequence of the proposed contracting out. On November 28, 1999 the union filed a policy grievance and 36 individual grievances (one of the employees who received notice did not file a grievance), making a total of 37 grievances. The parties agreed that Arbitrator Keller would arbitrate the grievances, including those concerning the union’s allegations that insufficient information had been provided by the company. The union also gave notice to Pitney Bowes that it intended to bring a sale of business application before the Board in the event of Pitney Bowes assuming responsibility for the courier and loading dock operations.

16The layoff notices were rescinded by the company on about December 19, 1999, the day before they were to take effect. No layoffs occurred. The grievances proceeded. Thereafter, at an arbitration hearing, two interim settlement agreements were reached with Arbitrator Keller’s assistance. On March 15, 2000 the parties concluded the first agreement, providing that the company would give additional documents and information to the union. The second agreement was concluded on April 3, 2000. It provided that the arbitration of the 37 grievances was adjourned sine die; during the currency of the collective agreement, subject to various conditions, the company would not take a final decision to contract out the courier and loading dock services; nothing in the settlement prevented either party from negotiating the issue of contracting out at collective bargaining. Either party was entitled to revive the arbitration hearing before Arbitrator Keller.

17There is a dispute between the parties as to the implications of the second settlement agreement. The employer understands it to mean that the courier and loading dock operations could be contracted out after the expiry of the 1997-2000 collective agreement and, under certain conditions, before that. The union understands it to mean that those operations cannot be contracted out until a decision concerning the matter has been issued by Arbitrator Keller. The arbitration is not complete. The parties return to the hearing in the near future.

18On May 8, 2000 the company issued what the parties referred to as “contingent notices” of layoff to the union and the employees of the courier and loading dock services. The notice suggested the contracting out would take effect on August 11, 2000 if no viable alternative to contracting out were identified by that date. In the notice to employees and the union, the company said the following:

We are writing further to our letter of December 16th, 1999. You will recall that we announced our decision to postpone the contracting-out of Courier and Loading Dock Services at that time. Since then, we have met with potential contractors of these services and have issued a Request for Proposal to several companies. However, before we decide whether or not to contract out Courier and Loading Dock Services, we wish to explore other possible options. We will be meeting with your Union representatives in the coming weeks for that purpose.

If no viable alternative is identified and a contractor is selected, the contracting out of these services is likely to take effect on August 11th, 2000. We anticipate that your position would be eliminated and that you would be placed on lay off status as a result of this restructuring at that time.

19The union sought information from the company and meetings were held between the parties. The union filed approximately 40 grievances. No arbitrator has yet been appointed to deal with them. Those grievances, like the others, were pending when negotiations for the renewal collective agreement commenced.

20In summary, there are four sets of grievances: the first set concerns the layoff of the skilled trades; the second, an aspect of that layoff; the third, the proposed contracting out of the courier and loading dock services under the company’s notice of February 15, 1999; and the fourth, the contingent notice of layoff of the courier and loading dock employees on May 8, 2000. The first set of grievances is before Arbitrator Mitchnick and not yet resolved; the second is before Arbitrator Keller, and not yet resolved; the third is temporarily resolved through the conclusion of the settlement agreements, but the parties are to return soon for the issues to be considered again by Arbitrator Keller; and the fourth set are unresolved, with no arbitrator yet appointed.

21What seems clear from the history of the parties’ relationship is that the company has sought to contract out parts of the bargaining units’ work and for a considerable period of time the company has wanted to contract out the work of the courier and loading dock services and it has been met by understandably fierce resistance from the union.

22The first collective agreement between the parties expired on August 16, 2000. The union held a meeting with the members of the bargaining unit on April 19, 2000 to discuss proposals. At that meeting the union obtained a mandate for bargaining and it took a secret ballot to obtain a strike mandate from the employees in the event of the union being unable to reach an acceptable agreement with the employer. The employees voted unanimously in favour of the strike mandate. The union gave notice to bargain on May 19, 2000. In the notice, the union advised the company of the unanimous strike mandate. The union advised also that it was simultaneously asking the Minister for the appointment of a conciliation officer under the Act, a copy of which request was attached to the notice to bargaining. The union’s detailed bargaining proposals were included with the notice.

23Mr. Grgar explained the reason for the union’s apparently belligerent approach to the forthcoming bargaining. He wanted to change the pattern of bargaining which had occurred in the negotiations between the parties for the conclusion of their first collective agreement. In Mr. Grgar’s opinion, serious bargaining did not really get underway until conciliation had been applied for. He wanted to avoid a period of relatively futile bargaining and he thought that notice of the members’ willingness to strike, and the union’s request for the appointment of a conciliation officer, would send a message of urgency. He wanted the company to know that the union was treating the bargaining seriously and it wanted the parties to focus their minds on the task of reaching an acceptable agreement in a timely manner. By applying immediately for the appointment of a conciliation officer, Mr. Grgar understood that the union was sending a message to the company that bargaining had to be completed by the deadline of August 16, 2000. This, he felt from his bargaining experience, would considerably focus the employer’s mind on the issues at stake in the bargaining.

24Further to the mood of seriousness and determination which the union wished to convey to the company, Mr. Grgar made clear that he was willing to meet as often as necessary to conclude an agreement before the deadline of August 16, 2000, when the existing collective agreement was to expire. He gave 34 dates when he was available to bargain in June, July and August, but he explained that his calendar filled quickly and he needed the company to respond promptly with the dates when it would be available. Mr. Grgar was informed that the company was to be using an outside consultant to assist them in the bargaining, and he tried to determine who that was in order to arrange dates directly. The company did not provide the information.

25Towards the end of May 2000, Mr. Kitchen was retained by the company to act as its spokesperson in the negotiations with the union. He contacted Mr. Grgar in mid-June and dates for the negotiations were arranged. A total of eight days were set. Mr. Grgar informed Mr. Kitchen that Mr. Pryor, the Conciliation Officer appointed, would be present at the meeting. Mr. Pryor was to play no conciliatory role - he briefly attended the first bargaining meeting, heard the exchange of proposals between the parties and the explanations for the proposals, but took no active part. He advised the parties he would be available to assist if they requested his further participation.

26The dates set for bargaining were July 6 and 17, and August 2, 3, 8, 10, 16 and 17. At the first bargaining meeting the parties agreed to separate language from monetary issues and to deal with the language issues first. Language issues were to occupy their attention until the 5th meeting, on August 8, when monetary issues were addressed for the first time.

27At the first meeting between the parties the union informed the company that it would be asking the Conciliation Officer to issue a “no board” report. This was consistent with the image the union wished to create that it was serious about the bargaining and it wanted to conclude an agreement by the deadline.

28The company responded in writing at the first bargaining meeting to the union’s written bargaining proposals of April 19. Both parties explained their respective positions. On contracting out, the union had proposed that there be no contracting out during the currency of the renewal collective agreement. The employer proposed that it have a complete right to contract out bargaining unit work. Agreement was reached as to what proposals were language issues, and what were monetary. Job security issues (including contracting out) were to be dealt with as part of the monetary issues. The parties agreed that the next meeting would be used to start the process of settling the language issues.

29The second bargaining meeting was on July 17. Some progress was made towards resolution of the language issues.

30At some stage in July the union arranged that a meeting of the bargaining unit would be held on August 17, 2000. That meeting was intended to enable employees to vote on whether to ratify or reject whatever agreement had been reached by then with the company, and, in the event of a rejection, the union could obtain a fresh strike mandate. It was set for 7:00 p.m. The early arrangement of that meeting added to the mood the union wished to create in the bargaining - the union was serious about concluding an agreement by August 16, and it wanted the company to focus its mind on settling the issues so that an agreement was concluded before the deadline. The threat which hung over the bargaining - certainly from management’s perspective - was that a strike would occur from that date if no agreement was reached. The union allowed that impression to be sustained.

