Canadian Union of Industrial Employees v. Bermay Corporation Limited, 1980 CanLII 766

[1980] OLRB Rep. February 166

2164-78-R Canadian Union of Industrial Employees, Applicant, v. Bermay Corporation Limited, Respondent, v. Goldcrest Furniture Ltd., Intervener.

BEFORE: M. G. Picher, Vice-Chairman and Board Members J. D. Bell and D. B. Archer.

APPEARANCES: Judith McCormack and Peter Dorfman for the applicant; Philip J. Wolfenden and Bill Nathanson for the respondent; Ian C. Welsh for the intervener.

DECISION OF M. G. PICHER, VICE-CHAIRMAN, AND BOARD MEMBER D. B. ARCHER; February 8, 1980

1. This application raises a number of fundamental issues respecting the operation of section 55 of The Labour Relations Act. Before dealing with them, however, the Board must address a number of objections raised by the employer relating to a representation vote ordered by the Board under section 55(8) of the Act.

2. By its majority decision dated July 12, 1979, [1979] OLRB Rep. July 608 the Board found that there had been the sale of a business from Goldcrest Furniture Ltd. (hereinafter referred to as "Goldcrest") to the respondent (hereinafter referred to as "Bermay") and an intermingling of employees within the meaning of section 55 of the Act. The Board ordered the taking of a representation vote among the employees of the respondent in a bargaining unit determined by the Board. The purpose of the vote was to determine whether the Board should declare that the collective agreement is no longer binding upon the employer and that the union is no longer the bargaining agent of the employees in the bargaining unit. The vote was held on September 17, 1979. Of the 67 ballots cast, 34 were marked in favour of the applicant union and 33 were marked against it.

3. After the counting of the ballots, the respondent requested a hearing, alleging in a letter of its counsel, dated September 25, 1979, that the employees had been misled by statements of representatives of the union. The statements were to the effect that if the union won the vote, the employees would come under the contract between the union and the predecessor employer, Goldcrest. The respondent submits that the issue in the vote was whether the applicant should represent the employees and nothing more. According to the respondent, a successful vote would only entitle the applicant to serve notice to bargain and to commence negotiating a new collective agreement on behalf of the employees as though the union was newly certified.

4. The respondent further submits that a change which occurred in the Board's notice to employees prior to the taking of the vote would have caused confusion in the minds of the employees. It submits that on that basis the vote should be set aside. The "Notice of Taking of Vote" (Form 42) first issued by the Registrar of the Board and dated August 28, 1979 contained the preamble:

"Whereas Canadian Union of Industrial Employees has applied to the Board for a Declaration under Section 55 of The Labour Relations Act that Bermay Corporation Limited is bound by the collective agreement between the Canadian Union of Industrial Employees and Goldcrest Furniture..."

By letter dated September 10, 1979 counsel for the respondent returned the notices to the Registrar submitting:

"The manner in which the Notice has been drawn is such as to create the impression that the employees will be voting on the question of whether Bermay Corporation Limited is bound by the collective agreement between the Union and Goldcrest Furniture Ltd."

5. The Registrar exercised his administrative discretion to re-issue the notices with the following amended preamble on September 10, 1979:

"Whereas Canadian Union of Industrial Employees has applied to the Board for a Declaration under section 55 of The Labour Relations Act, the Board has directed a representation vote be taken among certain employees of Bermay Corporation Limited as to whether or not they wish to be represented by the Canadian Union of Industrial Employees in their employment relations with Bermay Corporation Limited."

6. We deal firstly with the impugned propaganda statements of the union and the somewhat related issue of the notices. The vote was, as the respondent submits, a vote strictly on whether the employees wish to be represented by the union. But, as the Board will elaborate later, it cannot be said that the outcome of the vote would have no bearing on the status of the collective agreement. In the normal course, having found a single bargaining unit to be appropriate, if the vote had gone against the union the Board would inevitably have declared the collective agreement at an end.

7. It is the essence of a representation vote that union and employer will make contradictory statements and promises to the employees. Their statements tend naturally to favour their own objective and must be viewed in that light by any reasonable employee. To expect the parties to adhere to a standard of absolute accuracy in their every campaign utterance would reduce the traditional right of free speech to something close to the vanishing point. Apart. therefore, from redressing the effect of statements which are coercive and are of themselves breaches of the Act, the Board does not referee the accuracy of the propaganda statements of the parties to a representation vote. It is entirely within the ability of the parties, by means of their own propaganda, to correct or counter what they view as misleading or inaccurate statements made by their adversary. And in the end it is for the employees to decide what weight they will give to the statements of either side. In this case the challenged statements of the union were not coercive, they were open to reply by the employer and ultimately they could be evaluated by the employees. Indeed, for the reasons following in this decision, the challenged statements were arguably correct at the time they were made, and certainly no less accurate than the opposing position taken by the employer.

8. For the foregoing reasons the Board does not view the statements of the union as a reason to interfere with the result of the vote. We are likewise satisfied that the Registrar's technical refinement of the notice to the employees - a change made after the respondent's request - would not have caused any substantial confusion in the minds of the employees.

