No Severance for Employees Who Refused Alternate Work

Following the sale of the transmission rebuilding section of an automotive products company, six skilled, long-service workers were invited to bump into the remaining parts business. Instead, the workers grieved, seeking termination and severance pay.

The union took the position that the workers were entitled to severance and termination pay because they had been terminated when the section of the business that employed them was sold.

The workers were not obligated to “de-skill” and bump down into lower rated positions that would result in a significant loss of pay, the union said. In any case, any contemplated bumping down would amount to a constructive dismissal given the lower wages and fundamental changes to working conditions. This was not a layoff but a termination following the sale of the business, the union said. The workers were now out of a job and entitled under the collective agreement and the Employment Standards Act to termination and severance pay.

Business sold

The employer disagreed. Four of the workers had taken positions with the purchaser of the transmission rebuilding business and therefore were not entitled to severance or termination pay. While the business was sold, their employment was continuous according to the terms of the Employment Standards Act.

While the other two employees were not offered employment by the new purchaser of the business, they were offered reasonable, alternate employment with the existing employer and refused it. The employer agreed that at $21.10 per hour, the alternate positions in shipping paid less than the $28.77 the workers were accustomed to in the transmission plant, but argued that the discrepancy was not sufficient to permit them to reject the offered alternate employment.

The Arbitrator agreed. The four workers who had taken jobs with the new employer were not at issue. Their jobs continued with the new employer and they were not entitled either to termination or severance pay under the terms of the Employment Standards Act.

For the other two workers, the question was whether or not they were required to bump.

In general, the Arbitrator said, absent exceptional circumstances or explicit collective agreement provisions, employees cannot choose a layoff over the option of bumping a more junior employee. In this case, such speculation was irrelevant because layoffs were not an option — the jobs that the grievors had done were gone and were not coming back. The whole point of the seniority protection provisions negotiated in the collective agreement was to facilitate bumping in these circumstances, the Arbitrator said.

Work available

“The fact is that there was work available for these two grievors. Absent a provision in the collective agreement providing otherwise, it would not be normative, where there is work available for an employee, where the employee can be trained to perform that job, and where the parties have negotiated extensive seniority protection for senior employees, to allow those employees to reject that work and request termination and severance payments instead.”

Even if it was legally applicable, the doctrine of constructive dismissal had no bearing in this case. Obviously — because they had negotiated bumping protocols and made provisions for up to seven days of training — the parties had clearly contemplated the possibility that bumping employees would be going into different jobs with different skills, duties and responsibilities, the Arbitrator said.

The Arbitrator acknowledged that there was a significant discrepancy in wages but said that the difference in wages did not cross the threshold into unreasonableness, which becomes a consideration when wage reductions approach 50 per cent or more.

Moreover, the Arbitrator said, wages are only one aspect of total compensation, which includes ongoing seniority protections, benefits and pension entitlements.

The evidence was clear, the Arbitrator said, that the two workers had been encouraged to exercise their seniority and bump into the highest rated, non-trades positions remaining. They refused.

“While both [grievors] are long service employees, their legal entitlements are governed by the collective agreement and the Regulation. The result in this case, is that they are not entitled to either termination or severance pay.”

The grievances were dismissed.

Reference: Fenwick Automotive Products/City Wide Automatic Transmission Services and United Steelworkers. William Kaplan — Sole Arbitrator. Michael Failes for the Employer and Kevon Stewart for the Union. August 3, 2010. 13 pp.

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