York Region Cancels Contract with Struck Bus Service Provider: Lawful?

Here’s an interesting legal case study.
York Region has contracted out its bus services to three corporations whose employees are unionized.  There has been a work stoppage at all three companies for much of this winter.  The workers have been trying to move closer to parity with other bus drivers in the GTA, but the employers won’t budge.  While the provincial Liberal government has banned work stoppages involving the TTC, it has ignored the work stoppage in Vaughn.
Yesterday, York Region announced it had cancelled the contract with one of the contractors and served notice on the other two. It claims there is a term in the contracts that allows the region to cancel the contracts if a work stoppage continues beyond 30 days.  The Region now intends to contract out the bus services to another contractor.  Voila.  No more work stoppage in York.

The union’s leader says this: “Whoever takes over the contract would have to negotiate with the ATU. The region can’t just change contractors like it changes underwear.”

Issue One:  Is he correct?  Will the New Bus Service Provider be Required to Bargain with the Union?
Interesting question, one that has baffled labour boards and courts for decades.   If a government contracts out work, then takes the work back, and then re-contracts it out, is it a “sale of business” within the meaning of Section 69 of the Labour Relations Act?  That section is designed to prevent workers from losing their collective agreement and union when their employer’s business is sold to another company.  If there has been a “disposition of the business”, then the successor employer steps into the shoes of the predecessor for the purposes of the Labour Relations Act.
However, determining when a disposition of all or part of business in the case of a transfer from one contractor to another is complicated.  The Supreme Court considered the issue in an old case called Bibeault (1988) [transfer of work from one subcontractor, through an intermediary, to another subcontractor is not a sale of business] and Town of Ajax (2000) [when Town took back in-house its bus services from a subcontractor, and hired many of the contractor’s drivers, it constituted a sale of business].  The OLRB has considered similar scenarios on a number of occasions, including in Northway Bus Lines [not a sale of business when school bus services moved from Company A to Company B after Company A goes out of business, even though Company B bought buses from Company A and hired some of A’s former employees].
This is one of the more complicated areas of labour law, and the decisions are highly fact sensitive. There isn’t enough information in the media reports to really assess what is happening in the York bus situation. What exactly happens to the work once it is transferred from the struck employer to the new contractor will also be relevant.  We will have to keep an eye on this situation to see if the Union challenges the move in some manner.
Do you think that the Region should be permitted to do this?
[Note that in the early 1990s, the NDP government in Ontario amended the Act to clarify that a sale of business occurs whenever “substantially similar services are subsequently provided at the premise under the direction of another employer.” That law was designed to preserve collective agreements when subcontracting services (like cleaners, food services, etc) moved from contractor to contractor.  The Mike Harris government repealed that law.]
Issue Two:   Has the Region Committed an Unfair Labour Practice?
The other interesting issue raised by this story is the contract term itself, and the timing of Region’s announcement that it has cancelled the contract and is considering doing the same to the other two companies. The union alleges that the Region is attempting to scare the crap out of the workers of the other two companies to accept whatever is being offered by their employers, or else lose their jobs.
That might indeed be the case.  The employees of the other companies know now that if the work stoppage does not end quickly, their jobs may be disappear.   Would this effect how your willingness to vote in favour of whatever offer the employer has on the table?
Perhaps.  But is it unlawful for the Region to send out a signal to the workers that the continuation of a work stoppage will lead their employer to lose the contract (and presumably the workers’ jobs)?  Again, good question.  Take a look at Section 76 of the Labour Relations Act. It says that “no person” (that would catch the Region or the person who told the media that it was putting the contractors on notice that their contracts would be terminated if the work stoppage continues) can seek “by intimidation or coercion” to compel a person to refrain from exercising their legal right to strike.

Do you think the Region’s decision to cancel contracts of employers whose workers exercise the legal right to strike, and to threaten to do the same to other companies if workers’ continue their strike, amounts to a violation of the Section 76 prohibition?
If so, what remedy could the Labour Board order?