9. At the hearing counsel for the respondent raised a further objection to the regularity of the representation vote. He submitted that the vote was prejudiced by the participation of the union's president, Mr. P. Dorfman, as its scrutineer at the balloting. He also asked for an adjournment because the owner of the company, Mr. William Nathanson, was out of the country and unavailable for the hearing. Counsel for the respondent indicated that the sole purpose for adjourning would be to allow Mr. Nathanson to testify to the union propaganda prior to the vote and to the participation of Mr. Dorfman as scrutineer. The union's counsel then admitted all of the facts about the union's propaganda statements and Mr. Dorfman's role as scrutineer as they were alleged by the respondent. The need for Mr. Nathanson's testimony was removed and the adjournment was therefore denied.

10. The Board was previously aware of the respondent's objection to the participation of the union's president as scrutineer. Mr. Dorfman's nomination as scrutineer was the subject of an earlier decision of the Board, Bermay Corporation Limited, [1979] OLRB Rep. Sept. 848. That decision arose out of the objection of the employer to the participation of Mr. Dorfrian as the union's representative at the vote. The employer intended to bar Mr. Dorfman from its premises on the day of the vote to prevent him from acting as scrutineer. Pursuant to its authority under section 92(2)(j) of The Labour Relations Act, the Board ordered the employer to allow any scrutineer designated by the union to enter its premises for the purposes of the representation vote. In so doing, the Board noted that it was not necessarily endorsing the union's choice of scrutineer, thereby leaving the matter open for an objection in the appropriate form after the balloting.

11. Normally when all of the ballots are in the box following a representation vote the parties are given the opportunity of having the ballots counted immediately by the Board's Returning Officer. That way parties can learn right away what their collective bargaining situation will be as a result of the vote. A further advantage to an immediate count is that the result may render academic outstanding issues attaching to the application and eliminate the need for further litigation. The Board will not, however, count the ballots immediately after the vote unless it is clear that both parties are prepared to be bound by the result of the count. The Board therefore requires the parties to sign a "Consent and Waiver" form prior to counting the ballots. In this case the Consent and Waiver form presented to the parties states:

"We the undersigned hereby consent to an immediate counting of the ballots cast at the representation vote directed by the Board and held on the 17th day of September, 1979.

And we hereby waive any objections as to the regularity and sufficiency of the balloting.""

Prior to the counting of the ballots the above form was signed by Mr. Dorfman for the union and by Mr. Brisbin, the employer's counsel, for the company.

12. The employer, by objecting now to the union's scrutineer, is attempting to go back on that understanding. Having first waived any objection to the conduct of the vote it is not open to the employer to complain about the regularity of the balloting now having learned that the result of the vote was favourable to the union. That is precisely what the Consent and Waiver form is designed to prevent. If the Company had wished to pursue its objection it should have requested that the ballot box be sealed and the ballots not be counted pending a ruling on the merits of its complaint. Having failed to do so it may not now deny its counsel's undertaking.

13. The principal issue before the Board is whether a successful representation vote under section 55(8) of the Act results only in the preservation of a union's rights of representation in the workplace or whether the outcome of the vote can also go to the continuation of the collective agreement that was the product of those representation rights.

14. The employer submits that both the effect of section 55 and the intention of the Board's order is that the vote should determine only whether the union should be entitled to bargain on behalf of the employees. The respondent's position in this regard proceeds from a view of the operation of section 55 which is difficult to reconcile with the history of the Act.

15. There was a time when section 55 used to operate in the way the respondent says it should in this case. The first legislation imposing a duty on a successor employer when he purchased a business where a collective agreement was in effect was The Labour Relations Amendment Act, 1962-63, S.0. 1962-63, c. 70, s. 1, which introduced what was then section 47a(2) into the Act:

"Where an employer who is bound by or is a party to a collective agree-merit with a trade union or on behalf of whose employees a trade union has been certified as bargaining agent or has given or is entitled to give notice under section 11 or 40 [now 13 or 45] sells his business, the trade union continues, until the Board otherwise directs, to be the bargaining agent for the employees of the person to whom the business was sold in the like bargaining unit in that business, and the trade union is entitled to give to the person to whom the business was sold a written notice of its desire to bargain with a view to making a collective agreement, and such notice has the same effect as a notice under section 11."

16. That legislation kept the collective agreement and a union's bargaining rights distinct. What survived the sale of a business was the union's right to bargain on behalf of the employees in a bargaining unit like the unit described in the prior collective agreement or in an outstanding certificate. In other words, the union found itself in the same position as a newly certified union. The result was that the employees were then subject to having their terms and conditions of employment negotiated anew. The employees were not protected by the operation of what was then section 59 (now section 70), from changes in their terms and conditions of employment until the union gave the new employer notice of its desire to bargain. The collective agreement ended and the continued entitlement of the employees to have their contracts of employment unchanged depended on how quickly their union gave its notice to bargain. In the result, there was considerable insecurity surrounding the rights of employees as to their terms and conditions of employment if the business was sold to a new employer. And most importantly, the sale of the business effectively terminated the collective agreement.

