Ontario Public Service Employees Union v. Cybermedix Limited, 1981 CanLII 865

Ontario Labour Relations Board

[1981] OLRB Rep. January 13

1224-80-U Ontario Public Service Employees Union, Complainant, v. Cybermedix Limited, Respondent.

BEFORE: R. O. MacDowell, Vice-Chairman, and Board Members H.J.F. Ade and C.A. Ballentine.

APPEARANCES: C. G. Paliare, F. Tailor and L. Rothstein for the complainant; E.L. Stringer, Q. C., D. L. Brisbin and V. Belleville for the respondent.

DECISION OF THE BOARD; January 13, 1981

1. This is a complaint under section 79 of The Labour Relations Act alleging that the respondent has contravened section 14 of the Act. The relevant portion of section 14 reads as follows:

14. The parties shall meet.. . and they shall bargain in good faith and make every reasonable effort to make a collective agreement.

The case was argued on the basis of an agreed statement of fact.

2. The respondent company operates a number of medical testing laboratories from seventeen locations in Metropolitan Toronto, and employs approximately one hundred and twenty employees. On July 15, 1979, the complainant union applied to be certified as the bargaining agent for these employees. One of the matters in dispute during the certification proceedings was the description of the unit of employees appropriate for collective bargaining. The respondent took the position that there should be either seventeen, six or two separate bargaining units. The union sought a single comprehensive bargaining unit covering all of the respondent's employees and locations. The Board accepted the union's position and, in a decision dated August 7, 1979, certified the applicant as the bargaining agent for "all employees of Cybermedix Ltd. in Metropolitan Toronto, Ontario, save and except supervisors, persons above the rank of supervisor, office and clerical employees and persons regularly employed for not more than twenty-four hours per week, and students employed during the school vacation period."

3. By letter dated September 13, 1979, the trade union gave the employer notice to bargain, and thereafter, the parties met on a number of occasions in an attempt to effect a collective agreement. At the first or second meeting, the parties settled upon a recognition clause which closely paralleled the description of the bargaining unit certified by the Board. There were six bargaining meetings prior to the appointment of a conciliation officer in early April 1980.

4. By July 15, 1980, there were only two items remaining in dispute: union security; and the way ii which employees would be placed on a salary grid which had already been agreed upon. The former issue was resolved by the passage of Bill 89 amending section 36a of The Labour Relations Act. The second issue was resolved when the union agreed to the respondent's position. Since, there were no longer any outstanding differences between the parties, they signed the following memorandum of agreement:

"This memorandum of agreement entered into this 15th day of July 1980

between

Cybermedix Limited hereinafter referred to as "Employer"

— and —

Ontario Public Service Employees Union and its Local 544 hereinafter referred to as "Union"

The Employer and the Union, by the signature of their representatives below, agree that they shall recommend the terms of this memorandum to heir respective principals. Upon acceptance of this memorandum, each party shall notify the other and such ratification, either written or verbal, shall constitute acceptance. Until a formal document can be drafted and executed as a collective agreement, this memorandum, including all matters already agreed shall constitute the collective agreement.

1. All matters previously agreed to between the parties shall be included in the agreement.

2. Union security clause shall be based on the Union's proposal subject to deleting "new" in 401.

3. Salary grid placement shall, for 1980, be based on service as of January 1, 1980; effective 1981 placement shall be based on anniversary date.

Dated at Toronto this 15th day of July 1980

Cybermedix Limited OPSEU and Local"

(emphasis added)

5. The memorandum of agreement was signed by a senior official of the company, and it is difficult to see why any further ratification by its "principals" should be necessary; however, the language of the document is specific in this regard and its import is clear. Acceptance of the bargain would only occur when each of the parties notified the other that their respective principals were content with the settlement. In the absence of mutual ratification, there would be no binding agreement, and until ratification took place, the agreement would only be a tentative one. Moreover, by making it so, both parties are recognizing that one or the other may refuse to ratify, and further bargaining may be necessary.

6. There is no allegation of bad faith bargaining in respect of any of the negotiations prior to July 15, nor is there any allegation of any other unfair labour practice during or after the union's successful organizing campaign. The sole basis of the union's complaint is the respondent's repudiation of the July 15th memorandum of agreement.

