Ontario Labour Relations Board
File No.: 0118-01-PR Date: October 10, 2001
Between: International Brotherhood of Electrical Workers, Local 530, Applicant v. Sarnia Construction Association as agent for Shell Canada Products; International Brotherhood of Boilermakers, Iron Shipbuilders, Blacksmiths, Forgers and Helpers Local Union 128; Brick and Allied Craft Union of Canada Local Union 23; United Brotherhood of Carpenters and Joiners of America Local Union 1256; Operative Plasterers’ and Cement Masons International Association of the United States and Canada Local Union 598; International Association of Heat and Frost Insulators and Asbestos Workers Local Union 95; International Association of Bridge, Structural and Ornamental Ironworkers Local Union 700; Labourers International Union of North America Local Union 1089; United Brotherhood of Carpenters and Joiners of America, Local Union 1592; International Union of Operating Engineers Local Union 793; International Union of Painters and Allied Trades Local Union 1590; United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada Local Union 663; United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada Local Union 787; Sheet Metal Workers International Association Local 539; United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada Local 853; International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America Local Union 880, Responding Parties.
Before: Harry Freedman, Vice-Chair, and Board Members J. G. Knight and G. McMenemy.
Decision of the Board
1Two formal applications for reconsideration of the Board’s decision in this matter dated July 26, 2001 in which the Board made an order declaring that the proposed project agreement, as amended, is in force were filed and remain before the Board for determination. Both the Sarnia Construction Association as agent for Shell Canada Projects (the “proponent”) and the Sheet Metal Workers International Association, Local 539 (“Local 539”) formally applied for reconsideration of that decision. The Board, in its decision in this matter dated August 28, 2001 issued directions with respect to filing submissions in response to the requests for reconsideration and dealt with informal requests for reconsideration made by the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 663 (“Local 663”) and The United Brotherhood of Carpenters and Joiners of America, Local 1592 (“Local 1592”) set out in letters to the Registrar dated August 16 and August 17, respectively.
2The proponent submits that the Board has the discretion under section 163.1(9)4 of the Labour Relations Act, 1995, S.O. 1995, c. 1, as am. (the “Act”) to make an order declaring a project agreement is in force without any amendments even when the Board finds that the bargaining agent challenging the proposed project agreement has established that the employees it represents will be subject to a reduction “in the total wages and benefits, expressed as a rate” that is greater proportionally than the largest reduction applicable to an employee represented by a bargaining agent that gave notice of approval of the project agreement. The proponent submits that the Board has that discretion because section 163.1(9)4 uses the word “may” rather than “shall” and therefore has the following three options to choose from when the bargaining agent challenging the project agreement has met the criteria established by section 163.1(9)2 of the Act:
i) make an order amending the proposed project agreement and declaring the project agreement, as amended is in force;
ii) make an order declaring that the proposed project agreement shall not come into force; or
iii) make an order declaring the proposed project agreement is in force.
The Board did not come to a decision on that issue since we were satisfied that even if the Board did have that discretion the circumstances did not warrant the Board refusing to ameliorate the reduction faced by the employees represented by the applicant because the Board was satisfied that “changing the affected employees’ hourly rate can achieve the result contemplated by section 163.1(9)3 without affecting the substance of the proposed project agreement.” The proponent disagrees with that conclusion and submits that not only did the Board’s decision affect “the substance of the proposed project agreement, it has grossly undermined it.”
3The proponent submits that the purpose of section 163.1 of the Act “is to allow Ontario to compete, financially, with other industrial centres for industrial development.” It argues that the Board’s decision amending the proposed project agreement, even if there was a disproportionate reduction in the wages and benefits of the employees represented by the applicant, has made it impossible to enter into future project agreements. It points out that the Board’s decision, which found that the employees represented by the applicant should receive an hourly rate higher than the hourly rate payable under the applicable provincial agreement, creates a situation where the employees represented by the applicant will be paid significantly more than the other employees in relation to their provincial agreements if the applicant’s members actually work less than 40 hours a week because the disproportionate reduction resulted from a change in the standard work week.
