1002-99-U Amalgamated Transit Union, Local 1731, Applicant v. McIntosh Limousine Service Ltd., Air Cab Limousine Services (1985) Ltd., and Aaroport Limousine Service Ltd., Responding Parties.

BEFORE: Gail Misra, Vice-Chair.

APPEARANCES: Cynthia Watson, Gurder Singh, Parminder Gill, Brar Iqbalit, and Randy Graham for the applicant; Mark Stone and Anna Ruddy for the responding parties.

DECISION OF THE BOARD; May 30, 2000

1. This is an application filed pursuant to section 96 of the Labour Relations Act, 1995 (the “Act”) alleging violations of sections 17, 70, 72, 73, 76, 79, 82, and 86 of the Act.

2. The allegations in the application can be divided into two general categories: bad faith bargaining allegations, and unfair labour practice allegations with respect to the employers’ treatment of Mr. Parminder Gill, an executive member of the union local.

3. The application was filed with the Board on June 6, 1999 and at that juncture was largely a bad faith bargaining complaint. The responding parties did not file a response to the application as required by the Board’s Rules of Procedure. On December 6, 1999 counsel for the applicant (the “union”) wrote to the Board requesting a hearing and seeking to file additional pleadings as there had been further activity in the workplace since the original application had been filed. Following receipt of the December 6 letter the responding parties’ representative, Mr. John Clark, filed a response on behalf of the companies in which he indicated that it was a response to the December complaint. No response was ever filed regarding the original application.

4. The first day of hearing was held on March 8, 2000. At that time the Board ruled on a number of preliminary matters. The one of most significance for the purpose of this decision is the motion made by the applicant that the responding parties should be precluded from calling any evidence on the bad faith bargaining part of the application as they had failed to file a response. Having heard the parties’ submissions and since no response had been filed by the date of the hearing, the Board ruled that it would not grant an extension for the filing of a response to the original June 1999 complaint. The Board did however accept that the responding parties had filed a response to the union’s December 1999 additional allegations.

5. The responding parties requested reconsideration of the Board’s ruling as it was argued that Mr. Clark’s letter in December could be construed as a blanket denial of the June application. The Board considered the request, reviewed Mr. Clark’s letter and the cover facsimile memo he had sent to the Board, and concluded that it did not constitute a response to the June application. The reconsideration request was therefore denied.

6. In light of the Board’s ruling the union requested that the bad faith bargaining portion of the application be dealt with first as, in its view, the only remaining matter for the Board to decide is the appropriate remedy.

7. In order to argue with respect to the appropriate remedy, if any, the responding parties want to introduce before the Board evidence of having had continuing negotiations after June 1999, and to show that the parties had reached a Memorandum of Agreement [although it was not ultimately ratified by the bargaining unit members]. The union objects to the introduction of such evidence as it argues that the negotiations were held as part of settlement discussions to resolve the unfair labour practice complaint. The union is agreeable to having the Board receive the Memorandum of Agreement for the limited purpose of establishing what the union is prepared to live with should the Board impose a collective agreement. However even in that eventuality, the union argues that the Board should remove the terms which the union claims are “illegal”.

8. The first issue is therefore whether the discussions held after June 1999 which led to the August 18, 1999 Memorandum of Agreement were settlement discussions. The Board heard from Mr. John Clark who had been a consultant to the responding parties during the relevant period and who had met with the union. Mr. Clark was a forthright witness who did his best in an untenable situation. He testified that he had engaged in discussions with Ms. Watson, who was acting for the union, for the purpose of resolving the unfair labour practice complaint against the companies. He realized that there were problems between the owner of the companies, Mr. Zahavy, and some members of the union executive such that no productive discussions could take place with both present. He therefore asked to meet with the union, without the union executive being present, to have settlement discussions. He wanted to try to resolve all outstanding bargaining issues and matters left outstanding from the 1997 collective agreement discussions. Mr. Clark’s intent was to get his client “away from the bad faith bargaining complaint” by getting a collective agreement as there could then be no issue of bad faith bargaining if the parties reached a negotiated agreement.

9. Ms. Watson and Mr. Randy Graham, an International Vice President for the union, met with Mr. Clark and the responding parties. They reached a Memorandum of Agreement that the union hoped the membership would ratify but which Mr. Graham continued to maintain contained illegal terms. The Agreement was signed off by both parties on August 18, 1999, but was subject to ratification by the union membership. The union undertook to recommend ratification of the agreement by its members. On September 8, 1999 the members of the union rejected the Memorandum of Agreement.

