0833-99-R United Brotherhood of Carpenters and Joiners of America, Local 2486, Applicant v. MacIsaac Mining and Tunneling Company and MacRanald Enterprises Inc., Responding Parties.
0838-99-G United Brotherhood of Carpenters and Joiners of America, Local 2486, Applicant v. MacIsaac Mining and Tunneling Company and MacRanald Enterprises Inc., Responding Parties.
BEFORE: Caroline Rowan, Vice‑Chair, and Board Members G. Pickell and G. McMenemy.
APPEARANCES: Melissa Kronick, Fred Karst and Tom Cardinal for the applicant; Brian R. Gatien and Patrick H. MacIsaac for the responding parties.
DECISION OF THE BOARD; August 3, 2000
Board File No.0833-99-R is an application under section 69 and subsection 1(4) of the Labour Relations Act, 1995 (the “Act”) filed by the applicant, United Brotherhood of Carpenters and Joiners of America, Local 2486 (the “union”). Board File No. 0838-99-G is a referral of a grievance to arbitration pursuant to section 133 of the Act, which was adjourned pending the outcome of the union’s application under section 69 and subsection 1(4) of the Act. This decision deals with the Board’s disposition of the union’s application in Board File No. 0833-99-R.
The union takes the position that the responding parties, MacIsaac Mining and Tunneling Company (“MacIsaac Mining and Tunneling”) and MacRanald Enterprises Inc. (“MacRanald”), are associated or related businesses or activities under common control and direction. During the course of final argument, the union advised that it was not pursuing its sale of business application under section 69 of the Act. As such, the Board must determine only whether or not it should make a declaration that MacIsaac Mining and Tunneling and MacRanald are one employer within the meaning of subsection 1(4) of the Act because they are engaged in associated or related activities or businesses.
There is no dispute between the parties that three preconditions must be met before the Board will treat two or more entities as one employer under the Act. Firstly, there must be more than one corporation, individual, firm, syndicate or association involved. Secondly, the businesses or activities must be under common control or direction. Thirdly, the businesses or activities must be associated or related. The responding parties concede that the first two of these preconditions have been met in this case; that is, that MacIsaac Mining and Tunneling and MacRanald are separate entities operating under the common direction and control of the same principal, which in this case is Mr. Patrick H. MacIsaac.
The issue, in this case, therefore centers on whether or not the activities or businesses of MacIsaac Mining and Tunneling and MacRanald are associated or related. If so, the Board must then consider whether or not to exercise its discretion to make a declaration under subsection 1(4) of the Act in the circumstances of this case.
FACTS
The Board heard evidence from one witness, Mr. Patrick MacIsaac, who is the principal of both of the responding parties, MacIsaac Mining and Tunneling and MacRanald. The relevant facts were not in substantial dispute and may be briefly summarized as follows.
The union was originally certified to represent employees of MacIsaac Mining and Tunneling Company Ltd. by certificate dated August 25, 1965. Mr. MacIsaac testified that this company was incorporated by his father in 1953 and was in the business of mine contracting, which involves mine development work including sinking shafts. According to Mr. MacIsaac, the mine contracting activities of MacIsaac Mining and Tunneling Company Ltd. were subsequently continued through MacIsaac Mining and Tunneling, which is simply an operating division of MacIsaac Industries Limited (“MacIsaac Industries”). MacIsaac Mining and Tunneling, a division of MacIsaac Industries, continues to operate as a mine contractor and has no separate legal personality and no officers or directors. Mr. MacIsaac is president of both MacIsaac Industries and MacRanald.
On or about July 31, 1996, Mr. MacIsaac signed Minutes of Settlement with the union on behalf of MacIsaac Mining and Tunneling acknowledging that MacIsaac Mining and Tunneling is bound to the provincial ICI collective agreement with the union (the “Provincial ICI Agreement”).
Mr. MacIsaac noted that the carpentry work performed by MacIsaac Mining and Tunneling generally involves construction on the surface, which is incidental to its main contract. For example, MacIsaac Mining and Tunneling may have a contract with a client in the mining industry involving sinking a shaft. In order to do that work, a hoisting mechanism, which requires a foundation, would need to be installed. MacIsaac Mining and Tunneling would employ carpenters to perform that type of incidental construction work required. Prior to its work on the Sudbury Downs Renovation project referred to in greater detail below, MacIsaac Mining and Tunneling focused exclusively on work for clients in the mining industry.