4The proponent also submits that it is probable that no further project agreements will be reached as it is unlikely that any bargaining agents will agree to a reduction in their rates when other bargaining agents who do not agree can obtain rates that are higher than their provincial agreement rates. It argues that five bargaining agents have collective agreements with a 36 hour work week but only one of those bargaining agents received an increase in their rate. That, the proponent submits, adds to the divisions and unrest among the trades where all trade receive the benefits of the project agreement (five years’ maintenance, more favourable transfer clauses and a requirement of all unionized contractors) but the cost of those benefits are not shared equally among the trades as the applicant’s members receive a wage increase rather than a reduction. The proponent also referred to the letters from Local 663 and Local 1592 (referred to in the Board’s decision of September 12, 2001) as well as to a letter from the Labourers’ International Union of North America, Local 1089 (“Local 1089”) dated August 23, 2001 to support its position that the Board’s decision will jeopardize all future attempts to reach project agreements.
5Local 1089 asserted that the Board’s decision was an unexpected result that changed the proposed project agreement from being fair and equitable to one that is unfair and inequitable as it penalizes Local 1089 for having a 40 hour work week in its ICI provincial agreement. Local 1089 also suggested that the decision affects the overall harmony that was established by the proposed project agreement before the Board decided that the proposed project agreement imposed a disproportionate impact on the employees represented by the applicant. Local 1089 also suggested that the Board in a previous decision affecting Esso, Nova, Dow, Bayer and Trans Alta had dismissed the application challenging the project agreement and ruled that that project agreement in that case was proportional. It also requested reconsideration of the Board’s decision and asked that the Board declare the propose project agreement is in force and proportional.
6To the extent that the letter from Local 1089 constitutes a request for reconsideration, it is dismissed. The Board did not penalize Local 1089 for having a 40 hour work week under its ICI provincial agreement. Rather, the Board’s decision recognized that an increase in an employee’s work week could affect an employee’s total wages and benefits. The work week of employees represented by Local 1089 was not affected by the proposed project agreement; the work week of the employees represented by the applicant was. Furthermore, the decision referred to by Local 1089, although not cited specifically, is likely the Board’s decision in The Sarnia Construction Association, [1999] OLRB Rep. Sept./Oct. 894, application for reconsideration dismissed, [1999] OLRB Rep. Nov./Dec. 1091. The Board in that case dismissed the challenges that had been filed to the proposed project agreement because they were untimely. Furthermore, the Board noted that had a timely challenge been filed, it would have ordered an amendment to the proposed project agreement so that the reduction in total wages and benefits applicable to the employees represented by the applicants in that case would have been 12.94% and not 13% and would have ordered the proposed project agreement as amended to come into force. The Board in The Sarnia Construction Association case of September 1999 clearly indicated that it was prepared to order an amendment to the wage rate of a proposed project agreement if the proposed project agreement created a disproportionate reduction as a result of a change in the hours of work provisions found in the ICI provincial agreements.
7The proponent (and Local 663, Local 1592 and Local 1089) appear to misunderstand what the Board had attempted to do by making the order amending the proposed project agreement. The Act directs the Board to assess whether the proposed project agreement results in a disproportionate “reduction in the total wages and benefits” of employees represented by a union that has disapproved the proposed project agreement and filed a timely challenge when compared to the employees represented by a union that approved the proposed project agreement. It seems to us that the legislature created a process that tries to balance the freedom of trade unions to engage in collective bargaining and decide whether to join with other unions in a multi-party arrangement with an obligation to abide by the wishes of a majority of trade unions affected by that arrangement by ensuring that one or two unions could not veto the entire arrangement while also at the same time making sure that the employees represented by a union opposing the arrangement would be no worse off than employees represented by a union supporting the arrangement.
8The Board did not confine itself to consider only the hourly rate paid to employees when deciding whether the proposed project agreement resulted in a disproportionate reduction because the Act refers to “total wages and benefits”, not just wages. The Board’s order of July 26, 2001 in this matter, based on the material that had been submitted by the applicant and proponent, was made because the Board found that the least disruptive way to maintain a proportionate reduction in total wages and benefits under the proposed project agreement was to adjust the wage rate of employees represented by the applicant and that it was appropriate to make an order amending the proposed project agreement and declaring the proposed project agreement as amended is in force.
