[1989] OLRB Rep. February 175
2064-86-U; 2065-86-R; 3097-86-U International Union of Operating Engineers, Local 796, Complainant v. Metropolitan Life Insurance Company, Respondent; International Union of Operating Engineers, Local 796, Applicant v. Metropolitan Life Insurance Company, Respondent #1 v. Allen Maintenance Ltd., Respondent #2; International Union of Operating Engineers, Local 796, Complainant v. Allen Maintenance Limited, Respondent
BEFORE: Nimal V. Dissanayake, Vice-Chair, and Board Members R. J. Gallivan and P. V. Grasso.
APPEARANCES: Peter Waldman and Celine Castonguay for the complainant; D. Churchill-Smith, J. A. Roffey and D. Gibson for Metropolitan Life Insurance Company; E. Supino and N. Allen Prupas for Allen Maintenance Ltd.
DECISION OF NIMAL V. DISSANAYAKE, VICE-CHAIR AND R. J. GALLIVAN, BOARD MEMBER; February 9, 1989
File 2064-86-U and 3097-86-U are unfair labour practice complaints against Metropolitan Life Insurance Company (hereinafter referred to as "Metropolitan") and Allen Maintenance Ltd. (hereinafter referred to as "Allen") respectively. File 2065-86-R is an application under section 1(4) of the Act. These proceedings result from the contracting out in October 1986 by Metropolitan of cleaning services at 99 Bank Street in Ottawa. Shortly thereafter, the International Union of Operating Engineers, Local 796, ("the union") which held bargaining rights for some of the affected Metropolitan employees, filed the unfair labour practice complaint herein against Metropolitan (2064-86-U) and the application under section 1(4) herein (2065-86-R) together with an application under section 63 of the Act (2066-86-R). All three matters came before a previous panel of the Board ("previous panel") in January 1987.
Over the objections of counsel for the union, the previous panel had ruled that it would not consolidate the three files and that each application will be heard separately. Accordingly the section 63 application was heard first. The previous panel convened again in February, 1987 at which time on its own motion the Board decided to consolidate the two remaining matters, namely the unfair labour practice complaint and the section 1(4) application. In the meantime, after that hearing had commenced, the union filed the complaint herein against Allen (3097-86-U) and requested that it be also consolidated with the ongoing proceedings. The Board declined to do so, and File 3097-86-U was set aside in abeyance.
On March 10, 1987, the previous panel issued its decision in File 2066-86-R dismissing the application under section 63. In the meantime the hearings in Files 2064-86-U and 2065-86-R had been substantially completed. Unfortunately the Vice-Chair of the previous panel fell ill. When it became apparent that the Vice-Chair in question would not be able to resume the hearing, the Registrar listed those two files, together with file no. 3097-86-U, before the present panel for de novo hearing.
At the outset of the hearing the Board was called upon to make a number of rulings in view of the unusual circumstances of this case. We do not propose to set out all of these. However, we do note the submission made by counsel for Metropolitan, that since at the end of the hearing in File 2066-86-R before the previous panel, the parties had agreed that the evidence in that hearing will be applicable to the other two files, this panel should determine the matters before it solely on the basis of the evidence set out in the previous panel's decision in File 2066-86-R. Counsel for the union not only opposed this, but made a motion that this Board "vacate" the decision of the previous panel in File 2066-86-R. Counsel pointed to many alleged "irregularities", including the fact that the union was required to proceed first. For reasons orally delivered, the Board denied the union's motion to "vacate". While the Board was prepared to admit the evidence set out in the previous panel's decision, we ruled that the parties were free to adduce any evidence before us and that we would make our own findings of fact based on all of the evidence before us.
With that background, we turn to the matters before us. Metropolitan is a well known company in the field of life and health insurance and annuities. It has had its head office in Ottawa, Ontario, at least since 1924. In 1976 it acquired land and erected an office tower at 99 Bank Street, consisting of some fifteen floors. Since 1976, Metropolitan's offices have been housed at 99 Bank. However, its offices occupied only about 60 per cent of the building. The rest was leased to various tenants.