Sudbury Downs is a horse racing facility located at Highway 634, Chelmesford, Ontario. It was constructed on or about 1972 and was originally owned and managed by Sudbury Downs Holdings of Canada Limited, which company amalgamated with MacIsaac Industries on or about 1979. Thereafter, Sudbury Downs was owned and managed by Sudbury Downs Holdings, a division of MacIsaac Industries until on or about 1997. At that time, Mr. MacIsaac made a decision to incorporate MacRanald in order that the gaming operations then owned and managed by Sudbury Downs Holdings, a division of MacIsaac Industries, be carried on as a separate legal entity.
Mr. MacIsaac testified that there were a number of different factors that informed his decision in this regard. These factors included the fact that the gaming operations carried on by Sudbury Downs Holdings were so different in character from the mining related construction and mine development work carried on by MacIsaac Mining and Tunneling, MacIsaac Industries’ other operating division. In addition, in or about 1996, the Ontario government announced that it would enhance horseracing in the province of Ontario by allowing racetracks to host new forms of gaming activity. As such, Mr. MacIsaac felt that the disparity in the activities carried on by these two divisions of MacIsaac Industries involving mine development and gaming would become even greater and that it would be simpler from an operating perspective if the two activities were carried on as separate legal entities.
Mr. MacIsaac also noted that there are a number of different governing bodies dealing with the gaming operations and that, in his view, it would be “simpler and neater” if these bodies were dealing with a separate incorporated company directed exclusively at those activities. Additional business considerations included estate planning and the potential divestiture of the gaming activities. Mr. MacIsaac indicated that he felt that, from the perspective of marketability, it would be better to have separate entities carrying on the mine development activities and the gaming activities, rather than to continue to carry on these separate activities under one corporate legal entity.
MacRanald was therefore incorporated in 1997. It has two divisions: Sudbury Downs which owns and manages Sudbury Downs racetrack; and the Northern Teletheatre Network, which owns and manages off-track betting and other gaming operations across northern Ontario.
MacIsaac Mining and Tunneling, a division of MacIsaac Industries and MacRanald, however, share the same head office located 2070 Old Burwash Road. At that location, various accounting and other administrative personnel perform functions including certain accounting and payroll functions for both MacRanald and MacIsaac Mining and Tunneling, a division of MacIsaac Industries. Mr. MacIsaac also oversees the operations of both MacRanald and MacIsaac Industries through a reporting structure and gives direction to the management personnel employed by each of these companies. As principal of both companies, Mr. MacIsaac has ultimate authority to make decisions concerning the hiring and firing of employees of both companies.
On or about April 1999, the Regional Municipality of Sudbury granted a building permit to MacRanald to have extensive renovations done to the Sudbury Downs racetrack. MacRanald acted as its own general contractor for the renovation and expansion project (the “Renovation Project”). Mr. MacIsaac testified that he decided to have MacRanald act as its own general contractor because he felt that MacRanald had sufficient expertise to do so. In this respect, Mr. MacIsaac noted that MacRanald engaged Mr. Brian Koski as an independent contractor to act as project manager of the project and that Mr. MacIsaac also oversaw the work performed on the Renovation Project. Prior to the Renovation Project, however, MacRanald had not performed any construction work on its own behalf or otherwise.
Various contractors submitted tenders to MacRanald for the construction work on the Renovation Project. MacRanald engaged approximately six or seven contractors to perform work on the Renovation Project. One of the successful contractors engaged by MacRanald for the Renovation Project was MacIsaac Mining and Tunneling. In addition, MacRanald engaged a number of employees directly to do construction work on the Renovation Project including a couple of labourers and a plumber. Mr. MacIsaac indicated that at least one of the labourers that MacRanald employed directly on the Renovation Project had previously been employed by MacIsaac Industries. In addition, he noted that he believed that one or two other construction employees employed by MacRanald on the Renovation Project were also previously employed by MacIsaac Industries.
