Unilateral wage increase doesn’t violate agreement: Arbitrator

Union didn't bargain for right to approve changes in pay structure as long is it didn't decrease

An arbitrator has ruled an Alberta company doesn’t need union approval to raise the wages for a particular position.

Lilydale, a poultry processing company in Edmonton, was having problems recruiting and retaining workers at its turkey processing plant in the summer of 2007. This led to too much overtime, which in turn led to increased absenteeism. Concerned about the production requirements of the upcoming Thanksgiving season, Lilydale tried to attract workers by increasing the starting pay and compressing the wage progression for a particular job in the plant. The starting pay increased by $2 per hour and an employee would reach the maximum rate after 12 months of employment. Previously, it took 24 months to reach the maximum pay rate. The maximum rate did not change.

Lilydale also implemented a referral program, which would award employees who referred successful applicants to the company up to $2,000 for each referred new hire who stayed for a year.

The union objected to these initiatives because Lilydale unilaterally imposed them without consulting it. It disagreed with them and filed a grievance, saying the collective agreement prohibited the company from unilaterally changing the wage rates and stipulated the company and union must negotiate a rate of pay for any new work classifications.

The union also argued the company’s actions violated a clause in the agreement that stipulated Lilydale could not use its management rights to discriminate against employees. It said the wage increase for a particular position discriminated against employees in other jobs and the referral program put employees who knew fewer people who might be referred at a disadvantage in receiving the extra pay.

The arbitrator found the collective agreement didn’t prevent Lilydale from unilaterally implementing both the wage increase and the referral program. The agreement specifically said the company had to pay employees “not less than the regular hourly rates set forth” and could not reduce the rate agreed to by the union. However, the arbitrator said, Lilydale was paying employees more than the regular rates.

“On a plain and ordinary reading, the phrase ‘not less than’ contemplates that the employer might pay employees more than the regular hourly rates,” the arbitrator said. “(The union) did not bargain that the specified rates — and only the specified rates — would be paid during the life of the collective agreement, nor did it bargain that it had to approve any increases in the rates.”

The arbitrator also found the wage increase did not discriminate since it applied to all employees in the particular job classification and the top rate payable did not change. The referral program also did not discriminate because it was available to all employees. Determining there was no obstacle in the collective agreement to prevent the wage increase and referral program, the arbitrator dismissed the union’s grievance. See Lilydale Inc. v. U.F.C.W., Local 1118, 2008 CarswellAlta 1320 (Alta. Arb. Bd.).

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