FPSLREB Decisions

The request before the Chairperson of the Public Service Labour Relations Board

[1]   By letter of February 24, 2005, the Federal Government Dockyard Trades and Labour Council East (the “bargaining agent”), pursuant to section 64 of the Public Service Staff Relations Act (the “former Act”), requested arbitration in respect of all the employees of the Treasury Board (the “employer”) in the Ship Repair-East Group.

[2]   With its letter of February 24, 2005, the bargaining agent provided a list of the terms and conditions of employment that it wished to have referred to arbitration.   Its proposed new clauses 38.01 and 38.02 relate to contracting out.   That letter, the terms and conditions of employment and supporting material are attached hereto as SCHEDULE I.

[3]   By letter of March 10, 2005, the employer provided its position on the terms and conditions of employment that the bargaining agent wished to have referred to arbitration.   The employer raised a jurisdictional objection regarding the proposed new clauses 38.01 and 38.02.   The employer also provided a list of additional terms and conditions of employment that it wished to have referred to arbitration.   That letter and supporting material are attached hereto as SCHEDULE II.

[4]   The bargaining agent, by letter of March 21, 2005, responded to the employer’s position on the terms and conditions of employment that the bargaining agent wished to have referred to arbitration.   The bargaining agent also provided its position on the additional terms and conditions of employment that the employer wished to have referred to arbitration.   That letter is attached hereto as SCHEDULE III.

[5]   The employer, by letter of March 30, 2005, provided clarifications with regard to additional terms and conditions of employment that it wished to have referred to arbitration.   That letter is attached hereto as SCHEDULE IV .

[6]   On April 1, 2005, the Public Service Labour Relations Act (the “new Act”) was proclaimed in force.

[7]   On May 9, 2005, an arbitration board was established in this dispute.

[8]   On May 13, 2005, the parties were informed that the Chairperson of the Public Service Labour Relations Board intended to deal with the jurisdictional issue raised by the employer by way of written submissions.   The employer filed its submissions on May 27, 2005.   The bargaining agent replied to them on June 17, 2005.   Finally, the employer filed its rebuttal on June 24, 2005.

Arguments of the parties

[9]   The employer objects to having the proposed new clauses 38.01 and 38.02 referred to the arbitration board.   Its submissions read as follows:

. . .

          . . . the Employer respectfully submits that in accordance with article 150 of the new Public Service Labour Relations Act (PSLRA), such a proposal cannot be included in an arbitration award and therefore, should not be part of the Terms of Reference of the Arbitration Board. . . .

          In support of its position, the Employer would like to put forward the following arguments:

• In setting the Terms of Reference, the Chairperson must take into account section 6 of the PSLRA that refers to paragraph 7(1)(b) of the FAA [ Financial Administration Act ] .   This portion of the FAA allows TB to act for the Queen’s Privy Council with respect to the organization of the federal public administration, and the determination and control of establishments.   A “no contracting out” clause would be contrary to this provision of the FAA.
• In setting the terms of reference of the Arbitration Board, the Chairperson of the PSLRB must also take into account section 7 of the PSLRA.   In accordance with this provision, the Terms of Reference cannot include elements that would restrict management’s right to organize the federal public administration.   The inclusion of a “no contracting out” clause would be contrary to this provision of the PSLRA [ sic ]
• The bargaining agent’s proposed “no contracting out” clause should not be included in an arbitral award as this would be contrary to subsections 113 (a) and (b) as well as paragraphs 150(1)(b) and (c) of the PSLRA since it would require amendments to the Public Service Employment Act (PSEA) with respect to appointments and lay-offs.
• Pursuant to paragraph 150(1)(a) of the PSLRA, the “no contracting out” proposal could not be included in an arbitral award since it would require the amendment of the Public Service Re-Arrangement and Transfer of Duties Act and the block transfer provisions of the PSEA.   These provisions allow, amongst other things, for the transfer of work and employees to a separate employer.   The proposal would impede this ability and therefore these statutes would have to be amended.
• Pursuant to paragraph 150(1)(e) of the PSLRA, the “no contracting out” proposal could not be included in an arbitral award since it affects the organization of the public service or the assignment of duties to positions or persons.

