Ontario Public Service Employees Union v. The Crown In Right of Ontario, 1992 CanLII 6793

[1992] OLRB Rep. December 1155

2471-89-R Ontario Public Service Employees Union, Applicant v. The Crown In Right of Ontario as represented by the Centennial Centre of Science and Technol­ogy (Ontario Science Centre), and Mil-Dom-Ex Packaging, Respondents

BEFORE: R. 0. MacDowell, Alternate Chair, and Board Members G. 0. Shamanski and C. McDonald.

APPEARANCES: Kevin Whitaker, Sherry Currie, Tony Petti and Manlio Spessot for the applicant; Peter M. Whalen, John Guthrie and Robert Guthrie for the respondent company; no one appearing on behalf of the respondent Crown.

DECISION OF R. O. MacDOWELL, ALTERNATE CHAIR, AND BOARD MEMBER G. O. SHAMANSKI; December 7, 1992

1. This is an application under the Successor Rights (Crown Transfers) Act. It is one of a number of cases currently before the Board, in which OPSEU claims that it has acquired bargain­ing rights for the employees of a business that has contracted to provide services to the Crown. Because these cases involve similar themes, the decisions are being released contemporaneously. The sections of the Crown Transfers Act which are immediately relevant are as follows:

1.-(1)(t) "transfer" means a conveyance, disposition or sale;

(h) "undertaking" means a business, enterprise, institution, program, project, work or a part of any of them.

2.-(1) Where an undertaking is transferred from the Crown to an employer and a bargaining agent has a collective agreement with the Crown in respect of employees employed in the under­taking, the employer is bound by the collective agreement as if a party to the collective agree­ment until the Board declares otherwise.

4.-(1) Where an undertaking was transferred from the Crown to an employer or from an employer to the Crown and an employee organization, trade union or council of trade unions was the bargaining agent in respect of employees employed in the undertaking immediately before the transfer and,

(a) a question arises as to what constitutes a unit of employees that is appropri­ate for collective bargaining purposes in respect of the undertaking; or

(b) any person, employee organization, trade union or council of trade unions claims that by virtue of section 2 or 3, a conflict exists as to the bargaining rights of the employee organization, trade union or council of trade unions,

any person, employee organization, trade union or council of trade unions concerned may apply to the Board, in the case of the transfer of the undertaking to an employer, or to the Tribunal, in the case of the transfer of the undertaking to the Crown, and the Board or the Tribunal, as the case requires,

(c) may determine the composition of the unit of employees referred to in clause (a);

(d) may amend, to such extent as the Tribunal or the Board considers neces­sary,

(i) any bargaining unit in any certificate issued to any trade union or council of trade unions,

(ii) any bargaining unit defined in any collective agreement;

(iii) any unit of employees determined by the Tribunal to be appro­priate for collective bargaining purposes in respect of the under­taking, or

(iv) any unit of employees that is designated by the Lieutenant Gov­ernor in Council as an appropriate bargaining unit for collective bargaining purposes in respect of the undertaking.

(2) Where an undertaking is transferred from the Crown to an employer or from an employer to the Crown. any person. employee organization, trade union or council of trade unions may apply to the Board, in the case of the transfer of the undertaking to an employer, or to the Tri­bunal, in the case of the transfer of the undertaking to the Crown.

(a) within sixty days after the transfer of the undertaking; or

(b) within sixty days after written notice is given by the employee organization. trade union or council of trade unions of desire to bargain to make or renew, with or without modifications, a collective agreement,

and the Board or the Tribunal, as the case requires, may terminate the bargaining rights of the employee organization, trade union or council of trade unions bound by a collective agreement in respect of employees employed in the undertaking or that has given notice, as the case may be, if in the opinion of the Board or the Tribunal the transferee of the undertaking has changed the character of the undertaking so that it is substantially different from the undertaking as it was carried on immediately before the transfer.

5.-(1) Notwithstanding section 2, where an undertaking is transferred from the Crown to an employer who intermingles the employees employed in the undertaking immediately before the transfer with employees employed in one or more other undertakings carried on by the employer or an undertaking is transferred from an employer to the Crown and employees employees employed in the undertaking immediately before the transfer are intermingled with employees employed in other undertakings of the Crown and an employee organization, trade union or council of trade unions that is the bargaining agent in respect of employees employed in any of the undertakings applies to the Board, in the case of the transfer of the undertaking to an employer, or to the Tribunal, in the case of the transfer of the undertaking to the Crown, the Board or the Tribunal, as the case requires.

