The Collective Agreement and Grievance Arbitration

• Pages: 692-777

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Chapter : The Collective Agreement and

GrievanceArbitration

: INTRODUCTION

If the collective bargaining process (discussed in Chapters  and ) brings a settlement, the

terms will be embodied in a collective agreement (sometimes informally called a “contract”)

between the union and the employer. This chapter deals with the enforcement of such agree-

ments, rst the common law history and then under modern labour relations legislation.

Disputes over the interpretation and application of collective agreements are common-

place. An employee may claim that the agreement was violated when he was disciplined,

rejected for promotion, laid o, denied benets, or subjected to some other unwelcome

treatment. A union may challenge a management practice aecting the workforce at large,

or aecting the union in its role as bargaining agent. Or, less commonly, an employer may

claim that the union has not met its obligations under the collective agreement.

Modern Canadian labour relations legislation does not permit a contest of economic

power over these disputes. Strikes and lockouts are banned during the term of a collective

agreement, and every such agreement must provide a dispute settlement process to resolve

disputes over whether the agreement has been complied with. Some statutes specify that

this process must take the form of grievance arbitration. Until recently, even in jurisdictions

where arbitration was not specically mandated, it was used almost universally because

no practical alternative had been found. This is changing now with the introduction of “or

otherwise” language in nal settlement provisions, such as section  of the Nova Scotia

Trade Union Act and section  of the Ontario Labour Relations Act, and with developing

practices under collective agreements leading to such alternatives as mediation, media-

tion-arbitration (med-arb), and restorative conferencing.

Collective agreements normally provide for an informal grievance procedure through

which the parties attempt to resolve their disputes without resorting to an external, third party,

expedited arbitration process. If a grievance is not resolved in that way, either party may invoke

arbitration as a form of third-party adjudication. Arbitrators make legally binding rulings based

upon evidence and argument presented by the parties in an adversarial hearing. The parties to

a dispute normally choose the person who will act as arbitrator. Tripartite boards of arbitration

(consisting of a union and employer nominee and an impartial chairperson) were widely used

at one time, but single arbitrators are now much more common in most jurisdictions.

Mandatory grievance arbitration is often said to be the quid pro quo for the ban on mid-con-

tract work stoppages, in the sense that a union is denied the right to strike as a means of enfor-

cing the collective agreement but gains access to arbitration in exchange. However, as we will

see, this idea of a quid pro quo overlooks the fact that if a matter in issue is not addressed by

The Common Law View of Co llective Agreements | :

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the collective agreement, neither arbitration nor a strike or lockout is legally available to resolve

it. Although, in some instances, parties may resort to labour relations boards to resolve some

mid-contract issues, such as disputes over conguration of bargaining units.

Lawyers often tend to see grievance arbitration as serving only an adjudicative function,

but like the grievance procedure which precedes it, it performs other functions as well. Some

of the purposes served by the grievance process (including arbitration) were described by

Neil Chamberlain in The Labor Sector (New York: McGraw Hill, ) at :

The grievance procedure is . . . a many splendored thing. It is in part the judicial pro-

cess of applying terms of the agreement to particular situations, as it is most frequently

pictured. It is also the mechanism through which the rst-line representatives of union

and management engage in a continuing contest over the exercise of authority in the

shop. . . . The grievance process is also a device which strategic groups within the union

can use to engage in factional bargaining on their own behalf, sometimes challenging

the authority of the union in the doing but more often able to clothe their purpose in

“grievances” which have at least the air of legitimacy about them. And nally, the griev-

ance process, in the hands of sophisticated practitioners, can be made an instrument for

more eective administration within the shop.

The grievance arbitration process can also play an important role in the retention of employ-

ees. Allowing employees to air their complaints before an arbitrator might deter them from

leaving. In What Do Unions Do? (New York: Basic Books, ) Richard Freeman and James

Medo found that turnover was lower in American workplaces with a union than in those

without. They attributed the dierence to the “collective voice” oered by unions — a voice

that serves as a substitute for employee “exit.”

