CAW-Canada v. Charterways Transportation Limited, 1994 CanLII 9995

[1994] OLRB Rep. October 1296

3583-92-R; 3584-92-R National Automobile, Aerospace and Agricultural Imple­ment Workers Union of Canada (CAW-Canada) and its Local 222, Applicant v. Charterways Transportation Limited, The Corporation of the Town of Ajax, Responding Parties

BEFORE: Roman Stoykewych, Vice-Chair and Board Members 6. 0. Shamanski and B. L. Arm­strong.

APPEARANCES: L. N. Gottheil, Gord Vickers, Simon Threlkeld and Susan Collins for CAW Local 222; L. Steinberg, B. Quistgaard and Paul Middle ton for London and District Service Work­ers' Union, Local 220; Thomas A. Stefanik, Bill Heslop and Don Dewar for Charterways Transpor­tation Limited; Richard J. Charney, Rick Parisotto and Terry Barnett for The Corporation of the Town of Ajax.

DECISION OF VICE-CHAIR, ROMAN STOYKEWYCH AND BOARD MEMBER B. L. ARM­STRONG; October 27, 1994

1. This is an application pursuant to sections 1(4) and 64 of the Labour Relations Act.

I

2. Between 1977 and the events giving rise to this application, the responding party Char­terways Transportation Limited (hereinafter "Charterways") had operated certain aspects of the public transit system of the responding party Corporation of the Town of Ajax (hereinafter "Ajax" or "the Town") pursuant to a contractual relationship. The applicant trade union, which had obtained bargaining rights with respect to employees of Charterways engaged in the performance of that contract, asserts that Charterways and the Town are common employers within the mean­ing of section 1(4) of the Act insofar as they exercise common direction and control over the opera­tion of the transit system. In addition, the applicant union claims that the two responding parties have transacted a sale of a business as contemplated by section 64 of the Act by virtue of the Town cancelling its contract with Charterways and "taking back" the operation of the transit system. The respondents deny both allegations.

3. It is the thrust of the union's contention that the Town hired virtually the entire comple­ment of workers engaged in its local bus service formerly managed by Charterways, then used those workers to drive the same buses, on the same routes to the benefit of the same customers without any interruption of service. In the union's submission, the Town has become a successor employer under section 64 and 64.1 of the Act, with the result that the employees' right to union representation continues as well.

4. Interwoven into the merits of this application is the question of the constitutional status of Charterways. Although for many years it had operated its various business concerns throughout Ontario within provincial jurisdiction, including those in the Town, it was pleaded by Charterways, and supported by the Town, that Charterways was a federal undertaking by virtue of its regular inter-provincial activities carried on by some of its Branches and that, as such, it was not subject to the provisions of the Labour Relations Act. The question of the constitutional status of Charter-ways' operations in Ontario, including those in the Town of Ajax, was raised simultaneously in the context of a Ministerial reference before another panel of this Board. In order to prevent undue delay in the determination of the present application and to avoid the unnecessary duplication of litigation, it was determined that the present panel would proceed with the merits of the instant application, but that any decision it would render would be subject to the determination with respect to the constitutional status of Charterways. On that basis, hearings were held on various dates commencing August 3, 1993.

5. In the course of these proceedings, in a decision dated November 9,1993, (Charterways Transportation Limited, [1993] OLRB Rep. Nov. 1125), the panel hearing the Ministerial refer­ence determined that the operations of Charterways were a federal undertaking for constitutional purposes and that, therefore, its labour relations matters fell within federal jurisdiction. A hearing was held on November 29, 1993, to consider the submissions of the parties to the present applica­tion with respect to the status of the section 1(4) application in light of that finding. After consider­ing those submissions, the present panel of the Board dismissed the application insofar as it related to section 1(4) of the Act. Under the circumstances of this case, it is clear that any order or direc­tion that could be of practical significance to the parties would necessarily entail this Board assum­ing jurisdiction over the labour relations matters of Charterways, and thus, with respect to an entity over which this Board has no jurisdiction by virtue of the division of powers as contemplated by the provisions of the Constitution Act. Accordingly, the Board advised the parties on December 10, 1993 that it would no longer entertain the allegations concerning common direction and control pursuant to section 1(4). Thereafter, the scope of these proceedings was limited to those matters arising out of the applicant's claim that a sale of a business had been transacted as between Char­terways and the Town.

6. Neither the Town nor Charterways maintained that the federal nature of Charterways' undertaking presented a constitutional bar to our making a determination with respect to the sale of business allegation. However, by virtue of the determination that Charterways was a federal undertaking, any "sale" that might have occurred must now be characterized as one transpiring as between a predecessor employer in federal jurisdiction and a successor employer that operates within provincial jurisdiction. This raised the somewhat recondite issue of the precise timing of the alleged transaction and more particularly, the question of the applicability of the newly-proclaimed provisions of section 64.1 (1) of the Labour Relations Act. That section came into effect as of Janu­ary 1, 1993, and provides as follows:

64.1-(1) Section 64 applies with respect to the sale of a business when,

(a) before the sale, collective bargaining relating to the business by the prede­cessor employer is governed by the laws of Canada; and

(b) after the sale, collective bargaining relating to the business by the successor employer is governed by the laws of the Province of Ontario.

