[1980] OLRB Rep. November 1673
0701-80-R Rene Herweyer, Applicant, v. Retail Clerks Union Local 486, Respondent, v. Steve Duga, carrying on business as Otto's Deli, Intervener.
BEFORE: R.O. MacDowell, Vice-Chairman and Board Members F.W. Murray and H. Simon.
APPEARANCES: F.J. Mathews for the applicant; Alick Ryder, Q.C. for the respondent; and R.J. Mc Comb for the intervener.
DECISION OF R.O. MACDOWELL, VICE-CHAIRMAN, AND BOARD MEMBER H. SIMON; November 20, 1980
- This is an application for termination of the respondent union's bargaining rights. The application raises two issues: whether, having regard to the scheme of The Labour Relations Act, the application is timely; and, whether in the rather unique circumstances of this case, the Board can be satisfied that the employees have voluntarily signified their opposition to union representation. It will be convenient to deal with each of these matters in turn.
I
- The union is a party to a collective agreement with Loblaws Limited covering the Ottawa area, and running from January 1978 to May 31, 1980. In or about October 1979, Loblaws sold one of its delicatessen outlets to the intervener. On May 7, 1980, the Board declared that the intervener was "a successor employer" within the meaning of section 55 of The Labour Relations Act; and that accordingly, it remained bound by the predecessor's (“Loblaws”) agreement. The provisions for termination and renewal of that collective agreement read as follows:
"27.01 This Agreement shall become effective as of June 1st, 1978 and shall continue until May 31st, 1980. It shall continue automatically from year to year thereafter until either party serves written notice on the other party by registered mail within sixty (60) days and not less than thirty (30) days prior to the expiry date. Such notice shall indicate any changes to be negotiated. When such notice has been served by either party bound by this Agreement, the other party shall attempt to commence negotiations within a period of two (2) weeks from receipt of the notification. All conditions of this Agreement are to remain in force and effect until negotiations are completed and/or conciliation proceedings exhausted."
- On March 11, 1980 (i.e. before both the section 55 application and the Board's section 55 declaration) the union sent a notice to the intervener indicating its desire to bargain for a new collective agreement. This notice, it will be observed, does not comply with the time limits prescribed in the collective agreement; although it does comply with the broader time limit prescribed by section 45 of The Labour Relations Act. The relevant portions of that section read as follows:
"(1) Either party to a collective agreement may, within the period of ninety days before the agreement ceases to operate, give notice in writing to the other party of its desire to bargain with a view to the renewal, with or without modifications, of the agreement then in operation or to the making of a new agreement.
(2) A notice given by a party to a collective agreement in accordance with provisions in the agreement relating to its termination or renewal shall be deemed to comply with subsection 1."
There is no evidence that the intervener rejected the notice to bargain or raised any complaint concerning its timeliness. There is also no evidence of any meeting between the parties, bargaining, or communications with respect thereto. On June 27, 1980, the present termination application was filed (i.e. after May 31st, the nominal expiry date of the collective agreement). The union contends that the application is untimely.
- The union argues that its notice to bargain did not comply with the time limits set out in the collective agreement, and that for this reason, the agreement continues in force for another year. The union contends that the situation is governed by section 49(2)(c) of the Act, which provides that a termination application can only be made during the last two months of the agreement's extended term of operation (i.e. April, and May 1981). Section 49(2)(c) provides:
"49(2) Any of the employees in the bargaining unit defined in a collective agreement may, subject to section 53, apply to the Board for a declaration that the trade union no longer represents the employees in the bargaining unit,
(c) in the case of a collective agreement referred to in clause a or b that provides that it will continue to operate for any further term or successive terms if either party fails to give to the other notice of termination or of its desire to bargain with a view to the renewal, with or without modifications, of the agreement or to the making of a new agreement, only during the last two months of each year that it so continues to operate or after the commencement of the last two months of its operation, as the case may be."
The union argues that the notice to bargain referred to in 49(2)(c) refers only to a notice properly given under the collective agreement, and relies on the decision of this Board in Hield Brothers Limited 57 CLLC 11 18,072 for the proposition that the right to give notice under section 45 of the Act is not available in the case of a collective agreement framed in the language of the present one. Since section 45 cannot apply, it is irrelevant that the notice to bargain comes within the time limits prescribed by section 45. The terms of the agreement prevail, and the failure to comply with those terms results in both a continuation of the old agreement, and a bar to the present application. In the union's submission, there was a failure to give notice in accordance with the agreement, a section 45 notice is unavailable, the agreement continues in effect and no termination application can be made.