17. That was radically changed by an amendment of the section seven years later. The Labour Relations Amendment Act, 1970 (No. 2), S.O. 1970, c. 85, s. 22 replaced the above section with what is now section 55(2):

"Where an employer who is bound by or is a party to a collective agreement with a trade union or council of trade unions sells his business, the person to whom the business has been sold is, until the Board otherwise declares, bound by the collective agreement as if he had been a party thereto and, where an employer sells his business while an application for certification or termination of bargaining rights to which he is a party is before the Board, the person to whom the business has been sold is, until the Board otherwise declares, the employer for the purposes of the application as if he were named as the employer in the application.”

18. The section as it now stands stablizes the status quo from the moment of the sale and gives more security to employees and their union. Under the present provisions of section 55, the first question is whether the sale of business has occurred. A determination by the Board that a sale or transfer has occurred within the meaning of section 55 of the Act means that the collective agreement continues in force without interruption, binding the new employer just as it did his predecessor. There is no hiatus in the operation of the collective agreement and no room for the unilateral imposition of changes. The successor employer is obliged to observe the terms of the agreement in relation to all of the employees who come under it until the Board otherwise declares.

19. A necessary adjunct to the preservation of collective agreements or bargaining rights, as the case may be, after the sale of a business is the ability to sort out competing interests where two or more collective agreements or two or more sets of bargaining rights appear to conflict. No less important is the ability to make adjustments when, as in this case, non-union" employees of a successor employer are intermingled with employees whose terms and conditions of employment have been regulated under a collective agreement handed down from a predecessor employer. To deal with that problem section 55(6) of the Act provides:

"Notwithstanding subsections 2 and 3, where a business was sold to a person who carries on one or more other businesses and a trade union or council of trade unions is the bargaining agent of the employees in any of the business and such person intermingles the employees of one of the businesses with those of another of the businesses, the Board may, upon the application of any person, trade union or council of trade unions concerned,

(a) declare that the person to whom the business was sold is no longer bound by the collective agreement referred to in subsection 2;

(b) determine whether the employes concerned constitute one or more appropriate bargaining units;

(c) declare which trade union, trade unions or council of trade unions, if any, shall be the bargaining agent or agents for the employees in such unit or units; and

(d) amend, to such extent as the Board considers necessary, any certificate issued to any trade union or council of trade unions or any bargaining unit defined in any collective agreement."

Section 55(6)(a) of the Act was enacted at the same time as section 55(2). It gives the Board a discretion to deal with the realities of each particular situation where intermingling occurs. It clearly does not provide that the Board shall terminate the collective agreement any time there is intermingling of employees after the sale of a business.

20. Where the intermingled employees are drawn entirely from two bargaining units represented by two different unions the Board presumes that the majority of them have chosen collective bargaining as the mode of relationship with their employer. The issue then is not whether the employees should be represented by a union but rather which of the two unions should be their bargaining agent. If an overwhelming majority of the employees are members of one union the Board may, without more, declare that union to be exclusive bargaining agent for all of them (see, e.g. Alliance Dairy Ltd. [1966] OLRB Rep. Aug. 337). If, on the other hand, both unions represent a substantial number of employees the Board may, pursuant to section 55(8), order a representation vote by which the employees choose which of the two unions will be their bargaining agent. (e.g. The Borden Company Limited [1970] OLRB Rep. Jan. 1244). The result of the vote will inevitably extinguish one trade union s bargaining rights and collective agreement.

21. When, as in this case, the employees are drawn from two sources, one of which has not had collective bargaining, the Board may consider whether it is appropriate to exercise its discretion under section 55(6) to terminate a union's bargaining rights and, with them, its collective agreement. It may do so directly, without a vote, when a union represents only a small percentage of the employees. (e.g. The Corporation of the City of Mississauga [1(174] OLRB Rep. Mar. 184). Where, however, a substantial number of the employees have been represented by a union, the Board may take a representation vote among the employees to assist it in that determination. That is what was done in this case.

22. But whether the Board is dealing with the admixture of entirely unionized employees or of union and non-union employees, in the face of favourable evidence the Board's presumptive approach, based on the purpose of section 55 of the Act, is not to interfere with established bargaining rights. If the employees indicate in a vote that they wish to be represented by a union and the union's bargaining rights have matured into a collective agreement, the Board will declare that the collective agreement is no longer binding on the employer only where there are extraordinary and compelling industrial relations reason for doing so.

23. In if is case the employer argued that for a number of reasons, notwithstanding the results of the vote the Board should terminate the collective agreement and instead make a declaration that the union is the bargaining agent of the employees. First, it submits that the vote should be given less weight because it was won by a one vote margin. Secondly it argues that the content of the collective agreement should be viewed as a reason for declaring that it is no longer binding on the employer. Counsel maintains that because 24 of the employees are former Goldcrest employees who had input into the negotiation of the agreement and the other 45 employees had no such input, the agreement should be ended and the union required to bargain anew especially since the agreement contains a mandatory union membership provision for all employees. It submits, on all of these grounds, that it would be unfair to the employees to allow the collective agreement to continue.