7. Both the Town and Charterways argued that the provision was of no assistance to the applicant in this case because any transaction that may have occurred took place at some point in the evening of December 31, 1992. The respondents also argued that the provisions of section 64.1 (1) had no retrospective effect and applied only to "sales" that occurred after January 1,1993. It was conceded by the union that prior to January 1, 1993, the statute did not contemplate a sale of business from a federal to a provincial undertaking. (See Durham Transport [1978] OLRB Rep. Sept. 818; Municipality of Metropolitan Toronto [1975] OLRB Rep. Oct. 777). However, the applicant based its claim as to the applicability of that provision on the ground that the triggering events took place on or after January 1, 1993 and, in the alternative, that the provision had retro­spective effect so as to apply to the transaction before us.

8. Since the question of the applicability of section 64.1(1) necessarily depends upon cer­tam findings that are essential to our determination as to whether there was a "sale" pursuant to section 64 of the Act, we reserved our decision on that matter and render our reasons for ruling herein.

II

9. The Town of Ajax is a municipal corporation charged with the responsibility of adminis­tering the affairs of the Town of Ajax in the Regional Municipality of Durham, and in particular, of providing a transit system to the public. Pursuant to this charge, the Town has established a Public Transit Department, known as "Ajax Transit", which provides to the public a regularly scheduled bus service. The scale of operations of the Ajax Transit system has expanded dramati­cally over the past twenty years, commensurate with the growth of the Town itself. It appears that in the mid-1970's, the "system" consisted of two buses operating on a single route. By contrast, at the present time Ajax Transit operates twenty-two conventional buses over eight regularly-sched­uled routes in or around the Town, as well as a "Handi-Trans" programme, in which four vehicles equipped for the needs of the elderly or persons with disabilities are operated on a dispatch basis.

10. At all relevant times the Town has owned the buses, bus shelters, bus stops and virtu­ally all other tangible assets used in connection with the operation of the system. Since 1989, it has also owned the Transit facility in which those buses are garaged, cleaned and repaired. However, until the events which gave rise to the present application took place, the Town had never oper­ated Ajax Transit directly. Instead, it has contracted for the provision of drivers, mechanics and cleaners who would operate the system. From 1977 to December 31, 1992, that contract was with the responding party Charterways.

11. Charterways Transportation Limited is a large transportation undertaking operating in Canada and the United States. The company provides its transportation services in a number of forms. By far the largest portion of its business consists of the provision of school bus services to local school boards. In this capacity, the company owns and operates approximately 2,500 school buses in Canada, and almost twice that number in the United States. As its name suggests, Char­terways also operates bus charter services that are available to the general public, and for which at least a portion of its school bus fleet is utilized. Finally, Charterways is in the business of operating transit systems for municipalities on a contract basis. In Ontario, Charterways operates or has operated three such systems, one of which was for the Town of Ajax.

12. The company's head offices in Canada are located in London, Ontario, but it has estab­lished numerous sub-offices, called "Branches", throughout Ontario that are responsible for the day-to-day functioning of its various operations. Until 1993, Charterways' Ajax Branch was involved in the school bus and charter as well as the transit aspects of its operations. With respect to the former, Charterways owns and operates approximately 100 school buses out of its own Ajax facility pursuant to contracts with the several Boards of Education in the Durham and Scarborough regions, as well as with Ontario Hydro. To operate this system, Charterways employs, on a part-time basis, a large number of school bus drivers. The applicant has not obtained bargaining rights with respect to these employees and the operation of the school bus and charter service has not been substantially affected by the transactions giving rise to the present application. Accordingly, there is no claim with respect to bargaining rights as they may pertain to the employees in Charter-ways' school bus operation.

13. What the applicant seeks is a declaration from the Board that the bargaining rights it obtained with respect to the full-time conventional and Handi-Trans drivers and the mechanics and cleaners employed by Charterways in its Ajax Transit operations have survived the Town's termi­nation of its contract with Charterways and the "take back" of the transit operations. Specifically, the applicant asserts that these rights now attach to the Town of Ajax. Initially, these bargaining rights were obtained in the form of three separate certificates granted by this Board to the appli­cant in April, May and June of 1990 with respect to the above mentioned employees. However, in a subsequent collective agreement, which came into effect as of September 1, 1990, Charterways recognized the applicant as the bargaining agent for those employees in a single combined unit. As well, Charterways recognized the union as the bargaining agent "for any expansion of existing facilities in which work performed that is related to the mechanical maintenance and/or drivers of the Ajax Transit system located in the Province of Ontario". By all accounts, the collective bar­gaining relationship between the applicant and Charterways although brief, had been a harmoni­ous one.

14. The provision of the transit service to the Town by Charterways was regulated by a series of two-year contracts commencing in 1977. Initially, the contractual arrangement dealt only with the provision of a "conventional" bus service that was, as indicated, relatively modest in scale. However, over the years the scope of the operation not only expanded substantially, but by 1991, also included a separate, parallel arrangement for the provision of the Handi-Trans service. Although the specific terms of these rather complex and detailed agreements were modified from time to time, the essence of the arrangements remained the same: the Town supplied its fleet of buses, buildings, bus stops, signs, ticket and payment systems and schedules, while Charterways, on the basis of an hourly rate of actual operation, provided and co-ordinated a complement of trained drivers to operate the buses, and a group of mechanics and cleaners to maintain and repair the fleet. Charterways was also required to provide spare repair parts and fuel for the operation of the buses on an ongoing basis, for which they were reimbursed according to an arrangement set out in the agreement.

