B E T W E E N:

CANADA POST CORPORATION

                                                                                                                         ("the Corporation")

- and -

CANADIAN UNION OF POSTAL WORKERS

                                                                                                                                  ("the Union")

AND IN THE MATTER OF NATIONAL POLICY GRIEVANCE N00-03-00004

ARBITRATOR:    Kenneth P. Swan

APPEARANCES

For the Corporation:

Chris Wartman, Counsel
Jacques Mongeon, Officer, Grievance and Arbitration

For the Union:

Bernard Philion, Counsel
Donald Lafleur, 4^th National Vice-President
Jean-Claude Girard

AWARD

                              A hearing in this matter was held in Ottawa, Ontario on March 2, 2005. At the

outset of the hearing, the parties were agreed that the Arbitrator had been properly appointed from the

National list of arbitrators to hear and determine the present grievance pursuant to the formal

arbitration process.

                              The grievance, which was filed on February 12, 2004, is as follows:

The Canadian Union of Postal Workers grieves that the
Corporation has violated Article 17, Appendix "V" and
other articles and appendices of the Collective Agreement
in that it has implemented a policy, which provides that the
payment identified in Appendix "V-3" will not be paid
when an uncovered route is covered pursuant to the
provisions of clauses 17.04 and 17.05.

                              To those unfamiliar with the complexities of the collective agreement between

these parties, the grievance no doubt will seem rather cryptic. To make this Award more

understandable, I shall attempt a brief explanation of what is involved.

                              Letter carrier routes are subject to the Letter Carrier Route Measurement

System, a time and motion study program that assesses the routes in light of the standard times

required to carry out the procedures of delivering mail. A full-time route is 480 minutes of assessed

time, and letter carriers who work on routes assessed at that level or less are paid normal wages for

completing the route. Where the route is assessed at more than 480 minutes, Appendix "V"(3) comes

into operation. Prior to the negotiation of the current collective agreement, that which expires on

January 31, 2007, that provision read as follows:

- 2 -

OVER-ASSESSED ROUTES

1.     The Corporation agrees to a payment system for letter carrier routes assessed in excess of four hundred and eighty (480) minutes.

2.     Straight time payment will commence only when the over-assessed route is triggered at four hundred and eighty-five (485) minutes or above.

3.     The employee who is the regular employee on the route, or the employee who is on the route for the majority of the month shall receive the full over assessment payment for the month. Relief employees are excluded from the requirements of clause 7 of this appendix.

4.     The over-assessed route will detrigger when the over-assessment falls below four hundred and eighty-five (485) minutes.

5.     Payment

The incumbent of the route will be paid retroactively, either six (6) months or the length of time on the route, whichever is less for full minutes that the route is over-assessed.

Each subsequent payment will be made on a monthly basis.

6.     The payment for over-assessed routes will be for all full minutes over four hundred and eighty (480) provided that the route has been triggered.

7.     In order to be eligible for retroactive payment, the regular incumbent of the route must be on the route when the over-assessed route is triggered.

...

- 3 -

                              After the conclusion of the new collective agreement now in force, the amended provision now reads as follows:

OVER-ASSESSED ROUTES

1.    The Corporation agrees to a payment system for letter carrier routes assessed in excess of four hundred and eighty (480) minutes.

2.    Straight time payment will commence only when the over-assessed route is triggered at four hundred and eighty-five (485) minutes or above.

3.    The payment shall be paid to employees who have worked on the route, based on the number of days worked by each employee.

4.    The over-assessed route will de-trigger when the over-assessment falls below four hundred and eighty-five (485) minutes.

5.    Payment

When a route assessment reaches the four hundred and eighty-five (485) minute trigger or more, employees who have worked on this route shall be paid retroactively for each full minute that the route is over-assessed. However, the retroactive period shall be limited to six (6) months.

Each subsequent payment shall be made on a bi-weekly basis.

6.    The payment for over-assessed routes will be for all full minutes over four hundred and eighty (480) provided that the route has been triggered.