The work performed by MacIsaac Mining and Tunneling for MacRanald on the Renovation Project included some, but not all, of the carpentry work performed on the Renovation Project and some demolition work required on that project. Mr. MacIsaac signed the contract between MacRanald and MacIsaac Industries Limited in respect of construction work on the Renovation Project on behalf of both companies. This contract is for the supply of labour and equipment by MacIsaac Industries as required by MacRanald. Under the terms of the contract, MacIsaac Mining and Tunneling supplied MacRanald with labour, including carpenters, labourers, electricians and equipment operators, as well as equipment on an hourly basis.
MacIsaac Mining and Tunneling performed the carpentry work required under its contract with MacRanald under the terms of the union’s Provincial ICI Agreement. MacIsaac Mining and Tunneling did not, however, call the hiring hall for carpenters. In this regard, Mr. MacIsaac explained that two employees of MacIsaac Mining and Tunneling who are members of the union were available to do the carpentry work required under the contract, since the work they had previously been doing for MacIsaac Mining and Tunneling was coming to an end. MacIsaac Mining and Tunneling or its predecessor had employed one of these carpenters for approximately twenty-five years. Its contract with MacRanald therefore provided MacIsaac Mining and Tunneling with the opportunity to continue the employment of those carpenters.
During the period of the Renovation Project in 1999, both MacIsaac Mining and Tunneling and MacRanald paid Workplace Safety & Insurance Board (“WSIB”) premiums based on an assessment of a percentage of their respective payrolls at the rate applicable for “non-structural demolition work”. In the case of MacIsaac Mining & Tunneling, the premium applicable to the balance and, in fact, the majority of its payroll was assessed at the rate applicable to “Gold Mines, Contracting and Nickel Mines, Contracting”. By contrast, in the case of MacRanald, the premium applicable to the balance and, in fact, greater proportion of its payroll was assessed at the rate applicable to the “horse race tracks” classification. According to Mr. MacIsaac, MacRanald would not have paid a premium for demolition work at all if it had not been engaged in construction work on the Renovation Project.
Decision
Subsection 1(4) of the Act reads as follows:
(1) In this Act,
(4) Where, in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.
The purpose and effect of subsection 1(4) of the Act is described as follows in Brant Erecting and Hoisting [1980] OLRB Rep. July 945:
Section 1(4) was enacted in 1971 and deals with situations where the economic activity giving rise to employment or collective bargaining relationships regulated by the Act, is carried out by, or through more than one legal entity. Where such legal entities carry on related business activities under common control or direction, the Board is empowered to pierce the corporate veil. Section 1(4) ensures that the institutional rights of a trade union, and the contractual rights of its members, will attach to a definable commercial activity, rather than the legal vehicle(s) through which that activity is carried on. Legal form is not permitted to dictate or fragment a collective bargaining structure’ nor will alterations in legal form undermine established bargaining rights. In this respect the purpose of section 1(4) is similar to that of section [69] which preserves the established bargaining rights and collective agreement when a “business” is transferred from one employer to another. Section [69] has been part of the scheme of the Act since the mid 1960’s. Neither remedial provision requires a finding of anti-union animus their primary application is to bona fide business transactions which incidentally undermine or frustrate established statutory rights. Since the two sections are complementary, it is not unusual, as in the present case, for an applicant to rely on both.
Section 1(4) does not require that related business activities under common control or direction be carried on simultaneously or contemporaneously. This issue was clarified in 1975 by the addition to section 1(4) of the phrase “whether or not simultaneously”. The amendment reflects a legislative recognition that the essential unity and identity of an economic activity (which gives rise to employment) may be preserved even though the legal vehicles through which the activity is carried on will not operate simultaneously; and business may be effectively transferred from one corporate entity to another, without any of the indicia of a “transfer of a business” which might trigger the application of section [69]. This is especially the case in the construction industry where many of the employers will not have the permanence of investment in fixed plant and equipment characteristic of a manufacturing concern. A small construction company can move from jobsite to jobsite or place to place, assembling tools, equipment and a labour force as required after it has made a successful bid. There may be no established economic organization, labour force or configuration of assets. A single principal may have several companies which are used, more or less interchangeably, so that bidding is done and work performed through whichever company is convenient. In such circumstances there may be an effective transfer of businesses between related businesses without any apparent disposition of assets, inventory, trade names, goodwill, employees, etc. Similarly, where capital requirements are minimal and business relationships transitory, it is relatively easy to wind up one business, and create another one which carries on essentially the same business as before. Indeed there will often be good commercial reasons for doing so unrelated to any express desire to undermine the union’s bargaining rights. The earlier company may have run into financial difficulties, or lost its reputation, or there may be legal, accounting or tax advantages in establishing a new vehicle through which the business, or related business activities can be conducted. Again, it is quite possible to this without a clear and concrete disposition between the two firms so as to call section [69] into play. To ensure that the industrial relations status quo is preserved, the Legislature has provided that where two employers carry on related economic activities, under common control and direction, whether or not simultaneously, they can be treated as one for the purposes of the Act. However, it should be noted that section 1(4) is discretionary. The Board need not make a 1(4) declaration even when the conditions precedent are present; and has not done so, for example, where a trade union is seeking to extend rather than preserve its bargaining rights.
