The Canadian Textile and Chemical Union v. Union Felt Products (Ontario) Ltd.
[1992] OLRB Rep. July 871
1971-91-R The Canadian Textile and Chemical Union, Applicant v. Union Felt Products (Ontario) Ltd., Almac Products Inc., and Almac Industries Inc., Respondents v. United Steelworkers of America, Upholstering & Allied Industries Division (U.D.), Intervener
BEFORE: M. A. Nairn, Vice-Chair, and Board Members J. A. Ronson and R. R. Montague.
APPEARANCES: N. Roland, L. Ritchie, L. Sutherland and A. Feijo for the applicant; R. A. Werry and S. Caplan for the respondents; P. Turtle and J. O'Connor for the intervener.
DECISION OF THE BOARD; July 15, 1992
1This is an application under sections 1(4) and 64 of the Labour Relations Act (the "Act"). After hearing the evidence of the parties, by decision dated June 2,1992 we directed the filing of written submissions. We have received submissions from the applicant and intervener. We have received no submissions from the respondents pursuant to that decision. The applicant seeks a declaration that there has been a sale of a business and intermingling of employees and inter alia requests that one bargaining unit be described and a representation vote be held in order to determine which of two unions represent the employees in question. The intervener asserts that no sale of a business has occurred but that should the Board conclude otherwise, the Board should exercise its discretion not to order a vote among the employees, or alternatively put certain limits on any voting constituency should a vote be ordered. In that the parties have set out their submissions in writing we do not intend to review them in detail. We note that in his opening comments to the panel counsel for the respondents indicated that the respondents' position was that there had been a sale of a business.
2The background to this application is substantially not in dispute and can be outlined as follows. In late 1988 and early 1989, Union Felt Products (Ontario) Ltd. ("Union Felt") entered into negotiations with the owners of Almac Industries Inc., an unrelated and competitor company, both operating in the textile industry. On October 11, 1989 a deal was closed wherein the business of Almac Industries Inc. was sold to Almac Products Inc. Almac Products Inc. ("Almac") was incorporated specifically for the purpose of making the purchase from Almac Industries Inc. Almac is owned by Union Felt and its officers and directors are Messrs. Irving and Melvin Himel. These individuals are also the owners and directors of Union Felt. All of the business of Almac Industries Inc. transferred, including but not limited to, all machinery, inventories, leasehold improvements, goodwill, and rights and title to patents and brand names.
3The employees of Almac Industries Inc. continued to be employed. That plant is situate on Weston Road in the Municipality of Metropolitan Toronto. The intervener holds bargaining rights for a bargaining unit of employees described as all employees of Almac Industries Inc. in the Municipality of Metropolitan Toronto, save and except certain exclusions (the "Weston" employees). The applicant holds bargaining rights for a bargaining unit described as all employees of Union Felt Products (Ontario) Ltd. in the Municipality of Metropolitan Toronto, save and except certain exclusions. Union Felt operates a plant on Wiltshire Boulevard in the Municipality of Metropolitan Toronto (the "Wiltshire" employees).
4On December 31, 1989 a second transaction took place. Almac transferred what it had purchased from Almac Industries Inc. to Union Felt. Following the sale from Almac to Union Felt on December 31, 1989 the Weston employees continued to be paid by Almac. Mr. S. Caplan, the Vice-President and Corporate Counsel for Union Felt, described Almac as existing at that point as a "payroll company". The two plants continued to operate with separate plant managers. Subsequently, Almac was registered as a business name of Union Felt and since January 1992 all products and invoicing are solely in the Union Felt name.
5Beginning in January 1990 there was discussion of the consolidation of the two operations. They duplicated a number of processes and/or products. In 1990 felt production at Wiltshire was stopped and orders were met with felt supplied by production at the Weston plant. At that time, and although different options were discussed, a decision was made to close the Wiltshire location, to dispose of that property, and move all operations to Weston Road. In the result, in the fall and winter of 1991 the synthetic department was transferred from Wiltshire to Weston. This included both machinery and employees. Employees from Wiltshire were utilized in the transfer to set up the machines and employees were transferred to then run the equipment.
