AH 550
I N nn: MATT ER OF AN A RB ITRATI ON
BET WEEN: ALGO:'IA C ENTRAL RAILWAY (Herei nafl cr C~ II .t1lb. ~Com t>3ny")
~n,l
ASSOCIATION OF RAILWAY UNIONS-A CR (II cre;naftcr call ...1 lh e "U n;~n ")
GR IEVANCE RELAT ING TO PBII' (llereinarier called the ~G riev3nce')
ARBITRATOR: W. B. Rayner •
APP EA RANCES: • Fo r th e Un ion: G lenn wi lly
For Ihe Co mpa ny: William !\1cM .. r,..~y
Ilearin l: helll ~t Sa ul l Sle. Marie, Ihe 7" day of April , 2004.
AWAR B
The part;es !O lhis dispule which cen!e '" on the calculation of the payout of the
Profit Based Income Plan. hcn:innrtcr n:fcm:d (0 as lhe PBIP, are Algoma Ccnlml
Railway and the Association afRailway Unions at Algoma Ccntr.lL Before I lllm 10lhe
provisions of lhe collective agreement and the precise nat\lre of the dispute 1 need 10
ollli inc briefly lhe wrporale hislory of the C<:nnpany a< we ll as Ihe hislory llf Ihe PB1P .
Originally a private r.:J.jlway c<Jmpany. Algoma was acquired by Wisconsin C~ntral Rai lway in ]995. On 9 October, 200 t eN Rnil effectively aClluirc:d co,,[rol of Wisconsin
Central and Algoma Ctlllml. Wt,.," Algoma was controlled by Wisconsin cmplQyCCS al
Algom.1 participated in the PiliP payout m"'lc by Wi5C()osin 10 its cmployce$. Bet""«n
1995 and 2000 Ihe payout varied from a low of 3. 1% to 8%. In the ycm 2001 the payout
",';lS 6~•. The "uslom was to make II partial payout in December oflhe year in qu ... tion
with flu announcement of the fll"'[ figu"" in hlluary of the subsc<juenl year and pa)"If ... nl
in Fehn,ary.
For the 2001 yc.1r Algoma employees lI:td 5p<:nt three quarters of tile year working
under Wisconsin before lho: acquisition by eN. llmee eN decidc<lto use 1m, Wisconsin
figures for the final 200\ payout • In 2()O2 the payuullmdcr the pm p made by Algoma 10 ils employees was 5.95·""
This calculation was based on /I formula explained by IeU~r from the Supcrinlendelll o f
Algoma. Mr. Wolnail'!lki 10 the Union and 00 each employt:c. n.c lene. was 5/:nt on • August 16. 2002. It clt:.lrly StJtl:S that the fonnula to be used was as follows: 25'Y. ofthe • "bonus" was to be based on the performance of eN as a whole as Algonm employet:$ I()W
had One rull year under 1he eN urnbnolla. 75% of the amount to be pg.id OIIt was to be
based on the Eastern Oiv;siun "scorecanl.. Although the meaning ofscon..-card·· is
looscly d"'ICril",d in the letle. the pf~~isc defi nition is not import~mt to the issue before
me. What is important is that the Algoma cmplo)'tt§ ",,,'" now included in the Eastern
Division and not as part of Wisconsin Central. In 20021hc Wisconsin Centr.d PBlP came
in at 7",4 nd thus Ih" U!liun claims thatlhe 1'0lP for Algoma ,,",plo)''COi should have
been OO!;(d on Ihe Wis<;ollsill standard. II seek.s payment 10 Ihe employees of lhe 1.05%
diff~7t:nce.
l In order 10 supporl il$ claim Ih" Union ",Iics on IW1> Icl1clli o f llnllcr.o;\anding
which fonn JIIlrt of the collcctive agreement. uller'l is Iongstandi"l: and "'lIS ori~nally
enlcn:ll into by WiilConsin Cen tral. II states in part that the employer agr~s tl) provide \0
e:lch employee D "Profi l Based lrocomc: Plan-in accordance wilh its usual procuces. The
SI.-u>nd letter. Ictter #3 1, is ITIO~ =en\ and <Ill.\es in p.~rt tnat "Wilh regpecl lo U:tler of
UndeTstnnding /1"1, the Profil !lased Income Plan will continue IL'l per the sllltcment orCN • Presillenl 1'. Tellier for calendar year 2002. thereafter gainsharing. bonus I)' incenlive
prow.un~ may be implanc:nled by the ACR 31 its discn:lion."
