arbitration ruling: baxter sg residency bc lac 2011

7/29/2019 Arbitration Ruling: Baxter SG Residency BC LAC 2011

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IN THE MATTER OF AN ARBITRATION UNDER THEBRITISH COLUMBIA LABOUR RELATIONS CODE, R.S.B.C. 1996 c.244

BETWEEN:

Stargate Universe Productions II Inc.

(Employer)

AND:

British Columbia and Yukon Council Film Unions

(the Union)

(Re: Tor Baxter Grievance)

ARBITRATOR: Stan Lanyon, Q.C.

COUNSEL: Barry Dong and Kacey Krennfor the Employer

Bruce Laughton, Q.C.for the Union

DATE OF HEARING: January 27, 2011Vancouver, BC

DATE OF AWARD: February 14, 2011


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A W A R D

I. Introduction

[1]

The Union argues that its grievance is both a policy and an individual grievance. Itclaims that the Employers unilateral rule is unreasonable: that a non-resident of British

Columbia, who is otherwise qualified, will not be dispatched to work on any of its

productions.

[2] The Employer replies that the grievance is not arbitral because the Grievor was notemployed at the time that the grievance was filed; and, second, it argues that the Employers

residency requirement complies with the Provincial tax credit requirements, and is therefore

reasonable.

II. Facts

[3] The Employer, Stargate Universe Productions II Inc., is a film and televisionproduction company that produced Season 2 of the television series, Stargate Universe, in

Vancouver, British Columbia, from February to November 2010. Stargate Universe is

related to the Stargate series, which also includes Stargate SG-1 and Stargate Atlantis. Each

season of each series involves a new production entity, and therefore a new Employer.

Metro-Goldwyn-Mayer Studios is the distributor of the Stargate series.

[4] Stargate Universe Productions II Inc. is signatory to the Master Agreement betweenthe B.C. and Yukon Council of Film Unions and the Canadian affiliates of the Alliance

Motion Picture and Television Producers (AMPTP) and the B.C. Branch of the Canadian

Film and Television Production Association (CFTPAthe Producers/Employers). The

Master Agreement governs the terms and conditions of employment for employees on

certain film and television productions in B.C. and the Yukon. The term of the current

Master Agreement is March 29, 2009 to March 31, 2012. The Union, of which the Grievor,

Tor Baxter, is a member, is IATSE 891, whose members work in a wide variety of


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departments including construction, lighting, make-up, set direction, sound, editing, special

and visual effects.

[5] The Grievor is a member of the Construction Department of IATSE 891, and worksas a Scenic Carpenter. Mr. Baxter was first employed on Stargate SG-1, Season 2, in March

1998 through to Stargate SG-1, Season 5, October 2001. He returned to Stargate SG-1

Season 8 in March 2004, followed by Season 9, and worked concurrently on Stargate

Atlantis Seasons 1, 2 and 3, all ending in November 2006. From February to August, 2007,

Mr. Baxter worked on Season 4, Stargate Atlantis, and in addition worked on Stargatethe

Ark of Trust, and StargateContinuum. From February to October 2008 he worked on

Season 5 of Stargate Atlantis, and finally, from November 2008 to November 2009, he was

employed on Stargate Universe Season 1.

[6] Employees in the film and television industry are required to complete a residencydeclaration stating that they reside in Canada, and the Province of British Columbia.

Production companies that produce motion pictures and television series in British

Columbia qualify for both federal and provincial tax credits. Currently the available tax

credit on labour costs in British Columbia is 33%; the federal tax credit is a further 16%.

The Canada Revenue Agency (CRA) administers and audits both the provincial and federal

tax credits. It performs audits of the productions payroll records to determine the total

amount of tax rebate that a specific production is entitled to.

[7] It is up to each employer to collect the required residency information in order toqualify for the tax credit. In evidence is Mr. Baxters residency declaration. On February 5,

2007, he declared, in respect to Stargate Atlantis Season 4 production, that he was a resident

of British Columbia. On January 28, 2008 he filled out the same residency declaration

stating that he was now a resident of Point Roberts, Washington State, United States ofAmerica. Later that same year, November 28, 2008, he again declared that he was a

resident of Point Roberts.

[8] Julie Rieder has been the Production Accountant for the past seven years on bothStargate Atlantis and Stargate Universe series. Her duties include both the preparation of


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budgets and the collection of tax credits. She testified that the budgeting process for

proposed production involves the preparation of different budgets for different locations.

For example, a production may consider shooting in British Columbia, or in Ontario, or in

one of the American statesOregon or Michigan. The reason for the multiple budgets is

that productions will decide where they shoot based upon the net budgetthe actual costs

minus the tax credits. Tax credits vary depending upon the location. As she stated the

production goeswhere you get the most bang for your buck. Once a production begins,

she oversees the actual administration of payroll, and at the completion of the production,

she is responsible for applying and collecting all of the tax credits that the production is

entitled to.