As a matter of interpretation we find it difficult to accept that an early notice to bargain is insufficient to terminate the agreement on its nominal expiry date. The purpose of notice provisions is to ensure that both parties have an adequate opportunity to prepare their bargaining positions prior to the expiry of the agreement, and surely the parties could not have intended that an early notice would be ineffective, and that the agreement would therefore continue for a further year. We do not propose to review the numerous cases which distinguish between "mandatory" and "directory" provisions of a collective agreement, (but see generally: Brown and Beatty, Canadian Labour Arbitration, Canada Law Book, 1977 pp. 78-84); it suffices to say that we do not think that the parties intended the continuation provisions to operate despite a notice which was not only adequate but, in fact, more generous than that required by the agreement. Moreover, we see no reason for concluding that this early notice was a nullity, and could not be cured by the simple passage of time. There is no evidence that it was rejected or withdrawn, and we do not see why it cannot take effect on March 31, 1980- the first day for giving notice prescribed by the collective agreement. There is, however, an alternative reason for rejecting the union's claim that the present application is untimely; but, in order to appreciate the view which we take of this matter, it is necessary to specifically address both the Hield Brothers' case upon which the union relies, and what we conceive to be the scheme of The Labour Relations Act. As will become apparent, the term of the agreement, the right to give notice to bargain, the right to apply for conciliation, and the right to challenge the union's status as bargaining agent, are all interrelated.
A union acquires bargaining rights by demonstrating that the majority of the employees in a bargaining unit have become members, and a union can lose its bargaining rights when it no longer enjoys majority support. However, employees are not entirely free to select or reject a bargaining agent any time they wish. If such were the case, the stability of an established collective bargaining relationship would be jeopardized, and the certainty provided by a written collective agreement would be entirely illusory. The legislature has sought to balance the right of the employees to be represented by a bargaining agent of their own choosing, and the right of both the employer and an incumbent union to a reasonable degree of stability, by enacting statutory provisions which link the timeliness of representation applications to the term of the collective agreement. Basically, such applications can only be made during the last two months of the agreement's operation - that is, during the so called "open period".
Because the right to oust an existing bargaining agent is linked to the term of the collective agreement, it becomes imperative that the agreement's term be clear and easily ascertainable from the face of the document. There must be a fixed termination date from which the "open period" can be calculated. This object is accomplished by section 44 of the Act which provides, in part, as follows:
"(1) If a collective agreement does not provide for its term of operation or provides for its operation for an unspecified term or for a term of less than one year, it shall be deemed to provide for its operation for a term of one year from the date that it commenced to operate.
(3) A collective agreement shall not be terminated by the parties before it ceases to operate in accordance with its provisions or this Act without the consent of the Board on the joint application of the parties.
(5) Nothing in this section prevents the revision by mutual consent of the parties at any time of any provision of a collective agreement other than a provision relating to its term of operation."
Section 44 requires that a collective agreement must have a specific term of at least one year, and that this term cannot be altered without the consent of the Labour Relations Board. To an outside observer, it might seem odd that the parties to an agreement cannot effect a "novation", or by mutual consent alter the contract's term of operation; however, the reason for this restriction becomes apparent when one remembers that the agreement prescribes not just the terms and conditions of employment, but also the time when employees are permitted to challenge their union's bargaining rights and other unions can try to displace the incumbent. An alteration of the term affects the rights of third parties. If the parties to the agreement could alter its term of operation the "open period" could be eliminated or postponed. Similarly, if the termination date were uncertain, or depended upon the happening of an event extrinsic to the agreement and beyond the knowledge of the employees or a rival union, the timing of the open period would be uncertain, and neither the employees, nor other unions seeking to represent them would know precisely when their rights would arise. If the statutory scheme is to be effective therefore, the term of the collective agreement must be fixed, specific and easily ascertainable from the face of the agreement itself.
