The Collective Agreement and Grievance Arbitration

Chapter : The Collective Agreement and
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 | :
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,
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

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