IN THE MATTER OF A MEDIATION/INTEREST ARBITRATION

BETWEEN:

BRITISH COLUMBIA FERRY SERVICES INC.

(the “Employer)

AND:

B.C. FERRY & MARINE WORKERS’ UNION

(the “Union”)

MEDIATOR/ARBITRATOR:                                   Vincent L. Ready

COUNSEL:                                                            Glen Schwartz and

                                                                             Blaine Ellis et al

                                                                             for the Employer

                                                                             Jacqueline Miller et al

                                                                             for the Union

HEARING:                                                            February 8, 2007

                                                                            Vancouver, BC

WRITTEN SUBMISSIONS:                                     Between September, 2006

                                                                             and February 16, 2007

PUBLISHED:                                                         March 8, 2007

32115

            This is another in a series of awards arising from my appointment on December 1, 2003 as a special independent mediator to assist the parties in what must be described as one of the most difficult labour relations disputes in a lifetime of dealing with demanding disputes.

          The last Collective Agreement expired on October 31, 2003.  Little, if any, meaningful collective bargaining took place and upon my appointment, all of the bargaining issues remained outstanding.  Mediation ground to a halt on the second day of the first mediation and a strike ensued.  Following five days of strike action, the Government of British Columbia intervened with passage of the Railway and Ferries Bargaining Assistance Act which provided for an 80-day cooling-off period and my appointment as a Special Mediator.

          The parties remained intransigent.  They failed to reach agreement on any issue of substance.  On December 12, 2003, the strike ended with an agreement to refer all outstanding issues to final and binding arbitration.

          The relationship between the parties has long been fraught with tension.  This was confirmed in a report issued by George L. Morfitt in January, 2007:  A Review of Operational Safety at British Columbia Ferry Services Inc.:

During our review we observed tension in the relationship between the company and the union.  This situation is, in our view, largely dysfunctional and poses significant impediment to resolving operational safety issues and ensuring continuous improvements to the SMS [Safety Management System]. (p.7)

          BC Ferry Services Inc. was incorporated in 2003 under the Company Act.  Ownership of the single-issued voting share is held by the B.C. Ferry Authority established under the Coastal Ferry Act.  The Government of British Columbia is the holder of all of the preferred shares of the Employer but has no voting interest in either the Employer or B.C. Ferry Authority.

          The Employer has three wholly owned subsidiaries, one of which concerns this Award, namely Deas Pacific Marine Inc., which performs maintenance and refit operations.

          The Employer operates a large and complex ferry transportation system under a service contract with the Province for vehicles and passenger transportation services to communities along the coastal waters of British Columbia.  The Employer operates 36 vessels and 47 terminals on 25 routes, carrying in fiscal 2005/06 some 21 million passengers and 8.5 million vehicles on approximately 180,000 sailings.

          The Employer has some 2,900 full-time employees supplemented by up to 1,500 casual and seasonal workers hired to deal with increased work load during the summer and other peak-demand periods.

          The Coastal Ferry Act (2003), which established a new governance model for the ferry system, was an immediate cause of controversy between the parties.  The Act not only created an independent and self-financing company (as opposed to a crown corporation) but also established Deas Pacific Marine Inc. which previously had been part of the crown corporation.  Employees were transferred from the crown corporation to the new companies which were separate employers under the Act.

          The Act declared the new ferry company an essential service under the Labour Relations Code and provided that as between the Act and the Collective Agreement, the Act was paramount.

          The passage of the Act set the stage for a disruptive and acrimonious atmosphere at the bargaining table.  The Employer tabled an ambitious collective bargaining proposal affecting all material provisions of the Collective Agreement:  hours of work, classifications, contracting out, overtime, hiring, no wage increases in the first two years of the agreement.  The Union’s reaction was, delicately put, less than enthusiastic.  Mediation ended on the second day followed by strike action.  The Union ignored legislation which required a return to work.  The strike ended on December 12, 2003 with the agreement for final and binding arbitration.

          The dispute between the parties was mammoth, affecting almost every provision of the Collective Agreement.  Following arduous hearings and intense consultation with the parties, I issued an Interim Award on October 15, 2004, bringing a measure of stability to what had been a deplorably fractious and unacceptable relationship between the parties.

          Following on the October 15, 2004 Award, the parties undertook several implementation meetings and made significant progress in reaching agreement on a number of issues.  On April 26, 2005, I issued an award with respect to another five of the contentious unresolved matters.

