An arbitrator has ruled that Canadian Pacific Kansas City Railway violated its collective agreement by hiring retired union members as non-union fixed-term employees to perform the same work they did before retirement, ordering the company to stop the practice and compensate the union for lost dues.
The International Brotherhood of Electrical Workers System Council No. 11 filed a policy grievance after CPKC unilaterally decided in 2024 to hire former union members directly without union involvement, ending a decade-long practice of jointly negotiated fixed-term contract employee agreements.
From 2012 to 2023, the parties had jointly executed contracts for fixed-term contract employees (FTCEs) where the union received dues and highly skilled retirees often performed essential signals and communications work during staffing shortages. The 2012 template contract explicitly stated: “This position belongs to the IBEW Union and as such membership by you in the Union will be required.”
Company changes hiring approach
Starting in 2024, CPKC decided to exclude the union from the process entirely. In internal emails, company officials discussed their new approach. One March 2024 email noted the new contract “has a much different look than previous FTE agreements” because “this is now a contract between the company and Mr. B.”
Another April 2024 internal email revealed: “Based on the Union’s resistance to renew fixed term contracts in other areas we have worked with LR and HR and decided we are no longer going to involve the IBEW in fixed term contracts.”
The union argued these employees performed bargaining unit work within its exclusive jurisdiction and sought to have the work returned to the bargaining unit. CPKC maintained it had management rights to hire the workers and could rely on the collective agreement’s contracting out provision.
Key witness testimony
J.R., a former union member who worked for CPKC for 35.5 years as a signal maintainer, testified about his experience after retirement. CPKC hired him directly on a non-union contract as a “Fixed Term Employee” without union involvement.
During his contract, J.R. kept the same manager, CPKC employee number, and company email address. He performed identical duties, continued using a company laptop and vehicle, and received the same pay stub format. He even remained in CPKC’s share purchase plan without re-enrolling.
K.E., CPKC’s Director of Signals and Communications Operations West, described the company’s staffing challenges. In his territory from Saskatchewan to British Columbia, they had 13 maintainer and three technician vacancies. He explained various recruitment and retention difficulties, including high living costs in Vancouver and employee departures due to call coverage duties or remote assignments.
Arbitrator finds contracting in violation
Arbitrator G.C. rejected CPKC’s characterization of the workers as contractors, noting that the company’s own witness acknowledged it employed these individuals. The contracts themselves described each person as a “Fixed Term Employee.”
The arbitrator found the workers clearly fell within the union’s certified bargaining unit, which includes “all employees” in various classifications including maintainers and technicians. Since the retired employees continued performing essentially the same functions as during their careers, they remained within the union’s jurisdiction.
“The fact CPKC decided to exclude the IBEW when hiring these individuals cannot deprive the IBEW of its statutory rights as the certified bargaining agent,” the arbitrator ruled.
Contracting out provision doesn’t apply
CPKC argued it could rely on the collective agreement’s Article 21 contracting out provision, but the arbitrator disagreed. The provision allows contracting out work when technical skills aren’t available internally, sufficient qualified employees aren’t available, or other specific circumstances exist.
However, the arbitrator found “a massive difference exists between contracting out work to genuine contractors under article 21 and hiring retired employees to do essentially the same bargaining unit work they had performed previously.”
The arbitrator noted that while professional contractors exist in the railway industry, CPKC couldn’t find enough skilled third-party contractors to meet its needs due to severe personnel shortages.
Contracting in finding
Following precedent from a similar Canadian National Railway case, the arbitrator concluded CPKC engaged in “contracting in” rather than legitimate contracting out. The precedent involved an employer hiring individuals “to work to all intents and purposes, as employees alongside the bargaining unit employees, but outside the terms of the collective agreement.”
The arbitrator found this contracting in “essentially ignored the IBEW’s statutory rights and obligations as a certified bargaining agent under the Canada Labour Code.”
Remedies ordered
The arbitrator issued several remedies:
- Declared CPKC violated the collective agreement through contracting in when it hired retired former employees as non-union workers
- Declared the company violated the agreement by stopping recognition of the union’s role as certified bargaining agent
- Ordered CPKC to compensate the union with interest for lost dues
- Issued a cease and desist order against the contracting in practice
The arbitrator noted a cease and desist order was necessary because CPKC didn’t immediately disclose the important change to the union. “Instead, while the IBEW continued to propose further FTCE contracts for some of its retired members, CPKC instead acted unilaterally.”
The union didn’t receive damages beyond lost dues, with the arbitrator stating: “The arbitrator fully anticipates that CPKC will comply with the statutory orders being issued in this award.”
For more information, see Canadian Signals and Communications System Council No. 11 of The Ibew v Canadian Pacific Kansas City Railway, 2025 CanLII 59708 (CA LA).
