International Brotherhood of Electrical Workers Local 353 v. The Municipality of Metropolitan Toronto, 1986 CanLII 1673

[1989] OLRB Rep. March 279

0853-85-M International Brotherhood of Electrical Workers Local 353, Applicant v. The Municipality of Metropolitan Toronto, Respondent v. The Electrical Trade Bargaining Agency of the Electrical Contractors Association of Ontario, Intervener

BEFORE: Owen V. Gray, Vice-Chair, and Board Members W. H. Wightman and C. A. Ballentine.

APPEARANCES: B. Fishbein and Michael Lloyd for the applicant; H. A. Beresford, R. J. Atkinson and D. A. Brown for the respondent; S. C. Bernardo and Eryl Roberts for the intervener.

DECISION OF OWEN V. GRAY, VICE-CHAIR, AND BOARD MEMBER W. H. WIGHTMAN; March 3, 1989

1. Pursuant to section 124 of the Labour Relations Act ("the Act"), the International Brotherhood of Electrical Workers, Local 353 ("the Union") has referred to this Board for arbitration its grievance that in October 1984 the Municipality of Metropolitan Toronto ("Metro") breached the collective agreement by which they were then bound by contracting for the performance of electrical work with a contractor who was not party to a collective agreement with the IBEW or any of its Locals. Certain basic facts are not in dispute.

2. In July 1984, the Union was certified as exclusive bargaining agent for electricians and electricians' apprentices employed by Metro in two units as contemplated by subsection 144(2) of the Act. This had the result, the parties agree, that "both the Union and the Municipality became bound by the Provincial Agreement between the Electrical Trade Bargaining Agency of the Electrical Contractors Association of Ontario and the International Brotherhood of Electrical Workers and the IBEW Construction Council of Ontario ..., which Agreement was effective on May 4, 1984 and is to expire on April 30, 1986." That agreement ("the provincial agreement") is a provincial agreement within the meaning of clause 137(1)(e) of the Act covering employment of electricians and electricians' apprentices in the industrial, commercial and institutional ("ICI") sector of the construction industry. Section 5.05 of that agreement ("the subcontracting clause") provides:

The Company shall not directly or indirectly sublet any work under the jurisdiction of this Agreement to any other Employer or Employee who is not a party to an IBEW Construction Agreement nor require any employee to work on a piecework basis.

3. In October 1984, following a public call for tenders, Metro entered into a contract with Torontario Mechanical and Electrical Company Limited ("Torontario" or "the contractor") for the performance of modifications to firing ranges at 2 District and 3 District Headquarters of the Metropolitan Toronto Police. Of the $327,700.00 contract price, $33,500.00 was for electrical work which the parties agree fell within the ICI sector of the construction industry. Torontario's employees performed that work. Torontario is not party to the provincial agreement. At all times material to this dispute, the Union was ready, willing and able to supply workers to perform the subject electrical work, and contractors party to the provincial agreement were available to perform that work.

4. The respondent argues that it has not breached the provincial agreement because

1. In these circumstances, and for the purpose of all [of its] capital works budget construction, the Respondent is not an "employer" in the Construction industry within the meaning of section 117(c) of the Labour Relations Act. Rather, the Respondent is an owner when acting in this capacity and is therefore not bound by the provisions of the provincial collective agreement, including the subcontracting clause; and

2. In any event, the work in this case was not "sublet" within the meaning of Article 505 of the provincial collective agreement.

Both positions were thoroughly addressed in argument. The respondent specifically asked that we rule on the first of these arguments even if it succeeds on the second.

5. The parties agree on the truth of the following assertions, without agreeing on their relevance:

10. The Torontario contract emanated from and was administered by the Parks and Property Department of the Municipality ("the P & P Department").

11. Construction work for the P & P Department is carried out under either the capital works budget or the operating budget of the P & P Department.

12. All capital works construction associated with the Metropolitan Parks, the Metropolitan Zoo, the Metropolitan Police Force and the Department of Ambulance Services falls under the capital works budget of the P & P Department.

13. All construction work falling under the capital works budget of the P & P Department is awarded to outside contractors through the use of a public tendering process. Much of this work consists of large-scale projects which are financed by long-term debentures. Each capital works project has a consultant who is either an architect or design engineer engaged by contract, and it is usually an architect,

14. The Torontario contract was awarded under the P & P Department's capital works budget....

15. Construction, renovation and repair work is also performed under the P & P Department's operating budget.

16. Some construction, renovation and repair work falling under the P & P Department's operating budget is performed by employees of the P & P Department.... in 1985, the P & P Department employed 2 electricians, 3 carpenters, 1 plasterer, 1 tilesetter and 6 painters. The 2 electricians have worked steadily for the Municipality for the last number of years.

17. The P & P Department also engages contractors to perform construction, renovation and repair work falling under the P & P Department's operating budget. The work of these outside contractors is arranged either through a purchase order which is drawn up following the completion of a limited tendering process which is by invitation from a list of qualified contractors or, in rare cases, through the public tendering process.

18. All contracts in respect of all construction work performed by outside contractors for the Municipality, including

the P & P Department, regardless of whether the work falls under the capital works budget or the operating budget, provide that the rate of wages for workers:

"shall be no less than the rate set out in the Schedule of Wage Rates from time to time filed by the Fair Wage Officer in the office of the Clerk of the Metropolitan corporation after being first approved by the Metropolitan Executive Committee of the Metropolitan Council."