24. The union strenously resists any suggestion that the Board should look behind the result of the vote. It argues that a vote must be premised on the notion that if you win you win, and if you lose, you lose. Certainly, if the vote had gone against the union by a one vote margin the Board could not, by any accepted majoritarian principle, have done anything but terminate the union's bargaining rights and its collective agreement forthwith. It is in that sense, and only in that sense, that the vote becomes evidence to assist the Board in exercising its discretion under section 55(6)(a). The Board cannot make any inferences whatever from the result of the vote as to which employees do or do not support the collective agreement in whole or in part. All that the Board can infer, as it does, from the vote is that a majority of the employees wish to be represented by this union. Whether the union's collective agreement should in all of the circumstances of the case be continued or terminated is a separate question. Given the overriding purpose of section 55 to preserve collective agreements, undue weight should not be given to the fact that the transferred employees had no input into the negotiation of the collective agreement. In that regard they are no different than employees who are all newly hired after the transfer of a business with a collective agreement situation in which the Board has no discretion to terminate the union's contract.

25. Counsel for the respondent advanced a number of arguments as to why the Board should view the collective agreement which was negotiated with Goldcrest as so unsuitable to Bermay that it should be declared no longer binding. Firstly, he raises the fact that the agreement was meant to apply to both the woodworking plant and the upholstering plant of Goldcrest, while Bermay has no woodworking plant. Secondly, he submits that the seniority clause, based upon the length of service from the time an employee entered the company's employment, will cause irreconcilable conflicts. Thirdly, he argues that the agreement's provision for twelve union stewards based on two plants, and its reference to the "industrial relations manager", the "manufacturing manager" and the "general manager" in the grievance procedure, titles not found in Bermay's management ranks, are further grounds to find the agreement unsuitable. Fourthly, he maintains that the difference between the incentive work system in the collective agreement and the incentive work system which Bermay has used is reason to conclude that it should not be bound by the agreement. Lastly, he submits that only about one-third of the job classifications in the collective agreement apply to Bermay's operation. The respondent maintains that for all of the foregoing reasons the collective agreement is unworkable and should be declared at an end.

26. The jurisdiction to terminate a collective agreement is an extraordinary power, and the Board's discretion under section 55(6)(a) of the Act must therefore be exercised thoughtfully and with restraint. Other sections in the Act which give that power to the Board do so in specific language (see e.g. ss. 48(1), 49(6), 50 and 52(4) of the Act). The only part of section 55 which specifically empowers the Board to declare that a collective agreement is no longer binding on a successor employer is subsection 6(a). That is to say that the discretion only comes into play when there has been an intermingling of employees. When a unionized business is transferred to an employer who does not introduce employees from another business into the bargaining unit of predecessor employees, the Board does not have a discretion to declare that a collective agreement no longer binds the successor employer. Nor does the Board have that discretion when the sale of a business has occurred and all of the employees are either newly hired by the successor employer or entirely transferred from another of its businesses. The discretion arises only when there has been a mixing of employees from another business with the employees of the transferred business. In that circumstance the ability to declare a collective agreement no longer binding is a necessary part of the Board's jurisdiction to resolve conflicts in bargaining rights. The intermingling of employees is the linchpin of the Board's jurisdiction to declare a collective agreement no longer binding. The Board's discretion must therefore be applied and interpreted in that light.

27. Many of the points that the employer has raised to support its request to have the Board terminate the agreement will obtain in situations where a successor employer does not intermingle employees after the sale of a business and could not, therefore, ask for a declaration terminating the collective agreement. It is not uncommon, where there has been a sale of a business or part of a business, for a successor employer to inherit a collective agreement which includes articles relating to some aspect of the predecessor's business which the new employer does not wish to continue to operate. Furthermore, it is not unusual for an inherited collective agreement to include managerial titles that don't strictly coincide with the titles used by a successor employer. Nor is it uncommon for a successor employer to use only some of the employee classification found in a collective agreement or to encounter in an inherited collective agreement wage rates and remuneration schemes that are different from those which apply in its other plants. These are not insurmountable problems. It is always within the power of two parties to a collective agreement to modify the agreement as needs dictate. To the extent, therefore, that items such as those listed above appear incongruous, it is not unreasonable to expect the parties to make the necessary adjustments in the language of the agreement.

