Labour board ruling sets precedent

Union says getting severance after a strike is in serious jeopardy

Former unionized workers at a Saskatoon printing company are appealing a recent decision by the Saskatchewan Labour Board, after losing their bid for severance — a decision the Communications, Energy and Paperworkers (CEP) says could have far-reaching consequences.

“It’s a very dangerous precedent,” says Rhoda Cossar, national representative with the CEP. “It’s union busting at its finest.”

A Saskatchewan arbitrator recently ruled that 85 former Mercury Graphics workers were not entitled to severance, as they were not covered under a collective bargaining agreement at the time they lost their jobs.

The employees went on strike in early September 2008, after the two sides could not reach an agreement over the issue of seniority and layoffs. Mercury Graphics permanently closed its doors in December 2008, blaming the ongoing strike for a drop in business and for damage to its reputation.

Arbitrator Bob Pelton granted Mercury Graphics’ motion for non-suit in response to the union’s claims for severance pay. The severance would have been equal to two weeks’ pay for each completed year of service with the company. The company had been in business for 65 years, during which time it had always had a unionized workforce.

Pelton wrote in his decision that he has no jurisdiction to enforce severance pay provisions because the collective agreement had ended before severance pay claims were made.

“The right to severance pay provided for by the collective bargaining agreements in this case had not vested prior to the collective bargaining agreements having terminated,” he wrote. “Further, with the collective bargaining agreements having been terminated prior to the dispute having arisen, there are no collective agreements into which I can insert common law principles.”

Cossar calls the decision a “bad ruling” given that the company was not bankrupt at the time and later sold its assets to a U.S. company.

“It’s gut-wrenching,” she says. “Some people had been there for 35 years and thought severance was a bargained right that would be there forever.”

Instead, she says Pelton’s ruling suggests severance is not a vested right in the same manner as long-term disability or pensions.

“Unfortunately, there’s not a lot of case law,” she says.

Cossar says companies often threaten to shut down during a strike but, until now, she has never been concerned that members could lose their severance pay should the threat become reality. She’s concerned about how employers across Canada could interpret this ruling.

“This is huge,” she says. “I can see a lot of employers now waiting for a collective agreement to come up to lock out their employees. What if there’s a lockout? If the company folds, it doesn’t have to pay severance.”

The status of the collective agreement during a stoppage is an issue in the dispute between Steelworkers Local 6500 and mining company Vale over how to deal with workers fired during the recent. Earlier this month, the Ontario Labour Relations Board (OLRB) held a hearing to outline their cases.

The union wants the workers dealt with by a provincial arbitrator, but the company is arguing the labour board does not have the right to order arbitration — principally because there was no collective agreement in place at the time they were fired.

Cossar is concerned the Saskatchewan ruling could influence arbitration in other jurisdictions, which is why CEP is appealing the recent Mercury Graphics ruling.

“We may have to go to the Supreme Court with this,” she says.

The appeal is expected to be heard later this fall. Meanwhile, the OLRB has not ruled on the Vale case.

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