[9]

Ms. Rieder explained that over the past few years as tax credits have increased theCanada Revenue Agency has started auditing all productions. They now conduct a full

audit and look at every single person and every payment. In 2009 the Canada Revenue

Agency decided that Mr. Baxter, and others, did not meet the eligibility requirement for the

tax rebate because their residency was outside of B.C. and/or Canada. In respect to Mr.

Baxters work on Seasons 4 and 5 of Stargate Atlantis series they determined that his

residency did not comply with the statutory requirements. Ms. Rieder stated that the

Employer lost $27,686.18 in tax credits in relation to Mr. Baxter on Seasons 4 and 5 of

Stargate Atlantis. And if the current tax credit of 33% had been in effect the Employer

would have lost $32,714.58. This is on a total payment of wages and benefits of $74,827.50

to Mr. Baxter. As a result of this loss of tax credits in respect to Mr. Baxters employment,

the Employer did not name request him to work on Stargate Universe Season 2. Mr. Baxter

had been name requested to work on all the previous seasons.

[10] Kelly Moon is the Senior Steward for IATSE 891. She is ultimately responsible forthe dispatching of union members to productions, and for the issuance of permits to non-members to work on such productions.

[11] In both a telephone conversation in March 2010, and in a meeting in April 2010, Mr.John Lenic, Producer, Stargate Universe Season 2, confirmed to Ms. Moon that Mr. Baxter


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was not name requested to work on this production because he was not resident in British

Columbia.

[12] Ms. Moon testified that IATSE 891s membership consists of a total of 5,262members, of which 136 reside outside of British Columbia, and a further 36 reside outside of

Canada.

[13] In respect to the dispatch of union members to productions, Ms. Moon explainedthat there are two basic methods; first, a member may be name requested by an employer;

second, an employer may simply put in a general request for an employee and the union

will choose the next member entitled to be dispatched. She stated that in either case, the

union member has been dispatched by the union under the collective agreement,

specifically Article A1.09. There are 22 departments in IATSE 891, and when the Union

has exhausted all the members in each department, it then permits non-members, who are

qualified, to perform the work. If a producer elects to name request a particular member of

the Union, the Union cannot dispatch in preference to that name request; and employers are

entitled to name request prior to the Union dispatching. In respect to non-members, who

have been name requested, the Union issues permits to such persons to work on a specific

production. Permits are usually issued to persons who have special skills or special

relationships for example, the star of a production. This is often the case in regard to

American producers.

[14] Finally, Ms. Moon acknowledged that all of the unions in the film and televisionindustry were active in the attempt to achieve the desired tax credits in order to maintain the

industry in British Columbia.

[15]

Peter Leitch is President of North Shore Studios and Mammoth Studios. He is alsoChair of the Motion Picture Production Industry Association of British Columbia. This

organization is an association of all the stakeholders in the film industry in British

Columbia. It includes producers, unions, service providers and government. It works

closely with government, to ensure a competitive tax policy. It promotes the industry

locally and internationally; for example, the B.C. industry annually visits Los Angeles for


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meetings with U.S. producers to promote the infrastructure, the skills, the wide variety of

locations, the same time zone, and provincial tax benefits, all to underline the fact that

British Columbia is a desirable place to produce television and film productions. There are

approximately 20,000 direct jobs in the film industry and another 10,00015,000 in indirect

employment. The B.C. industry has over the past number of years averaged approximately

$1 billion a year.

[16] Mr. Leitch explained that the various tax rebates were amended in this province inFebruary 2010. The primary tax credit was changed from 25% to 33% on all wages

directly employed on production. In addition, there is a further 17.5% credit on digital and

animation effects; a further 6% in respect to regional productions; and a 6% distant tax

credit. These increases were due to the fact that Quebec and Ontario had in 2009 variedtheir tax rebates to 25% all spenda tax credit on all goods and services including such

expenditures as hotels, supplies, labour, etc. This amounts to more extensive tax credit than

even the most recent amendments passed in British Columbia. Similar tax rebates exist in

the United States and in Europe. Recently Michigan increased its tax rebates to 40% on all

goods and services.

[17] As Mr. Leitch explained, the B.C. tax credit is tied to residency in British Columbia;in other words, a production is not entitled to a tax credit for any labour performed by

someone who is not a resident of British Columbia. Mr. Leitch stated that the tax credit is

critical to the B.C. industry; and that if it were eliminated tomorrow, the film industry

would nolonger be viable in this Province; and that the immediate result would be the

erosion of productions, followed by the erosion of the infrastructure. Finally, productions

are sensitive to the level of our dollar versus the American dollar. The currency exchange

rate has a huge impact on the industry, and that every time the dollar goes up, there is a

significant cost disadvantage to B.C. production.