28. This is not to say that when there is an intermingling of employees following the sale of a business, there will never be good industrial relations reasons to relieve an employer from the continued operation of a collective agreement. Through subsection 6(a) of section 55 the Board has the authority to assess the merits of industrial relations problems that arise and, where appropriate, make a remedial order tailored to the facts. The Board can amend the bargaining unit, end the agreement, or it can end the union's bargaining rights. But vested contractual rights are not lightly to be interfered with, and any employer seeking such relief has a heavy onus to discharge. It must first establish that there has been meaningful degree of intermingling. For example, where two or three employees from another business of an employer are intermingled into a bargaining unit of a hundred, normally neither common sense nor the balance of convenience will favour the termination of the entire collective agreement. Secondly, the employer must satisfy the Board that because of the intermingling a continuation of the collective agreement will work immediate and substantial prejudice to the operation of its business. This, then, brings us to the employer's concern with respect to the incentive and seniority provisions of the collective agreement, the two issues raised by the respondent which arguably raise practical problems caused by the intermingling of the two groups of employees.

29. Bermay addressed no substantial representations as to how the work incentive system in the collective agreement would prejudice its operations. The Board cannot, therefore, conclude that the difference in its work incentive system will cause Bermay an industrial relations problem that justifies terminating the collective agreement. Nor can we conclude that the application of the seniority clause will create an unworkable problem. It provides, in part:

"Article 6— Seniority

6.01 - It is understood that all employees are hired on a probationary basis and the probationary period shall continue for the first seven weeks. Upon completion of the probationary period, an employee shall be entitled to seniority rights dating from the day on which he entered the Company's employment. [emphasis added]

6.02 - Seniority shall be on plant-wide basis and there shall be a separate seniority list for the upholstery plant and a separate seniority list for the woodworking plant. The Company agrees to maintain seniority lists [or each plant and these shall be posted in the plant within thirty days after the signing of this Agreement. Any objection to these seniority lists shall be submitted to the Company by the Union within fifteen days after the lists have been posted. After these fifteen days have expired the Company shall furnish the Union with copies of each seniority list every six months and the Company acknowledges the right of the Union to question the accuracy of a list in the event of error.

6.03(a) - In the event of layoff or recall of the workforce governed by this Agreement, the following factors will be considered:

(a) length of continuous plant service:

(b) skill and ability.

Where the factors in factor (b) above are relatively equal, then factor (a) shall govern.”

30. Generally the seniority provision in any collective agreement becomes important in the event of the transfer, demotion, layoff and recall of employees, in the computation of an employee's sick leave credits and vacation entitlement or when a dispute materializes over a competition among employees for a job posting. Seniority can be departmental, plant-wide or company-wide, and the arbitral jurisprudence is replete with awards arising out of the disagreement of parties as to the application of the seniority provisions of their collective agreement. The arbitral authorities establish that there can, in a merger situation, be a dovetailing of seniority lists by the operation of law. The outcome in any particular case will depend on the wording of the collective agreement. (see Re Federal Wire and Cable (1960), 3 U.M.A.C. 276 (Laskin); Toronto Electric Commissions, (1967) 19 L.A.C. (Arthurs) and, generally, Palmer, Collective Agreement Arbitration in Canada, (Toronto), 1978) at pp. 388-94). The Board does not view the present form of the seniority clause as creating a potential for disruption that would justify terminating the collective agreement in its entirety. Given the wording of the clause, the employer will never be without the requisite number of qualified employees no matter how the clause is applied to the employees.

31. Both the incentive work scheme and the seniority clause are the kind of matters which parties to a collective agreement can, after the sale of a business, adjust themselves to make sense of their contractual relationship. Alternatively, as the Board has noted, any unsettled difference can be adjudicated when an appropriate grievance finds its way to arbitration. In this case, for the reasons given, the Board does not consider either the incentive work system or the seniority provision grounds to vitiate the entire collective agreement.

32. The final issue is the question of which employees are covered by the collective agreement that has survived the sale. The company submits that from the time of the sale it is required to apply the collective agreement only to the employees who were previously em­ployed by Goldcrest. It takes the position that employees transferred into the newly purchased plant from Bermay's business previously located at Chesswood Drive have no rights under the collective agreement at least until a finding of a sale has been made by the Board or, alternatively, until the time when the Board declares that the agreement should continue. The union submits that all employees in the plant purchased by Bermay, including newly hired and transferred employees, fall into the bargaining unit as of the time of their transfer or hire and must be paid and otherwise dealt with according to the terms of the collective agreement, at least until the collective agreement is terminated under section 55(6)(a).

33. The respondent's argument raised the suggestion that an order under Section 55(6)(a) of the Act terminating the collective agreement would relieve the employer of both past and present obligations under the contract. While counsel's argument was not absolutely clear on this point, it seemed to anticipate that a declaration at the present time terminating the collective agreement would retroactively void the agreement from the time of the sale. He also seemed to hold the alternative view that a declaration at this time favourable to the continuation of the collective agreement would mean that it would apply to the transferred employee only from this time forward. It is clear to us, given the very words of the section, that any declaration by the Board under section 55(6)(a) that an employer "is no longer bound by the collective agreement" can only be prospective in effect. Many rights under the Act, including access to arbitration, conciliation and the bar against strike and lock-out depend on the existence of a collective agreement. Given the scheme of the Act there are obvious poll icy reasons to limit the scope to be given to the Board's order in this circumstance. In this regard it is instructive to compare the wording of section 50, by which the Act renders "void' a collective agreement made following a certification obtained by fraud. While, given tie outcome of this application, it need not be conclusively determined by this case, it would appear that under section 55(6)(a) the Board cannot rescind the operation of the collective agreement for any period of time prior to the date that an application is filed under the section. (The Bryant Press Limited, [1972] OLRB Rep. Mar. 186.)

