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Model Clause on Financial Exigency

1
Financial exigency is a situation where the institution experiences substantial and recurring losses which threaten the survival of the institution.

2
No member shall be terminated, dismissed, suspended, or otherwise penalized with respect to terms and conditions of employment and/or rights or privileges relating to employment on account of budgetary reasons. Members may be laid off in accordance with this article only if a state of financial exigency has been declared and confirmed pursuant to the procedures contained in this article, and then only after every effort has be undertaken to alleviate the financial exigency by economies in all other segments of the budget, and after all means to improve the institution’s revenues have been exhausted.

3
Lay-off pursuant to this article is not dismissal for cause, and shall not be recorded or reported as such.

4
In the event that the employer considers that a financial exigency exists, within the meaning of Article 1, it shall give notice to the association of such belief. As of the date of such notice to the association, the procedures specified in this article shall apply. There shall be an institution-wide hiring freeze. No new positions shall be created.

5
Within five days of giving notice of its belief that a financial exigency may exist, the employer shall forward to the association all financial documentation relevant to the alleged state of financial exigency.

6
Within 15 days of the notice specified in Article 4, the parties shall establish a financial commission which shall review all materials it deems relevant to the alleged financial exigency and report in writing to the employer and the association that either:

(a) a state of financial exigency exists, or
(b) a state of financial exigency does not exist.

7
The composition of the financial commission shall be as follows:¹

(a) three representatives selected by the association,
(b) three representatives selected by the employer, and
(c) a chair selected unanimously by the six representatives.

None of the above members of the commission shall be a government official.

8
The financial commission shall determine its own terms of reference and decision-making procedures consistent with generally recognized principles of natural justice.

The cost of the financial commission established under this article shall be borne by the employer.

9
The onus of proof shall be on the employer to establish to the satisfaction of the financial commission that a state of financial exigency exists within the meaning of Article 1.

10
The employer shall cooperate with the financial commission and shall provide all documentation necessary to establish to the satisfaction of the financial commission that a state of financial exigency exists within the meaning of this article.

11
The financial commission shall invite and consider submissions on the institution's financial condition. Inter alia, it shall consider:

(a) whether there are substantial and recurring losses which threaten the survival of the institution;

(b) whether, in view of the primacy of academic goals at the institution, a reduction in the number of academic staff is necessary to effect a cost saving;

(c) whether every effort has been made to achieve cost savings in other areas of the institution’s budget;

(d) whether every effort has been made to improve the institution's revenue position by any other means, including borrowing, deficit financing, and the sale of assets not essential to the academic functioning of the institution;

(e) whether every effort has been made to secure further assistance from government;

(f) whether enrollment projections are consistent with the proposed reduction in the academic staff complement;

(g) whether all means of reducing the academic staff complement have been exhausted, including voluntary early retirement, voluntary resignation, voluntary transfer to reduced time status and voluntary redeployment, and

(h) whatever other matters it considers relevant.

The report of the financial commission shall answer each of (a) through (g) above, and all other matters considered under (h).

12
The financial commission shall deliver its report to the employer and the association within 90 days of its appointment.

(a) If the commission finds that a state of financial exigency does not exist, there shall be no lay-offs.

(b) If the commission verifies that there is a state of financial exigency the report shall specify the amount of reduction required, if any, in the budgetary allocation to salary and benefits for members of the bargaining unit. Any reduction in the budgetary allocation for academic salaries and benefits shall be made conditional upon the further exploration of alternative cost-saving measures by the institution, and the commission shall remain seized of its jurisdiction in this matter pending the satisfactory exhaustion of all such specified alternatives.

(c) Whether the commission confirms or rejects the financial exigency, the parties recognize that the commission may also make recommendations regarding any financial problem it deems relevant, provided that such recommendations are consistent with the provisions of the collective agreement.

(d) Within 30 days of receiving the report, the parties shall meet to discuss the implementation of these recommendations.

13
Where the financial commission confirms that a state of financial exigency exists, the reduction in salaries and benefits of members shall not exceed the amount specified pursuant to12(b).

14
Where a reduction in the academic staff complement is required, lay-offs shall take place in the following order:

First: contract academic staff²
Second: tenure-track appointments and if necessary,³
Third: tenured or continuing appointments.

In each of the above categories the lay-offs shall be by reverse order of seniority. The association shall be provided with existing current seniority lists within each of the categories. If two (2) or more members have equal seniority, the order of seniority shall be decided by lot.

