Limitations on the Exercise of Management Rights

Any action taken by the employer relying on management rights is subject to the following limitations: (1) the measures must not contravene other provisions of the collective agreement; (2) the action taken must be legal; (3) there must not have been previous statements or conduct that creates an estoppel; and (4) any rules established must meet the requirements set out in the case KVP Co. Ltd.1

Provisions of the Collective Agreement

When the employer claims to exercise any management rights, it must comply with other provisions in the agreement. A fundamental principle in labour relations is that the collective agreement must be read as a whole document. If the contract requires the employer to provide clothing, the employer could not rely on the management rights article to adopt a policy on uniforms that requires employees to pay for them.

Compliance with the Law

Any action the employer takes relying on the management rights article must meet the basic requirement of complying with any relevant legislation and the common law. An employer cannot take any action that violates legislation, including human rights, employment standards, other statutes or the common law. In one case, an employer relied upon the management rights provisions in the collective agreement to attempt to introduce a biometric payroll and timekeeping system that used employee fingerprints. Although it should be noted that the law relating to privacy is still evolving, an arbitrator prohibited the establishment of the system

on the basis that it was an invasion of the employee's privacy interests.2 Similarly, arbitrators in some jurisdictions have not allowed employers to require employees to obtain flu vaccinations where there was no legislated basis for the requirement; in the absence of such legislation, the vaccination was an illegal assault.3

Estoppel

The doctrine of estoppel may prevent the union or the employer from relying on and enforcing the terms of the collective agreement. Where a party makes a representation to the other, by way of words or conduct, indicating that an issue will be dealt with in a manner different from the provisions of the agreement, the party who made the representation will not be able to later insist upon the collective agreement being enforced.

Statements made by a party to the agreement could be the basis for an estoppel. In one case, a collective agreement provided that layoffs would occur in reverse order of seniority. The employer, a hospital, hired two laboratory technicians. The hiring manager assured both technicians when they were hired that they would not be laid off because of funding cuts or the return of other employees to the department. However, the hospital laid off the technicians 14 months after they were hired when other employees returned to the bargaining unit. When the employees objected, they were told that the collective agreement was clear on the question of seniority on layoffs and there was nothing that could be done because they had the least seniority. A grievance was filed, and the arbitrator held that the doctrine of estoppel applied.4 Because of the representations made to the technicians before they were hired, the employer could not rely on the collective agreement, and the layoff of the technicians was nullified.

The union and the employer should be alert to the possibility of estoppel based on conduct or past practice. In one case, the collective agreement provided that certain benefits would be paid to employees after a three- day waiting period.5 Despite the terms of the collective agreement, the employer had a long-established practice of paying employees benefits during the three-day period. When the employer indicated it would enforce the three-day waiting period in the future, the union filed a grievance relying on estoppel. The arbitrator upheld the grievance and ordered the employer to continue to pay the benefits according to its practice for the balance of the term of the agreement.

Similarly, a union might be caught by an estoppel argument based on prior past practice if it failed to enforce all the terms of the agreement. For example, a collective agreement will usually provide for a probationary period. If the employer made a habit of extending the period, in breach of the agreement, and the union took no action, the union may not be allowed to object to an extension of the period on the basis of estoppel.6

An estoppel will not be established by a single failure to comply with or enforce the collective agreement; however, employers and unions should be aware of the risk of repeated failures to enforce a term of the agreement. An employer who wanted to vary from the collective agreement to deal with a short-term issue should consider consulting with the union and attempting to reach an agreement that would prevent an estoppel argument being raised when the employer wished to revert to the terms of the agreement. For example, if the agreement provided for a rate of remuneration for employees who drove their own cars, and the price of gas increased significantly, an agreement might allow the employer to increase the mileage allowance for a time and avoid any possible estoppel arguments later.

Estoppel does not mean that a party will be prevented from enforcing the terms of the agreement indefinitely. An estoppel will cease at the next round of contract negotiations if the union or the employer advises the other that it will rely on the strict terms of the agreement in the future. The party that has previously relied on the variation from the collective agreement will have to negotiate a change to the agreement. If it fails to do so, it will be deemed to have agreed to the application of the agreement as written.

Requirements for Rules Established in KVP Co. Ltd.

Most arbitrators hold that any rules established by management pursuant to the management rights article must comply with the requirements established in the case of Re Lumber and Sawmill Workers' Union, Local 2537, and KVP Co. Ltd. An excerpt from the case setting out the requirements for rules is provided in Figure 10-1 .

Figure 10-1 Requirements for Employer Rules

In the KVP Co. Ltd. case, the arbitration board's decision provided that:

A rule unilaterally introduced by the company, and not subsequently agreed to by the union, must satisfy the following requisites:

It must not be inconsistent with the collective agreement.

It must not be unreasonable.

It must be clear and unequivocal.

It must be brought to the attention of the employee affected before

the company can act on it.

The employee concerned must have been notified that a breach of such rule could result in his discharge if the rule is used as a foundation for discharge.

Such rule should have been consistently enforced by the company from the time it was introduced.

One of the requirements that may be of particular interest to employers is that a rule made by management must not be unreasonable. For example, employers who attempt to establish rules relating to personal appearance may encounter difficulty. The employer has the right to establish reasonable rules to protect its image and business interests. However, the employer must show that the rule prevents a threat to its business and is not just imposing the employer's preferences on employees. In cases where employers have established rules prohibiting facial jewellery, the employer has been required to produce evidence of harm or loss through opinion surveys or customer feedback to establish that the rule is reasonable. When determining if a rule is reasonable, some arbitrators have distinguished between rules that affect employees' personal choices outside of the workplace, such as prohibiting beards, as opposed to rules that only affect employees at the workplace, such as prohibitions against jewellery. The requirement that a rule or policy be reasonable may mean that employers in unionized workplaces cannot use random drug testing because they cannot establish the reasonableness of the testing.

Using the above information from my textbook, coherently and concisely, describe the limitations of Management Rights.