CITATION: Canadian National Railway Company v. Teamsters Canada Rail Conference, 2023 ONSC 3365

DIVISIONAL COURT FILE NO.: DC-22-2721

DATE: 20230613

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

RSJ Edwards, Matheson, Stewart JJ.

BETWEEN:

Canadian National Railway Company

Applicant

– and –

Teamsters Canada Rail Conference and Michelle Flaherty

Respondents

Richard J. Charney and Tiffany O'Hearn Davies, for the Applicant

Michael A. Church and Sukhmani Virdi, for the Respondent, Teamsters Canada Rail Conference

HEARD in Ottawa via videoconference: February 15, 2023

REASONS FOR DECISION

Stewart J.

Nature of the Application

[1] The Applicant, Canadian National Railway Company (“CN”) brings this application for judicial review of the decision of Arbitrator Michelle Flaherty dated May 30, 2022. CN seeks an order setting aside the decision or, alternatively, an order that the dispute be sent back to another arbitrator for a new hearing.

[2] At the conclusion of the proceedings before the panel we advised counsel for the parties that we would dismiss the application, with reasons to follow. These are those reasons.

Background Facts

[3] Cole Bujold, the grievor in this labour relations dispute, is employed by CN as a locomotive engineer. Bujold is a member of his labour union, Teamsters Canada Rail Conference (“Teamsters”), which engages in collective bargaining with CN on his behalf and on behalf of the other members of his bargaining unit.

[4] On January 20 and 21, 2020 Bujold took personal leave days as provided by the applicable statutory provisions of the Canada Labour Code, RSC 1985, c L-2 (the “Code”). Pursuant to section 206.6 of the Code, amended in 2019 to allow federally regulated employees to have paid personal leave days, Bujold and his fellow employees are entitled to a maximum of five personal leave days per year and are entitled to be paid at “their regular rate of wages for their normal hours of work” for three of those days. Section 206.6 (2) provides as follows:

Personal Leave

Leave with pay

206.6 (2) If the employee has completed three consecutive months of continuous employment with the employer, the employee is entitled to the first three days of the leave with pay at their regular rate of wages for their normal hours of work, and such pay shall for all purposes be considered to be wages.

[5] In order to calculate the amount of pay to which employees taking personal leave days pursuant to s. 206.6 of the Code are entitled, the Canada Labour Standards Regulations, CRC, c 986 (the “Regulations”) were also amended. Section 17 of the Regulations establishes two methods to calculate the pay of employees taking personal leave days as follows:

For the purposes of subsections 206.6(2), 206.7(2.1), 210(2) and 239(1.3) of the Act, the regular rate of wages of an employee whose hours of day differ from day to day or who is paid on a basis other than time shall be

(a) The average of the employee’s daily earnings, exclusive of overtime hours, for the 20 days the employee has worked immediately preceding the first day of the period of paid leave;

or

(b) An amount calculated by a method agreed on under or pursuant to a collective agreement that is binding on the employer and the employee.

[6] The pay earned by Bujold from his job as a locomotive engineer varies from one shift to the next and depends on the number of miles he travels and the allowances he receives based on the length of the train, the type of train, and the time spent in railroad terminals. Bujold therefore submitted a claim to CN for payment of wages for the eligible three personal leave days in the amount of $1,192.00, a figure based upon the remuneration received by another locomotive engineer employed by CN who worked on January 20 and 21, 2020.

[7] In purported satisfaction of Bujold’s claim, CN paid him only $504.20, the equivalent of what it maintained was two “basic days” of wages to which he was entitled as defined in the collective agreement.

[8] The parties therefore agree that Bujold is entitled to compensation for the two days of personal leave as mandated by the Code, but they differ as to how that compensation is to be calculated.

Decision of the Arbitrator

[9] Teamsters filed a grievance challenging CN’s calculation of payment for personal leave days. Teamsters argued before the Arbitrator that compensation for personal leave days must be calculated according to s. 17(a) because its collective agreement with CN, entered into before the amendments to the Code and the Regulations, is silent on payment for any personal leave days. Under s. 17(a) Bujold is entitled to a calculation based upon average daily earnings for the 20 working days preceding January 20, 2020.

[10] CN submitted to the Arbitrator that s. 17(b) was the calculation guide that applied, and therefore compensation should be determined according to the “basic day” rate of pay as stipulated in Article 3.3 of the collective agreement between the parties which provides that:

Basic Day Rate of Pay

3.3 In all classes of service covered by paragraphs 1.7, 1.8 and 1.9 of Article 1, 100 miles or less, 8 hours or less, straight-away or turnaround, shall constitute a day's work; miles in excess of 100 will be paid for at the mileage rates provided, according to class of power and service.

[11] The Arbitrator agreed with the position advanced by Teamsters, allowed the grievance and directed CN to compensate Bujold for the personal leave days in accordance with s. 17(a) of the Regulations. The Arbitrator decided that s. 17(b) applies only if the parties actually have agreed on a method for calculating such compensation. In this case, CN and Teamsters had not specifically bargained for or agreed upon what constitutes a “regular rate of wages” for the purposes of personal leave days.

