Finances legitimate reason to lay off workers: arbitrator
A Vancouver shipbuilder’s layoffs at the height of construction was challenged by its union, but the company had legitimate reasons, according to an arbitrator.
Vancouver Shipyards Company is a business involved in the construction and repair of ships and barges based in North Vancouver, B.C. In April and May of 2019, the company built three new vessels for the Coast Guard and the Navy. They were large vessels with complex electrical systems, so the company employed a large number of electricians on the projects.
On April 10, 2019, the company determined it was over budget on the second vessel and would have to reduce labour costs. The electrical area manager asked the manager of electrical trades if some of the electricians could be shifted to work on the third vessel instead of being laid off, but construction delays made that impossible.
The second vessel had reached a stage where the work required more experienced crews, so the company looked to make its cuts from a group of more than 40 probationary employees who had no seniority. The company came up with a list of nine electricians based on factors such as attendance records and who was nearing the end of a current task. One left voluntarily while the other eight were laid off.
One week later, the company requested a dispatch to the second vessel project of 13 electricians who were experienced in marine work who had recently finished work on BC Ferries projects. Thirteen electricians were moved to the third vessel project to make room, but the third vessel wasn’t far enough along to take on additional electricians. The company cancelled the dispatch for the new electricians.
On May 23, the company hired 10 electricians, including three who had been laid off on April 10. On July 9, 12 more were dispatched, including another person from the April 10 layoffs.
The union grieved the layoffs, arguing that the collective agreement stipulated that “no employee will be disciplined or discharged except for just and reasonable cause.” The union said there was no shortage of work and the layoffs were a “disguised termination” so the company could replace the employees with attendance and other issues.
Arbitrator cites previous case law
The arbitrator noted that previous case law had established that a valid layoff can occur without an actual reduction in work. Other factors such as budgetary issues, operating efficiency, or other economic grounds were legitimate reasons to lay off workers.
Conversely, it had also been established that in cases where there was a “disguised termination,” there was “a clearly identified employee or specific group of employees who had issues with or were at loggerheads with the employer.”
The arbitrator also noted that when there are no seniority-related restrictions — as with the probationary employee laid off — or any other restrictions within the collective agreement, “it is quite normal and prudent business practice to lay off when possible employees who are less productive when making a decision to who to lay off.”
It made sense to choose employees with attendance issues. However, not all of the workers had these issues, which undermined the argument the dismissal was disciplinary in nature, said the arbitrator — particularly at an important time in the construction projects.
The arbitrator also noted that the company successfully met its target launch date without hiring more electricians until late May, showing that it didn’t have work that it absolutely needed the laid-off employees to perform.
“The union theory which postulates that an employer would orchestrate a layoff of nine employees at a crucial period in the construction timeline in order to disguise the termination of three lacks any merit or credibility,” said the arbitrator in dismissing the union’s grievance.
Reference: Vancouver Shipyards Co. IBEW, Local 213. Nicholas Glass – arbitrator. Aug. 26, 2019. David Woolias, Carly Stanhope employer. Brandon Quinn for employee. 2019 CarswellBC 2632
