CAW LAW REPORT

Edition 3 - Volume 1 May 21, 1991

The CAW-Canada has collective bargaining relationships with hundreds of employers, many of whom produce goods or provide services using sophisticated technology and/or specialized business practices. Some employers view their own technological processes and specialized business practices as unique in the market place and thus, any information relating to their own technology and practices is seen by management as their own private property and strictly confidential. While one might understand why an employer might want to protect information which, if disclosed, might arguably damage its standing in the market place, recently, the CAW-Canada Legal Department has reviewed a question regarding an employer strategy to keep so called confidential business information private. The employer's strategy was, from its own point of view, simple. The employer, active in the automotive parts sector, attempted to have each individual worker in the CAW-Canada bargaining unit sign individual agreements with the employer in which the worker individually would promise not to release so called confidential business and/or technological information to any person outside the confines of the company. The individual agreement which the employer drafted was two pages long and was phrased in very thick legalistic language. It listed a series of undertakings which the individual worker had to promise to obey and there was a line at the bottom of the second page upon which the worker was to sign his/her name. The implicit but unstated undertaking in the agreement was that if the confidentiality of any business or technological information was breached by a worker, that worker was subject to immediate discharge from employment.

Our advice was as follows. We suggested that the union should strongly reject this kind of individual agreement and immediately demand that the employer withdraw the proposed agreement from circulation and immediately terminate its strategy of obtaining individual agreements.

Not withstanding the serious and clear problem regarding how one properly defines what is so called confidential business or technological information, there is a fundamental issue here that should be addressed. It is the opinion of the CAW-Canada Legal Department that we should, as a matter of law, never accept a management strategy by which the employer attempts to conclude and enforce individual worker agreements. Labour law jurisprudence has established the principle that where a collective agreement is signed, there no longer exists individual contracts or individual agreements of employment, or the possibility of creating individual agreements or contracts. The case of McGavin Toast Master Limited v. Ainscough et al. [1976] 1 S.C.R. 718, 54 D.L.R. (3d) 1 stands for this proposition. Our position should be if any such individual agreements happen to be signed, they are, at law, invalid. Indeed, some arbitrators have issued decisions in which they have directed employers to cease and desist from negotiating individually with employees in relation to terms and conditions of employment (see: Canada Post Corporation (1988), 1, L.A.C. (4th) 138 (Weatherill) and Union Carbide Canada Limited (1970), 22 L.A.C. 194, (O'Shea).

The collective agreement is the sole and unique governing contract of employment in the workplace and the employer must accept and recognize its supremacy.

The intensity and breadth of the Tory attack on workers and workers legal rights can be understood by the following saga regarding a case called Caron and The Canada Employment and Immigration Commission (S.C.C.), decided, January 17, 1991.

This case involved workers at an aluminum plant in Quebec who were locked out by their employer. A collective agreement and a memorandum governing the workers return to work was signed on March 29, 1986, and 970 of the approximately 1430 workers involved in the labour dispute immediately reported to the plant. The remaining workers were gradually recalled for work. The U.I. Commission held that the workers who were not immediately recalled to work were only eligible for unemployment insurance benefits as of May 17, 1986, a month and a half after the labour dispute ended. The governing and applicable statute was (and remains) section 44(1)(a) of the Unemployment Insurance Act, 1971, which reads as follows:

"A claimant who has lost his employment by reason of a stoppage of work attributable to a labour dispute is not entitled to receive a benefit until the termination of the stoppage of work."

On appeal, the U.I. Board of Referees concluded that the so called "stoppage of work" terminated on April 26, 1986. The reason why the Board of Referees came to that conclusion was that as of April 26, 1986, the so called "85% rule" had been met. The "85% rule" was a rule of thumb, adopted by the Commission and generally accepted by Boards of Referees, which held that when 85% of the workforce involved in a labour dispute had been recalled to work, the stoppage of work had ended and thereafter benefits were payable to those workers not yet recalled to work. In the Caron case, as of April 26, 1986, 71% of the pre-lockout production levels had been reached, and 90% of bargaining unit workers had been recalled. On further appeal, the Umpire affirmed the U.I. Board of Referee's decision. However, on further appeal to the courts, the majority of the Federal Court of Appeal allowed the workers application to review and set aside the Umpire's decision. The Federal Court of Appeal decided that the workers in this case were entitled to benefits as of March 29, 1986 when the collective agreement and return to work memorandum were signed. The Federal Court of Appeal found that a work stoppage attributable to a labour dispute cannot continue after the point at which the parties to the dispute have indicated a desire to resume performance of their contract and have, in fact, resumed such performance.

The good news in this saga in that the Supreme Court of Canada agreed with the position of the Federal Court of Appeal. The Supreme Court of Canada found that nothing in section 44(1) of the Unemployment Insurance Act, 1971 supports the use of criteria such as particular levels of production and the return to work of a particular number of employees in order to interpret the words "termination of the stoppage of work". The Supreme Court of Canada said that the so called "85% rule" could not be adopted by the Commission as a means of interpreting section 44(1) of the Act. The "85% rule" had no basis in law according to the Supreme Court of Canada.

At this point, the Tory government intervened. The Tory government, understanding that the Supreme Court of Canada would rule in favour of workers in this case, amended the regulations made under the Unemployment Insurance Act, 1971 to reflect the negative interpretation of the Board of Referees and Umpire in this case. As of November 1, 1990, section 49 of the Unemployment Insurance Regulations C.R.C. 1978, chapter 1576 has been amended to state that a stoppage of work is terminated when the workforce and the level of production at the workplace attains 85% of their normal level. In one fell swoop the Tory government took away the legal victory workers had obtained in the Federal Court of Appeal and the Supreme Court of Canada. Accordingly, only workers whose benefit period would have commenced before November 1, 1990, can take advantage of the favourable decision of the Supreme Court of Canada. Today the "85% rule" has legal effect because of the actions of the Tory government in Ottawa.