10. Section 17 of the Act states:

The parties shall meet within 15 days from the giving of the notice or within such further period as the parties agree upon and they shall bargain in good faith and make every reasonable effort to make a collective agreement.

11. The duty to bargain in good faith and to make every reasonable effort to make a collective agreement is not held in abeyance because a complaint is filed alleging that a party is bargaining in bad faith. This obligation continues for both the negotiating parties. It is for this reason that the Board will often consider evidence of the parties’ actions after the filing of a bad faith bargaining complaint.

12. Mr. Clark, acting as a responsible agent for the responding parties, wished to extricate his clients from the union’s complaint to the Board. He realized that getting a collective agreement was the best way of doing that since the complaint was about the responding parties’ failure to bargain in good faith to reach a collective agreement. Inevitably that meant that he was operating on two separate, but related, agendas.

13. In this case the parties met after the filing of the application, for the dual purposes of attempting to settle the complaint and to reach a collective agreement. In the Board’s view this is behaviour which should be encouraged in order to foster good labour relations between employers and unions. It is in the general public interest to have parties both attempt to resolve their own problems, and to negotiate collective agreements without Board intervention. The Board is mindful of the community’s understanding that settlement discussions are generally conducted on a “without prejudice” and “off the record” basis. However, in a situation where the parties have an ongoing obligation to continue to bargain to reach a collective agreement, and there is a bad faith bargaining complaint before the Board, it is incumbent on the parties to be clear about the context in which they take actions after the application has been filed. Where an issue arises, as in this case, about the status of the discussions or the outcome, the Board will have to consider whether the parties agreed specifically that the negotiations they undertook after the filing of the application were under the rubric of “settlement discussions” and as such were off the record, i.e. without prejudice discussions.

14. There is no specific indication before me that the parties agreed to conduct their negotiations off the record or without prejudice to the union’s unfair labour practice complaint. It seems most likely in the circumstances of this case that both the parties were genuinely attempting to fashion a memorandum of agreement that the union membership would ratify, thereby ending the long period they had all been operating without a collective agreement. Most likely had the membership ratified the memorandum of agreement that would have resolved the bargaining in bad faith complaint.

15. It would be artificial to disallow consideration of the Memorandum of Agreement of August 18, 1999 for the purpose of showing that the parties had been able to bargain something, while still allowing consideration of that document for the purpose of fashioning a remedy, should one be granted. It is of course helpful for the Board to consider a freely-bargained agreement between parties when it is attempting to provide a suitable remedy in cases of this sort. Therefore, for all of these reasons, the Board will consider the Memorandum of Agreement of August 18, 1999 for all purposes in determining the bad faith bargaining portion of this complaint.

16. The facts outlined below are as found in the union’s application of June 30, 1999, and the various documents presented to the Board by the parties with reference to the bad faith bargaining complaint. In particular, the documents the Board is relying on include the first contract arbitration award, the Teamsters’ (the previous bargaining agent for this group of workers) collective agreement, the sample service agreement, the sample lease agreement, the “collective agreement” tentatively agreed to by the parties on August 26, 1997, and the Memorandum of Agreement of August 18, 1999.

17. On July 8, 1993 the union was certified to represent the dependent contractors of the responding parties which include drivers, lessee drivers and broker drivers. These dependent contractors had been represented by the Teamsters union prior to that time and had been governed by a collective agreement that expired on May 31, 1992. However, the new union and the responding parties were unable to reach a first collective agreement through bargaining so they had to resort to first contract arbitration. On April 13, 1995 the first contract arbitration award issued from a panel chaired by Mr. W.B. Rayner, with nominees J.J. Carruthers and B.W. Earle (the “Rayner award”). The parties never translated the award into a collective agreement format, and simply lived with the award as if it was the collective agreement until the expiry of the award on April 13, 1997.

18. The Rayner panel considered the provisions of the Teamsters’ collective agreement in reaching its decision because that was the best evidence of what free collective bargaining in this workplace had achieved. In the final analysis the Rayner panel ordered that the provisions of the Teamsters’ agreement were to continue in force except for the provisions that the board had specifically modified. The union had requested that the service agreements be incorporated into the collective agreement, but the board of arbitration declined this request. The Teamsters’ agreement provisions regarding the role of service agreements would therefore have remained in place. As part of its Management Rights the employer continued to have the right to require service agreements from all dependent contractors (see Article 3.2 of Teamster’s collective agreement).