(Article 39(B) (ii)(b), General Conditions, Exhibit 3).

6. Over the course of seven hearing days we heard the testimony of several witnesses called by the respondent with respect to various matters including

a) the contract between Metro and Chisholm, Fleming and Associates under which the latter, a consulting engineering firm, designed the firing range improvements, prepared tender documents, reviewed and made recommendations on tenders received, arranged for plan approvals and construction permits, inspected and reported to Metro on Torontario's work as it proceeded, reviewed and certified the accuracy of Torontario's periodic progress claims;

b) the function performed on behalf of Metro by the Fair Wage officer, both generally and in respect of the contract between Torontario and Metro;

c) the function performed by a Metro employee, Mr. D'Albequerque, as "project supervisor" with respect to the firing range improvements; and

d) Metro's dealings with the Electrical Trade Bargaining Agency ("the ETBA") and other participants in province-wide bargaining in the ICI sector of the construction industry.

The first of the two defences recited in paragraph 4 and the alleged relevance of the evidence referred to in this and the immediately preceding paragraph arise out of three prior decisions of the Board: Kapuskasing Board of Education, [1981] OLRB Rep. Mar. 300 ("Kapuskasing #2"); Brant County Board of Education, [1984] OLRB Rep. Oct. 1349 ("Brant #1"); and Brant County Board of Education, [1986] OLRB Rep. Sept. 1187 ("Brant #2"). It would be useful to review those decisions before dealing with the parties' arguments in this case.

7. In 1972, the Kapuskasing Board of Education directly employed certain carpenters in the construction of a swimming pool. The United Brotherhood and Joiners of America ("the carpenters' union") applied under the construction industry provisions of the Act for certification as exclusive bargaining agent for carpenters and carpenters' apprentices employed by the school board. The Board granted the application, rejecting the argument of the school board that it was not a "person who operates a business in the construction industry" within the meaning of what is now clause 117(c) of the Act: Kapuskasing Board of Education, [1972] OLRB Rep. June 587 ("Kapuskasing #1"). When the province-wide bargaining provisions of the Act later came into force, the school board became bound by successive provincial agreements governing employment of carpenters in the ICI sector.

8. Kapuskasing #2 dealt with a grievance by Local 1669 of the carpenters' union that the school board had breached the provincial agreement then in force by awarding a contract for the construction of a school addition to a contractor who was not bound by the provincial agreement. The relevant article of that agreement provided that:

4.01 Any work that is the work of the Union under the provisions of Article 19 of this Agreement shall only be sub-contracted to an employer bound by this agreement.

9. The Board recited and dealt with the issues in these three paragraphs:

4. The applicant contends that by awarding the contract for the school addition to Hembruff and Dambrowitz, the respondent violated article 4.01 of the Provincial agreement. The respondent, however, takes the position that it cannot be bound by the terms of the Provincial agreement since, with respect to this particular project, it was acting only in its capacity as a school board and not as an employer in the construction industry. The respondent took great care to distinguish the facts at hand from those in an earlier proceeding (Kapuskasing Board of Education, [1972] OLRB Rep. June 587), wherein the Board found it to be an employer in the construction industry. In that case, the respondent had acted as its own general contractor in the construction of a swimming pool and had also directly employed certain carpenters working on the project.

5. In that the respondent is not directly employing any labour on the school project, and is also not acting as its own general contractor, we are of the view that it is not at the current time an employer in the construction industry. Instead, its status is that of an owner who has let a contract for an entire project to a general contractor. It may well be that an owner can be obligated by the provisions of a collective agreement to let out contracts only to general contractors in contractual relations with a particular trade union. However, the language in article 4.01 of the agreement before us does not contain such a restriction. Article 4.01 has reference only to the subcontracting out of work. Subcontracting involves the awarding of a secondary contract, whereby a subcontractor undertakes to perform certain of the obligations previously assigned to a principal or prime contractor. In the instant case, the respondent, in its capacity as an owner, has let a primary contract to a general contractor. The general contractor has, in turn, subcontracted certain of the work to other employers.

6. In that the respondent has only let a primary contract to a general contractor, and has not itself subcontracted out any work, we are of the view that its actions do not come within the purview of article 4.01. The grievance is accordingly dismissed.

10. The trade union applicant in Brant #1, Local 9 of the International Union of Bricklayers and Allied Craftsmen ("the bricklayers' union"), had been certified in August 1983 as exclusive bargaining agent of bricklayers and bricklayers' apprentices employed by the Brant County Board of Education. In December 1983 it referred to arbitration a grievance that the school board had in the meantime violated Article 1(c) of the bricklayers' provincial agreement by awarding a contract for masonry work to a contractor not bound by that agreement. The respondent admitted that it had become bound by the bricklayers' provincial agreement when the union was certified. It apparently argued that by the time it made the impugned contract it was no longer an "employer in the construction industry". The majority decision dealt with that argument this way:

11. The threshold issue that must be determined is whether the respondent was acting as an "employer" in this case. Section 145(4) establishes that an "employer" in this sector of the construction industry is bound by the provincial agreement by virtue of certification or voluntary organization:

145.-(4) After the 30th day of April, 1978, where an affiliated bargaining agent obtains bargaining rights through certification or voluntary recognition in respect of employees employed in the industrial, commercial and institutional sector of the construction industry referred to in clause 117(e), the employer, the affiliated bargaining agent, and the employees for whom the affiliated bargaining agent has obtained bargaining rights are bound by the provincial agreement made between an employee bargaining agency representing the affiliated bargaining agent and an employer bargaining agency representing a provincial unit of employees in which the employer would have been included.

