Air-Care Ltd. v. United Steel Workers of America et al., [1976] 1 SCR 2

Supreme Court of Canada

Air-Care Ltd. v. United Steel Workers of America et al., [1976] 1 S.C.R. 2

Date: 1974-10-01

Air-Care Ltd. Appellant;

and

United Steel Workers of America et al. Respondents.

1974: March 21, 22; 1974: October 1.

Present: Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE COURT OF QUEEN’S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC

Labour relations—Collective agreement—Temporary shortage of work—Company’s right to reduce the number of working hours rather than the number of employees—Definition of “lay‑off”.

The appellant Air-Care Ltd. reduced the regular work week of its employees because of a temporary lack of work. The respondent union filed a grievance, claiming that the company had violated the collective agreement. The union contended that employees were entitled to a forty-hour work week and that the company should lay off employees instead of reducing the work week of all employees. A majority of the Arbitration Board set up to consider the grievance found for the union. This award was set aside by the Superior Court. The Quebec Court of Appeal (Casey J.A. dissenting) allowed the union’s appeal and restored the Arbitration Board award.

Held: The appeal should be allowed.

Article 10.01 of the collective agreement, dealing with lay-offs due to a shortage of work, has no application because none of Air-Care Ltd.’s employees were “laid off”. There was no reduction in the working force and the status of the employees as employees was unaffected. Article 10.01 provides a procedure to follow when lay-offs due to a shortage of work occur, but it does not impose a duty to lay off in the event of a shortage of work.

Under the Management Rights clause (Art. 4.01), the company retains the right to schedule production as it determines in its best interest and the right to reduce the work week if operational needs require. The company has the right, under the terms of the agreement, to reduce the hours of work for a period rather than impose a lay-off.

By imposing a duty to lay off in the event of a shortage of work, the Arbitration Board acted in violation of Art. 7.03, which expressly limits the jurisdiction

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of the Board to deciding the matter within the existing provisions of the agreement without altering or amending the agreement.

The Board did not lose jurisdiction by failing to give its decision within the mandatory thirty days from the end of the hearing (Art. 7.02). The right of a party should not be lost or in any way prejudiced as the result of dilatory conduct on the part of a Board over which it has little or no control.

Bell Canada v. Office and Professional Employees’ International Union Local 131, [1974] S.C.R. 335, referred to.

APPEAL from a judgment of the Court of Queen’s Bench, Province of Quebec, Appeal Side, setting aside a judgment of the Superior Court on an award from the Arbitration Board. Appeal allowed.

K.J. MacDougall and P.J. Perrault, for the appellant.

P. Lesage, for the respondents.

The judgment of the Court was delivered by

DICKSON J.—The issue in this appeal is whether Air-Care Ltd. under the terms of its collective agreement with Local 7010 of the United Steel Workers of America was obliged, during a temporary shortage of work, to lay off employees, as the Union contends, or whether it was entitled to place all employees on a short work week, as the Company maintains. None of the facts are in dispute.

On September 30, 1970, Mr. G.O. Burton, Manager of the Air Distribution Division of the Company caused to be posted in the Air Distribution Division Plant, a notice advising all employees that due to a temporary lack of work the plant would operate on a short work week for the following periods:

Closing Friday, October 9, 1970, at 0:30 a.m., and

reopening, Tuesday, October 13, at 7:30 a.m., also

Closing Friday, October 23, 1970, at 0:30 a.m., and

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reopening, Monday, October 26, 1970, at 7:30 a.m.

On October 14, 1970, Mr. J.A. Baillies, Manager of the Air Handling Division of the Company caused to be posted in the Air Handling Division Plant a notice that due to temporary lack of work the plant would operate on a short work week for the following periods:

Closing Friday, October 23, 1970, at 0:30 a.m., and

reopening Monday, October 26, 1970, at 7:30 a.m., also

Closing Friday, October 30, 1970, at 0:30 a.m., and

reopening Monday, November 2, 1970, at 7:30 a.m.

The Union filed a grievance in which it claimed the Company did not have the right to reduce the work week; that all employees must be paid on the basis of a forty-hour week, and in the event of shortage of work the work force must be reduced. A majority of the Arbitration Board set up to consider the grievance found for the Union, while commending the Company for wishing to retain all employees at work at reduced salary, rather than favouring some to the detriment of others. Mr. Justice Nichols of the Superior Court, District of Montreal set aside the arbitration award. The Court of Appeal (Tremblay C.J.Q. and Deschenes J.A. with Casey J.A. dissenting) allowed the appeal and dismissed the petition of the Company.

The articles of the Collective Agreement which are of particular concern are these:

ARTICLE 2. PURPOSE OF AGREEMENT

2.01 It is the intent and purpose of this Agreement to maintain cordial relations in the Plant, to clearly define hours of work and other working conditions, to provide a method for the orderly adjustment of differences and grievances, and to protect the safety and health of employees.

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ARTICLE 4. MANAGEMENT RIGHTS

4.01 The Union recognizes the inherent right of the Company to manage the business and agrees that this right shall remain unimpaired except insofar as the express provisions of this Agreement stipulate otherwise. Always provided that any dispute as to whether any Rules and Regulations are reasonable, or any dispute involving claims of discrimination against any employee in the application of such Rules and Regulations, shall be subject to the grievance procedure of this Agreement.