15. Initially, the agreement stipulated that the Town's buses would be garaged, repaired and maintained in Charterways' Ajax facility, out of which it also operated its school bus fleet. However, in December 1989, this arrangement was altered with the opening of the Town's own Transit Facility. At that time the transit operations of Charterways were transferred to the Town's facility at 110 Westney Road in Ajax. In operational terms, this meant that Charterways' "Transit Supervisor", who had "hands on" responsibility over the day-to-day co-ordination of the transit aspect of its business, and the drivers who operated the buses, now worked in or out of the Town's Transit Facility. In addition, Charterways' Maintenance Supervisor, and the four Charterways mechanics whose work he oversaw, now performed their work out of the Town's facility. The maintenance supervisor, however, was stationed at the Town's facility only on a part-time basis as he split his attention between the supervision of the mechanics and cleaners at the Transit Facility and of those at Charterways' remaining school bus operations. Finally, Charterways deployed a part-time dispatcher at the Ajax facility. However, Fred Thompson, the General Manager of the Ajax Branch of Charterways, whose responsibilities included both the transit and the school bus operations, was not stationed at the Town's Transit facility. Although a frequent visitor to the Town's transit facility as the company's liaison person with the Town, and although he was the Charterways official responsible for the performance of the contract, he retained his office in the Charterways facility.

16. A review of the terms of the contract, which the evidence disclosed were substantially complied with and was operated on an arm's length basis, reveals that the Town retained a consid­erable degree of control over the operation of the transit system. Primarily, this aspect of the rela­tionship was played out between Fred Thompson and Terry Barnett, the Town's Director of Tran­sit. Barnett was Thompson's counterpart as the liaison person for the Town with respect to the performance of the contract. Barnett, who testified on behalf of the Town, was also the Town offi­cial ultimately responsible for the operation of Ajax Transit, and was actively involved in the oper­ations of that enterprise. The extensive evidence of his activities revealed that his "hands on" man­agerial style meant that there were few aspects of the operation of Ajax Transit that did not bear his personal imprint, and that as a result, Ajax Transit was very much a creature of the Town. Thus, although the contract states rather generally that Charterways was to provide the Town with a "public bus transportation system", as a matter of practise the Town retained virtually complete control over the kind, number and appearance of buses that it would provide to Charterways; the routes and schedules pursuant to which the system would operate; the rates and method of collec­tion of fares, including the introduction of new technology in this respect; the regimen and stan­dards of repair, maintenance and cleaning of the fleet of buses, including the qualifications of the mechanics that were to perform the work; the nature, size and appearance of advertising that would appear on the buses; and other sundry details of the operation of the transit system. Cer­tainly as far as the public was concerned, Charterways had no visible presence in the operation of the system: the buses all bore the logos or other identification of "Ajax Transit"; the drivers were required to dress in uniforms that, although belonging to Charterways, identified them as drivers of Ajax Transit; and all informational material provided to the public of course identified the sys­tem as that of Ajax Transit or of the Town of Ajax.

17. For its part, Charterways' principal function under the arrangement was to recruit, hire, train, discipline, schedule and otherwise deploy an appropriately skilled complement of drivers, mechanics and cleaners. This personnel function was an important exception to the otherwise sub­stantial control of the system exercised by the Town and was an area in which Charterways demon­strated a substantial degree of independence. Although according to the terms of the contract the Town could specify that drivers were to be, among other things, "polite and well-groomed at all times", and exhibit such salutary characteristics of bus drivers as maturity, emotional stability, courtesy, self-discipline, and honesty, it was in the field of recruitment and deployment of a skilled transport work force that Charterways exercised its entrepreneurial initiative and contributed its particular expertise.

18. In this respect, the evidence reveals that the large majority of the drivers, mechanics and cleaners working in the transit portion of its Ajax operations were recruited from other aspects of Charterways' organization, including the school bus service in Ajax, and were selected, trained and their employment relationship administered according to methods and procedures established by Charterways. The complement of employees assembled over the years by Charterways to oper­ate the Ajax Transit system exhibited a considerable degree of continuity, as is evidenced by their substantial seniority in both the Charterways system and with Ajax Transit itself. Upon reviewing the evidence, we are satisfied that this element of continuity was crucial to the proper operation of the transit system. In this respect, it is noteworthy that the importance of an identifiable and con­tinuous work force is reflected in the terms of the contract between Charterways and the Town. Thus, one of the obligations that Charterways undertook in the operation of the system was that "the same vehicle operators will be regularly assigned to the Transit System to ensure route familiarity, system continuity, and allow passenger recognition." As we noted earlier, the terms of the contract were substantially complied with. To similar effect, Terry Barnett conceded in his evi­dence the importance of the driver recognition factor, allowing that the goodwill resulting from driver recognition would serve to maintain, if not increase, ridership. More generally, it is clear that Charterways considered its driver complement collectively as an essential asset in the opera­tion of its business as it related to its transit operations. Indeed, the Vice-President of the Cana­dian Division of Charterways, characterized the Charterways work force as a group of "highly qualified professionals" that was the product of considerable investment in terms of training both by Charterways and, indirectly, by the Town itself.

19. The decision to build its own transit facility signalled the first step in the Town's long-range plan to "take back" the operation of its transit system - a matter that was repeatedly charac­terized by Barnett as a "natural progression". Stripped to its essentials, it became increasingly clear to the Town that, with the growth in size of the transit system, it could operate the system more economically by itself than it could by utilizing a contractor to supply its work force. The "take back" process was given considerable impetus in early 1992 when the Town voiced its dissat­isfaction over the implementation of the rate increases set out in the contract with Charterways, and more particularly, upon Charterways' refusal to "voluntarily" forego these increases in the ensuing discussions. Ultimately, after several months of negotiation that bore no tangible results as far as the Town was concerned, Town Council voted on July 20, 1992 to terminate the contract with Charterways as of December 31, 1992 and to commence the operation of the system on its own as of January 1,1993. Even at that point, however, the matter was far from settled, and it was not until August 26, 1992 that the employees of Charterways received notice that their employ­ment would not be continued beyond the termination of the contract with the Town.

