R. HERMAN ARBITRATION/MEDIATION INC.

Transcription

1 R. HERMAN ARBITRATION/MEDIATION INC. 729 Briar Hill Avenue Toronto, Ontario M6B 1L6 Telephone Facsimile April 1, 2013 Mr. R. Graham Williamson Koskie Minsky Suite 900, Box Queen Street West Toronto ON M5H 3R3 Mr. Jeffrey D. A. Murray Stringer LLP Barristers & Solicitors 110 Yonge Street, Suite 1100 Toronto ON M5C 1T4 SENT BY REGULAR MAIL AND Dear Sirs: Re: Ontario Painting Contractors Association and International Union of Painters and Allied Trades; Interest Arbitration Enclosed is my Award, dated today, together with my account. Would you please forward them to the appropriate individuals. Yours truly, Robert J. Herman RJH/ss Encl.

2 IN THE MATTER OF AN INTEREST ARBITRATION BETWEEN: ONTARIO PAINTING CONTRACTORS ASSOCIATION ( OPCA ) -AND- INTERNATIONAL UNION OF PAINTERS AND ALLIED TRADES AND ONTARIO COUNCIL OF THE INTERNATIONAL UNION OF PAINTERS AND ALLIED TRADES ( IUPAT ) ARBITRATOR ROBERT J. HERMAN APPEARANCES FOR OPCA JEFFREY D. A. MURRAY PAUL BUZZIN THOMAS CORBETT ANDREW SEFTON FOR IUPAT GRAHAM WILLIAMSON JOHN O GRADY KEVIN ELLIOT MICHAEL COLAFRANCESCHI KEN REID KEN BURLEY A HEARING WAS HELD IN THIS MATTER IN TORONTO ON MARCH 15, 2013

3 A W A R D 1. OPCA and the Acoustical Association Ontario and the Interior Systems Contractors Association of Ontario collectively constitute the Employer Bargaining Agency and IUPAT is the Employee Bargaining Agency for purposes of negotiating a Provincial Collective Agreement (the Provincial Agreement ) in the Industrial, Commercial and Institutional ( ICI ) sector of the construction industry. OPCA and IUPAT are responsible for negotiating the renewal of Appendix A of the Provincial Agreement, which is the subject of the instant interest arbitration. 2. On November 12, 2012, the parties signed a Memorandum of Agreement (the Memorandum ) that included an agreement to refer to mediation/arbitration any disputes remaining after negotiations for the renewal of Appendix A. Pursuant to that agreement, two issues that were not resolved during bargaining have been referred to me for mediation/arbitration. Mediation took place during the morning of the hearing but was unsuccessful and the issues in dispute were accordingly arbitrated. 3. The Memorandum stipulates that the arbitration shall be by final offer selection on an issue by issue basis and that an Award issue within 30 days of the final submissions of the parties. It also sets out a number of criteria to which the Arbitrator shall have

4 2 regard, including changes in the Consumer Price Index ( CPI ) between May 13, 2010 and the date of the hearing and economic conditions in the construction industry at the time of the hearing. It also states that the Arbitrator shall not have regard to collective agreement renewals outside the construction industry in Ontario and notes that the Arbitrator shall settle the disputes in a manner which would have been achieved by the parties in negotiating a provincial agreement had they resorted to a strike/lockout dispute resolution mechanism rather than interest arbitration. 4. An interest arbitrator should attempt to replicate the bargain the parties would have reached if they had successfully concluded a Provincial Agreement through negotiation, to select terms that the parties themselves might likely have agreed upon. Such terms are most commonly those that fall within the normative range of terms in comparable sector collective agreements. For this reason, generally speaking, interest arbitration should not be a mechanism or process that results in breakthrough provisions, provisions that represent significant variance from common or customary provisions negotiated previously by the same parties or by other parties in the relevant industry, sector and geographic location. Of course, any attempt to replicate the results of bargaining may be somewhat constrained by the requirement in a final offer selection process that one of the proposals in its entirety must be selected without amendment, as it may be that both competing proposals contain terms that the parties might not themselves have negotiated and that an arbitrator might not otherwise impose. At the