[18] Mark Crowley is the Senior Vice President, Labour Relations, for MGM TelevisionEntertainment Inc. Part of his duties has been his direct involvement in labour relations in

the B.C. film industry since 1994. He stated that historically film production in British

Columbia was attractive based on the Canadian dollar, especially when it was in the range


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of $0.65 to $0.70 as against the American dollar. A tax credit at that time was nice, but not

essential. However, with the Canadian dollar at or near parity with the American dollar

the tax credit becomes all important.

[19] Mr. Crowley gave an example of a recent decision concerning the production of amotion picture in which production budgets were prepared for Vancouver, Toronto, Oregon

and Detroit, Michigan. In spite of the fact that Detroit has no infrastructure, and crews had

to be brought in, Detroit was chosen because of the significant tax credit that it offered

(40%). As a result of the size of this tax credit several productions have been shot in

Detroit. In all cases, the pre-budget analysis consisted of adding up the established rates,

and crew costs and then developing the net budgeta tax analysis, based on the tax

credits available in each location.

[20] Mr. Crowley explained that the two determinants in respect to where a film ortelevision production may be chosen are based on, first, cost, and second, where the star

wants to be. He stated that if there was a choice between two workers performing the

same work, and one cost $30,000 more a year, MGM would hire the less expensive

worker. And the Stargate series initially came to British Columbia because the Star,

Richard Dean Anderson, had previously worked in Vancouver on a prior television series.

[21] Finally, Mr. Crowley testified that when MGM brings a production to B.C. it willuse work permits sparingly. MGM does not want to permit a lot of non-BC Film Council

members, who are not residents of British Columbia,because they want to utilize the

economic advantages of the particular location (tax credit). As a result, they only bring

people up to do work when it is necessary. Further, this means they attempt to train as

many local people as possible. Finally, in cross-examination, Mr. Crowley frankly

acknowledged that his advice to MGM productions is that if they cant get the tax credit,they should not employ the person.


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III. Analysis and Decision

[22] The Employers first argument is that this grievance is not arbitrable. It says that Mr.Baxter was not an employee of Stargate Universe Productions II Inc. at the time the

grievance was filed, and therefore this arbitration board has no jurisdiction to hear the

matter. However, the Union points to the dispatch provisions, arguing that they provide

Mr. Baxter the right to grieve; and second, that this is a policy grievance as well as an

individual grievance.

[23] The dispatch provisions of the collective agreement are set out in Article A1.09.They read as follows:

A1.09 Union to Furnish Employees: The Union agrees to furnishLocal 891 Employees covered by this Agreement to perform work

in the job classifications of the departments as listed in ArticleA1.04 of this Master Agreement, and that said Employees will be

competent and will perform such work as is required by the

Employer under the provisions of this Master Agreement.Local 891 Employees shall be dispatched as follows:

Department Roster

1. Local 891 shall maintain a roster of its available and qualifiedmembers within each department recognized in the MasterAgreement (the Department Roster).

2. In order to remain on the Department Roster, a member must:(a) be a member of Local 891 in good standing as defined inArticle 1.10 and;

(b) have worked under the Master Agreement no less thanthirty (30) days in the preceding three (3) years; or

(c) have been unable to meet the requirements of subsection (b)as a result of absences due to disability, parental, union orpolitical leave.


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Auxiliary Roster

3. Local 891 shall maintain a roster of available and qualifiedworkers who are not members of Local 891 (the AuxiliaryRoster).

4.

In order to move from the Auxiliary to the Department Roster,a worker must:

(a)have worked ninety (90) days under the Master Agreement;and

(b)apply for and be accepted into Membership with Local 891which membership shall not be unreasonably withheld.

Order of Dispatch

5. Local 891 shall dispatch or the Employer may directlyemploy persons for employment in the following order:

First: Persons on the Department Roster who have been

selected by an Employer and who accept dispatch.

Second: Persons who are on the Department Roster and

who are available and qualified for dispatch according to

Local 891s dispatch procedure.

Third: Persons who are on the Auxiliary Roster who have been

selected by an Employer and who accept the dispatch.

Fourth: Persons who are on the Auxiliary Roster and who are

available and qualified for dispatch according to Local 891s

dispatch procedure.

6. When Local 891 is unable to supply available and qualifiedpersons in accordance with the preceding section, theEmployer may employ any person under the terms of the

Master Agreement.

7. The Employer shall not unreasonably refuse to acceptpersons dispatched by Local 891.

8. Members on the Department Roster may displace (i.e.,bump) employees who were selected or dispatched from the

Auxiliary Roster only in accordance with the following

conditions:

(a) The Member shall notify Local 891 of the proposed bump.


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(b)Local 891 shall determine the last employee selected ordispatched from the Auxiliary Roster and notify theEmployer of the proposed bump.

(c)Following the notification described in (b) Local 891 maydispatch the member to commence work following thecompletion of the bumped employees last scheduled shift.

(d)Articles 10.03 and 10.04 of the Master Agreement do notapply to a bumped employee.