7. Unknown to the union, the respondent had been attempting for some time to acquire control of S & M Laboratories Ltd., a company in the same business as the respondent, having approximately fifteen locations and eighty employees. Other firms were also seeking to purchase S & M and for this reason the respondent endeavored to keep its activities secret. Ultimately, the respondent was successful, and an agreement to purchase the shares of S & M was signed on July 5, 1980 — that is, ten days before the memorandum of agreement with the trade union. It should be noted however, that this share purchase agreement contained a number of conditions which had to be satisfied before it could become legally enforceable. Those conditions were not satisfied until the end of the business day on Friday August 1st, 1980.

8. On August 5th, 1980, Mr. L. Delauney-Belleville, general manager, of the respondent telephoned the union to advise that he was revoking the memorandum which he had signed unless the recognition clause of the proposed collective agreement was amended to make it clear that none of the terms of the agreement would apply to the employees of S & M. There followed an exchange of correspondence between the parties and on August 7, Mr. Delauney-Belleville wrote:

"This letter will confirm our telephone discussion during which I advised you that this letter has been sent to you. We have been advised by our solicitors that you spoke to Mrs. Crowe at Stringer and Brisbin and advised her that you did not wish any mention of S & M Laboratories Limited in the exclusion clause of the collective agreement. It is our position that this matter must be specifically dealt with in order to avoid confusion and dispute in the future, therefore this company does hereby revoke the memorandum of agreement between us until we have satisfactorily resolved the issue and concluded a new memorandum of agreement or an amendment to the previous memorandum of agreement. We will be pleased to meet with you as soon as a date can be arranged which is mutually agreeable to us, the union and Mr. Brisbin."

On September 5, 1980, he reiterated his position:

"Please be advised that the Company has reviewed the issue outstanding between the parties. It is still the position of the Company, as stated in my letter to you dated August 7, 1980 that, to avoid future confusion and uncertainty, employees of S & M Laboratories Limited ought specifically to be excluded from the Recognition Clause, and particularly Article 1, of the Collective Agreement."

9. Except for the issue of the recognition clause (which at present mirrors the description of the bargaining unit certified by the Board) there is no other issue remaining in dispute between the parties. The respondent's position (as indicated in its letters, and repeated to the Board) is that it is entitled to demand a clause ensuring that the settlement will not apply to S & M, and further that it is entitled to refuse to enter into the agreement which the parties had previously negotiated until this demand is met. The company is prepared to adhere to the settlement which was negotiated with respect to its own employees; but it will only do so if it is made clear that the bargain will never extend to the employees of S & M. There is no evidence that the parties have ever met to discuss the ramifications of the acquisition of S & M, although the union made it clear at the hearing that it was not prepared to accede to the respondent's request to alter the recognition clause of the proposed agreement.

10. On October 29, 1980, (i.e. about one week after the hearing in this matter) the union applied to the Board for a declaration (inter alia) that the respondent and S & M are "one employer" pursuant to section 1(4) of the Act. If the union is successful in its application it will "acquire" bargaining rights for the employees of S & M; and if there is a collective agreement in existence at the time of the declaration, there is a strong argument that it will apply automatically to the employees of S & M. It is evident therefore, that the concern expressed by the respondent is n )t an academic one, for unless the agreement expressly addresses the situation of S & M, that firm's employees may automatically acquire all of the rights and obligations of "employees" under the agreement. However, there was no evidence before the Board from which we can assess the potential impact if at some time in the future the collective agreement with the complainant is extended to the employees of S & M.

11. In th2 absence of any evidence to the contrary, we are prepared to accept the respondent's assertion that the actual acquisition of S & M did not become a certainty until August 1, 1980, two weeks after it had signed the memorandum of agreement with the union. We also accept its submission that the dynamics of the share purchase transaction and the existence of other bidders made it imprudent to reveal its plans until they had crystalized. Finally, we are satisfied that the respondent is not trying to avoid entering into any agreement with the complainant; rather, it is attempting to ensure that the scope of the bargain will never extend beyond the original employee group which the union was certified to represent.

12. The union contends that the memorandum of agreement signed by the parties constitutes a binding collective agreement and urges the Board to infer the fact of ratification from the respondent's silence from July 15th to August 5th. We cannot accept this contention. The agreement is clear on its face, and is expressly made subject to ratification by both parties. If the union membership had failed to ratify the settlement there would be no binding agreement between the parties. The respondent's failure to ratify has the same effect. The respondent has not ratified the July 15th settlement. We are satisfied that there is no collective agreement now in existence.