The next section of this issue deals with questions arising from the Employment Standards Act of Ontario.

1. Many of our CAW-Canada collective agreements provide for the payment of supplementary unemployment benefits (S.U.B.). S.U.B. is payable in a variety of circumstances, apart from the circumstance of actual termination of employment of a worker. Questions have been posed about the treatment of S.U.B. received by a worker who is also entitled to severance pay under the Employment Standards Act of Ontario. Is severance pay reduced by the amount of S.U.B. received by the worker? If so, by how much? And in what circumstances?

The applicable section of the Employment Standards Act of Ontario reads as follows:

"Section 40a(4): Severance pay under this section is payable to an employee in addition to any other payments under this act or contract of employment without set off or deduction except for (a) supplementary unemployment benefits payable to and received by the employee".

The Ministry of Labour has recently issued a clarification of its policy regarding the meaning of section 40a(4)(a) and the deductibility of S.U.B from severance pay. The Ministry's policy reads as follows:

"Clause 40a(4)(a) by its terms allows S.U.B. to be deducted where it is both "payable" and "received". The reference to "payable" means that not all S.U.B. payments were contemplated by the section, but rather only those which were to be received by the worker in the future after termination. This in turn means that S.U.B. payments made before a workers right to severance pay has crystallized (ie. before all the necessary conditions for entitlement have been met) are not deductible from severance pay, because these S.U.B. payments have the character of having been paid and not "payable". The worker's entitlement to severance pay is not established until such time as the worker is terminated."

Therefore, if a worker is laid off from active employment in an operating plant and receives S.U.B. payments in the thirty-five weeks following his/her commencement of layoff, such S.U.B. is not deductible from the worker's severance pay if the worker accepts severance pay on his/her thirty-fifth week of layoff.

2. The closure of the tire manufacturing operation of Goodyear Canada Inc. in Toronto gave rise to an important decision regarding severance pay entitlement in Ontario. The decision, written by Referee Ken Swan reviewed the meaning and scope of section 40a(2)(g) of the Employment Standards Act of Ontario which reads as follows:

"Sub sections (1a), (1b) and (1c) apply to (ie. severance pay is payable to) an employee who, upon having his employment terminated, retires and is entitled to receive a reduced pension benefit."

Certain workers at Goodyear Canada Inc., upon obtaining proper notice of their plant closure, advised their employer that they were retiring and electing to take an early pension upon their termination. The company argued that as the pension benefits which those terminated employees received were exactly what they were entitled to at the time of their termination and were not "actuarially" reduced, those workers were excluded from benefits under the Employment Standards Act.

However, the union's argument prevailed at the hearing before an Employment Standards officer. The workers argued that the plant closure at Goodyear Canada Inc. forced certain workers to accept early retirement, and, therefore, accept a pension which was reduced from what it would have been if they had continued in their employment with Goodyear and had the opportunity to accumulate further service credits. Referee Swan concluded that a "reduced" pension benefit did not require it to be "actuarially" reduced to satisfy the eligibility provisions for severance pay under section 40a(2)(g) of the Employment Standards Act noted above.

The final result, therefore, of the Goodyear case is that employers must now pay severance pay to terminated employees who elect on a plant closure to take an early pension and, therefore, a "reduced" pension benefit under the Employment Standards Act, if the workers could have otherwise continued to accumulate pension service credits had their workplace not closed.

Are workers who participate in a work sharing agreement full time or part time employees for the purposes of a certification application? That question was examined by the Ontario Labour Relations Board in a recent decision dealing with the CAW's bid for a unit of workers at Kehl Tools Limited.

In October, 1990, the company experienced a slow down in business. The company then entered into a Work Sharing Agreement with Employment and Immigration Canada. Available work was shared among the seven or eight employees participating in the programme. The company paid the workers for the time actually worked and these wages were subsidized with Unemployment Insurance benefits. When the CAW applied for certification in January 1991, the company took the position that four of the employees in the programme were part-time employees, having worked less than 24 hours in a week in four of the previous seven weeks. The company sought to have those part-time employees in a bargaining unit separate from that for which the CAW had applied.

The Board rejected the company's argument and ruled that, in essence, the part-time/full-time question was a red herring. In creating the appropriate bargaining units for collective bargaining purposes, and where a party has requested separate full-time and part-time units, the Board will first determine if the company has a history of employing part-time employees. In this case, the Board ruled that a three month old Work Share Program, where there was no other evidence of part-time workers, was not sufficient to establish a "history" of a part time work force. The Board stated:

"But even if such a limited time period (and one resulting from a temporary program) could show a "history", we do not accept that the employer was creating a part time work force it was, rather, participating in a temporary Work Share Programme designed to avoid the layoff of some of its otherwise full time employees."

In addition, the Board held that the employees in the Work Share Programme had the same community of interest as the other full time employees.

The Board certified the unit concluding that an "all employee" unit was appropriate.

While a strict application of the Board's rules for determining bargaining units would suggest that the workers in question were part time employees, this case demonstrates that the Board will look beyond the surface of matters to determine the true nature of the employment relationship.

See; Kehl Tools Limited (April 25, 1991 (O.L.R.B.)

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