          The parties have continued their discussions culminating in direct negotiations spanning the period September 6 to 8, 2006.  These negotiations were productive in that they shed light on a number of issues but at the conclusion still failed to produce an agreement.  I should, however, observe that since the issuance of the October 15^th Award, the parties have worked diligently to establish a labour relations framework which, in large part, recognizes the need for long-term stability and fundamental changes to the Collective Agreement.  These changes and improvements are reflected in the attached Collective Agreement.

          In issuing this final award, which will allow the parties to assemble a Collective Agreement (more than three years following the expiry of the previous Collective Agreement), I have taken careful note of the parties’ settlement framework as well as all of the submissions which I have received and considered.

          Thus, the purpose of this Award is to deal with those issues which remain outstanding and which the parties, notwithstanding recent admirable efforts, have been unable to settle and over which the parties have granted to me exclusive jurisdiction to resolve by way of final and binding arbitration.  Those issues are:

          A.      Term and wage rate adjustments;

          B.      Exclusions;

          C.      Deas Pacific Marine Inc. (“Deas Pacific”);

          D.      Past practices;

          E.      Homesteading of licensed positions;

          F.       Labour relations;

          G.      Bargaining structure.

TERM AND WAGE RATE ADJUSTMENTS

          Term of the Collective Agreement shall be November 1, 2003 to October 31, 2012.

WAGE RATES

Special Adjustments

1.       April 1, 2007 – employees of Deas Pacific Marine to receive the general wage increase and lump sum payment in lieu of the July 1, 2007 adjustment of 1.9%.  Thereafter they shall receive the wage adjustments as set out above commencing April 1, 2008.

2.       Senior Chief Stewards and Chief Stewards to receive the 3.0% + 3.0% wage adjustment on April 1, 2007 as intended under the Ready Award and the 3.0% adjustment on November 1, 2007.

3.       A new classification shall be established called Bridgewatch with a rate of pay 4% higher than the Deckhand classification.  (Implemented as per the Interim Award).

4.       An ERA in possession of a 4^th Class Motor Certificate shall receive a 4% wage increase effective April 1, 2007.

5.       Effective April 1, 2007 the wage grid shall be eliminated.

6.       Effective April 1, 2007 Article 21.01 Dirty Money and Heat Money, add:

17.     The cleaning of lube/oil purifiers/clarifiers.

7.       Effective April 1, 2007 the rate of pay for Seasonal Employees shall be 90% of the classification worked and 95% for returning Seasonals.

EXCLUSIONS

          The October 15, 2004 Award made clear the need for logical exclusion of certain positions from the bargaining unit in order for the Employer to meet its management and statutory responsibilities.  Notwithstanding the exclusions granted in the October 15, 2004 Award, the Employer holds a strong view that there exists an operational and managerial need for a large number of additional exclusions.  The Union is equally adamant that no further exclusions ought to be granted.  I award the following:

The bargaining unit shall be comprised of all employees of the Employer except those positions currently excluded and those positions which may be excluded by the following process:

A.      With effect from April 1, 2007, the Employer shall advise the Union in writing of new or additional positions at or below the level of Manager which the Employer believes must be excluded from the bargaining unit.

B.      The Employer shall provide the Union with the applicable job descriptions and such further information which the Union reasonably requires in order to reach a conclusion with respect to the requests for exclusion.

C.      The Union is entitled to challenge all excluded positions in accordance with the Collective Agreement.

D.      Any disputed requests for exclusion shall be referred to Vincent L. Ready, or, in his absence, to Colin Taylor for final and binding resolution in accordance with the parties’ agreement to grant exclusive jurisdiction to do so under the October 15, 2004 Award.

DEAS PACIFIC

          The Deas Pacific Marine Component Agreement shall be incorporated into Article 33 of the Collective Agreement as attached as Appendix “B”.

PAST PRACTICES

          The Employer wishes to terminate the myriad of practices which have accumulated over the years.  The precise extent and nature of these practices is unknown.  They arise in response to particular circumstances.  The Union is opposed to the unilateral termination of past practices without the parties knowing their precise nature and in the absence of informed discussion as to the consequences of their cessation.  The Union, not unreasonably, requested an opportunity to negotiate changes to the Collective Agreement language which is affected by past practice.  I order as follows:

A.      Where the Union alleges that a provision of the Collective Agreement is affected by a past practice, the parties shall meet and attempt to reach a mutually satisfactory resolution.

B.      In the event the parties are unable to reach agreement, they may, by mutual agreement, refer the dispute to Vincent L. Ready or, in his absence, Colin Taylor for assistance.