34. The rights of employees under the collective agreement after a sale are clearly not, therefore, dependent on and effective only from the date on which the Board finds, in a contested case, that a sale has occurred or, alternatively, the date on which it determines that the collective agreement should not be terminated. The thrust of section 55 is that the rights of all employees under the umbrella of the agreement are preserved effective from the date on which the sale of the business takes place. That raises the issue of which employees come under this umbrella of the agreement.

35. Section 55 of the Act cannot be applied or interpreted without regard to the first principles of bargaining under the Act. Bargaining rights under The Labour Relations Act have two incontrovertable attributes. Firstly, they apply to a bargaining unit rather than to individuals, and, secondly, they are exclusive. The Labour Relations Act contemplates that employees will be grouped, accordingly to their jobs, into an aggregation of job classifications - the bargaining unit - that, once established, is indivisible for purposes of collective bargaining. An employee may be a member of more than one union, but when he works for a given employer he is exclusively represented by the union that holds the bargaining rights for the job classification in which he is employed. The employees within the unit bargain with one voice through one union toward one collective agreement by which they and their employer will be bound.

36. That is not to say that the bargaining unit is immutable. By an order of the Board or by the agreement of the parties a bargaining unit may be altered in its job composition. It may also increase or decrease in size. For example, when an employer with a unionized plant within a given municipality opens a second plant in the same municipality and a union holds the bargaining rights for all employees of that employer within the municipality, there is a resulting accretion to the bargaining unit. The recognition clause in the collective agreement governs and the second plant falls within the bargaining unit by the operation of the private law of the parties. The same would be true if municipality-wide bargaining rights are held under a Board certificate, prior to the making of a collective agreement. There the accretion to the bargaining unit occurs by the operation of the Act. Always the critical starting point for collective bargaining is the bargaining unit - a collectivity which may increase or decrease in she, but all of whose members occupy job classifications that give them a common industrial relations interest in consequence of which they are exclusively represented by a single trade union under the Act. Together they choose their bargaining agent and through it they bargain with their employer, strike or are locked out, and finally make and live by a collective agreement.

37. Berrnay's assertion that the transferred employees are outside the agreement and governed by individual contracts of employment flies in the face of the fundamental proposition that when a collective agreement operates, it operates comprehensively. Perhaps the most definite statement of the sovereignty of the collective agreement was made by the Supreme Court of Canada in Syndicat Catholique des Employees de Magasins de Quebec, Inc. v. Compagnie Paquet Ltee [1959] S.C.R. 205 at 212; 18 D.L.R. (2d) 346 at 353-4 where Judson, J. for the majority of the Court said of employment relations in a workplace with a collective agreement:

"There is no room left for private negotiation between employer and employee. Certainly to the extent of the matters covered by the collective agreement, freedom of contract between master and individual servant is abrogated. The collective agreement tells the employer on what terms he must in the future conduct his master and servant relations

38. Central to the concept of the collective agreement is the right which the union has to see the agreement observed, a right separate and distinct from the rights of individual employees who may come and go. In McGavin Toastmaster Ltd. v. Ainscough (1975), 1975 CanLII 9 (SCC), 54 D.L.R. (3d) 1 (S.C.C.) at 6 Laskin, C.J.C., for the majority, emphasized that employees who came into a business do so on the terms of the collective agreement. In this regard he quoted with approval the following words of Judson J. in the Paquet case found at 355 D.L.R.; 214 S.C.R.:

"If the relation between employee and union were that of mandator and mandatory, the result would be that a collective agreement would be the equivalent of a bundle of individual contracts between employer and employee negotiated by the union as agent for the employees. This seems to me to be a complete misapprehension of the nature of the juridical relation involved in the collective agreement. The union contracts not as agent or mandatory but as an independent contracting party and the contract it makes with the employer binds the employer to regulate his master and servant relations according to the agreed terms."

39. It is against this background that the operation of section 55 of the Act must be construed. Upon the sale of a business section 55(2) dictates that the collective agreement be given full force and effect. In an agreement continued under section 55(2), as in any collective agreement, it is the scope clause that determines which employees come under it, at least until some contrary order is made by the Board under section 55(6). As the agreement continues to operate, so does its scope clause. Since the scope clause applies to job classifications, and not to individuals, employees newly hired or transferred into those job classification must fall under the agreement. That is the result most true of the language of section 55 and to the first principles of unit bargaining under the Act.