[12] In arriving at this conclusion, the Arbitrator determined that the parties had not intended Article 3.3 to be a standard measure for calculating any paid day off work. Article 3.3 is a minimum entitlement for a day’s work, whereas the Labour Code states that compensation for personal leave days is to be at a “regular rate of wages.” The Arbitrator decided that the Labour Code’s reference to “regular wages” suggests something other than a basic, minimum entitlement.

[13] Further, the Arbitrator observed that the basic day rate is not the only, or even the dominant, method for calculating compensation for locomotive engineers. The basic day rate generally applies when a locomotive engineer loses a tour of duty or where an employee is relocated and is seeking accommodation. Neither of these situations was found to be analogous to the taking of personal leave days. It therefore could not be inferred that the parties’ intention was for the basic day rate to apply to personal leave days.

[14] As a result, the Arbitrator concluded that compensation for personal leave days must be determined based on s. 17(a) of the Regulations.

[15] CN now seeks judicial review of the arbitrator’s decision on the grounds that it is unreasonable. In response, Teamsters submits that the decision is reasonable and that CN has not discharged its burden to demonstrate otherwise.

Jurisdiction

[16] This court has jurisdiction to review the decision of the Arbitrator pursuant to ss. 2(1) and 6(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1.

Standard of Review

[17] The parties agree that the standard of review in this case is reasonableness as set out in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653.

Law and Discussion

[18] As described in Vavilov, supra, a reasonableness review properly considers both the reasoning process and the outcome. The hallmarks of reasonableness are justification, transparency, intelligibility. A reasonable decision may be justified in relation to the relevant factual and legal constraints that bear on the decision.

[19] The burden is on CN to show that the decision is unreasonable before it can be set aside. More precisely, the Supreme Court has stated (Vavilov, para 110):

The burden is on the party challenging the decision to show that is unreasonable. Before a decision can be set aside on this basis, the reviewing court must be satisfied that there are sufficiently serious shortcomings in the decision such that it cannot be said to exhibit the requisite degree of justification, intelligibility and transparency. Any alleged flaws or shortcomings must be more than merely superficial or peripheral to the merits of the decision. It would be improper for a reviewing court to overturn an administrative decision simply because its reasoning exhibits a minor misstep. Instead, the court must be satisfied that any shortcomings or flaws relied on by the party challenging the decision are sufficiently central or significant to render the decision unreasonable.

[20] Therefore, a decision may be unreasonable if the reasoning process is irrational and illogical. It may also be unreasonable if it is untenable in light of the relevant factual and legal constraints that bear on it.

[21] Notably, however, the Supreme Court of Canada has repeatedly held that a “(r)easonableness review is not a line by line treasure hunt for error” (see: Newfoundland Nurses and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62). Despite the need for scrutiny pursuant to Vavilov, that admonition remains apt.

[22] Accordingly, the issue before this Panel is whether the Arbitrator’s interpretation of s. 17, having regard to the decision as a whole, has been shown to be unreasonable and inconsistent with the text, context and purpose of the Code and Regulations.

[23] CN submits that the Arbitrator’s interpretation of s. 17(b) is inconsistent with the text, context, and purpose of the relevant provisions, CN argues that the Arbitrator unreasonably concluded that the basic day rate set out in Article 3.3 does not satisfy criteria in s. 17(b) because it operates as the “minimum pay” a locomotive engineer will receive “for any given shift.”

[24] CN further asserts that the Arbitrator’s conclusion that “regular wages” means something other than a basic minimum entitlement is unreasonable because nothing in the provision suggests that regular wages cannot be the minimum daily pay an employee is guaranteed to receive. Additionally, CN asserts that the exclusion of overtime indicates that the term “regular wages” does simply mean the basic entitlement to wages.

[25] CN also submits that the language of s. 17(b) does not support the arbitrator’s conclusion that it only applies where the collective agreement sets out a method for calculating compensation (1) for personal leave days under s. 206.6(2) of the Labour Code or analogous leaves, or (2) that is the dominant method of calculation for paid leave. Rather, CN takes the position that the wording of s. 17(b) supports an interpretation that it applies where parties to a collective agreement have agreed to a method of calculation to determine an employee’s regular rate of wages for normal hours of work.

[26] In this regard, CN relies on that authority that stands for the proposition that the exclusion of words from legislation reflects intention (see: University Health Network v. Ontario (Minister of Finance), 2001 8618 (ON CA), 208 D.L.R. (4th) 459 (Ont. C.A.)).

[27] CN also submits that the Arbitrator’s interpretation of s. 17(b) is inconsistent with the provision’s purpose, which in its view is to respect freedom to contract between parties to a collective agreement and to permit those parties to agree to a method of calculation that considers the unique features of the employer’s business and industry. CN argues that the parties have agreed to the calculation of wages for paid days off in Article 3.3. of the collective agreement. CN asserts that s. 17(b) reflects Parliament’s intent to respect that agreement and should be interpreted to avoid imposing a method of calculation that disrupts strategic balancing achieved through years of collective bargaining.