5 3 same time, the proposal that contains the most significant structural or entitlement changes or provides for compensation well below or above industry and trade standards may be less attractive. 5. The two issues referred to arbitration are monetary increases and overtime rates. Monetary Increases 6. I do not propose to refer to or summarize all the arguments or submissions of the parties, as they are set out in detail in their respective Briefs. 7. For across-the-board compensation increases (i.e. wages and benefits) over the three years of the new Provincial Agreement, IUPAT proposes for all locals for industrial work increases of 2.50% as of May 1, 2013, 2.50% as of May 1, 2014, and 2.30% as of May 1, 2015, for a compounded total increase of 7.48%. For commercial work, it proposes for Local 557 (Toronto and Oshawa) and Local 1671 (Thunder Bay) increases of 2.25% as of May 1, 2013, 2.10% as of May 1, 2014, and 2.00% as of May 1, 2015, for a compounded total of 6.49%, and for commercial work for all other locals, increases of 2.10%, 1.90% and 1.90% as of the same dates, for a compounded total of 6.02%. 8. OPCA s proposal is designed to move substantially towards standardized compensation levels in what it describes as the regional markets of Northern Ontario, Central Ontario, Eastern Ontario and Western Ontario. While the average increases it proposes across the three contract years will total 6.99% for commercial and 6.82% for

6 4 industrial, with a combined overall average of 6.91%, in order to narrow substantial current compensation differences within different locals in a proposed regional market, it proposes that a number of locals receive total increases of only 5.30% while others receive increases as high as 9.49%. More specifically, OPCA proposes the following total percentage increases over the three contract years: Grand Valley Commercial 9.49% Industrial 9.49% Hamilton-Wentworth Commercial 9.49% Niagara Region Industrial 9.49% London Commercial 5.57% Industrial 5.52% Kingston Commercial 5.30% Industrial 5.30% Ottawa Commercial 6.75% Industrial 6.64% Sarnia Commercial 5.30% Industrial 5.30% Sault St. Marie Commercial 7.99% Sudbury District Industrial 6.38% Thunder Bay Commercial 5.30% Industrial 5.30% Toronto Commercial 5.30% Oshawa Industrial 5.30% Windsor Commercial 9.49%* Industrial 9.49%*

7 5 (* OPCA advised that although its Brief indicates that the increases proposed for Windsor are 9.46%, this figure resulted from an Excel rounding error in preparing the Brief, and that the correct proposed percentages for Windsor should be 9.49%, as set out above) 9. IUPAT notes that the CPI for Ontario increased by 4.8% over the three years of the expiring agreement (if the figures from May 2010 to January 2013, the most recently available month of data, are prorated for the 36 months up to the expiry date of the current Provincial Agreement, April 30, 2013). It compares this 4.8% increase to compensation increases received by Painters over the same period, which averaged 6.00% for commercial and 7.51% for industrial, arguing that increases greater than CPI increases are the pattern and are appropriate. With respect to projected CPI increases over the term of the new Provincial Agreement, it notes that different authorities predict increases in the CPI ranging from 1.1% to 2.2% per year and it therefore asserts that a total 6.0% increase in the CPI over this period is most likely to occur. IUPAT refers to a number of recent Ontario settlements for other trades in the construction industry: 7.5% to 8.5% for the IUOE, 7.75% for the Ironworkers, and 7.5% to 8.3% for the Labourers (depending on the Board Area). It submits that the Carpenters have resolved monetary increases for most Board areas, and given the positions taken at interest arbitration by the parties to the Carpenters Provincial Agreement for those Board Areas still in dispute, the increases for Carpenters will range between 7.5% and 8.3%. IUPAT points out that these construction unions will therefore all receive (through