          There are several cases on the matter of jurisdiction of arbitration boards emanating from the PSSRB and the Courts.   Also in support of its position, the Employer would like to refer to some of those decisions:

          In PSAC v. NCC, [1998] 2 FC 128 (T-2084-96), the Federal Court upheld the decision of the PSSRB Chairperson to refuse to include in the terms of reference a proposal for a no contracting out clause.   The Court stated that this would operate to prevent lay-offs and therefore would be contrary to paragraphs 69(3)(a) and (b) of the PSSRA (now paragraphs 150(1)(e) and (c)).   The Court relied on a number of conciliation board decisions where contracting out proposals were found to be proposals regarding lay-offs.

          In NABET v. House of Commons, [1988] CPSSRB No. 77 (PSSRB File No 485-H-1), the Board held that the no contracting out clause interfered with the employer’s exclusive right to determine its own organization, and therefore violated the management rights clause in the Parliamentary Employment and Staff Relations Act, the equivalent of s. 7 of the PSSRA/PSLRA.

          In Public Service Alliance of Canada v. Canada (Treasury Board) [ 1987 ] 2 F.C. 471, Court file No. A-147-86, Justice Marceau, speaking on behalf of the Court, found that matters that fall within section 7 of the Act are capable of being included in a Collective Agreement only if the Employer voluntarily agrees to it.   However, the Court also found that a proposal that violates section 7 of the Act couldn’t be referred to binding arbitration.   Sections 113 and 150 of the PSLRA must also be read in light of ss. 6 and 7.

          In Canada (Attorney General) v. Canada (Public Service Staff Relations Board), [ 1988 ] F.C.J. No. 633, Court File No. T-915-88, the Court, dealing with a case of “Binding” Conciliation, also found that the Employer could voluntarily agree to bargain matters falling within section 7 of the Act but that these matters could not be referred to “Binding” Conciliation.

          In summary, the Employer respectfully submits that the Arbitration Board cannot properly deal with the issue of “no contracting out” since doing so would be contrary to ss. 113 and 150 of the PSLRA, and would infringe on the Employer’s rights under ss. 6 and 7 of the PSLRA.   The Employer has never agreed and does not agree to have this issue included in the Terms of Reference of the Arbitration Board or a clause of this nature included in the Collective Agreement.   We therefore ask that the Chairperson of the Public Service Labour Relation [ sic ] Board (PSLRB) exclude this proposal from the Terms of Reference of the Arbitration Board.

. . .

[10]   The bargaining agent filed the following reply to the employer’s objection:

. . .

Issue

The sole issue for determination is whether the Arbitration Board appointed pursuant to the Public Service Staff Relations Act , for the purpose of concluding terms and conditions of employment in a renewal collective agreement, should be mandated to deal with the Dockyard Council’s proposal on contracting out.

Background

The collective agreement between the Dockyard Council and the Treasury Board expired on December 31, 2003.   Negotiations for renewal of that collective agreement commenced in 2004 and reached an impasse in early 2005.   The Dockyard Council filed a request to have the outstanding issues submitted to a Board of Arbitration pursuant to the Public Service Staff Relations Act , which was then in effect.   In addition to wages, a number of issues remained outstanding, including the Dockyard Council’s proposal on contracting out:

38.01	The Employer shall not contract out work that is normally performed by employees in the bargaining unit;
	(a) where there are employees available who are qualified to perform the work; or
	(b) where there are employees on layoff who are qualified and available to do the work.
38.02	Where contracting out is required because there is a shortage of qualified employees, the Employer shall meet with the Council to discuss whether it is necessary to hire additional employees to perform the required work.   Where there is sufficient work available to create a full-time position, the Employer shall hire employees to perform that work.

The Treasury Board has opposed the inclusion of this proposal in the terms of reference.   The Dockyard Council submits that the proposal should be included in the terms of reference.