40. The contrary interpretation of section 55 put forth by the employer, separating as it does former Goldcrest employees from former Bermay employees, would work a dramatic departure from the established concept of unit bargaining. If the employer's argument is correct a number of strange things would happen in the industrial relations of its newly acquired workplace. Two separate groups of employees would work side by side in the same job classifications. One group of employees would have collective bargaining through a union and the other would not. The terms and conditions of employment for one group would flow from the collective agreement while the other group would be governed by individual contracts of employment. One group would have the right, through their union, to bargain with the employer and engage in a lawful strike. The other group would not. Furthermore, the non-union employees could at any time organize and get certified by another union. Or they might obtain representation by the same union and bargain on a different timetable from their fellow employees. And where would newly hired employees fit within this division? Would they fall into the bargaining unit as they inevitably would in a successorship that does not involve the intermingling of employees, or would they join the transferees with individual contracts of employment?

41. Tracing the ramifications of the employer's position makes it clear that it is inconsistent with the scheme of The Labour Relations Act. By the passage of section 55 of the Act the Legislature did not intend to construct a mechanism that could create such confusion and do such violence to the concept of unit bargaining. There is nothing on the face of section 55 to suggest that after the sale of a business a union's collective agreement should be other than fully alive or that its scope clause should be other than vital and binding, extending to all employees in the workplace who fall within it. In our view, the words of section 55 of the effect that the agreement is binding upon the successor employer until the Board otherwise declares, mean just what they say. The language of the section makes it patently clear that the legislature intended the agreement to apply to all the employees who would by virtue of their job classifications fall within the scope of the bargaining unit.

42. In this case the controlling fact is that the employees of Bermay were poured into the Goldcrest location. As employees entering the acquired business, they became part of a living bargaining unit, and not a dormant unit comprised only of former Goldcrest employees. To conclude otherwise is to amend section 55(2) to say that upon the sale of a business a successor employer is bound by all terms of the collective agreement except the scope clause. That is not what the section says.

43. Sometimes the policy of the Act to preserve collective bargaining rights will result in two collective agreements existing side by side. That would have happened in this case if the transferred employees had come from another plant of the employer with its own collective agreement negotiated with another union containing a scope clause overlapping the scope clause in the collective agreement in force in the newly purchased plant. In that situation the policy of the Act to preserve established bargaining rights would require the employer to respect both collective agreements until a Board order could be made determining which union and which collective agreement should have precedence. The wording of section 55(6) anticipates that situation and provides the mechanism to resolve it.

44. Where, however, there is only one collective agreement involved, any transferred or intermingled employees from another business must, like newly hired employees, clearly fall within the bargaining unit as of the time of their transfer. We realize that our conclusion in this regard is different from the conclusion of the Board in Bryant Press Limited [1972] OLRB Rep. Apr. 301. That decision, made shortly after the amendment of section 55 of the Act and prior to much of the jurisprudence that has evolved under the section, can no longer be viewed as an authoritative statement of the rights of parties under section 55 of the Act.

45. For the foregoing reasons the Board has reached the following conclusions, which it summarizes for the purposes of clarity:

1. The sale of a business from Goldcrest to Bermay took place within the meaning of section 55 of the Act (see Bermay Corporation Limited [1979] OLRB Rep. July 608).

2. From the time of the sale Bermay became bound to the collective agreement previously in effect between the applicant union and Goldcrest.

3. An intermingling of employees took place within the meaning of section 55(6) of the Act. Employees transferred to the former Goldcrest plant came under the collective agreement from the time of their transfer.

4. Pursuant to its authority under section 55(6) the Board amended the wording of the bargaining unit description to suit the respondent's situation. The Board then ordered the taking of a representation vote pursuant to section 55(8) to determine whether it should exercise its discretion to declare the collective agreement no longer binding, and terminate the bargaining rights of the applicant union.

5. There was no material misrepresentation made by the union to the employees as to the consequences of a vote in favour of the union, nor was there, as a result of the change in the wording of the Board's notice to the employees any reasonable likelihood of confusion among the employees sufficient to cause the Board to disregard the result of the vote.

6. The union having won the representation vote and there being nothing in the collective agreement which sufficiently prejudices the respondent so as to cause the Board to end the collective agreement, the Board does not declare that the collective agreement is no longer binding upon the employer.

DECISION OF BOARD MEMBER J. D. BELL:

1. On July 12, 1979 the Board issued a decision in which the majority found that the transactions discussed in that decision constituted the transfer of part of Goldcrest's business to Bermay within the meaning of section 55 of The Labour Relations Act. I dissented from this finding, my dissent being recorded in that decision.

