[1986] OLRB Rep. September 1187
2467-84-M; 2468-84-M; 2791-84-M Ontario Provincial Conference of the International Union of Bricklayers and Allied Craftsmen, Applicant, v. Brant County Board of Education, Respondent
BEFORE: D. E. Franks, Vice-Chairman, and Board Members J. F. Kennedy and M. Eayrs.
APPEARANCES: B. Fishbein and T. Oldham for the applicant; Janice Baker and Joe Saldarelli for the respondent.
DECISION OF THE BOARD; September 23, 1986
These three cases are referrals of grievances for arbitration pursuant to section 124 of the Act. They involve three different projects. However, all three allege a violation of the subcontracting clause in the provincial collective agreement between the International Union of Bricklayers and Allied Craftsmen and the Ontario Provincial Conference of the International Union of Bricklayers and Craftsmen and The Masonry Industry Employers Council of Ontario which is binding upon the respondent.
The present cases are similar to a previous case between the same applicant and the same respondent. (See The Brant County Board of Education [1984] OLRB Rep. Oct. 1349). Like the previous case, in the present case there is no issue that the collective agreement referred to above is binding on both parties and that the contracts were let to various non-union employers. Indeed, as a consequence of this the applicant argued that the present case was res judicata (an unusual plea for an applicant).
In its previous decision, the Board, on the basis of certain agreed facts, specifically rejected the argument that the respondent was not an employer in the construction industry and in effect found that the respondent was still an employer in the construction industry since it had been so recently certified by the trade union in the construction industry. Consequently, the Board found that the subcontracts to non-union employers were violations of the "subcontracting clause" the provincial collective agreement for bricklayers.
We are not prepared to find that the present case is res judicata as a result of the previous decision of the Board. The previous decision rested upon certain agreed facts which are not agreed to in the present case but more specifically the scope of the Board's decision leaves open the possible finding, in a future case that, the respondent might not be an employer in the construction industry at a future date. As the Board reasoned in its earlier decision:
However, having once been recognized as an employer operating a business in the construction industry, does the respondent forever maintain that characterization? It certainly does not do so automatically. Depending on the nature of projects undertaken and one's involvement in those projects, an entity can change from being the operator of a business in the construction industry and thus an "employer", to be simply being an "owner" of property who purchase construction or masonry services. But on the basis of the evidence before this Board, we are bound to conclude that when engaged on the project in question the respondent must still be considered to be operating a business in the construction industry and thus, an employer bound by the provincial agreement. The facts put before this Board established that the respondent was certified in the summer of 1983 as an employer who was bound by the Provincial Agreement between the applicant and the Masonry Industry Employers' Council of Ontario. Thus, it was recognized that as of that time, the respondent was operating a business in the construction industry. A short time later, the respondent let out a contract for the work that is now in question was to have masonry work performed on a building owned by the respondent. It is clear that this work falls within the scope of the provincial agreement and is construction or masonry work. Thus, the respondent must be viewed as continuing to be engaged in the operation of the construction business by its contracting for the performance of masonry work. While the onus is upon the union, the weight of this evidence combines to persuade the Board, on the balance, that the respondent continues to be operating a business in the construction industry and was engaged in a project regarding work covered by the provincial agreement.
This evidentiary conclusion is to be distinguished from the situation where evidence can establish that an entity has changed its status from being an employer because it is operating a business in the construction industry to becoming simply an owner of property who is purchasing construction skills or services. That was the situation in the Kapuskasing 2 case where the Board of Education was found to have become an "owner" rather than an "employer" within the meaning of the collective agreement. This distinction could be established, inter alia, by evidence regarding the nature of work being done, the respondent's degree of control over the project, the work, the materials and the manpower as well as its participation, if any, in the project in question. However, on the basis of the facts before this Board, we find it reasonable to conclude that the respondent was acting as an "employer" in that it was operating a business in the construction industry at all material times.
Thus, the Board left open the question, as to whether, in future circumstances, the present respondent might not be an employer in the construction industry. On the facts of the present case the respondent now seeks to show that it is no longer in the construction industry.
The problem raised in the present case is considerably more difficult than the problem in a certification case where the application for certification is brought pursuant to the construction industry provisions of the Labour Relations Act. In such certification cases, the employer has employees performing work that is normally work considered in the construction industry and, therefore, a conclusion that the person is operating a business in the construction industry flows from the finding that the person actually has employees in the construction industry. Consequently, the focus of many of the certification cases is whether having employees engaged in construction constitutes the operation of a business in the construction industry. The present case raises the problem that the employer does not have employees, but if it is operating a business in the construction industry, the respondent is caught by the subcontracting clause in the collective agreement between the employer and the trade union.