6The overall move was planned to occur over approximately a two year period. In August 1991 Wiltshire employees were called to a meeting by the Himels and the planned integration of the two operations at the Weston location was outlined to them. Representatives of both trade unions were present. Prior to that, the representative of the applicant asked for and received a tour of the Weston plant. At the meeting Mr. M. Himel made clear an intention to integrate the Wiltshire and Weston operations. The intervener's representative was of the view that this was however conditional, and that he understood that even if the integration occurred, two separate bargaining units operating under two separate collective agreements would continue even at one plant. However we are satisfied from a review of the evidence that at that meeting a clear intention to integrate the operations at the Weston Road location was disclosed and further, that the Himels' indicated that they would continue to apply both existing collective agreements until such time as the two unions or the Labour Board had determined any issue of representation. The representatives of the respondents have~ throughout these proceedings, attempted to avoid becoming caught in what they see as an issue for the employees and the two unions involved. The representatives of both unions identified potential labour relations difficulties with regard to issues of lay-off, bumping, posting rights, and seniority rights and expressed their concerns at that meeting. Following the August meeting the union representatives had brief discussions but were unable to come to any resolution.
7In the result, employees, for example from the synthetic department, that transferred to Weston continued to be treated as members of the "Wiltshire" bargaining unit and were paid and dealt with according to the applicant's collective agreement. Employees from Weston continued to be dealt with according to the intervener's collective agreement.
8At the time of this hearing it was apparent that the two-year time frame for total integration of the operations was no longer viable. Union Felt had been unable to find a buyer for the Wiltshire property. No specific plans existed for the movement of the balance of equipment and there is no longer an established intention to move everything to Weston Road. In the present economic circumstances the cost of moving from Wiltshire is prohibitive. The remaining identifiable intention is to close the Wiltshire plant at some point and to somehow integrate the operations.
9It is the intervener's contention that employees at Weston Road are employed by Almac and that no sale of a business to Union Felt has occurred. While the facts are perhaps somewhat unusual we do not accept that submission. It is clear that Almac was created for the sole purpose of facilitating the sale of Almac Industries Inc. to Union Felt. Union Felt now owns and controls all of the business of its previous competitor Almac Industries Inc. That is the operative transaction in these particular circumstances. The separation of the payroll function performed by Almac is consistent with the Himels' intention to treat the entities separately in that they bear different legal responsibilities to each of two separate bargaining units and bargaining agents. That is the only function performed by Almac and Almac itself is now a registered business name of Union Felt. There is no basis to accord Almac a separate employer identity in these circumstances. There is no doubt that there is only one employer. While the employees at Weston may identify themselves as "Almac" employees (not surprising perhaps, having been employed by Almac Industries Inc.) we are satisfied that that business has been purchased by Union Felt Products (Ontario) Ltd. Contrary to the intervener's submission, this finding is entirely consistent with the purpose of section 64, to preserve bargaining rights when the legal identity of the employer has changed. The difficulty in this case arises because two trade unions hold bargaining rights for similarly described employees within the same geographic area now employed by the same employer. Simply put, the bargaining rights held by the applicant and intervener described in their respective recognition clauses now overlap. This raises the issue of whether there has been an intermingling within the meaning of section 64(6) of the Act and if so what consequences flow. Should the bargaining units now be described more specifically such that the applicant's bargaining rights be referable to the Wiltshire location and the intervener's bargaining rights be referable to the Weston location or is it more appropriate that one bargaining unit be described?
10In addition to the facts already outlined, the degree of integration of the two operations can be summarized as follows. While the two physical operations have not been integrated according to the original plan, there has been movement of work between the plants. All felt production at Wiltshire has stopped and any and all felt production is being performed at Weston. As a result of this reduction of work at Wiltshire at least one employee transferred to another area in the Wiltshire plant. The synthetic line has moved from Wiltshire to Weston. Employees from Wiltshire were used to move and to set up the machinery at Weston, and operators from Wiltshire were then transferred to Weston. For a four to five week period during the transition, the machines were operated on a night shift and the employees were supervised by the Weston night crew supervisor. There has been a reduction in picker room work at Wiltshire and Mr. Marshall, the plant manager at Wiltshire, confirmed that at least some of this work has transferred to Weston. Shoddy production is being performed at Weston. No new raw material is being ordered for shoddy production at Wiltshire and this work will (if it has not already) cease at Wiltshire. It is Mr. Marshall's belief that while there has been a reduction in sales, a lay-off at Wiltshire was at least in part a result of shoddy production being performed at Weston and then purchased by Wiltshire. Material handlers at Weston are dealing with raw material and inventory for all production at Weston including the synthetic line and the attendant warehousing has shifted from Wiltshire to Weston. Similarly, truck drivers are dealing with product from both locations. Both existing collective agreements cover both material handlers and truck drivers. There has been one complaint as between Weston and Wiltshire drivers as to who was entitled to certain preferred loads, a matter based at least in part on seniority. The order desk at Wiltshire has been closed and an employee at Weston operates an order desk and schedules the machines for both locations. The representative of the Wiltshire health and safety committee has been asked to inspect the Weston premises. In that there are no physical barriers between the transferred Wiltshire employees and the employees at Weston, health and safety problems in the Weston plant potentially affect both groups of employees equally. The employer has attempted to maintain separate lines of supervision between employees from Wiltshire and employees from Weston.
