When bargaining goes wrong (Legal view)

Misunderstanding over how drivers are paid leads to windfall for workers

Honeywell ASCa Inc., an aerospace product and parts manufacturer in the southwestern Ontario town of Amherstburg, had a policy in which its truck drivers were supposed to be paid an hourly rate for certain types of delays. The drivers’ pay was made up of three basic components: a basic weekly guarantee; a mileage rate paid on top of the weekly guarantee for distance travelled; and an hourly rate paid for time when the drivers are engaged in activities other than driving, or when they are delayed or stopped while driving.

For the latter pay, the company would generally begin paying drivers after one hour in some circumstances and after three hours for others. However, the policy had been applied inconsistently over the years. After the Sept. 11 terrorist attacks, delays at the border increased and the company began paying drivers after a one-hour delay even though the collective agreement said three, a practice that went on for about a year.

There was also a distinction in the collective agreement about “expected” and “unexpected” delays. Derek Fletcher, Honeywell’s distribution supervisor, admitted the old agreement was followed only “to the best of our abilities” and confessed, “I still don’t understand expected and unexpected delays –– it doesn’t make sense to me.”

The parties tried to clarify the policy with a series of memos between the company and the union, outlining the changes and intending to make the policy “fair, equitable and consistent.” Unfortunately, the wording in the last memo before new contract negotiations began (referred to as exhibit six in the negotiations) did not satisfy the union as the number of deductible hours before the hourly rate was paid would increase to five in some of the scenarios.

The employer wanted the new collective agreement to reflect existing practice. It did not intend to reduce the waiting times. In contrast, the union was not happy with the deductibles and wanted them reduced. The fact the Teamsters’ business agent did not understand how the deductibles were calculated did not bode well for negotiations.

However, in the last draft proposal given to the union during negotiations, the number of one-hour scenarios increased substantially beyond what the union had asked for. The union was “flabbergasted,” but no one expressed astonishment because “one does not show any emotion during collective bargaining.” The next day at the bargaining table they asked for clarification of the one-hour deductible and management confirmed it. Unfortunately, management thought they were agreeing to something else — the draft proposal (exhibit six) given to the union just before the formal negotiations began.

The membership ratified the agreement based on a negotiation summary provided by the company. Union officials later estimated the gain arising from the language change to be worth $1,500 to $2,500 per driver per year.

Needless to say, it didn’t take the company long to realize the financial consequences flowing from the change in wording. They went to arbitration where management argued the union’s interpretation was incorrect, but the arbitrator considered it more consistent with the “natural and ordinary meaning” of the words used and noted several difficulties with the company’s convoluted alternative interpretations.

The company then argued for rectification of the agreement to reflect what the parties discussed during the bargaining, or alternatively that the union be stopped from relying on its interpretation (an estoppel). The arbitrator said, first, the mistake was not mutual and second, no sharp practice had ensued whereby the union had hoodwinked management. Had they been trying to pull the wool over management’s eyes, the union would not have asked for clarification. Not only that, but management was tangled in a knot of conflicting interpretations of the proposal they thought they had agreed to. Estoppel was also a non-starter: a misunderstanding at the bargaining table is “not a sufficient basis upon which an estoppel can be founded,” the arbitrator said.

As the arbitrator pointed out, and the evidence given at the arbitration hearing made clear, no one had a clear recollection of what was said. The arbitrator observed: “This case exemplifies the importance of keeping complete and accurate records during collective bargaining.” There was miscommunication throughout the negotiations:

•The problem started long before negotiations began and might have been rectified had the two attempts to clarify the wording received proper follow-up and closure, not to mention clear presentation in the first place.

•One of the union representatives was offended that a payroll clerk represented by a rival union drafted a proposal. If he hadn’t let his emotions run away with him, he might have replied to the five-hour deductible error –– the real issue –– rather than throwing the proposal into the trash.

•Few people seemed to understand the nature of the issue or the significance of the mathematics involved in calculating the correct pay. Even the director of human resources from the parent plant in New Jersey did not understand the union’s concern with the language in the document management relied on (exhibit six). Worse, he hadn’t seen it prior to negotiations.

•Although an official note taker and several others took notes, nowhere in management’s notes was there a reference to an intention to codify the existing practice.

•The bargaining process was not interactive. The company presented proposals to which the union reacted, but as the HR director observed, there was “very little discussion as to what the proposals meant.”

•When negotiators for management sensed something was off-track, they pushed the misgiving aside rather than acting on it. They also didn’t state out loud to what exactly they were agreeing.

•No one had a system for keeping track of the blizzard of proposals and counter-proposals in the swirl of labour negotiations. As a result, no one was sure what documents were being referred to.

The importance of using dedicated negotiators and keeping proper records during collective bargaining cannot be underestimated. Without those important elements, parties can find themselves in a mess of confusing proposals and misunderstandings.

For more information, see:

Honeywell Asca Inc. and Teamster, Chauffeurs, Warehousemen and Helpers, Local 880, an Ontario Arbitration Board decision; Ted Crljenica – Sole Arbitrator, dated Jan. 7, 2007.

Lorna Harris is the assistant editor of Canadian HR Reporter’s sister publication CLV Reports, newsletters that report on collective bargaining and other issues in labour relations. She can be reached at (416) 298-5141 ext. 2617 or [email protected].

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