Since the early 1960's, Metropolitan has had a collective bargaining relationship with the union. At the relevant time a collective agreement was in place, covering a variety of Metropolitan's full-time employees including cleaning staff. Metropolitan had full-time and part-time cleaning staff, who cleaned not only the areas occupied by Metropolitan, but also those occupied by its tenants. In this manner, Metropolitan fulfilled its obligation to its tenants under the leases to provide cleaning services. Only the full-time cleaners were covered by the collective agreement.
Metropolitan has a Real Estate Division and a Property Management Branch within its organization and these sections are responsible for Metropolitan's real estate assets and investments. In November, 1984, Metropolitan acquired another premises at 50 O'Connor as an investment property. This building, located adjacent to the 99 Bank building, was leased out to tenants. Prior to doing so, Metropolitan put tenders out for the cleaning of 50 O'Connor. Following a bidding process, Allen was awarded a contract for cleaning 50 O'Connor.
In early 1986, Mr. Gordon Harrison, Metropolitan's Director of Property Management undertook a review of the cleaning of 99 Bank, and issued a report, which in essence recommended that the cleaning of 99 Bank be contracted out. In Harrison's assessment this would represent a 50 per cent saving for Metropolitan. In June 1986, Harrison's recommendation was approved by Metropolitan's Management Committee subject to legal advice. After a legal opinion was obtained, Allen was invited to submit a quotation for the cleaning of 99 Bank street and on September 22, 1986 a contract was executed.
The evidence indicates that this contracting out of cleaning services to Allen resulted in the termination of employment of some 48 part-time cleaners (not represented by the union) and some ten full-time cleaners (represented by the union). Essentially, Allen took over the work performed by the night cleaners, the bulk of whom were part-time and hence not unionized.
Allen has been active in the office cleaning business since 1967. Its operations are mainly in the cities of Montreal, Ottawa and Toronto. At the time of the hearing, it had some 200 office cleaning contracts. Metropolitan was one of its many "customers", and represented less than five per cent of its total work. Allen has never had any corporate relationship with Metropolitan (i.e. no common shareholders, directors, managers etc.) and has never represented itself as having any such relationship.
The union contends that under section 1(4) Metropolitan and Allen are to be treated as one employer for the purposes of the Act. Alternatively it is submitted that the employees used by Allen to perform the cleaning at 99 Bank are, in law, employees of Metropolitan. In addressing the section 1(4) application the Board must examine the activities engaged in by Metropolitan and Allen, and if it is satisfied that the conditions precedent to the application of section 1(4) have been met, the Board must decide whether it will exercise its discretion to make a declaration. Section 1(4) of the Act provides:
Where, in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.
Until October 1986, Metropolitan engaged its own employees in cleaning 99 Bank and at that time Allen took over the same activity. Since Metropolitan and Allen, two separate corporations, carried on the same activity (albeit not simultaneously) the conditions set out in section 1(4) would be satisfied if the union can persuade the Board that such activity was carried out under common control or direction.
As noted, Allen is owned and operated completely independently of Metropolitan, and there is no connection between the management or employees of the two corporations. Since there is no institutional relationship, any common control or direction must be found in the contractual arrangement entered into for cleaning of 99 Bank and the day to day implementation of that contract.
The Board has recognized that section 1(4) may in certain circumstances apply to sub-contracting relationships and further that in certain situations the purchaser of the service, and not the sub-contractor, may be found to be the true employer of the employees performing the work. In Complete Car Care Centre, [1983] OLRB Rep. Aug. 1293, the Board observed at 1298-99:
"The Board has previously accepted the proposition that sub-contracting relationships can under certain circumstances bring two nominally independent firms within the ambit of section 1(4). As was stated in the Charming Hostess case [1982] OLRB Rep. April 582, the more closely a firm which has contracted out work controls when, where, how, by whom and at what place the work is to be done, the more the activities of the two firms will appear to be under joint control or direction. Indeed, the degree of control may be so great as to lead to the conclusion that the firm allegedly contracting-out certain work is in fact the true employer of the individuals performing it, and that they are not employees of the 'sub-contractor' at all. See: K Mart Canada Limited, [1983] OLRB Rep. May 649. In addition, a section 1(4) declaration may be appropriate in instances where a sub-contractor is effectively dominated by the firm letting out the work, and it appears the true purpose of the sub-contract was not to provide the dominant firm with independent managerial or employee skills, but rather to provide it with a separate non-union' corporate vehicle with which it could continue performing the same work as before but outside of any collective bargaining obligations. See J.H. Normick Inc. [1979] OLRB Rep. Dec. 1176 and Donald A. Foley Limited [1980] OLRB Rep. Apr. 436."