The expiry date of the collective agreement does more than delimit the open period during which an incumbent union's status can be challenged; it also governs the time during which either party may seek to renegotiate the collective agreement, and if necessary, resort to conciliation. Before a party may strike or lockout, there must be at least one stage of compulsory conciliation, and the right to resort to conciliation is contingent upon a party giving a "notice to bargain" within the 90 days preceding the expiry of the agreement (see section 45). A 'section 45 notice" triggers the right to conciliation under section 15, and ultimately sets in motion the steps upon which the right to strike depends. As in the case of the "open period", the section 45 notice period is calculated with reference to the expiry date of the agreement.
The scheme of the Act envisages the periodic renegotiation of collective agreements and a right to resort to conciliation which is triggered by a notice within the period prescribed by section 45. In view of the simple language and purpose of section 45, it would be surprising in our view if a notice properly given within the prescribed time limit did not bring the subsisting agreement to an end and crystalize the right to resort to conciliation. Where the Legislature has envisaged that parties could "contract out" of a statutory provision, it has used very clear and specific language (see for example, section 37(5a)). No such language appears in section 45, and we do not think the Board should readily conclude that its provisions can be bypassed. Nevertheless, this is the effect of the Hield case to which we now turn.
The Hield case involved an interpretation of section 45 of the Act which, as we have already noted, provides that either party to a collective agreement may, within 90 days before the agreement "ceases to operate" give notice of a desire to renegotiate the agreement. The case dealt with a collective agreement which, like the present one, provides that it will continue in effect if notice to bargain is not given in accordance with a prescribed form. In Hield, the Board held that a failure to give the prescribed notice means that the agreement never ''ceases to operate" on its nominal expiry date, but rather continues as if the term of operation had been longer ab initio. For example, a one year agreement would not cease at the end of its nominal one year term of operation but would become, in effect, a two year agreement. The Board then reasoned that, there being no termination on the nominal expiry date, there was no end point from which to calculate the 90 day period contemplated by section 45. Because the agreement did not cease to operate on its nominal expiry date, section 45 had no application. In the result, the Board determined that by appropriate language in the collective agreement, the parties could modify or eliminate the right to give notice under section 45. A contractual notice period and a "continuation" clause could foreclose access to that section.
The Board in Hield did not enunciate any labour relations rationale for the interpretation it adopted (other than a general observation that a party which had negligently failed to give notice under its agreement should not be allowed to fall back on the Act); nor is it evident that this interpretation is the only or most reasonable one, having regard to the scheme of the Act. Indeed, it is difficult to discern what industrial relations policy is promoted by permitting parties to "contract out" of what appears to be a clear statutory right. This was the view expressed by the minority in Hield. The majority approach would also seem to result in a series of anomalies - bearing in mind that the Hield view turns on the proposition that the collective agreement does not expire on its nominal expiry date but continues in force as if it had a longer term ab initio.
Can the agreement be said to have a "specific term" within the meaning of section 44 of the Act, if its term of operation is either its nominal term of operation, or some longer period depending upon the giving of notice? When is the "open period", which, is should be recalled, is also calculated with reference to the term of operation of the agreement? Is the open period postponed? Alternatively, does it make sense to say that the agreement terminates for the purposes of section 5 and 49, (so that a certification or termination application made "after the commencement of the last two months of its operation" is timely); yet does not terminate for section 45 purposes, (so that no notice can be given "within the period of 90 days before the agreement ceases to operate")? If failure to give notice can alter the expiry date of the agreement, how can the employees or a third party determine when "the last two months of the agreement's operation" will be? It cannot be assumed that such information will be provided by parties to the agreement who might well oppose alteration of the status quo. Do the rights which would arise during the open period disappear; and if this is the result, is it a tenable view of the Legislature's intention? The Hield view appears to contemplate a notional revision of the agreement's term of operation on the failure to give a timely notice, but this kind of revision with its associated impact on third party rights is precisely what sections 44(3) and (5) are designed to prevent.