8 6 negotiations or interest arbitration) larger increases under their new Provincial Agreements than they received under their expiring agreements. Accordingly, it submits, there is a demonstrated and universal pattern for increases this time that are greater than those received during the last round, reflecting a general consensus that the construction industry is in better shape now than it was when the prior agreements were settled. For Toronto and Thunder Bay, IUPAT argues, the industry is forecast to significantly grow over the next three years, justifying larger increases in those areas. 10. IUPAT notes that the net real increase its members received for performing commercial work over the last three years was 1.3% (6.1% average compensation increase less the CPI increase of 4.8%) and for performing industrial work it was 2.7% (7.5% average compensation gain less the CPI increase of 4.8%). It asserts that its proposal is designed to generate a similar modest real compensation gain over the next three years, since the projected CPI increase is 6.0% and it is proposing (when rounded off) increases of 6.0%, 6.5% and 7.5%. Finally, IUPAT acknowledges that the actual new dollar figures it proposes include application of the requested percentage increases to industry fund contributions, which application OPCA opposes, and IUPAT concedes that the actual figures should therefore be adjusted to reflect that the percentage increases are not to be applied to those contributions. 11. OPCA opposes the compensation increases proposed by IUPAT, arguing that they are too large and are not justified, whether on the basis of past increases or current

9 7 sector conditions and projections. It notes that compensation increases have tracked the CPI quite closely over the last five provincial agreements and there is no reason to assume the parties would not have done so again, had they been able to settle this issue through negotiations. In support of its own proposal, OPCA states that it is designed to establish a relatively harmonized compensation structure within the four geographic areas into which OPCA divides the province, OPCA asserting that each such area describes a relatively coherent local market. It argues that continuing the existing compensation differences in the ten different locals is at variance with the way the industry actually works and will continue to result in competitive difficulties. It submits that the ten areas no longer represent distinct markets and have over time become parts of larger regional markets, and it seeks with its proposed increases to eliminate (or largely eliminate in some regional areas) the disparity of compensation within each of the four regional markets. As to the appropriate level of increases, OPCA submits that its proposed increases will either preserve or improve real compensation for the vast majority of Painters when compared to projected increases in the Consumer Expenditure Price Deflator ( CPD ). The CPD is a better measurement of the future state of the economy, submits OPCA, because it is a measure of consumer price inflation, and is therefore of more assistance in predicting future purchasing and costs levels. Based upon projected CPD increases for the next three years, OPCA submits, the increases in its proposal range from 1.2% lower than CPD increases to 3.34% higher, depending on the particular provincial region a local falls within and the local s current compensation

10 8 rates when compared to other locals within the same region. It notes that historically negotiated increases for Painters have been lower than settlements of the other trades and asserts that growth in the unionized painting industry has been stagnant compared to growth in other trades during the period from 1994 to OPCA emphasizes that its proposed increases will provide increases for the vast majority of Painters consistent with the historic pattern of increases that equal or exceed projected increases in the CPD. 12. It appears that while compensation increases for these parties have historically closely tracked increases in the CPI, in more recent years the monetary increases received have actually been greater than CPI percentage increases. For example, the percentage increase in the CPI for 2009 was 4.86% and compensation increases for Painters that year averaged 7.33%, and in 2012 the percentage increase in the CPI was 6.38% and compensation increases for Painters averaged 6.91%. While it is difficult to predict future CPI increases, the projected increase of 6.0% over the three contract years predicted by IUPAT is reasonable, given the existing data and the models and assumptions of the various agencies or entities that have predicted CPI increases and the size of their predicted increases. I prefer the predictions based upon CPI increases rather than CPD increases because of the long track record of institutions following and predicting CPI increases, the nature of the institutions that look to the CPI rather than the CPD, the historical relationship between Painter compensation increases and the CPI (and not the CPD), and the fact that these parties agreed in the Memorandum that it is

