Introduction

In Tshiuetin Rail Transportation Inc v Steelworkers, Local 7065-75 arbitrator Bruno Leclerc and the Quebec Superior Court challenged the well-established principle in labour relations that an employer retains managerial rights in the absence of limiting provisions in a collective agreement.

The arbitrator and the court found that the employer had violated the collective agreement although it contained no limitation to the employer's managerial rights in regard to the contested action. Rather, they found that the employer had violated the agreement because it contained no clear provision that allowed the employer to act as it did. Therefore, the question remains: what is happening to managerial rights and what measures can employers take to protect them?

Facts

Tshiuetin Rail Transportation Inc, a federal undertaking, was experiencing a period of financial difficulty, as were many businesses in Quebec's Côte-Nord area at the time. The employer therefore decided to reduce, for a limited period, the hours of work of all regular full-time employees unilaterally from 40 hours to 35 hours per week.

The collective agreement applicable to the employees affected by this decision contained a clause stating, in no uncertain terms, that the agreement included all limitations to the employer's management rights. Further, the agreement contained no specific provision restricting the employer's right to reduce its employees' hours of work temporarily.

Nonetheless, the union challenged the temporary reduction of its members' hours of work by filing both individual and collective grievances.

Decision

The arguments presented by each party were fairly straightforward. The union argued that the employer violated the collective agreement by unilaterally reducing the hours of work of regular full-time employees because it converted their status from regular 'full-time' employees to regular 'part-time' employees and modified their working conditions, including wages, all in one stroke.

The employer alleged, among other things, that it could temporarily reduce the employees' hours of work because the collective agreement in no way limited its management rights in this regard.

The arbitrator decided in favour of the union. His reasoning relied on the rules applicable to the interpretation of contracts, according to which the clauses of a collective agreement must be interpreted in relation to one another. The arbitrator thus held that a regular 'full-time' employee is an employee whose standard work-week comprises 40 hours per week and such an employee is entitled to receive remuneration corresponding to that number of hours of work per week.

The arbitrator concluded that by reducing their hours of work from 40 hours to 35 hours per week, the employer had effectively changed the employees' status and remuneration, which violated the collective agreement as it contained no clause that authorised the employer to do so.

The Quebec Superior Court upheld the arbitrator's decision. It concluded that this was reasonable, particularly in finding that no clause in the collective agreement authorised the employer to reduce the employees' hours of work.

In support of this finding, the court distinguished the case from prior decisions where the courts and tribunals had accepted an employer's unilateral decision to reduce its employees' working hours. In one such decision, the parties had anticipated that a full-time employee would "normally" work a certain number of hours per week and thus did not guarantee this number of hours. In another case, the parties had specifically provided that there was no guarantee regarding the number of hours or days of work, despite the fact that the regular work-week was defined as including a specific number of days and hours.

Comment

The decision can be seen as a warning sign for employers when negotiating and drafting collective agreements. Indeed, the reasoning in this case appears to be contrary to the usual principles of labour relations because the question was not whether the collective agreement restricted the employer's managerial rights regarding hours of work, but rather whether it contained a clause that specifically allowed the employer to do so.

Employers should therefore be mindful and take notice that such an interpretation is possible. When drafting collective agreements, they should anticipate situations of financial hardship which may arise in an unpredictable manner and, specifically, provide that certain working conditions (eg, the number of hours of work per day and per week) are not guaranteed and may change in such circumstances.

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For further information on this topic please contact Mikaël Maher at Fasken Martineau DuMoulin LLP by telephone (+1 514 397 7400) or email (mmaher@fasken.com). The Fasken Martineau DuMoulin LLP website can be accessed at www.fasken.com.

This update was reprinted with permission from Northern Exposure, a blog written by lawyers in the labour, employment and human rights group at Fasken Martineau, and produced in conjunction with HRHero.com.