11Both trade union representatives identified a number of potential difficulties arising from the integration of the operations and attempting to maintain and administer two separate collective agreements. They are not difficult to anticipate and include primarily the difficulty of allocating scarce or preferable work as between employees whenever seniority is a factor. There is the difficulty for each bargaining agent in determining the precise ongoing nature of the constituency that it represents for purposes of bargaining and then asserting those rights on employees' behalf, for example, where work is shifted, where employees are being recalled, or to take an existing example, where work is being performed without regard to its origin, as with the material handlers and truck drivers. The only unusual feature in this case is that the original plan for complete integration, while not changed, has been put on hold due to other economic variables.
12Whether intermingling is described as "of the employees" or "of the business" we are satisfied on the facts outlined that intermingling has occurred. What then, from a labour relations point of view? The fact that there has not been a complete integration of the two operations is not determinative of any result. The question is whether the labour relations difficulties that are contemplated by section 64(6) have, or are likely to, arise, and if so, how best to resolve the bargaining unit configuration and any resulting issue of representation. This is not a case where employees from a non-union environment are intermingled with employees of a unionized environment. In that case, the same conflicts may not arise as clearly do arise in circumstances where the employer is confronted with applying two sets of rules arising from separate collective agreements to a group of employees.
13We agree with the intervener that existing bargaining rights ought not to be lightly interfered with. The difficulty in this case however, as the applicant points out, is that the existing bargaining rights of both the applicant and intervener have been affected by the business decision of the employer. While we also agree that a finding of intermingling may not preclude the maintenance of two separate bargaining units, we are not persuaded that that is an appropriate result in the circumstances of this case. Having determined that a sale has occurred both trade unions have equal claim to the work being performed in accordance with the recognition clauses in their respective collective agreements. The underlying problem in this case is that they also each have equal claim to bargaining rights for all employees including those historically represented by the other trade union. This is clearly a representation issue.
14To the extent that the intervener seeks to rely on the City of Peterborough [1984] OLRB Rep. Dec. 1752, we prefer and adopt the reasoning in the Municipality of Metropolitan Toronto, [1992] OLRB Rep. March 315 (see particularly paragraphs 56-69 of that decision).
15In the result we conclude pursuant to section 64(6) of the Act that one bargaining unit be described to include all employees represented by the applicant (the "Wiltshire employees") as well as all those employees represented by the intervener (the "Weston employees"). In the circumstances it is appropriate to order a representation vote to determine which of the two trade unions should continue to hold bargaining rights for the one bargaining unit.
16The applicant would have the Board order the vote as of the date of the effective announcement to the employees of the integration, that is August 28, 1991. The applicant argues that all employees including those on lay-off be entitled to vote. It is the intervener's position that should a vote be ordered, only those employees who are actually physically present at the Weston location be allowed to vote. The panel's goal is to structure the vote so that it will reflect the wishes of the employees who have a real and continuing interest in the outcome of that vote. In the circumstances we direct that the voting constituency be comprised of all employees of Union Felt Products (Ontario) Ltd. that fall within the existing bargaining units represented by the applicant and intervener at either location who were employed on September 12, 1991, or who have become employed since that date, and who continue to be employed on the date the vote is taken.
17We have not specifically described one combined unit at this time as we note that certain specific exclusions to the otherwise "all employee" descriptions are described differently as between the two existing recognition clauses. We intend that the voting constituency include the Wiltshire and Weston employees over whom the applicant or intervener currently claim bargaining rights. This includes any employee currently on lay-off who continues to enjoy a right of recall as of the date of the vote under the collective agreement currently applying to that employee. If there is any dispute concerning the voters' list that matter may be dealt with by the panel. The parties can agree to allow an individual to vote and segregate that ballot pending the resolution of any dispute regarding their eligibility to vote should that become necessary.
18This matter is referred to the Manager of Field Services for the purpose of having the parties meet with a Labour Relations Officer to describe the voting constituency set out, to prepare a voters' list and to forthwith conduct the representation vote ordered.