(e)No member may bump into a position chosen by thatmember but must accept the position identified by Local891. The bumping outlined above shall not occur where it

would disrupt consistency or continuity of the crew or the

production.

(emphasis added)

[24] There are two primary methods of dispatch. First, an employer may name request aparticular union member, and if that member accepts that name dispatch, he/she is then

employed on that production. The second method is that the employer puts in a general

request for a Union member who is skilled to perform the work it requires. In the second

case, the Union dispatches the person next entitled to be dispatched under its various

department rosters. This Order Of Dispatch is set out in Article A1.09 (5) (quoted above).

I accept Ms. Moons evidence that under the Collective Agreement a union member is

dispatched pursuant to the collective agreement whether it is by an employers name

request, or from the Unions department roster.

[25] An examination of Article A1.09(5), Order of Dispatch, reveals that the subsectionuses the term Persons. It does not speak of employees who are to be dispatched. The

word employee is used in Article A1.09(8), permitting senior union members to use their

seniority to bump employees. In such circumstances, one union member is using their

greater seniority to replace an existing employee in an ongoing production. It is therefore

proper to speak ofemployees in Article A1.09(8).


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[26] However, Article A1.09 uses the term Persons because this refers to unionmembers who are not currently employed. Indeed, they are members of the Union who are

waiting in turn to be dispatched to employment. Such persons have a right to the grievance

procedure. Article A1.09(7) recognizes this fact stating that the Employer shall not

unreasonably refuse to accept personsdispatched by Local 891 (emphasis added). And,

indeed, if members of the Union did not have the right to challenge dispatches, whether in

respect to the Unions administration of the dispatch system (under theLabour Relations

Code), or in respect to an employers arbitrary refusal to accept union members, then these

members would have no rights in respect to employment opportunities. A dispatch system

permits employers to hire employees only when and where they are needed. They do not

need to carry a permanent employee complement. Conversely, the dispatch system

provides the Union with the opportunity to control the supply of skilled employees. Thus,

the administration of the dispatch system is a vital aspect of the rights of employees in the

film industryas it is in other industries of this Province, for example, the construction

industry.

[27] Conversely, the Union acknowledged that a union member has no right of recall to aspecific employer or production. Moreover, if an employer begins a second production, it is

free to name request a prior employee, or not. Thus, if a union member is not namerequested, nor are they dispatched pursuant to a general request by a production, the

employer is correct in stating that such a person would not have the ability to grieveabsent

a breach of the collective agreement or theLabour Relations Code.

[28] However, the Union claims that in this case the Employer has unilaterallyimplemented a rule that breaches Article A1.09(7) of the Collective Agreement. It says that

the refusal of the Employer to name request Mr. Baxter was based upon a rule it had

unilaterally implemented in respect to his lack of residency in the Province of British

Columbia. The Union agrees that but for this requirement of residency, Mr. Baxter

would not have otherwise had the right to grieve. It also states that the grievance is both an

individual grievance on behalf of Mr. Baxter and a policy grievance on behalf of the Union

and its members.


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[29] Mr. Crowley candidly acknowledged that he unilaterally implemented a rule inrespect to the dispatch of union members in addition to those requirements set out in the

collective agreement. He acknowledged that he will not name request, nor accept a union

member dispatched to any MGM production, unless they are a resident of British

Columbia. His reason is that such non-residents do not qualify for the Provincial Tax

Credit (33%) on the cost of their labour.

[30] The grievance, as originally crafted (May 7, 2010), raises Mr. Baxters specificcircumstances, but also raises the Employers residency requirement more generally we

view such a practice as discrimination in employment and that it is prohibited under the

B.C. Human Rights Codeunder Section 13 [discrimination based on place of origin].

Although the Union has abandoned its human rights claim, it now seeks an interpretation of

Article A1.09 consistent with the Canadian Charter of Rights and Freedoms. Further, the

Unions grievance concludes with a reservation clause in which the Union reserves the right

to add additional defenses and arguments at any time up to and including arbitration. The

Employer simply denies that this grievance is a policy grievance; alternatively, it argues that

if it is a policy grievance the Union is entitled to only a declaration. However, the Union has

abandoned its claim for compensation on behalf of Mr. Baxter and states that it seeks only a

declaration in respect to either the individual grievance or the policy grievance.

[31] If the Union had sought to convert a policy grievance, seeking only a declaration,into an individual grievance that sought past wages and benefits, it would have a very steep

hill to climb. A party will generally not be permitted to expand the remedies it seeks at the

arbitration hearing itself. However, in this case we have the opposite circumstance; here a

party seeks to reduce their remedies to a simple declaration.

[32] The issue, as framed by both parties, has remained the same throughout; that is, theUnion has challenged the Employers unilateral rule of a residency requirement as a pre-

condition to the employment of its members. This has remained the core issue throughout

the grievance process and the arbitration. Moreover, a declaration in respect to this matter

raises no issue of prejudice to the Employer; nor have they argued any. Thus, this matter


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can proceed either on the basis of an individual grievance or a policy grievance. Either one

is properly before me. The matter is therefore arbitrable.