None of these possibilities were considered by the Board yet they would seem to follow from its analysis. On the other hand, what mischief would arise or prejudice ensue if, despite the terms of any agreement, a party were entitled to give a notice to bargain within the time prescribed by section 45 which will eventually terminate the agreement and trigger the right to resort to conciliation and the other dispute settlement mechanisms prescribed by the Act? A termination of the agreement does not plunge the parties into a legal limbo, expose them to immediate economic conflict or prevent collective bargaining. On the expiry of the agreement section 70 of the Act maintains the collective bargaining status quo and no strike or lockout can occur until conciliation has been exhausted and the time periods prescribed in section 63 have elapsed. In the absence of clear statutory language, or compelling policy considerations we do not think the Board should adopt an interpretation which limits the right to give notice and engage in the process of renegotiation contemplated by the statute -especially, where, as here, the reasoning supporting that interpretation raises analytical difficulties when applied to other related parts of the Act. As the Supreme Court of Canada observed in William Bradburn v. Wentworth Arms Hotel Ltd. et al, 1978 CanLII 44 (SCC), [1979] 1 S.C.R. 846 (per Estey J.), a tribunal should not readily embrace an interpretation which seems inconsistent with an established statutory scheme. Of course, nothing would prevent an automatic renewal of the agreement if neither party gave notice under section 45, but in our view it is more consistent with the scheme of the Act, to treat such continued operation as the automatic renewal for a further term, after expiry of the agreement on its nominal expiry date.
We have carefully considered the Hield case, as well as those cases which have followed it; and we might note that in all of the recent cases which have followed the Hield decision, the Board has expressly refrained from asserting its correctness. The Board has emphasized the reliance interests of the parties rather than the inherent logic of the decision or its industrial relations efficacy. In Nortex Products [1978] OLRB Rep. Nov. 1036 Hield was followed "with a considerable feeling of regret" and in Canadian Chemical Workers Union, [1980] OLRB Rep. July 952 the Board remarked that the Hield decision” may well be ripe for a reconsideration". We are also aware of the importance of consistency in the Board's approach to statutory interpretation. The Board's decisions create a background against which parties negotiate collective agreements, as well as reliance interests which cannot be ignored (although it might be noted that here it is the party which gave the notice which is now seeking to rely on its deficiency) Nevertheless, we do not think the Hield reasoning is either correct or consistent with the scheme of the Act, and we do not think that it should be followed. In our view, section 45 creates a substantive right, which cannot be avoided or abridged in the manner suggested by the Board in Hield. If proper notice is given within the 90 day time period prescribed by section 45, the agreement will terminate on its nominal expiry date, and the parties will be entitled to resort to conciliation - regardless of the notice provisions in the agreement. The parties may provide for notice periods different from those set out in section 45, and compliance with those provisions will satisfy the requirements of section 45(1) [see section 45(2)]. However, the basic rights to give a "section 45" notice cannot be removed by judicious drafting.
In the present case, a notice to bargain was given on March 11, 1980 -well within the 90 day period prescribed by section 45. In our view this notice was effective to terminate the collective agreement and entitled the union to engage in collective bargaining and apply for conciliation, even if it did not comply strictly with the notice procedure in the collective agreement. Since there was no collective agreement in operation at the time the application for termination was made, and since there was no application for, or appointment of, a conciliation officer such as to bring into operation the bar prescribed in section 53 of the Act, we are satisfied that the present termination application is timely.
II
- The remaining issue before the Board is whether the petition filed in support of this application reflects the voluntary wishes of those who signed it. The onus is upon is upon those seeking to rely on this statement to satisfy the Board in this regard. The approach which the Board takes in these matters has recently been reviewed in Grove Park Lodge [1980] OLRB Rep. Feb. 235, in a long passage to which we might usefully refer. At page 240, the Board commented:
"The Board has always been sensitive to the particular vulnerability of employees arising out of the employer-employee relationship. As stated in the Pigott Motors (1961) Ltd. case, 62 CLLC ¶16,264:
There are certain facts of labour-management relations which this Board has, as a result of its experience in such matters, been compelled to take cognizance. One of those facts is that there are still some employers who, through ignorance or design, so conduct themselves as to deny, abridge or interfere in the rights of their employees to join trade unions of their own choice and to bargain collectively with their employer. In view of the responsive nature of his relationship with his employer, and of his natural desire to want to appear to identify himself with the interests and wishes of his employer, an employee is obviously vulnerable to influence, obvious or devious, which may operate to impair or destroy the free exercise of his rights under the Act. It is precisely for this reason, and because the Board has discovered in a not inconsiderable number of cases, that management has improperly inhibited or interfered with the free exercise by employees of their rights under the Act, that the Board has required evidence in a form and of a nature which will provide some reasonable assurance that a document such as a petition, signed by employees purporting to express opposition to the certification of a trade union truly and accurately reflects the voluntary wishes of the signatories.
and in the Peel Block Co. Ltd. case, 63 CLLC ¶ 16,227:
It is a function and duty of this Board to be vigilant and scrupulous in its concern to protect the fundamental rights of employees to make their own choice, as distinct from the choice of their employer, on the matter of selecting or rejecting a bargaining agent.