An "employer" in the construction industry is defined in section 117(c) as:

"employer" means a person who operates a business in the construction industry, and for purposes of an application for accreditation means an employer for whose employees a trade union or council of trade unions affected by the application has bargaining rights in a particular geographic area and sector or areas or sectors or parts; [emphasis added]

Therefore only an "employer" within the meaning of section 117(c) of the Act can be bound by the provincial agreement and article 1(c) in particular. Therefore, to be an employer in the construction industry, one must be operating a business in the construction industry. This Board has made it clear that an entity need not be primarily engaged in construction to be considered to operate in the construction industry. Thus, certificates were issued in the cases of Tops Marina, supra, Kapuskasing 1, supra, City of Toronto, supra, and Municipality of Metropolitan Toronto, supra. In addition, the Union was issued a certificate for the employees of this respondent and the Board considered that it was engaged in construction although construction was not its primary activity.

12. 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 [sic] 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.

13. 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.

11. In Brant #2, the Board had before it three subsequent grievances by the bricklayers' union, each alleging a violation by the Brant County Board of Education of the clause of the bricklayers' provincial agreement which was considered in Brant #1. The panel rejected the trade union's argument that the applicability of that clause to the activities of the respondent was res judicata as a result of the decision in Brant #1. After reciting paragraphs 12 and 13 of the Brant #1 decision, the panel noted that

On the facts of the present case the respondent now seeks to show that it is no longer in the construction industry.

It went on to deal with the issues this way:

5. 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.

6. 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. Re. 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.

7. 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 in 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 [sic] 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.

10. 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.

11. 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.

12. 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.

13. In conclusion therefore the three grievances are allowed....

12. Against the background of Kapuskasing #2, Brant #1 and Brant #2, the respondent argues that a distinction must be made between someone who is acting as an "employer in the construction industry" and someone acting as an "owner", such that no one can be bound by a construction industry collective agreement in respect of a purchase of construction services when and to the extent they are acting in the latter category. One of the premises on which the respondent founds this argument is that it would have been unreasonable for the Legislature to have expected that the employer bargaining agencies established under the province-wide bargaining provisions of the Act, agencies which the respondent characterizes as dominated by sellers of construction services, could effectively represent both sellers and purchasers of construction services in collective bargaining. It follows, counsel for the respondent submits, that the Legislature must never have intended that the construction industry provisions of the Act would apply to entities acting as "owners" and that those provision should therefore be interpreted accordingly. The distinctions contemplated in the Board's decisions in Kapuskasing #2, Brant #1 and Brant #2 are consistent with this view, he says, but ought to be taken farther than is contemplated in Brant #2 because any prudent purchaser of construction services would fail the "control test" expressed in that decision merely by taking reasonable steps to protect its interest as purchaser.

13. Metro concedes that it is bound by the terms of the Provincial agreement with respect to its direct employment of electricians to perform construction work in the ICI sector. It concedes that a suitably worded "contracting out" provision could be applicable to any arrangement under which it contracted for the performance of ICI construction work on small projects of the sort which have been performed in the past by direct employees of Metro, but says that projects paid for out of its capital works budget, like the subject project, are not of that sort. Metro is not an "employer in the construction industry" with respect to this project, it argues, because the relevant control of the project is in the hands of consulting engineers and not in Metro's hands directly.

14. Before considering the peculiarities of its construction industry provisions, we think it would be useful to review certain basic features of the scheme of the Labour Relations Act.

15. A trade union may apply under the Act for certification as exclusive bargaining agent for a bargaining unit of employees of a particular employer. Success in that application depends on establishing that there are at least two such "employees" and that a majority of those employees favour representation by the trade union. Once the trade union is certified as bargaining agent for a defined bargaining unit of employees of an employer, the trade union and the employer are parties to a collective bargaining relationship in which at any given time they are subject either to a duty to bargain for a first collective agreement or to the terms of an existing collective agreement or to a duty to bargain for the renewal of a collective agreement. This collective bargaining relationship continues unless and until one of the parties ceases to exist or the trade union abandons its bargaining rights or those bargaining rights are terminated as a result of some proceeding under the Labour Relations Act. Unless one of those events occurs, that collective bargaining relationship continues even when there are no persons employed in the bargaining unit for which the trade union has bargaining rights. The employer party may cease operations yet still be bound by the terms of a collective agreement or by an obligation to negotiate a collective agreement.

16. The right to act as exclusive bargaining agent of all employees of an employer in a defined bargaining unit is the right to represent all those who may be employed in that unit from time to time, not just those employed in the unit at the time that right is acquired. The employer party cannot unilaterally bring that right to an end by ceasing to employ anyone in that unit for a period of time.