[33] The Union claims that either under Article A1.09(7), the Employers requirement ofresidency is unreasonable; or under theKVP Co. Ltd. (1965) 16 L.A.C. 73 test, it equally

fails the test of reasonableness. InBrown and Beattystext, Canadian Labour Law, 4th Edition

September 2010, there is the direct quote from the KVP Co. Ltd. decision setting out the test

that an employer must meet in imposing a unilateral rule, as well as introductory and

summary comments:

Even where such rules do not form part of the agreement, it isnow generally conceded that in the absence of specific language

to the contrary in the collective agreement, the making of suchrules lies within the prerogative or initiative of management,and arbitrators have held this to be so whether or not an expressmanagements rights clause exists reserving the right ofmanagement to direct the workforce. However, this rule-making power is neither absolute nor without limitation.Rather, as summarized inKVP Co., a number of principlesrelating to this power have now become universally acceptedamong arbitrators. These principles provide that:

ICharacteristics of Such Rule

A rule unilaterally introduced by the company, and notsubsequently agreed to by the union, must satisfy the followingrequisites:

1. It must not be inconsistent with the collective agreement.2. It must not be unreasonable.3. It must be clear and unequivocal.4. It must be brought to the attention of the employee affected

before the company can act on it.5. The employee concerned must have been notified that a

breach of such rule could result in his discharge if the rule isused as a foundation for discharge.6. Such rule should have been consistently enforced by the

company from the time it was introduced.

IIEffect of Such Rule re Discharge


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1. If the breach of the rule is the foundation for the dischargeof an employee such rule is not binding upon the board ofarbitration dealing with the grievance, except to the extentthat the action of the company in discharging the grievor,finds acceptance in the view of the arbitration board as to

what is reasonable or just case.2. In other words, the rule itself cannot determine the issuefacing an arbitration board dealing with the question as towhether or not the discharge was for just cause because thevery issue before such a board may require it to pass uponthe reasonableness of the rule or upon other factors whichmay affect the validity of the rule itself.

3. The rights of the employees under the collective agreementcannot be impaired or diminished by such a rule but only byagreement of the parties.

Reformulated, these criteria may be said to require than anyplant rules which are unilaterally promulgated must not beinconsistent with the terms of the collective agreement, their

enforcement not be unreasonable, and they must be broughtto the attention of those intended to be regulated by them.

(emphasis added)

[34] In respect to the requirement of reasonableness, the following summary is set out inBrown and Beatty:

4:1554 The reasonableness requirement

In applying the standard of reasonableness, arbitrators assessthe extent to which the rule is necessary to protect theemployers interests in operating the plant, in preserving itsproperty, and generally in carrying out its operations in areasonably safe, efficient and orderly manner. At the sametime, the impact of the rule upon the employees interests must

be assessed and a balance struck that gives an appropriate effect

or proportional regard to each interest. Thus, where a rulepurports to regulate or concern itself with the employees

private lives, to be reasonable the employer must establish asubstantial connection with its legitimate interest.

(emphasis added)(p. 4-25)

[35] In regard to the six criteria set out inKVP Co. Ltd, (quoted above) the Union tookissue with only one; that is, such a rule must not be unreasonable. This is the same wording


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as is set out in the collective agreement: Article A1.09(7) states that the Employershall not

unreasonably refuse to accept persons dispatched by Local 891. However, in addition, the

Union argues that theKVPtest of reasonableness, and the collective agreement provision,

A1.09(7), must both be interpreted in light of the Canadian Charter of Rights and Freedoms;

more specifically, Section 7 the right to life, liberty and security of the person It

relies on three decisions: Godbout v. Longueuil (City[1997] S.C.J. No. 95; Telus

Communications Co. v. Telecommunications Workers Union (Denial of Benefits Grievances)[2010]

C.L.A.D. No. 11;Kamsack (Town) and CUPE Local 1881 (Erhardt)[2000] S.L.A.A. No. 4;

Cochrane (Town) v. CUPE Local 71 (Kulgawchuk Grievance)[2005] O.L.A.A. No. 450.

[36] In Godbout, supra, Michelle Godbout held the position of a radio operator for theLongueuil Police Force. As a condition of her employment, Ms. Godbout was required tosign a declaration promising that she would live in the City of Longueuil for as long as she

remained an employee of the municipality. This declaration also stated that if she moved

out of Longueuil for any reason she could be dismissed without notice. Several years after

commencing employment with the municipality she moved to a neighbouring municipality,

Chambly. The municipality asked her to move back into the City of Longueuil; however,

she refused to do so. The City then dismissed her. It was agreed that her firing was due

solely to her refusal to remain a resident of the City of Longueuil.