The Law

The Treasury Board has indicated the Arbitration Board’s terms of reference should be determined in accordance with the Public Service Labour Relations Act .   We submit that the transitional provisions of the new Act make it clear that this arbitration must be concluded under the provisions of the former Public Service Staff Relations Act .   The relevant provisions of the PSSRA are:

7	Nothing in this Act shall be construed to affect the right or authority of the employer to determine the organization of the Public Service and to assign duties to and classify positions therein.
57(2)	No collective agreement shall provide, directly or indirectly, for the alteration or elimination of any existing term or condition of employment or the establishment of any new term or condition of employment,
	(a the alteration or elimination or the establishment of which would require or have the effect of requiring the enactment or amendment of any legislation by Parliament, except for the purpose of appropriating moneys required for its implementation; or
	(b) that has been or may be established pursuant to any Act specified in Schedule II.
69(1)	[Repealed, 1992, c. 54, s. 57]
(2)	Subsection 57(2) applies, with such modifications as the circumstances require, in relation to an arbitral award.
(3)	No arbitral award shall deal with
	(a) the organization of the Public Service or the assignment of duties to, and classification of, positions in the Public Service;
	(b) standards, procedures or processes governing the appointment, appraisal, promotion, demotion, deployment, lay‑off or termination of employment, other than by way of disciplinary action, of employees; or
	(c) any term or condition of employment of employees that was not a subject of negotiation between the parties during the period before arbitration was requested in respect thereof.
(4)	An arbitral award shall deal only with terms and conditions of employment of employees in the bargaining unit in respect of which the request for arbitration was made.

The leading case on the application of the PSSRA is Public Service Alliance of Canada v. National Capital Commission [1997] F.C.J. No. 1418 (F.C.T.D.).   In that decision, the Court considered the decision of the Chair of the PSSRB to delete the following union proposal from the terms of reference to an arbitration board:

47.01

The Employer can engage in contracting out of services and functions performed by employees if the contracting out will not result in any loss of employment.

The Court determined that the proposed clause would operate to prevent layoffs and was appropriately deleted from the terms of reference.   However, the Court did not comment on other proposals that were included in the terms of reference (copy attached) under review, namely:

7.02	Supervisors and other employees not included in the bargaining unit shall not perform any work normally performed by bargaining unit members, except in the case of an emergency or for the purpose of instructing bargaining unit members.

The Chair determined that this clause was related to the assignment of duties to persons rather than to positions and did not fall within the provisions contained is s.7 or 69(3)(a) of the PSSRA (see p. 16 & 17).

47.02	Before the Employer can contract out any work normally performed by bargaining unit members it shall:
	(a) provide the union with three (3) months notice of the nature of the intended contracting out and the likely consequences, if any, to the job assignments of bargaining unit members and;
	(b) at the request of the Union meet with the Union representatives to discuss the reasons for the contracting out and to consider alternative solutions.

The Chair determined that 47.02 was properly included in the terms of reference (p. 20).

Analysis

The Dockyard Council submits that the decision of the Federal Court in the PSAC decision can be distinguished on the wording of the proposal article in that case.   That proposal article specifically stated no contracting out could take place which would result in layoffs.   The Dockyard Council’s proposed 38.01 & 38.02 contains no such reference.

As with proposed article 7.02 in the PSAC case, our proposed 38.01 and 38.02 deal with assignment of duties to persons – not positions.   The Employer could still conduct layoffs if there is truly a shortage of work, but not by arbitrarily taking the regular work of the bargaining unit and effectively selling it to the lowest bidder.

While it may be argued that our proposed 38.01 may indirectly limit the ability of Treasury Board to arbitrarily layoff employees even when there is sufficient work to do, the proposed article 38.02 clearly does not impact on the ability of the employer to layoff.   Article 38.01 deals with an increase in work and the hiring of new employees, not a reduction in work.