- In Caressant Care Nursing Home of Canada Limited, [1985] OLRB Rep. Jan. 50 at 53-54, the Board discussed the effect of section 1(4) on a sub-contracting arrangement:
"In Kennedy Lodge, the Board introduced the terms 'core' and 'peripheral' functions, in commenting upon the question of community perception. ... Without seeking to define any further the terms 'core' and 'peripheral', we would simply observe that the contracting out of the kind of work involved here, in terms of food services and housekeeping services, would not seem to offend the sensibilities of the labour relations community in the way that the purported contracting-out of direct nursing care does. And indeed the history of companies like Versa Services in providing these services within the health care industry of the province makes it difficult for anyone to argue 'surprise' over a development like the present. In any event, as the Board noted at the end of its comments with respect to community perception in Kennedy Lodge, the question before the Board and arising under the Act remains one of intent, and of 'control', and we find nothing in the evidence before us to suggest anything but a bona fide intent to hand the responsibility for these severable aspects of the Home over to the business organization of Versa Services. Whether these are areas, as they obviously are, which are integral to the continued operation of a nursing home, and with respect to which a strike could obviously cause disruption, and whether as a result the employees engaged in these on-site activities fall under the Hospital Labour Disputes Arbitration Act, as they obviously do, does not assist the Board in assessing on a case by case basis the degree of responsibility given up in a particular 'subcontracting' arrangement, and that remains the issue for the Board under section 1(4) of our Act."
It is clear that Metropolitan prepared the specifications which were included in the cleaning contract. This contract spells out Metropolitan's cleaning requirements, outlines in considerable detail the various cleaning functions which must be performed, and the frequency with which such tasks should be performed. The evidence is that there was hardly any "negotiations" involved and that Allen agreed to the specifications that were required by Metropolitan.
The contract price was arrived at by Allen in its bid, by estimating its costs for wages and supplies and adding to it a profit mark-up. The contract contains an escalation clause, whereby additional wage costs resulting from an increase in the statutory minimum wage rate is passed on to Metropolitan.
Allen hired approximately 25 employees to service the 99 Bank contract, after running a newspaper advertisement and interviews conducted by its management at its own offices. During work hours at 99 Bank, Allen employs a Quality Control Manager and other supervisory personnel. These individuals have no connection with Metropolitan or its management. It is Allen's management that determines the employee complement, work schedule and job assignment. The supplies and tools required for the work are provided by Allen. Metropolitan is not involved in the hiring, supervision, disciplining, or termination of Allen employees, nor is Metropolitan involved in an ongoing monitoring function as to the employees' work performance.
However, this is not to say that Metropolitan is totally disinterested in the way Allen employees go about their tasks and in the end product. It would have been surprising if they were so disinterested because, as the landlord, it had a responsibility towards its tenants to provide adequate cleaning services. If there was inappropriate conduct or incompetent work performance by an Allen employee, the affected tenant would naturally look, not to Allen with whom the tenant has no connection, but to its landlord, Metropolitan. It is logical to expect that Metropolitan would in these circumstances pass on any tenant's complaint to Allen and insist that Allen abide by its contractual obligations. If the allegation is substantial and amounts to a non-compliance with the terms of the cleaning contract, Allen would be expected to take immediate corrective action.