20. The task of preparing for the "take back" of the operations commenced in earnest by the fall of 1992. Given that the Town already had in place the material and, in many respects, the organizational elements of the transit system, the decision to run the transit system without the assistance of the contractor did not involve a significant alteration of the method of operation. Indeed, it appears that from the outset, it was the intention of the Town to alter as little as possible tn terms of the operatton of the system. In this respect, the evidence indicates that the transition from Charterways to the Town would have scarcely been noticed by the general public. Terry Bar­nett remained firmly in charge of the Ajax Transit organization. To replace the managerial and supervisory functions previously performed by Charterways personnel, the Town created a new managerial position in Ajax Transit, and hired Ron Roffey to fill it. Roffey, who had previous experience with neither the Town nor with Charterways, commenced his employment in mid-December. In addition, the duties of the Transit Facility's Office Manager were now expanded so as to include certain of the duties previously performed by Charterway's Transit Supervisor.

21. By far the most significant transitional activity engaged in by the Town was the recruit­ment of a work force to operate the transit system. It appears that Charterways, upon the extinc­tion of its transit operations in Ajax, had no comparable employment to offer to its complement of employees working on its Ajax Transit contract. Although it was open for those employees to apply for the part-time jobs in the school bus service, Charterways itself recognized that this was an unacceptable option given the substantially inferior terms and conditions of employment pre­vaihng there. In any event, it appears that few if any of the former Charterways drivers engaged in the Transit aspect of its operation remained with the company after the termination of the contract with the Town.

22. For its part, the Town was of the view that it was under no obligation to keep on the employees formerly employed by Charterways. It was Barnett's evidence that it was the intention of the Town to operate the Transit system on a union-free basis and to hire entirely on the basis of "merit". In this respect, he stated that although the former employees of Charterways were free to apply for positions with the Town, no "preferential treatment" would be accorded them in the open competition for the positions.

23. However, the evidence is clear that the matter of previous employment with Charter-ways was far from being a matter of indifference to the Town. Notwithstanding Barnett's claims that the Town was, in effect, assembling a "new" work force, both the process by which the Town's employee complement was staffed and the result of the hiring process point instead to sub­stantial continuity. Thus, contrary to the Town's human resources policy concerning hirings, the former drivers of Charterways were given special advance notice of the competition for the "new" positions. To similar effect, although the hiring process was nominally under the direction of the Town's Human Resources Department, the evidence revealed that the hiring was accomplished as a matter internal to Ajax Transit and that former employees of Charterways previously engaged in the supervision and training of drivers were retained by the Town, at least temporarily, to assist in the hiring process.

24. Most striking of all, however, is the result of the hiring process, in which the Town retained a large majority of the former Charterways employees utilized in the operation of the Transit service. Thus, of the 12 full-time conventional drivers hired by the Town, nine (seven in a full-time capacity, and two in a part-time capacity) had previously worked for Charterways on its Ajax contract. Of the 13 part-time drivers hired by the Town, only two were from the "outside", the remainder being former Charterways drivers. In the case of the Handi-Trans service, all five drivers, including three full-time and two part-time, were retained. In total, of the thirty drivers hired by the Town, twenty-three, or almost four-fifths of its "new" operator complement, previ­ously performed that work for Charterways on its Ajax contract. Cleaners and maintenance per­sonnel hired by the Town exhibited a similarly high degree of success in obtaining jobs with the Town: two full-time mechanics and one part-time cleaner hired by the Town were previously employed by Charterways in its Ajax Transit operations; only one full-time cleaner was hired from "outside". These employees, along with the small number hired from "outside", were all given offers of employment that was to commence on January 1, 1993. The evidence revealed that the hirings were confirmed by Town council later in January. In sum, although the Town did not retain the entirety of the complement of employees previously employed by Charterways to perform its contract with Ajax Transit, we are nonetheless satisfied that what was retained was a substantial majority of them and that they constituted an identifiable, core group.

25. However, the Town retained virtually no other aspects of Charterways' business. In contrast to the complement of drivers, mechanics and cleaners which, as indicated, was in substan­tial part retained, none of Charterways' managerial and little of its supervisory staff engaged in the performance of work at Ajax Transit remained with the Town upon the completion of the con­tract. In effect, the organization operating the transit contract in Ajax was disbanded by Charter-ways, and its managerial personnel was assigned elsewhere. Thus, Sherry Strong, the Transit Supervisor responsible for the day-to-day co-ordination of the transit operations, remained an employee of Charterways albeit in another capacity. Fred Thompson, the General Manager of the Ajax Branch, was redeployed to manage another Charterways Branch. As indicated above, in their place the Town hired persons from outside the Charterways organization to perform their functions. Nevertheless, certain parts of the Charterways supervisory complement remained intact in the Town's operations: the Town retained the services of Les Rae as supervisor of mechanics and Jack Kennedy as part-time dispatcher. Both had performed similar functions for Charterways.

26. Similarly, the Town retained little or none of the tangible assets owned by Charterways since, as we noted above, virtually all the assets utilized in the operation of the Transit system were not only owned, but were substantially controlled by the Town throughout the duration of the con­tract. Provision was made to reconcile fuel accounts, tools and other operational items on a detailed and arm's length basis. Aside from a few pieces of furniture which it used in the Transit facility, and the uniforms worn by the drivers, Charterway's transit operations appeared to require the ownership of very few tangible assets. In any event, both the furniture and the uniforms were retained by Charterways upon the termination of the contract.

