[1998] OLRB REP. NOVEMBER/DECEMBER 916
1800-98-G; 2633-98-G International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 736, Applicant v. Calorific Construction Ltd., Responding Party
BEFORE: Harry Freedman, Vice-Chair, and Board Members J. G. Knight and G. McMenemy
APPEARANCES: Gary Caroline and Doug Smees for the applicant; Michael Kalyn for the responding party.
DECISION OF THE BOARD; November 25, 1998
I. These are two referrals of grievances to the Board for determination under section 133 of the Labour Relations Act, 1995 (the "Act").
- Board File No. 1800-98-C relates to a grievance dated July 30, 1998 in which the applicant demanded that the responding party deposit a bond or certified cheque in the amount of $20,000 pursuant to article 32 of the Provincial ICI Ironworkers Collective Agreement (the "Collective Agreement"). Following the referral of that grievance to the Board for determination, it was settled in discussions between Cecil Kalyn, President of the responding party and Douglas Smees, Business Manager of the applicant. The terms of the settlement were contained in a letter from Mr. Kalyn to Mr. Smees dated September 11, 1998. That letter stated:
This letter shall serve as a memorandum of an agreement reached on our telephone call of this morning, September 11, 1998, regarding the grievance filed under section 133.
The agreement reached is that Calorific Construction Ltd. will immediately pay the July remittance in the amount of $5,693.31 and also issue a further post-dated cheque (for September 15, 1998) for the August remittance. The $20,000.00 deposit or bond requirement under the grievance, is waived until such time as Calorific Construction Ltd. puts in a request for ironworkers. At that time, it is understood that Calorific Construction Ltd. and the Ironworkers' Local 736 will discuss the issue of a deposit.
The referral to the Board in Board File No. 1800-98-C was adjourned sine die by decision dated September 14, 1998, following the settlement. As we are satisfied that the grievance was settled, the referral of the grievance in Board File No. 1800-98-C is hereby dismissed.
Board File No. 2633-98-C relates to a grievance dated October 21, 1998 filed by the applicant against the responding party. That grievance also seeks the deposit of a cash bond or certified cheque in the amount of $20,000 pursuant to Article 32 of the collective agreement. Article 32 of the Collective Agreement provides:
ARTICLE 32- BONDING
For the purpose of ensuring compliance with the provisions of Article 10.3, 30.2, 31.1 and 31.3:
(a) each Employer who first becomes bound by this agreement after the effective date hereof shall forthwith after becoming bound and to the extent of $20,000.00; and
(b) each Employer declared by the Trustees of the Welfare and Pension Funds to have been frequently delinquent in making full and timely payments in connection with such funds shall forthwith after being advised of such declaration and tot he extent of such amount determined by the Trustees not to exceed $20,000.00;
cause to be deposited with the Plan Administrator a cash bond or certified cheque payable to the Plan Administrator, who may apply all or any amount resulting therefrom to satisfy any delinquency with respect to any of the payments called for under the above Articles.
Subsequent to such application of any amounts the Employer shall forthwith replenish such cash bond or certified cheque amount. The legal or other costs associated with obtaining the said bond or enforcing this provision shall be borne entirely by the Employer. These costs shall be part of any order or declaration issued against the Employer by the Ontario Labour Relations Board or board of arbitration.
- The facts relevant to the disposition of this matter were not disputed. In July, 1998, Mr. Smees requested that the trustees of the Ironworkers Central Welfare Fund make the declaration under section 32(b) of the Collective Agreement so that the responding party would be required to deposit a bond with the plan administrator. The trustees dealt with Mr. Smees request at their meeting on July 8, 1998. Following that meeting, the benefit plan administrator, by letter dated July 14, 1998, demanded that the responding party deposit the bond required by article 32 of the Collective Agreement. That letter stated:
Pursuant to Article 32 of the Collective Agreement between the Ontario Erectors Association Incorporated, the Ontario Erectors Association and the International Association of Bridge, Structural and Ornamental Ironworkers and the Ironworkers Ontario District Council, the Trustees of the Welfare and Pension Funds request that Calorific Construction Ltd. immediately deposit a $20,000 bond with the Plan Administrator.