The evidence indicates that when Metropolitan did the cleaning of 99 Bank through its own employees, it maintained a log book where complaints about the cleaning were entered by Metropolitan's tenant co-ordinator. When the cleaning supervisor arrived each night, he or she inspected the log book and took whatever action required with respect to complaints. When Allen took over the cleaning of 99 Bank, the log book concept was continued. Mr. E. Supino, a principal of Allen, testified that the log book is a tool commonly used in the office cleaning industry where the cleaning is done at night and the customer's work hours do not overlap with that of the sub-contractor's.
Counsel for the union submits that common control or direction is established by the terms of the cleaning contract itself. Particular reliance is placed on the detailed specifications of the cleaning functions and clause 7(b) of the contract which provides:
Any person employed on the work who is disorderly, incompetent or unacceptable to the Owner for security reasons shall be removed immediately when required by the Owner and no such person shall be re-employed on any part of the work without the consent of the Owner.
Counsel further relies on Kennedy Lodge Inc.,[1984] OLRB Rep. July 931 and contends that Metropolitan has contracted out a core part of its business of being a landlord and urges us to find that it continued to exercise control over that activity following the contracting out. Alternatively it is contended that the true employer of the employees performing the work under the cleaning contract is Metropolitan.
- Despite the able submissions of counsel for the union, we are of the view that common control or direction has not been established. The Board does not see the detailed cleaning contract as indicative of control or direction as would satisfy section 1(4). These specifications ultimately go to describing the end product expected by Metropolitan for the price paid. It is not an exercise of ongoing control and direction. In Federated Building Maintenance Company Limited, [1985] OLRB Rep. Nov. 1585, in dismissing a similar section 1(4) application with respect to a sub-contracting arrangement for office cleaning, the Board was also faced with a similar detailed cleaning contract. The Board, at page 1595 made the following observation:
Because there is considerable competition for the services which Federated supplies, O&Y may have considerable leverage, but this is no more than a customer would normally have in a favourable market and is not the kind of control which, in itself, would warrant a "related employer" declaration under section 1(4) of the Act. Nor do we think that much turns on the specificity of the cleaning contract. Detailed contracts of this kind are quite common in the industry, are necessary, given the size of complexity of O&Y's building, and in any event, are not analytically different from the kind of detailed contracts found in other sectors of the economy (in the construction industry, for example). A degree of functional interdependence is inevitable, and implicit in many subcontracting arrangements. What is significant here is the absence of any other indicia of relatedness, or the mischief which section 1(4) was designed to prevent.
- Similarly, clause 7(b) of the contract is not evidence of control or direction by Metropolitan of Allen employees. The evidence is clear that the right to hire, supervise and fire these employees is exercised by management of Allen. Clause 7(b) is a recognition that Allen will provide employees who can provide a service that meets the standards set out in the contract and that Allen will not employ employees who are disorderly. This is not surprising because it must be remembered that the work is performed on Metropolitan's premises. This provision is meant to deal with extreme circumstances and there is no evidence that Metropolitan has exercised it since the contract became effective in 1986. In The Corporation of the City of Stratford, [1985] OLRB Rep. June 923, the contract for garbage collection entered into by the City contained the following clause:
Should any overseer, mechanic, driver or workman employed on or about the work or in connection therewith, give any just cause for complaint (of which the Engineer shall be the sole judge), the Engineer shall notify the contractor in writing, stating the reasons therefore, and the contractor shall discipline such person forthwith to the satisfaction of the Engineer and he shall not again be employed by the contractor on any City work without the consent in writing of the Engineers.
That did not cause the Board to find that the city had common control or direction.
The log book, in our view, is nothing more than a practical necessity as a tool of communication. The ultimate benefactors of Allen's cleaning services, i.e. individuals in Metropolitan's offices and in the various tenants' offices, are at work during the day. If they find any problem, it must be communicated to Allen, who only appears at night to perform the work. The system set up is a sensible and logical one. The tenant who has a complaint informs the tenant co-ordinator employed by Metropolitan, who in turn communicates the complaint to Allen through the means of an entry in the log book. The evidence is that the tenant co-ordinator merely passed on the information. She did not monitor the situation to ensure that corrective action is taken. She became involved again only if a further complaint is received. It is further the evidence that if corrective action was not forthcoming despite repeated complaints and entries in the log, the avenue open to Metropolitan was to contact Allen's principal's to demand compliance with the contractual terms. It is also noteworthy that Allen did not blindly act upon receiving a complaint. Its supervisors first ensured that the complaint is substantiated and that it has resulted in a non-compliance with Allen's obligations under the contractual terms.
