I have written a couple of explanatory posts (see here and here) on Ontario’s new Bill 148 legislation, which amends parts of the Employment Standards Act, Labour Relations Act, and Occupational Health and Safety Act.
This post arises from a quick chat I had the other day with Ferdando Reis, who is Director of the Legal Department for the United Food and Commercial Workers in Canada (and an alumni of the Osgoode Hall Law School specialist LLM in Labour and Employment Law for which I am the Director — PLUG: new cohort starting in fall 2018…). Fernando and I were chatting about how Bill 148 deals with employees who work for employers operating in the “building services” industry, and how it is similar yet slightly different than legislation (Bill 40) enacted to deal with the same issue by the Bob Rae NDP government of the early 1990s.
Bill 148 adopts almost verbatim the text from the 1992 legislation in expanding the scope of the successorship provisions in the Labour Relations Act. However, the treatment of employees under the ESA is different under Bill 148 than it was in the early 1990s in regards to what happens to employees when a service contract is transferred from one provider to another. The result I think is that Bill 148 both makes it easier for building services employees to unionize, and actually creates a strong incentive for them to do so.
Let’s walk through this. Let me know if you think I’m missing something or my reading of the law is incorrect.
Firstly, building service employers include all those companies that provide food services, cleaning services, and security services for and in buildings across the province. These companies usually get business contracts through a tendering process. Companies bid on the jobs and the building owner or property manager awards the contract to the winning bidder. Legal issues arise because the contracts are sometimes re-tendered, or the contract provider is otherwise replaced for one reason or another by a new contractor.
From an employment law perspective, the question has been what to do about the employees who performed the work at the premises for Contractor A when the contract is then transferred to Contractor B. Should Contractor B be required to retain the employees of Company A? If not, which company should be on the hook for termination pay if as a result of the transfer of the contract, the original employees who performed the work for Contractor A no longer have jobs? What if Contractor A is unionized and governed by a collective agreement? Should Contractor B inherit the collective agreement and the employees of Contractor A who are protected by it? Both the Employment Standards Act and the Labour Relations Act have something to say about these questions.
How Bill 148 Regulates the Building Services Industry
Let’s consider first how Bill 148 alters the Labour Relations Act in relations to employees in the building services industry.
Bill 148 recognizes that employees who work for companies that provide cleaning, food, and security services in buildings are vulnerable and difficult for unions to organize, and therefore gives them an easier route to unionization than most other employees in Ontario. A new Section 15.2 of the Labour Relations Act will permit unions organizing these workers to opt for a one-step, card-check model of certification rather than the more challenging two-step mandatory ballot model in effect for most employees. The new requirement for employers to provide unions with employee lists with contact information will facilitate contact with these workers as well. So Bill 148 intends to the road to unionization easier for building service employees.
Importantly, Bill 148 also amends the “successor employer” provisions of the LRA by reinstating an old law originally enacted by the Bob Rae NDP government as part of Bill 40 way back in 1992. I recall those days, because I was working as a summer law student in the legal department of United Steelworkers in Toronto at the time, which represented a bunch of security guard companies. That law (which appeared as Section 64.2 of the 1992 LRA) deemed a transfer of a contract from one service provider to another to be a “sale of business”. For example, if Contractor A had a contract to provide security or cleaning services to a condominium building and then one day the condo owner decided to use Contractor B to provide the services instead, the old Section 64.2 deemed Contractor B to be the successor employer, provided certain conditions were satisfied.
That law addressed the fact that the normal successorship provisions in the Act did not capture the situation of a service contract with a unionized company being cancelled by the building owner or manager, and then re-tendered or re-assigned to a new services company. Therefore unionized cleaners could lose their collective agreement coverage and job rights every time their employer lost a contract. Sometimes employees of Contractor A were hired on by the new Contractor B, but under a brand new employment contract since the collective agreement did not carry over to Contractor B.
The NDP’s Bill 40 law, which like Bill 148 was intended to better protect vulnerable employees, legislated that the transfer by the property owner from Contractor A to Contractor B is a “sale of business”. This meant that collective agreement between a union and
Contractor A carried over to Contractor B so that Contractor B became the employer party to the collective agreement; it stepped into the shoes of the predecessor employer for the purposes of the collective agreement and the employees’ previously employed by Contractor A also now became employees of Contractor B. The legal reform created a measure of job security and collective agreement flow through for workers in the building services industry.