[37] The Majority of the Supreme Court concluded that the City of Longueuil hadbreached Section 5 (Every person has a right to respect for his private life), of the Quebec

Charter of Human Rights and Freedoms, R.S.Q. c. C-12, and that the Citys conduct was not

justified under Section 9.1: a provision which states that democratic limits may be placed

on the scope of a persons rights and freedoms.

[38] Mr. Justice LaForest (joined by L-Heureux Dub and McLachlin, J. (as she thenwas)) concluded that Section 7 of the Charterestablished the right to an irreducible

sphere of personal autonomy where an individual may make inherently private choices free

from state interference. (para 66) He further concluded that choosing where to

establish ones home is, likewise, a quintessentially private decision going to the very heart


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of personal and individual autonomy. (para. 66) Mr. Justice LaForest then finds that a

choice of residency is one deserving of constitutional protection:

Moreover, not only is the choice of residence often informed by

intimately personal considerations, but that choice may alsohave a determinative effect on the very quality of ones privatelife. The respondent put this point succinctly in her factum:

[Translation] Residence determines the human andsocial environment in which an individual and his or herfamily evolve: the type of neighbourhood, the schoolthe children attend, the living environment, services, etc.In this sense, therefore, residence affects the individualsentire life and development.

To my mind, the ability to determine the environment in whichto live ones private life and, thereby, to make choices in respectof other highly individual matters (such as family life,education of children or care of loved ones) is inextricably

bound up in the notion of personal autonomy I have beendiscussing. To put the point plainly, choosing where to live will

be influenced in each individual case by the particular socialand economic circumstances of the person making the choiceand, even more significantly, by his or her aspirations,concerns, values and priorities. Based on all theseconsiderations, then, I conclude that choosing where to

establish ones home falls within that narrow class of decisionsdeserving of constitutional protection.(para. 68)

[39] Mr. Justice LaForest then proceeds to balancing the constitutional right of theindividual claimant against the countervailing interests of the state (para. 76). The

municipality had put forward three justifications for its residency requirement: first, the

maintenance of a high standard of municipal services; second, the stimulation of local

business, municipal taxation and revenue; and third, the need to ensure that workers

performing essential public services are physically proximate to their place of work. Mr.

Justice LaForest concluded the first two reasons were not sufficiently compelling to override

Ms. Godbouts right to decide her place of residency; however, the third, in certain

circumstances, would justify a residency requirement. However, this essential service

exception was not sufficiently compelling in the circumstances of Ms. Godbout.


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[40] Mr. Justice Major, on behalf of the Majority, wrote that although not warranted inMs. Godbouts particular circumstances, the Citys objectives of improving the quality of

service by fostering loyalty of employees, of supporting the local economy, and of ensuring

certain essential service employees were readily available, may, depending on the

circumstances, all be sufficiently compelling to justify an infringement ofan employees

right to privacy. The Majority of the Court also expressly stated its view that it was

unnecessary to address whether or not the Citys residency requirement infringed Section 7

of the Canadian Charter of Rights and Freedoms.

[41] The Godboutdecision was cited in both the Town of Kamsack, supra and the Town ofCochrane, supra decisions. In both cases the respective municipalities had adopted a

residency requirement that made employment conditional upon its employees residing

within the township. In the Town of Kamsack, supra the arbitration board concluded that it

did not need to determine the issue of a residency requirement under the terms of the

Canadian Charter of Rights and Freedomsbecause the Employers residency requirement failed

the test of reasonableness under theKVPtest:

79 As to the reasonableness or otherwise of the residency

policy I accept Professor Beattys observations in theMcKellarGeneral Hospitalcase quoted at p. 173 of this Award that a test

of reasonableness entails an element of proportionalitybetween the objectives which are sought and the means bywhich those purposes are accomplished, and further thathaving some reason or rationale relevant to the employmentrelationship must be balanced against the competingclaims and interests of the employee . Clearly, and evenapart from the Canadian Charter of Rights and Freedomsan

individual has an interest in where to reside. Arbitraljurisprudence is clear that unless there is a substantial and

legitimate business reason, employers have no authority,control, interest or jurisdiction over an employees behavioroutside the employees hours of work (See Brown & Beatty,para. 7:3010, p. 7-29) and in my view an employees behaviorwould include where the employee chooses to live.

80 The rationale for the Residency Policy was twofoldfinancial and security. As regards security the evidence simply


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falls far short of supporting a role that would require Ms.Erhardt as a Clerk Steno II to reside in Kamsack as opposed to25 km outside of Kamsack. The financial rationale has moremerit and I recognize that the Towns declining population is aserious concern for it. Although by not residing in Kamsack

Ms. Erhardt does negatively affect the Towns per capita grants,the financial concern is met in part by the fact that Ms. Erhardtis still a property owner within Kamsack and that her and herpartner own property in the R.M. of Cote which R.M. doescontribute to a degree to the costs of operating the serviceswhich the Town of Kamsack provides. However, and even ifMs. Erhardt was not a property owner, I am simply unable toconclude that the Towns legitimate concerns in this regardoutweigh Ms. Erhardts right to live and conduct her life,outside her working hours, as she sees fit. Even if, as theevidence indicated, an additional 3 employees will move out of

town if the grievance is upheld, that fact simply will notsignificantly impact on the Towns financial concerns and doesnot justify such an intrusion on the lives of its employees.