(a) may declare that the employer or the Crown. as the case may be. is no longer bound by the collective agreement referred to in section 2 or 3;

(b) may determine whether the employees concerned constitute one or more appropriate bargaining units;

(c) may declare which employee organization, trade union or council of trade unions shall be the bargaining agent in respect of each such bargaining unit; and

(d) may amend, to such extent as the Board or the Tribunal considers neces­sary.

(i) any certificate issued to any trade union or council of trade unions,

(ii) any bargaining unit defined in any collective agreement,

(iii) any unit of employees determined by the Tribunal to be appro­priate for collective bargaining purposes in respect of any of the undertakings, or

(iv) any unit of employees that is designated by the Lieutenant Gov­ernor in Council as an appropriate bargaining unit for collective bargaining purposes in respect of any of the undertakings.

(2) Where an employee organization, trade union or council of trade unions is declared to be a bargaining agent under subsection (1) and it is not already bound by a collective agreement with the successor employer in respect of employees employed in the undertaking that was transfer­red, the employee organization, trade union or council of trade unions is entitled to give to the successor employer written notice of desire to bargain to make or renew, with or without modi­fications, a collective agreement.

2. The Union contends that a contract between the Ontario Science Centre and Mil­-Dom-Ex Packaging ("Mil-Dom") for the construction and delivery of some crates, constitutes a "transfer of part of an undertaking" from the Crown to Mil-Dom, with the result that the Union's bargaining rights and collective agreement are applicable to Mil-Dom's business - at least for the duration of the contract. Mil-Dom argues, in the alternative that:

(1) There was no "transfer" within the meaning of section 2.

(2) Mil-Dom did not acquire anything from the Crown except payment for the crates it manufactured, and certainly did not acquire part of the Crown's "undertaking".

(3) If Mil-Dom acquired a "part" of the Crown's undertaking for the duration of the contract, section 4(2) of the Act applies because Mil­Dom has "changed the character of the undertaking so that it is sub­stantially different from the undertaking as it was carried on immedi­ately before the transfer". In Mil-Dom's submission the Union's bar­gaining rights should therefore be terminated.

(4) For the duration of the contract there was an "intermingling" with Mil-Dom's employees that warrants a declaration under section 5(a) of the Act that it was not bound by the Crown's collective agreement with the Union.

(5) There was a reversion or re-transfer of the undertaking immediately upon completion of the contract.

The Union agrees with submission (5). It disputes submissions (1)-(4).

3. A hearing in this matter was held in Toronto on December 12, 1990. The Union and

Mil-Dom were both represented by counsel. No one appeared on behalf of the Crown; however, counsel for the Union filed this Agreement:

Board File No. 2471-89-R

BEFORE THE ONTARIO LABOUR RELATIONS BOARD

BETWEEN:

ONTARIO PUBLIC SERVICE EMPLOYEES UNION

Applicant

• and -

THE CROWN IN RIGHT OF ONTARIO as represented by THE CENTENNIAL CENTRE OF SCIENCE AND TECHNOLOGY (ONTARIO SCIENCE CENTRE) and MIL-DOM-EX PACKAGING

Respondents

AGREED STATEMENT OF FACT OF THE APPLICANT, ONTARIO PUBLIC SERVICE EMPLOYEES' UNION AND THE RESPONDENT, THE CROWN IN RIGHT OF ONTARIO as represented by THE CENTENNIAL CENTRE OF SCI­ENCE AND TECHNOLOGY (ONTARIO SCIENCE CENTRE)

1. On or about October 19, 1989, the Respondent, Centennial Centre of Science and Technol­ogy ("the Centre") issued a purchase order (P.O. no. 16093) to the Respondent, Mil-Dom-Ex Packaging ("Mil-Dom-Ex") for the construction of sport show crates.

2. At the time the purchase order was issued, the Applicant, Ontario Public Service Employees' Union, had a collective agreement with the Respondent, the Crown in Right of Ontario, cover­ing employees who performed similar services to those covered by the purchase order.

3. The Applicant, Ontario Public Service Employees' Union, and the Respondent, Crown in Right of Ontario, agree that the issuance of the purchase order constitutes the transfer of an undertaking within the meaning of the Successor Rights (Crown Transfers) Act, R.S.O. 1980, c.489.