17. Clause 1(1)(e) of the Act defines "collective agreement" as

an agreement in writing between an employer or an employers' organization, on the one hand, and a trade union that, or a council of trade unions that, represents employees of the employer or employees of members of the employers' organization, on the other hand, containing provisions respecting terms or conditions of employment or the rights, privileges, or duties of the employer, the employers' organization, the trade union or the employees, and includes a provincial agreement.

As we have already noted, a collective agreement continues to be binding on the parties to it even if there are no employees in the bargaining unit to which it relates. It could not seriously be argued that the agreement would lose its character as a "collective agreement" because the employer party had ceased to employ anyone and, thus, had ceased to be an "employer". "Employer" is a label used to identify a party with whom a trade union has a collective bargaining relationship. That label applies so long as the collective bargaining relationship exists, even at times when that party does not employ anyone and, so, might not be described as an "employer".

18. Provisions specifically dealing with the construction industry were first added to the Act in 1962. They defined "employer" and "trade union" this way:

"employer" means a person who operates a business in the construction industry;

"trade union" means a trade union that according to established trade union practice pertains to the construction industry.

Apart from the addition to the definition of "employer" of language covering applications for accreditation, these definitions have not since changed, and now appear as clauses (c) and (f) of section 117 of the Act.

19. The meaning of "employer" in the context of a certification application in the construction industry has been the subject of numerous decisions since construction industry provisions first appeared in the Labour Relations Act in 1962. The thrust of those decisions is reflected in the following extract from The Kinsman Club of Leamington, [1983] OLRB Rep. Nov. 1850 at paragraph 17:

The definition of "employer" in what is now section 117(c) of the Labour Relations Act has been examined in numerous decisions of this Board, including: Tops Marina Motor Hotel, supra, Kanadia Niagara Falls Limited, [1966] OLRB Rep. April 9; Automatic Fuels Limited, [1966] OLRB Rep. April 22, Tricont Projects Limited, [1966] OLRB Rep. May 121, Hareb Development Limited, [1968] OLRB Rep. May 181, Loblaw Groceterias Co. Limited, [1969] OLRB Rep. June 392, Mattagami Lake Mines Limited, [1970] OLRB Rep. Feb. 1356, Kapuskasing Board of Education, [1972] OLRB Rep. June 587, Ameri-Cana Motel Ltd., [1972] OLRB Rep. Dec. 997, Group Thirty-Three Limited, [1974] OLRB Rep. Dec. 888, The Corporation of the City of Toronto, [1978] OLRB Rep. Dec. 145 (Judicial review denied sub. nom. Re City of Toronto and Carpenters' District Council of Toronto and Vicinity, 1980, 27 O.R. (2d) at 673), 2S8167 Vending Company Limited, [1979] OLRB Rep. June 595, The Municipality of Metropolitan Toronto, [1980] OLRB Rep. Jan. 62 (Judicial review denied, Ontario Divisional Court, January 29, 1981 (unreported)), The Board of Education for the City of Windsor, [1983] OLRB Rep. May 831; and City of Kitchener, [1983] OLRB Rep. Sept. 1490. These decisions establish that a person may be an "employer" within the meaning of section 117(c) even though its primary "business" is not in the construction industry, it does construction work only for its own benefit and not for others, and the project active at the date of the application is the only construction project in which it has ever engaged or ever intends to engage. A person may also fall within the S. 117(c) definition of employer even though it does not engage in construction or any other business with a view to or hope of making a profit. In effect, the Board asks whether the putative employer was engaged in construction activity at the date of the application, and broadly interprets the phrase "operates a business" as describing the state of being busily engaged in an activity (see Re City of Toronto and Carpenters' District Council of Toronto and Vicinity, supra, at page 674). Thus, a non-profit entity such as a board of education or municipal corporation may be an "employer" within the meaning of section 117(c) if it acts as its own contractor in building a swimming pool (Kapuskasing Board of Education, supra) engages carpenters to do restoration and remodeling (City of Toronto, supra, The Municipality of Metropolitan Toronto, supra) engages plumbers to do repair work (The Board of Education for the City of Windsor, supra) or employs bricklayers to erect partitions and walls in public buildings (City of Kitchener, supra).

As this passage indicates, municipalities and other public authorities have repeatedly and unsuccessfully argued that the definition of "employer" in clause 117(c) cannot apply to them. The Board has taken the same approach to interpretation of the word "business" in clause 117(c) of the Act as did the Supreme Court of Canada (in a somewhat different context) in Canada Labour Relations Board v. City of Yellowknife, [1977] 2 SCR 729 where, at page 738, Mr. Justice Pigeon said that:

"business" has been said to mean "almost anything which is an occupation, as distinguished from a pleasure - anything which is an occupation or duty which requires attention..." (per Lindley, L.J. in Rolls v. Miller, at p. 88). There is no doubt that the word "business" is often applied to operations carried on without an expectation of profit. In my view, it would be contrary to the whole concept of classifying employees for jurisdictional purposes by reference to the character of the operation, to attempt to make a distinction depending upon whether the employer is a private company or a public authority...

20. The phrase "person who operates a business in the construction industry" has not been confined in application to vendors of construction services. In the final analysis, any person who employs workers to perform construction work has been treated as an employer in the construction industry for the purpose of applications for certification under the construction industry provisions of the Labour Relations Act.