                              In most cases, the employee working an over-assessed route will be the regular

employee on the route. When that employee is absent, his or her place will normally be taken by a

relief employee, who will be assigned to that route for full days as required until the regular employee is

able to return. Clauses 17.04, 17.05 and 17.06 of

- 4 -

the collective agreement, however, provide for the coverage of routes in circumstances where there is

no relief letter carrier either available or willing to cover the route. Clause 17.06, which deals with the

coverage of known absences of five working days or more, does not present a problem in the present

context, since it results in employees being assigned to the route for full days at a time.

                              Under 17.04 and 17.05 however, where there are no unassigned letter carriers or

relief letter carriers to take over the route on a full-day basis, the collective agreement provides for

coverage of the route by increasing hours for part-time employees up to eight hours per day, or by

overtime by full-time or part-time letter carriers as required. Under clause 17.05, the number of

volunteers available determines the number of hours that will be assigned to each volunteer. Under

paragraph 17.05(a), the assignment may be split into four portions of one hour and 45 minutes, three

portions of two hours and 20 minutes, or two portions of three hours and 30 minutes. Each volunteer is

then guaranteed work for the designated portion of the assignment at an overtime pay rate of time and

one-half. Under paragraph (b), however, where there is only one volunteer, the volunteer may select

either a block of one hour and 45 minutes, of a block of three hours and 30 minutes. The remainder of

the assignment is then covered by other means, typically temporary employees.

                                Therefore, under clauses 17.04 and 1.7.05, employees are likely to be working

not a full shift, but one-quarter, one-third or one-half of a full shift to cover the absence, and at least to

some extent this coverage will be provided at overtime rates. The Corporation has taken the position

that item 3 of the amended Appendix "V"(3), which says that employees will be paid "based on the

number of days

- 5 -

worked" does not provide for payment of partial days. As a result, therefore, it has not paid any part of

the over-assessed route payment to employees who are assigned under clauses 17.04 and 17.05 to

work a portion of a shift during the absence of the employee who normally holds that assignment. The

Union objects to this interpretation, and has filed the present grievance.

                                The parties were able to agree on certain matters in relation to the negotiating

history surrounding the. amendment of Appendix "V"(3) in the last round of bargaining. Leading up to

the negotiations, the Union published its "Program of Demands" which included, as item #86, the

following:

Payment for over-assessed routes to trigger at 480 minutes. Employees who perform the work will receive the over assessed payment.

                                On May 23, 2003, the Union provided language to the Corporation which

included a proposed. amendment to item 3 of Appendix "V"(3) in the form which was ultimately

adopted, as well as a proposal to amend item 5. On May 27, 2003, the Corporation provided a

"comprehensive framework for settlement" to the Union, in which, in paragraph 28, it made a number

of proposals entitled "Housekeeping". Among these provisions were "administrative amendments

already proposed" to Appendix "V"(3)

                                The reference to housekeeping changes already proposed in the Corporation's

comprehensive framework arises from a document dated January 17, 2003. Some changes were

proposed there to Article 35, which made administrative reference to the payment of the

over-assessed route payment, without affecting anything at issue in the present arbitration. The changes

proposed to Appendix "V"(3) appear to be only to

- 6 -

change the payment cycle in the second paragraph in item 5 to biweekly from monthly, and a

parenthetical addition to the original version of item 3 which states "(This clause needs revision)". There

is a note at the bottom of this document as follows:

The aforementioned collective agreement language represents a "housekeeping"/administrative change which is agreed to by the parties without prejudice to their ability to suggest further changes to it which may be required to effect the resolution of other demands that are currently at issue between them.

                               On July 24, 2003, the parties signed off a revised version of the Appendix in the

same terms as it now exists. This version includes, as can be seen, both the "housekeeping" change to

the payment cycle in item 5 and the Union's substantive change to items 3 and 5.