31On July 20, 2000 the union sent a fax to Mr. Pryor requesting the “no board” report. In the union’s request, Mr. Grgar asked that the no board report be issued so that “the parties are in a legal strike/lockout position on August 17th or 18th, 2000”. The request was copied to Mr. Kitchen, among others. Mr. Kitchen regarded the union’s approach to the bargaining - its applying promptly for conciliation and for the no board report - as being very aggressive. Mr. Grgar explained that he intended to convey to the company, by his request for a no board report, that the parties had to “hurry up”; they had been bargaining for two days and, from his perspective, they had agreed to almost nothing. He wanted there to be a greater sense of urgency and purpose in the bargaining if an agreement were to be reached before the deadline.

32On August 1, 2000 a no board report was issued in response to the union’s request. That put the parties in a position to take industrial action on August 17.

33By August 8, the 5th bargaining meeting, Mr. Grgar was somewhat frustrated by the lack of progress in the negotiations. By that date the company had not yet presented its response to the union’s monetary proposals of May 2000. There had not been any meaningful discussion of job security, contracting out, severance pay and wages. He expressed some criticism of the company’s response to the union’s proposals, its apparent lack of willingness to engage properly with the union on the substantive issues before them.

34Mr. Kitchen informed the union that the company intended to proceed with the contracting out of the courier and loading dock operations. He advised that the company had entered into a letter of intent with a prospective contractor, but that no contract had yet been concluded. The company’s intention was to conclude such a contract at the appropriate time (which the company understood to be, at the latest, upon the expiry of the collective agreement, when, on its interpretation of the Settlement Agreements it concluded in respect of the grievances before Arbitrator Keller, it was entitled to do so). That information and advice was given in the context of the company’s response to the union’s proposal that there should be no contracting out. The company made clear that it did not intend to agree upon any limitation of its right to contract out bargaining unit work.

35At the August 8 meeting Mr. Grgar inquired of Mr. Kitchen as to the company’s intention at midnight on August 16 (when industrial action would become lawful), given that the parties had agreed to use August 17 as a bargaining day. Mr. Grgar undertook that the union would not strike before midnight on August 17. Mr. Kitchen promised to advise of the company’s position at the next meeting.

36At the next meeting, on August 10, Mr. Kitchen undertook on behalf of the company that no lockout would occur before midnight on August 17.

37In the contingent notice of layoff given to the union and the employees in the courier and loading dock on May 8, 2000 the company anticipated that those employees would be laid off on August 11. That did not occur. Management chose not to effect the layoff during the currency of the collective agreement (which expired on August 16) without Arbitrator Keller’s concurrence. When the notice was issued management anticipated that the arbitration process might be complete by August 11, but that was not to be the case. Hence the decision to effect the layoffs was delayed.

38Bargaining continued during the days scheduled and many issues of difference between the parties were resolved. Prior to August 17, though, there had been no movement by either party in respect of contracting out. Both were maintaining their starting positions. So, by the start of the meeting on August 17, the last scheduled day, some significant issues remained outstanding. They included the two principal issues:

• Contracting out

  The union’s proposal was that there should be no entitlement to contract out bargaining unit work. The company’s proposal was that there should be no limitation on contracting out. The parties were also apart on the severance to be paid to employees being laid off.

• Wages

  The parties were significantly apart on their wage and other monetary proposals.

Of the outstanding issues, the core issue of dispute between the parties was the company’s intention to contract out the work of the courier and loading operations. The union had made clear that it wanted the company to rescind its plan to shed the courier and loading dock work. The union reiterated its 100% strike mandate on the issues of job security and wages and that a strike was likely to occur if these issues were not addressed to the union’s satisfaction, and any such strike would likely be long and bitter.

39The meeting on August 17 commenced at about 11:15 a.m. Mr. Kitchen conveyed to the union that the company had made a strategic decision to contract out the courier and loading dock operations. He gave notice that was going to occur on the following day, August 18. He presented an Offer of Settlement (“the Offer”), which, with various adjustments to the company’s earlier proposals, and accommodation and acceptance of some of the union’s proposals, included a Discontinuance Agreement. The proposed Discontinuance Agreement was an accord to drop all existing contracting out grievances and not initiate any others.

40Mr. Kitchen explained it was not a final offer, although there was not much flexibility. The employees of the courier and loading dock were to be laid off after midnight of August 17, on August 18. They would be paid until August 25. They could elect to bump within the bargaining unit or they could choose to receive severance pay and a gratuitous lump sum of $2,000 per employee laid off, with a waiver of any recall entitlement. Employees would continue to receive benefits until October 31. (It appears, when making this offer, that management innocently overlooked Article 23.03 which provided for continuing benefits for the duration of the weeks of severance and notice for each employee). The company did not believe that it was obliged to give notice pay to employees being laid off because, in its view, notice had been given in May 2000. However, it was nonetheless willing to provide notice pay and severance pay. The Offer was the first compromise by either party on the positions they had adopted as regards the contracting out (and related) provisions of the collective agreement. The Offer contained an improvement to the severance pay provisions of the then current collective agreement.

41A condition of the Offer was the union agreeing to the Discontinuance Agreement, which involved the withdrawal of all of the outstanding contracting out and layoff grievances referred to earlier. Furthermore, the agreement contemplated that the union would not file any fresh grievance in respect of the impending contracting out and layoff. The union was to agree also that it would not bring an application before the Board seeking an order under subsection 1(4) or section 69 of the Act in respect of the entity, Inplex, to which the courier and loading dock operations were to be contracted out. (Prior to the meeting on August 17, when the union was informed that Inplex was likely to be the enterprise which would take on the courier and loading dock work, the union had given notice to that company of its intention to proceed with a related employer and sale of business application before the Board if it took on that work.)

42Mr. Grgar explained that he did not have authority to waive the union’s intended application to the Board. He would need to confer with the union’s Executive Board to change the union’s decision to proceed. Mr. Kitchen explained that the company was making the offer to “call off the war” concerning the company’s contracting out of those functions it did not consider to be part of its core business. The company's aim was to save considerable costs in litigation. To that end the company was offering a severance package for those employees who would be laid off that was more generous than that available under the collective agreement.

43In evidence at the hearing Mr. Grgar suggested that he indicated that he regarded the Discontinuance Agreement as being illegal when it was first presented by Mr. Kitchen as part of the Offer. For reasons which follow, I think he is mistaken.

44The Offer included the company’s response to the wage improvement proposal of the union and other concessions on monetary issues between the parties. For example, the company agreed to extend recall rights to 36 months for employees with more than 5 years service; it improved its shift premium offer; it was willing to add a maternity leave supplement.

45Mr. Kitchen explained that the Offer was conditional on ratification that day by the union’s bargaining unit.

46The union’s bargaining team caucused on the Offer. They returned to the meeting with the employer and Mr. Grgar set out the union’s response. He gave three alternative offers (which I refer to as “Option 1”, “Option 2” and “Option 3”).

47Option 1 contained the following terms (on matters not yet agreed or not conceded by the company in the Offer): there would be no contracting out of bargaining unit work and no loss of jobs for the duration of the forthcoming collective agreement; the union would abandon its proposals to improve severance pay beyond what the company had offered; the union would withdraw its proposal to amend the provisions concerning training, bereavement leave, work scheduling, tuition, parking, sick days and RRSP. This option left the following issues outstanding: contracting out; overtime; shift premium; shift maintenance premium; wages; and vacation pay.

48Option 2 was a variation of Option 1. All of its terms would apply save that the company could contract out the courier and loading dock operations provided that Inplex (or whatever other company assumed the operations) accepted the collective agreement as being binding upon it, and the employees laid off by the company would be employed by it.

