Labourers International Union of North America, Local 1036 v. The Corporation of the City of Sault Ste. Marie, 1991 CanLII 6206

[1991] OLRB Rep. September 1091

1605-91-FC Labourers International Union of North America, Local 1036, Applicant v. The Corporation of the City of Sault Ste. Marie, Respondent

BEFORE: Ken Petryshen, Vice-Chair, and Board Members M. M. Vukobrat and P. V. Grasso.

APPEARANCES: S. B. D. Wahl and William Suppa for the applicant; Roy Bernardi, Terry Ackland and Lone Bottos for the respondent.

DECISION OF THE BOARD; September 9, 1991

Decision

This is an application for a direction that a first collective agreement be settled by arbitration, pursuant to section 40a of the Labour Relations Act.
This application was made on August 9, 1991 and heard on August 28, 1991 in Sault Ste. Marie. At the hearing, the parties advised the Board that, in essence, only one issue stood in the way of concluding a collective agreement. We were advised that there were a few other issues outstanding; however, the parties did not anticipate any difficulty in resolving them. In fact, during the course of a brief recess during the morning, the parties were able to resolve these matters with the result that only one issue kept them apart. The one issue which continued to separate the parties concerned whether the collective agreement would contain a subcontracting provision.
The materials filed by the parties disclosed that there was very little disagreement on the facts. The applicant, the Labourers' Union of North America, Local 1036 ("the Labourers"), called one witness to testify in support of the application. The Corporation of the City of Sault Ste. Marie ("the City") elected to call no evidence. The evidence of Bill Suppa, the Labourers' Business Manager, had the effect of restating the parties' positions rather than disclosing any significant factual dispute. Given the narrow issue to be determined, the nature of the materials filed and the brief viva voce evidence that was called, the Board was able to complete the hearing in one day.
Although the issue separating the parties is rather narrow, it is useful to briefly review the history of the bargaining relationship. By application for certification dated June 25, 1987, the Labourers applied for certification for construction labourers in the employ of the City in the industrial, commercial and institutional sector of the construction industry in the Province of Ontario and construction labourers in all other sectors of the construction industry in OLRB geographic Area #21, save and except non-working foremen and persons above the rank of non-working foreman. The bargaining unit consisted of approximately nine employees employed in connection with the construction of the Salmonid Fish Hatchery in the City. (We note that the Board also had before it an intervener's application for certification by the Carpenters' Union.) In its reply to the application, one of the positions the City took was that the Canadian Union of Public Employees, Local No. 3 ("CUPE") was the bargaining agent of the employees who may be affected by the application. Although it received timely notice of the hearing, the City did not attend the hearing held on August 6, 1987. CUPE did attend the hearing. It is clear from the decision the Board issued certifying the Labourers for the bargaining unit it sought that CUPE did not take the position at the hearing that the bargaining unit proposed by the Labourers conflicted with its bargaining rights. In its decision, the Board noted the agreement of the parties that the Labourers' bargaining unit "does not cover any of the non-construction activities (and specifically the maintenance activities) covered by the respondent's (the City's) collective agreement with Local 3, Canadian Union of Public Employees".
It is unnecessary to set out in great detail the reason why the City did not appear at the August 6 Board hearing nor the extent of the proceedings which the City pursued subsequent to the hearing. In essence, the City felt it was denied the right to a fair hearing by the Board. By letter of August 10, 1987 the City requested reconsideration of the Board's decision and in a decision dated October 9, 1987 that request was denied. The City commenced judicial review proceedings on November 25, 1987. The Divisional Court dismissed the application for judicial review on October 5, 1988. By notice of motion dated October 20, 1988, the City applied for leave to the Court of Appeal. The Court of Appeal denied leave to appeal.
During the course of the above proceedings, the Labourers and the City reached certain understandings. By letter dated October 8, 1987 from its counsel, the City undertook "not to let any contract or retain any services for the use of non-union labourers or carpenters until such time as the issue of certification has been resolved". In January 1988, the City undertook, on a "without prejudice" basis, to abide by the terms of the Labourers' Provincial Collective Agreement. The parties also agreed that while the certificates were being contested there would be no bargaining in the non-ICI sectors.
The first negotiating meeting took place on October 27, 1989. The last meeting prior to the filing of this application occurred on July 8, 1991 when the parties met with a conciliation officer. By notice dated July 15, 1991 the Minister of Labour informed the parties that he would not appoint a Conciliation Board. For our purposes, it is not necessary to review in detail what occurred during bargaining. However, two aspects of the negotiations which are central to this application are worth reviewing in some detail. The first concerns the City's position on who it intended to employ to perform work under the Labourers' collective agreement and the second concerns the subcontracting issue.
During the course of bargaining in the Spring of 1991, B. Suppa asked R. Bernardi, who handled the negotiations on behalf of the City, whether the City intended to hire members of the Labourers to perform work falling within the Labourers' bargaining unit. Mr. Bernardi was quite unequivocal when he responded that the City did not intend to employ directly members of the Labourers. The City explained that this was so because the work which the Labourers' members would perform was being performed and has always been performed by City employees represented by CUPE. The City expressed the view that it first had an obligation to its own employees.
From the outset of the negotiations, the City indicated it would not agree to a subcontracting provision of the sort that is commonly found in construction agreements. The Labourers initially proposed the following clause:

