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How Does a CLAC Contract Compare?

At the end of the day, the main concern of most union members is how good their collective agreement is. The main job of a union is to negotiate a collective agreement that guarantees good working conditions, fair rules for payment, raises and promotions, and a grievance procedure with teeth in case anything goes wrong.

Comparing collective agreements between different employers is difficult. Some employers are more difficult to bargain with than others. Different groups of employees often want different things and ask their union to bring different issues to the bargaining table. And sometimes the financial situation of a particular employer means, for the good of the company, that the workers agree to a less ambitious agreement than they may have otherwise.

But fortunately for us (but not the workers), a situation that occurred recently in Edmonton gives us the opportunity to directly compare a CLAC contract with the contract of a real union.

Finning International is a Canadian-based distributor of heavy equipment. Part of its business involves "remanufacturing" used and worn parts for Caterpillar and other lines of construction equipment. The 250 workers at this Finning Component Rebuild Centre were members of the International Association of Machinists and Aerospace workers (IAM) Lodge 99.

In the spring of 2005, Finning closed its Component Rebuild Centre, and contracted out the work to a new facility called OEM Remanufacturing Company Inc., which was built and financed with Finning money.

When Finning transferred its rebuild operation to OEM, it managed to dump the Machinists' union in favour of CLAC. At the Alberta Labour Relations Board hearing, the employer even stated that the way they shifted the work was designed to avoid the Machinists having successor rights, which are legal protections designed to make sure employers can't get rid of a union by playing this kind of shell-game:

"Finning and O.E.M. Reman says that their commercial arrangements do not engage the successorship or common employer provisions of the Code; this is at its root just an unobjectionable contracting out of Finning's work, nothing more. They forthrightly say that their transactions were structured under legal advice to achieve just that result."

Alberta Labour Relations Board
International Association of Machinists and Aerospace workers Local Lodge #99 and
Finning International Inc., (Finning Canada), division of Finning International Inc. and
O.E.M. Remanufacturing Company Inc.
Page 2, paragraph 24

Given that the work being done at Finning/IAM and OEM/CLAC are essentially the same, looking at the two contracts in this situation lets us compare apples with apples. What does the comparison show? The move paid immediate dividends: CLAC quickly agreed to a collective agreement grossly inferior to the Machinists' contract.

Here are a few of the key issues:

Wages

Wages under the CLAC contract are lower for most (but not all) jobs. In several cases the new rates are 20 to 25 percent lower than those in the Finning/IAM agreement. Here are the differences in wages between the two contracts:

Classification
Finning
Rate
Classification
OEM
Rate
 % Drop in Wage
Production Helper
 $19.34
 Production Assistant
 $14.33
 25.9 %
Labourer/Janitor
 $16.18
 Housekeeper $14.33
 11.4 %
Mat. Supply Ass't 2
 $19.92
 Shipper Receiver
 $17.31
 13.1 %
Mat. Supply Ass't 2
 $19.92
 Parts Picker
 $17.31
 13.1%
Benchhand
 $22.70
 Painter/Packager $17.31
 23.7 %
Welder
 $31.17
 Welder $22.95
 26.4 %
Production Mechanic
 $22.89
 Chrome Technician
 $22.95
 -0.3 %
Machinist
 $31.48
 Material Fabricator
 $26.23
 16.7 %
Machinist
 $31.48
 Spec. Material Fabricator
 $29.09
 7.6 %
Machinist
 $31.48
 Block Rebuild Tech.
 $29.09
 7.6 %
Production Specialist
 $26.40
 Crankshaft Rebuild Spec.
 $29.09
 -10.2%


But the wages themselves aren't the whole story - far from it!

Under the CLAC agreement the salary paid for any specific job depends on an employee's rating as a "Bronze", "Silver", "Gold" or "Platinum" employee. How a worker is placed in this rather bizarre wage scale is entirely up to the employer. The union has no grounds to grieve such a placement, and no appeal to a third party is provided for in the agreement.

Essentially, under the CLAC agreement, how much you get paid depends on how much the boss likes you. Not exactly worth the price of union dues the workers have to pay to CLAC every paycheque.

Paid Vacation

Employees get much less paid vacation under the CLAC agreement. In fact, over a 30-year career, a worker would get about 24 percent less vacation than under the old Finning/IAM contract.

General Holidays

The OEM/CLAC agreement gives employees ten General Holidays per year, as opposed to 12 under the Finning/IAM agreement.

If workers at OEM want New Year's Day off, they can get it by agreeing to work on Remembrance Day. Happy New Year, CLAC members!

Pension

The Finning/IAM contract obliges the employer to contribute an amount equal to 5.75 percent of an employee's salary toward the pension. The OEM/CLAC agreement requires a mere 3 percent from the employer.

So, moving across the street and signing a CLAC deal means the employer saves almost half the amount they have to pay into helping support its workers in their retirement years.

Probationary Period

The Finning/IAM contract had a probationary period of 90 days for new hires. Under the new OEM/CLAC agreement, the probationary period is 6 months! That's 6 months where an employee has little or no protection and can be fired without recourse.

Job Security

Of course, under the CLAC agreement workers don't even have meaningful job security after they pass their probation period.

The old Finning/IAM contract said that layoff was done in reverse seniority within each job classification, so if you're the new guy, you're the first to go if the company lays people off. Laid-off employees had recall rights for 12 months and their benefits continued for the first four months after layoff.

With the OEM/CLAC agreement, seniority is not considered when determining layoff order. You've been here 30 years and the guy beside you has only been here for a week? Tough luck. The contract also has no recall rights for laid-off workers.

Worst of all, Article 15.05 of the OEM/CLAC agreement allows the employer to terminate any employee without just cause, as long as the company agrees to give the terminated worker severance pay. So much for job security.

Promotions

The Finning/IAM contract included language to guarantee that decisions on who gets promoted is based on seniority, skill and ability. The new OEM/CLAC agreement says that seniority is not a factor, and it is at the employer's discretion to decide who gets a promotion.

So, to review, what did the workers get when Finning moved its operations to OEM and workers got stuck with a CLAC agreement?
  • Lower pay for the same work with a "ranking" system that leaves it up to the employer to decide who gets paid more
  • Less paid vacation and fewer stat holidays
  • Just over half of the previous employer contributions to their pension
  • A doubling of the probationary period
  • Promotions based on how much the employer likes you rather than your seniority or ability
  • No job security
A pretty good deal for the employer, and a pretty bad deal for the workers who are now paying CLAC dues for not a heck of a lot.

Lucky for them, there are things a CLAC member can do.