In making this determination, we respectfully request that the Chair consider the following additional facts:

(a)	Treasury Board has a long standing arrangement with the West Coast Dockyard Council which restricts contracting out by requiring the employer to pay when contractors are used in the Westcoast dockyard.   Attached is a letter dated August 21, 1980 which describes this arrangement.
(b)	The arbitration panel does not have to accept the proposal as written and can in fact substitute different language if it deems it appropriate;
(c)	We do not accept the submission of the Treasury Board that our proposal would violate s.7(1)(6) of the Financial Administration Act .   The Treasury Board would still be acting for the Crown, but that provision does not prevent it from negotiating these issues with the union;
(d)	We also dispute the Treasury Board’s assertion that our proposal would require audits to the Public Service Employment Act ; and
(e)	Finally, we dispute the Treasury Board’s submission that the Public Service Re-Arrangement and Transfer of Duties Act is relevant to this issue.   That Act deals with whole scale transfers of operations, not mere contracting out of bargaining unit work.   The proposed contracting out clause would not in any way affect that Act.

In our view, the Board has the following options:

• It can remove this issue from the terms of reference to the Arbitration Board entirely.   We have set out above our reasons why the Board should not do so.
• It can submit the proposed contracting language to the Arbitration Board with clear terms of reference that the decision of the Arbitration Board must be consistent with the prior court decisions relating to the issue of layoffs.   The issue of contracting out is clearly an issue that is appropriate for bargaining and arbitration and the Arbitration Board can deal with that issue by issuing a decision that is consistent with the law.
• If it decides that Article 38.01 is not appropriate, it can still submit the proposed article 38.02 to the Arbitration Board.
• If it decides not to put either of the Dockyard Council’s contracting out proposals to the Arbitration Board, it can permit the Arbitration Board to consider the Dockyard Council’s original contracting out proposal in this round of negotiations.   That proposal was to have the same arrangement that exists between Treasury Board and the Westcoast Council extended to the Dockyard Council.

In our view, it is critical that the Board make it clear that contracting out is an appropriate issue for bargaining.   To hold otherwise would be to give license to the employer to potentially contract out all of the bargaining unit’s work which could, if taken to its logical conclusion, effectively end the Dockyard Council’s very existence.   The Dockyard Council must be able to negotiate protections for its members to ensure that this does not happen.   If the Council cannot require Treasury Board to bargain in good faith over an issue that goes to the heart of the Council’s very viability, then where can it raise these issues?

Conclusions

It is our submission that the proposed articles 38.01 and 38.02 are appropriately included in the terms of reference to the Arbitration Board which appointed pursuant to the PSSRA.   To the extent that restrictions on layoffs cannot be the subject of an award by the Arbitration Board, the terms of reference can clearly state that limitation while permitting the Arbitration Board to deal with the substantive issue of contracting out.

Alternatively, we submit that the Chair should permit the Dockyard Council to substitute its original contracting out proposal which would incorporate the same arrangement on contracting out that currently exists between the Westcoast Council and Treasury Board.

. . .

[ Sic throughout]

[11]   The employer’s rebuttal reads as follows:

. . .

          In terms of the applicable legislation, the Employer continues to maintain that by virtue of Section 57 of the Public Service Modernization Act transitional provisions, it is the provisions of the Public Service Labour Relations Act (PSLRA) that applies [ sic ] to this dispute.

          In its submission, the Bargaining Agent quotes the 1987 Federal Court decision in PSAC v. NCC.   The Bargaining Agent argues that the Court did not comment on two proposals that the Chair of the then Public Service Staff Relations Board (PSSRB) had determined to be properly included in the terms of reference of the arbitration board named to hear that dispute.   The Employer submits that the reason the Court did not comment on them was that neither one was the subject of the judicial review.   In any case, the fact that the Chair of the PSSRB concluded that the two Union’s proposals were properly included in the terms of reference is not relevant to our case.   We submit that the language proposed by the Council for clauses 38.01 and 38.02 is very different than [ sic ] that of the two proposals quoted by the Council regarding the PSAC v. NCC case.   One of those proposals had nothing to do with contracting out but talked about the way the employer did its staffing.   Also, the Chair determined that the proposal was acceptable because it dealt with the assignment of duties to persons rather than to positions.   However, s.7 of the PSLRA now refers to duties being assigned to positions and persons.   Therefore, any clause dealing with the assignment of duties would not be acceptable under the new Act.   As for the other proposal, it did not restrict Management’s right to contract out but simply required prior notice and consultation in cases where the employer decided to contract out some work.