… It is not necessary to have shared participation in a common business or endeavour or even contemporaneously economic activity. The relationship between the business entities is a functional rather than a temporal one. Businesses or activities are “related” or “associated” because they are of the same character, serve the same general market, employ the same mode and means of production, utilize similar employee skills, and are carried on for the benefit of related principals. If these criteria are met, two businesses may be “related” within the meaning of section 1(4) even though their activities are carried on through different or corporate vehicles and are not carried on simultaneously. It is evident that the Legislature has created a regime of collective bargaining law which significantly modifies the common law notions of “privity of contract” or “the corporate veil”.
A finding under subsection 1(4) of the Act does not, however, require a finding of improper motive on the part of the responding parties. The Board explained the rationale for this as follows in PCL Constructors Eastern Inc., [1995] OLRB Rep. October 1277:
In sections 1(4) and 64 and the Board’s jurisprudence, the focus is on trade union collective bargaining rights, and more specifically, on protecting a trade union’s bargaining rights from being affected by corporate or commercial activities. Neither section 1(4) or section [69] is an unfair labour practice provision. Both are concerned with the effects of business decisions or dealings on established bargaining rights, rather than with the motivation for such decisions or dealings. Section 1(4) and [69] apply equally to commercial attempts to escape from bargaining rights and to bone fide business transactions which are not improperly motivated but which nevertheless erode established bargaining rights. As the Board pointed out in KNK Limited, [1991] OLRB Rep. Feb. 209, section 1(4) is not a penalty provision. Instead, it operates to allow the Board to deal with business transactions from a labour relations perspective without the constraints imposed by the rules of common or commercial law. The same is true of section [69].
Accordingly, it does not matter whether or not any of the business or corporate dealings which have brought the responding parties to where they are today were improperly motivated…
In this respect, the Board notes that there is, in any event, no suggestion on the evidence before the Board that Mr. MacIsaac’s decision either to carry on the gaming operations through MacRanald rather than as a divison of MacIsaac Industries or to have MacRanald act as its own general contractor or otherwise was motivated by any anti-union animus. The union did not further suggest that Mr. MacIsaac’s business dealings reflected any improper motive.
- As previously noted, the responding parties concede that two of the three preconditions necessary to a finding that MacRanald and MacIsaac Mining and Tunneling are related employers within the meaning of subsection 1(4) of the Act have been met in this case. Accordingly, the issue to be determined is therefore whether or not the third precondition has been met; namely whether or not the activities or businesses of MacIsaac Mining and Tunneling and MacRanald are associated or related. If so, the next issue is whether the Board should exercise its discretion to make a declaration under subsection 1(4) of the Act.
Related Activities
The responding parties take the position that the mine development activities of MacIsaac Mining and Tunneling and the gaming activities of MacRanald are completely distinct activities. As such, there is no relationship and/or association between these two distinct activities or businesses. The responding parties further contend that the construction activities performed by both MacRanald and MacIsaac Mining and Tunneling represent a small proportion of their activities. According to counsel for the responding parties, the WSIB statements submitted into evidence indicate that the construction activities of MacRanald during the period of the Renovation Project represent only approximately 14% of that company’s payroll. He further notes that the percentage is even less than that for MacIsaac Mining and Tunneling.
In the circumstances of the present case, the Board agrees that the gaming operations of MacRanald and the mine development activities carried on by MacIsaac Mining and Tunneling are distinct and separate activities. The Board, however, finds that the common meeting ground in the activities carried on by the responding parties is in the area of construction. According to Mr. MacIsaac, MacIsaac Mining and Tunneling and its predecessor have historically performed construction work including carpentry work under the terms of the Provincial ICI Agreement from time to time as and when required in order to complete its mine development work performed for clients in the mining industry.