19. The Rayner award notes that the employer does not pay employees (dependent contractors) in this industry, but rather, they pay the companies to drive the limousines. In particular, they make lease payments and pay office and dispatch fees. The union, in the first contract arbitration, was therefore seeking to reduce both of these types of fees (as opposed to an increase in wages for regular employees). The arbitration board ordered that the dispatch and office fees and the lease fee be frozen for the two-year term of the collective agreement. The Teamsters’ collective agreement had also contained provisions regarding dispatch fees and lease payments.

20. The union requested language in the area of insurance and was granted the following language:

The employees shall have the right to purchase their own insurance policies either collectively or individually, provided that the policies comply with the Conditions of Permit.

Any employee may choose to be insured under a policy purchased by the Company. If any employees so choose, the Union shall be provided with such insurance policy or policies and a list of the vehicles that are covered by the said policies and any other pertinent information. The cost of such insurance shall be charged to the individual employee and collected monthly in accordance with Article 12 of this agreement.

21. After the first collective agreement expired in April 1997, the union and the responding parties bargained for a new collective agreement. The first memorandum of agreement they reached in 1997 was overwhelmingly rejected by the membership despite the union bargaining committee recommendation of the proposal. A second such agreement was also overwhelmingly rejected by the membership. The union asserts that “in large part the proposed collective agreements were rejected by the membership insofar as such collective agreements contained proposed provisions which were unlawful” (para. 4, union’s Schedule “A” to the application).

22. The union claims the terms were unlawful because the brokerage fee increase that the responding parties and union bargaining committee were agreeing to would have been above the Consumer Price Index; there were restrictions being placed on the members’ ability to choose their insurance coverage; and, the mandatory lease agreements would impose these “unlawful” terms. It argues that the responding parties could not bargain these terms to impasse. Parenthetically the Board notes that it is not clear how the responding parties may be said to be bargaining these issues to impasse when the bargaining agent had reached agreements on the subjects with the employers, and had agreed to put two packages to the bargaining unit for ratification by the time the application was made to the Board in June 1999. The problem was that the bargaining unit kept rejecting the memoranda of agreement the bargaining committee had negotiated and was recommending.

23. The union’s view that the terms are “unlawful” is premised on an assertion that when the collective agreement and the statutory freeze expired, the responding parties had to revert to applying the terms of the service agreement, which contains provisions regarding insurance and increases in fees. Therefore, the union asserts, it is “unlawful” for the responding parties to bargain terms which are worse than the service agreement. The service agreement terms will be discussed later in this decision.

24. The parties met with a conciliation officer but the efforts were unsuccessful. On August 18, 1997 a “no board” report issued and since September 2, 1997 the parties have been in a legal strike/lockout position. There has been no strike or lockout although the employer had indicated it would lock out the bargaining unit after September 2, 1997. It never did so.

25. The union’s pleadings refer to a number of letters sent by Mr. Zahavy or the responding parties to the union or to the bargaining unit members. However, since these letters were not put before the Board, the Board has relied on the union’s pleadings exclusively in outlining the following correspondence. On August 18, 1997 Mr. Zahavy, the owner of the responding party companies, issued letters to the bargaining unit members indicating that lease agreements must be signed and that bargaining unit members would in the future have to be insured under the fleet insurance carried by the responding parties. The responding parties had bargained for mandatory lease agreements but the bargaining unit had rejected the bargained terms twice. The union pleads that the requirement to carry the companies’ insurance was unlawful as it did not conform to the terms of the service agreement. Effective September 2, 1997 the responding parties also imposed a 6% increase in the brokerage fee that the union claims is unlawful, again because the service agreement does not mandate an increase of that magnitude. The statutory freeze requiring the employer to maintain the terms and conditions of employment as per the collective agreement expired as of September 2, 1997.

26. It would seem that the responding parties did not in fact enforce the company insurance requirement immediately as on February 12, 1998 and on dates thereafter the responding parties informed the bargaining unit members that by September 1, 1998 they would have to join the company fleet insurance. The union continued to maintain that this requirement was unlawful.