49Option 3 was unconventional. From the union’s perspective it tried to deal with the reality of its bargaining unit being more than decimated by the contracting out of the courier and loading dock services. In the union’s caucus meeting the employee representatives suggested that if the bargaining unit was going to be denuded (by the proposed contracting out of the courier and loading dock services), with the union left with so little bargaining power, then perhaps each employee should be able to decide whether he or she wished to continue in employment under the new circumstances, or be laid off. Option 3 suggested that the company be permitted to proceed with the contracting out of the courier and loading dock operations. The large number of employees in those operations would be laid off. The remaining employees in the bargaining unit would have an option as to whether to be laid off on the same terms as those who were laid off by the company, or remain in employment. The contracting out and the alleged lack of information concerning the contracting out grievances would be withdrawn. The other grievances would be resolved on some basis. The union would not initiate a related employer and sale of business application before the Board. The amount paid in severance would increase to six weeks per year of service and notice pay would be three weeks per year of service. The mandatory exit employees (from the courier and loading dock services) would receive a lump sum signing bonus of $5,000; non-mandatory departing employees would be given one month’s notice pay. The company would compensate the union for legal fees in the grievances to date, estimated to be in the region of $15,000 to $20,000. The company would compensate the union for the loss of union dues revenue for a period of 5 years. This option would require acceptance by the union’s Executive Board (particularly the non-referral of a related employer and sale of business application to the Board). Option 3 effectively entailed the union walking away from its bargaining rights and receiving some compensation in return.

50Mr. Grgar explained that if Option 3 was possibly acceptable to the company then the existing collective agreement could be extended until the terms of the Option were fully articulated.

51Mr. Grgar made clear that the options were not final offers, but were expressed as a basis for settlement. There was some room for adjustment to each of the options.

52The company considered the union’s proposals. They were not acceptable as a basis for settlement of the renewal collective agreement. In its view, bargaining could not continue beyond the evening, into the night. Mr. Kitchen had suffered a bereavement that day and he was due to commence a two-week vacation the following day. He was not available to continue the negotiations well into the night. The union had known of the vacation for some time. The union had a meeting planned for 7:00 p.m. with the bargaining unit employees and the company treated that meeting as the deadline for discussions. The company felt that the proper time had arrived to present a final offer.

53Returning to the bargaining meeting at about 4:06 p.m., the company’s representatives advised the union that none of its Options was acceptable. Mr. Kitchen informed the union representatives that the company had prepared a final offer, which was presented in writing (“the Final Offer”). The Final Offer had a cover page. It set out the proposed duration of the collective agreement (3 years) and it explained that the Final Offer was divided into three parts: a Schedule “A” containing the provisions which the parties had already agreed upon; a Schedule “B” containing the company’s final offer in respect of the items still in dispute between the parties and a Schedule “C” consisting of the Discontinuance Agreement. The cover page made clear that the offer was conditional upon ratification by the membership on or before 12:00 midnight, August 17, “failing which it is withdrawn without further notice”.

54In Schedule “B” the company improved upon its previous wage proposal and its shift premium proposal, although they still fell short of what the union had been proposing. There were other improvements to the Offer which had been presented earlier, some of which entailed the company accepting the union’s proposal. There was no compromise from the company’s previously stated position regarding contracting out and the closing of the courier and loading dock operations.

55Schedule “C” contained the Discontinuance Agreement. It reads:

Schedule C

Discontinuance Agreement

WHEREAS the Company has advised the Union that it intends to discontinue its courier and loading dock (including special services) operations at BCE Place.

WHEREAS the Company has advised the Union and its employees that it intends to contract with Inplex Inc. to provide courier and loading dock services at BCE Place (the “Transaction”).

WHEREAS the Union has filed grievances alleging that such action is in violation of the collective agreement between the parties.

AND WHEREAS the Union has advised the Company that it intends to institute proceedings under the Labour Relations Act, in respect of the Transaction including an application under section 69 of the Act.

AND WHEREAS the Company and the Union wish to fully resolve all matters in dispute in any way related to the Transaction.

Therefore, the Parties agree to the following in full and final resolution:

1. This agreement sets out all the terms and conditions which apply to the discontinuance of the courier and loading dock operations and the terms of the collective agreement shall not apply except as incorporated into this agreement.

2. All courier and loading dock employees shall be laid off effective August 18, 2000.

3. Such employees will remain on the payroll and be paid at their regular hourly rate until Friday, August 25, 2000. Prior to August 25, 2000 employees shall advise the Company in writing as to whether they wish to exercise their right to bump pursuant to Article 8.05 and whether they elect to receive payments under this agreement and waive their right of recall.

4. Employees laid off as a result of the discontinuance of the courier and loading dock operations shall receive pay in lieu of notice calculated in the amount of two (2) weeks for each year of service to a maximum of sixteen (16) weeks in accordance with Article 24.01 of the collective agreement.

5. Employees laid off due to the discontinuance of the courier and loading dock operations shall receive severance pay in accordance with Article 24.01 of the collective agreement.

6. In addition, such employees shall receive a lump sum payment in the event amount of $3,000.00 less applicable statutory deductions.

7. As a condition of receiving payments under this agreement, the employee must elect to waive any rights of recall he may have under the collective agreement.

8. Benefits for such employees shall continue to October 31, 2000 at which time the benefits shall cease.

9. All payments under this agreement shall be calculated at the appropriate wage rate under the collective agreement, which is effective August 18, 2000.

10. The Union hereby withdraws any and all grievances in any way related to the contracting out of the skilled trades or courier and loading dock operations including grievances alleging violations of Articles 23.01 and 24.01 of the collective agreement.

11. The Union undertakes and agrees not to file any grievances in any way related to the discontinuance of the courier and loading dock operations, the lay-off of employees as a result and the performance of such operations by Inplex Inc. or such other supplier as may be designated by the Company.

12. The Union undertakes and agrees not to commence or file any complaints, applications or proceedings under the Ontario Labour Relations Act, including any applications, complaints or proceedings under section 1(4), 69 or 96 of the Act in any way related to the discontinuance of the skilled trades and courier and loading dock operations, the lay-off of employees as a result and the performance of such operations by Inplex Inc. and such other supplier as may be designed by the Company.

13. The Union acknowledges and agrees that this agreement is in full satisfaction of any and all obligations of the Company for notice of lay-off, pay in lieu of notice or severance pay under the collective agreement and the Employment Standards Act.

56Mr. Kitchen explained the improvements contained in the Final Offer over the Offer. In Schedule “C” there are some monetary improvements over what was conveyed in the Offer as regards the severance payments which employees laid off as a result of the contracting out of the courier and loading dock operations would receive. There is some difference between the parties as to what the value of the additional benefits to the laid-off employees would be above what was required under the collective agreement. The company estimated it to be worth between $280,000 and $300,000; the union about $80,000. The employer’s estimate does not accurately take account of the applicability of the continuation of benefits provision in Article 23.03 of the collective agreement. The difference is also explained by the different views of the parties to the notice requirement. That difference stems from differing interpretations of the implications of the settlement agreements concluded in the context of the Keller arbitration. It is therefore difficult to determine exactly what the actual cost to the company would have been, over and above its collective agreement obligations, in the severance arrangements contained in Schedule “C” of the Final Offer, without a deeper inquiry than is necessary to make.

57Mr. Kitchen also tabled a Picketing Protocol Agreement. He asked Mr. Grgar to advise the company as soon as possible of the outcome of the membership meeting which was scheduled for 7:00 p.m. so that, if the Final Offer was not accepted, an orderly transition could occur. By that Mr. Kitchen meant that the employees would be locked out and others would assume the responsibility for the functions performed by the company at BCE Place.