C.      In the event the parties are unable to reach agreement and do not agree to seek the assistance described or the assistance does not result in agreement, then the issue shall be referred to Vincent L. Ready, or his alternate, for a final and binding determination of the length of notice which the Employer must provide to the Union of its intention to terminate the practice.

HOMESTEADING OF LICENSED POSITIONS

          Throughout these lengthy deliberations, the Union has forcefully expressed the view that there are staff shortages, especially with respect to Licensed Officers and Trades.  While acknowledging this concern, the Employer takes a much broader view, suggesting that the system and logistics of posting and selecting employees results in unacceptable and inefficient staffing hurdles.  For example, the Employer argues that filling a regular Engineering vacancy in Tsawwassen can take months and is exacerbated when the resulting vacancy under the system becomes a Casual Engineering requirement in a remote location, in which case, the hours available are insufficient to attract the person required.

          The Employer points out that the process of Homesteading on an alternative posting basis has helped considerably in staffing unlicensed vacancies since the October 15, 2004 Award and urges extension and expansion of this process to include both licensed and unlicensed vacancies.

          The Union takes the position that staff shortages can be alleviated by significantly increased wages, specific classification adjustments, elimination of the wage grid and benefit entitlement for casuals.

          The issue of staffing and regularization of a greater part of the workforce is both contentious and critical and I find merit in the views of both parties.  Thus, this Award and the October 15, 2004 Award incorporate a number of the Union’s recommendations around pay and benefits:  in particular the October 15^th Award provided that Senior Officers receive 15% and Junior Officers and Trades 9% in special wage adjustments.  I am also persuaded that the so-called “bottlenecks” raised by the Employer do exist and that a more balanced approach to the filling of vacancies will benefit both parties.  With this in mind I am awarding the following Job Posting – Homesteading language in the form of a Memorandum of Understanding to have effect from the date of this Award and to expire on October 30, 2012:

1.       In order to encourage and facilitate regularization of the workforce and the timely posting of Regular, Regular Part-Time and Term Certain positions, the selection process shall reflect a balance between employees currently working at the position location (the Homestead) and employees at other locations.

2.       Regular and Term Certain postings for both Licensed and Unlicensed vacancies shall be filled on an alternating basis of one Homestead position followed by one system-wide posting for each location.

3.       In the event there are no available or suitable employees for a Homestead posting, the Employer may elect to source external candidates.

4.       The Employer and the Union shall have the discretion to mutually agree on a ”case-by-case”, “geographical” or other basis to fill vacancies in an alternative manner.

LABOUR RELATIONS

          I have, in this Award and previous awards, commented on the deplorable state of the labour relations when I first entered this dispute.  Since that time, I have worked with the parties to not only resolve their extraordinary dispute but to assist in the improvement of their relationship.  The Morfitt Report, supra, provides a useful definition of organizational culture:

...the set of shared values, beliefs, norms and practices that guide an organization and are subscribed to by its members.  While vision, goals and values are important to management, the issue is the degree to which they are accepted by people in the organization and play a role in the workplace.  A strong organizational culture is one in which there is a vision that everyone understands.  Everyone is working together because they understand what the goals are and how the organization is achieving them. (p.23)

          Mr. Morfitt went on to stress the importance of the Employer and Union demonstrating willingness to work together.  He then said at p.24:

During the course of our work, we observed considerable tension in the relationship between the company and the union that is, in our view, dysfunctional.  It poses a significant impediment to resolving operational safety issues and continuously improving the SMS.

          Strong words from a respected source.  In nautical terms, that is a warning shot across the bow.

          The organizational culture must be improved and I am pleased to say that since my first introduction to this alarmingly acrimonious dispute, I have observed significant improvement in the business-like approach the parties have adopted.  While it still needs improvement, these positive steps are laudable and must continue to the point of cordiality.

          I must also observe that the tragedy involving the Queen of the North caused a serious setback in the relationship.  One would have thought that this incident would have caused the parties to come together in a spirit of shared concerns, values and interest but, in fact, it destroyed a lot of the progress which has been made since December, 2003 and drove the parties further apart with unseemly and all-too-public charges and counter-charges.

          One year has passed since the sinking of the Queen of the North yet the incident remains very much in focus.  Investigations continue and with them come the consequential uncertainties, doubts and accusations.  It is essential that this incident be closed as quickly as is practicable and that the parties move on.  With this in mind, I urge the parties to cooperate to the fullest extent so that the investigations can be concluded with dispatch.  Thereafter, it will be for the parties to continue to provide complete and unconditional cooperation in implementing whatever recommendations are made and accepted.