27. The service agreement is an agreement between a company (any of the responding parties) which is duly licensed by the Greater Toronto Airport Authority to operate a limousine service to and from Pearson International Airport, and a broker who wishes to operate an automobile utilizing the company’s limousine license and dispatch and other services. The body of the service agreement addresses the grant by the company to the broker of the right to operate a limousine for a monthly fee. It outlines the services the company undertakes to provide. The agreement is renewed year to year on the same terms and conditions as those set out in the service agreement, except for fees and charges which are set out in a schedule to the agreement and are subject to change. There are provisions for the termination of the agreement, the duties of the broker, matters regarding the automobile to be used, who can drive the limousine, how brokers can collect payments from patrons, etc.

28. With respect to increases in dispatching and brokerage fees, Schedule A to the service agreement states:

Each Year:

Dispatching and Brokerage annual fees increases shall not exceed the Consumer Price Index as published by Statistics Canada for the preceding year and ten (10%) per cent whichever is less; provided that the Corporation shall be permitted at any time to, after August 31^st, 1982, make application for an amount in excess of the Consumer Price Index or the ten (10%) per cent amount to the Ontario Highway Transport Board or alternatively to any other independent body that may be mutually agreed to between the parties. …

Airport Platform Dispatching fees are subject to change at any time upon 30 days written or verbal notice.

29. With respect to insurance the service agreement states:

30. (a) For the convenience of the Broker and to enable him to enjoy fleet insurance rates, the automobile of the Broker (as well as those of all other Brokers) may be insured in the name of the Corporation, covering public liability, property damage, fire, theft, and collision protection. …

(b) If the Broker wishes and is able to do so, he may furnish evidence of insurance by a satisfactory insurer as arranged by himself for the coverage as above and hereafter specified. Upon production of proper evidence to this effect, it shall not be necessary for the Broker to obtain his insurance coverage under the aforesaid fleet insurance arrangement. …

30. On a number of occasions during the period following the expiry of the freeze on the collective agreement the responding parties indicated that if bargaining unit members did not comply with the new requirements their driving privileges with the companies would be withdrawn and their lease agreements would be terminated.

31. From a review of the Teamsters’ collective agreement there does not appear to have been any requirement that dependent contractors sign a lease agreement in 1990. The Rayner award in 1995 makes no reference to a lease agreement. It would appear that in the 1997 round of bargaining the employer wanted all dependent contractors, as a condition of continuing employment, to be party to a form of lease which was referred to as Schedule A to the collective agreement. The union’s bargaining committee appears to have agreed to this requirement and a form of lease during the first rounds of bargaining in 1997 as the lease agreement forms part of the collective agreement tentatively agreed to by the parties’ bargaining committees on August 26, 1997. As has been noted earlier, the membership of the bargaining unit rejected that agreement even though the bargaining committee recommended acceptance.

32. Nonetheless, following the expiry of the statutory freeze the responding parties, relying on the lease agreement that had been bargained but rejected, advised its employees on a number of occasions that it would require them to sign lease agreements if they wished to continue to drive for the companies. The union alleges that it was unlawful for the responding parties to force this requirement on the drivers because the collective agreement had not been ratified.

33. The parties put before the Board two decisions that addressed matters very similar to those in the present case. It appears that a number of individuals from another limousine company filed a civil action seeking a court interpretation of the service agreement in order to restrain that company from raising its brokerage fees above what was permitted under the service agreement (which contained a similar provision linking increases to the Consumer Price Index). That bargaining unit was also in a strike/lockout position where the terms of the collective agreement had expired. The motion was heard by the court on September 4, 1998 and by a decision dated September 25, 1998, the bargaining unit members were successful in that the court held that the terms of the service agreement governed even though the collective agreement had expired (Emile Dagher et al. v. McDonnell-Ronald Limousine Service Limited, Court File No. 98-CV-148637, Ontario Court (General Division), Brennan J.).