In Federated Maintenance (supra) also, there was evidence of the purchaser relaying tenants' complaints to the sub-contractor and demanding corrective action. However, the Board concluded that section 1(4) was not properly applicable.
It is not necessary here to decide whether cleaning was a core or peripheral part of Metropolitan's activity of being a landlord. As the Board in Caressant Care Nursing Home (supra) did, (see the reasoning reproduced at paragraph 15 above) we observe that it is not uncommon for a landlord of a large office building to contract out its cleaning services. It cannot be said that such action "will surprise the labour relations community or offend its sensibilities".
On the basis of the total evidence before us, we are satisfied that Allen assumed full control and direction of the cleaning services when it took over the 99 Bank contract. Allen pre-existed this contract by nearly 20 years, as a contractor providing specialized office cleaning services. Metropolitan represented only about 5 per cent of Allen's total business. Allen had its own principals, management and employees. It offered its specialized service to anyone who was willing to meet its terms, and Metropolitan was one of its many customers. Apart from the contractual rights it had, Metropolitan had no connection with Allen institutionally or in terms of controlling and directing the day-to-day affairs of Allen with respect to 99 Bank.
In Federated Maintenance (supra) at page 1594 the Board stated:
- Section 1(4) permits the institutional rights of a trade union and the contractual rights of its members to attach to a definable commercial activity regardless of the particular legal vehicles through which that activity is carried on. Legal form or changes in form will not necessarily dictate, fragment, or undermine a collective bargaining structure. Two firms - quite separate in law - can be treated as one employer for collective bargaining purposes, and the union need not pursue the often difficult question of who would be "the real employer" applying common law tests. Moreover, if a particular commercial relationship falls within the ambit of the language of section 1(4) and the facts establish the mischief which section 1(4) was designed to avoid, it does not avail respondents to claim that they are separate companies with merely a "subcontracting" relationship. There is no magic in terminology. On the other hand, while many subcontracting arrangements might arguably fall within a literal reading of the language of section 1(4), we do not think the statute was ever intended to collapse the vast majority of bona fide subcontracting relationships. Section 1(4) is clearly discretionary, and should be applied only where there is clear evidence of the mischief it was intended to avoid.
[emphasis added]
In all of the circumstances, the mischief addressed in section 1(4) is not present here.
- The Board also cannot accept the contention that Metropolitan is the true employer of the employees performing the cleaning at 99 Bank. In York Condominium Corporation, [1977] OLRB Rep. Oct. 642 at 645, the Board set out a list of factors relevant to the issue of who is the employer:
"(1) The party exercising direction and control over the employees performing the work. -See the Municipality of Metropolitan Toronto case, 61 CLLC 16,214; the Sentry Department Stores Limited case, [1968] OLRB Rep. 540, 546; the Beer Precast Concrete Limited case, [1970] OLRB Rep. 224, 227-8; the Belcourt Construction (Ottawa) Limited case, [1971] OLRB Rep. 32, 325; and the Reid's Holdings (Belleville) Limited case, [1972] OLRB Rep. 753, 761.
(2) The party bearing the burden of remuneration. - See the Municipality of Metropolitan Toronto case, supra; the Goldlist Construction Limited case, [1966] OLRB Rep. 487, 488; the Beer Precast Concrete Limited case, supra; the Kel Truck Services Ltd. case, 1972 CLLC 16,068; and the Templet Services case, [1974] OLRB Rep. 606, 608.
(3) The party imposing the discipline. - See the Reid's Holdings (Belleville) Limited case, supra; and the Templet Services case, supra.