                               The Union argues that, quite simply, its objective in amending the Appendix was

to ensure that, rather than all of the over-assessed route payment for one month going to one

employee, who might not have worked anything like the full month, the over-assessed route payment

should be divided among the employees who actually performed the work. It argues that the language

which it proposed for item 3 achieves that purpose, in that the reference to employees being paid for

"the number of days worked can logically include fractions of days, whether one-quarter,. one-third or

one-half of a day as required by clause 17.05. The Union argues that items 5 and 6 of the Appendix

clearly indicate that, where the parties intended that it was required to identify a full minute of

over-assessment in order to be paid for that minute, they knew how to draft language that would

specify that result. If they had intended that only full days

- 7 -

would be paid under item- 3, then they would certainly have used similar language in order to achieve

the result for which the Corporation now argues.

                               Moreover, the Union introduced evidence through its 4t1' Vice-President, Mr.

Donald Lafleur, that under Article 15, which specifies payment for overtime, despite the use of the

expression "for all hours worked", employees are paid to the minute for the exact time worked. Mr.

Lafleur's evidence was not contradicted. In such an important clause, the Union argues, the parties

have interpreted the expression of a period of time as including fractions of that period of time as well.

Thus, the Union's proposed interpretation of "days worked" in item 3 of the Appendix is consistent

with the interpretation assigned to "hours worked" elsewhere in the collective agreement.

                               The Corporation's argument is three-fold. First, based on the language of the

collective agreement, it argues that the Union's interpretation is simply incorrect. It refers to the use of

the word "day" in paragraph 14.02(c), and to the definition of "working day" in clause 36.11. I note

that neither of these provisions offers a definitive meaning for the word "day" standing alone, and that

paragraph 14.02(c) offers no definition at all.

                               It also argues that item 3 of the Appendix is a qualifying paragraph, whereas items

5 and 6 deal with payment. I am nevertheless unable to see how this distinction forwards the

Corporation's interpretation of the words "the number of days worked" in item 3, which clearly

establishes an entitlement to worked on the route". Item 5 seems to be a control on retroactivity, while

both items 5 and 6 seem to limit payment to full minutes of over-assessment only, an expression on

which the Union relies upon to support its interpretation of item 3.

- 8 -

                               The Corporation also refers to a number of provisions which use the expression

"hours worked"; these include subparagraph 16.01(a)(ii) and (iii), and (b)(ii) and (iii), clause 16.02,

clauses 18.10 and 18.1 1, and paragraph 44.19(b). and clause 44.28. In respect of none of these

provisions, however, is there any evidence that the use of the expression "hours worked" restricts the

payment of partial hours worked. Indeed, the only evidence I have about the practice of the parties in

relation to the expression "hours worked" is that of the Union in relation to clause 15.01, where the

same expression is used, and where employees are paid to the minute for fractions of hours worked.

                               The Corporation also refers to clause 44.28, which specifies a payment "per

hour", which is a different expression. It also refers to paragraph 14.12(c), which deals with the phrase

"entire shift cycle in itself or portion thereof', and paragraph 15.27(a), which uses the expression "each

consecutive eight (8) hours or a portion thereof". No one seemed to be able to explain what paragraph

14.12(c) refers to, and I do not think it adds anything to the argument. Paragraph 15.27(a), however,

applies to the extraordinary circumstance where an employee is paid a full standby payment not only

for being available for a full consecutive eight hours, but also for being available for any portion thereof.

This is the opposite of the interpretation the Corporation seeks in item 3, since it specifies full payment

for being on standby for a fractional period, rather than no payment at all for working a fractional shift.

It is the kind of extraordinary result which one would expect the parties to have specified in this

particular way. It really does not bear on the interpretation of the word "day" to include fractional days

as well as full days.

- 9 -

                               Second, the Corporation argues that the principle of contra proferentem should

apply to deny the Union the right to assert the interpretation which it does. The negotiating history

clearly indicates that the Union provided the language which was ultimately agreed to and is now

disputed, and any ambiguity in that language must therefore be laid at the door of the Union.