4. The Applicant, Ontario Public Service Employees' Union, and the Respondent, Crown in Right of Ontario, are therefore in agreement to the issuing of a declaration by the Board with respect to the instant application in the following form:

The Board hereby declares that by virtue of Section 2(1) of the Successor Rights (Crown Transfers) Act, the Respondent, Mil-Dom-Ex Packaging, is bound by the col­lective agreement between the Management Board of Cabinet and the Ontario Public Service Employees' Union with respect to the following bargaining unit:

All employees of Mil-Dom-Ex Packaging who performed services pursuant to a purchase order issued by the Centennial Centre of Science and Tech­nology (Ontario Science Centre) dated on or about October 19, 1989 (P.O. no. 16093), save and except those employees otherwise excluded from the collective agreement between the Management Board of Cabinet and the Ontario Public Service Employees' Union.

DATED AT TORONTO, this 11th day of DECEMBER, 1990.

'Angela E. Rae" "K. Whitaker"

Signature for the Respondent, Signature for the The Crown in Right of Ontario Applicant, Ontario as represented by the Centennial Public Service Centre of Science and Technology Employees' Union (Ontario Science Centre)

4. As will be seen, the Crown and the Union both agree that the contract with Mil-Dom constitutes a transfer of an undertaking within the meaning of the Crown Transfers Act. The Crown and the union agree that the collective agreement between the Crown and OPSEU applies to the employees of Mil-Dom insofar as those employees were performing services necessary to fulfil Mil-Dom's contract with the Crown. The Union also claims that it became the bargaining agent of those employees for the same period and purpose; that is, for the duration of the contract, and insofar as Mil-Dom's employees were doing work associated with fulfilling that contract.

5. Mil-Dom is not a party to this agreement between OPSEU and the Crown, nor are Mil­Dom's employees. Mil-Dom rejects the legal conclusion to which the Crown and the Union have agreed. Mil-Dom's position is set out in paragraph 2 above.

6. The facts are not in dispute.

7. Mil-Dom runs a packaging business with production facilities in Mississauga, Ontario. The company was incorporated in 1981 and is owned by four individuals. Those individuals have no relationship directly or indirectly with anyone working for the Ontario Science Centre.

8. Mil-Dom's packaging business includes the construction and delivery of wooden crates to a variety of industrial and commercial users. Mil-Dom has never done work for the Science Cen­tre either before or after the contract in question. Mil-Dom has no continuing or even sporadic relationship with this Crown entity, and there is no evidence that Mil-Dom has any relationship with any other manifestation of the Crown.

9. The contract in question is a tiny proportion of Mil-Dom's business. The purchase order from the Science Centre is in the amount of $16,910.00 to which is added $3,818.28 in respect of federal and provincial sales tax. This represents about two per cent of Mil-Dom's total sales for 1989. The five invoices associated with the transaction are among the thirty-five that Mil-Dom worked on in October - November 1989. This is only two per cent of the two hundred and nine invoices processed in that calendar year.

10. The contract with the Science Centre arose as a result of a tender request in the form of a "fax" that was transmitted to a number of companies in the crate construction business. It was what Mil-Dom describes as a "cold call". It was not solicited or anticipated by Mil-Dom, but pre­sumably came because someone at the Science Centre knew of the company's existence and the nature of its business. We do not have the list of companies that received this fax, nor do we know why Mil-Dom was included on this list; however, it clearly had nothing to do with any previous relationship with the Ontario Science Centre. The fax in question reads as follows:

URGENT

FACSIMILE TRANSMITTAL

DATE: October 16, 1989

TO: J. Guthrie – Mil Dom Ex

FAX #: 670-2928

FROM: Tom Kasanda, International Marketing, OSC

FAX #: 416-429-2934

We have an urgent requirement for immediate pricing on the attached items. The need to pro­cure these crates has just been confirmed and delivery of at least 50% of the order will be required October 31, 1989. I wish to select a fabricator by 3:00 pm on Tuesday in order to ini­tiate an order prior to leaving Toronto on business. Please fax your quotation to my attention. Kindly direct any questions to Bob Irving at 429-4100 ext 366. Your understanding and assis­tance in providing an immediate quotation is appreciated.

Sincerely.

Tom Kasanda

International Marketing

11. The request for tender (fax) was supplemented by a "request for quotation" form, which includes this brief description of the work in question:

The Ontario Science Centre has a requirement for prefabricated knock-down re-useable ship­ping crates to store and ship exhibits from its exhibition on 'Sport'. The exhibition will be dis­mantled starting 1 November, t989. Delivery of unassembled crates required on 31 October, 1989

The document then sets out the details of the crates' specifications, construction, materials to be used and necessary fastenings. The request for "quotation" form also contains this advice to poten­tial bidders:

Please quote prices on materials and services listed below subject to the following:

1. Prices must include Federal Sales Tax, unless otherwise requested.

2. The Ontario Science Centre reserves the right to select any or all items from this tender unless the vendor specifically denies this right.

