Northern Exposure

The erosion of employers’ managerial rights

by Mikael Maher

In a recent arbitration case, Tshiuetin Rail Transportation Inc. v. Steelworkers, Local 7065-75, the arbitrator, Bruno Leclerc, and the Superior Court of Quebec challenged a well-established principle in labor relations, which is that an employer retains managerial rights in the absence of limiting provisions in the collective agreement.

In this case, the arbitrator and Superior Court found that the employer had violated the collective agreement although the agreement did not contain a limitation to the employer’s managerial rights in regard to the contested action. Rather, they found that the employer had violated the collective agreement because it did not contain a clear provision that allowed the employer to act as it did. Therefore, the question remains: What is happening to managerial rights, and what measures can employers take to protect these rights?


Tshiuetin Rail Transportation Inc., a federal undertaking, was experiencing a period of financial difficulty, as were many businesses in Québec’s Côte-Nord area at that time. Therefore, the employer decided to unilaterally reduce, for a limited period of time, the hours of work of all regular full-time employees from 40 to 35 hours a week.

The collective agreement applicable to the employees affected by this decision contained a clause stating, in no uncertain terms, that the collective agreement included all limitations to the employer’s management rights. Furthermore, the same  agreement did not contain a specific provision restricting the employer’s right to temporarily reduce its employees’ hours of work.

The union nonetheless challenged this temporary reduction of its members’ hours of work by filing both individual and collective grievances, and the union prevailed.


The arguments presented by each of the parties were fairly straightforward. The union argued that the employer violated the collective agreement because, by unilaterally reducing the hours of work of regular full-time employees, it converted their status from “regular full-time employees” to “regular part-time employees” and modified their working conditions, including their wages, all in one stroke.

The employer alleged, among other things, that it could temporarily reduce the employees’ hours of work because the collective agreement did not limit in any way its management rights in this regard.

The arbitrator decided in favor of the union. His reasoning relied on the rules applicable to the interpretation of contracts, according to which the clauses of a collective agreement must be interpreted in relation to one another. The arbitrator thus decided that a “regular full-time employee” is in fact an employee whose standard workweek is 40 hours a week and such an employee is entitled to receive remuneration corresponding to that number of hours of work per week.

The arbitrator concluded that by reducing their hours of work from 40 to 35 hours a week, the employer effectively changed the employees’ status and remuneration and did so in violation of the collective agreement since it did not contain any clause that authorized the employer to do so.

The Superior Court of Quebec upheld the decision of arbitrator Leclerc. It concluded that his decision was reasonable, particularly in finding that no clause in the collective agreement authorized the employer to reduce the employees’ hours of work.

In support of this finding, the court distinguished the present case from prior decisions where the courts and tribunals had accepted the employer’s unilateral decision to reduce its employees’ working hours. In one decision, the parties had anticipated that a full-time employee would “normally” work a certain number of hours per week and thus did not guarantee this number of hours, while in another case, the parties had specifically provided that there was no guarantee regarding the number of hours or days of work, despite the fact that the regular workweek was defined as including a specific number of days and hours.


The decisions in this case can be seen as a warning sign for some employers when they are negotiating and drafting their collective agreements. Indeed, in our view, the reasoning in this case appears to be contrary to the usual principles of labor relations, because the question was not whether the collective agreement restricted the employer’s managerial rights regarding hours of work, but rather whether it contained a clause that specifically allowed the employer to do so.

Employers should therefore be mindful and take notice that such an interpretation is possible. Therefore, when drafting collective agreements, it is important to anticipate situations of financial hardship, which may arise in an unpredictable manner, and specifically provide that certain working conditions, such as a number of hours of work per day and per week, aren’t guaranteed and may change in such circumstances.

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