27. As indicated earlier, Charterways' contract with the Town expired on December 31, 1992, and although there was substantial dispute in the evidence as to a purported "early termina­tion" of the contract, it is clear that Charterways wound up its operations at the conclusion of the bus services that evening. Final fuel levels were reconciled, a dispute concerning parts inventory was deferred, and the sundry details relating to the termination of Charterways' activity appear to have been completed in the evening of December 31, at which time Charterways vacated the Town's facility. Although the Town engaged two persons to perform a special New Year's Eve ser­vice that evening on a casual basis, regular operations, utilizing the complement of drivers it had hired, commenced the next day. To the general public unaware of the termination of Charterways' contract, there would be no noticeable difference in the operations. Similarly little change would be appreciated from the perspective of the employees: substantially the same drivers would be per­forming the same work to achieve the same purpose within the same transit system, albeit for a dif­ferent employer and under a different supervisor. Under these circumstances, the trade union claims, the Town has transferred to itself a part of Charterways' business.

28. The question before this Board, then, is whether in these circumstances the Town's acquisition of the employee complement formerly engaged by Charterways is sufficient to trigger the "sale" provisions of the Act.

III

29. Section 64 of the Act reads in relevant part: 64.(l) In this section, "business" includes one or more parts of a business; ("entreprise")

"predecessor employer" means an employer who sells his, her or its business; ("employeur precedent")

"sells" includes leases, transfers and any other manner of disposition; ("vend")

"successor employer" means an employer to whom the predecessor employer sells the business. ("employeur qui succede")

(1.1) This section applies when a predecessor employer sells a business to a successor employer.

(2) If the predecessor employer is bound by a collective agreement, the successor employer is bound by it as if the successor employer were the predecessor employer, until the Board declares otherwise.

(2.1) If the predecessor employer is a party to any of the following proceedings, the successor employer is a party to the proceeding as if the successor employer were the predecessor employer, until the Board declares otherwise:

1. A proceeding before the Board under any Act.

2. A proceeding before another person or body under this Act or the Hospital Labour Disputes Arbitration Act.

3. A proceeding before the Board or another person or body relating to the collective agreement.

(2.2) If the predecessor employer has given or been given a notice relating to bargaining for a collective agreement or has requested the appointment of a conciliation officer or mediator, the successor employer is considered to have given or been given the notice or to have made the request, until the Board declares otherwise.

(3) If, when the predecessor employer sells the business, a trade union is the bargaining agent for any employees of the predecessor employer, has applied to become their bargaining agent or is attempting to persuade the employees to join the trade union, the trade union continues in the same position in respect of the business as if the successor employer were the predecessor employer.

30. The Board has long recognized that the purpose of the "sale of business" provisions in the Act is to provide a degree of stability to a trade union's bargaining rights upon the change of ownership of an undertaking. The successorship provisions of the Act were initially utilized pri­marily with respect to "paper transactions" engaged in for the purpose of eliminating trade union bargaining rights through a change in the identity of the employer. However, the Board has long recognized the further important collective bargaining purpose served in preserving trade union bargaining rights through the various legitimate transactions entailing a change in the identity of the employer (Aircraft Metal Specialities [1970] OLRB Rep. Sept. 702; Marvel Jewellery Limited [1975] OLRB Rep. Sept. 733). The concerns towards which the successorship provisions were addressed, and the labour relations purposes they serve, were set out fully in Metropolitan Parking Inc. [1979] OLRB Rep. Dec. 1193:

In the absence of a successor rights provision any change in the legal identity constituting the employer would destroy subsisting bargaining rights, whether they flow from certification or derive from a collective agreement with the predecessor employer. Incorporation of the busi­ness, its transfer to other individuals, or a change in partnership, would all effect a change in "the employer" even where the plant equipment, products and work force remain substantially the same. The employees might find themselves working at the same plant, at the same machine, under the same working conditions, with the same supervision, doing exactly the same job as they did before~ but as a result of a transfer (of which they may not even be aware) their collective bargaining rights and their collective agreement would disappear. Section 55 [now 64] avoids this destruction of bargaining rights and prevents a dislocation of the collective bargain­ing status quo by transforming the institutional rights of the union and the individual rights of the employees, (both of which are grounded in the statute) into a form of "vested interest" which becomes rooted in the business entity, and like a charge on property, "runs with the busi­ness.

The concept of successorship is an attempt to balance the interests and expectations of parties in the industrial community and preserve both collective bargaining stability and industrial peace. The employer retains his freedom to dispose of all or part of his business; but it is recognized that one cannot realistically expect that the interest of employees will be at the forefront of his negotiations. On the other hand, his employees may have recently struggled to become orga­nized or to achieve a collective agreement. They expect that their statutory right to bargain col­lectively and their negotiated conditions of employment will have some permanence. Their expectations would be frustrated if a transfer of the business terminated both. Of course, the transfer of the business is not the only occurrence which could frustrate employee expectations. A re-organization of the production process, the introduction of "job destroying" technological change or a geographic move beyond the scope of the collective agreement will materially change the industrial relations status quo. A business transfer, however, involves a new employer and raises legal problems of an entirely different order which cannot be easily accom­modated in bilateral bargaining processes. It is to these problems that section 55 [now 64] is addressed.