In 1999, MacIsaac Mining and Tunneling also engaged in construction work including carpentry work falling under the terms of the Provincial ICI Agreement on the Renovation Project for MacRanald. There is no dispute between the parties that the work performed by both of the responding parties on the Renovation Project was in the nature of civil construction work. According to Mr. MacIsaac, this represents MacIsaac Mining and Tunneling’s first contract for a “client” outside of the mining industry. This contract with MacRanald, however, afforded MacIsaac Mining and Tunneling with the opportunity to continue to employ two carpenters during a period when work in the mining industry was otherwise slow.
MacRanald also engaged in construction activities when it acted as its own general contractor and also employed construction employees directly on the Renovation Project. According to Mr. MacIsaac, this was the first and only time MacRanald engaged in construction activities of any kind. Its primary business concerns are involved in the gaming industry.
Two entities can, however, be treated as one employer for the purposes of the related activity even when the primary activities of each are different, provided that both entities carry on an associated or related activity. As the Board noted in Duffy Mechanical Contractors Limited, [1994] OLRB Rep. August 992:
The fact that the entities in issue are primarily involved in different concerns and activities does not preclude a finding by the Board that they are associated or related. Provided there is an associated or related activity carried on, even if the majority of the activities of the entities concerned are different, the entities can constitute one employer for the purposes of the related activity. In this respect, the Board agrees with the following comments from Frank Plastina Investments Ltd., [1986] OLRB Rep. June 720:
Given the remedial thrust of section 1(4) and the broad language chosen by the Legislature (“associated” or “related”, “activities” or “businesses”), it is apparent that the section was intended to apply to a wide variety of commercial activities, even when an employer’s main or principal business concern may be something else. That was the opinion of the Board in Elmont Construction Limited, [1974] OLRB Rep. June 342 (application for judicial review dismissed, sub nomine, Elmont Construct Limited and Bruce Huntley Contracting Limited v. Toronto Building and Construction Trades Council et al, 75 CLLC 14,270), and it is one with which we respectfully agree. The fact is, that a firm engaged in the construction business can, with relative ease, become involved, from time to time, in various sectors, subdivisions, phases, or specialized kinds of construction work, depending largely upon the business opportunities which present themselves, and we do not think we should readily hold that those activities are “unrelated” – particularly if they are being undertaken at the same time and involve common managerial or employee skills. …
[emphasis added]
In Duffy Mechanical Contractors Limited, supra, the Board found that the responding parties carried on related activities in circumstances where ninety-five (95) percent of one company’s activities involved fabrication of duct work whereas that activity represented only thirty-eight (38) percent of the other company’s activities.
Similarly, in Elmont Construction Limited and Bruce N. Huntley Contracting Limited, [1974] OLRB Rep. June 342, the Board found that the responding parties (referred to therein as “Elmont” and “Huntley”) carried on associated or related activities, notwithstanding that the principal activities of these entities were unrelated. Elmont, which had a bargaining relationship with the union in that case, carried on business as a general contractor in the construction industry constructing buildings on lands owned by others. Huntley, on the other hand, carried on “the business of purchasing and investing in land, building on these lands for its own use and leasing the buildings to produce revenue”.
The application under section 69 and 1(4) in Elmont Construction Limited and Bruce N. Huntley Contracting Limited, supra arose out of a project involving the erection of three buildings by Huntley for its own purposes. Both Huntley and Elmont were engaged in work on that project. Huntley was the owner, builder and developer and Elmont was retained to do construction work on the project. Bruce Huntley, like Mr. MacIsaac in the present case, was involved in the day to day management and direction of both Huntley and Elmont. As in the present case, both companies had common directors and officers and operated out of the same office facilities using some of the same staff. In all of these circumstances, the Board found at p. 347 that:
…insofar as the construction aspect of Huntley is concerned, Huntley and Elmont are associated or related activities or businesses carried on under common control and direction and in the area of construction are to be treated as constituting one employer for the purposes of the Act.