See also CCH Canadian Limited [1975] OLRB Rep. Jan. 19. which involved an application for termination of bargaining rights.
The Board has before it, in the present case, a cogently-worded statement of desire signed by almost the full complement of the bargaining unit. The Board must still be satisfied, however, that the motivation behind such a statement was of a truly voluntary nature; that is, as the above cases indicate, that the employees are not simply identifying themselves with the choice of their employer, out of fear of antagonizing their employer, or fear of reprisal, or for whatever reason. This is a fundamental duty which the Board owes to the employees themselves, and is made a pre-condition under section 49(3) of The Labour Relations Act to its power to direct the holding of a representation vote.
As the Pigott Motors case, supra, makes clear, so vulnerable are employees to employer influence that the influence need not even be created by employer design. The Board in a long line of cases has refused to accept as voluntary a statement of opposition to a trade union signed in circumstances where the employees could reasonably believe that their failure to sign would come to the attention of management. In the Morgan Adhesives of Canada Limited case, [1975] OLRB Rep. Nov. 813, for example, the Board stated at paragraphs 30 and 31:
The finding of the Board is not intended to imply collusion or other conscious or deliberate improprieties on the part of either the objectors and/ or the respondent company. There is no evidence before the Board which would support such a finding.
The evidence taken as a whole however, supports the inference that the employees of the respondent company would logically have assumed that management supported the petition, albeit in a tacit manner and that the names of those refusing to sign the petition would become known to management.
In carrying out its statutory duty, the Board is at the same time conscious that it must not be overprotective of employees' interests to the pout where its evidentiary requirements become an unwitting-trap for those very employees trying to express themselves. At all times a balance must be struck."
What makes this case somewhat unusual is that the bargaining rights which the applicant seeks to displace are not founded on either a certification or an established collective bargaining relationship with the intervener. The union acquired the right to represent the intervener's employees as a result of a section 55 declaration which bound the intervener and his employees to the terms of a bargaining relationship between the union and Loblaws. There is no evidence that any of the employees had any pre-existing allegiance to the union or that, following the section 55 declaration, the union made any effort to solicit their support or forge such relationship. It may be that in the face of employer opposition, the union might have faced some difficulties; however, there is no evidence that any attempts were made to contact the employees or communicate the relative advantages of trade union representation. In the circumstances. some dissatisfaction or confusion about the value of such representation would not be surprising. This is not a situation in which employees have had a sudden and inexplicable change of heart concerning union membership which they had affirmed a short time before, nor is this a case in which employees are seeking, without apparent reason, to displace a lone established bargaining agent. In the absence of factors such as these, it is much easier to conclude that the employee opposition to the union is entirely voluntary. There are, however, a number of other factors which the Board must consider, and which were elaborated in the evidence of both individuals who testified in support of the application.
Otto's Deli is a small delicatessen business employing a total of 13 employees. Steve Duga, the owner, is actively involved in running the business which is managed by Duga himself, and Peter Herweyer, the father of one of the applicants herein. Of the 9 part-time employees on schedule B, 3 are close relatives of Mr. Duga. The applicant Rene Herweyer, the son of the manager, and Annie Herweyer the manager's wife are 2 of the 3 full-time employees whose names appear on schedule A. Counsel for the union contends that, given this family connection, it is inconceivable that these employees would not have discussed the union with the owner and been influenced by both the economic and family relationship. He further contends that involvement of the owner's family in the discussions about the union as early as the successor rights application, and, in particular, preceding the solicitation of the petition against the union, and the support of family members for the petition itself, make it impossible for those who were not family members to indicate their support for the union. Counsel for the applicants and the intervener, on the other hand, argue that at least 5 of the 12 employees are relatives of the owner or manager, and that this in itself suggests that they would be opposed to the union. In essence, each of the parties urges the Board to draw a different inference from these family relationships, and although the inferences are entirely different neither is unreasonable.
