In the last several months, we have posted several blog entries detailing how employers can reduce employment costs and/or increase workforce flexibility in these tough economic times. We have talked about furloughs, work-sharing programs, changing employment contracts, adjusting the size of the workforce and reducing employees’ hours of work.
But all of these discussions have been in the context of nonunion workplaces. What about a unionized workplace – do employers have the same flexibility to reduce hours, shorten the workweek, impose work-sharing programs or set up other cost-saving measures? The answer depends.
Of course, if the collective agreement directly permits or prohibits a certain type of cost-saving program, the answer will be in the language of the collective agreement.
But many collective agreements do not deal with these types of specific situations. In these cases, in the face of a shortened workweek, a reduction in hours of work, or a work-sharing program, a union may file a grievance claiming that the employer has breached the layoff provisions of its collective agreement. Arbitrators are therefore left to determine whether the layoff provisions of a collective agreement have been violated.
The good news is that not all reductions in hours, shortened workweeks, or other cost-saving measures that result in fewer hours for employees constitute layoffs. In determining whether the layoff provisions of a collective agreement have been violated, arbitrators will consider the following factors:
- The nature of the management rights clause. If the management rights clause gives the employer the exclusive right to schedule work, establish hours, establish shifts, limit operations, etc., the employer will have a better chance of implementing one of these types of cost-saving programs.
- Whether there are any other provisions of the collective agreement that limit management’s general or specific authority. If the collective agreement says that one of the cost-saving programs outlined above can only be implemented on agreement of the union, for example, that would limit the employer’s ability to unilaterally do so.
- Whether the action is temporary. If a shortened workweek is introduced temporarily, to deal with a temporary reduction in work, for example, an arbitrator is more likely to support the shortened workweek. If such a program starts to look like the new norm, the arbitrator will be less inclined to support it.
- Whether the cost-saving program is implemented across the board. A temporary reduction in hours that affects all members of the bargaining unit is more likely to be given the arbitrator’s seal of approval. Cost-saving programs that affect only a few (which may affect the relative seniority of only those few) are less likely to be supported.
- The reason for the action. Cost-saving measures implemented for valid business purposes are more likely to be permissible.
- Whether the cost-saving program was implemented in good faith. If there is any sense that the employer implemented the program in bad faith or to defeat seniority protections, the program is less likely to be acceptable.
Although there may be less flexibility for cost-saving programs in a unionized workplace, depending on the language in your collective agreement, you may still have some. If you determine that your collective agreement gives you some flexibility and you decide to implement one of these cost-saving programs, we suggest that you:
- Clearly document the business reason for the change.
- Clearly document that the change is meant to be temporary, including the proposed end date.
- Where possible, implement the change across the board.
By taking these steps, you should insulate yourself from a negative decision by an arbitrator and, hopefully, complaint by the union.