11 9 the CPI that must be taken into account between May 2010 and the date of the hearing. The recent relationship between compensation increases and CPI increases over the last two contracts suggests that compensation increases under the new agreement should be greater than 6.0% over the three contract years. 13. OPCA argues that the unionized painting industry has stagnated compared to other trades and that this reality has strongly influenced the parties negotiations over compensation increases. Certainly, the data demonstrates that the overall work for Painters under the Painters Appendix has not grown as quickly or as materially as has the amount of work performed by other unionized construction trades workers between 1994 and However, since 2009 unionized painting work has increased every year and has increased in total by approximately 18%, an increase in painting work that can be considered significant. Given the recent steady improvement in the health of the Painting industry and the amount of painting work of being done under the Appendix, it is likely that the parties would have agreed in negotiations to material increases in compensation. Indeed, the competing proposals both seem to recognize this, for they both propose substantial compensation increases and are not far apart when their respective proposals for compensation increases are averaged across the commercial or industrial sectors. Thus, IUPAT requests an average industrial increase of 7.48% while OPCA proposes an average increase of 6.82%, and IUPAT proposes an average commercial increase of 6.02% or 6.49%, varying between Toronto and Thunder Bay and

12 10 the rest of the province, and OPCA proposes an average increase of 6.99%. Both parties propose increases that within the relevant sector are only approximately.7% to.9% apart over the entire three years in issue, and if projected CPI increases of 6.0% are accurate, both hold views that appropriate increases should be somewhat above projected CPI increases. 14. Negotiated increases by other construction unions for renewal of their provincial agreements are also of particular relevance. Compensation increases as of the date of the hearing for other construction unions for their new provincial agreements range from approximately 7.5% to over 8.0%. As well, all other negotiated construction industry increases as of the date of the hearing have resulted in larger percentage increases than were received by the union in question during the term of their prior provincial agreements, suggesting a general acknowledgment in the industry that higher increases than last time are now appropriate, an approach consistent with much of the provided data. 15. In this context, IUPAT s proposed increases fall within the reasonable range. Over the last agreement, percentage increases averaged about 6.0% in commercial and 7.51% in industrial. The averaged increases proposed by IUPAT are less than received by other trades to date (consistent with the historical pattern in this respect), are of approximately the same amounts as received in the previous round (even though the current trend is for higher increases this round), and provide for a modest gain above

13 11 CPI increases, reflecting the trend in the last few bargaining rounds for Painters. While I am not persuaded of the proffered justification for a higher increase for Thunder Bay (a projected increase in the amount of work in Thunder Bay), the increases proposed by IUPAT are structured in the pattern historically utilized by the parties, including that Toronto and Thunder Bay receive increases different than the rest of the province. Overall, IUPAT s proposal does not require the adoption of any breakthrough changes and falls within the normative range of compensation increases for Painters, given the recent increase in work for Painters, current and projected economic data, negotiated compensation increases in previous rounds, particularly more recent ones, and recently negotiated compensation increases for other construction unions in the ICI sector for the same period. It is a reasonable proposal that in light of comparable settlements might well have been agreed upon by the parties had there been the threat of a strike or lockout or had an actual strike or lockout taken place. 16. I am not persuaded that the same can be said about OPCA s compensation proposal. The increases of 5.30% proposed for some locals are below normative ranges while the large increases proposed for other locals are greater than can be justified on the basis of customarily relevant factors, such as historical patterns, economic conditions, and comparator construction industry increases. As well, OPCA justifies the disparity in size of the proposed increases upon the need to achieve regional harmonization, but I am unable to verify on the data before me that the proposed four

14 12 regional markets in fact actually operate coherently within each proposed region. 17. Significantly, the Employer s request that the province be reconfigured for compensation package purposes on the proposed regionalized basis represents a departure from the approach historically taken by these parties when negotiating increases. While the parties have previously negotiated different increases for Toronto and Thunder Bay, there is no history of movement towards the regionalization sought through this interest arbitration. Nor am I able to discern whether this issue was even raised during bargaining, in this or any prior round of bargaining. Whether it was or not, for an interest arbitrator to impose the requested regional harmonization and the accompanying high compensation increases for some locals and relatively low compensation for others must be considered a breakthrough item, and I consider it unlikely that the parties would have negotiated such changes or agreed to such changes to avoid or end a strike or lockout. 18. As noted, I am required to select one of the proposed compensation increases in its entirety. Because IUPAT s proposal falls within the normative range while OPCA s does not for the reasons expressed above, I select IUPAT s proposal, adjusted to reflect that there should be no increase applied to industry fund contributions. Overtime Double Time