15
After the selection of the academic staff members who are to be laid off, but prior to the implementation of such lay-offs, the employer shall make every reasonable effort to secure positions elsewhere in the institution, including administrative positions, for those individuals who are to be laid off. Individuals who accept such alternative employment shall retain all pre-existing employment rights, including salaries, pension and benefits, and credit for sabbaticals. Individuals who accept such alternate employment shall be given the opportunity to retrain for their new duties, and the employer shall pay any related fees and shall pay their existing salaries while they retrain.

16
(a) For each contract academic staff member who is selected for lay-off, the employer shall provide a minimum of six months’ written notice of the proposed date of lay-off or six months’ salary in lieu of notice, or notice that the employer will honour all contractual obligations to the member. Where the member’s contract is for more than six months, the period of written notice or salary in lieu shall be adjusted accordingly.

(b) For each member who is serving in a tenure-track, tenured or continuing appointment who is selected for lay-off, the employer shall provide:

(i) 18 months' written notice of the proposed date of lay-off or salary in lieu thereof; and

(ii) one month's salary for each year of service in the institution, with no less than 12 months’ salary for members with tenure or continuing appointments.

All payments under Article 16 shall be based on the individual's total salary, including the employer's contributions to pension and other benefit plans.

In addition to the other allowances specified above, academic staff members who receive notice of lay-off shall also have the option of receiving their accumulated sabbatical entitlement in the form of paid leave on a pro-rata basis, commencing on the date when their lay-off is scheduled to begin. Academic staff members who exercise this option shall be treated in all other respects as being laid off within the meaning of this article.

17
Academic staff members who are laid off shall have, for a period of five years, a right of first refusal for any post in their former academic unit, unless the employer can demonstrate that the post is so specialized that it cannot be filled by the candidate or by a re-arrangement of the duties of other members of the same academic unit. In addition, each academic staff member who is laid off shall have a right of first refusal for any other vacant post in the institution for which he/she is qualified or for which he/she may be expected to be qualified within a period of training. Disputes arising out of these recall procedures are referable to the grievance and arbitration process set out in this agreement. Without limiting the generality of the foregoing, arbitration is available with respect to disputes concerning the qualifications and/or suitability of the recall candidate, the respective qualifications of competing recall candidates, compliance with positive action policies included in this agreement, the required degree of specialization and consideration of re-arrangement of duties.

18
Individuals who are recalled pursuant to Article 17 shall have up to six months to accept such recall offer, and up to 12 further months to terminate alternative employment and take up the offered post.

19
(a) Recalled employees returning to service in the institution shall retain all rights and entitlements at the time of lay-off. The salary of the recalled employee shall be the salary at the time of lay-off increased by any applicable across-the-board or standard increments, not including increments for career development awarded during the period of lay-off unless the person’s activities during lay-off warrant payment for career development.

(b) In cases where a person is recalled to a non-bargaining unit position and the individual’s salary prior to being laid off was superior to the salary of the recall position, the individual shall receive the salary at the top of the salary scale for that position.

20
Each academic staff member who is recalled to an area or post other than within his/her original discipline retains a full right of first refusal for any opening in his/her original discipline.

21
As long as any academic staff member is eligible for recall under this article, there shall be a moratorium on all new appointments of any kind, including but not limited to administrative positions, support staff and teaching assistants. Moreover, while the employer is entitled to fill existing positions, it may do so only if those members with recall rights do not have the necessary qualifications or cannot reasonably be retrained for those positions. For greater certainty, the arbitrator shall have jurisdiction to review the substance of the employer's decision with respect to necessary qualifications and reasonable retraining.

22
Should a member on a recall list refuse to take a position, their name shall remain on the recall list.

23
Academic staff members who are laid off shall be assured of full access to scholarly facilities, including office and laboratory space, and library and computer services (including e-mail and Internet services) until alternative academic employment is secured, or their recall rights expire, whichever first occurs.

24
For purposes of facilitating retraining, laid off academic staff members shall receive full tuition waivers for any course taken at the institution during the recall period. In addition, the spouses and dependents of laid off academic staff members shall have the same rights to tuition assistance as spouses and dependents of academic staff.

25
Until they have secured alternative full time employment, laid off academic staff members shall be provided, at the institution's expense, with all pension and insurance coverage (including life, medical, dental, sickness and disability) or coverage equivalent to that provided to academic staff who have not been laid off.

26
Academic staff members on lay-off who are recalled shall repay any portion of the payment specified in Article 16 which exceeds their entitlement had they continued to occupy their normal position.

Endnotes
1. CAUT recommends that at least one of the representatives selected by the association should have financial expertise.

2. Contract academic staff includes anyone who does not hold a tenure-track, tenured or continuing appointment.

3. Definitions of tenure-track and continuing appointments vary across the country. Associations should adapt the definition to their own agreements.