13. The union argues in the alternative, that if there is no agreement now in operation, the respondent is precluded from "reneging" or repudiating the settlement reached on July 15th. While the union acknowledges that the company may have had legitimate business reasons for preserving the secrecy of its share purchase plan, it contends that if a change in business circumstances was contemplated, the company should not have, apparently unreservedly, entered into the July 15th memorandum of agreement. Furthermore, the agreement cannot apply to S & M as the situation now stands, for S & M is a separate legal entity and employer. Thus, argues the union, the respondent's demand is either academic, an attempt to vary the bargaining unit certified by the Board, or an attempt to avoid the future application of section 1(4) of the Act. The union contends that whichever way one characterizes the respondent's conduct, it constitutes bargaining in bad faith.

14. Before turning to the merits of the parties' respective positions, it may be appropriate to refer briefly to the legal parameters within which their rights must be determined. This is not the first time that an attempt has been made to alter a recognition clause in an agreement, nor is it the first time that a party has been accused of "reneging" on a settlement. Some guidance in respect of these matters can be gleaned from the Board's decided cases and the structure of the Act itself.

15. Firstly, it is clear that S & M was not a party to the certification proceeding, and is not covered by the certificate establishing the union's bargaining rights. The union has no right to represent the employees of S & M, and would itself be bargaining in bad faith if it sought to negotiate on behalf of S & M's employees, or apply economic pressure to force an extension of the agreement beyond the scope of the Board certificate. The union could approach S & M for voluntary recognition, but, if rebuffed, it must resort to the mechanisms for establishing bargaining rights prescribed by The Labour Relations Act. Until it does so, its rights are circumscribed by the existing certificate, and it has no right to recognition for any greater bargaining unit. Similarly, the respondent cannot insist upon bargaining terms and conditions of employment for the employees of S & M. S & M remains a separate legal entity and employer, unless the Board otherwise declares.

16. The question of recognition or an extension of recognition is a permissible subject for negotiations between a trade union and employer, and frequently, an expansion of an employer's operation will be dealt with by an agreed extension of the union's bargaining rights to the new operation and its employees. However, while the issue can be raised and discussed, it cannot be pressed to an impasse, or become the focus of a test of economic strength. Unless the parties agree to a voluntary extension of bargaining rights (in effect, a voluntary recognition in respect of part of a bargaining unit), they must negotiate on the basis of the established bargaining structure. Neither of them can precipitate a strike or lock-out to change it. In United Brotherhood of Carpenters and Joiners of America [1978] OLRB Rep. Aug. 776, for example, a trade union with bargaining rights in certain geographic areas engaged in a strike to force an employers' organization to recognize it in geographic areas for which the union had no bargaining rights. The employers' organization contended that this attempt to use economic pressure to force and extension of bargaining rights was inconsistent with the scheme of Act and bargaining in bad faith. At paragraphs 11 and 18, the Board commented;

"11. The question squarely before the Board in this case is whether the respondent in insisting upon the extention of bargaining rights was pursuing a demand inconsistent with the scheme of The Labour Relations Act and, therefore, illegal. If the demand can be characterized as being inconsistent with the scheme of the Act, then we would be forced to conclude that it would be a failure to bargain in good faith to carry such a demand to the point of impasse. On the other hand, if the demand does not run contrary to the scheme of the Act, it cannot be said that there is any breach of section 14, even though it might be difficult for the complainant to meet this demand. To answer this question the Board must examine both the provisions of the Act establishing provincial bargaining and its provisions dealing with voluntary recognition.

18. The lawfulness of the strike, however, does not make a demand for voluntary recognition at the bargaining table any more consistent with the scheme and purpose of the Act. This scheme clearly requires that a union must establish that it represents employees before it can acquire bargaining rights. The usual method of establishing representation is through the certification procedure set out in the Act. It should be noted that the Act expressly provides a special, and more expeditious, certification procedure for the construction industry. Bargaining rights may also be obtained through voluntary recognition but such bargaining rights may have to be tested under section 52 of the Act, and a determination may l)e made by the Board that the trade union was not entitled to represent the employees at the time the agreement was made. Given this underlying requirement of representation, the Board must conclude that the taking of a demand for voluntary recognition to an impasse at the bargaining table is conduct inconsistent with the scheme of the Act. While the parties may raise this matter in bargaining it is not an issue that should become the subject matter of a strike. Just as an employer cannot use its economic leverage to bargain out of established bargaining rights, a trade union cannot use its economic leverage to attempt to extend bargaining rights. Such demands, in the Board's view, must be removed from ;he bargaining table once a strike or lock-out is imminent, or in progress. If such demands are not removed at this time, the party pressing such demand must be held to have breached the duty to bargain in good faith.'