58The joint meeting ended at about 4:15 p.m. The management team returned to their caucus room. A member of the management team asked Mr. Kitchen whether he thought it was okay for management to distribute the Final Offer to the employees in the bargaining unit at BCE Place so they would have it when they met that evening. Mr. Kitchen said, “no”, it was not alright until the union’s representatives had been informed that the company intended to give copies of the Final Offer to the employees. He did not want the letter containing the Final Offer to be released until, as a courtesy, the union had been told that would happen. Mr. Kitchen went back down to the meeting room where the union caucus was taking place, he drew Mr. Grgar from the meeting and advised him that the company was going to distribute its Final Offer to the employees. According to Mr. Kitchen it was at this point, for the first time, that Mr. Grgar raised with him the notion that the company’s Final Offer was illegal. Mr. Grgar was referring to the provisions of the Discontinuance Agreement in paragraphs 10, 11 and 12.

59Mr. Grgar’s account is slightly different. He says that he made this point after the Offer was presented and again at the meeting between the parties which had just ended, after Mr. Kitchen had conveyed the Final Offer. Not much turns on this difference in my view, but, to the extent it is necessary, although Mr. Grgar was in all other respects an excellent witness, I find that Mr. Grgar was mistaken on this point. My reasons for this conclusion are the following. Mr. Grgar’s notes, although not verbatim, are extremely helpful and relatively comprehensive. All exchanges of significance are recorded in his notes. There is no mention, though, in his notes of his having suggested that the Offer or the Final Offer was illegal at the time, or shortly after, either was conveyed for the first time by Mr. Kitchen to the union. After the joint session, when the company’s representatives left the room, Mr. Grgar records that he telephoned the union’s in-house counsel, Mr. Stephen Lavender, and discussed the company’s Final Offer. The first reference to illegality occurs after Mr. Grgar’s note of his conversation with Mr. Lavender. Mr. Kitchen’s notes, although somewhat more abridged than Mr. Grgar’s, contain no reference to Mr. Grgar claiming the Final Offer to be illegal until the parties get back together after the union’s representatives have caucused and considered the company’s Final Offer. That occurs at about 5:20 p.m. From all of this, it seems clear that, upon being told on the telephone by Mr. Grgar of what was in the Final Offer, Mr. Lavender advised Mr. Grgar that he regarded the company’s Final Offer as being illegal because of its requirement that the union waive its entitlement to pursue grievances and applications before the Board. Mr. Grgar may well have concluded that himself before speaking to Mr. Lavender, or suspected it, but I find that he did not convey that opinion to the company until he had taken Mr. Lavender’s advice, shortly before he met Mr. Kitchen outside of the meeting room at about 4:20 p.m. He then conveyed that view formally in the joint bargaining meeting, when the parties reconvened.

60After Mr. Kitchen’s discussion with Mr. Grgar regarding notice of the Final Offer to employees, Mr. Kitchen returned to the management team and he said that the notice could be issued to employees. Those still at work between 4:20 p.m. and 5:00 p.m. received the company’s written Final Offer. The covering letter to employees reads as follows:

As you are aware, the Canadian Union of Operating Engineers and General Workers and the Company have been diligently negotiating a Collective Agreement.

Unfortunately, no agreement has been reached.

The Company has tabled a Final Offer to reach a settlement with CUOE. We believe the offer is fair for all parties involved.

We ask that you consider the offer seriously.

Thank you for your consideration.

61As stated, the parties reconvened at 5:20 p.m. Mr. Grgar gave the union’s response to management’s Final Offer. He advised that the union would not be putting the Final Offer to the union’s membership. There would be no vote. The union’s position was that the company could not press to impasse demands that the union waive its entitlement to pursue grievances and applications before the Board. Mr. Grgar said that the union would be bringing an application before the Board. He informed the company representatives that he and the other members of the union bargaining committee would be advising the union’s members to continue to report for work at their regularly scheduled work times. He suggested that additional dates be arranged to continue the bargaining process. He said that any variation to terms and conditions of employment by management would be treated by the union as an unlawful lock-out, and the company would be responsible for any losses suffered by the union or its members as a result.

62The company representatives then caucused. When the parties got back together, at about 6:30 p.m., Mr. Kitchen informed the union representatives that the company disagreed with the union’s interpretation of its Final Offer. It did not regard its Final Offer as being illegal. He expressed the view that the Board encouraged the settlement of outstanding disputes, and that is what the employer was seeking to do in its Final Offer. He said that the company’s Final Offer was motivated only by a desire to “call off the war” and to find a final resolution of all outstanding issues between the parties. He made the point that if the company’s Final Offer was illegal, then the union’s Option 3 was of the same sort. In response, Mr. Grgar said that he was withdrawing its offer. Mr. Grgar says that he intended to convey the withdrawal of only Option 3. Mr. Kitchen understood him to be referring to all of the Options. I accept that Mr. Grgar intended to withdraw only Option 3; Mr. Kitchen’s interpretation, though, of what Mr. Grgar said was not unreasonable.

63Mr. Kitchen said that, given the union’s response that it would not put the Final Offer to its members for ratification, the condition imposed upon the Final Offer - that it be accepted by midnight, failing which it was withdrawn - could not be met and, accordingly, the Final Offer was withdrawn. He went on to say that the union had advised the company throughout the negotiations that a strike would occur at midnight that night. In light of that eventuality the company had taken steps to ensure what Mr. Kitchen called “an orderly transition”, i.e. a transition from the bargaining unit employees performing the bargaining unit work to others doing that work. To that end Mr. Kitchen said that as of midnight that night the employees would not be permitted to report for work and they should not endeavour to do so.

64Mr. Grgar expressed the view that the union was willing to continue bargaining that night and suggested that the bargaining unit meeting could be postponed. The company explained that it was not available to do so any longer that evening. Dates were set for the continuation of bargaining at a later date. Mr. Grgar informed the company’s representatives that the union would continue bargaining with them to endeavour to conclude a collective agreement, but it would also proceed to the Board for an order to remedy what it saw as an imminent illegal lock-out.

65The situation at 6:30 p.m., at the time the bargaining between the parties ended and the union’s representatives were to go off to meet with the employees in the bargaining unit, was therefore as follows. The company’s Final Offer had been withdrawn. The company was under the impression that the union had withdrawn all three Options. The union regarded itself as having withdrawn only Option 3 (because, like the employer’s Final Offer, it arguably contained what the union perceived as an illegal provision - the withdrawal of the grievances and an undertaking not to pursue particular grievances or complaints before the Board). It regarded Options 1 and 2 as continuing to exist, available for acceptance by the company. In practical terms, assuming that the concessions conveyed by both parties during the final phase of the bargaining are acceptable, some items will have been resolved, and others would remain unresolved. The potentially resolved items included: the extension of some laid-off employees’ recall entitlement to 36 months; the provision of safety boots; amendment to the definition of “spouse” in the bereavement leave provision; meal allowance; distribution of overtime; paid holidays; supplemental benefits for maternity leave. The items which remained outstanding were the following: an aspect of the bereavement leave provision; overtime; shift premiums; the scope of the shift maintenance provision; wages; contracting out; parkas; the calculation of vacation pay. Most of these are substantial items.

66The bargaining ended at about 6:30 p.m. The union’s representatives left to meet with the bargaining unit employees. The employees were under the impression, having received a written version of the employer’s Final Offer, that it was open for acceptance and a vocal group at the meeting were intent upon holding a vote on the offer. Only with considerable effort over a lengthy period did Mr. Grgar persuade those present at the meeting that the employer’s Final Offer had, in fact, been withdrawn and that there was nothing on the table for them to accept.

67At midnight on August 17, effective from August 18, the union’s members were locked-out by the employer. The work they perform at BCE Place is being performed by replacement workers working from Inplex.