In the present case, MacRanald and MacIsaac Mining and Tunneling are primarily involved in different concerns or activities, being gaming operations and mine contracting respectively. Prior to the Renovation Project, it appears that the activities or businesses of MacRanald or MacIsaac Mining and Tunneling were distinct in that MacRanald was engaged exclusively in performing its gaming operations and was in no way involved in construction activities. There appears to have been no common meeting ground in the activities performed by the responding parties at that time. However, Mr. MacIsaac made a decision to have MacRanald operate as its own general contractor and also to have MacRanald perform construction work directly.
In addition, as noted in the passage cited above in Frank Plastina Investments Ltd., supra, in determining whether or not activities are “related”, the Board has not generally distinguished between different types of construction work because of the relative ease with which a construction business can become involved in different sectors or specialized construction work depending on the opportunities that present themselves. In the circumstances of the present case, while MacIsaac Mining and Tunneling has historically focussed exclusively on clients in the mining industry, it did perform construction work outside of the mining industry for MacRanald with respect to the Renovation Project.
The construction work performed by both entities on the Renovation Project was of the same character, used similar employee skills and was performed for the benefit of the same principal, Mr. Patrick MacIsaac. The evidence is that MacRanald, operating as its own general contractor, contracted out some of the construction work on the Renovation Project, including some carpentry work, to MacIsaac Mining and Tunneling and also contracted out a portion of the construction work, including some carpentry work, to other contractors. MacRanald also performed some of the construction work directly and to this end hired a number of construction employees directly including some who had previously worked for MacIsaac Mining and Tunneling. In all of these circumstances, the Board finds that at least for the period of the Renovation Project, MacRanald and MacIsaac Mining and Tunneling were engaged in a very much related activity. The Board therefore further finds that the third precondition to a finding under subsection 1(4) of the Act has been met.
Effect of the amendments to the definition of “employer” under section 126 of the Act
The responding party, however, argues that the amendments to the definition of “employer” under the construction industry provisions of the Act now preclude a finding that the responding parties in this case are “related employers” under the provisions of subsection 1(4) of the Act. In this regard, counsel for the responding parties concedes that the evidence suggests that MacIsaac Mining and Tunneling meets the definition of “employer” under section 126 of the Act. He, however, submits that the evidence indicates that MacRanald does not meet the amended definition of employer in that its operations fall squarely within the definition of “non-construction employer” within the meaning of the exception contained therein, since its only engagement in the construction industry is incidental to its primary business.
The amendments to the Act referred to by counsel for the responding parties read as follows:
“employer” means a person other than a non-construction employer who operates a business in the construction industry, and for the purposes of an application for accreditation means an employer other than an non-construction employer for whose employees a trade union or council of trade unions affected by the application has bargaining rights in a particular geographic area and sector or areas or sectors or parts thereof.
“non-construction employer” means a person who is not engaged in a business in the construction industry or whose only engagement in such a business is incidental to the person’s primary business.
- Conflict- Where there is conflict between any provision in section 128 to 144 and any provision in sections 7 to 63 and 68 to 125, the provisions in sections 128 to 144 prevail.
127.1(1) Grandparented non-construction employers – This section applies with respect to a non-construction employer if, on the day this section comes into force, a trade union represents employees of the non-construction employer employed, or who may be employed, in the construction industry.
(2) Continued application of certain sections – Section 127 to 168 continue to apply, subject to subsection (3), with respect to the non-construction employer and the employees the trade union represents as if the definition of employer in section 126 included the non-construction employer.
(3) Exception if declaration – If a declaration is made under subsection 127.2 (2) that a trade union no longer represents employees employed, or who may be employed, in the construction industry, subsection (2) of this section ceases to apply with respect to the non-construction employer and those employees.
127.2 (1) Non-construction employers, application for termination – This section applies with respect to a trade union that represents employees of a non-construction employer employed, or who may be employed, in the construction industry
(2) Declaration – On the application of a non-construction employer, the Board shall declare that a trade union no longer represents the employees of the non-construction employer employed in the construction industry, if, on the day the application is made, the non-construction employer does not employ any such employees represented by the trade union.
(3) Collective agreement ceases to apply – Upon the Board making a declaration under subsection (2), any collective agreement binding the non-construction employer in so far as the collective agreement applies to the construction industry.
(4) Amendment of unit – The Board may re-define the composition of a bargaining unit affected by a declaration under subsection (2) if the bargaining unit also includes employees who are not employed in the construction industry.