Throughout this chapter, the reader should keep in mind the distinction between “griev-

ance” or “rights” arbitration on the one hand, and “interest” arbitration on the other. This

chapter addresses issues surrounding the former, while Chapter  addressed interest arbi-

tration. This distinction is particularly important when reading the excerpts from Weiler and

Beatty in Section : below.

: The Common Law View of Collective Agreements

Before the advent of modern labour relations legislation in the s, collective agreements

were generally unenforceable at law. A system of binding arbitration had not yet developed,

and Canadian courts were unwilling to entertain civil actions based on collective agreements.

Three major common law obstacles stood in the way of the enforcement of collective

agreements by civil action — obstacles related to the fact the contractual parties to the col-

lective agreement are the union and the employer, not the individual employees. First, as we

saw in the preceding chapter, trade unions were not considered to have the legal capacity

to make binding contracts or to sue or be sued in their own name. Because they sought to

aect the operation of the labour market, they were thought to operate in illegal restraint

of trade. Because they were unincorporated associations, they were treated as being with-

out legal status. Second, the courts doubted that employers and unions intended their col-

lective agreements to be legally binding, rather than mere informal understandings. Third,

CHAPTER : THE COLLECTIVE AGREEMENT AND GRIEVANCEARBITRATION

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traditional rules of privity of contract were held to prevent individual employees from enfor-

cing collective agreements to which they were not themselves parties.

Young v Canadian Northern Railway, []  DLR  at – (PC)

[A collective agreement, called Wage Agreement , was in force between the Railway

Association of Canada, representing employers, and Division  of the Railway Employees’

Department of the American Federation of Labor, which negotiated on behalf of railway

employees. The plainti was not a member of Division . The defendant railway hired him

as a machinist, telling him that he would receive the going rate for machinists but not

giving him a written employment contract. In addition to rules on hours and wages, Wage

Agreement  provided that in the event of a workforce reduction, junior employees would

be laid o rst, in accordance with a seniority rule.

Young was laid o out of order of seniority. He sued for damages for wrongful dis-

missal, lost in the Manitoba courts, and appealed to the Judicial Committee of the Privy

Council. At the time, no Canadian jurisdiction had labour relations legislation of the sort

now in force across the country.]

LORD RUSSELL: . . . The fac t that the railway company applied [Wage Agreement ] to

the appellant, is equally consistent with the view that it did so, not because it was bound

contractually to apply it to him, but because as a matter of policy it deemed it expedient

to apply it to all. If the conduct of the railway company in applying the provisions of the

agreement to the appellant could only be explained by the existence of a contractual

obligation to the appellant so to do, it would be not only permissible, but necessary to

hold that the existence of the contractual obligation had been established. In the cir-

cumstances, however, of the present case, their Lordships nd themselves unable so to

decide. But the matter does not quite rest there. When Wage Agreement  is examined,

it does not appear to their Lordships to be a document adapted for conversion into or

incorporation with a service agreement, so as to entitle master and servant to enforce

inter se the terms thereof. It consists of some  “rules,” which the railway companies

contract with Division  to observe. It appears to their Lordships to be intended merely

to operate as an agreement between a body of employers and a labour organization by

which the employers undertake that as regards their workmen, certain rules bene-

cial to the workmen shall be observed. By itself it constitutes no contract between any

individual employee and the company which employs him. If an employer refused to

observe the rules, the eective sequel would be, not an action by any employee, not

even an action by Division  against the employer for specic performance or damages,

but the calling of a strike until the grievance was remedied. If, in the present case, the

appellant has suered any injustice at the hands of the railway company, it was in the

power of Division  to obtain justice for him had they chosen so to do. It is suggested

that Division  chose not so to do, because the appellant was a member of a rival organ-

ization. Assuming the suggestion to be well founded, the moral thereby pointed would

appear to be that in the case of an “open” shop, the protection which an agreement such

as Wage Agreement  aords to a workman who is not a member of the contracting

labour organization, is to be measured by the willingness of that body to enforce it on