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CP Rail overhauls firing policy to improve labour relations

A Canadian Pacific Railway crew works on their train at the CP Rail yards in Calgary.

TODD KOROL/REUTERS

Canadian Pacific Railway Ltd. has implemented a new disciplinary program for its unionized employees in a bid to improve labour relations and overhaul a dismissal policy criticized as unduly harsh.

Keith Creel, CP's new chief executive officer, said in a memo to employees the company will use more "non-disciplinary assessments" and "deferred suspensions" instead of actual suspensions to punish those who violate safety rules or the attendance policy.

CP workers represented by five unions perform work ranging from driving and fixing trains to administrative support and policing.

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In the memo sent earlier this month, Mr. Creel said an extensive turnaround at CP achieved results but included mistakes. The company underwent widespread cost-cutting and job losses starting in 2012 under CEO Hunter Harrison. Some employees said a harsh culture developed in the company during that period.

"The transition was tough," Mr. Creel said in the memo, obtained by The Globe and Mail. "When you are in survival mode you have to move quickly. When you do, you can make mistakes. We got most things right, as we can all see in the results, but not everything. That's why a few weeks ago, as one of my first acts as CEO, I asked my team to take another look at our discipline policy. It's not that we need to dwell on the how's and why's of the past, but I want the future to look different."

CP's new employee discipline and accountability policy, effective March 8, includes an informal process to deal with employees who have had no violations for three years. "Progressive discipline" starts with five-day suspensions for less serious offences. "Serious offences," including violating radio rules or improperly dismounting moving equipment will bring a 10-day suspension. Major offences, including exceeding speed limits by 10 miles (16 kilometres) an hour or causing a derailment, carry a 20-day suspension or outright dismissal.

The changes come after a Globe and Mail investigation revealed soaring numbers of firings of locomotive crews for minor transgressions. The Globe found Mr. Harrison's bid to turn around what was an industry laggard in four years came at a steep price for employees, who recounted being bullied by bosses, rampant dismissals and a culture of fear and intimidation.

"We are going to try a different approach," Mr. Creel said in the memo, which was posted to CP's internal website and distributed to the company's train stations across Canada a week after the publication of The Globe's story early this month.

The union leader who represents 1,100 CP employees, who repair and maintain locomotives and rail cars, said he welcomed CP's bid to end the "egregious" discipline practices unsupported by case law in other trades.

"We still feel the new policy is too punitive in its application, but it is definitely a step in the right direction," said Bruce Snow, Unifor's national rail director.

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After Mr. Harrison's arrival at CP, grievances over dismissals of train operators rose to an average of 23 a year from an average of five in the previous nine years, according to the Teamsters Canada Rail Conference union. Seventy-seven of the 92 train operators fired got their jobs back only after arbitration, where CP's disciplinary procedures were often criticized as excessive and unjust.

Transgressions for which train engineers and conductors were fired included removing safety glasses in a locomotive, urinating outside a rural station or getting hurt on the job and not reporting it in a manner the company deemed satisfactory.

"I came very close to losing my family because of what was done to me, and I'm sure there are employees who have paid that price," one worker told The Globe, which agreed not to name him to protect him from reprisals.

To be sure, the list of firings also includes dismissals for serious safety violations that caused derailments.

Martin Cej, a CP spokesman, said work on the new policy began in early February, shortly after Mr. Creel was promoted. Mr. Cej said Mr. Creel recently met with the leader of the Teamsters union, and is currently meeting with large groups of employees, "answering questions and hearing their concerns."

"CP has reached out to the [Teamsters] ahead of the expiration of the current contract and we look forward to working collaboratively with the union leadership in the months ahead," Mr. Cej said in an e-mail.

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Mr. Harrison became CP's CEO after a fight for control of the boardroom led by activist investor William Ackman, who saw CP as an underperforming company with a stock price that did not reflect its potential value. Mr. Harrison embarked on an aggressive campaign of cost-cutting and implemented scheduled railroading that required fewer locomotives and employees. The share price and profits soared.

In 2013, Mr. Harrison hired Mr. Creel, who was his understudy at Canadian National Railway Co. and his replacement when he left to pursue the CEO's job at CSX Corp. in January.

In the memo to employees, Mr. Creel said CP before Mr. Harrison's revamp was a "company in serious trouble."

"Our free cash flow was negative $592-million, meaning about half a billion dollars more went out than came in. Our service and operating ratio were the worst in the business. Our credit rating was BBB-, just above a junk rating. Clearly, the direction in which CP was headed was not sustainable," Mr. Creel said.

In early March, about 60 engine crew members who had been dismissed were awaiting arbitration, said Dave Fulton, a Teamsters union official. Not all are likely to get their jobs back, given their conduct, he said.

Mr. Fulton said that on the morning The Globe published its investigation, the company called nine employees who had been dismissed and told them to return to work. The Globe was unable to confirm this with CP.

Mr. Creel said in the internal memo he would personally review "outstanding terminations."

"I have already directed some reconsiderations. Not all cases can be eligible. Some infractions are so serious that, for the protection of all, there can be no second chance," he said.

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