82 I have concluded that the Residency Policy, as a unilaterallyimposed rule is, in all of the circumstances of the present case,unreasonable.

(para. 79, 80 and 82)

[42] Similarly, in the Town of Cochrane, supra the arbitration board concluded that theresidency requirement failed on the basis of reasonableness as set out in theKVPtest. It

further agreed that a residency requirement was an infringement upon the freedom of an

employee:

20 It is worth notice here the case ofGodbout v. Longueuil[1997] S.C.R. 844, in which the Supreme Court of Canadastruck down a municipal residence requirement in a case

brought by an employee who was terminated after she moved

from the city. All nine judges said the requirement violated theQuebec Charter, and three said it violated the Canadian Charterof Rights and Freedoms, specifically Section 7s right to life,liberty and security of the person (the other six said it wasunnecessary to rule on the Canadian Charter). Writing for thosethree La Forest J. said (at paragraph 66 and 67),


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the autonomy protected by the s. 7 right to libertyencompasses only those matters that can properly becharacterized as fundamentally or inherently personalsuch that, by their very nature, they implicate basicchoices going to the core of what it means to enjoy

individual dignity and independence In my view,choosing where to establish ones home is aquintessentially private decision going to the very heartof personal or individual autonomy. In my view, thestate ought not to be permitted to interfere in this privatedecision-making process, absent compelling reasons fordoing so.

21 The judgment goes on to leave open the possibility thatmunicipalities may have the right to impose residencerequirements on essential workers, such as firefighters or

ambulance personnel, but adds (at paragraph 85) thatconsiderations such as distance from work or time needed toget there may constitute more cogent criteria upon which tostructure such a requirement than city limits. The main point,with which I agree, is that a residence requirement is animposition on a fundamental freedom and is only justified tothe extent that is strictly necessary. Where the employer hasnot even attempted to define reasonable response times, andwhere employees are on standby for only a quarter of their timeoff, a residence requirement seems neither necessary norreasonable.

(para. 21 and 22)

[43] As set out inBrown and Beatty, and quoted above, the issue of reasonableness in thesecircumstances begins with the recognition that a rule of residency, unilaterally imposed by

an employer, is intended to regulate an employees private life - where they choose to live.

In such circumstances, there must be a substantial connection between the rule and the

employers business interests. I conclude that this test is easily resolved in these

circumstances: there is a direct and material connection between the Employers

requirement of residency and the provincial tax credit which statutorily applies only toemployees who are residents of the Province.

[44] The second aspect of reasonableness in this case is the significance of the provincialand federal tax rebates(the provincial tax credit is 33% and the federal is 16%). Mr.

Leitch testified that the British Columbia provincial tax credit must compete both nationally


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and internationally with other jurisdictions in order to attract film and television

productions. Both Ontario and Quebec have tax credits of 25% on all goods and services,

thus exceeding the British Columbia tax credit which is limited to simply the cost of labour.

Indeed, Michigan has recently instituted a 40% tax credit on all goods and services, and as a

result, Detroit has recently attracted productions on that basis alonenotwithstanding that

they neither have the infrastructure nor trained film crews. In summary, Mr. Leitch

described these tax credits as critical to the television and film industry, and that without

them, there would be an immediate erosion of productions, followed by a further erosion

of the existing infrastructure.

[45] Mr. Crowley stated that with the Canadian dollar at or near par with the Americandollar, a tax credit becomes increasingly important. He explained how productions developcomparative budgets based on tax credits that may be obtained in different locations; for

example, net budgets may be prepared forBritish Columbia, Ontario, Oregon, Michigan,

all for the same production. And it is the net budget that is often determinative of where the

production is actually filmed. It is clear, therefore, that provincial and national tax credits

in Canada, and the tax credits offered internationally, are an essential element in the

development and maintenance of the television and film industry worldwide.

[46] Third, the Canada Revenue Agency, which administers the tax credits on behalf ofboth the federal and provincial governments, conducts regular audits in respect to television

and film productions. As Ms. Rieder stated, these audits have increased as the tax credits

have correspondingly increased. She testified that the Canada Revenue Agency has

consistently refused to extend the provincial tax credit to any employee who is not a resident

of British Columbia.

[47]

Fourth, Mr. Crowley, who acknowledged he is responsible for the implementation ofthe residency rule, also candidly admitted that he has hired certain individuals who do not

qualify for the tax credit. The usual example may be the star of the series or an

exceptionally skilled individual and/or their special assistants. The number of such

employees are few because the production, as he stated, wants the cost effectiveness of the

tax credit. I conclude that these exceptions to the residency rule, as explained by Mr.