Recognition and the scope of the union's bargaining rights were negotiable items, but not objectives for which the parties could invoke economic sanctions.

17. The Board applied a similar mode of reasoning in a different context in Toronto Star Newspapers Limited [1979] OLRB Rep. Aug. 811. In that case one union complained that an employer had undermined its bargaining rights by entering into an agreement with another union extending recognition over employees represented by the complainant. The complainant alleged an unlawful interference with established bargaining rights, and the situation was complicated by the close relationship between recognition and the work jurisdictions of the two craft unions involved; however, the Board's reasoning and conclusion are summarized in a long passage to which we might usefully refer. After discussing the scheme of the Act and the statutory mechanism for resolving work assignment disputes, the Board went on to conclude:

23. In United Brotherhood of Carpenters and Joiners, supra, the Board found that while the parties could discuss the issue of recognition at the bargaining table it could not become the subject matter of a strike. The Act provides a means for the acquisition of bargaining rights and it is inconsistent with the scheme of the Act to take a demand for "voluntary" recognition to an impasse. Accordingly, the party pressing the demand to an impasse was held to have breached the duty to bargain in good faith. Similarly, the Board is of the view, having regard to the scope of section 81(1) of the Act, that it would not be inconsistent with the overall scheme of the Act to take a demand for work assignments which could form the subject matter of a section 81 complaint (either at the time or upon the actual assignment of work) to a bargaining impasse. The Act provides a comprehensive vehicle resolving these multi-party disputes and hence the issue cannot form the proper subject matter of a strike or lock-out within the context of bipartite negotiations. If taken to a bargaining impasse as in this case, therefore, the issue must be withdrawn from the bargaining table without prejudice to a subsequent hearing under section 81 of the Act. The parties are encouraged to seek voluntary agreement in respect of competing work jurisdiction, as the parties to the instant application have done in the past, by any attempt to use economic sanctions or the immediate threat of same to force a settlement or to compromise the position of another in respect of a work assignment dispute which may become the subject matter of a section 81 complaint is contrary to the scheme of the Act and is, therefore, in violation of section 14 of the Act.

The Board was satisfied that where the Act provides a vehicle for resolving jurisdictional or recognition disputes, the parties are prohibited from resolving these matters by a strike or lock-out. The proper course is for one or both of them to apply to the Board for a declaration clarifying their rights. Thereafter, they can negotiate a collective agreement within the framework thus established.

18. "Reneging" has also been considered in a number of Board decisions; but the fact that one party modifies a bargaining position or withdraws an offer previously made has never been sufficient, in itself, to constitute a "per se" violation of section 14. As the Board noted in Pine Ridge District Health Unit [1977] OLRB Rep. Feb. 65, collective bargaining is a dynamic process which:

occurs over an extended period of time against a fluid backdrop of events. A party may thus come to reshape its view of its own best interests from one point in time to another, and so wish to change its position at the bargaining table."

The passage of time, changes in economic circumstances, or shifts in the balance of bargaining power can influence one party or the other to reevaluate its position, or insist on concessions not previously sought. Such changes in bargaining posture cannot be automatically equated with bad faith bargaining — although in some cases, of course, an employer's sudden and inexplicable inflexibility, or a radical change in bargaining stance may provide strong evidence of bad faith bargaining, or support an inference that it is engaging in "surface bargaining" arid has no real intention of concluding a collective agreement. In Wilson Automotive [1980] OLRB Rep. July 1136, for example, the Board observed that:

"a natural suspicion attaches to the motives of an employer who alters his bargaining position at a critical stage of the negotiations" [and] "this is especially so where the negotiations are for a first agreement".

In that case the submission of a drastically revised position was one of the factors supporting a finding of bad faith bargaining. Likewise in Graphic Centre [1976] OLRB Rep. May 221, the tabling of additional new demands at the "eleventh hour" was construed as an attempt to derail the bargaining process and avoid a collective agreement. (See also: Fotomat Canada Ltd. [1980] OLRB Rep. Oct. 1397, and cases cited therein.) On the other hand, in Pine Ridge District Health Unit, supra, and Toronto Jewelry Manufacturers' Association [1979] OLRB Rep. July 719, the revocation of a previous offer was not characterized as bargaining in bad faith. Changing economic circumstances justified the change in bargaining posture and in these cases the Board was satisfied that the respondent employer was still prepared to enter into a collective agreement — albeit one more favourable than it had previously sought. Thus the propriety of a party's conduct, can only be determined after a careful assessment of all of the circumstances including the reasons for the repudiation of the position previously held, and the efforts made to explain the new position to the other party. In Pine Ridge District Health Unit, supra the Board put it this way:

"We turn to the final issue. Did the Board of Health further breach the duty to bargain in good faith by reneging on its agreement to Article XXIII, the interest arbitration clause? The revoking of a tentative agreement may well, in some circumstances, be a breach of the duty to bargain in good faith. That will clearly be so when, on the verge of the making of a final agreement a party backs away from its earlier tentative agreement to a major term, having obviously cajoled and deceived the other party in a clear attempt to avoid concluding any final agreement whatsoever. That is, a principle, no different than the lumping-in of surprise demands when final settlement is in sight. (See Graphic Centre (Ontario Inc., supra.)

Either tactic is calculated to wreck the framework in which the parties define and some reasonably to rest their mutual expectations.

That is not to say, however, that parties may never alter their positions on items tentatively agreed to. Counsel for the complainant argued that absent an express understanding there operates a presumption that terms agreed to prior to the making of an overall agreement must be seen as firmly agreed. Counsel for the employer responds that without express notice to the contrary a presumption exists that no term agreed to is firmly agreed to until all items are agreed to and finally ratified. In our view recourse to presumptions is of little help. No two bargaining relationships are the same and each case must depend on the particular relations between the parties at a given point in time. A web of understandings, that are both tacit and expressed, of varying degrees of definitiveness, will operate between them and will colour the quality of their actions."

19. The respondent seeks to limit the application of the collective agreement to the situation as it existed on July 15th. To this end, it has refused to enter into a collective agreement based on the bargaining unit description determined by the Board, and has insisted that, instead, the recognition clause in the agreement must contain additional language specifically excluding any possible application to the employees of S & M. But S & M and Cybermedix are separate legal entities. The terms of the settlement could not apply to the employees of S & M. Of course, there was a possibility that if the common principles of the two companies subsequently caused them to engage in related economic activities which undermined the union's established bargaining rights at Cybermedix, the union might be prompted to file an application under section 1(4); but the employer is not entitled to demand contractual protection against this contingency by insisting on a modification of the recognition clause so that any such application would be nugatory. A party cannot bypass or "contract out" of the related employer provisions of the Act, and because the settlement as originally framed could not apply to the employees of S & M, it is difficult to discern any other motivation for the respondent's revised position. Just as the union could not strike to force the respondent to extend the scope of the agreement to S & M's employees, the employer cannot precipitate a strike to ensure its continued exclusion or avoid the potential application of section 1(4) should the Board decide that the circumstances justify its application. Insofar as the respondent is seeking to vary the Board's certificate, exclude S & M, and avoid the impact of section 1(4), we are satisfied that its position is inconsistent with the scheme of the Act and, in accordance with the principles enunciated in Toronto Star and the Carpenters' case constitutes bargaining in bad faith. The scope or extent of the union's bargaining rights must be settled through the established mechanisms provided in The Labour Relations Act.

20. We turn now to the question of remedy. The union is seeking a direction requiring the respondent to execute a collective agreement on the basis of the July 15th settlement. We do not think such direction is necessary or appropriate in the circumstances which now exist. There is currently pending before the Board a section 1(4) application which, if successful, could virtually double the size of the bargaining unit, and extend it to almost twice as many employees and locations as were present when the Board issued its certificate and the July 15th settlement was concluded. Had it not been for the actual filing of this application, the Board would have been inclined to direct that the respondent execute a collective agreement based on the memorandum which it signed on July 15, 1980. For the reasons we have already given, we do not think that it was or is entitled to demand a modification of the recognition clause as a form of "insurance" against a possible 1(4) proceeding; and on all other matters the parties were ad idem. Now that the issue has been put before the Board, however, the respondent is entitled to await its resolution. While the likelihood of a section 1(4) declaration may be remote, there may well be matters arising out of this eventuality which the parties should deal with through collective bargaining. Accordingly, the Board does not consider it appropriate, at this stage, to direct the respondent to execute a collective agreement on the terms previously agreed to. For the present, the Board considers it sufficient to declare that the respondent's insistence on altering the recognition provision of the settlement (and the Board certificate) is inconsistent with the scheme of the Act and a breach of section 14 thereof.

21. The Board will, of course, remain seized in the event that, following a resolution of the related employer issue, it becomes necessary to deal further with the present complaint.