31. A collective bargaining status quo is preserved upon a sale of an employer's business by statutorily transforming the bargaining rights that had previously been defined with respect to the employees of a particular employer so that they now attach to a "business" entity. In analyzing the circumstances of the alleged sale, the Board pays particular attention to elements of continuity between the predecessor's and successor' business. In that respect, the Board has found it useful to "trace" the elements of that business to ascertain whether they have been transferred to the pur­chaser so as to constitute a transfer of at least a part of the business. The matter is one of charac­terization of fact and in that respect, the Board has made it very clear that what constitutes the sale of a business under section 64 of the Act is not a matter for which there is a single decisive test. In recognition of the great diversity of commercial affairs, the statute does not contemplate an exhaustive definition of the term "business" and the breadth of the definition of "sale" similarly bespeaks the need for a case by case elaboration of the term in light of labour law policy. The Board commented in Culverhouse Foods Ltd. [1976] OLRB Rep. Nov. 691 that although the range of such elements is potentially endless, the principal focus of the Board's inquiry is to determine whether there has been a continuation of all or part of the business:

In each case the decisive question is whether or not there is a continuation of the business... The cases offer a countless variety of factors which might assist the Board in its analysis; among other possibilities the presence or absence of the sale or actual transfer of goodwill, a logo or trade mark, customer lists, accounts receivable, existing contracts, inventory, covenants not to compete, covenants to maintain a good name until closing or any other obligations to assist the successor in being able to effectively carry on the business may fruitfully be considered by the Board in deciding whether there is a continuation of the business, Additionally, the Board has found it helpful to look at whether or not a number of the same employees have continued to work for the successor and whether or not they are performing the same skills. The existence or non-existence of a hiatus in production as well as the service or lack of service of the customers of the predecessors have also been given weight. No list of significant considerations, however, could ever be complete; the number of variables with potential relevance is endless. It is of utmost importance to emphasize, however, that none of these possible considerations enjoys an independent life on its own; none will necessarily determine the matter. Each carries signifi­cance only to the extent that it aids the Board in deciding whether the nature of the business after the transfer is the same as it was before, i.e., whether there has been a continuation of the business.

32. While the potential indicia of a sale may well be endless, the Board places considerable reliance upon the specific commercial context in which conclusions regarding the sale of a business are made, and emphasizes that it should not disregard the fundamental differences in the various contexts in which the successorship issue arises. In The Tatham Co., [1980] OLRB Rep. Mar. 366, the Board stated:

Factors which may be sufficient to support a "sale of a business" finding in one sector of the economy may be insufficient in another. In some industries, particular configuration of assets -physical plant machinery and equipment - may be of paramount significance; while in others it may be patents, "know-how", technological expertise or management skills which will be signif­icant. Some businesses will rely heavily upon the goodwill associated with a particular location, company name, product name or logo; while for other businesses, these factors will be insignifi­cant. The Labour Relations Act applies equally to primary resource industries, manufacturing, retail and service sectors, the construction industry and certain public services provided by mun­icipalities and local authorities. In each of these sectors the nature of the business organization is different, yet in each case section [64] must be applied in a manner which is sensitive to the busi­ness context and the purpose which the section is intended to accomplish.

33. As noted above, the Act must be applied to all sectors of the economy equally, and in that respect, the Board must be sensitive to the evolution of forms of business organization, partic­ularly in the service industry, which utilize few, if any, tangible assets. In this regard, the Board has frequently expressed its view that in undertakings in the service sector, such goods as managerial systems, "know how" or other intangibles are of greater importance than the presence or absence of a particular configuration of physical assets. (see, e.g., Charming Hostess, [1982] OLRB Rep. Apr. 536; Toronto College Street Centre [1986] OLRB Rep. June 913.) For example, in the Toronto College Street Centre case, the Board found that a sale of a business has transpired in the absence of the transfer of any material assets. What was transferred in that case were "intangible" assets such as operational and managerial systems, and, it is important to note, the complement of employees.

34. The factor of continuing employment of the predecessor's employees has presented the Board with certain pragmatic difficulties, since it is a factor that is frequently in the hands of a potential successor who may wish to defeat the trade union's claim of successorship. For obvious reasons, the Board is reluctant to ignore potentially relevant indicia of continuity, while at the same time is loath to reward conduct that seeks to undermine the purposes of the Act. Accord­ingly, it is the Board's policy to consider continued employment as a factor in assessing the conti­nuity of a business, but not to take into account the failure of the alleged successor to rehire the employee complement. (Gordon's Markets, [1978] OLRB Rep. July 630; upheld November 21 1978 (Ont. Div. Ct.) unreported.) Thus, the Board has frequently adverted to the importance of the retention of the skills, expertise and specific identity that resides in the employee complement in making its assessment of whether a transfer has occurred. (Culverhouse Foods Ltd., supra; Metropolitan Parking, sup ra; Beef Terminal [1980] OLRB Rep. Aug. 1167) Particularly in the con­text of the "key man" cases, the Board has frequently found that the identity of a business is so closely linked to the skills and experience of a particular manager or employee such that his or her retention by the alleged successor is of prime importance in determining whether a sale of part of a business has transpired. (See, for example, Gallant Painting [1991] OLRB Rep. Sept. 1051; Ably Concrete Floor Limited, [1991] OLRB Rep. May 579.)