21. Just as it does under the general provisions of the Act, certification under the construction industry provisions creates a collective bargaining relationship between the applicant trade union and the respondent "employer". Likewise, the continuation of that collective bargaining relationship is not contingent on the employer's continued employment of workers to perform construction work. No doubt because the situation with which it deals is more common in the construction industry than elsewhere, the prospect of an employer's having no employees in the bargaining unit for which a trade union has bargaining rights is specifically addressed in section 121 of the Act, which provides that

An agreement in writing between an employer or employers' organization, on the one hand, and a trade union that has been certified as bargaining agent for a unit of employees of the employer, or a trade union or a council of trade unions that is entitled to require the employer or the employers' organization to bargain with it for the renewal, with or without modifications, of the agreement then in operation of for the making of a new agreement, on the other hand, shall be deemed to be a collective agreement notwithstanding that there were no employees in the bargaining unit or units affected at the time the agreement was entered into.

22. Even if it would not otherwise have been so, the language of section 121 makes it clear that a person in a construction industry collective bargaining relationship with a trade union need not continue to be an "employer" in the ordinary sense in order to have continuing rights and obligations as an "employer" in the sense in which that word is used in the construction industry provisions of the Labour Relations Act. It seems well settled that someone may be an employer for purposes of collective bargaining and labour relationships under resulting collective agreements even if that person would not have the rights and obligations of an employer under the common law of master and servant: International Longshoremen's Association, Local 273 et al. v. Maritime Employers' Association et al., 1978 CanLII 158 (SCC), [1979] 1 SCR 120, 89 D.L.R (3d) 289 (S.C.C) at pages 1 to 6-7 (S.C.R), 293-4 (D.L.R). Counsel for the respondent agrees that the question whether it directly employs electricians on the subject construction project or any other contemporaneous construction project is irrelevant to the question whether the terms of the applicable collective agreement may be brought to bear on its activities. On the respondent's view, the provisions of the collective agreement are applicable to it even if it does not directly employ electricians, but only when and to the extent that it is in other respects an "employer in the construction industry".

23. The question whether Metro was both "an employer" in the literal sense and "a person who operates a business in the construction industry" in the sense intended by clause 117(c) of the Act was undoubtedly a relevant question when the trade union made its application for certification. It would undoubtedly be a relevant question if and when another trade union applied under the construction industry provisions for certification with respect to employees of Metro. Why, though, should it be a question of any significance during the currency of the collective bargaining relationship which results from certification, except to the extent that a resulting collective agreement makes the question or any aspect of it relevant? The collective bargaining relationship which results from certification is one concerned not only with existing employment but also with future employment. The "employer" party to that relationship is so labelled not only because it was an employer in the ordinary sense at the time the relationship arose but also because in future, and from time to time, it may be an employer of persons in respect of whose employment the trade union has thus a recognized interest. Once a trade union has been certified as the exclusive bargaining agent for workers employed by an "employer" and the trade union and "employer" have entered into a collective agreement, one would have thought that the applicability of the collective agreement to any particular situation would thereafter be determined by the terms to which the parties had agreed.

24. The thrust of the respondent's argument, however, is that by defining "employer" as "a person who operates a business in the construction industry", the Legislature created a statutory limitation on the circumstances in which or to which such a collective agreement can apply. The Legislature's motivation in imposing this statutory limitation, the respondent argued, is that employer bargaining agencies dominated by vendors of construction services should not be put in a position of bargaining with respect to the rights and obligations of those who function solely as purchasers of such services. There are a number of weaknesses in this argument. One weakness becomes apparent upon examining the statutory history of the provisions in question.

25. The language on which the respondent relies was adopted by the Legislature in 1962, when the first construction industry provisions were introduced into the Act. At that point, an employer for whose employees a construction trade union held bargaining rights could not become bound by a collective agreement other than one agreed to by it or by an employers' organization which it had expressly or impliedly authorized to act for it in collective bargaining. That only changed in 1970, with the addition of the accreditation provisions in what are now sections 125 to 134. The province-wide bargaining provisions, under which employers are bound by agreements negotiated by employer bargaining agents with respect to the ICI sector of the construction industry, were first introduced into the Act in 1978. Whatever else may have been the reason why the Legislature defined "employer" as "a person who operates a business in the construction industry" in 1962, it could not have been to deal with any supposed conflict of interest created by province-wide bargaining in the ICI sector.

26. Subsection 145(4) speaks directly to the applicability of a provincial agreement:

After the 30th day of April, 1978, where an affiliated bargaining agent obtains bargaining rights through certification or voluntary recognition in respect of employees employed in the industrial, commercial and institutional sector of the construction industry referred to in clause 117(e), the employer, the affiliated bargaining agent, and the employees for whom the affiliated bargaining agent has obtained bargaining rights are bound by the provincial agreement made between an employee bargaining agency representing the affiliated bargaining agent and an employer bargaining agency representing a provincial unit of employers in which the employer would have been included.

Section 117 begins with the words "In this section and in sections 118 to 136...". It does not apply to section 145. Even if this is regarded as a oversight rather than deliberate, it leaves no room for any reasonable belief that the Legislature was counting on the old language in 117(c) to have a new limiting effect with respect to the scope of collective agreements negotiated under the province-wide bargaining provisions.