3. Lowest or any tender not necessarily accepted.

4. If unable to meet exact specifications and can advise substitute, please do.

5. QUOTATION MUST BE MADE ON THIS FORM

12. Neither before nor at the time of the contract did the Ontario Science Centre or any other Crown representative advise Mil-Dom of the potential application of the Crown Transfers Act. Nor did anyone suggest that the work or Mil-Dom's employees might be governed by the Crown's collective agreement with the Union. There was no indication from the Crown that when Mil-Dom undertook to supply crates to the Crown's specifications, it was also automatically obliged to make the wages, hours, benefits etc. of its employees conform to those prescribed in the civil service collective agreement. And there was no indication that this unilateral business decision by Mil-Dom would have the effect of making OPSEU the bargaining agent for Mil-Dom's employ­ees, who had no previous contact or relationship with OPSEU.

13. The packaging and display crates which are the subject of the purchase order were man­ufactured in Mil-Dom's own facility, using lumber and hardware that Mil-Dom had on hand or purchased with its own resources in order to fulfil the requirements of the contract. The crates were constructed with the company's own equipment, under the company's own supervision, using the company's own employees. There was no input whatsoever from the Ontario Science Centre, other than the description of the crates that it required. The company did not use or depend upon any skills or "know-how" of employees of the Ontario Science Centre.

14. The company allocated two of its employees to do the rough carpentry work associated with the Science Centre order. Each crate required between six to nine hours' work so that, in total, the thirty-eight crates represent between two hundred and fifty - three hundred work hours in the company's shop. To this must be added the time and effort expended to load and deliver those crates (on the company's own truck using its own driver). However, the two employees in question did not work exclusively on the Science Centre order. That was only part of the work in progress at the time. Workers were shifted from job to job in accordance with the availability of materials and the pressure of delivery dates. Counsel observes that if the Board were disposed to make the declaration to which the Union and the Crown have agreed, it would be very difficult to determine the application of the collective agreement or the extent of the Union's bargaining rights. Those rights might vary from hour to hour, and day to day, depending upon the work in which the shop employees might be engaged from time to time. The position of the truck driver might be even more ambiguous if his delivery schedule included both Science Centre material and packaging items for other customers.

15. There is no evidence that any of Mil-Dom's employees are members of OPSEU, have any desire to be represented by OPSEU or have any former connection with OPSEU or the Crown. There is no evidence that during the currency of the contract OPSEU ever approached these employees or made any effort to represent them. We do not know the current terms and con­ditions of employment for these workers, and therefore cannot determine whether the application of the OPSEU collective agreement would be beneficial or detrimental to them. All that can be said is that if OPSEU's application is granted, their employer's choice of customer may produce an automatic revision of their terms of employment while they are doing particular work. Similarly, they will be automatically represented by a trade union with which they have no previous connec­tion.

16. Mil-Dom has no continuing relationship with the Science Centre, and therefore no direct knowledge of its workings; however, Mil-Dom does not dispute the fact that the Science Centre has a shop with employees having similar skills to its own workers, or that those shop employees working for the Science Centre might in other circumstances have built the crates in question, and have built crates of that kind before. Counsel concedes that, in this sense, work which might have been done by Crown employees was done by Mil-Dom's workers. It is the same kind of work that Crown employees have done before, and we do not know why, in this instance, the Science Centre decided to "contract out" the work rather than have the crates built "in house".

17. It is clear, therefore, that Mil-Dom's employees were performing "functions" which were ordinarily undertaken by Crown employees in the ordinary course of their duties at the Ontario Science Centre; and, but for the "subcontract" to Mil-Dom, those employees would have

built the crates as they had done before. Crating exhibits is a "function" the Science Centre regu­larly does. We do not know the extent to which the Science Centre uses such subcontractors to supplement, or substitute for, the efforts of its own employees.

18. It is this "sub-contracting arrangement" which is the Union's real concern. OPSEU views subcontracting as a loss of work opportunities which would otherwise accrue to the benefit of its members, and argues that if the work is done by another employer, the Crown Transfers Act requires that employer to recognize OPSEU as the bargaining agent for its employees, and to pay them (etc.) pursuant to the OPSEU collective agreement. For OPSEU, the work functions per­formed by its members are a critical "part" of the Crown's "undertaking". When those work func­tions are taken over by the employees of a subcontractor, OPSEU's bargaining rights should follow "the work" - defined as the kind of job functions Crown employees customarily perform.