Essentially, counsel for the responding parties submits that the legislation now prohibits a single employer declaration in these circumstances. The Board notes that the amendments to the Act referred to by counsel for the responding parties do not provide any explicit prohibition on a finding that two or more entities are one employer for the purposes of subsection 1(4) of the Act where one of the responding parties meets the definition of “non-construction employer” contained in section 126 of the Act and the other does not. In this respect, the Board notes that if the legislature intended to prohibit a single employer declaration in these circumstances, it was open to it to say so explicitly.
The Board is further unable to find that such a prohibition can be implied from a reading of the amendments referred to above. In this respect, the Board firstly notes that the definition of “employer” contained in section 126 of the Act defines the word “employer” for the purposes of the construction industry provisions of the Act contained in sections 127 to 168 of the Act only, and therefore does not alter the terms of subsection 1(4) of the Act. In addition, the Board observes that the section 127.1 of the Act makes it clear that the construction industry provisions of the Act continue to apply to a “non-construction employer if a trade union represents employees of the non-construction employer employed, or who may be employed, in the construction industry” on the day that section came into force, being on August 24, 1998, until such time as a declaration is made under subsection 127.2 of the Act that a trade union no longer represents employees employed, or who may be employed, in the construction industry. In other words, the amendments do not alter the pre-existing rights of a construction trade union to represent employees of a non-construction employer employed, or who may be employed, in the construction industry until such time as a declaration is made terminating those bargaining rights under section 127.2 of the Act.
For all of these reasons, the Board is not persuaded that the amendments referred to above preclude a declaration that MacIsaac Mining and Tunneling and MacRanald are one employer within the meaning of subsection 1(4) of the Act.
The Board’s discretion
The final issue to be determined is whether or not the Board should exercise its discretion to make a declaration that MacRanald and MacIsaac Mining and Tunneling are one employer under subsection 1(4) of the Act. In this respect, the union submits that there has been an erosion of its bargaining rights in this case in that the union has performed some but not all of the carpentry work on the Renovation Project. In addition, the union notes that if a declaration is not made in this case there is the potential for erosion of the union’s bargaining rights in that MacRanald could be used to perform MacIsaac Mining and Tunneling’s construction work in future.
The responding party, on the other hand, argues that the construction work performed by MacRanald on the Renovation Project represents simply a “one-off” occurrence and that MacRanald has no intention of continuing construction activities now that the Renovation Project is complete. The responding party also argues that the Board should not exercise its discretion in situations in which there is merely a potential that the union’s bargaining rights could be eroded in future.
As previously noted, subsection 1(4) of the Act is concerned with the erosion of a trade union’s bargaining rights in situations where separate entities operate related activities under common control and direction. A declaration should generally be made where, as here, the legal requirements for a section 1(4) declaration and where the erosion of a trade union’s bargaining rights have been established. As the Board stated in KNK Limited, [1991] OLRB Rep. February 209 at para 57:
In our view, where a trade union has established the legal requirements for a section 1(4) declaration, as well as the “mischief” which such a declaration was designed to prevent, a declaration should ordinarily be made unless there is either particular prejudice or compelling policy reasons for not doing so. Those policy reasons should be rooted in labour relations rather than commercial law considerations, and the alleged prejudice should involve something more than having to apply a collective agreement which the related employer has disregarded in the past. If that were the test, the purpose of section 1(4) would be undermined, and the related employer could plead, in reply, the very “mischief” upon which the union relies and for which section 1(4) is a remedy.
The Board is not persuaded that the fact that MacRanald has performed bargaining unit work on a single project to date in circumstances referred to as a “one-off” occurrence is on its own a compelling reason for not making a declaration.
The Board must, however, still consider whether or not MacRanald’s performance of bargaining unit work in its capacity as general contractor of the Renovation Project represents an erosion of the union’s bargaining rights in this case as contended by the union or whether or not there is merely the potential for future erosion if a declaration is not made. As previously noted, a portion of the carpentry work required on the Renovation Project was performed under the terms of the Provincial ICI Agreement given that a portion was subcontracted to MacIsaac Mining and Tunnelling. Another portion of that work was, however, performed non-union by other contractors.