27. We do not understand the Legislature's use of the word "employer" in subsection 145(4) to be a means by which it has in some way restricted the potential scope of provincial collective agreements. The word "employer" is simply a convenient means by which to identify a person for whose employees an affiliated bargaining agent has obtained bargaining rights. If the respondent to a referral to arbitration under section 124 is a person for whose ICI sector employees an affiliated bargaining agent has obtained bargaining rights (and those bargaining rights have not been abandoned or terminated), then that respondent is bound by the terms of any collective agreement which the relevant employer bargaining agency had statutory authority to enter into. If the respondent is such a person and the collective agreement terms in question are terms to which the employer bargaining agency had statutory authority to agree then that, in our view, is the end of any statutory question. Any remaining issues would be issues of interpretation, application, administration or alleged violation of the agreement.

28. As we read the decision in Kapuskasing #2, it did not suggest that there was some statutory limitation on the applicability of a construction industry collective agreement to circumstances in which the "employer" party is functioning only as "owner" or in some other supposedly limited capacity. On the contrary, the Board noted that "it may well be that an owner can be obligated by the provisions of a collective agreement to let out contracts only to general contractors in contractual relations with a particular trade union." It went on to consider whether the terms of the agreement in question could be interpreted as having that effect. It concluded that they could not. The panel which decided Brant #1 took it that the dispositive finding in Kapuskasing #2 was that the respondent was not an employer in the construction industry. With great respect to that panel, it appears to us that the dispositive finding in Kapuskasing #2 was that the subcontracting clause on which the trade union relied did not prevent an "employer" from letting "a primary contract".

29. We respectfully disagree with and reject the notion that, apart from any question of interpretation of the language of the collective agreement, the Board is bound to consider whether the respondent to a referral to arbitration under section 124 was acting as a person operating a business in the construction industry in respect of the subject matter of the grievance. If we are wrong in this, and the language of the legislation does require the Board to determine, on each referral to arbitration under section 124, whether the "employer" party was a "person who operates a business in the construction industry" in relation to the subject matter of the grievance at the time it occurred, then we are persuaded that the respondent satisfies that test in this case.

30. The respondent concedes, as it must, that it is not necessary for a person to have direct employees performing construction work on a particular project in order to be a "person who operates a business in the construction industry" in relation to that project. Indeed, if being an operator of a business in the construction industry is a statutory prerequisite to being an "employer" who can be bound by a construction industry collective agreement then, in view of section 121 and the analysis we have already set out, it must be possible to be a "person who operates a business in the construction industry" without directly employing any construction workers. Having eliminated that as a means of distinguishing those who satisfy the "person who operates a business in the construction industry" test from those who do not, it does not seem to us that ownership of the property on which the construction takes place is a relevant distinguishing characteristic by itself. Businesses in the construction industry take many forms. Some construction industry businesses purchase land for development - that is, with the intent of reselling the land after causing buildings to be constructed on it. Even if none of the actual construction is performed by direct employees of such a developer, no one would seriously suggest that the developer was not operating a business in the construction industry.

31. If it is at all relevant to ask whether a person bound by a construction industry collective agreement is a "person who operates a business in the construction industry", we do not accept that the question is to be answered in the negative if the person in question is a "mere purchaser" of construction services. In a broad sense, and except for individuals engaged only in the sale of their own labour, all those who operate businesses in the construction industry purchase construction services either from their employees or from independent contractors or both. Some do so in order to discharge obligations they have undertaken in a contract to supply construction services. Others do not. When interpreting the phrase "person who operates a business in the construction industry" in relation to certification applications, the Board has made no distinction between vendors of construction services and those who "operate a business in the construction industry" only with a view to enjoying the results themselves. We see no reason why such a distinction should be imported into the same phrase if the interpretation and application of that phrase is of some relevance to the disposition of a grievance arising under a collective agreement.

32. As we have already observed, if being an operator of a business in the construction industry is a statutory prerequisite to being an "employer" who can be bound by a construction industry collective agreement, then it must be possible to be a "person who operates a business in the construction industry" in the sense intended by clause 117(c) without directly employing any construction workers. The only way one can in any sense "operate a business in the construction industry" without directly employing construction workers is by engaging an independent contractor or contractors to bring construction about. It necessarily follows that the mere purchasing of construction services from independent contractors must amount to operating a business in the construction industry in the sense intended by clause 117(c) in at least some circumstances. Having regard to the purpose of the statutory provisions in question, we cannot see why the Legislature would have intended the phrase "operates a business in the construction industry" to apply to mere purchasers of construction services from independent contractors in some circumstances and not in others. It seems to us that if the phrase was intended to have continuing significance once a collective bargaining relationship is established, it must have been intended to describe anyone who effects construction, whether by hiring construction workers or by engaging contractors.

33. Here, Metro effected construction. It had it in its power to determine how and by whom that construction would take place. It chose to have consulting engineers act as its agent in respect of the details. If its status in respect of the project is of any relevance to the applicability to it of the collective agreement then, for the reasons we have set out, that status should not depend on whether that agent was an employee or an independent contractor. Implicit in Metro's argument is that the consulting engineers exercised the sort of control which would satisfy the control test for which it contends. They did so as agent for Metro. As against the contractor, Metro had the right to bypass the consulting engineers and exercise that control directly. Therefore, Metro did have the sort of control which even it concedes would make it a "person operating a business in the construction industry" in relation to the subject project.