9The proponent suggested in its request for reconsideration that the Board’s approach to considering the weekly total pay created confusion. It goes on to provide an example of two bargaining agents having the same percentage reduction but one having a reduction of $75 a week while the other having a reduction of $100 a week and suggests that such a difference might be grounds for a successful challenge. The Act, at least on that point raised by the proponent, is quite clear. Sections 163.1(9)2 and 163.1(9)3 refer to total wages and benefits expressed as a rate and to proportional differences. A submission claiming a disproportionate reduction based on the difference between the actual amounts paid rather than on the percentage difference in total wages and benefits expressed as a rate would have no merit and would, in our view, be summarily dismissed.
10The proponent submits that it did not address the financial impact of the standard work week because its position was that “clearly the legislation did not contemplate the consideration of a standard work week in the expression ‘total wages and benefits as a rate’ or for that matter the standardization of other terms and conditions such as travel, room and board.” The proponent did not however provide the Board with what should be considered other than the wage rate. Furthermore, as noted earlier, the Board had already indicated in its September 1999 decision involving the applicant and the Sarnia Construction Association that a change in the standard work week would likely be considered when determining whether there was a reduction in “total wages and benefits expressed as a rate”. Surely, if the legislature had wanted to restrict the assessment of whether a disproportionate impact resulted from a proposed project agreement to only the wages of employees expressed as a rate, the words “total wages and benefits” would not have been used in section 163.1(9).
11The applicant, in reply to the request for reconsideration filed by Local 539, agrees that the Board should reconsider the decision to reflect the accurate information now available to the parties. The applicant stated: “…it is clear that the Board’s decision must be revised to the extent required to bring the rate of the reduction in total wages and benefits experienced by members of the IBEW into line with that experienced by the Sheet Metal Workers.” As the Board indicated in its September 12, 2001 decision in this matter the revised wage rate would be in the range of 97% of the provincial ICI rate rather than greater than the ICI rate.
12Thus, the issue for the Board is whether it should amend the proposed project agreement as requested by Local 539 and agreed to by the applicant or despite finding a disproportionate reduction affecting the applicant, order the proposed project agreement is in force without amendment on the assumption that the Board has the power to do so as suggested by the proponent. (The proponent did not suggest that the Board should make an order declaring that the proposed project agreement shall not come into force.)
13In our view, the legislature set out an elaborate and precise procedure that must be followed to bring a project agreement into force. It provided safeguards to ensure that employees represented by one trade union would not suffer a disproportionate reduction if their representative did not accept the proposed project agreement and filed a timely challenge to that proposed project agreement. It directed the Board to review the “total wages and benefits” to determine whether there was a disproportionate reduction, expressed as a rate, before deciding whether or not to declare a proposed project agreement in force. And, if the Board found a disproportionate reduction, the Board could either declare that the proposed project agreement would not come into force or order an amendment to the proposed project agreement and declare that the proposed project agreement as amended come into force. There would have been little sense for the legislature to have created that type of process and then at the end of the process, despite having had the Board undertake the analysis and calculations required, permit the Board to ignore its finding of disproportionate impact and declare that the proposed project agreement come into force without amendment. Thus, we do not accept that the Board has three options, as submitted by the proponent, when it finds that the bargaining agent challenging the proposed project agreement has met the criteria established by section 163.1(9)2 of the Act. In our view, the Board can do one of two things in that situation. The Board may either make an order amending the proposed project agreement and declaring the project agreement, as amended, is in force or make an order declaring that the proposed project agreement shall not come into force.
14We are satisfied that the Board’s decision of July 29, 2001 properly and fairly determined the issue of the applicant’s challenge to the proposed project agreement. Subject to the revision based on the information filed by Local 539 and the applicant in the course of dealing with the requests for reconsideration, the Board is not prepared to reconsider the decision by ordering that the proposed project agreement come into force without amendment. Therefore, the proponent’s request for reconsideration is dismissed.
15Local 539, in its request for reconsideration, indicated that the base hourly rate under the ICI provincial agreement for the employees it represents (journeyman rate) was $28.28 and with other benefits the total wage package would be $37.70 per hour. The applicant, in its submissions in response to the request for reconsideration filed by Local 539, suggested that the hourly rate for members of Local 539 was $28.69 with a total wage package of $39.92. The applicant attached what it says is a copy of the local wage appendix for the Sarnia area containing the wage and benefit rates for members of Local 539. Local 539 did not indicate that the applicant was using the wrong figures. Therefore, the Board is prepared to proceed to set out its calculations of the rate and reduction based on the material filed by the applicant.