34. That decision has since been overturned by the Ontario Court of Appeal in Dagher et al. v. McDonnell-Ronald Limousine Service Limited, 1999 CanLII 9305 (ON CA), 46 O.R. (3d) 97, November 5, 1999, Finlayson, Moldaver and Sharpe JJ.A. In finding that the Board had the exclusive jurisdiction to decide whether the employer had violated its duty to bargain in good faith by imposing the fee increase, the Court of Appeal stated:

The fact that the service agreement predated the collective agreement is of no significance. The contractual terms respecting the brokerage fees in the service agreement ceased to govern the parties once the appellant entered into the collective agreement with the respondents' bargaining agent. That collective agreement negotiated with the Union as the official bargaining agent of the respondent employees placed the parties to this agreement squarely within the jurisdiction of the OLRB. This is so even after the collective agreement has expired in accordance with its terms where, as here, the parties were negotiating a new collective agreement and one of the parties alleged that the other engaged in unfair labour practices under the Act. …

It was a mistake for the application’s judge to entertain the matter. He could not resolve the overall dispute between the parties and essentially was being asked to determine a subsidiary issue in a labour conflict that was already before the OLRB, a fact that was conceded in effect by the respondents’ counsel. …

35. In late February 1998 the president of the Local union asked the responding parties to resume negotiations to get a collective agreement as the employees were working under terms and conditions which the responding parties had imposed. In March 1998 the union advised Mr. Zahavy that it was relying on section 11 of the service agreement regarding insurance and was of the view that as a result the companies could not require insurance under the companies’ fleet insurance policy. In late March 1998 Ms. Watson advised the companies that the main outstanding issue was that of the inappropriate brokerage fee increase which the union believed the responding parties could not impose because it was a breach of the service agreement.

36. The responding parties did not respond to the request to resume negotiations. On April 6, 1998 the union again wrote to them requesting that bargaining resume. The response was that there were essentially no issues to be discussed, so no bargaining took place.

37. A number of bargaining unit employees filed a civil action seeking an injunction to restrain the responding parties from, among other things, terminating the lease agreements, changing the insurance requirements and increasing fees above the Consumer Price Index. The motion was brought before the Court on April 24, 1998 and the individuals were successful in obtaining an interim injunction. The Board was not provided with a copy of this decision.

38. In September 1998 the bargaining unit voted to create a separate Local. On December 8, 1998 the new local was given a charter and became the Amalgamated Transit Union, Local 1731 (it had been Local 1572). By a letter dated October 25, 1998 Randy Graham, the International Vice-President of the union, introduced the new officers and bargaining committee to the responding parties. On November 16, 1998 the new Local President, Gurdev Singh, wrote to Mr. Zahavy to indicate that the union would like to recommence discussions in order to conclude a collective agreement. Later in November 1998 the responding parties indicated they were not satisfied that there had been a new Local created and refused to meet with the new bargaining committee.

39. The union wrote to the responding parties again on February 9, 1999 seeking to resume negotiations for a new collective agreement. However, by the time this application was filed on June 30, 1999, it had not heard back from the responding parties. It was in this context that the union alleged that the responding parties were in breach of section 17 of the Act.

40. The remedies the union is seeking include a declaration of a violation of the Act; that the responding parties cease and desist from violating the Act; that the Board impose a collective agreement removing the unlawful terms which the responding parties are insisting upon, and that the Board substitute the provisions of the predecessor collective agreement (the Rayner award); that the collective agreement be imposed retroactively; a posting; and damages for all losses incurred by the union and the bargaining unit members.

DECISION

41. For ease of reference section 17 of the Act is reproduced here again:

The parties shall meet within 15 days from the giving of the notice or within such further period as the parties agree upon and they shall bargain in good faith and make every reasonable effort to make a collective agreement.

42. The onus of proving that the responding parties have breached section 17 of the Act lies on the union.

43. Having reviewed the union’s June 1999 pleadings as outlined above, it would appear that by the time this application was filed the responding parties had been refusing to meet with the union or the executive to continue to bargain between February 1998 and June 1999. Had this been all that there was before the Board it is likely that the Board would find that the responding parties had breached section 17 of the Act by failing to meet to bargain in good faith and to make every reasonable effort to make a collective agreement. However, that is not reflective of what happened before February 1998 or in the aftermath of the filing of the application.

44. Prior to February 1998 the workplace parties had negotiated two offers which the union recommended to its members for ratification. Both offers were rejected. The responding parties thereafter took the position that there was nothing more to be bargained.

45. The Board has concluded, for the reasons already given above, that it will consider the evidence of the parties’ efforts after the filing of this application. As is clear from the memorandum of agreement of August 1999 before the Board, and Mr. Clark’s evidence, the responding parties met with the union in and around August 1999 and bargained another memorandum of agreement. That agreement was subject to ratification by the union membership, and as has been noted earlier, was also rejected. The rejection does not nullify the fact that the parties did meet and attempt to reach a collective agreement. On the basis of what is before the Board it also cannot be said that the responding parties had taken such unreasonable positions in negotiations that the union could not agree to the employers’ terms. The union was prepared to, and did, recommend that memorandum of agreement to its members.