It is not, in the Board’s view, entirely apparent that the construction work performed by MacRanald in its capacity as general contractor represents an erosion of the union’s bargaining rights in the sense that that work was diverted away from MacIsaac Mining and Tunneling. According to Mr. MacIsaac, MacIsaac Mining and Tunneling’s construction related activities and in particular work under the union’s provincial ICI agreement have historically been limited to work in the mining industry incidental to its mine development work. It therefore appears that the Renovation Project provided MacIsaac Mining and Tunneling with an opportunity to maintain the employment of a number of carpenters who may otherwise have been laid off because of lack of work opportunities in the mining industry.
On the other hand, the evidence before the Board in this case also suggests that MacIsaac Mining and Tunneling is certainly capable of doing, and in fact did a portion of, that work. It therefore appears that Mr. MacIsaac could equally have decided to have MacIsaac Mining and Tunneling, which company had experience in the construction industry, act as the general contractor of the Renovation Project rather than MacRanald, which company had no prior experience in construction. Had he chosen to do so, however, there is no dispute that all of the carpentry work on the project falling under the terms of the Provincial ICI Agreement would have had to be performed using members of the union. The construction work performed by MacRanald in its capacity as general contractor therefore represents an erosion of the union’s bargaining rights in that an opportunity for growth in the construction activities of MacIsaac Mining and Tunneling was directed to the non-union MacRanald instead.
The Board also notes that the potential for erosion of the trade union’s bargaining rights in the present case is not entirely academic as it was in the Vagden Mills Ltd. [1998] O.L.R.D. NO. 4221, decision referred to by the responding parties. In that case, although the Board noted that a declaration of relatedness may be made where there has been no erosion of the union’s bargaining rights but simply a risk of future erosion, the Board concluded at paragraph 99 that a declaration under subsection 1(4) of the Act was premature and would serve little purpose in the circumstances of that case. The Board in Vagden Mills Ltd. stated as follows:
In DONALD A. FOLEY LIMITED, [1980] OLRB Rep. April 436, the Board found there was no common ownership, but that the nature of the relationship between the two companies was such that there was substantial functional interdependence amounting to common control. The Board also noted that there had been no erosion of the union’s bargaining rights, but that a declaration of relatedness was necessary because there was a risk of future erosion….
While there has been no apparent erosion of the union’s bargaining rights[in the present case], the Board accepts the union’s argument that there is a potential for such erosion in the future. Hosiery is a non-union plant operating in the same industry as Fields; it has been the guarantor for Fields’ suppliers; it holds the lease on Fields’ accounting and inventory computer system; and, it is a major customer of Fields. Nonetheless, to date Hosiery has seemingly acted to prop Fields up. There is no evidence of the diversion of any part of the business from the unionized Fields to the non-union Hosiery, or of an erosion of the union’s bargaining rights. It is unclear what labour relations purpose would be served by declaring that Hosiery and Fields are related employers. As noted above, UNITE does not have bargaining rights extending to the Scarborough plant, there is no movement of employees between Trenton and Scarborough, and UNITE continues to actively hold bargaining rights for the Fields’ employees. It would be premature at this time for the Board to make a section 1(4) declaration of relatedness.
In that case, unlike in the present one, the non-union company had not performed any work falling within the scope of the union’s bargaining rights and was further unlikely to do so in future since the non-union facility fell outside of the geographic scope of the union’s bargaining rights. In Vagden Mills Ltd., supra, the Board therefore declined to make a declaration under subsection 1(4) of the Act at that time.
In the present case, the union’s bargaining rights have been eroded by MacRanald’s performance of carpentry work falling under the terms of the Provincial ICI Agreement on a non-union basis. The Board also notes that there is, in any event, the potential for future erosion of the union’s bargaining rights if a declaration is not made at this time. In all of the circumstances, the Board is satisfied that in the area of construction MacRanald and MacIsaac Mining and Tunneling are to be treated as constituting one employer for the purposes of the Act.
Accordingly, having found that the responding parties are carrying on associated or related activities under common control or direction, we hereby direct that, for the purposes of the Act and the applicant’s bargaining rights as currently reflected in the Provincial ICI Agreement, they are to be treated as constituting one employer. We further declare that MacRanald is bound to the Provincial ICI Agreement as if it had been a party thereto.
This matter is referred to the Registrar to set a date for hearing of the application in Board File No. 0838-99-G.
“Caroline Rowan”
for the Board