22.01 The Employer agrees to contract, subcontract, award, assign, or in any way transfer work covered by this Collective Agreement only to others who are in contractual relations with the Union.

The Labourers subsequently amended its subcontracting proposal to read as follows:

22.01 The employer agrees to contract or subcontract, award or assign or in any way transfer work covered by this Collective Agreement only to those contractors who agree to perform such work in accordance with all the terms and conditions of the Collective Agreement.

22.02 In the event that such contractors referred to in Article 22.01 fail to perform such work in accordance with the terms and conditions of this Collective Agreement, the employer agrees that it will be responsible for such violation and fully liable in damages as if the employer had committed the violation itself.

In response to a request from the Labourers, the City proposed the following wording for a clause concerning the contracting or subcontracting of work:

22.01 The parties agree that the Employer has the right to contract, subcontract, award, assign or in any way transfer work covered by this collective agreement to others, whether or not such others are in contractual relations with the Union.

The City's reasons for the position it took at the bargaining table on the issue of subcontracting are contained in a letter from Mr. Bernardi to Mr. Suppa dated May 24, 1991, the relevant portions of which are as follows:

I do not agree with your interpretation of the City position on the contracting out provisions of the collective agreement.

The City is interested in protecting its right to contract out work to any public bidder, regardless of whether such contractor is union or non-union, has agreements with Local 1036 or any other construction union.

The City has preserved its right to contract out its work in its collective agreements with other City employees under the jurisdiction of C.U.P.E.

The City does contract out work in the ICI. sector to contractors certified by Local 1036 as required by the terms of the Provincial agreements. Therefore, members of Local 1036 do benefit from City work performed by contractors.

Your proposal on the contracting out provisions would effectively force contractors in the non-ICI. sector to enter into a contractual relationship with Local 1036 in order to be able to bid for City work. This would be a back door approach to the certification of these contractors by Local 1036, who have the right to organize and obtain bargaining rights for such employees.

In the circumstance of work regularly and normally performed by City employees, the City will abide by its collective agreements with C.U.P.E., and its own employees will continue to be utilized for the City's ongoing requirements.

In its submissions at the hearing, the City reviewed the position it took at the bargaining table. Mr. Bernardi emphasized that the City's primary role was not in the construction industry and that its position had to be viewed in that context. He stated that the City is accountable to approximately 80,000 ratepayers and had the obligation to award contracts to the lowest bidder able to perform the required work. He also noted that the City felt obliged to ensure that everyone, whether union or not, had access to City work. Mr. Bernardi stated that accepting either of the restrictive subcontracting provisions proposed by the Labourers would be inconsistent with its obligations as a municipal government. Mr. Bernardi pointed out that no restrictions on subcontracting were a part of the other bargaining relationships it has with various trade unions. The City was complying with the subcontracting provision in the Labourers' Provincial Collective Agreement but this was a collective agreement the City became bound to by law and did not itself negotiate.
For our purposes, the relevant statutory provisions are as follows:

40a.-(1) Where the parties are unable to effect a first collective agreement and the Minister has released a notice that it is not considered advisable to appoint a conciliation board or the Minister has released the report on a conciliation board, either party may apply to the Board to direct the settlement of a first collective agreement by arbitration.

(2) The Board shall consider and make its decision on an application under subsection (1) within thirty days of receiving the application and it shall direct the settlement of a first collective agreement by arbitration where, irrespective of whether section 15 has been contravened, it appears to the Board that the process of collective bargaining has been unsuccessful because of,

(a) the refusal of the employer to recognize the bargaining authority of the trade union;

(b) the uncompromising nature of any bargaining position adopted by the respondent without reasonable justification;

conclude a collective agreement; or (d) any other reason the Board considers relevant.