(4) The party hiring the employees. - See the Municipality of Metropolitan Toronto case, supra; the Sentry Department Stores Limited case, supra; and the Reid's Holdings (Belleville) Limited case, supra.
(5) The party with the authority to dismiss the employees. - See the Municipality of Metropolitan Toronto case, supra; and the Templet Services case, supra.
(6) The party who is perceived to be the employer by the employees. - See the Sentry Department Stores Limited case, supra.
(7) The existence of an intention to create the relationship of employer and employees. - See the Belcourt Construction (Ottawa) Limited case, supra."
- In The City of Stratford (supra), the Board characterized the issue as "who exercises fundamental control over the working lives and working environment of the employees". On the evidence, we cannot reasonably conclude that it is Metropolitan that exercises such control. While Metropolitan does have some general control and direction over the work performed by the Allen cleaners through its contractual rights, that is not sufficient to make it the employees' employer. Nor does that constitute "common control or direction" within the meaning of section 1(4). In Caressant Care Nursing Home (supra) at 51, the Board stated:
"There is no doubt that all of the services provided by Versa Services or any contractor to the licensee of the Home would have to be carried out under the 'general direction' of the licensee, and the contractor remains 'responsible' to the licensee, as Exhibit 3 stipulates, for it is the licensee itself who at all times remains ultimately responsible for the maintenance of adequate care in the Home. But the specific options reserved to Caressant Care under this arrangement we find to be no more than a customer could normally expect to have access to, either expressly or as a matter of commercial reality, in ensuring that the performance of the contractor continues at all times to meet its general specifications and requirements. We recognize that there is in any business relationship, apart from perhaps fixed-term contracts, the right of termination of the arrangement by the customer which, as a practical matter, requires a contractor to be more or less responsive to, any complaints by its customers. The question is whether, on an on-going basis, the contractor really has taken over control and responsibility for the selection, training and supervision of the employee workforce, and is truly independent in making the decisions that it does."
[Emphasis added]
Despite the contractual obligations and the working arrangements it had with Metropolitan, we are convinced that Allen took over on an on-going basis, the control and responsibility for the selection, training and day-to-day supervision of the employees and that in making the decisions that it does, it is truly independent.
We turn next to the complaint against Allen. The allegation is that Allen conspired with and/or aided Metropolitan in getting rid of the latter's unionized cleaners. Apart from making this bold assertion, the only concrete evidence relied on by the union is the fact that Allen did not give any special priority to the displaced Metropolitan employees when it hired its workforce to service the 99 Bank contract. The evidence is absolutely clear that Allen had no input into or knowledge of, Metropolitan's decision to contract out the cleaning at 99 Bank. The quality of its service was known to Metropolitan from its work at 50 O'Connor. On the basis of that reputation Allen was invited to submit a bid for 99 Bank. It did, and its bid was accepted. The evidence of both of Allen's principals is uncontradicted that, while Allen was aware at the time of the bidding that Metropolitan had its own employees cleaning 99 Bank, it had no knowledge of whether they were full-time or part-time or what wages were paid to them. Specifically, they were unaware right up to the time of receiving notice of these proceedings that the Metropolitan Cleaners were unionized.
Mr. Supino candidly admitted that the experience of the Metropolitan employees and their knowledge of the building would have made them attractive candidates for employment by Allen. However, it was Allen's policy not to enter into a cleaning contract with conditions attached about hiring the customer's former employees. Allen insisted on doing its own hiring based on its own criteria. Allen followed its usual policy when it advertised the cleaning positions in the media. Any person, including former Metropolitan employees, were free to apply. Indeed the evidence is that two or three Metropolitan employees (it was not clear whether they were full-time bargaining unit employees) did make inquiry, but were not willing to meet Allen's productivity standards and/or accept the wages being offered. This is not surprising because Allen's wages were substantially lower than what employees of Metropolitan earned under the collective agreement. Also, Allen was proposing to perform the cleaning at 99 Bank with a workforce which was almost half the size of the employee complement utilized by Metropolitan. There is no reason to doubt Mr. Supino's evidence that Allen would have been more than happy to employ former Metropolitan employees if they were willing to meet the higher productivity standards set by Allen and to accept the substantially lower wages. There was a conspicuous absence of evidence of any Metropolitan employee agreeing to those terms being refused employment by Allen.
