December 18, 2009                  Issue No. 31

WHERE UNION AGREES TO LOW WAGE INCREASE, RESTORATION TO NORMATIVE LEVELS WILL BE GRADUALIZED, ARBITRATOR RULES

 The Facts:

After municipalities in the Toronto area amalgamated and formed the City of Toronto in 1998, salary increases for firefighters were established by an interest arbitration board chaired by Martin Teplitsky. However, while all firefighters from the former municipalities were eventually brought to the same salary level, Etobicoke firefighters did not achieve full parity with the other firefighters until January 1, 2001. The Etobicoke firefighters maintained that full parity should have been awarded to them in 1998, thus entitling them to greater retroactivity.

Litigation ensued between the Etobicoke firefighters, the Toronto Firefighters' Association and the City of Toronto. The action was settled by an agreement to refer the issue to the original interest arbitration board.

The Arguments: 

The Etobicoke firefighters requested that their salaries be increased, as of 1998, to equal those of the other firefighter groups in Toronto, each of which was awarded the same wage rate in 1998. In the alternative, they submitted that full parity with the other firefighter groups in Toronto should have been achieved earlier than January 1, 2001. While they accepted that the Board's decision was a discretionary one requiring consideration of many factors, it was the Etobicoke firefighters' position that "the most important factor, which should prevail over all others, was pay equity; that is, all firefighters in Toronto should earn the same rate of pay, at the first opportunity, i.e. 1998, regardless of their earnings pre-amalgamation or any other factor." 

The City did not agree.

The Decision:

 The interest arbitration board, chaired by Martin Teplitsky, reconvened, seven years after it had originally sat, and considered the matter de novo (afresh), but it unanimously denied the Etobicoke firefighters' request.

The chair accepted that pay equity was an important factor, but declared that it was not the only factor to be considered: "There are other factors which must be taken into account, one of which, in this Board's opinion, is the dynamic of collective bargaining which may, depending on the circumstances, call for incremental change in working conditions and gradualized improvement in wages." Elaborating further on the role of gradualization in the collective bargaining process, the chair stated: "Gradualization reflects the collective bargaining reality that catch-up may not be achieved all at once, rather over a period of time, in situations where employees have through their own negotiations placed themselves in a position from which they subsequently seek to be relieved."

In this regard, the chair found that the salaries of the Etobicoke firefighters "fell behind" in the circumstances at hand because of the give-and-take of collective bargaining: "[T]he Etobicoke firefighters accepted 0% in 1996 and 0% in 1997 – a lower settlement than they otherwise would have achieved – to secure a particular goal in bargaining. They could not reasonably expect their salaries to be restored fully the following year because the effect of immediate restoration would be to deprive the employer of the benefit of its bargain, which involved an ongoing cost. In the ordinary course of bargaining, this self-created falling behind would have been gradually redressed over several years."

"Employees should neither benefit nor be harmed by amalgamation," the chair stated, pointing out that to grant the Etobicoke firefighters' request for immediate full parity in 1998 would result in giving them a benefit that they would not have achieved otherwise: "To award an increase in 1998 of more than 5% to Etobicoke firefighters to bring them immediately to full parity with other firefighter groups in Toronto would have given them a benefit from amalgamation that they would not have achieved in free collective bargaining."

Striking the appropriate balance between "the competing interests of parity and respect for the collective bargaining process," the board denied the request of the Etobicoke firefighters, ruling that "incremental catching-up of the Etobicoke firefighters is consistent with sound labour relations and with prevailing collective bargaining practices. The alternative, a windfall, would be inconsistent with sound labour relations."  

Comment:  

This interest arbitration turned, in part, on the issue of replication – that is, the board should seek to award a collective agreement as close as possible to what would likely have been achieved through collective bargaining had that been possible. In this regard, once the Etobicoke firefighters accepted a lower wage increase in return for an (unspecified) collective bargaining gain, the die was cast.

Case Name: Toronto Professional Firefighters Association and Certain Firefighters of the Former City of Etobicoke v. Corporation of the City of Toronto

Jurisdiction: Ontario

Proceeding: Interest Arbitration

Arbitrator: Martin Teplitsky, Chair

Date: June 18, 2009

Full Text: http://onlinedb.lancasterhouse.com/images/up-Teplitsky_TorontoFF.pdf