In the recent decision of Viterra v Grain Services Union, 2013 SKCA
93 the Saskatchewan Court of Appeal reaffirmed the power of
arbitrators to hold parties to past practice in applying a
collective agreement through the doctrine of estoppel.
This case considered the employer's long-standing practice
of paying of paying certain groups of employees vacation pay on
their overtime hours at "vacation entitlement rates".
Other employees were paid at the minimum rates required by the
Canada Labour Code. The original employer, Saskatchewan
Wheat Pool, began this practice. Saskatchewan Wheat Pool's
collective agreements did not specify the rate of vacation pay on
overtime hours. When Saskatchewan Wheat Pool took over Agricore
United it was renamed Viterra. Viterra, as the new employer,
negotiated new collective agreements with the Union. The rate of
vacation on overtime hours was not discussed in bargaining and no
significant changes were made to the language relating to vacation
pay or to the language relating to overtime hours.
More than a year after the new agreements were finalized
Viterra's new management discovered the practice of paying
certain employees vacation entitlement rates. Viterra began paying
all employees at the Canada Labour Code rate without
consulting the Union. The Union filed a grievance which was allowed
on the grounds that the collective agreement implicitly required
the higher rates of pay and that Viterra's past practice had
effectively become part of the collective agreement. The
arbitration panel's decision was upheld on judicial review.
The Saskatchewan Court of Appeal rejected the arbitration
panel's position that the payment of vacation entitlement rates
was already incorporated into the collective agreement, but it
upheld the panel's finding on the issue of past practice and
estoppel. The Court concluded that it was reasonable for the
arbitration panel to find that Viterra had effectively represented
that it would continue paying certain employees vacation
entitlement rates by failing to indicate otherwise during
bargaining. The Court also found that the panel reasonably
concluded that the Union relied on this representation to its
detriment. As a result, the tests for establishing estoppel were
met and the Court found that the panel had reasonably concluded
that Viterra was unable to change this practice without negotiation
with the Union.
Of particular significance to the Court was the fact that the
issue between Viterra and the Union was compensation. The Court
held that generally, in labour relations, compensation is not
changed without bargaining. The Court appeared to view this fact as
enhancing the reasonableness of the panel's decision.
This decision continues to strengthen the jurisprudence on the
doctrine of estoppel that parties to a collective agreement can be
prevented from unilaterally changing past practices even when there
is no basis for the practice in the collective agreement. As such,
employers should be aware that any longstanding practice could be
considered a part of the collective agreement, subject to change
only through bargaining. This will be particularly so when the
practice is long-standing or relates to compensation issues.
Norton Rose Fulbright Canada LLP
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