In these circumstances the Board cannot make an inference of unlawful motive on the part of Allen, by its failure to make a special job offer to Metropolitan's former employees. On the contrary, the evidence indicates that Allen dealt with the situation in accordance with its usual practice. Therefore the complaint against Allen has not been established.
The complaint against Metropolitan is two-fold. First, it is contended that the contracting-out was motivated, in whole or in part, by anti-union considerations. Secondly, it is alleged that Metropolitan was guilty of bad faith bargaining by failing to disclose during collective bargaining its decision to contract out cleaning services at 99 Bank.
The evidence is that Metropolitan had entered into a cleaning contract with Allen with respect to 50 O'Connor. Through that, Metropolitan got to know the quality of service provided by Allen and the cost. In 1986 it undertook a review of its cleaning at 99 Bank and decided to contract out that also to Allen. Before doing so, Metropolitan obtained a legal opinion from legal counsel experienced in labour relations matters.
Despite the valiant efforts of union counsel to convince us to the contrary, we are satisfied that what occurred here is a bona fide contract out of cleaning work to a pre-existing contractor, who was a specialist in the field. In reaching this conclusion, we have been influenced by the fact that the majority of the employees affected by the decision were part-timers, who were not unionized. In other words, the bulk of the work contracted out was cleaning work performed by part-time night cleaners. The contracting out did not result in the ousting of the collective agreement or the union. Indeed, the evidence is that the bargaining unit is still in place consisting of some 12 employees in different job classifications other than cleaning, and that the collective agreement had been renewed since the filing of the present applications. The only adverse result from the union's point of view was the termination of ten cleaners who were members of the bargaining unit. While the loss of employment of bargaining unit members is a serious matter under any circumstances, in the particular facts before us we cannot conclude that anti-union considerations played any part in Metropolitan's decision to contract out.
We are also of the view that there has been no contravention of the duty to bargain in good faith. Counsel claims that the failure to disclose during collective bargaining of the contracting out of cleaning services amounts to bad faith bargaining. Whether or not the collective agreement's scope clause captured 50 O'Connor, there is no evidence that the union has ever asserted any bargaining rights with respect to 50 O'Connor. From the time 50 O'Connor was acquired, Metropolitan operated it as being non-union. The two buildings are situated adjacent to each other. And yet the union did not exercise diligence to assert its bargaining rights. In these circumstances there has been no breach of section 15 with respect to 50 O'Connor.
While 50 O'Connor was contracted out in 1984, Mr. Harrison's evidence is that he reviewed the cleaning situation at 99 Bank in 1986, i.e. after the bargaining had been completed. His recommendation was approved and a decision to contract out taken only in June 1986. At most, the evidence indicates that Metropolitan decided to experiment with contracting out cleaning services at 50 O'Connor, with an idea that if the experiment is successful, consideration will be given to contracting out cleaning at 55 Bank also. The evidence is that during collective bargaining the union made no inquiry about contracting out. Indeed the topic of contracting out was never raised. On the basis of the evidence, we cannot infer that at the time of the negotiations, a de facto decision had been made to contact out 99 Bank. That decision was taken only in 1986 following the report prepared by Mr. Harrison. At best, Metropolitan, was in a wait-and-see mode with respect to the desirability of contracting out. This is not a situation which triggers a duty to disclose on Metropolitan.