After delivery of that letter to the responding party and the subsequent refusal of the responding party to comply with article 32, the grievance in Board File No. 1 800-98-G was filed and ultimately resolved.
On or about October 14, 1998, the responding party contacted the applicant's hiring hall and requested members of the applicant be dispatched to work at the responding party's coke oven project at Stelco Hilton Works.
The responding part's request for ironworkers was referred to Mr. Smees. Mr. Smees and Mr. Kalyn spoke about the responding party's request. Mr. Smees advised Mr. Kalyn that unless a $20,000 bond was deposited, members of the applicant would not be dispatched to work for the responding party. (Sections 10.5, 30.4 and 31.1 of the Collective Agreement all provide that it is not a violation of the Collective Agreement "... if the supply of labour is withheld due to non-payment of ..." contributions required by the Collective Agreement.) As of October 14, 1998, the responding party was in arrears for remittances in excess of $14,000. (See the decision in Calorific Construction Ltd. dated November 19, 1998, Board File No. 2640-98-G.) Mr. Kalyn later advised Mr. Smees that he could not obtain a bond and indicated to Mr. Smees that the work would be subcontracted.
The responding party made a subcontracting arrangement with Tomahawk Welding, a contractor bound by the Collective Agreement. The manner in which Tomahawk Welding employed members of the applicant on the responding party's coke oven project at Stelco is the subject a grievance filed by the applicant against Tomahawk Welding referred to the Board for determination in Board File No. 2637-98-G. That referral was adjourned sine die. (See the decision in Tomahawk Welding dated November 19, 1998, Board File No. 2637-98-G.) The applicant suggested during the course of the hearing in these matters on November 17, 1998 that the subcontracting arrangement between the responding party and Tomahawk Welding was a sham set up to allow the responding party to avoid the bond obligation under article 32. We do not consider it necessary to make a determination of the bona fides of the subcontracting arrangement between Tomahawk Welding and the responding party in order to deal with issue before us.
The applicant established and it was not disputed by the responding party that since January, 1993, and continuing up to November 17, 1998, the responding party has been frequently delinquent in making the required remittances under the Collective Agreement and its predecessors in respect of the Ironworkers Central Welfare Fund (see section 10.1), the Ironworkers Ontario Pension Fund (see section 10.2), the Ironworkers Trade Improvement Plan Trust (see section 30.1), field dues (see section 31.1), and District Council dues (see section 31.3).
Counsel for the applicant argued that the trustees had acted reasonably in making the declaration necessary to require the responding party to post the bond. Indeed, the representative of the responding party did not take issue with the applicant's assertion that the trustees had followed the requirements of article 32 when making the declaration. The applicant filed minutes of the meeting at which the trustees dealt with the issue. The minutes relating to the responding party stated:
The trustees instructed the administrator to request a bond from Calorific Construction as they have been frequently delinquent in making full and timely payments of the welfare and pension contributions.
Counsel for the applicant submitted that the Collective Agreement contemplates the trustees exercising their discretion to determine whether an employer would be required to deposit a bond and if a bond were required, to determine the amount of the bond. The minutes of the meeting clearly indicated that the trustees had exercised their discretion to require the responding party to post a bond but there was no written evidence that the trustees had determined what the amount of the bond should be. The Board indicated to counsel for the applicant that we were of the view that it is the trustees and not the plan administrator who determine the amount of the bond. Counsel for the applicant advised the Board in response to the concern expressed that Mr. Smees had, in fact, recommended to the trustees that the bond should be in the amount of $20,000. Counsel further represented that the trustees had adopted Mr. Smees' recommendation with respect to the amount of the bond despite the minutes being silent in respect of the amount. The representative of the responding party did not take issue with that factual representation. Therefore the Board was satisfied that the trustees had determined that the responding party was required to post a $20,000 bond in accordance with article 32 of the Collective Agreement.