The Labourers argued that it is entitled to a direction since the process of collective bargaining has been unsuccessful for the reasons set out in 40a(2)(a), (b) and (c). However, the central feature of the Labourers' position is that by taking the position it has during bargaining, the City has refused to recognize the bargaining authority of Labourers. Having reviewed all of the material before us and the parties' submissions, the Board has concluded that the Labourers' position has considerable merit.
As a result of a certificate issued by the Board to the Labourers in 1987, the Labourers have bargaining rights for a bargaining unit of construction labourers employed by the City in the non-ICI sectors of the construction industry in Board Area #21. No other trade union holds bargaining rights for construction labourers employed by the City. CUPE did not oppose the Labourers' application in 1987 and it agreed that its bargaining rights pertained to maintenance work. The City takes the view that some of the work that would fall under the Labourers' agreement has been performed in the past by CUPE members and it feels an obligation to ensure that CUPE members continue to perform this work. It is this approach which led the City to advise the Labourers during bargaining that it did not intend to hire labourers under the Labourers' agreement. In the Board's view, this is a clear case of an employer refusing to recognize the bargaining authority of a trade union. It is the Labourers that have the bargaining rights for construction labourers and the City fails to recognize this when it says that CUPE members will be assigned work of construction labourers. It is not our view of the situation that the City has any anti-union sentiments towards the Labourers. When Mr. Bernardi indicates that the City feels an obligation to its current employees, we have no doubt that its approach is genuine. The difficulty, however, is that such an approach fails to recognize the bargaining authority of the Labourers and this is one of the reasons why the negotiation process between the Labourers and the City has not been successful.
The effect of the City's approach as addressed above is compounded by the City's refusal to include one of the subcontracting clauses proposed by the Labourers. By saying it will not hire persons to perform construction labourers' work under a Labourers' collective agreement and by not agreeing to a subcontracting provision, the Labourers' bargaining rights are virtually meaningless.
In The Metropolitan Toronto Apartment Builders Association, [1978] OLRB Rep. Nov. 1022, the Board made the following comments concerning subcontracting provisions:
In arriving at this conclusion the Board recognizes that, in the context of the construction industry, a sub-contracting clause may serve a purpose parallel to that of the union shop, or union dues provision, in the industrial setting. Both types of clauses can be construed as attempts by trade unions to enhance their strength as collective entities. At this point, however, the comparison ends. Union security in the industrial setting appears to refer primarily to provisions, such as union shop clauses and dues shop clauses, which serve to ensure that all members of the bargaining unit contribute to the financial support of the bargaining agent. In the construction industry, on other other hand, union security appears to be more related to contractual provisions recognizing the union's claim to particular work, i.e., the sub-contracting provisions. These provisions appear to be primarily directed at preserving a union's work jurisdiction so that it can continue to provide work for its members. The construction union in so doing is then able to maintain its own strength as a collective entity.
The object of a sub-contracting clause is to preserve the work jurisdiction of the trade union which is the beneficiary of the clause. While it may be that a sub-contracting clause, such as the one contained in the MTABA-Council agreement, has a much greater impact than the one contained in the agreement between Local 1 and the MCAT, both share a common purpose - to ensure that any work contracted-out is performed only by members of the union which has obtained the sub-contracting clause. In both cases, moreover, this purpose is carried out by the placing of restraints upon the tendering of sub-contracts, restraints that prevent the members of other unions from gaining access to the work. In the light of these considerations it would not be consistent for the Board to distinguish between forms of sub-contracting arrangements. In the Board's view, all such arrangements fall outside the scope of section 38(1)(a), and must find their legal jurisdiction elsewhere in the Labour Relations Act. If the sub-contracting provision in the MTABA-Council agreement is illegal then so must be the sub-contracting clause in the Local l-MCAT agreement.
We note the above reference to indicate the implications for the Labourers in not having a subcontracting provision in the circumstances of this case. It is unnecessary for us to decide whether the City's uncompromising position on the subcontracting position is without reasonable justification.
Having concluded that the negotiation process for a first collective agreement between the City and the Labourers has been unsuccessful as a result of the City's refusal to recognize the bargaining authority of the Labourers, the Board hereby directs that the first collective agreement be settled by arbitration.