46. This brings to the fore the question of the “unlawful” terms. The union maintains that the responding parties could not insist on the inclusion of unlawful terms in the memorandum of agreement of August 1999 or the earlier memoranda. Presumably the corollary to that assertion is that the union bargaining committee could not agree to unlawful terms either, although it appears to have done so three times during the negotiations with these responding parties when it has reached three memoranda of agreement which it has recommended to its members. The union asserts that the bargaining unit members have in part rejected the memoranda of agreement because of the inclusion of the unlawful terms.

47. The union argues that since it has pled that the terms in question are “unlawful”, and because the responding parties did not file a response to that part of this application, the Board must accept that the terms are in fact unlawful. The union is asserting that the Board should accept the facts the union had set out in its application and find against the responding parties on that basis.

48. The Board derives its jurisdiction from the Act, and in this instance, from section 96(4). Therefore the Board has to be satisfied that an employer has acted contrary to the Act before it can impose any remedy (see Fanone Plumbing Mechanical Limited, unreported, Board File No. 1408-99-U, March 31, 2000). A party can plead whatever it wants to, but it cannot make legal conclusions and expect that the Board will simply accept those conclusions because no response has been filed. In a situation where no response has been filed the Board may accept the factual assertions made in the pleadings, but it does not have to accept the party’s assertion of what is a breach of the Act or is allegedly unlawful. That is the very question the Board must decide based on the asserted facts.

49. As has been outlined above, it is the union’s view that the terms are “unlawful” because when the collective agreement and the statutory freeze expired, the responding parties had to revert to applying the terms of the service agreement, which contains provisions regarding insurance and increases in fees. The union is essentially arguing that the service agreement is the “floor” in bargaining and remains a constant even when a collective agreement expires and the statutory freeze expires. Thus, it is asserting that the parties cannot bargain for inclusion in the collective agreement a provision that is worse than the service agreement, and the responding parties cannot impose terms on dependent contractors which are at odds with the service agreement.

50. For the reasons that follow, the Board does not agree with the union’s argument in this regard. It appears that the responding parties use a standard form of service agreement. These service agreements governed the relations of the responding parties with their brokers or broker/drivers prior to the dependent contractors being certified. After certification with the Teamsters’ union, that union bargained terms and conditions of employment at variance with some provisions of the service agreement. When the ATU became the bargaining agent for these dependent contractors, it was unable to reach a first collective agreement and invoked first agreement arbitration. In the course of that arbitration the union specifically asked the Rayner panel to give it language regarding insurance and a diminution in the amount of brokerage and dispatch fees. What it was seeking was at variance with and better than the terms of the service agreement.

51. The union was successful in convincing the arbitration board to grant it the insurance language it was seeking. It was not successful in getting a diminution in the brokerage and dispatch fees, but the Rayner panel did freeze for two years the rates at what they were at that time. Thus, the Rayner award superseded the terms of the service agreement to the extent that the Rayner panel awarded different terms. Insofar as these items were the subject of bargaining, they are covered by the collective agreement which prevails over the service agreement What the Rayner panel awarded became the basis of the new collective agreement that governed the parties’ relations for the next two years until 1997. It is undisputed that the Rayner award was treated as the collective agreement. The terms of the service agreement, other than those modified by the Rayner award, remained extant.

52. The terms of the Rayner award were applied by the responding parties until September 1997, when the statutory freeze expired and the parties were in a legal strike or lock out position. However, since 1995 and throughout the bargaining for a new collective agreement, the responding parties have been seeking new language regarding insurance and increases in the dispatch and brokerage fees. After the expiration of the statutory freeze the responding parties have attempted, and been partially successful, in implementing some of what they had negotiated with the union even though the bargaining unit did not ratify a collective agreement.

53. The Board cannot find anything untoward in the responding parties’ decision to impose the insurance and fee increase terms, nor the need for lease agreements. All of these matters had been bargained about during the negotiations for a new collective agreement from 1997 on. In the August 1997 tentative agreement the union bargaining committee had agreed about aspects of these areas, and in particular to the requirement of a lease agreement, a 6% increase in the monthly lease fees, and a 6% increase in the monthly dispatch and office fee. It had also agreed that there could be increases in the following years in accordance with the Consumer Price Index. The tentative agreement on insurance was to set up an insurance trust fund for all employees, and all employees would have to purchase their insurance from that trust fund. Thus the parties had agreed that employees would all have to participate in one insurance policy, and that they would not be able to choose their own insurer in the future. Since the bargaining unit did not ratify the tentative agreement, the trust fund was not set up. The employer began to require that employees carry insurance through the companies’ fleet insurance.