Observations from the above facts and evidence

68The approach to bargaining adopted by the union, which it saw as indicating seriousness, was assertive and somewhat bellicose. Throughout, from the time it gave notice to bargain until the last day of bargaining, the union maintained the impression that its members were willing to strike, and would strike, if no acceptable agreement were reached on the two principal items in dispute between the parties: wages and contracting out. From the union’s ostensible indications, the company reasonably assumed that a strike would occur at midnight on August 17. There is nothing unusual or improper in a union creating this kind of impression. Its effect, though, was that the company approached the bargaining with the strike in mind. It was geared to concluding the bargaining by that time, failing which it had prepared itself for the withdrawal of work by the employees. When it became clear late on August 17 that the union had not presented its final position, that it was willing to continue bargaining and to extend the deadline when industrial action could occur, the company already had in place contingent arrangements (replacement arrangements) to ensure that BCE Place continued to operate without disruption. It had planned for industrial action at midnight on August 17. When it was clear that the union would not strike, the company decided it would lock-out the employees.

69The company took advantage of the situation created by the union. It wanted to effect the contracting out of the courier and loading dock services and it made arrangements to do so at the earliest opportunity, after it became lawful to change terms and conditions of employment on August 17, 2000.

70From the union’s perspective the bargaining was not complete when the company presented its Final Offer. No impasse had been reached because the union still had room to move on its proposals. Objectively, though, once the employer presented the Final Offer which was open to ratification or rejection by the union’s membership, and that offer was rejected by the union’s representatives, and withdrawn by the employer, the parties were at impasse. The fact that the union had room to move on the proposals it had presented to the company earlier on August 17 (the three Options) became irrelevant at that point. The terrain had shifted.

71The union was willing to engage with the employer in discussion and consideration of a settlement proposal which combined various monetary provisions with the waiver of entitlements at the Board and at arbitration. The union’s own Option 3 was of that sort. It was suggesting that its rights at arbitration and at the Board, even its collective bargaining rights, be compromised as a basis for achieving an overall settlement. It was willing to consider surrendering its bargaining rights for a substantial pay-out.

72Although Mr. Grgar somewhat contested that the settling of outstanding grievances as part of concluding a renewal collective agreement is a frequent or common occurrence, I am satisfied that is so.

73Both parties compromised their former positions during the negotiations on August 17. The company moved first on the critical areas of contracting out and wages, and the union moved too in response. The company’s Final Offer was an improvement upon what it had offered earlier in the day. It incorporated elements of the union’s position and accepted them.

74The Final Offer was an integrated package. The offers on money (improvements to wages and other monetary items) were connected to what Mr. Kitchen referred to as “ending the war”, i.e. ceasing the existing litigation at arbitration, and forestalling any further grievances and any application to the Board. Mr. Kitchen explained that the company’s Final Offer would have been less generous financially had paragraphs 10, 11 and 12 been excluded from the Discontinuance Agreement. No such offer was ever presented by the company. Mr. Kitchen made clear in the negotiations that the money offers the company was making were dependent upon withdrawal of the current grievances and an undertaking not to pursue fresh grievances in respect of the contracting out of the courier and loading dock operations. Yet, notwithstanding the improvement to the company’s monetary offers, occasioned by the inclusion of paragraphs 10, 11 and 12, the monetary amounts offered still fell short of what the union was proposing. Hence, had the company deleted paragraphs 10, 11 and 12 and reduced its monetary offers (as Mr. Kitchen says would have been the case), there is little likelihood that the offer, so adjusted, would have been acceptable to the union’s representatives. I cannot therefore conclude that, had the adjustment been made and a revised offer been presented, that the union would have accepted the offer which might have resulted.

75When bargaining ceased at 6:30 p.m. on August 17 there was no employer offer on the table. The employer’s Final Offer had been withdrawn. Mr. Kitchen conceded that if the union and the employees had had a change of heart at their meeting after 7:00 p.m. on August 17, there was then no offer available to them which they could accept.

76The company gave the Final Offer to the union’s members before the union’s representatives had had an opportunity to consider it in caucus and to respond to it. As a courtesy, the company had informed the union of its intention to distribute the Final Offer among the employees. Accordingly, the union was aware that the employees would receive it, although it had not reacted to the document when that happened.

Bargaining subsequent to the hearing

77Subsequent to the hearing of the matter, the Board has been informed in writing by the employer’s counsel that the parties met again on September 7, 2000. At that meeting the employer tabled an Offer of Settlement which did not include a request for any agreement or undertaking by the union not to file grievances or commence proceedings before the Board. That offer was not acceptable to the union.

Argument and Decision

The case concerning the alleged illegal lock-out

78The company’s action, locking out employees at midnight on August 17, was legitimate from the perspective of the timeliness of the action. A “no board” report had been issued and 16 days had elapsed thereafter, making industrial action timely. That is not what this case is about though. The union does not claim the company’s lock-out is illegal because it does not comply with the timeliness provisions of the Act. The case concerns, on this issue, (a) whether an employer can lock-out workers in respect of a demand that they (and their union) waive entitlements to pursue claims at arbitration or before the Board, and (b), if there is no offer available for acceptance, whether an employer can lock-out its employees.

79The union distinguishes between bargaining over the waiver of statutory rights, and pushing a demand of that sort to impasse. It has no difficulty with the fact that the company (and the union itself) made proposals which it says included the waiver of statutory rights (withdrawal of the grievances and undertaking not to bring a related employer and sale of business application before the Board). Its complaint is that the employer pushed those proposals to impasse. It contends that is unlawful and that the lock-out which followed is consequently also unlawful.

80The union relies upon Aristokraft Vinal Inc., [1985] OLRB Rep. June 799 at 809 ¶28:

We are satisfied that if a lock-out is imposed by an employer “with a view to compel or induce his employees to refrain from exercising any rights … under this Act”, it is illegal even if it is otherwise timely. (See Irving Oil Ltd., 80 CLLC 14,054 (N.B.C.A.).) The Board stated in Westroc Industries Limited, [1981] OLRB Rep. March 381 at 392:

“… a lock-out aimed at dissuading employees from exercising rights under the Act is never lawful and the concept of timeliness simply has no application to such activity.”

[emphasis added]

That aim need not be the sole, principal, or predominant one of the lock-out. It is sufficient to establish that a lock-out is unlawful, regardless of timeliness, if unlawful intent forms even a part of the motivation for the lock-out. (See Westinghouse Canada Ltd., [1980] OLRB Rep. April 577 at 600-605, and in particular paragraphs 54-56.) It is clear, therefore, that a determination of whether the lock-out was lawful in this case must rest on our assessment of the company’s motive for imposing the lock-out. That assessment, as we said earlier, cannot be carried out in isolation. Regard must be had to all of the conduct of both parties, both before and during the lock-out to ascertain whether the company had an illegal purpose in doing what it did.

81The company responds that its withdrawal of the Final Offer means that it did not push the demands contained in paragraphs 10, 11 and 12 of the proposed Discontinuance Agreement to impasse.

82The Board’s approach to this issue is as stated in Aristokraft Vinyl Inc., at 809 ¶26:

While it may be helpful to examine independently the various events which occurred and the conduct of the parties during the relevant times, the Board should not focus on each element separately since we are examining, in this complaint, the bargaining process that the parties have followed. One cannot properly analyze the lock-out without considering what had taken place prior to the lock-out, nor can one assess the legality of the bargaining positions of the company without also considering the entire context in which the company’s positions developed.

83There is nothing wrong in a party making demands, during bargaining, of the other that grievances be dropped or that the party forebear from pursuing a statutory entitlement, particularly if the demand is in respect of a known or anticipated cause of action. Contracting out had become the central cause of tension between the parties from before the conclusion of their first collective agreement, during the course of the life of the collective agreement and during the negotiation of the renewal agreement. The grievances which followed the contracting out of various functions were well known to the parties, and they were unresolved at the time of the bargaining. The company reasonably anticipated a string of grievances arising from the contracting out of the courier and loading dock operations. The company had notice from the union that it would pursue a related employer and sale of business application before the Board if the courier and loading dock work were contracted out to Inplex or some other contractor. The demand by the employer that the union waive its existing grievances and that it abstain from pursuing those causes of action (at arbitration and before the Board) related to known issues, which had been the subject of much discussion between the parties. The employer was not asking the union to agree to some overall, sweeping abandonment of its statutory entitlement to use grievance arbitration and the Board. Its proposal was for a limited waiver, relating specifically to the contracting out which had occurred, and that which was to occur on August 18. The employer’s proposal was a bona fide endeavour to bring an end to a long history of conflict between the parties at arbitration. The transaction costs of the attempts to contract out work had been considerable and the employer wished to put an end to those costs: A.N. Shaw Restoration Ltd., [1976] OLRB Rep. Sept. 504, at 507-8 ¶12.