ARTICLE 7. ARBITRATION

7.03 The decision of the majority shall be the decision of the Arbitration Board, and if there is no majority, the decision of the Chairman shall be the decision of the Board, but the jurisdiction of the Arbitration Board shall be limited to deciding the matter at issue within the existing provisions of the Agreement and in no event shall the Arbitration Board have the power to add to, subtract from, alter or amend this Agreement in any respect.

ARTICLE 10. SHORTAGE OF WORK

10.01 In all cases of lay-offs, because of shortage of work, employees shall be listed by occupation in order or length of service, the last hired at the bottom of the list. Proceeding upwards from the bottom of the list, the following factors will be considered:

(a) Service.

(b) Knowledge, efficiency and ability to perform the work.

(c) Physical fitness.

Where factors (b) and (c) are relatively equal, factor (a) shall govern.

ARTICLE 23. HOURS OF WORK

23.01 A day is a twenty-four (24) hour period beginning with the start of the employee’s shift.

23.02 (a) The work week will be forty (40) hours consisting of eight (8) hours per day, Monday to Friday inclusively.

23.09 Nothing in this Agreement shall be read or construed as a guarantee of hours of work per day or week or a guarantee of days of work per week.

In short compass the case for the Union is that according to the agreement the work week is to be

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forty hours and in the event of a shortage of work Art. 10.01 applies and obliges the Company to lay off employees with due regard for seniority and the other factors mentioned. The Company, on the other hand, says no employee is assured forty hours per week, that Art. 23.09 makes this clear, and if there is a shortage of work the inherent right of the Company to manage the business, preserved by Art. 4.01, leaves the Company with three options: (i) to retain all employees at full pay though working part time, (ii) to place all employees on a short work week or (iii) to lay off employees in the manner prescribed by Art. 10.01.

The Union’s case rests in large measure on the submission that there is no difference between a reduction in the hours of work and a lay-off and the moment one reduces the hours of work of an individual that individual is laid off (mise à pied). “Lay-Off” is not defined in the Quebec Labour Code, R.S.Q. 1964, c. 141. However, the Shorter Oxford English Dictionary defines “layoff” as follows: “Lay-off, a period during which a workman is temporarily discharged.” and Nouveau Larousse Universel, Tome 2 “Mise à pied”: “retrait temporaire d’emploi”. In my opinion none of the employees of Air-Care Ltd. was laid off on the occasions in respect of which the grievance was raised. There was no reduction in the working force and the status of the employees as employees was unaffected by the notices posted by Mr. Burton and by Mr. Baillies. The action taken did not undermine the seniority protection assured by the agreement. I do not think Art. 10.01 has any application whatever, for the reason there were simply no “eases of lay-offs”. Article 10.01 describes in detail the procedure to be followed when lay-offs occur due to a shortage of work but it is impossible to read into the language of the article the duty to lay off employees in every event of shortage of work. Under the Management Rights clause Art. 4.01 the Company retained the right to schedule production as it determined in its best interest and the right to reduce the work week if operational needs required; no clause in the

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agreement serves to impair or limit either of these rights. The agreement might have required the Company to institute a lay-off of personnel before reducing the work week; it might have placed a limit on the extent of the reduction of the work week or the frequency of any such reduction which would be permissible before applying lay-off machinery; but the agreement is silent on both of these points.

If a shortage of components or a breakdown of machinery or fire or flood had caused the Company to close the plants for a few hours or a day no one could have seriously contended that this amounted to a lay-off and that unless seniority was in some way recognized the employees would be entitled to be paid for hours not worked.

The Company had the right, in my view, under the terms of the agreement, to reduce the hours of work for a period, rather than impose a lay-off. When the Arbitration Board held otherwise it added to the agreement by imposing upon the Company a duty, not assumed through collective bargaining, to lay off employees whenever there was a shortage of work, and in doing so the Board acted in violation of Art. 7.03 which expressly limited the jurisdiction of the Board to deciding the matter within the existing provisions of the agreement and explicitly denied it the power to add to, subtract from, alter or amend the agreement in any respect. Bell Canada v. Office and Professional Employees’ International Union Local 131[1].

The Company took the further point that the Board had lost jurisdiction and its award was null for failure to give its decision for almost a year (January 20, 1972) from the end of the hearing (February 11, 1971) and almost six months from

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the date of the last written submission (July 13, 1971), contrary to Art. 7.02 of the collective agreement, which called for the Board to render a decision within thirty calendar days from the end of the hearings. During argument on this appeal the Court made clear its view that the point was without merit. The right of a party should not be lost or in any way prejudiced as the result of dilatory conduct on the part of a Board over which it has little or no control.

I would allow the appeal, set aside the judgment of the Court of Appeal and restore the judgment of Nichols J. with costs in this Court and in the courts below.

Appeal allowed with costs.

Solicitors for the appellant: Duquet, MacKay, Weldon, Bronstetter & Johnston, Montreal.

Solicitors for the respondents: Trudel, Nadeau, & Associates, Montreal.