54. Once the collective agreement term expired and the statutory freeze was over, the employers were free, subject to certain limitations, to change the rates of wages, or “any other term or condition of employment or any right, privilege or duty of the employer, the trade union or the employees”. (See for example Sumner Press Ltd., [1991] OLRB Rep. Oct. 1207 at para. 41 and The Hydro-Electric Commission of the City of Ottawa, [1993] OLRB Rep. Nov. 1231 at para. 7). Section 86(1) of the Act states:

55. (1) Where notice has been given under section 16 or section 59 and no collective agreement is in operation, no employer shall, except with the consent of the trade union, alter the rates of wages or any other term or condition of employment or any right, privilege or duty, of the employer, the trade union or the employees, and no trade union shall, except with the consent of the employer, alter any term or condition of employment or any right, privilege or duty of the employer, the trade union or the employees,

(a) until the Minister has appointed a conciliation officer or a mediator under this Act, and,

(i) seven days have elapsed after the Minister has released to the parties the report of a conciliation board or mediator, or

(ii) 14 days have elapsed after the Minister has released to the parties a notice that he or she does not consider it advisable to appoint a conciliation board,

as the case may be; or

(b) until the right of the trade union to represent the employees has been terminated,

whichever occurs first.

55. In McIntosh Limousine Service Ltd. (as yet unreported decision of the Board, File No. 3953-99-M, April 28, 2000) the Board addressed an interim relief application filed by the applicant in this case with respect to the responding parties in this case. In its decision the Board made some general comments, with which I agree, about what happens after the expiry of the statutory freeze. It stated:

56. However, in the instant case, the statutory freeze found in section 86(1) of the Labour Relations Act expired many months ago, so the responding companies have the “ostensible right” to alter “any term or condition of employment or any right, privilege or duty of the employer, the trade union or the employees [which here includes dependent contractors]”.

57. I have used the word “ostensible” in the previous paragraph because, of course, while section 86(1) permits an employer to initiate change once the statutory freeze has expired and the right to strike has accrued (the effect of section 86(1)(a)), the companies’ conduct must also conform to other provisions of the Act – particularly the section [17] duty to bargain in good faith and the unfair labour practice provisions which prohibit behaviour motivated by anti-union considerations (see especially sections 70, 72, and 76 of the Act). A change in economic circumstances initiated by the “employer” may still be unlawful under the Act, even though it is beyond the time prescribed by section 86(1).

58. On the other hand, employer conduct which impacts adversely on employees does not become unlawful under the Labour Relations Act merely because it contravenes some collateral contractual or common law arrangement, or some other regulatory scheme (licensing provisions, for example). And this latter caveat may be important when one is dealing with “dependent contractors”, because, as I have already noted, dependent contractors are not normal employees. They are a kind of hybrid who are typically engaged in a variety of commercial arrangements that are different from those of a normal employee, and that may or may not be subsumed in any collective agreement. (See again the definition of “dependent contractor” reproduced above). In consequence dependent contractors may have enforceable legal claims and obligations outside of, and in addition to, those found in the collective agreement (just like ordinary employees may have rights found in benefit plans that may, or may not, be included in a collective agreement – see Canadian Broadcasting Corporation v. NABET (1997), 1997 CanLII 1078 (ON CA), 155 D.L.R. (4^th) 159). There may be collateral legal arrangements respecting tools, vehicles, equipment, the supply of materials and so on, that do not appear in the collective agreement or may subsist on their own once the agreement has expired.

59. The Legislature has provided that dependent contractors may engage in collective bargaining, and the definition of “collective agreement” is elastic enough to encompass the whole panoply of their rights and obligations. The agreement can be tailored to the special circumstances of a “dependent contractor”. But the collective agreement need not be so all-encompassing. The bargaining parties can decide what will or will not be included in the collective agreement (and thus what will or will not be “arbitrable” pursuant to section 48 of the Act). Moreover, the statute (other than section 86) does not deal comprehensively with the situation which obtains when the collective agreement is no longer in force. For example: sections [17] and 73 continue to apply, but, by the same token, section 86 suggests that the employer retains some ability to initiate changes. So, in summary, the legal situation of the union’s members is an amalgam of collectively bargained items and other items, which may have their own legal foundation.

