In a recent decision, the Ontario Labour Relations Board refused to exercise its discretion to declare that two construction companies were one employer under subsection 1(4) of the Labour Relations Act, 1995 (Act). Subsection 1(4) of the Act permits the Board to treat two different entities as a single employer, and to grant the relief it deems appropriate, where the two entities operate under common control and direction. In The United Brotherhood of Carpenters and Joiners of America, Local 93 v. Les Industries CAMA, Jumec Construction Incorporated (March, 2015), although the two companies were found to be under common control and direction, the Board refused to declare them as a single employer for lack of evidence of any meaningful erosion of the union’s bargaining rights. Emond Harnden’s own Sebastien Huard expertly represented one of the companies in this interesting case involving associated businesses.
The policy underlying subsection 1(4) of the Act is to preserve the institutional and contractual rights of a trade union by attaching those rights to a commercial activity as opposed to a particular legal vehicle through which the activity is carried on. The effect is that the established bargaining rights and collective agreement will be preserved, even where the commercial activity or business is transferred from one employer to another. In this respect subsection 1(4) is similar to section 69, which preserves collective bargaining rights where a business is sold or transferred.
There are three pre-conditions that must be met in order for the Board to treat two or more entities as a single employer under subsection 1(4) of the Act:
- there must be more than one organization involved;
- the businesses or activities must be under common control and direction; and
- the businesses or activities must be associated or related.
In this case, the companies Cama and Jumec conceded that the first and third pre-conditions had been met but disputed the second pre-condition. They argued that the entities were not under common control and direction. In making its determination, the Board looked for the following indicators of common control:
- common ownership or financial control;
- common management;
- interrelationship of operations;
- representation to the public as a single integrated enterprise; and
- centralized control of labour relations.
It found that the two companies had common ownership and control by virtue of the majority shareholder of Jumec holding 49% of the shares of Cama. The Board noted that this individual was acknowledged to be a key management employee of both companies, and had been involved in labour relations decisions at both companies. It therefore concluded that the companies operated under common control and direction.
The next issue was whether the Board would exercise its discretion to declare the companies as a single employer under the Act. The Board noted that the purpose of such a declaration is to prevent bargaining rights from being eroded, but, that such a declaration should not be made where doing so would result in an extension or expansion of the union’s bargaining rights. In the case at hand, the Board found that the potential for any erosion of the union’s bargaining rights in the future was “speculative at best”. It found that to declare the entities as a single employer would have the effect of expanding the union’s rights. In dismissing the union’s application the Board went on to note that subsection 1(4) was not meant to replace the certification process and to capture a pre-existing company which “largely continued to operate as it did before its connection to the unionized one”.
For further information please contact Sébastien Huard at 613-940-2744.