35. What constitutes the "business" that is alleged to have been transferred is critical to a determination under section 64 of the Act, since it is only to a "business" that bargaining rights attach. Aside from providing that a business includes a "part" of a business, the statute offers little guidance, and the matter of definition has been left to the Board. At a general level, the Board will assess whether what has been transferred is the whole, or coherent organizational part, of a "func­tional economic vehicle". Once again, this is a matter of factual determination, dependent on the specific commercial context in which the transaction occurs. Thus, in instances where the organiza­tional or goodwill elements of a business are its essential features, the Board will not attribute great significance to the transfer of the tangible assets from one entity to the other; conversely, where a tangible asset or some other "good" is the defining feature of a business, its passage from one employer to the next may well constitute the sale of "part" of a business notwithstanding that no other element of the predecessor business has been transferred. (Accomodex Franchise Man­agement Inc. [1993] OLRB Rep. April 281.)

36. Although the distinction may frequently be difficult to draw, a "business" is in this respect to be set apart from the work performed by its employees: both the Board and the Courts have reasoned that the general statutory scheme of granting trade unions bargaining rights with respect to employees of employers, and, in turn, the specific language of the sale of a business pro­vision in which rights attach to the "business" entity militates against a finding that the rights attach to the work that is performed. (Syndicat national des employees della Commission scolaire de l'outaouais (CSN) v. Union des emplo yes de service local 298 (FTQ), Bibeault et al 1988 CanLII 30 (SCC), [1988] 2 SCR 1048; British American Bank Note Company [1979] OLRB Rep. Feb. 72; Metropolitan Parking, supra; Parnell Foods Limited [1992] OLRB Rep. Dec. 1164.) The distinction between a "transfer of a business" and a "transfer of work" has been extensively examined by the Board in Metropolitan Parking, supra, and more recently, in Parnell Foods, supra, and little would be gained by recapitulating that analysis here. It is sufficient to note that although the Board may con­sider whether similar work is being performed as a factor in determining whether or not there has been a sale, where the Board is satisfied that what has been transferred as between two employers is principally a right or opportunity to perform certain work, the Board will normally conclude that a "business" has not been transferred. In that respect, the mere fact that the same work is being performed by another employer does not determine that there has been a sale of a business. (See, for example. Metropolitan Parking, supra; The Corporation of the City of Stratford, [1985] OLRB Rep. June 923.) Instead, in order to trigger the sale provisions of the Act, the Board must satisfy itself that a particular economic organization, or part thereof, in the form of a configuration of assets, organizational capacity, or some other "intangible" good that is an essential characteristic of one business has been transferred from one entity to another.

IV

37. It was the argument of both the Town and Charterways that no such transfer had occurred in the present application. Relying upon such cases as Metropolitan Parking, supra, Charming Hostess, sup ra, and City of Stratford, supra, it was argued strenuously that the Board should not find that a sale of a business has occurred between Charterways and the Town because what has been transferred was only "work". By terminating the contract, and in the absence of a transfer of material assets or the incorporation of the organizational capacity of the predecessor, it was argued that what was effected was a mere reversal of the contracting-out of work. Thus, the "take back" effected by the Town did not involve the transfer of any "going concern" previously owned by Charterways, but at most, the retrieval of a work opportunity that was previously per­formed by an economic organization assembled by Charterways. At the conclusion of the contract, Charterways merely "lost business" in the colloquial sense; it did not effect the transfer of a busi­ness as contemplated by the Act. It was argued that the mere fact that the work is essentially iden­tical, and that it happened to be performed by some, but not all of the employees previously employed by Charterways, does not change the fact that the "business" in which Charterways was engaged did not transfer to the Town.

38. The Board agrees that the principles that have been developed for a determination of whether a sale has occurred in the contracting out context are of significant assistance to it in the examination of a take back (Toronto College Street Centre, supra). Further, there can be little doubt that bargaining rights attach to the "business" entity upon a sale, and not merely work. Nev­ertheless, it is equally clear that the adoption of the legal form of contracting out of work does not insulate transactions from the operation of the sale of business provisions of the Act. The Board has made it clear that it will scrutinize the substance of a transaction, whether it be characterized as a contracting out or otherwise, to determine whether there has been a transfer of an essential ele­ment of the predecessor's business organization, and whether that element, in turn, forms an inte­gral part of the successor's operations. As the Board emphasized in Metropolitan Parking, sup ra, a transaction adopting the legal form of "contracting out", although inherently entailing the transfer of work, may nonetheless involve the sale of a business:

The present case involves a form of subcontracting, and subcontracting arrangements always involve the transfer of work. Work or services performed by A's employees within A's organiza­tion are "contracted out" to B, and B uses his own managerial skills, plant and equipment and "know how" to supply to A, for a price, the product, services, facilities or components formerly produced by A's employees. A, therefore, is contracting for the use of B's economic organiza­tion in lieu of his own. A is generating a particular demand, or market, for B's product, and it is implicit in the arrangement that, thereafter, the two businesses will remain in a kind of symbi­otic relationship, bound together by close economic ties. The continuity of the work, and the preservation of a close economic relationship between the two parties is implicit in subcontract­ing and does not, in itself, establish the transfer of all, or part, of a business. If it is clear on the evidence, however, that B is unable to fulfill A's requirement's with his existing equipment or organization, and received from A a transfer of capital, assets, equipment, managerial skills, employees or know how, then the transaction no longer looks like a simple contracting out of work. A may not be making use of B's economic organization, rather A may be transferring part of his economic organization to B (and recall that section [64] is triggered by "part of a business") or merely permitting B to make use of his (A's) organization while retaining control and direction of the related economic activity. Of course, it is to be expected that when A phases out part of his operation there may be certain equipment or assets which are now surplus and which can be disposed of on the market. These assets may, as a matter of convenience, be purchased by B. None of these factors unequivocally demonstrate or foreclose the application of section [64] (or 1(4)). If however, "but for" the transfer of such assets, licenses, know how or property interests from A, B would be unable to fulfill the contract, then it is easier to infer a transfer of part of A's business - albeit a part which A no longer wishes to operate itself.

