Battlefords and District Co‑operatives Ltd. v. RWDSU, Local 544, [1998] 1 S.C.R. 1118

Retail, Wholesale and Department Store Union, Local 544 and Marcella Peters Appellants

v.

Battlefords and District Co‑operatives Limited Respondent

Indexed as: Battlefords and District Co‑operatives Ltd. v. RWDSU, Local 544

File No.: 25366.

1998: January 27; 1998: June 4.

Present: L’Heureux‑Dubé, Gonthier, Cory, McLachlin, Iacobucci, Major and Bastarache JJ.

on appeal from the court of appeal for saskatchewan

Labour law ‑‑ Collective agreement ‑‑ Judicial review ‑‑ Reduction of hours of work ‑‑ Whether reduction of hours of work constituted a layoff ‑‑ Whether arbitration board decision finding breach of collective agreement patently unreasonable.

The appellant employee’s hours of work were gradually diminished when the size of her department was reduced and effectively combined with another department. While her hours were being reduced, staff from the other department (all junior to her) were assigned hours for tasks normally performed by her department and her request to transfer to that department was refused. The grievance alleged that the substantial reduction in hours of work amounted to a partial layoff. A labour arbitration board allowed the grievance and declared that the terms of the collective agreement had been breached and that a layoff had occurred. The respondent’s application for judicial review was dismissed by the Court of Queen’s Bench but an appeal from that decision was allowed by the Court of Appeal. At issue here is whether it is patently unreasonable for an arbitration board to conclude that a significant reduction in work hours in circumstances where a part‑time employee was singled out can amount to a constructive layoff.

Held: The appeal should be allowed.

The appropriate standard of review in this case is that of patent unreasonableness and the principles set out in Canada Safeway Ltd. v. RWDSU, Local 454 are applicable.

The Board’s conclusion that the reduction in hours amounted to a constructive layoff was not patently unreasonable. A significant reduction in hours, in circumstances where a particular employee is singled out, may amount to a constructive layoff. The collective agreement did not define “layoff”. In these circumstances the Board had jurisdiction to interpret “layoff” as it appeared in the general provision dealing with layoffs in the context of the entire agreement.

Employers must have the ability to reorganize their departments and staff. Nevertheless, absent a clearly expressed intention to the contrary, the provisions in a collective agreement should not generally be interpreted in a way that undermines acquired seniority rights of employees and fundamentally alters the nature of the employment.

The Board’s decision was not patently unreasonable merely because the appendix provision, which entitled part-time workers with seniority to work in their department, was not applied or because practical difficulties might arise in other circumstances. In reaching its decision the Board made use of the concept of constructive layoff. The fact that the concept was unknown at the time the collective agreement was entered into did not have the effect of changing the Board’s decision from one of interpreting the agreement to one of amending it. Finally, as an expert tribunal, the Board could collaterally observe the significant number of part‑time employees in the retail industry and its decision would not be patently unreasonable even if this observation were wrong.

Cases Cited

Applied: Canada Safeway Ltd. v. RWDSU, Local 454, [1998] 1 S.C.R. 000; referred to: Re City of Edmonton and Energy and Chemical Workers Union, Local 829 (1984), 1984 CanLII 5191 (AB GAA), 15 L.A.C. (3d) 137; Re Cove Guest Home and Canadian Brotherhood of Railway, Transport & General Workers (1988), 1988 CanLII 9276 (NS LA), 1 L.A.C. (4th) 42; Re Colonial Cookies (Division of Beatrice Foods Inc.) and United Food & Commercial Workers, Local 617P (1990), 1990 CanLII 12795 (ON LA), 13 L.A.C. (4th) 405.

APPEAL from a judgment of the Saskatchewan Court of Appeal (1996), 1996 CanLII 4965 (SK CA), 144 Sask. R. 20, 124 W.A.C. 20, [1996] S.J. No. 199 (QL), allowing an appeal from a judgment of Matheson J. (1993), 1993 CanLII 8784 (SK QB), 114 Sask. R. 200, dismissing an application for judicial review from a labour arbitration board decision. Appeal allowed.

Leila J. Gosselin and Larry W. Kowalchuk, for the appellants.

Dale K. Hallson, for the respondent.

//Cory and McLachlin JJ.//

The judgment of the Court was delivered by

1 Cory and McLachlin JJ. -- This appeal was heard at the same time as that of Canada Safeway Ltd. v. RWDSU, Local 454, [1998] 1 S.C.R. 000. The issue raised is the same: namely whether it is patently unreasonable for an arbitration board to conclude that a reduction in the work hours of a part‑time employee can amount to a constructive layoff. However, the factual background and the reasons of the Board are significantly different.