15 OPCA proposes the elimination of double time overtime and its replacement by time and a half for industrial work on Saturdays, Sundays and holidays in Hamilton, Sarnia and Thunder Bay. It argues that in these geographic areas the continuing requirement that those contractors bound to the Provincial Agreement pay double time for such work places them at a significant competitive disadvantage relative to non-union contractors. More particularly, OPCA submits, double time creates a competitive bidding disadvantage and results in punitive losses where unplanned and unavoidable overtime is needed on industrial jobs. 20. IUPAT notes that double overtime has been paid for industrial work in Sarnia and Thunder Bay without break since With respect to Hamilton, double time was paid for Saturdays, Sundays and holidays from 1986 until 1994, when the parties agreed to reduce it to time and a half, which was the rate paid during the terms of the three provincial agreements from 1994 to In 2004, however, the parties agreed to reinstate double time overtime for industrial work in Hamilton for weekends and holidays. IUPAT submits that it would be a breakthrough item to reduce the overtime to time and a half when the parties themselves have a long unbroken history of double time for two of the three areas in question and for the third, Hamilton, they reinstated double time themselves. It asserts that OPCA has not made any application to the Ontario Labour Relations Board pursuant to Section of the Act, which allows parties to seek local area amendments to overtime rates, amongst other matters, nor has

16 14 it utilized Article 34 of the Appendix A, that allows for amendments to remove competitive disadvantages and to recover market share. It maintains that OPCA cannot be that concerned about the double time when it declined to utilize procedures available to it to seek changes in the rates. IUPAT also notes that the prevailing pattern for overtime rates on Saturdays, Sundays and holidays for other construction unions is for payment at double time, and that in some agreements where double overtime is not required for all locals, it is nevertheless still paid in Hamilton, Sarnia and Thunder Bay. 21. OPCA does provide some evidence of the competitive need for its requested change and of examples where utilizing the market recovery provisions of the Provincial Agreement proved fruitless, evidence that was not refuted by IUPAT and which I accept as accurate. I consider it likely that the maintenance of double time for industrial work in the three locals in question in part at least creates a competitive disadvantage on some occasions for unionized contractors. 22. Nevertheless, it remains true that the parties themselves for many years have agreed to double time for industrial work in all three locals. The parties turned their minds to amending the rates in 1994 and yet they only amended the overtime rates from double time to time and a half for Hamilton, maintaining double time for Sarnia and Thunder Bay, and for Hamilton they then amended the double overtime rate back into the agreement in 2004, where it has remained since. In the result, for Sarnia and Thunder Bay the weekend and holiday overtime rate has remained at double time since

17 and when the parties in relatively recent times turned their minds to the appropriate rate for Saturdays, Sundays and holidays overtime, they either decided to continue to maintain the rate at double time or reduced it for Hamilton only for a number of provincial agreements, only to more recently agree to reintroduce it there. Again, I am unable to determine whether this issue was raised in bargaining. Further, the evidence simply does not establish a demonstrated need for change that has arisen since the parties themselves reintroduced the double time rate for Hamilton and chose to maintain it for Sarnia and Thunder Bay. 23. Double time on Saturdays, Sundays and holidays is the prevalent pattern in the construction industry, and even where it is not generally the applicable rate, in a number of agreements it is still the rate applied to work in Hamilton, Sarnia and Thunder Bay. 24. Given the bargaining history and the absence of a compelling case that recent material changes in the three local economies now require a reduction in the rates, it is unlikely that the parties would have bargained for a reduction in this rate for the three locals. As well, the selection of OPCA s proposal would introduce rates that are at odds with normative provisions for Saturday, Sunday and weekend overtime rates, both for these parties and across the industry. In these circumstances, to select OPCA s proposal would be to impose a breakthrough item, and I decline to do so. I therefore select the proposal of IUPAT that there be no change to the Article in question. 25. I remain seized for any matters arising from the referral to arbitration or this

18 16 Award, including any remedial issues. Dated at Toronto this 1 st day of April, 2013 Robert J. Herman - Arbitrator