[1981] OLRB Rep. January 31
1460-80-U Service Employees International Union, Local 204, Complainant, v. Heritage Nursing Home Limited, Respondent
BEFORE: M. G. Picher, Vice-Chairman, and Board Members W. F. Rutherford and E. C. Went.
APPEARANCES: Jeffrey Egner, Carl Morris, Maria Terceira and Maria Oliveira for the complainant; John O'Donoghue, Anthony Baldanza, Mrs. Goldie Berg and Mr. Len Glaser for the respondent.
DECISION OF M. G. PICHER, VICE-CHAIRMAN, AND BOARD MEMBER E. C. WENT; January 15, 1981.
This is a complaint filed under section 79 of The Labour Relations Act. The complainant alleges that the employer, Heritage Nursing Home Limited, has violated sections 56, 58 and 61 of the Act by contracting out work previously performed by employees represented by the union. The union is the bargaining agent for all employees of the nursing home except medical and nursing staff, security staff and office employees. The union has also filed a grievance to arbitration in respect of the same to issue. In this complaint it maintains that the decision to contract out was motivated, in whole or in part, by anti-union sentiment and is therefore a breach of the Act within the principles applied by the Board in Westinghouse Canada Limited, [1980] OLRB Rep. Apr. 577 and Humber College, [1979] OLRB Rep. June 520.
The evidence of Mrs. Goldie Berg, Administrator of the respondent, which the Board accepts, is that after lengthy concern over the cost and quality of cleaning services provided by the Home's own employees, she decided to contract the housekeeping and janitorial work to Cosmos Building Maintenance, and independent cleaning services contractor. As a result, the Home has had better cleaning without the ongoing concern of maintaining cleaning equipment, and has realized a saving of some two thousand dollars ($2,000) per month. There is no evidence whatever to suggest that the Home or any of its officers were motivated by anti-union sentiment in coming to their decision or that the employer sought, as in Westinghouse and Humber College, to either limit or eliminate the ability of employees to exercise their rights under The Labour Relations Act. Having regard to the evidence, the Board is satisfied that the decision to contract out the respondent's housekeeping work was made entirely for legitimate business reasons. The union argues, nevertheless, that because the employer's action relieves it of obligations under a collective agreement it necessarily involves "collective bargaining factors" which impact adversely on the union in a way contrary to the Act.
The facts of this case are similar to those found in Kennedy Lodge Nursing Home [1980] OLRB Rep. Oct. 1453. That complaint, by the same union, in the shadow of a similar collective agreement, alleged that another nursing home had illegally breached the Act by contracting out its cleaning work to the same independent service. In that case the Board, faced with the same arguments, made the following observations:
If the complainant's argument was accepted, any action taken by an employer, which has an economic impact upon the bargaining unit would lead to an inference that the employer was motivated by anti-union considerations. For example, employer initiated decisions which resulted in the replacement of bargaining unit employees through process change, methods change, equipment change done solely to effect savings in labour costs would, on the basis of the complainant's argument, in and of themselves justify an inference of anti-union motivation. To accept such a conclusion would appear to be directly contrary to section 68 of the Act which provides in part:
'Nothing in this Act prohibits any suspension or discontinuance for cause of an employer's operations.., if the suspension, [or] discontinuance. . . does not constitute a lockout..:.'
The Board, in the past, has made clear that 'cause' in section 68, supra, relates only to 'lawful cause'. If the cost of doing business is too high in relation to the business revenues generated, the employer, who is motivated solely by correcting that imbalance, is not precluded by the Act from taking that action. Absent restrictions in the relevant collective agreement, business operations are not 'frozen' by the collective relationship so long as the action taken is not in any way motivated by the accomplishment of an unlawful objective.
The facts of this case do not disclose any desire on the part of the employer to rid itself of union representation of its employees. Rather, a legitimate business decision was made which resulted in an annual saving of around $50,000. The fact that the union and the employees were adversely affected does not of itself taint the legitimacy of that decision.
The possibility that an employer might contract out bargaining unit work for legitimate business reasons has become part of the reality of collective bargaining over the last 30 years. There is little jurisprudential support for the notion that a collective agreement is a "no cut~~ contract of employment given to a union for the period of its term. The fact that clauses limiting the ability of an employer to contract out are expressly included in collective agreements with some frequency is substantial evidence that the general expectation of the labour relations community is to the contrary. If a union wishes to protect itself from the risk of contracting out, it may attempt to do so at the bargaining table where that issue can be dealt with like any other economic issue. (See, Russelsteel Ltd. (1966), 1966 CanLII 853 (ON LA), 17 LAC 253 (Arthurs) and see, generally, Brown and Beatty, Canadian Labour Arbitration (Toronto, 1977) at 180-81.) The evidence establishes that in fact in other collective agreements the complainant union has expressly negotiated that protection. In this case it has not. In these circumstances the Board should not lend its remedial authority to fill a contractual gap.
In the instant case there are no reasons other than legitimate business reasons established in evidence for the respondent's decision to contract out its housekeeping services. For the foregoing reasons, therefore, the complaint must be dismissed.
DECISION OF BOARD MEMBER W. F. RUTHERFORD;
I dissent.
The majority approach in this case and in the recent case of Kennedy Lodge Nursing Home is one which will serve to undermine the rights which employees have by virtue of the provision of The Labour Relations Act. That Act provides employees with the right (which is protected by a number of provisions of the Act) to join a trade union, participate in its lawful activities, and have that union certified by the Labour Relations Board as the exclusive bargaining agent of those employees. The union is then in a position to bargain with the employer in order to determine the terms and conditions which will govern the relationship between the employer and the employees.
Once wages and classifications have been determined by the parties and included in a collective agreement, an employer should not be able to contract out the work covered by those classifications simply to save on labour costs. Whether or not there is evidence of overt anti-union animus on the part of the employer, the fact remains that the obligations which the collective agreement places the parties under have been painlessly avoided. The agreement has been reduced to nothing.
I cannot accept the majority view that this result is one which the legislature intended by its inclusion of s. 68 in The Labour Relations Act. That section reads:
Nothing in this Act prohibits any suspension or discontinuance for cause of an employer's operations or the quitting of employment for cause if the suspension, discontinuance or quitting does not constitute a lock-out or strike.
In a case where bargaining unit work is still being done, albeit by non-bargaining unit employees, it does not make sense to say that there has been a "suspension or discontinuance for cause of an employer's operations." The operations continue almost as before, but the bargaining rights which formerly applied to that operation have been effectively defeated. I cannot agree that such action on the employer's part should be considered lawful unless there is clear and explicit anti-union animus. When an employer acts, as the employer in this case had done, such action is inherently destructive of employee rights under The Labour Relations Act.
The majority has also stated that if a union wishes protection from the possibility of an employer contracting out bargaining unit work it must bargain for that protection. This approach overlooks the inherently destructive nature of the contracting out of such work when all that really happens is that different individuals wind up performing the work. The employer has bargained for certain wage rates and job classifications. He should not be able to escape the obligations which he agreed to simply by contracting the work out (it should be noted that a union is not in a position to re-open any of the items in the collective agreement until that agreement has expired).
For these reasons, I would find that the employer has violated The Labour Relations Act by contracting out its housekeeping and janitorial work.