Factual Background

2 Marcella Peters was a regular part‑time employee in the bakery department of the Battlefords and District Co‑operatives Ltd. The employer decided to reduce the size of the bakery department and effectively combine it with the deli department. As a consequence, Ms. Peters’ hours were reduced progressively over a period of time from an average of 30 to 35 hours per week to 28 hours per week. By the time the grievance had been filed, she was averaging only 13 hours per week.

3 While Ms. Peters’ hours were being reduced, staff from the deli department, who were all junior to her, were assigned tasks normally performed by those in the bakery department. When Ms. Peters complained to the manager, she was informed that the bakery department was losing money and as a result the reductions in hours were necessary. As a consequence of the amalgamation of the bakery and deli departments, there was limited need for bakery staff to be involved in sales. There was only one person junior to Ms. Peters in the bakery department, and his hours were reduced even more than Ms. Peters’ hours. Ms. Peters request to be transferred to the deli department was refused.

4 In her grievance, Ms. Peters claimed that the substantial reduction of her hours of work amounted to a partial layoff. She claimed the right to exercise her seniority rights under the collective agreement and as well she sought monetary compensation.

Decisions Below

Arbitration Board

5 The Board found that the term “layoff” was not defined in the collective agreement and turned to the decisions of other boards for guidance. It found that every reduction in work hours does not amount to a layoff. While it recognized that management should have the discretion to reorganize the workplace and reduce staff or hours where required, the Board distinguished situations where all employees’ work hours were reduced for economic reasons from those where the hours of only some of the staff are reduced. Although no layoff can be said to have occurred in the former case, the latter may constitute a layoff. The Board also found that a layoff can occur without there having been a total elimination of an individual’s work hours.

6 The Board held that the reduction of Ms. Peters’ hours was not a mere issue of scheduling but one of layoff as well. Further, it was contrary to the collective agreement for “junior employees in other departments [to] be given more hours of work to do a job for which a more senior employee is qualified to work”. Ms. Peters’ grievance was upheld.

Court of Queen’s Bench (1993), [1993 CanLII 8784 (SK QB)](https://www.canlii.org/en/sk/skqb/doc/1993/1993canlii8784/1993canlii8784.html), 114 Sask. R. 200

7 Matheson J. held that the Board’s decision could only be set aside if it was patently unreasonable.

8 Following a review of leading texts which have discussed the meaning of “layoff”, Matheson J. concluded that the term has generally been interpreted to refer to “temporary severance of the employment relationship for the purpose of reducing the employment force to meet the manning requirements of the employer” (p. 203). He noted that according to this interpretation, a mere reduction in working hours could not constitute a layoff. However, he found that the meaning of “layoff” must be examined in the context of each individual arbitration and that the particular effects of the alleged layoff on the grievor’s seniority rights had to be considered.

9 Matheson J. found it significant that three other arbitration boards had concluded that if a worker’s hours are reduced, while more junior employees are permitted to work without any reduction in their hours, a layoff has occurred. In light of these decisions, he concluded that the Board’s award could not be characterized as patently unreasonable. The application to quash was dismissed.

Court of Appeal (1996), [1996 CanLII 4965 (SK CA)](https://www.canlii.org/en/sk/skca/doc/1996/1996canlii4965/1996canlii4965.html), 144 Sask. R. 20

10 In a brief oral decision, the appeal was allowed and the Board’s award quashed. The court found the case indistinguishable from Canada Safeway Ltd., supra.

The Standard of Review

11 The appropriate standard of review in this case is that of patent unreasonableness and the principles set out in Canada Safeway Ltd., supra, are applicable. The Board’s decision should only be set aside if it fails to meet that standard.

Was the Board’s Decision Patently Unreasonable?

12 Article 8 of the Collective Agreement deals with layoffs. It reads:

ARTICLE 8 -- LAYOFFS AND RECALLS

1. When reducing or recalling staff, seniority shall prevail, provided the senior employee has the merit, ability and fitness to handle the work to be performed.

The Board held that “layoff” or “reducing staff” was “capable of meaning either a reduction in the hours of work assigned to one staff person or a total elimination of that person’s hours”. It emphasized that employees with less seniority were assigned hours which Ms. Peters would otherwise have been entitled to work.

13 In making this finding, the Board gave no consideration to Appendix B, paragraph 6 of the collective agreement which arguably limits the right of part‑time employees to be rescheduled on the basis of seniority, to rescheduling within departments only. It provides:

6. Regular part‑time employees’ hours of work shall be scheduled and they shall be called to work on the basis of seniority subject to availability and providing the employee has the merit and ability to handle the work to be performed. The provision shall apply on a departmental basis only.