60. The terms that the responding parties imposed in this case cannot be said to be designed to undermine the union because the union bargaining committee had been prepared to accept these terms, or variations on the terms, and had recommended ratification by the membership. The responding parties, in the absence of a ratified collective agreement, appear to have instituted terms (whether lawful in a civil contract sense or not) that the union had been prepared to agree to.

61. Nor can it be said that the terms were unlawful. In the Board’s view once the parties bargained about terms of the service agreement and the Rayner panel imposed collective agreement terms which modified the service agreement, the service agreement terms were no longer applicable for the bargaining unit members. The only terms dealt with by either the Rayner panel or the previous Teamsters’ collective agreement were ones that had some relationship to compensation or working conditions. That is what collective agreements deal with. The Rayner panel specifically refused to incorporate the service agreement as a whole into the collective agreement. Thus, the provisions of the service agreement which related to matters outside of the Teamsters’ previous agreement, or the Rayner award, remained in force, but all other service agreement provisions dealt with through negotiations or the first contract award were effectively revoked for the bargaining unit members, and were superseded by the collective agreement terms.

62. The Board does not accept the union’s contention that upon expiry of the term of the collective agreement the responding parties and the dependent contractors reverted to the terms of the service agreement. To maintain that position would require the Board to find that when a collective agreement and the statutory freeze expires employees can revert to reliance on their individual contracts of employment which preceded the collective bargaining relationship. That is both historically and intuitively not the case. Employees, or dependent contractors, seek representation through a bargaining agent or trade union because they are somehow dissatisfied with their employment relations with their employer. A union, once certified as the bargaining agent for the employees, bargains a collective agreement in order to improve the working conditions of the employees. Once it does so, the original individual contracts of employment are spent, except to the extent that something may not have been bargained about or be a perquisite that the employer continues to offer to its employees outside of the collective agreement. In this case, from the Board’s perspective, all service agreement terms which had not been amended through collective bargaining or the imposition of the Rayner award, remained in effect. However, those terms that had been bargained or imposed through the Rayner award, were for the purposes of the Labour Relations Act, 1995 subject to change by the responding parties after the expiry of the statutory freeze.

63. In all of the circumstances of this case the Board cannot find that the responding parties bargained in bad faith contrary to their obligation under section 17 of the Act. The union and the responding parties reached three agreements that were put to the bargaining unit for ratification. That indicates that the parties were able to reach some understanding, even if the union bargaining committee was not completely satisfied about the terms of the prospective agreement. The bargaining unit rejected the offers three times, apparently claiming that the responding parties are seeking unlawful terms in a new agreement. Notwithstanding their rejection of the offers, the bargaining unit has not engaged in a strike even though it has been without an agreement for about three years. The Board has not found that the terms in contention are unlawful, and as such, cannot find that the responding parties are bargaining to impasse something they cannot so bargain. In any event, as the Board noted earlier in the decision, it is difficult to see how it can be said that the responding parties have bargained these terms to impasse when the union and the responding parties have been able to reach agreements on them which the union has recommended to its members for acceptance.

64. For all of the above reasons the bad faith bargaining portion of this application is hereby dismissed.

65. In the original application the union also alleged that the responding parties had breached sections 70, 72, 73, 76, 79, 82, and 86 of the Act. However, at the hearing the union did not rely on any of these sections and made no arguments regarding its allegations of breaches of these sections. Therefore, the Board declines to make any findings regarding breaches of the above-noted sections.

66. By a letter dated March 16 2000 the applicant is seeking to add further allegations and pleadings to this application. Although the union had already addressed the issue of the “unlawful” leases in its submission on the bargaining in bad faith portion of the complaint, it is now seeking to add further allegations about this very subject. The Board has addressed this matter already and has found that the responding parties are not breaching the Act in requiring workers to sign lease agreements or carry insurance through the responding parties’ insurer. The Board therefore declines the union’s request to amend its pleadings as outlined in the union’s letter dated March 16, 2000.

67. I remain seized with respect to the remainder of the application. This matter is referred to the Registrar to set further dates in consultation with the parties.

“Gail Misra”

for the Board