TORONTO -- A potential labour disruption could be looming at Canadian National Railway Co. after the country’s largest railway decided to unilaterally impose contract changes on 1,700 of its engineers following 14 months of failed contract negotiations with their union.

The Teamsters Canada Rail Conference (TCRC), which represents the engineers, said it is consulting with its lawyers to determine whether the move is tantamount to a lock-out because it essentially dictates the company’s terms outside of bargaining, said Daniel Shewchuk, the union’s president.

“This could be considered a lock-out,” Mr. Shewchuk said in an interview, adding that the union would consider a strike otherwise. “We can’t just sit idly by and have the company arbitrarily change the terms and working conditions of our members at will.”

A strike could come as soon as this weekend. While CN said it is too early to determine whether such a disruption would shut down much of its rail service, an engineer is considered an essential part of running a train.

The engineers have been without a contract since Dec. 31, 2008 and currently have a strike mandate. The parties hit an impasse last Friday on rules governing the maximum amount of miles engineers can work in a month and wages after more than a year of bargaining.

A federal mediator has been assisting in the talks since August, but CN walked away from the table and has rejected any future dates proposed by the union for the talks to resume. This also has the union considering filing a complaint that the railway is bargaining in “bad faith.”

The primary sticking point is that CN wants to raise the maximum amount miles its engineers can work in a month to 4,300 miles in order to bring them in line with the caps for its conductors. Currently, engineers, who make more than $100,000 annually on average, cap out at 3,800 miles, and work on average 15 to 17 days a month, compared to the 16 to 18 days conductors do.

The conductors have a different cap than the engineers because they only joined the TCRC in September 2008 and the union argues layoffs will likely occur if the engineer’s mileage cap is raised.

CN has suggested the negotiations be taken to binding arbitration, but this has been rejected by the union.

“After 14 months of trying to bargain new agreements with the union, we concluded further talks would not result in a settlement,” said Mark Hallman, CN spokesman. “If the TCRC has a suggestion to resolve our difference, we’d be happy to meet them as soon as tomorrow.”

In the meantime, CN said it will implement a 1.5% wage increase for its engineers and to bring their mileage caps in line with the conductors as of Nov. 28 until a new agreement can be reached. “We made a range of offers and they were rejected, and we think it’s time to move forward,” Mr. Hallman said.

He noted that the changes will not only increase the amount of hours engineers can work, but will pay them more.

Stewart Saxe, a labour specialist and partner with Baker & McKenzie LLP, said while the railway may be within its rights to impose the changes, he would not recommend it.

“The risk of polarizing the situations, and riling up the employees behind the union, is definitely a risk that has to be carefully considered and is why it is so unusual for the employer to take unilateral action, even when it can,” Mr. Saxe said.

Jacques Emond, Emond Harnden LLP partner, added: “Ultimately, in these circumstances, it is up to the employees to accept or not. If they accept, they come back to work on the revised terms until a new collective agreement is reached. If they do not accept, they continue on strike.”

In 2007, CN ended a protracted labour fight with its 2,800 conductors and track workers that resulted in two labour disruptions after the federal government imposed back-to-work legislation that forced them to undergo final and binding arbitration, as well.

CN said its net income was reduced by $35-million that year as a result of the strike.

Financial Post

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