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Crowley, do not amount to an arbitrary or inconsistent application of the Employers rule;

rather, the examples given, and not disputed, represent a coherent and commonsensical

approach to the business viability of each production; in other words, the exceptions are

reasonable, and do not challenge the fairness of the general residency requirement.

[48] Fifth, the Employers residency requirement is consistent with the collectiveagreement. The parties have specifically negotiated a provision in the collective agreement

that requires employees to provide information confirming their residency in order for

production companies to receive the federal and provincial tax credits:

1.21 Residency: Employees must provide Canadian andProvincial residency information sufficient to ensure that theproduction company is eligible to receive the federal and

provincial incentives including tax credits. This informationwill be held in accordance with thePersonal InformationProtection Act.

[49] It was agreed between the parties that this provision is not a residency requirement,but rather a disclosure requirement. Thus, the parties have recognized contractually the

importance of residency in respect to both attracting productions to the Province, and the

significance of these tax credits in respect to the employment of Union members on these

productions.

[50] Sixth, Ms. Moon, on behalf of the Union, acknowledged that IATSE 891, along withthe other unions in the film industry, joined with the Producer/Employers to persuade the

provincial government of the crucial importance of tax credits to the film industry in this

province. As well, as Mr. Leitch stated, both Employers and Unions join together annually

to persuade American producers to come to the Province of British Columbia to take

advantage not only of the skills, the infrastructure, the locations, but also the tax credits

available to all such producers should they decide to film in the Province of British

Columbia.

[51] Finally, the prior cases have involved residency requirements within a specificmunicipality. In this case the first residency requirement involves an entire province; the

second involves a residency requirement within an entire country.


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[52] Thus an employers rule or decision to hire one employee over another, both ofwhom are equally skilled (and all other things being equal), because one qualifies for a tax

credit in respect to their services, while the other does not, is a reasonable decision or policy.

And the reasonableness of this decision or rule is even more compelling when the

significance of that tax credit is viewed, not just in individual circumstances, but within the

context of the industry as a whole, and moreover, as public policies that must compete both

nationally and internationally, and finally, the role of these parties in the creation and

implementation of these policies.

[53] I conclude, therefore, that under the Collective Agreement, Article A1.09(7), andunder theKVPtest, the residency requirement imposed by the Employer in this case is

reasonable.

[54] However, the Union says, that notwithstanding the Employers legitimate interest inthe issue of tax credits, its residency requirement, when interpreted in light of the Charter,

cannot survive.

[55] It is not in dispute that the Canadian Charter of Rights and Freedomsdoes not apply tothese private parties. However, I do accept the Unions position that Chartervalues, such as

privacy, must inform the law of employment as it is developed in arbitration (Peace Country

Health [2007] AGAA No. 17 (QL) (Sims); Telus Communications Co. (2010) 192 LAC 4th 240

(Lanyon).

[56] In the circumstances ofGodbout, supra;Kamsack, supra and Cochrane, supra, themunicipalities had implemented policies requiring employees to reside within each of their

municipalities. In the circumstances of this case, these are private parties who are

compelled to follow provincial and federal legislation should they seek to avail themselvesof the benefit of tax credits. This legislation is enforced by the Canada Revenue Agency.

[57] The Union seeks an interpretation of the concept of reasonableness, under thecollective agreement and/or theKVPtest, that is informed by the Charters value of privacy.

However, what the Union specifically seeks is to obtain a ruling that incorporates Mr.


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Justice LaForest Minority opinion in Godbout, supra, that the Employers rule, which

directly derives from federal and provincial statutes, violates the privacy rights of its

members. The remedy it seeks is either to have the Employers rule struck down, or a

constitutional balancing of the respective rights of its members on a production by

production basis. It seeks, in effect, not simply a definition of reasonableness informed by

Charter values, but ratherCharterconclusions and remedies in respect to the issue of a

residency requirement in the film industry in British Columbia. Thus, the Union seeks to do

indirectly through an interpretation of the concept of reasonableness, what it has chosen not

to do directly - challenge the constitutionality of the residency requirements under section 7

of the Charter. And in such a challenge all interested parties would be able to participate. I

therefore decline to address the Unions arguments under the Charter.

[58] I note, but do not decide, that the Grievor, Mr. Baxter, seeks to use the Chartertoconfirm his right to live in a different countryU.S.A. The grievance claims this right as

well. The Union has 36 members who reside outside of Canada; and it has 136 members

who reside outside the Province of British Columbia.

[59] In summary, I conclude that the Employers implementation ofits residencyrequirement, concerning the respective tax credits, is reasonable, under both the collective

agreement, and under theKVPtest. I have declined to address the Unions arguments in

respect to the Charter.

[60] It is so awarded.[61] Dated at the City of New Westminster in the Province of British Columbia this 14thday of February, 2011.

Stan Lanyon, Q.C.

arbitration ruling: baxter sg residency bc lac 2011

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