Partial Closure of Business Rules Do Not Apply to Layoff

When the manufacturing crisis that preceded the recent recession struck, the company was forced to lay off employees. Eventually, roughly 230 employees were laid off out of an original workforce of 300. As well, a number of machines were taken out of service and removed from the workplace.

The collective agreement had recently been renewed. During negotiations, the union had demanded plant-wide seniority rather than occupational seniority. The company did not accept the demand. In the end, the parties agree that, in the event of permanent closure or permanent partial closure of a department only, the employees affected would have plant-wide seniority.

When, during the second round of layoffs, 140 employees lost their jobs, the union launched a grievance. The layoffs had taken place based on occupational seniority and not plant-wide seniority, despite the fact that over 50 per cent of the employees in one department had been laid off. That grievance was not pursued.

Also during that round, the grievor was laid off. After 35 weeks off the job, he chose to retain recall rights rather than accept severance. He also launched a grievance of his own, claiming that the original event had been a permanent partial layoff and that plant-wide seniority should have applied to the layoff.

Department continued to operate

The employer’s position was that the layoff had not been a permanent partial closure because the company was still making the products that the department produced and still owned the machines. It had rationalized and improved processes so that the department had become much more efficient. And it intended to call back some of the laid-off employees, as indeed the grievor eventually was.

The arbitrator agreed that the company had not intended to permanently close the department. “At the time of the layoffs this was not thought to be a permanent downturn in the economy nor a permanent reduction in orders, and it was not viewed as a permanent shutdown of the positions.”

But, could the fact that the company eventually offered severance under the terms of the Employment Standards Act make them part of a permanent partial shutdown? Again, the arbitrator disagreed. “Permanent has a different meaning than lengthy. Permanent conveys a more enduring meaning, it is something which is expected to last indefinitely without change.” The “lengthy but temporary” layoff did not trigger the language of the collective agreement.

The union also relied on the fact that three of the 12 production lines in the department were closed. The number of employees directly affected by these changes did not meet the threshold. “Contractions of a department are perhaps more likely to occur in slow economic times when fewer employees are working. However, if a permanent partial shutdown affecting only a small portion of the employees in a department occurs at a time when many other employees are already laid off due to a major downturn in the economy, the earlier layoffs should not all be treated as one event and, in particular, the earlier lay-offs should not all be attributed to the permanent partial shutdown.”

The grievance was dismissed.

Reference: Timken Canada LP and United Steel, Paper and Forestry, Manufacturing, Energy, Allied Industrial and Service Workers International Union (United Steelworkers), Local 4906. Sole Arbitrator – Howard Snow. B.R. Baldwin for the Employer and Steven R. Banks for the Union. Dated June 22, 2010. 28 pp.

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