34. In summary, once it is established that the respondent is bound by the subject provincial agreement by reason of its being a person for whose employees affiliated bargaining agents have bargaining rights then, in our view, the only relevant question about its activities in relation to the subject project is whether those activities violated some provision of that provincial collective agreement. We respectfully reject the conclusion of the panel in Brant #1 that there is a threshold question whether Metro is also a "person who operates a business in the construction industry", either generally or in relation to the project which is the subject of the grievance. If that is a threshold question, however, we reject the control test postulated in Brant #1 as the method of answering it. The fact that Metro was responsible for bringing about the construction and had it in its power to chose how and by whom the construction would be performed is enough to make it a "person who operates a business in the construction industry" for any relevant statutory purpose.

35. We turn, then, to the question whether the activities complained of in this grievance violated the provincial agreement.

36. The clause which the union alleges Metro breached reads:

505 SUBCONTRACTING

The company shall not directly or indirectly sublet any work under the jurisdiction of this Agreement to any other Employer or Employee who is not a party to an IBEW Construction Agreement nor require any employee to work on a piecework basis.

There is no challenge here to the well-established proposition that a collective agreement term which restricts or controls the subcontracting or contracting out of work which might be performed by bargaining unit employees is a legitimate form of union security provision: Metropolitan Toronto Apartment Builders Association, [1978] OLRB Rep. Nov. 1022 (jud. rev, denied (1979) 24 O.R. (2d) 399 (Ont. Div. Ct.)). There is no suggestion that this is something which is beyond the scope of the province-wide bargaining in which employer and employee bargaining agencies are by the Act authorized to engage. It seems common ground that the electrical work included in Metro's contract with Torontario was the sort of work contemplated by the phrase "work under the jurisdiction of this agreement". Torontario is not party to "an IBEW Construction Agreement". If Metro "directly or indirectly sublet work" to Torontario, then it violated the provincial agreement.

37. As "sublet" and "subcontract" are synonymous in this context, the remaining issue in this case is the very issue addressed in Kapuskasing #2 in 1981, three years before the collective agreement in question here was negotiated. That decision held that "[s]ubcontracting involves the awarding of a secondary contract, whereby a subcontractor undertakes to perform certain of the obligations previously assigned to a principal or prime contractor" and that someone who lets a contract for the performance of work which they are not themselves under a contractual obligation to perform for someone else cannot be said to have "subcontracted" any work. Like the respondent in Kapuskasing #2, Metro was under no contractual obligation to any other person to perform the work for which it let a contract to a "non-union" contractor. In the absence of any evidence that the parties to the collective agreement before us agreed at the time on some other meaning for "subcontract" or "sublet", we see no reason not to follow Kapuskasing #2, on this issue and find that in contracting with Torontario Metro did not "sublet" work.

38. As the respondent points out, the decision in Kapuskasing #2 gives the word "sublet" its ordinary meaning. The Shorter Oxford dictionary defines "sublet" as meaning, among other things, "to lease out (work, etc.) under a subcontract". It says the verb "subcontract" means "to make a subcontract" and that the noun "subcontract" means "a contract, or one of several contracts, for carrying out a previous contract or part of it" (emphasis added). The terms "subcontractor" and "subcontracting clause" are defined in Labour Law Terms: A Dictionary of Canadian Labour Law, Sack, Jeffrey and Poskanzer, Ethan (Toronto: Lancaster House, 1984) as follows:

subcontractor independent contractor who is engaged by an employer to perform part of the work which the latter has contracted to do; a subcontracting clause is a provision in a collective agreement restricting the right of an employer to subcontract bargaining unit work

[emphasis added]

39. The union argued that Kapuskasing #2 was wrongly decided, and invited us to interpret the word "sublet" the way "subcontract" was interpreted in the following passages from Brant #1:

15. Like most collective agreements, one of its obvious purposes is to define and protect union members by assuring them access to the work encompassed by the collective agreement. a subcontracting clause is then included in the collective agreement as an expansion of this job protection as it gives conditional rights to an employer to hire outside of the security clause. But, when an employer wants to hire outside of workers covered by the security clause, it is obligated to do so in accordance with article 1(c); that is~ that it can only subcontract to a subcontractor who is also bound by the Provincial Agreement. Subcontracting must then be recognized as the awarding of a contract to perform work encompassed by the collective agreement by anyone not covered by the union security clause.

17.... Thus, subcontracting is understood simply to be the hiring of anyone other than those covered by the collective agreement's security clause.

40. The passages from Brant #1 on which the union relied cannot be considered in isolation from the fact that the panel in that case heard viva voce evidence that the parties who bargained the collective agreement there in issue had formed a special understanding about the meaning of "subcontract". That the passages relied upon by the union must be understood in that context is made clear by the decision itself, in the portion of paragraph 17 to which the union did not refer in its written argument:

17. Subcontracting as we have defined it above is in accordance with the evidence given as to the parties' understanding of the meaning of article 1(c). The parties who drafted and negotiated this collective agreement understand article 1(c) to bind any employer who is subject to the collective agreement to abide by it whenever it contracts to have skilled work done by anyone other than those covered by article 5. We recognize that this interpretation was not understood or intended by the respondent to these proceedings. But be that as it may, the respondent is bound by the contract drafted by its agent on its behalf and must also be bound by the interpretation that that agent shared with the other party to the collective agreement.