The Union says thm il entered Ihe 1'fI""'n1 co lll:"live agreement I)n Ille
understanding thai the PSII' would oonlinllC and thai il would be based on tile same
fonnula as the Wis<onsin Cenlral employet:s. Bolh sides agree Ihal Ihe Union was
concerned thalthc PSII' eOllIinue as il iSITIOn: profitable lhan oth.". CN incentive plans. • However the ComJlllny does nOI agret: Ihulthen: was any su ggestion hy it 111.1\ the
calculation ",ould be based on 11\1: Wisconsin figUfl:5. Indeed Mr. McMurray argues with • som" fo= that the Plll"Jll'sc of any incentive plan is to encoumge tmplo~·ce.~ to contribute
to the financial SOCCC!S'l of the company lind thaI it mllk~"S no :sense: 10 tic the ioccntive to
the pc:rformance of Ihe Wiscons in Divi sion Ihm is separate fron, Ihe employ~"C. in
Algoma Cenlral a5 those employ""" cannol affecl the performanc( ofl hc Wisconsin
Divi sion. It is dear that Ailloma Cenlral ha..lx:cn pliICed in tht I.'..nstcm J)i~i sion (sec Ihe
Aug&St 161lo lener refem:d to e:u-lier) and il is also clear that under the managements righl.'l
provision of the agreement, Article 3. Ihc CO ",pilay had the right 10 organi~..c its divi.ions
as il saw til unless lhere WlIS 5I.MT>I' promise made 10 the Union "hich pr~"\IenlS il from 50
dninl!'
J
I 1110; Union ""y~ Ihallh,,,, "01$ such a proonitiC made hy Mr Tellier during a
~lICSlion and nswCr session with employees al Wionsin Ccnlml during Ihe acquisilion •
petiOlI. One must n:memOCr that'" th;,l timc the All,'Oma cmplO)'CCS w.,-e P.1" or
Wisconsin Cenlral. I agree with Company coun..,1 th:,t . when 100""..1 m as a whole. II!>:
lenor of lite oommcnts was lhal various progr.uns would continue: butlhat those progrnms • would be changed or Bdnl'l~-d ",I!>:rc n~'Ceuary. 1M! only commenl of Tellier 111m mighl
assist tbe Union is in response 10 question II which osh his intention with rcSpc:l:1 to
Algoma C~"lraL 11is re:lponSC' was IhlU Algoma .•... Op<:r.lle'S as a IiCparate onit wilhin the
WC nelwor~. There arc no plans althis time 10 Chatlll! lhat. Should Ihis chang~ and
employee'S be affcclro. applicable Canadian """erance bene fils will be a"lilab1e~ • The Company Mglle_ lhallll!: w i"vanc!: i~ l>nlimcJy in Ihal the grievancc was nOI
filro Wltil after II;; Wiscollsill PiliP figure btcamc tOO"'in in February, 2002. and thaI the
Union kllew or oughlto ha,·c known liS early"" August 16, 2002 tllm Algoma W:t.5 to he
j""luolcd in the: EasI~TIl mvision wh,ch is the n:al dispute belWc..,n the panics. s......,nndly it
argues thaI the Un;o" is barred fMIl prl)Cuding because of the prirn:iple of laches.
Because of my eonclu~ion On the meril:l o f tloc case I do nO! nc.,.-d 10 deal w ilh cither of
these arguments. Ilowl:"Cr I wQUld point out lhat tile: Union. "hil wailing 10 s..'C v'hethcr
the Wisconsin Cc ntrJI paynut was snw ller or grelter than the pu),out announced by the
Company. could hardLy be 5I!"fllO have 5lC"pl 00 its righls so as 10 trigger the doctrine of
laches. There certainly is no estoppel crealed as 1 can sec: no detriment suni:red by th~
Company by the Union not grievilill in I\UI:USI. 2002.1 make no comTTI<:nl on lhe
limdinCS!l issue.
, When I lum 10 lhe merits., 1 am un~ble 10 find ~n)'lhing in Tellier'. wmmCllI. Ihal
WO\I!d support Ihe Union'~ p<>'Iition. Whik il is Ime Ihat he said thallh"", Were no plans
to ch:mgc Ihe opcrnlion of Algoma ",,!hill Wisconsin he also indicated lhal !hing,s could
change , There is no specific mentiun of PUll' anywhere in hi s comments. While Lelle, of
Ur><lcm!U1ding /131 makes il clear lhal ?BI? will continue for 2002 there is nothing in that
Letter" hieh requ ires that Allomn. stay within Wisconsin u,nlrnl for the pllrpo!ll:S of • calc ulalinl: PBI P. CcrUinly Tellier ""VeT promi~ that in his c<>mmmts. MOI','Ovcr [
h.a~·c fOWld thallhe Company could h:r.vc been placed in the Eastern Division ",ithoul a
violali"n oflhe aW'e-':llICnl u»d " 'iIS in fact so p laced. II makes sense that with thnt
plll«"ll1Cnt the cakulation of !he ,,"'plo)'1.-.:s' ? BIP should be governed by !he pen()rnlance • of the Division in which they arc placed und w hose performance Iheir d rons con
Influence. •
Accordingly the uicvance is di..mi.o;cd.
• •
J)al~d 111 Gr:m d lIelld, the 14'· d ay of April , 2004.
W. II. R al' ''" ~
,