                               Perhaps the best explanation of the application of this doctrine to labour

arbitration is found in Re Sutton Place Hotel and United Steelworkers of America, (2001) 107

L.A.C. (4th) 370 (Armstrong). In paragraph 40 of that award, the arbitrator referred to his earlier

award in Re Medis Health and Pharmaceutical Services Ltd. and Teamsters, Chemical and Allied

Workers, Local 424, (2000) 93 L.A.C. (4th) 118 (Armstrong), at pages 126-7, which is as follows:

Since there is ambiguity in Article 14.06, I have determined that this is a proper case for the application of the contra proferentem rule of construction. Under that rule, in cases of doubt, and as a last resort, language should be construed against the grantor or promissor under the contract, especially when the clause being construed creates an exemption, exclusion or limitation. In this case, I find that the promissor is the Employer, who, under Article 14.06, is committing itself to a stipulation, by way of exception to the basic proposition that overtime is voluntary, as to the amount of compulsory overtime that may be required of employees, both per day and cumulatively per week.

Concerning the operation of the contra proferentem rule, see Chitty, supra, [Chitty on Contracts, General Principles, Vol. l, London, Sweet and Maxwell, 1999] at 12-081, p. 619ff.:

Another rule of construction is that a deed or other instrument shall be construed more strongly against the grantor or maker thereof (verba cartarum forties accipiuntur contra proferentem). This rule is often misinterpreted. It is only to be applied in cases of

- 10 -

ambiguity and where other rules of construction fail. Nevertheless, despite certain doubts which have been cast upon it from time to time, the rule has been constantly cited as a rule of construction from Cokes's time to the present day. For instance Coke says: "It is a maxim in law that every man's grant shall be taken by construction of law most forcibly against himself"; and in 1949 Evershed M.R. said:

"We are presented with two alternative readings of this document and the reading which one should adopt is to be determined, among other things, by a consideration of the fact that the defendants put forward the document. They have put forward a clause which is by no means free from obscurity and have contended ... that it has a remarkably, if not an extravagantly, wide scope, and I think that the rule contra proferentem should be applied ..."

The justification for the rule has been said that "a person who puts forward the wording of a proposed agreement may be assumed to have looked after his own interests so that if the words leave room for doubt about whether he is intended to have a particular benefit there is reason to suppose that he is not.

To the same effect is Fridman's Law of Contract in Canada, 4th ed., 1999, Carswell at p. 495:

In cases of doubt, as a last resort, language should always be construed against the grantor or promissor under the contract .... In the words of Sir Montague Smith, in McConnel v. Murphy (1873), L.R. 5 P.C. 203 at 218-219:

"Where a stipulation is capable of two meanings equally consistent with the language employed, that shall be taken which is most against the stipulator and in favour of the other party."

And later, from Fridman, at p. 496:

The contra proferentem rule is of great importance, especially where the clause being construed creates an exemption, exclusion or limitation of liability. [Italics added.]

- 11 -

Here, as I have said, it is an exemption clause that is being construed; namely, an exemption to the basic principle that overtime is voluntary. Simply put, if the Employer wished to have the power to make daily assignments of overtime in varying durations of up to three hours, it should have said so in clear and express terms.

                               The maxim, as appears from this excerpt, seems to have two forms. In one, the

presumptive interpretation is against the party drafting the disputed language, while in the other it is

against a grantor or promissor who seeks to rely on an exemption or limitation. The difficulty in

applying this maxim to a collective agreement in the present circumstances arises from the very stringent

conditions which are applied to the use of the maxim. It is only to be applied in cases of doubt, and

only as a last resort, and especially where the clause being construed creates an exemption, exclusion

or a limitation. It is appropriately applied in circumstances where a party puts forward a clause that is

by no means free from obscurity and then contends that it has a "remarkably, if not an extravagantly,

wide scope".