19. OPSEU relies upon a line of Board decisions beginning with KBM Forestry Consultants Inc., [1987] OLRB Rep. March 399, July 1007, and Charmaines Janitorial Services, [1983] OLRB Rep. Sept. 871, which held that the "functions" performed by the Crown were a "part" of its "undertaking", capable of being "transferred" within the meaning of the Crown Transfers Act. The "functions" of the Crown were defined in terms of the "work" that Crown employees customarily perform. If that "work" was undertaken by a subcontractor, OPSEU's collective agreement fol­lows the work, and binds the subcontractor and its employees.

20. OPSEU asserts that this is the test for a Crown transfer which the Board has recently endorsed, and, in fact, that is the underpinning of item 2 of OPSEU's agreement with the Crown reproduced at paragraph 3 above. OPSEU submits that this agreement reflects the current state of the law, which defines the Crown's undertaking in relation to the functions it performs and the work Crown employees do. Similarly, the declaration set out at item 4 of the agreement is the kind which the Board has typically and recently given under the Crown Transfers Act. OPSEU submits that the agreement was intended to avoid the necessity of a hearing, but, in any event, summarizes the result which flows from the established law as applied the facts of this case. Mil-Dom's concur­rence is not necessary.

21. OPSEU argues that the law in this area has been settled and followed quite recently, and it would be inappropriate to reconsider it now. The respondent replies that this analysis and its consequences were neither envisaged by the Legislature when the Crown Transfers Act was passed in 1977, nor compelled by the statutory language the Legislature actually used.

22. Having outlined the facts, and a brief summary of the parties' positions, we now turn to legal and policy considerations.

[Paragraphs 23 to 169 have been omitted. See Parnell Foods Limited [infra, p. 1164] at paragraphs 61 to 204: Editor]

Decision

170. We are satisfied that, although the respondent Mil-Dom-Ex Packaging and its employ­ees are performing "work" or "functions" formerly done by employees of the Ontario Science Centre, that arrangement does not constitute a "transfer" of "part" of the Crown's "undertaking", within the meaning of the Crown Transfers Act. What the respondent has "acquired", is the right to supply goods and services to the Crown, for a price, using its own tools, materials, equipment, employees, and know-how - in short, using its own undertaking. It has not acquired part of the Crown's undertaking. Having regard to the instrumental approach to which we have referred at length, there is no "Crown Transfer" on these facts.

171. This application is therefore dismissed; and in view of the Board's finding under section 2 of the Crown Transfers Act, it is unnecessary to consider the definition of the bargaining unit, whether there has been an "intermingling", or whether the "character" of the undertaking has been changed.

DECISION OF BOARD MEMBER CAROLE McDONALD; December 7, 1992

1. I have read the majority decision and with the greatest respect I must dissent in part.

2. This application is one of a number of cases currently before the Board as test cases for OPSEU in anticipation of a number of further applications. While I agree with the final decision of the majority, I would continue to follow the jurisprudence set out by the Board in KBM and the cases that followed.

3. The majority in this decision defines the mischief in KBM and Charmaine as the preser­vation of work opportunities enjoyed by Crown employees (#170, p.113). However, the majority in KBM did not deal with that issue and the majority in Charmaine came to the opposite conclu­sion:

We are of the view that the definition of [undertaking' in clause I(I)(h) of the Act does not include the mere performance of labour in itself

We conclude that the term [work' does not refer in itself to the exertion of labour and that in and by itself the performance of labour does not constitute an undertaking (#21 p.877).

4. At the same time, the Boards in KBM and Charmaine refused to require a transfer under the Crown Transfer Act. In doing so, however they did not completely discard the concept of "total business" or "functional economic vehicle". The Boards arrived at a point between the "mere performance of labour" and a "transfer of assets" which was a modified functional eco­nomic vehicle test which could be sensitive to the diversity of Crown undertakings. Each of the cases decided in the KBM, Charmaine, and Dunning constellation of cases found that a Crown transfer had taken place when the transferred work was conducted at a place of operations in which employees in the Crown bargaining unit would have ordinarily performed the work. This is an element of the business carried on by the Crown which can be sufficient in itself to identify a transfer which warrants a continuation of bargaining rights.

5. Here, the employees of Mil-Dom-Ex, though performing "work" or "functions" for­merly done by employees of the Ontario Science Centre, have acquired nothing more than the opportunity to do the work. They have not acquired part of the Crown's undertaking.