41. Neither the applicant nor the intervener led any evidence that in bargaining for the subject or any previous collective agreement they had agreed upon or even discussed the meaning of "sublet" in its application to employers who are not "contractors" who contract to perform electrical work for others. Indeed, the language of the agreement itself suggests that the parties did not specifically consider whether the provisions of the subject agreement were appropriately worded so as to bear application to employers other than contractors. After providing in its preamble that "[i]n this Agreement, the terms Contractor, Employer and Company are interchangeable", Section 201 of the agreement says this:

201 CONTRACTOR QUALIFICATIONS

Certain qualifications, knowledge, experience and financial responsibility are requires of everyone desiring to be a Contractor in the Electrical Industry. Therefore, an Employer who contracts for electrical work is a person, firm or corporation having these qualifications and whose principal business is Electrical Contracting and who maintains a permanent place of business and an adequate financial status to meet payroll requirements.

In defence of the appearance of a clause like this in a provincial agreement purportedly binding on contractor and non-contractor employers alike, counsel for the union suggested we might conclude that this was language imported unchanged from agreements which the union and employer association parties had made before the advent of statutory province-wide bargaining, agreements which would only have covered contractors. He was unable to say why, if we could suppose this about Section 201, we could not suppose the same about section 505. Counsel for the union asked rhetorically why the bargaining parties would have used language inapplicable to non-contractors. The language of the agreement suggests that they simply did not think about non-contractors.

42. The intervener agrees with the union that section 505 applies to any contracting out of work, not just to "subcontracts". Counsel for the intervener argues that

Given the agreement between the Applicant and the E.T.B.A. on the intent, purpose and meaning of Article 5.05 [sic] it is respectfully submitted that it cannot be challenged in the absence of an application under section 89 of the Act alleging a violation of section 152(2) [sic] of the Act or in the absence of evidence to suggest that the language was intended to mean otherwise or that it has been consistently applied in a manner that derogates from the position taken by the Applicant and Respondent [sic].

We do not accept that the terms of a provincial agreement must be taken to mean whatever the statutory bargaining agents for the employers and unions bound thereby may subsequently agree for the purpose or in the context of a particular dispute about the application of the agreement. The only effective agreement is the one those bargaining agents make at the time the collective agreement is settled. That agreement is supposed to be in writing, a requirement which is of particular importance when the employers to be bound are not at the bargaining table. There is no evidence that the agreement to which counsel refers was made at the time the collective agreement was settled. If the employer and employee bargaining agencies have the power to negotiate an amendment to the 1984 collective agreement with retroactive effect, which we need not decide, there is no suggestion they have done so. If there were, such action by the employer bargaining agency would no doubt be closely scrutinized under subsection 151(2).

43. We are persuaded that the word "sublet" in section 505 of the subject agreement means the same as "subcontract" did in the clause under consideration in Kapuskasing #2. The addition of the words "directly or indirectly" may ensure that any transaction which is in substance a "sublet" will be caught whatever its form, but does not broaden the language to cover any contract which is not in substance a "subcontract". Metro's contract with Torontario was not in substance a "subcontract".

44. Accordingly, we find that the respondent was bound by the provincial agreement and section 505 thereof in respect of the project in question, but did not violate section 505 by contracting with Torontario for performance by the latter of electrical work on that project.

CONCURRING OPINION OF BOARD MEMBER C. A. BALLENTINE; March 3, 1989

1. The respondent raised two defences to the grievance:

a) That it is not an employer in the construction industry with respect to this grievance, but rather an "Owner" who let a capital works project to a contractor and accordingly was not bound to the Provincial Collective Agreement; and

b) In any event, as a matter of contractual interpretation, there was no violation of the obligation contained in section 5.05 of the Collective Agreement.

2. Although I have some reservation to the finding of the Board in (b) mentioned above, I am completely satisfied with the finding that the respondent is bound to the collective agreement. This decision by the Board means that once a person is found to be an employer in the construction industry and is bound to the collective agreement, it makes no difference whatsoever whether the employer is a sub-contractor, general contractor, owner/builder or owner. This finding of the Board also makes it clear that once a union gains bargaining rights in the construction industry those bargaining rights are protected and remain in full force unless the employees of the employer succeed in terminating those rights or the union abandons its bargaining rights in accordance with the Act.

3. The Board in this decision has clarified the Brant County case #1, which left a wrong impression that in certain circumstances an employer in the construction industry could become an owner and not be bound to a collective agreement. In Kapuskasing #2 the impression was left that the employer, whether a contractor or owner could be bound to the collective agreement providing the language of the collective agreement effected that. This decision of the Board confirms Kapuskasing #2. Therefore, the controversy left by the above-mentioned cases has now been corrected and clarified.

4. In regard to the Board's decision that although the respondent is bound to the provincial agreement and section 5.05 thereof but not in violation of the same, this finding is strictly on the language contained in sections 2.01 and 5.05. With regard to the matter whether a party is prohibited from contracting out work to a contractor not in contractual relations with the union, that is a matter for further collective bargaining between the relevant parties.