84There is no evidence to suggest that the employer had any intention to punish employees for having exercised rights under the Act. The facts in this case are therefore significantly different from those in Burlington Northern Air Freight (Canada) Ltd., [1986] OLRB Rep. Dec. 1628, see 1668 ¶119. The desire of the employer to persuade the union and its members to abandon rights to pursue grievances and to bring a particular application before the Board was motivated by an intention to achieve a particular business objective - to dispense with operations and services it no longer regarded as part of its core business - and to bring an amicable end to a lot of costly litigation.

85The union accepts that the employer is entitled to make the proposals it did. Its contest is with the employer including the proposals as part of its Final Offer and then, effectively (so the union says), driving those proposals to impasse and using the lock-out to force their agreement.

86The union makes the point that the definition of lock-out in subsection 1(1) of the Act does not distinguish between a lawful and an illegal lock-out. Both are included within the definition, which reads:

"lock‑out" includes the closing of a place of employment, a suspension of work or a refusal by an employer to continue to employ a number of employees, with a view to compel or induce the employees, or to aid another employer to compel or induce that employer's employees, to refrain from exercising any rights or privileges under this Act or to agree to provisions or changes in provisions respecting terms or conditions of employment or the rights, privileges or duties of the employer, an employers' organization, the trade union, or the employees.

In the union’s submission, compulsion to induce the employees “to refrain from exercising any rights or privileges under this Act” is illegal. Compulsion for the other purposes stipulated in the definition is legitimate.

87The parties accept that the company has locked out its employees. The question is whether the lock-out is lawful. For a lock-out to occur, the act of preventing employees from working must be linked to a demand, to a subjective intention on the part of the employer to compel or induce employees to accept something lawful: Preston Springs Gardens Retirement Home, [1984] OLRB Rep. Sept. 1241 at 1246 ¶15. The system of collective bargaining anticipates that parties will bargain with each other over terms and conditions of employment. If they do so in good faith, yet are unable to reach an agreement, at the point of impasse they are reciprocally entitled to take industrial action against the other.

88There need not always be an offer on the table when an employer locks out its employees, or when a union chooses to strike. It is lawful for a party to present a final offer and, when the other indicates its unwillingness to accept it (or to put it to its constituency for consideration, as here), to withdraw it and take industrial action. In a sense the party exercising its power says to the other, our last offer is not acceptable, you can now come back to us with something that we can look at. Parties understand when there is no offer on the table that one or other of them (usually the party which rejected the last offer) can return with something fresh which seeks, in whole or in part, to meet the interests of the other. Parties expect that the exigencies of economic pressure will affect the offers which will be made during the course of a strike or lock-out. Parties are not tied to the last offer made (and withdrawn) before the industrial action began. They may adjust their proposals as the strike or lock-out proceeds.

89In general, “the Board must exercise considerable restraint in intervening in negotiations between parties who are committed to reaching a collective agreement…. Too penetrating a review by this Board will only insert it as a third party in the bargaining arena to be tactically used by the negotiators, deferring their attention from the principal task at hand” (Radio Shack, [1979] OLRB Rep. Dec. 1220). The Board is generally concerned to monitor “the process of bargaining and not the content of the proposals advanced” (Radio Shack, [1985] OLRB Rep. Dec. 1789, at 1798 ¶34). However, there are circumstances when the Board will intervene. One such circumstance is that described above in Aristokraft Vinyl Inc. The Board adopts a taint test. If a demand to waive statutory rights forms any part of the demand pressed to impasse, then it is deemed to be motivated by reasons which are prohibited by the Act.

90The issue was considered in Radio Shack [1985], above, at ¶¶35-37:

35. We turn then to the company’s demand that the union withdraw the unfair labour practice complaints currently pending before the Board. The union contends that this was an “illegal demand”; or, at least, that if the matter was negotiable, then it was illegal for the company to “press it to impasse”. In counsel’s submission, the company is not entitled to make statutory rights the subject of an exercise of bargaining power. The company cannot demand that, as a condition of settlement, the union withdraw the pending complaints and compromise such employee rights or remedies as may be available to them under the statute.

36. We are inclined to agree with the union’s general proposition that, however broad the scope of bargaining, it does not encompass demands which are illegal or inconsistent with the scheme of the Labour Relations Act. A simple example would be a union’s insistence on maintaining the right to strike to enforce compliance with a collective agreement, when the Act quite clearly provides that such matters must be resolved by arbitration. Another simple example might be a union demand for a wage increase beyond the ceiling provided in wage restraint legislation (see Croven Limited, [1977] OLRB Rep. March 162), or an employer demand which interfered with internal union affairs or the representation of employees by a union (see the discussion A.N. Shaw Restoration Ltd., [1976] OLRB Rep. Sept. 504 at paragraphs 10-13). More subtle was the situation in United Brotherhood of Carpenters & Joiners of America, [1978] OLRB Rep. Aug. 776. There, a trade union certified to represent employees in a specific geographic area, struck to force the employer to extend recognition beyond the bounds of the Board certificate. The Board held that this was tantamount to a recognition strike. It was an illegal demand which was inconsistent with the scheme of the Act and contrary to the duty to bargain in good faith. Although the parties were entitled to negotiate about the scope of bargaining rights, a dispute could not be pressed to impasse. Similarly, in Toronto Star Newspapers Limited, [1979] OLRB Rep. May 451, [1979] OLRB Rep. Aug. 811, the Board held that it was illegal for a union to threaten a strike in order to secure a particular work assignment when section 91 of the Act provided a statutory mechanism for resolving disputes of this kind. In both cases the Board observed that it was lawful, and often sensible, to raise those matters at the bargaining table and seek to resolve them through negotiations. But neither party was entitled to use its superior bargaining power to force the other party to forego rights or abandon remedies available under the statute.

37. In our view, that approach is equally applicable here. It would be abhorrent and contrary to public policy if an employer could rely on its superior bargaining power to avoid the consequences of its own illegal acts. Continued bargaining or willingness to enter into a collective agreement cannot be made dependent upon the acceptance of provisions in that agreement which, in their effect, are repugnant to the Act’s specific language, protections, or basic policy. We do not think that an employer is entitled to rely upon its superior bargaining power to compel the withdrawal of a pending unfair labour practice complaint, nor can it make the signing of a collective agreement contingent upon such withdrawal. To do so would be interfering with the union’s right to represent those employees, and penalizing other members in the bargaining unit because the discharged workers were seeking legal vindication. To hold otherwise would make the employees’ statutory rights illusory, and subject to the balance of bargaining power rather than the rule of law.

91In a sense the Board’s approach to a bargaining proposal to waive statutory rights is somewhat analogous to the American NLRB’s approach to the distinction between mandatory and permissive subjects of bargaining. While the distinction between mandatory and permissive subjects of bargaining has no general efficacy in our labour law, the similarity is that in the U.S. a party cannot push to impasse a permissive bargaining subject; only mandatory issues can be pressed to impasse. Just so, in the Board’s jurisprudence, parties are free to bargain over the waiver or compromise of statutory rights, but they may not press them to impasse.