We do not think that we should readily draw inferences from the mere existence of a family relationship. In some circumstances, relatives may reasonably be perceived as having a special relationship with the employer which could influence an employee's choice with respect to trade union representation, but we do not think that this is always the case, nor are we prepared to automatically assume that the existence of a family relationship necessarily evidences a community of interest with the employer. It may be that there is a presumption tending in that direction but we are all aware that family relationships do not always exhibit the solidarity which counsel suggests. The involvement of family members is not irrelevant, but it is not the only factor to be considered especially where, as here, the inferences to be drawn from it are unclear. Of equal significance in our view is the general atmosphere prevailing at the work place, and the impact this would likely have on employee perceptions.
Steve Duga, the owner has been opposed to the trade union from the beginning and this opposition was shared by Peter Herweyer, his manager. Duga refused to acknowledge the union's rights under section 55, and following the Board's successor rights declaration, has refused to adhere to, or implement the collective agreement by which he is bound. In mid-February, just before the section 55 application (but when he would have been aware that such application was forthcoming) Duga implemented his own health and benefit plan, and gave the employees the impression that this plan would be lost if the union were successful. The employees were advised of the obligation to pay union dues, but no mention was made of the benefits contained in the collective agreement - benefits which were substantially higher than those which were currently in effect. In the first week of June, the 9 part-time employees were granted a wage increase. Almost contemporaneously, the applicant made arrangements for taking a "vote" to test employee support for the union. This vote was conducted by Rene Herweyer. Each employee was asked to write on a piece of paper his support for, or opposition to, the union, and to give that "ballot" to Herweyer. Those who signified opposition were then invited to sign a petition against the union. All of the employees filled in their "ballot" in opposition to the union, and at least 2 employees who were not scheduled to work at the time made a special trip by public transportation in order to record their position. The petition resulting from this process is the one upon which the applicant relies to demonstrate that the employees have all voluntarily signified their opposition to continued union representation.
The question before the Board is whether the statement in opposition to the union is voluntary. The evidence in this regard is equivocal. The fact that the employees have no prior union allegiance and were "swept into" the bargaining unit supports an inference that the petition is voluntary-as does the evidence of early employee opposition to the union, and perhaps the close family relationship of many of the employees. In Erie Sand and Gravel Ltd., [1980] OLRB Rep. June 824 a panel of the Board including the present Vice-Chairman found a termination application to be voluntary where employees of a small business had been swept into a bargaining unit in a situation similar to the present one by operation of section 1(4) of the Act. Here however, there are a number of other factors which must be considered including: the employer's well known opposition to the union; his refusal to adhere to the collective agreement even after the Board's section 55 order; his unilateral introduction of a benefit package and subsequent suggestion that it would be lost if the union were successful; his selective information about the union; and the granting of a wage increase immediately prior to the circulation of a "ballot" and petition in opposition to the union. The unilateral wage increase is of particular concern, for as the Supreme Court of the United States remarked in NLRB v Exchange Parts Co. (1964), 375 U.S. 405 (per Harlan J.):
"The danger inherent in well timed increases is the suggestion of a fist inside the velvet glove. Employees are not likely to miss the inference that the source of benefits now conferred is also the source from which future benefits must flow, and which may dry up if it is not obliged."
None of these factors operate independently and in our view their cumulative effect would be sufficient to suggest to the average employee that their employer actively wished them to reject their union and that they might suffer adverse employment consequences if they chose not to do so. These supervening events complicate the Board's task and outweigh the inference which might otherwise have been drawn from the absence of previous trade union allegiance. The intervener's conduct has made it more difficult for employees to freely express their true wishes with respect to trade union representation, and much more difficult for the Board to conclude that the present expression of employee opposition is truly voluntary. In the circumstances, and after weighing the factors which point in one direction against those which point in the other, we have concluded that we are not satisfied that the forty-five percent of the respondent's employees in the bargaining units prescribed by the agreement, have voluntarily signified their opposition to the union. The application is therefore dismissed.
DECISION OF BOARD MEMBER F.W. MURRAY:
- I agree with majority that the termination application is timely; however, I am unable to agree with the majority view with respect to the voluntariness of the employee petition supporting the application. My views in this regard will be issued at a later date.