2. Having made that decision, the majority went on to state in paragraph 17:

"That finding, however, does not dispose of the matter. In this case the respondent has some 70 production employees, 24 of whom were represented for collective bargaining purposes by the applicant under the predecessor employer. While section 55 of the Act operates to protect the bargaining rights of those employees and their union it also provides a mechanism to balance their interest with the interest of the respondent's former employees and new employees who work side by side with them." [emphasis added]

3. The majority continues in paragraph 18, which states:

"An obvious concern in the resolution of the conflict that arises upon the intermingling of employees who have previously been organized with employees who were previously not organized is the interest of the employer to have its industrial relations conducted within the framework of a rational bargaining structure. In this case, the Board is satisfied that it would be contrary to the interests of the employer and of the employees as a group to segregate the former employees of Goldcrest into a vestigial bargaining unit that would exclude all other production employees. It would, in our view, be equally inappropriate to effectively grant the bargaining rights for the two thirds of the production employees who have not previously been organized to the applicant without any indication of the wishes of that majority group. The Board is therefore satisfied that it should in these circumstances describe the appropriate bargaining unit and exercise its discretion under section 55(8) of The Labour Relations Act to conduct a representation vote among all the employees in the bargaining unit." [emphasis added]

4. The majority then described the bargaining unit and who shall vote in paragraphs 19 and 20. Paragraph 21 stated:

"Voters will be asked to indicate whether or not they wish to be repre­sented by the applicant in their employment relations with the respondent."

5. The decision having been made that a sale within the meaning of section 55 had occurred I agree with the above reasoning and the direction to conduct a representation vote.

6. The purpose of the vote was clear and not ambiguous, i.e., do the employees wish to be represented by the applicant in their employment relations. There was no mention or even an inference in the July 12, 1979 decision that the purpose was to determine whether the Goldcrest agreement should apply to the Bermay operations. The first reference about Bermay being possibly bound by the Goldcrest collective agreement was when the first Form 42 was issued on August 28, 1979. This was objected to and was withdrawn by the Registrar. A new Form 42, which properly reflected the Board's direction, was issued on September 10, 1979. Once again this direction was specific and clear.

"Whereas the Canadian Union of Industrial Employees have applied to the Board for a declaration under section 55 of The Labour Relations Act, the Board had directed a representation vote be taken among certain employees of Bermay Corporation Limited to whether or not they wish to be represented by the Canadian Union of Industrial Employees in their employment relations with Bermay Corporation Limited." [emphasis added]

This theme was continued on the ballot which the Board presented to the employees to indicate their wishes.

7. The Board's decision of July 12, 1979 was clear and the direction for conducting the vote was specific as well as the wording on the ballot used by the Board at the polling place. None of these made any reference to the interpretation now cited as the purpose of the vote in the majority decision in section 4 of paragraph 45:

"...to determine whether it should exercise its discretion to declare the collective agreement no longer binding, and terminate their bargaining rights of the applicant union."

This interpretation has risen out of the hearing held subsequent to the vote and the counting of the ballots. This hearing was held October 22, 1979 and concerned certain allegations of impropriety which have been dealt with on the majority report. I have no disagreement with the majority findings in those matters.

8. The majority decision goes to great lengths to interpret section 55 very narrowly and infer that the Board's discretion is limited; particularly as it refers to section 55(2). However, in my opinion, section 55(6) gives the Board power and the discretion to sort out the problems that are created by a declaration that this transaction is a sale for purposes of the Act. Further, section 55(8) permits the Board to hold a representation vote to help determine what it should do in any specific case.

9. In the instant case the Board noted that only 24 of the 67 employees involved were former employees of Goldcrest and ordered a vote to be held to decide if the majority wished to be represented by the union. It is interesting to note that if this was an application for certification 24 out of 67 would not be sufficient for even a pre-hearing vote. However, the vote was held and the employees indicated by a one vote majority that they wished to be represented by the union in their employment relations with Bermay.

10. The next step the Board should take is to declare that the applicant union repre­sents the employees in their employment relations with Bermay Corporation Limited. If the Board is concerned that the Goldcrest agreement may interfere with such declaration then that agreement should be declared null and void as it pertains to the Bermay bargaining unit.

11. When the Board goes beyond the above and declares that as a result of the vote the Goldcrest agreement is binding of Bermay and its employees, the purpose of the vote had been misrepresented to those who cast their ballots. The only way which this misrepresentation, though it may have been inadvertent, can be corrected at this stage, is to conduct a new vote and ensure that the Board's direction clearly indicate that the matter to be decided by the vote is the question of the Goldcrest agreement.

12. The next point in the summary of the majority is item 6 i.e., "there is nothing in the collective agreement which sufficiently prejudices the respondent". This causes me con­cern because the majority have simply brushed aside the various differences which were identified at the hearing by saying the parties can renegotiate these areas and if they cannot reach an agreement, they can resort to arbitration, under the terms of the collective agreement. In my opinion this is a naive suggestion because Article 9.10 of the agreement limits the power of the Board of Arbitration in that it shall not have any authority to make any decision which is inconsistent with the terms of the agreement. Therefore, the only solution to the problem of agreement language is to bargain in good faith for a complete agreement as contemplated by section 14 of the Act.

13. I would therefore direct that:

1. The Goldcrest agreement does not apply to the Bermay Corporation from the date of sale except, as it may apply to those Goldcrest employees in accordance with the Bryant Press Limited case which was the authorizatative statement in effect at the time of the sale.

2. The bargaining rights of the Canadian Union of Industrial Employees will flow to the Bermay Corporation in the bargaining unit described in the decision of July 12, 1979.

3. The parties should meet to negotiate a collective agreement as contemplated in section 14 of the Act.