92The reason for this approach by the Board is that the Act conceives of certain issues being ultimately the subject of industrial action, and other issues being ultimately the subject of adjudication (whether in arbitration or at the Board). Parties cannot strike or lock-out on those issues which social policy requires should be settled by adjudication. Hence, as examples, recognition disputes, grievances, claims of unfair labour practice cannot be the subject-matter of a strike or lock-out. Similarly, without agreement (or some statutory provision, such as first contract arbitration), interest issues are determinable by negotiation and ultimately by industrial action, not adjudication. This division of resolution process is fundamental to the system of collective bargaining. If the Board countenances the use of industrial action to force the resolution of matters which the Act requires to be addressed by adjudication, then it enables economic force to be used indiscriminately. The scheme of the Act is that industrial action, which has wider social consequences than the harm to the parties to the dispute, is deliberately limited in scope and time. The limitations are justified because parties have available to them adjudicative remedies to deal with issues which concern their collective relationship (as opposed to terms and conditions of employment) or which arise during the currency of a collective agreement (when strikes and lock-outs are proscribed). In this way the Act limits the range of issues and occasions when strikes and lock-outs can be used. There is a balance struck between the parties’ freedom to put pressure on each other to accept a particular contract and the social interest of ensuring that the range of issues over which such coercive contracting can occur is limited and defined. (See Toronto Star Newspapers Limited, [1979] OLRB Rep. Aug. 811, particularly 824-5 ¶¶21-23; Cybermedix Limited, [1981] OLRB Rep. Jan. 13, at 17-21 ¶¶16-19; T. Eaton Company Limited, [1985] OLRB Rep. Mar. 491, at 505-508 ¶¶45-49).

93The Radio Shack [1985] decision, above, is interesting from another perspective. Although the Board expressed the view, as quoted, that the combination of a demand to waive a statutory entitlement taints an otherwise legitimate bargaining proposal if pushed to impasse, the Board did not find that to constitute bad faith bargaining. The reason for this result was that the Board found the union had engaged in discussion of the outstanding unfair labour practice complaints, it had itself initiated proposals in this regard, and it had failed to inform the employer of its view that the employer’s demand (that it withdraw its unfair labour practice complaints) was illegal. The Board said that “it was incumbent upon the union to put that proposition directly to the company to give it an opportunity to respond” (1800 ¶40). In other words, the Board expected the union to have raised its objection to the illegality of the employer including a demand for waiver of a statutory right and then pursuing that demand to impasse before the union presented it, for the first time, to the Board.

94The facts in this case have similarities and differences from those in Radio Shack [1985]. The similarities: the union engaged in negotiations with the employer on a proposal arguably that the union waive statutory entitlements. After the employer verbally presented the Offer and mentioned that a Discontinuance Agreement would be a necessary part of the settlement, the union responded with its options, one of which, Option 3, included considerable provision for the waiver of the union’s statutory rights. In fact, the union’s proposal went further than the employer’s. I have found that Mr. Grgar did not raise an objection at that stage to the illegality of the proposal. That was to happen only after the Final Offer had been put to the union and its representatives had begun to caucus on the matter. So far the facts here are similar to those in Radio Shack [1985]. But then they differ. The union told the employer that it regarded the Final Offer as being illegal. The employer disputed that interpretation, but nonetheless, perhaps partly out of a sense of caution, withdrew it. The employer was therefore on notice that the union regarded the offer as illegal and responded immediately by withdrawing it.

95Having said this, it is not incumbent upon a union immediately to point out the possible illegality of a proposal. Without conceding there was any illegality in the company’s offers, the company’s counsel at the hearing suggested that Mr. Grgar should have raised the illegality immediately after it was presented and the union should not have engaged at all in discussing the possible withdrawal of its grievances and the waiver of other statutory entitlements. He suggested that a union is put to an election: either it talks about the employer’s proposal to compromise its grievances, or it must immediately inform the employer that it regards the proposal as illegal and take no part in discussing it. I do not agree. Posing the matter in that way misconceives negotiating a demand to waive a statutory right, and pressing such a demand to impasse. The first is quite legitimate, even desirable. The second is not. As said in Radio Shack [1985], “it is not illegal to raise outstanding complaints at the bargaining table or to seek a resolution short of litigation. It will often make good sense to do so. The Act itself contemplates and encourages settlement discussions …”. If a union were to do otherwise, and pointblank refuse to enter into any discussion of the issue, which may be a matter of great importance to the parties they could possibly resolve by negotiation, then a valuable opportunity to come to terms would be lost. Accordingly a union may, and perhaps should, engage constructively with an employer and exchange proposals with it regarding the terms upon which particular statutory rights might be compromised or indeed abandoned. A union may continue to do so right to the point when the proposal is part of a final offer which is being pressed to impasse. At that point, if the offer is not acceptable to the union and if the union wishes to make an issue of the illegality of pursuing it to impasse, it must inform the employer that it regards the offer as illegal and it must give the employer an opportunity to withdraw the offer or present an alternative, lawful proposal which excludes the impugned portion. If the employer does not do either, the union may come to the Board and seek a remedy.

96If the standard were otherwise, a union would constantly be put to introducing and reiterating objections to illegality when engaged with the employer in a genuine endeavour to conclude a collective agreement. Its interjections would almost certainly undermine and inhibit the bargaining process. On the other hand, if the union were never required to raise its objection with the employer before coming to the Board, then an employer could be lulled into a false sense of security and act to its detriment on a misleading representation from the union that it did not regard the proposal as being illegal and that it never intended to pursue the matter. In short, there should be a fair opportunity for free discussion of the compromise of statutory rights, yet, before a union intends to challenge an employer’s pressing an offer to impasse which includes that compromise, it must give notice thereof to the employer to enable the employer to withdraw the offer or to present one which does not include that compromise.

97The employer wished to achieve certain economic demands and it wished to bring about an end to its long and costly legal battle over its various attempts for some years to contract out work. The demands contained in paragraphs 10, 11 and 12 were addressed to the latter intention. Those were demands that the union waive or forebear from pursuing grievances or a 69/1(4) or a section 96 application before the Board. However these demands were withdrawn by the withdrawal of the Final Offer. The last communications to the union before the lock-out was the withdrawal of the Final Offer. Nothing then remained on the table for acceptance by the union before the lock-out.

98The union says that the withdrawal of the Final Offer was an artificial act. It says that, despite the withdrawal of the Final Offer, what continued to inform the lock-out were the demands contained in paragraphs 10, 11 and 12 of the Discontinuance Agreement. It suggests that the Board should look behind the manifest withdrawal of the Final Offer to see what was lurking beneath. What lingered and what, in the union’s submission, continued to inform the bargaining between the parties in the period of the lock-out was the demand to waive statutory rights by the union and its members. That, the union suggests, means that the employer pursued an illegal demand to impasse, rendering the lock-out illegal.

99The first question to be addressed is whether the demands in paragraphs 10, 11 and 12 were demands that the union “refrain from exercising any rights or privileges under this Act”. Whether or not a demand to withdraw or not pursue grievances such as is contained in paragraphs 10 and 11 amounts to a request that the union refrain from exercising rights under the Act need not be decided because the demand in paragraph 12 clearly is of that sort. A union has a statutory right to bring a 69/1(4) or an unfair labour practice application before the Board. The demand that the union forebear from doing so is therefore a demand that the union refrain from exercising a right under the Act.

100Paragraph 12 of the Discontinuance Agreement was an integral part of the employer’s Offer and its Final Offer. It was withdrawn with the withdrawal of those offers. The question is whether, notwithstanding its withdrawal by the employer, paragraph 12 was nonetheless pressed to impasse.