In BCL Canada Inc., [1984] OLRB Rep. June 791 at 793, the Board made these comments about the duty to disclose a planned contracting out:
Based on the evidence before us we consider that the most probable conclusion to be drawn is that after mid-May, 1983, when the ECCO Packaging proposal was rejected, contracting out ceased to be regarded as a likely avenue to be actively pursued by the respondent. We accept the evidence of the respondent that while the collective agreement was being negotiated in 1983 there was no decision, firm or otherwise, to contract out and that there was a decision made to realize savings by reducing the amount of material which had to be used in sheeting. As a consequence, we can see no basis for the application of the reasoning in Westinghouse Canada Limited [1980] OLRB Rep. April 577 or Consolidated Bathurst Packaging Ltd. [1983] OLRB Rep. Sept. 1411 to give rise to any obligation to make an unsolicited disclosure about contracting out.
We can see no basis in the evidence for drawing any inference that the respondent had made a de facto decision to contract out while negotiating for the 1983/84 collective agreement. There is ample evidence to the effect that the respondent viewed the sheeting operation as a necessary evil which it required to reduce the cost of its production waste. It seems to have been an open secret that it would get out of its sheeting operation if it could be presented an attractive viable alternative. That seems to have been the extent of the respondent's planning. it did nothing to invite proposals after May, 1983, and all of its actions after that date were aimed at improving its production of film so that the sheeting operation would get less material. This is exactly the sort of planning situation that both the decisions in Westinghouse, supra, and Consolidated Bathurst, supra regarded as being beyond the scope of any duty to volunteer information.
The Board is of the view that with respect to 99 Bank, Metropolitan had not reached any de facto decision at the time of negotiations and that in that situation there was no duty to make unsolicited disclosure.
For the reasons set out above, the Board is not persuaded that any basis for relief has been made out and accordingly these complaints and application are hereby dismissed.
DECISION OF BOARD MEMBER P. V. GRASSO; February 9, 1989
I dissent, in part, from the majority decision.
I am satisfied, on the facts in this case, that a section 1(4) has been met. Section 1(4) of the Act reads:
1 -(4) Where, in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.
- While Allen Maintenance seems to exercise fairly free discretion over staffing, the cleaning agreement gives Metropolitan Life the ability to exercise a degree of managerial authority respecting staff, it has also reserved to itself considerable managerial authority over the day-to-day operation. Some of this control has not been exercised because the arrangements appear, at present, to be operating on an agreeable basis. Should any disagreement arise Metropolitan Life has reserved to itself the ability to step in and assume direction in respect to key areas of management. Allen Maintenance retains responsibility in hiring and directing of employees subject, however, to their obligation under the contract. For an example under Appendix "E", page 2 of 5, paragraph 3 of the cleaning contract, it states:
- All persons employed as Daytime staff are to have authority to carry out directions given to them by the Director or Buildings Manager whether or not this involves minor changes to the specification.
Director or Buildings Manager, as above noted, refers to Metropolitan Life Personnel and not Allen Maintenance. In addition, Metropolitan Life has total discretion to decide whether or not a completed cleaning operation is acceptable to them.
- In Hansuk, operating as Wendy's Bake-off, (1987) Alberta Labour Relations Board Rep. July 188, the Board noted that:
This was an application by the union for declaration that the operator of the bakery department in a retail store was a common employer with the store. The retail store changed its system for making baked goods so that the process would be run by persons under contract to Wendy's Bake-off, a subcontractor, rather than by employees of the retail store. The former employees either transferred to bakeries in other stores or were laid off. The employer argued, inter alia, that the operator and the retail store were not engaged in associated or related activities.
- The Alberta Labour Relations Board held that Wendy's Bake-off was bounded by the existing collective agreement and at page 189 said:
The Board found that the arrangement was an attempt to maintain basically the same end product using lower paid non-union employees in place of the higher paid union employees in the store's bargaining unit. The degree of integration, the lack of any demonstrable independent aspect to the bakery's operation and the continued high level of retail store involvement in the bakery's operation distinguished this from straight case of subcontracting to an independent operator.
- For the reasons set out above, I find that Allen Maintenance Limited and Metropolitan Life Insurance Company are common employers pursuant to section 1(4) of the Act for the purposes of collective bargaining, as a result I would make a declaration under section 1(4) that Allen Maintenance Limited is bound by the collective agreement currently in force between Metropolitan Life Insurance Company and the International Union of Operating Engineers, Local 796.