The matter in Agrium
Vanscoy Potash Operations v United Steel Workers Local 7552, 2018 SKCA 50 (CanLII) came to
the Court by way of an arbitration decision finding employer liability and
awarding damages to the union. The employer contested and applied
for judicial review. When the court dismissed the employer’s
application, the employer appealed.
Vanscoy Potash Operations v United Steel Workers Local 7552, 2018 SKCA 50 (CanLII) came to
the Court by way of an arbitration decision finding employer liability and
awarding damages to the union. The employer contested and applied
for judicial review. When the court dismissed the employer’s
application, the employer appealed.
The union had been completing rehabilitation work at a mining site. The
employer then assigned the union workers to other parts of the operation and
entered into a contract with non-bargaining unit workers to do the work. The union
grieved, alleging the employer had “contracted in” workers in violation of the Collective
Agreement (“CA”).
employer then assigned the union workers to other parts of the operation and
entered into a contract with non-bargaining unit workers to do the work. The union
grieved, alleging the employer had “contracted in” workers in violation of the Collective
Agreement (“CA”).
The Employer’s Position
The employer argued the management rights clause allowed
it to operate and manage the business as it saw fit, subject only to express
restrictions in the CA. As the CA permitted the hiring of independent
contractors if the employer deemed it necessary, the employer argued that since
these were independent contractors it deemed necessary, it was not in breach of
the CA.
it to operate and manage the business as it saw fit, subject only to express
restrictions in the CA. As the CA permitted the hiring of independent
contractors if the employer deemed it necessary, the employer argued that since
these were independent contractors it deemed necessary, it was not in breach of
the CA.
The Union’s Position
The Union conceded that the CA allowed for independent contractors, but
argued that the workers brought in by the employer were not treated as
independent contractors. The union argued non‑bargaining unit personnel had been brought in to the workplace to work
alongside bargaining unit employees. The union asserted that the work had not been “contracted out” because
the employer never relinquished control of, or alienated, the work to workers
it brought in. In essence, the workers had been contracted in.
argued that the workers brought in by the employer were not treated as
independent contractors. The union argued non‑bargaining unit personnel had been brought in to the workplace to work
alongside bargaining unit employees. The union asserted that the work had not been “contracted out” because
the employer never relinquished control of, or alienated, the work to workers
it brought in. In essence, the workers had been contracted in.
Decision
To reach its decision, the arbitrator (and later the
courts) cited with approval the decision in Hydro
Ottawa Ltd. v International Brotherhood of Electrical Workers, Local 636, 2007 ONCA 292 (CanLII), [Hydro
Ottawa], where the Ontario Court of Appeal defined contracting out, at para
36, saying it involves:
courts) cited with approval the decision in Hydro
Ottawa Ltd. v International Brotherhood of Electrical Workers, Local 636, 2007 ONCA 292 (CanLII), [Hydro
Ottawa], where the Ontario Court of Appeal defined contracting out, at para
36, saying it involves:
…
a situation where “an integral function or a whole
operation of the business of the employer is assigned to an independent
contractor”; the work is done off site and, where done at the same location as
the bargaining unit employees, usually involves work of a different nature even
though it is bargaining unit work; the independent contractor controls the
work, and the employer has “effectively abdicated” the work to the outside
contractor.
a situation where “an integral function or a whole
operation of the business of the employer is assigned to an independent
contractor”; the work is done off site and, where done at the same location as
the bargaining unit employees, usually involves work of a different nature even
though it is bargaining unit work; the independent contractor controls the
work, and the employer has “effectively abdicated” the work to the outside
contractor.