101What is clear from the evidence is that the lock-out was going to occur on August 18, unless there was an agreement before then. The employer intended to contract out the courier and loading dock operations when it was lawful to do so. It sought, through its bargaining with the union, to get the union to agree to that demand, but, failing agreement by the deadline of midnight on August 17, it intended to proceed. The parties could not agree upon the principal features of the renewal collective agreement, particularly the contracting out provision. The monetary issues were significant and the parties had made little progress towards agreement when the deadline approached. It is clear that the parties were poles apart on the contracting out issues and that they were not going to come to terms, whether or not paragraphs 10, 11 and 12 of the Discontinuance Agreement formed part of the employer’s Final Offer. It seems that the lock-out was going to occur if there was no agreement by midnight on August 17, regardless of the provisions of the Discontinuance Agreement.

102The context in which the Offer and the Final Offer were made was the following. The parties had set themselves a deadline. They were trying to reach an agreement by then. Both realized that August 17 was the last day of real bargaining before the strike/lock-out deadline. There were time limits as to when the bargaining had to stop. They had until about 6:30 p.m. to reach an agreement. The flurry of proposals on that day - the Offer, the three Options and the Final Offer - were designed to see if an agreement could be reached before the deadline. The proposals in paragraphs 10, 11 and 12 in the Discontinuance Agreement were intended to ensure that the employer could contract out as it wanted to do. They were presented in that context.

103As soon as the possible illegality of the Final Offer was conveyed to the employer by the union, the employer withdrew the offer. Both the Final Offer and the Offer were raised fleetingly, as part of the general endeavour by the parties to see if they could come to terms on that day before their meeting was to end. Parties understand that proposals presented and rejected can be withdrawn from the table and they then have no further efficacy. Despite the break-off in discussions on August 17, the situation was still fluid when they separated. The union made clear that it had room to move on its Options 1 and 2. Before they parted on August 17, the parties arranged further dates on which to bargain. They were still exploring options when the deadline arrived. From the context of the negotiations, I cannot conclude that the employer was so wedded to its proposals in paragraphs 10, 11 and 12 of the Discontinuance Agreement that it was not willing to reach an agreement unless those paragraphs formed part of it. That was clear from the withdrawal of the Final Offer. Those provisions had made no appearance prior to August 17, and they were gone on that day. When the parties got back together on September 7 the provisions were missing from the employer’s proposal. That too suggests that the employer did not pursue them to impasse.

104I cannot conclude from the evidence that the purpose of the lock-out was to enforce paragraphs 10, 11 and 12 of the Discontinuance Agreement. In the circumstances the lock-out was not unlawful.

The alleged unfair labour practice case concerning the employer’s communication of the Final Offer to the employees on August 17, 2000

105The employer’s communication of the Final Offer to the employees occurred late in the negotiations, a few hours before the deadline for the completion of negotiations before industrial action was anticipated. It occurred in the context of an imminent meeting of the employees (their first such meeting for a long time), which had been arranged well in advance, when both parties anticipated a final (or close to final) offer would be presented for ratification by the employees. The employer wanted the employees to know the detail of what was contained in its Final Offer. The covering letter which accompanied the Final Offer, and the Final Offer itself, did not attempt to disparage the union, nor did they suggest or attribute any blame to the union for the parties’ failure to reach an agreement. The covering letter went no further than asking the employees to give serious consideration to the company’s proposal for settlement of the renewal collective agreement. The Final Offer was conveyed to the employees only once it had been conveyed to the union’s bargaining team, when it was explained and any queries concerning it were discussed.

106The union did not have an opportunity to caucus on the Final Offer and to provide its response to the employer before it went to the employees; it is also true that Mr. Grgar and the union’s representatives had to deal with some significant degree of dissatisfaction when they met their membership after they had been given the Final Offer because the employees were under the impression that the Final Offer was still available for acceptance, when that was no longer the case. This inconvenience and the difficulty faced by the union’s representatives would not have occurred had the employer delayed the issue of the Final Offer to each employee until it had heard the union’s considered response to the offer. The problem, though, which the company faced at the time was that waiting would have meant its offer would not have got to the employees. By the time the union reverted to the company with its response to the Final Offer, the work day was finished and the employees were already on their way to the union meeting. The employer would have been unable to provide each employee with a copy of the Final Offer at that stage. The company anticipated, prior to the union’s response to the offer, that the Final Offer would be put to a ratification vote. It wanted each of the employees to have full details of what was contained in the Final Offer and so it gave them a copy shortly before they went off shift.

107The Board expressed its approach to this issue in Forintek Canada Corp., [1986] OLRB Rep. Apr. 453, at 474 ¶43:

In assessing whether employer communications during or in relation to collective bargaining go beyond the bounds of permitted speech into the realm of prohibited interference, the Board has considered whether they reflect an attempt to explain the position the employer has taken at the bargaining table or, rather, an attempt to disparage the union or its proposals. The Board looks at the context, content, accuracy and timing of employer communications in discerning their purpose and effect. Communications made after good faith bargaining has reached an impasse are less suspect than those made during early stages of bargaining, accurate statements are less suspect than inaccurate ones and, in any event, communications of explanations or positions not first fully aired at the bargaining table are highly suspect: A.N. Shaw Restoration Ltd., supra, at paragraphs 19 to 22 and The Citizen, [1979] OLRB Rep. Mar. 177 at paragraphs 57 to 64; and see Fruehauf Trailer Company of Canada Limited, [1975] OLRB Rep. Jan. 77; Canada Cement Lafarge Ltd., [1980] OLRB Rep. Nov. 1583; Globe and Mail, [1982] OLRB Rep. Feb. 189.

See also A.N. Shaw Restoration Ltd., [1978] OLRB Rep. May 393, at 398 ¶¶17-18.

108An employer is entitled to communicate directly with its employees over issues involved in collective bargaining with their collective representative, provided that the form, content and frequency of the communications are not such as to undermine the status of the union as their collective bargaining agent. The employer must not seek directly, or indirectly, to bargain directly with the employees. The communications are likely to be lawful as long as they do not have the effect of inviting or encouraging the employees to bargain directly with the employer, rather than through their union. The full bargaining context must be taken into account when assessing the impact of the communication; so too the content, accuracy and timing of the communication. (See the Board’s comments in Toronto Star Newspapers Limited, [1988] OLRB Rep. Aug. 987, particularly 995-6 ¶¶33-34; Barouh Eaton (Canada) Ltd., [1988] OLRB Rep. June 549, at 554 ¶26.)

109It is only when communications between employer and employees go beyond the bounds of legitimate freedom of expression and encroach upon the union’s exclusive right to bargain on behalf of its employees that they become illegal. Such communications become illegal only when they represent, “in reality”, an attempt to bargain directly with employees. (The Citizen, [1979] OLRB Rep. Mar. 177, at 201-2 ¶56.)

110The question of the fairness of referring a final offer to employees was considered in Perimeter Transportation Limited, (1990) 9 CLRBR (2d) 264. The B.C. Industrial Relations Council found, at 266, that it was not a violation of a provision equivalent to section 70 of the Act for an employer to explain its final offer to employees, “provided the explanation is not misleading, coercive or calculated to intimidate, and provided that it has first made the employees’ bargaining representative aware of its position”. The company has satisfied this test. No doubt it would have been better to have allowed the union to respond to the Final Offer before referring it to the employees. However, the failure to have done so did not make the employer’s conduct unlawful. There was no attempt to subvert the union as the employees’ collective bargaining representative. There was no move to bargain directly with the employees. Giving them the written details of the Final Offer was so that they could make an informed decision when they considered the Final Offer at their meeting on August 17.

111In the circumstances I find that the employer did not commit any violation of section 70 of the Act when it distributed its Final Offer among its employees in the late afternoon of August 17. The union’s unfair labour practice complaint is therefore to be dismissed.

DISPOSITION

112I make the following declarations:

(1) the application in Board File No. 1478-00-U is dismissed;

(2) the applicant’s unfair labour practice application in Board File No. 1479-00-U is dismissed.

“Christopher J. Albertyn”

for the Board