The new Bill 148 reinstates the old Bill 40 Section 64.2 almost exactly as it was written in 1992. The new provisions will appear in Section 69.1 of the revised Labour Relations Act. Here is the text:
69.1 (1) This section applies with respect to services provided directly or indirectly by or to a building owner or manager that are related to servicing the premises, including building cleaning services, food services and security services.
(2) This section does not apply with respect to the following services:
1. Construction. 2. Maintenance other than maintenance activities related to cleaning the premises. 3. The production of goods other than goods related to the provision of food services at the premises for consumption on the premises.
(3) For the purposes of section 69, the sale of a business is deemed to have occurred, (a) if employees perform services at premises that are their principal place of work; (b) if their employer ceases, in whole or in part, to provide the services at those premises; and (c) if substantially similar services are subsequently provided at the premises under the direction of another employer.
(4) For the purposes of section 69, the employer referred to in clause (3) (b) of this section is considered to be the employer who sells the business and the employer referred to in clause (3) (c) of this section is considered to be the person to whom the business is sold. Successor rights, other service providers
The Employment Standards Act also deals with the situation of a building service contract being transfer from Contractor A to Contractor B. Section 10 of the ESA provides (with some conditions which we needn’t worry about for our purposes in this post) that if the new contractor (Contractor B) takes over the service contract formally done by Contractor A, and it hires an employee of Contractor A to perform similar work at the same premises where the employee had done work for Contractor A, then the employment of that employee is deemed to be without interruption for the purposes of entitlements under the ESA.
Lastly, Section 75 of the ESA deals with what happens when Contractor B does not hire or retain an employee who formally performed worked for Contractor A. It provides that Contractor B must comply with the termination and severance provisions of the ESA, subject to several exceptions. Firstly, if the employee is retained by Contractor A, then the law does not treat them as having been terminated. Secondly, there is an exception that relates to various circumstances in which the employee had not worked primarily at the premises where the transfer of undertaking had occurred during the 13 week prior to the transfer. And, thirdly, Contractor B is relieved of the obligation to comply with the notice and severance provisions if the employee refuses a “reasonable offer” of a job from Contractor B.
Where Does This Leave Us?
So to tie this altogether, let’s consider an example.
Assume Security Guard Company A (SGC-A) is unionized and has a contract to provide security services as BMO Stadium in Toronto. Company A’s employees are covered by a collective agreement between the UNION and SGC-A. One day, BMO Stadium tells SGC-A that has decided to switch security companies and that moving forward it will be using Security Guard Company B (SGC-B). Under the new Bill 148 provisions, the collective agreement probably flows over from SGC-A to SGC-B and along with it, all the terms and conditions of employment and job rights employees had with SGC-A. SGC-B cannot win the contract by costing in lower wages because it still has to pay the same wages as required by the collective agreement and retain Company A’s employees, provided the same or similar work is still being done at the same premises. So, in short, thanks to Bill 148, the unionized employees of SGC-A now have job protection if their employer loses the contract to another service provider.
Now let’s change the facts slightly. Instead of SGC-A being unionized, let’s assume it is a non-union operation. In that case, when it loses the contract, the successorship provisions in the Labour Relations Act no longer apply. We are now dealing with the common law regime and the regulatory regime (i.e. the ESA). If SGC-A is nonunion, then its employees can be terminated when the contract is transferred from SGC-A to SGC-B. Section 75 of the ESA requires SGC-B to comply with the notice if termination (and severance if applicable) provisions when the SGC-A employees are terminated, but those employees have no legal right to continue to do the cleaning work for SGC-B.
This is where Bill 148 veers from the situation under Bill 40 back in the 1990s. When Bill 40 was in force, the Employment Standards Act had provisions requiring Contractor B in the scenario we have been discussing to “make reasonable offers of available positions to those persons” who had performed work at the premises for Contractor A. Moreover, the offers needed to be made in order of seniority (length of service with Contractor A). If you want to read the ESA sector in place back in the 1990s, here it is in PDF.
Bill 148 does not include such a provision, with the result that, unlike during the Bill 40 years, Contractor B today has no obligation to offer jobs to employees of Contractor A if Contractor A is a nonunion company. This presumably creates a very strong incentive for employees of nonunion, building services employers to quickly join a union if the want to ensure a measure of job security when and if their employer loses a service contract. It is not clear to me whether this outcome was the intention of the Liberal Party, or an oversight.
Issues for Discussion
Do you agree that the model for dealing with building services employees in Bill 148 creates an incentive for these employees to unionize?
Can/should unions use this scenario to their advantage in organizing campaigns in this industry? How might they do so?
If so, do you think that was an intentional policy decision by the Liberals?