Letter RE: CN Agreement

(CN Letterhead not reproduced)

December 1, 1999

Mr. W. Guy Scarrow
Vice-President
Canadian Council of Railway Operating Unions
750-1595 Telesat Court
Gloucester, Ontario
K1B 5R3

Dear Mr. Scarrow;

This is in reference to the discussion on November 30th concerning the arbitration award dated 25 November 1999 as it relates to the flow back of UTU employees from VIA to CN.

It is our understanding that VIA has notified employees that they will no longer compensate them as a result of the above mentioned award. As such, a number of these employees have contracted the Company to exercise seniority at CN.

As discussed, in addition to qualification issues referred to further below, there are many outstanding matters yet to be resolved which would have a bearing on the outcome of such a transfer, such as, the decision of the CIRB which has yet to be dealt with, the training and seniority dispute at VIA, and the legal proceedings which have been and may be undertaken on the CIRB ruling, and on the Picher award, all of which may certainly change the legal rights of the parties or the composition and number of employees that would flow back to CN.

In light of the above, without prejudice to either parties' positions in this matter and subject to the final outcome of the various legal proceeding and related issues, the Company would agree with you to compensate the affected employees who have requested to exercise their seniority to CN on an interim basis, until further notice on the following agreed upon conditions:

Former VIA employees will be placed on the "non-essential" board at CN.

Employees on the "non-essential" board will be paid at the same rate they were being paid immediately prior to their transfer to CN.

Subject to qualifications, as well as particular collective agreement seniority, such employees will be required to protect work in reverse seniority order when no other employees are available under agreements 4.2, 4.3 or 4.16.

All earnings made while working under Agreements 4.2, 4.3 or 4.16 will be used to offset the "non-essential" board payment.

It is understood that in most cases, in order to utilize these employees, forms of training, L.C.S., O.B.R.S., C.L.O., etc., current rules and medical qualification will be required. Until such time as the outstanding legal proceedings and related matters referred to above have been resolved, the Company will project the usage of such employees at each terminal and limit training/qualifying accordingly.

I trust this accurately reflects our agreement on this matter.

Richard J. Dixon
Vice President

I concur:

W. G. Scarrow
Vice President - C.C.R.O.U. (UTU)