                               In the present case, while the language is perhaps not completely free from doubt,

the parties have referred to whole periods of time such as "hours worked" elsewhere in the collective

agreement, apparently without creating any particular difficulty in interpretation. There is no reason to

think that the expression "days worked" is any more ambiguous than "hours worked", nor that it should

require any particular treatment when it is proposed by one party as an amendment to the collective

agreement.

                               Second, all the Union is proposing here is a redistribution of the amounts which

were always payable under the Appendix; it is the Corporation which is proposing an exemption,

exclusion or limitation" in that it argues that days which are covered

- 12 -

under clauses 17.04 and 17.05 should not be paid at all, to anyone, thus reducing its liability to pay the

over-assessed route payment to the extent that absences are covered under those provisions. In short,

it is the Corporation's position which is a claim for a significant change in entitlement, while the Union's

is a claim simply for redistribution.

                               Finally, the Corporation argues that there should be an estoppel raised against the

Union for representing that this is merely a housekeeping change, thus lulling the Corporation into

accepting the change without considering more fully , its implications. With respect, this argument

simply is not borne out by the facts adduced. It was the Corporation which presented a request for a

housekeeping change in the Appendix, and only noted in passing that some change would have to be

made to item 3. The Union never advanced its proposal as a housekeeping change, and indeed

provided complete language for the provision which clearly indicated what were the amendments which

it required in the Appendix. In fact, the Union's original proposal did not even include the housekeeping

change requested by the Corporation, which was to change to hi-weekly payments from monthly

payments. It is only in the final version signed off by both parties that this housekeeping change is

reintroduced.

                               In my view, there is nothing which could be construed as a representation by the

Union that its proposed change to item 3 was in response to the Corporation's proposal for

housekeeping changes in item 5. The Union proposed a new item 3 which directly responded to its

demand at the outset of negotiations that the over-assessed route payment should be paid to the

employees who actually perform the work, rather than being assigned for the entire month to one

employee who' might not have worked for the entire month. And in any event, the housekeeping

proposal has an express recognition

- 13 -

that agreeing to any such changes is to be without prejudice to any other amendments either party may

advance.

                               In my view, neither of the Corporation's two equitable arguments can succeed,

and this matter has to be interpreted on the basis of the language of item 3 itself. That language more

closely supports the Union's position than the Corporation's, and the interpretation which the Union

places upon the expression "days worked" is more consistent with the rest of the collective agreement

than the interpretation proposed by the Corporation, which would have the significant effect of denying

payment of the over assessed route payment for days for which it would have been paid under the

previous version of the Appendix.

                               Finally, I note that the Corporation raised the specter of complex accounting

procedures required in order to keep track of the employees to whom the over-assessment allowance

would have to be paid in circumstances where those employees work for a fractional day rather than a

complete day. I note that there was no evidence whatsoever to support this assertion, and I am unable

to accept, in the absence of some evidence, that modern management information systems cannot be

adjusted to keep track of entitlement for partial days of work when they must already have been

conceded to be able to keep track of individual full days.

                               There remains the question of remedy. Clause 9.09 of the collective agreement

provides that an authorized representative of the Union or a national representative of the Corporation

"may present a policy grievance in order to obtain a declaratory decision". In my view, the appropriate

remedy in a case like this is a declaration, which is to the effect that payment of the over-assessed

route payment

- 14 -

pursuant to Appendix "V"(3), item 3 is to be made not only to employees who work full days, but also

to those who work fractional days on an over-assessed route. The parties are agreed that the

over-assessed route payment is to be made at straight time, even if the employee would be entitled to

overtime rates for the work otherwise performed.

                               If there are individual grievances awaiting resolution which claim payment of the

over-assessed allowance on behalf of individual employees or groups of employees, then, pursuant to

clause 9.103, they will have to be resolved in accordance with this Award. For . any future situations,

the Corporation is simply bound by this Award and required to pay over-assessed allowance in

accordance with this finding.

                               The grievance is therefore allowed. I retain jurisdiction over this matter to

whatever extent may be necessary to bring it to a full and final conclusion.

DATED AT TORONTO, Ontario this 15^th day of March, 2005.