[28] CN submits that Article 3.3 of the collective agreement explicitly defines a “basic day” as “100 miles or less, 8 hours or less straight-away or turnaround, [and] shall constitute a day’s work.” Further, article 1.7 sets out the rate of pay for 100 miles (i.e., the basic day). CN argues that the parties’ intention to use the basic day as the dominant measure to calculate pay owing to a locomotive engineer for a paid day off is reflected in Articles 22.1, 23.7, 29, 69.5, and 78.7(g). CN submits that exceptions for different methods of compensation such as bereavement leave or holiday pay do not displace the presumption of the basic day calculation.

[29] Despite the able efforts of counsel for CN in outlining the position taken by it, I am not persuaded by these arguments. Rather, I agree with the submissions advanced by Teamsters. Specifically, I agree that CN has not demonstrated that the decision under review has been shown to be unreasonable. Moreover, I view the decision of the Arbitrator as reasonable and as abiding by the requirements for same as set out in Vavilov, supra.

[30] Considering the award as a whole, the Arbitrator’s interpretation of s. 17(b) was reasonable because it was consistent with the text, context, and purpose of the Labour Code and the Regulations. The Arbitrator did not narrowly interpret s. 17(b) by declining to accept CN’s argument that the parties had agreed to a method of calculating personal leave days. In doing so, the Arbitrator carefully and thoroughly reviewed the collective agreement and found that none of the methods of calculating pay put forward by CN applied to circumstances of personal leave days.

[31] Section 206.6(2) of the Labour Code and s. 17 of the Regulations refer specifically to pay at an employee’s “regular rate of wages.” The formula set out in s. 17(a) reflects Parliament’s intention that “regular rate” should indicate some degree of frequency. For example, under s. 31 of the Regulations “regular hours of work” are calculated by averaging the prior four week period excluding overtime pay. Further, the word “earnings” in s. 17(a) includes amounts others than hourly wages, such as statutory holiday pay, shift differentials, and pension. “Earnings” therefore refers to any remuneration received for work performed.

[32] The Arbitrator’s interpretation of “regular rate of wages” is fully consistent with the purpose of s. 206.6 (2) of the Labour Code. That purpose is to ensure that employees who must miss work because of personal reasons do not suffer a wage loss. The legislative intent underlying s. 206.6 (2) therefore is to ensure that federally regulated workers, such as the grievor, have access to fair leave in such circumstances and will receive fair compensation.

[33] In my opinion, the Arbitrator’s interpretation of the collective agreement in this regard was reasonable. Article 3.3 cannot be interpreted as a default or general method of compensation for this purpose because the provision is silent on the issue of personal leave days. An anchor in the collective agreement must hook the entitlement of paid personal leave days to Article 3.3 in order to provide an operative method of calculation. Although Article 3.3 establishes a default measure of a day’s work, it does not establish a default measure of compensation. Indeed, Articles 4.3, 4.4, and 6.4 through 6.10 of the collective agreement show that locomotive engineers frequently may be entitled to compensation well beyond the basic day rate under its provisions.

[34] The Arbitrator recognized that the Code and Regulations protect the ability of parties such as CN and Teamsters to bargain an alternate method of calculating compensation where employees are compensated on a basis other than their time for the purposes of section 206.6(2) of the Code.

[35] The Arbitrator also acknowledged that, notwithstanding the amendment of the Code subsequent to the parties’ last round of bargaining, she was not precluded from considering the methods of compensation to which the parties had agreed specifically for the purposes of interpreting s. 17 of the Regulation.

[36] It may be additionally observed that it remains open to parties to any collective agreement, including this one, to seek to achieve agreement on payment for personal leave days within the overall context of their bargaining that would result in the application of s. 17(b) of the Regulation.

[37] In conclusion, the Arbitrator’s decision has not been shown by CN to be unreasonable.

Conclusion

[38] For these reasons, the application is dismissed.

Costs

[39] The parties have agreed that costs will be awarded to the successful party in the amount of $5000.00, all-inclusive. Accordingly, CN shall pay to Teamsters $5000.00 in costs for this application.

Stewart J.

I agree _______________________________

RSJ Edwards

I agree _______________________________

Matheson J.

Released: June 13, 2023

CITATION: Canadian National Railway Company v. Teamsters Canada Rail Conference, 2023 ONSC 3365

DIVISIONAL COURT FILE NO.: DC-22-2721

DATE: 20230613

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

RSJ Edwards, Matheson, Stewart JJ.

BETWEEN:

Canadian National Railway Company

Applicant

– and –

Teamsters Canada Rail Conference and Michelle Flaherty

Respondents

REASONS FOR DECISION

Stewart J.

Released: June 13, 2023