The representative of the responding party, as indicated earlier, did not take issue with any of the factual representations made to the Board by the applicant. He submitted that the responding party does not maintain a full-time crew of ironworkers. Rather, the responding party employed ironworkers to perform work when it occasionally does work covered by the Collective Agreement. The responding party also stated that it would no longer employ ironworkers directly but rather would engage subcontractors to perform work covered by the Collective Agreement when it required such work to be carried out. The representative of the responding party also submitted that the applicant would be secure if the Board made an order directing the responding party to deposit a $20,000 bond the next time it was about to employ ironworkers as its direct hire employees.
We are satisfied that the conditions precedent for an employer being obliged by article 32 of the Collective Agreement to deposit a bond with the plan administrator have been established by the applicant. Indeed, there was no dispute that the responding party had been frequently delinquent in making full and timely payments in connection with the various funds established pursuant to the Collective Agreement.
As counsel for the applicant pointed out, the purpose of the bond is to ensure the timely payments of employees' health and welfare and pension contributions. Counsel demonstrated that in this case the responding party has for over a year failed to pay over $14,000 in remittances. That late payment of remittances creates, as counsel suggests, an unfair advantage for delinquent employers over their more responsible competitors who comply with the Collective Agreement. Furthermore, counsel argues, that if the Board were to accede to the responding party's request that a bond not be required to be deposited until the responding party directly employs ironworkers again, there would be no assurance that the responding party would comply with the obligation to post a bond. He also pointed out that if the responding party was not delinquent when it sought the dispatch of ironworkers, then the applicant would be required by the Collective Agreement to dispatch members without any assurance that the appropriate remittances would be paid promptly. Counsel submitted that the self-help protections afforded the applicant in sections 10.5, 30.4 and 31.1 of the Collective Agreement, referred to in paragraph 8 above, would not apply in such a situation.
It is clear to the Board that the Collective Agreement permits the trustees of the welfare and pension funds to determine, in their discretion, whether an employer bound by the Collective Agreement will be required to post a bond and to determine the amount of that bond. That discretion is circumscribed by requiring the trustees to be satisfied that the employer has been frequently delinquent in making full and timely payments in connection with the trust funds established under the Collective Agreement. In our view, an employer who has been frequently delinquent in making the required remittances under the Collective Agreement has no cause to complain when the trustees require that employer to post a bond to secure prompt payment of such remittances in the future. We agree that continually being late with remittances required under a collective agreement gives delinquent employers a competitive advantage since they have the use of funds over a significant period of time (in this case, over $14,000 for more than one year) without paying for their use. Furthermore, the bond does provide the applicant and its members with appropriate security in respect of welfare and pension coverage. An employer that is frequently delinquent in making remittances creates a financial risk that the parties to the Collective Agreement have determined should not be borne by the applicant and its members.
Although the responding party says to the Board that it will only subcontract work covered by the Collective Agreement in the future, the Board is not prepared to make an order compelling it to do so. We do not believe that an order requiring the responding party either to subcontract all work in the future (assuming we have jurisdiction to make such an order) or to post the requisite bond at some point in the future when it directly employs members of the applicant would be effective. The applicant, in our view, could not quickly and efficiently enforce that kind of order should the responding party decide not to subcontract work and employ members of the applicant as direct hires. In our view, the deposit of a bond is an efficacious means of ensuring prompt payment of remittances required by the Collective Agreement.
We are satisfied that the responding party is required to deposit a bond with the plan administrator in accordance with the Collective Agreement. The responding party's failure or refusal to deposit the bond demanded is a violation of that Collective Agreement. In our view, the appropriate remedy in this case is to require the responding party to deposit the bond. However, as the responding party may not be able to secure the required bond immediately, we allow some period of time to the responding party to deposit the bond.
Counsel for the applicant also sought, pursuant to the second paragraph of article 32 of the Collective Agreement "the legal and other costs associated with obtaining the said bond or enforcing this provision ..." Counsel for the applicant represented to the Board that the legal and other associated costs incurred were $2,500, which amount was not disputed by the representative of the responding party.
The Board hereby directs Calorific Construction Limited to:
a) deposit with the Ironworkers Benefit Plan Administrator a cash bond or certified cheque payable to the Ironworkers Benefit Plan Administrator in the amount of $20,000 on or before December 15, 1998;
b) pay forthwith to the applicant the sum of $2,500.