The very origin of the subcontracting clause is to prevent an employer bound by a collective agreement from avoiding that collective agreement by contracting out the work rather than performing the work with its own employees. Such clauses have been regarded by this Board (see, The Metropolitan Toronto Apartment Builders Association [1978] OLRB Rep. Nov. 1022) as valid "union security" provisions in that they attempt to protect a legitimate concern of the trade union, i.e. rendering bargaining rights meaningless by subcontracting. The impact of the clause then is to say to the employer "you don't have any employees in the construction industry but you ought to have our members working on the job and therefore you have violated our collective agreement." Almost by definition then, it will be seen that in subcontracting cases, such as the present, there is no employment relationship to place the respondent in the construction industry.
From the employer's point of view, the result would seem to be that once having engaged in the construction industry and having been certified by a trade union such as the applicant trade union, the employer is bound by the subcontracting clause, particularly in relation to the industrial, commercial and institutional sector of the construction industry until such time as a successful termination application is brought by employees. Further, the subcontracting clause will be effect so that even though the employer may wish to contract out the work the scope of contractual arrangements that can be made is limited to those contractual relations which comply with the subcontracting clause in the collective agreement. In the previous decision by this Board, the comment was made that the employer was bound by the subcontracting clause only where the employer was an employer operating a business in the construction industry and thus bound by operation of the Labour Relations Act to the provincial agreement between the trade union and the relevant employer bargaining agency. The question which arises in the present case thus becomes; can an employer, bound by a provincial agreement, purchase construction outside the scope of the subcontracting clause, that is, can the employer act as a purchaser only and not as a person operating a business in the construction industry?
8, We are of the view that this may be possible, but there are no clear cut simple criteria, which exists to delineate when a person is simply purchasing construction and not operating a business in the construction industry.
9, In paragraph 13 of its previous decision, the Board suggested some directions which might be explored in order to develop a distinction between "owner" or "purchaser" and employer. In the present case there is an example of one such criteria which might be a valuable method for determining whether or not a purchaser, when purchasing construction, is or is not engaged in a business in the construction industry. We would suggest that the amount of control exercised by the purchaser can frequently be used to determine whether or not that purchaser is operating a business within the construction industry and, thus, bound by a subcontracting clause. On the one hand, there are situations where a purchaser of a certain construction has the undertaking designed and drawn by a third party, for instance, an architect or engineer, and the purchaser then puts the matter up for public tender and has the third party architect or engineer supervise and control the construction. The purchaser may take the position that as a purchaser there is no control by the purchaser over the construction job site. That is, the totality of the construction is totally in the hands of other entities and the purchaser is no more in the construction industry than, for instance, the purchaser of an automobile is engaged in the automobile manufacturing industry.
However, few purchasers of construction are prepared to be that totally isolated from the construction work that they are purchasing. Thus, on the other hand, if the purchaser wants to retain control of the job site or to retain control over the quality of the construction work performed, then that purchaser is a very real entity on the job site and can be said to be engaging in a business in the construction industry by virtue of exercising that control.
For example, many of the larger and frequent purchasers of construction have their own staff who are assigned tasks on the construction work site. Some tasks relate to the quality of the work, the cost of the work or in some cases the labour relations on the total job site. It is impossible to say that such a purchaser of construction with a presence on the job site (indeed frequently exercising indirect but very real control over the job site) is not engaging in the construction business notwithstanding the fact that that may not be the primary business of the purchaser.
The facts in the present grievances are themselves a very interesting example of this kind of control over the job site. The major grievance we are concerned with involves certain brick work in relation to a historic building and the respondent Board of Education hired a person on its staff with a background in masonry restoration. And indeed, in reviewing the bidders on the job, the evidence is that Mr. Saldarelli, specifically rejected certain bids as potentially doing very real damage to this historic site because of the contractor's lack of competence. At that point, the respondent cannot be said to be simply a purchaser of construction. The respondent is making a business decision about the contractor that will do the work which is essentially a business decision frequently made by contractors and is thus engaging in a business in the construction industry. In all three of the grievances before us, the role played by the respondent Board of Education was such that they exercised enough control to be engaged in the construction that was the subject of these grievances.
In conclusion therefore the three grievances are allowed. The applicant is entitled to compensation for breach of the subcontracting clause by the respondent. The matter is referred back to the parties to agree on the issue of compensation. In the event that they are unable to reach such agreement, we remain seized of that issue.