[emphasi added]

39. In numerous instances, the Board has determined that, notwithstanding that the trans­action took the legal form of a contracting out, a sale of a business had taken place because the alleged successor employer also had transferred to it an essential aspect of the predecessor's busi­ness. (Culverho use Foods Inc., supra; Thunder Bay Ambulance Services, [1978] OLRB Rep. May 467.) In Parnell Foods, supra, for example, the Board was satisfied that a sale had taken place in a contracting out transaction where the predecessor had transferred, along with the work that was to be performed, some of the essential organizational elements of the undertaking that would other­wise be unavailable to the successor.

40. In the context of the present application, it is crucial to note that the "business" in which Charterways was engaged was not the provision or operation of a bus service. Although that position was urged upon us by the trade union, the facts disclose that the substantial elements of the business so described remained at all times within the Town's ownership and control. Instead, the scope of the business engaged in by Charterways' was much narrower, and particularly by the time of the events giving rise to the application, consisted primarily of the provision of a skilled work force to the Town.

41. Charterways' business insofar as it related to Ajax Transit was carried on as an organi­zationally distinct branch that in turn, was further sub-divided in operational terms because of the Town's requirement that the Transit operation be run out of the Town's facility. Although the operation of the business entailed the application of managerial and organizational systems, the business was primarily carried on through the utilization of an identifiable employee complement skilled in the operation of the Ajax Transit System that, through its efforts over the years, it had recruited, trained and co-ordinated. Particularly bearing in mind the operational requirement that the employee complement remain stable, the work force engaged by Charterways can be consid­ered its most valuable asset. Given its centrality to its operation, then, we conclude it constituted a distinguishing "part" of its business.

42. By virtue of its acquisition of that employee complement in a substantially similar form, the Town gained possession of the distinguishing feature of Charterway's business. Furthermore, we are satisfied that the employee complement continued to serve the same integral, function in the operation of Ajax Transit once that system was run by the Town in its entirety. In contrast to the relatively unskilled work force in Metropolitan Parking, whose particular identity was at best a matter of indifference to the alleged purchaser, in the present application the employee comple­ment, given its specific composition that is linked to the operational requirement for continuity, constituted an integral feature of Charterway's transit business in the Town of Ajax and, upon the termination of the contract, essential to the continued operation of Ajax Transit. The evidence is clear that the Town wished to operate the system in much the same manner as previously, and in the context of the particular commercial context, the continuity of the employee complement played a significant role in achieving that goal. We note that the Town solicited the applications of these employees, and, given their experience and the importance of continuity for the operation of the transit system, it is hardly surprising that a substantially unchanged employee complement emerged from the open competition for the jobs. Thus, the Town, by hiring the employees for­merly engaged in the operation of the transit system, ~~took back" significantly more than it ini­tially contracted out: what might well have been, in the words of Metropolitan Parking, a "simple contracting out" in 1977 constituted a transfer of a part of Charterways' business upon the con­tract's take back since it entailed an incorporation of an element of the previous employer's organi­zation that was essential to the continued operation of the transit system.

43. In summary, we are satisfied that by acquiring the substantial part of the work force previously employed by Charterways to perform its obligations under its contract with the Town, the Town transferred to itself an essential element of that business. Consequently, we conclude that in so doing, Charterways and the Town have transacted a sale of part of a business within the meaning of section 64 of the Act.

V

44. Finally, we are satisfied that the provisions of section 64.1(1) have application to that sale since the Town acquired the capacity to utilize the employee complement formerly employed by Charterways only as of January 1, 1993. Although it may be that Charterways' role in the opera­tion of the system was completed by the evening of December 31, 1992, the evidence is clear that the members of the employee complement did not commence their employment with the Town in any sense until January 1,1993. In this respect, it is important to note that it is the hiring of the employees previously employed by Charterways, rather than the taking over complete control of the transit system, that triggered the sale.

45. Considerable argument was directed to the fact that Charterways retained two employ­ees to operate a special New Year's Eve service. However, we cannot accept that the use of two drivers on a casual basis on the evening of December 31, 1992 was sufficient to trigger a sale under the provisions of the Act. Moreover, it is to be noted that these drivers were not thereafter retained by the Town as part of its regular driving complement, but instead, were placed on a casual list of drivers that, in any event, became effective January 1, 1993. Furthermore, in light of our determination that the transfer of the employee complement constituted the triggering event of the sale, it is unnecessary to determine the precise time at which Charterways' contract with the Town expired nor is it necessary to address the question of the retrospective application of section

64.1 (1).

46. Accordingly, we are satisfied that the sale took place on or after January 1, 1993, and that, therefore, the provisions of section 64.1 (1) apply to that transaction. As a further result, we find that the Board has jurisdiction with respect to a sale of a business as between Charterways, whose collective bargaining matters are governed by the laws of Canada, and the Town, whose col­lective bargaining matters are governed by the laws of Ontario.

47. Having regard to the foregoing, the Board finds that there has been a sale of a business as between Charterways and the Town within the meaning of section 64 of the Act and we so declare. Under the circumstances, which include the parties' request that we take no remedial action beyond a declaration of a sale, we find it appropriate to make no further declaration or order at this time. We remain seized with respect to any issues that may arise out of our finding that a sale has taken place.

48. The reasons for Board member Shamanski's dissent in this matter are unavailable at this time and will follow in due course at which time they will be distributed in the same fashion as the instant decision.