Job security clauses factor into rail shutdown

The unions grieved when the employer shot down a portion of its operations. The arbitrator found that the change was an "operational change" and not a traffic fluctuation. Also, the province's role as originator of the shutdown did not insulate the employer, as the two were too closely linked.

A transportation commission established by a provincial government announced its intention to shut down passenger rail service to isolated northern communities.

The unions grieved, arguing that the proposed shutdown failed to comply with the notice periods required by the Employment Security and Income Maintenance Agreements (ESIMA) in the collective agreements between the parties.

On Aug. 16, 2012, a provincial Order-in-Council was signed to authorize the shutdown of a passenger rail line that served isolated northern communities.

The unions and about 378 workers were also notified on Aug. 16 of the decision to shut down the rail service effective Sept. 28, 2012.

The government explained that budgetary constraints compelled it to shut down the rail line, which was reliant on annual subsidies that were projected to increase to about $400 per passenger.

Ridership numbers were stagnant and cost increases had pushed up the annual costs to run the line. The bill in the year 2000 was about $12.5 million. In 2012, the cost was nearly $20 million. The rail line was no longer viable, according to the ministry responsible for the rail commission that operated the line.

Operational or organizational change

The Commission said that ESIMA provisions designed to shield workers against “technological, operational or organizational change” did not apply in this case.

The Commission said that section 8.7 in the ESIMA specifically excluded “normal reassignment of duties arising out of the nature of the work which the employees are engaged nor to changes brought about by the fluctuation of traffic or normal seasonal adjustments.”

The bottom line, the Commission said, was that the rail line was shut down because it was no longer economically viable not because of “operational or organizational change.”

Moreover, the Commission said, the shutdown was insulated from ESIMA protections in any case because the changes that were put into effect to shut down the line were brought about by a government directive that was beyond the control of the Commission.

$10,000 claims for suffering

The unions took a different view, arguing that the facts of the case did establish that the shutdown of the rail service was an “operational change” for the purposes of the ESIMA language in the collective agreements. The unions made claims for remedial assistance for the workers, including payments of $10,000 to each member of the bargaining unit for mental pain and suffering and for personal and family stress.

The unions challenged the Commission’s assertion that ridership numbers were down and presented numbers which showed that — though there was a slight decrease in passenger numbers in 2009–2010 — the numbers were, in fact, up for the following year and for the year to date, when measured in 2012.

The Arbitrator ruled that the shutdown did constitute an operational change and that the ESIMA language in the collective agreements did apply.

The Arbitrator did not credit the Commission’s argument that ESIMA provisions did not apply because the Commission was not responsible for the government’s decision to shut down the rail service. The Commission was created by statute and ultimately controlled entirely by the government. An operational change dictated to a Crown Corporation by a government directive was not insulated from the application of ESIMA protections, the Arbitrator said.

“On the contrary, if the Employment Security and Income Maintenance Agreement is to have any meaning within the context of a Crown corporation, article 8 of the ESIMA must surely be interpreted to encompass operational and organizational changes by the “shareholder,” which is to say the Government which oversees the Crown corporation. To come to any other conclusion, in my respectful view, would be artificial and unrealistic in the extreme.”

Not a business decision

The Arbitrator also suggested that the Commission’s argument that ESIMA protections did not apply because of the exception for “fluctuations” in traffic that brought the line’s viability into question were also artificial or disingenuous.

The rail line was never operated with the realistic prospect of generating profit.

“[T]he modus operandi of the Northlander train was premised on an acceptance that it would not have sufficient ridership or revenues to pay its own way. It would, by definition, operate at a loss and require government subsidies to keep it afloat,” the Arbitrator said.

The closure of the rail line was not a business decision based on declining ridership numbers but a policy decision by government that it would no longer subsidize rail service to northern communities.

“I can see no basis to sustain the suggestion that what motivated the decision of the Government of Ontario, and effectively governed the actions of the Commission in the cancellation of the Northlander train, can be fairly said to have been prompted by any fluctuation of traffic in the sense intended within the language of article 8.7 of the ESIMA. On the contrary, what the facts before me confirm is a clear operational decision, taken independently, in furtherance of a policy of the Government of Ontario to no longer subsidize passenger rail service between Toronto and Northern Ontario. The fact that that decision is put into effect or implemented by the Commission brings it amply within the application of the ESIMA.”

The parties were ordered to follow the procedures established by article 8 of the ESIMA to identify adverse impacts on employees caused by operational and organizational changes instituted by the Commission.

Reference: Ontario Northland Transportation Commission and National Automobile, Aerospace, Transportation and General Workers Union of Canada, Local 103 and United Steelworkers, T.C. Local 1976. Michel G. Picher — Sole Arbitrator. Roy Filion for the Employer. Brian Stevens for CAW. Shawn O’Donnell for the USW. Nov. 19, 2012. 28 pp. 

Mark Rogers is a writer and editor who specializes in labour relations and occupational health and safety.

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