14 The respondent, employer argued: (1) that the Board’s finding of an Article 8 layoff on the basis of a reduction of hours was patently unreasonable, particularly in view of Appendix B, paragraph 6; (2) that the Board’s interpretation of the collective agreement as a whole was patently unreasonable; (3) that the Board’s decision altered the terms of the collective agreement in a patently unreasonable manner.

15 It is true that the case could have been decided differently. However, in light of the facts presented in this case, it cannot be said that the conclusion of the Board, that the reduction in hours amounted to a constructive layoff in the circumstances of this case, was patently unreasonable. Here only two employees had their hours of work substantially reduced while more junior employees replaced them. It was clearly within the jurisdiction of the Board to interpret “layoff” as it appeared in Article 8 of the collective agreement. The collective agreement did not specifically define layoff. It was therefore open to the Board to give the term a meaning in the context of the entire agreement.

16 In the companion case Canada Safeway Ltd., supra, consideration was given to the circumstances in which a constructive layoff might be found. It was observed that a significant reduction of hours might be capable of supporting a finding of constructive layoff. When the parties are governed by a collective agreement, the essential question is whether the facts can lead to a finding of constructive layoff in the context of the agreement.

17 It has been held in several arbitral decisions that a significant reduction in hours, in circumstances where a particular employee is singled out, may amount to a constructive layoff: see Re City of Edmonton and Energy and Chemical Workers Union, Local 829 (1984), 1984 CanLII 5191 (AB GAA), 15 L.A.C. (3d) 137, at p. 140; Re Cove Guest Home and Canadian Brotherhood of Railway, Transport & General Workers (1988), 1988 CanLII 9276 (NS LA), 1 L.A.C. (4th) 42, at p. 46; Re Colonial Cookies (Division of Beatrice Foods Inc.) and United Food & Commercial Workers, Local 617P (1990), 1990 CanLII 12795 (ON LA), 13 L.A.C. (4th) 405, at p. 411. This conclusion seems eminently reasonable. It follows that it was not patently unreasonable for the Board in this case to conclude that there had been a layoff.

18 The respondent argued that Appendix B, paragraph 6, makes it clear that Article 8 did not apply to Ms. Peters, and that when it is taken into account, the Board’s construction appears to be patently unreasonable. While the Board should have considered Appendix B, paragraph 6, the failure to do so does not of itself make the Board’s decision patently unreasonable. The provision entitles part‑time workers with seniority to hours of work within their departments. But it does not expressly deal with the situation presented here where tasks traditionally assigned to employees in one department are assigned to employees in another department as part of a workplace reorganization. It cannot be said that Appendix B, paragraph 6, was intended to supersede Article 8 in situations where the significant reductions in hours of apparently targeted employees amounted to constructive layoffs. Rather a strong argument could be made that paragraph 6 contemplates a situation where departments remain more or less stable. It does not address a reorganization which dramatically reduces a department so as to undermine part‑time employees’ seniority rights. Employers must have the ability to reorganize their departments and staff. Yet, in the absence of a clearly expressed intention to the contrary, the provisions in a collective agreement should not generally be interpreted in a way that undermines acquired seniority rights of employees and fundamentally alters the nature of the employment. Appendix B, paragraph 6 does not demand such an interpretation. Therefore, it cannot be said that it was patently unreasonable for the Board not to apply it to the facts of this case.

19 The respondents’ second argument is that if “layoff” in Article 8 is interpreted to include a reduction in hours, then the logical corollary is that “recall” must be interpreted to include an increase in hours. This, the respondent suggests, is absurd. On this issue, the reasons of Matheson J. are sound. In his view, the suggestion that a decision applying a collective agreement may give rise to practical difficulties in other circumstances did not suffice to show that the decision was patently unreasonable. Moreover, he was not certain that the suggested problem would ever arise.

20 The respondents’ third argument is that since the concept of a constructive layoff was not known at the time the collective agreement was made, it is patently unreasonable to interpret the agreement as including this possibility. This, it is said, would amount to the Board amending the agreement. This submission cannot be accepted. The Board, in its decision, interpreted the agreement. It did not amend it.

21 Finally, the respondents characterize the Board’s reference to “the significant number of employees in this province who are employed on a part‑time basis in the retail industry” as an irrational finding of fact unsupported by the evidence. This is not correct. This is something that the Board, as an expert tribunal, would know and could consider in its reasons. In any event, it is a collateral observation and even if it were wrong, it would not suffice to establish that the Board’s decision was patently unreasonable.

22 The appeal will be allowed, the order of the Court of Appeal set aside and the order of the Board restored. The appellants will have their costs throughout.

Appeal allowed with costs.

Solicitors for the appellants: Kowalchuk Law Office, Regina.

Solicitor for the respondent: Federated Co‑operatives Limited, Saskatoon.