Contracting in differs in that it occurs when non‑bargaining unit
personnel are brought into the workplace to perform work that is the same or of
a similar nature to that work being performed by bargaining unit employees. In Hydro
Ottawa the Court offered the following definition:
personnel are brought into the workplace to perform work that is the same or of
a similar nature to that work being performed by bargaining unit employees. In Hydro
Ottawa the Court offered the following definition:
“Contracting
in”, on the other hand, involves a situation where non‑bargaining unit
personnel are brought into the workplace to work alongside bargaining unit
employees, performing the same work as those employees, under the same
supervision and utilizing the same material and equipment provided by the
employer; the way in which the bargaining unit and non‑bargaining unit
employees work is virtually indistinguishable”.[1]
in”, on the other hand, involves a situation where non‑bargaining unit
personnel are brought into the workplace to work alongside bargaining unit
employees, performing the same work as those employees, under the same
supervision and utilizing the same material and equipment provided by the
employer; the way in which the bargaining unit and non‑bargaining unit
employees work is virtually indistinguishable”.[1]
The Court
also recognized the negative effects of contracting in:
also recognized the negative effects of contracting in:
These and
other arbitral decisions all emphasize that contracting in is “inherently
destructive to the bargaining relationship” and generally contrary to the
obligations undertaken by the employer in the collective agreement.
other arbitral decisions all emphasize that contracting in is “inherently
destructive to the bargaining relationship” and generally contrary to the
obligations undertaken by the employer in the collective agreement.
After surveying the law, the Arbitrator concluded that
the management rights clause could not be exercised in a manner inconsistent with
other provisions in the CA. The accepted approach to the issue of contracting
out is that unless the collective agreement states otherwise, an employer is
entitled to do so. In this case, however, the CA did provide against
contracting out. Though the CA allowed for the hiring of independent
contractors, the employer’s right did not extend to hiring a contractor to
actually do bargaining unit work and the employer was found liable for breach
of the CA.
the management rights clause could not be exercised in a manner inconsistent with
other provisions in the CA. The accepted approach to the issue of contracting
out is that unless the collective agreement states otherwise, an employer is
entitled to do so. In this case, however, the CA did provide against
contracting out. Though the CA allowed for the hiring of independent
contractors, the employer’s right did not extend to hiring a contractor to
actually do bargaining unit work and the employer was found liable for breach
of the CA.
Having found that the employer was liable, the question of remedy
remained. The union sought
damages for loss of overtime opportunities and lost union dues calculated at
1.45 percent of the amount paid to the non-bargaining unit workers. The employer
argued that damages for overtime were too speculative and that the union dues
ought to be calculated on the basis of the employer hiring eight employees at
the minimum hourly wage pursuant to the CBA.
remained. The union sought
damages for loss of overtime opportunities and lost union dues calculated at
1.45 percent of the amount paid to the non-bargaining unit workers. The employer
argued that damages for overtime were too speculative and that the union dues
ought to be calculated on the basis of the employer hiring eight employees at
the minimum hourly wage pursuant to the CBA.
The Arbitrator agreed that a damages award for lost
overtime was too speculative. The Arbitrator instead ordered the Employer to
pay the assessment rate for union dues based on the monies paid to the workers
who had been contracted in. The Court of Appeal upheld the arbitrator’s award.
overtime was too speculative. The Arbitrator instead ordered the Employer to
pay the assessment rate for union dues based on the monies paid to the workers
who had been contracted in. The Court of Appeal upheld the arbitrator’s award.
Comment
As noted in
the Hydro Ottawa decision,
contracting in is inherently destructive to good labour relations. Workers have
long fought against employers who would bring in others to do bargaining unit
work. And for good reason: if contracting in were allowed to go unchecked, it
would chip away at union bargaining power. The bargaining unit as a
counterbalance to employer power would
be undermined and workers would be subject to the whim of employers. Union’s
must continue to grieve against such destructive employer practices and strive
to maintain the balance. We’re happy to report that, in this case, the Court
not only accepted the importance of protecting union’s from contracting in, it
upheld the damages awarded against the employer.
the Hydro Ottawa decision,
contracting in is inherently destructive to good labour relations. Workers have
long fought against employers who would bring in others to do bargaining unit
work. And for good reason: if contracting in were allowed to go unchecked, it
would chip away at union bargaining power. The bargaining unit as a
counterbalance to employer power would
be undermined and workers would be subject to the whim of employers. Union’s
must continue to grieve against such destructive employer practices and strive
to maintain the balance. We’re happy to report that, in this case, the Court
not only accepted the importance of protecting union’s from contracting in, it
upheld the damages awarded against the employer.