          The Queen of the North incident has put an intolerable strain on the parties.  It must be brought to an end so that the parties can move forward free of that yoke and forge a new, solid, and mutually-beneficial relationship.

          Toward that end, it is ordered that any matters under the Collective Agreement, not already referred to arbitration, including any disciplinary action arising from the Queen of the North incident be referred for final and binding determination on an expedited basis to Vincent L. Ready, or, in his absence, to Colin Taylor.

          The said arbitrators shall have the jurisdiction to determine their own procedure with respect to such disputes.

BARGAINING STRUCTURE

          It is all too clear that the current collective bargaining structure does not work.  One only needs to analyze the current labour dispute to come to that conclusion.  Both parties have demonstrated they are unwilling to set aside their philosophical differences in order to achieve a collective bargaining structure which meets their needs and takes into consideration the vital role which the ferry system plays in the day-to-day lives of the public which depends upon it.  Indeed, the ferry-system users and the public generally have little or no tolerance for labour disruptions in this vital transportation system.

          That said, during these arbitration proceedings Ms. Jacqueline Miller, President of the Union, made a compelling submission for the adoption of a new and fresh approach to collective bargaining at B.C. Ferry Services.  It was, in part, modelled after the binding arbitration system adapted by Washington State Ferries and its marine unions.  It is also asserted that a fresh approach to bargaining would provide for greater certainties to the Company, the employees and the public because, with the adoption of objective principles, the parties could enter into long term collective agreements and thus meet the parties’ interests in longer term collective agreements.

          Having carefully considered the arguments presented I have determined they have considerable merit in a more meaningful bargaining process.  Therefore I award a new bargaining structure be implemented as follows:

A.      A permanent collective bargaining dispute resolution panel shall be established.

B.      The members of the panel are:

                   Vincent L. Ready

                   Colin Taylor

                   Irene Holden

          The parties may, by mutual agreement, change a panel member.

C.      Six months in advance of the wage re-openers and the expiry of their collective agreement, the parties shall jointly conduct a salary and benefits survey of relevant comparable employers for use in guiding the parties in reaching a new collective agreement.  The survey shall be for the purpose of disclosing generally prevailing levels of compensation, benefits and conditions of employment relevant to the business of the Employer.  The parties shall agree on the terms of the survey and may call upon the panel or one of its members for assistance.  If agreement is not reached within twenty (20) days on the terms of the survey, then the panel will meet to set the terms of the survey.

D.      No later than three (3) months before the expiry of their collective agreement, the parties shall exchange bargaining proposals and no later than fifteen (15) days thereafter, the parties shall begin collective bargaining.

E.      During collective bargaining, the parties may call upon a member of the panel to provide assistance.

F.       If the parties reach impasse, the parties shall enter into mediation with one or more members of the panel.

G.      If the impasse persists for fourteen (14) days after mediation commences, or beyond any other date mutually agreed by the parties, all impasse items shall be submitted to the panel for final and binding arbitration.

H.      In reaching its decision, the panel shall take into consideration:

          i.        The salary and benefits survey;

          ii.       The compensation, benefits and working conditions for employees as compared with the public and private sector employees in relevant comparable employment, including in states along the west coast of the U.S., including Alaska, and within B.C. in comparable positions;

          iii.      The economic realities of the marketplace in terms of recruitment and retention of a skilled and qualified workforce;

          iv.      Prevailing economic conditions in the Province;

          v.       The economic viability of the Employer;

          vi.      The interests of the users of the ferry system;

          vii.     Historical bargaining patterns;

          viii.    Cost of living;

          ix.      Such other factors which the panel deems relevant.

I.        The decision of a majority of the panel is the decision of the panel but, if there is no majority decision, the decision of the chair is the decision of the panel.

J.       The decision of the panel is binding on the parties who must comply in all respects with the decision.

THE COLLECTIVE AGREEMENT

          The Collective Agreement shall consist of this Award and the October 15, 2004 Award except where amended by the parties, as well as all matters previously agreed between the parties and contained in Appendix “A” attached, and the Deas Pacific Marine Agreement Contained In Appendix “B”, attached.

          I retain jurisdiction to deal with any issues arising out of the interpretation, implementation and application of this Award.  My jurisdiction will also include dealing with any matters that may have been inadvertently overlooked in this Award and its Appendices.

          Dated at the City of Vancouver in the Province of British Columbia this 8^th day of March, 2007.

	_____________________________    Vincent L. Ready