          As for the case now before the Public Service Labour Relations Board (PSLRB), we submit that should clauses 38.01 and 38.02 be included in the collective agreement, they would severely limit situations where the employer can contract out work now performed by members of the SR‑East bargaining unit.   Clause 38.01 would in effect prevent the employer from contracting out if there are employees qualified to do the work whereas clause 38.02 would force the employer to hire SR employees in order to avoid the need for contracting out.   As stated in our initial submission to the PSLRB, we respectfully submit that such clauses would restrict management’s right to organize the federal public administration.

          In its submission, the Bargaining Agent also refers to an agreement between the Employer and the West Coast Dockyard Council.   The Employer submits that this kind of arrangement is not negotiable.   Furthermore, the Council’s proposal to that effect has been withdrawn during negotiations and has not been submitted to the PSSRB earlier in this process to be part of the terms of reference of the Conciliation Officer or more recently, as being part of the issues in dispute to be dealt with by the Arbitration Board.   Consequently, the Employer therefore submits that the Chair cannot include this proposal in the terms of reference of the Arbitration Board.

          We would also like to comment on the Council statement about having the PSLRB making it clear that contracting out is an appropriate issue for bargaining and that to hold otherwise would give license to the Employer to go forward with some kind of abuses.   One important distinction to make is that there is a difference between matters that can be bargained and matters that can be included in an arbitral award.   The employer’s position in this case is not about finding ways to treat its employees in an arbitrary fashion but is based on the system for collective bargaining that Parliament enacted for the public service.

          In summary, we would like to reiterate the arguments contained in our letter of May 27, 2005 to the effect that the Arbitration Board cannot properly deal with the issue of “no contracting out” since doing so would be contrary to ss. 113 and 150 of the PSLRA and would infringe on the Employer’s rights under ss.6 [ sic ] and 7 of the PSLRA.   Therefore, we ask again that the Chairperson of the PSLRB exclude this proposal from the Terms of Reference of the Arbitration Board.

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Reasons

[12]   The parties are not in agreement as to which Act applies to the request for arbitration before me.   The employer submits that it should be decided in accordance with the new Act, while the bargaining agent alleges that the former Act should have application.

[13]   On April 1, 2005, the new Act, enacted by section 2 of the Public Service Modernization Act (PSMA), S.C. 2003, c. 22, was proclaimed in force.   The PSMA contains transitional provisions dealing with the effect of the coming into force of the new Act on matters that have been filed under the former Act.   Section 57 of the PSMA is the transitional provision applying to requests for arbitration filed prior to the coming into force of the new Act.   It provides as follows:

   57. (1) The following rules apply to request for arbitration made before the day on which section 136 of the new Act comes into force [April 1, 2005] and for which no arbitral award had been made before that day:

  (a) if no arbitration board had been established or arbitrator appointed before that day, the request is to be dealt with as though it had been made under section 136 of the new Act;

. . .

  (2) For greater certainty, an arbitral award may be made under subsection (1) only in respect of a term or condition of employment that could have been embodied in an arbitral award made under the former Act as it read immediately before the day on which section 140 of the new Act comes into force [April 1, 2005] .

[14]   Although paragraph 57(1)(a) of the PSMA stands for the proposition that the request for arbitration at hand is to be dealt with pursuant to the new Act, subsection 57(2) clearly states that the terms of reference to the arbitration board shall be consistent with the provisions of the former Act.   The provisions of the former Act relevant to the objection raised by the employer are those identified by the bargaining agent in its reply to the employer’s objection (supra).

[15]   I now intend to deal with the proposed new clauses 38.01 and 38.02 separately.

The proposed new clause 38.01

[16]   The proposed new clause 38.01 reads as follows:

38.01    The Employer shall not contract out work that is normally performed by employees in the bargaining unit:

(a) where there are employees available who are qualified to perform the work; or

(b) where there are employees on layoff who are qualified and available to do the work.

[17]   The Federal Court had the opportunity to examine a similar, although not identical, proposal in Public Service Alliance of Canada v. National Capital Commission, [1998] 2 F.C. 128 (T.D.).   In that case, the Court found that:

. . .