16The employees represented by Local 539 have the following hourly pay scale under the Sheet Metal International Association ICI provincial agreement in effect after May 1, 2001:
Base Rate: $28.69 Vacation Pay $2.87 Total (Base Rate & Vac. Pay) $31.56 Health & Welfare $2.59 Pension $4.30 Stabilization Fund $1.00 Total Package $39.45 Industry Fund $0.47 Total $39.92
An employee represented by Local 539 working a forty-hour week under the ICI provincial agreement would earn $1704.24 ($39.45 x 40) + ($31.56 x 4). (The latter 4 hours of premium pay include payment of the hourly rate and vacation pay; no amount is included in those premium hours for health & welfare, pension and stabilization fund.) The amount paid to the industry fund is also not included in the calculation. That same employee working 40 hours under the proposed project agreement would earn $1514.80 ([$29.98 {$31.56 x 95%} + $2.59 + $4.30 + 1.00] x 40), which results in a reduction of $189.44 per week or 11.12%
17The employees represented by the applicant have the following hourly pay scale under the IBEW ICI provincial agreement in effect after May 1, 2001:
Base Rate $32.20 Vacation Pay $3.22 Total (Base Rate & Vac. Pay) $35.42 Union Funds $1.93 Pension Fund $3.22 Total Package $40.57 ECA Fund $0.28 Total $40.85
An employee represented by the applicant working a forty hour week under the ICI provincial agreement would earn $1785.08 ($40.57 x 36) + ($40.57 x 2 x 4). The premium hours worked include payment of all benefits for each hour paid. Under the proposed project agreement, an employee represented by the applicant working a forty hour week would be paid $1552.00 ([$33.65 {$35.42 x 95%} + 1.93 + 3.22] x 40) which results in a reduction $233.08 per week or 13.06%.
18In order to achieve a reduction of 11.12% rather than a reduction of 13.06%, the hourly base rate in the project agreement for employees represented by the applicant would have to be changed from $30.59 ($32.20 x 95%) to $31.38 or a reduction of $0.82 per hour from the hourly base rate in the ICI provincial agreement or to put it another way, the employees represented by the applicant must receive under the project agreement 97.45% of the hourly base rate that is found in their ICI provincial agreement.
19The Board has made its determination of the reduction by applying the formulae in its July 26, 2001 decision using the rates supplied by the applicant in its submissions dated September 18, 2001 (which had appended to it the excerpts from the relevant ICI provincial agreements) and to which neither the proponent nor Local 539 took issue. As the Board was prepared to order an amendment to the proposed project agreement where the amended wage rate would be slightly above the rate in the ICI provincial agreement, the corrected rate, which involves a reduction of more than 2.5%, ought to be incorporated in the proposed project agreement. The Board is of the view that all of the parties affected by the proposed project agreement would be better served and the purpose of section 163.1 of the Act, as articulated by the proponent, would be met by declaring the proposed project agreement as amended is in force rather than declaring that the proposed project agreement shall not come into force. Therefore, the Board grants the request for reconsideration made by Local 539 (and agreed to by the applicant) to amend the Board decision in this matter dated July 26, 2001.
20The Board hereby amends its July 26, 2001 decision by deleting “100.22%” where it appears in paragraph 26 of that decision and inserting “97.45%” in its place. Therefore, the Board orders that the proposed project agreement is amended so that section 10(a) of the amended proposed project agreement shall now provide:
The parties agree to the following standard terms and conditions for employment at the Projects:
(a) Base Wage Rates
(i) All employees save and except employees represented by the International Brotherhood of Electrical Workers, Local 530 working under the terms of this Project Agreement shall be paid 95% of the prevailing base hourly wage rates set forth in the applicable Provincial Agreements.
(ii) All employees represented the International Brotherhood of Electrical Workers, Local 530 working under the terms of this Project Agreement shall be paid 97.45% of the prevailing base hourly wage rate set forth in the Provincial Agreement between The Electrical Trade Bargaining Agency of the Electrical Contractors Association of Ontario and the International Brotherhood of Electrical Workers & the IBEW Construction Council of Ontario.
The Board hereby makes an order pursuant to section 163.1(9)3(ii) of the Act declaring that the proposed project agreement as amended by the Board’s order herein is in force.
"Harry Freedman"
for the Board