. . . a proposal preventing the contracting out of services would prevent the contracting out of functions perhaps presently performed by certain employees during regular hours of work.   Such a proposal could thereby directly operate to prevent lay-offs, and hence be contrary to paragraphs 69(3)( a) and 69(3)( b) [of the former Act].

. . .

[18]   I recognize that, unlike clause 47.01 in National Capital Commission (supra), the proposed new clause 38.01 does not specifically tie the employer’s contracting out ability to the absence of lay-offs.   However, the fact remains that its object is to establish limitations on the employer’s ability to contract out work normally performed by employees in the bargaining unit.

[19]   The employer correctly pointed out that its right to determine the organization of the Public Service and to assign duties to positions therein is protected by legislation.   Such protection is found in section 7 of the former Act.   The Federal Court of Appeal, in Public Service Alliance of Canada v. Canada (Treasury Board), [1987] 2 F.C. 471, was asked to determine the effect of that provision on a proposal that would otherwise be arbitrable.   The Court found that such a proposal could be referred to arbitration only if “. . . its effect would leave intact the untouchable prerogatives of Government defined in section 7 [of the former Act].”

[20]   In National Association of Broadcast Employees and Technicians v. House of Commons, PSSRB File No. 485‑H‑1 (1988) (QL), the Public Service Staff Relations Board found that a proposal preventing contracting out “. . . clearly interferes with the employer’s right to determine its organization. . . .” and could not be considered within the scope of a request for arbitration.

[21]   The bargaining agent argued that the “Treasury Board has a long standing arrangement with the West Coast Dockyard Council which restricts contracting out. . . .”, suggesting that the proposed new clause 38.01 could be referred to arbitration because it has been the object of discussions between the parties.   The Federal Court dealt with a similar issue in Canada (Attorney General) v. Canada (Public Service Staff Relations Board) (1988), 21 F.T.R. 195.   In that case, the Court found that, although “. . . the employer could ‘voluntarily’ discuss matters that fall within the scope of Section 7 [of the former Act]. . . .” during collective bargaining, such matters could not be referred to binding conciliation without the employer’s agreement.   I am of the view that this pronouncement applies equally to requests for arbitration.

[22]   For all these reasons, I do not refer the proposed new clause 38.01 to the arbitration board for arbitration.

The proposed new clause 38.02

[23]   The proposed new clause 38.02 reads as follows:

38.02    Where contracting out is required because there is a shortage of qualified employees, the Employer shall meet with the Council to discuss whether it is necessary to hire additional employees to perform the required work.   Where there is sufficient work available to create a full-time position, the Employer shall hire employees to perform that work.

[24]   The proposed new clause 38.02 contains two elements.   Its first sentence relates to consultations between the parties with a view to assessing the need for more staff.   The employer raised no issue with regard to that first sentence.

[25]   The employer’s objection relates to the second sentence, which object is to establish an obligation on the employer’s part to hire additional employees in specific circumstances.   As mentioned earlier, the employer’s right to determine the organization of the Public Service and to assign duties to positions therein is protected by section 7 of the former Act and a proposal affecting that right could not be referred to arbitration without the employer’s consent.   For the same reasons as those expressed in relation to the proposed new clause 38.01, I do not refer the last sentence of the proposed new clause 38.02 to the arbitration board for arbitration.

Matters referred to the arbitration board for arbitration

[26]   Accordingly, pursuant to section 144 of the new Act, the matters in dispute on which the arbitration board shall render an arbitral award in this dispute are those set out as outstanding in schedules i, ii, iii and iv attached hereto, with the exception of the proposed new clause 38.01 and the second sentence of the proposed new clause 38.02.

[27]   Should any jurisdictional objection arise during the course of the hearing as to the inclusion of a matter in these terms of reference, that question must be submitted forthwith to me because the Chairperson of the Public Service Labour Relations Board is, according to the provisions of subsection 144(1) of the new Act, the only person authorized to make such a determination.

July 15, 2005.

Yvon Tarte,
Chairperson
Public Service Labour Relations Board