0248-00-ES UFCW, Local 1000A, Applicant v. Cara Operations Limited; Can Can Food and Vending Services Ltd. and Ministry of Labour, Responding Parties.

Employment Practices Branch File Nos.: 40010943 and 40010944

BEFORE: Stephen Raymond, Vice-Chair.

APPEARANCES: Sean FitzPatrick and Kevin Benn for the applicant; Brian O’Byrne, Jennifer Davey, Frank Charron, Craig Richardson and Jim Whyte for Cara Operations Limited; Hugh Dyer and Mike Byerley for Can Can Food and Vending Services Ltd.; Murray Klein for the Ministry of Labour.

DECISION OF THE BOARD; November 5, 2001

1. Prior to June 5, 1999, the Greater Toronto Transport Authority (“GTAA”) determined that Bitove Corporation (“Bitove”) would no longer be the sole provider of food services at Pearson International Airport (“Pearson”). Instead, the GTAA would contract with three corporations who would provide food services at Pearson – Bitove, Cara Operations Limited (“Cara”) and Can Can Food and Vending Services Limited, operating as Select Service Parties (“Can Can”). I will refer to this determination of the GTAA throughout this decision as “the transaction”. The employees of Bitove received notices of termination from Bitove. UFCW Local 1000A (“UFCW”), which represented the employees of Bitove, took the position that, pursuant to the Employment Standards Act, R.S.O. 1990, c. E.14, as amended (the “ESA”), the terminated employees were also entitled to termination notice or pay in lieu of that notice from Cara and/or Can Can.

2. The issue in this matter is whether Cara and/or Can Can are successor employers pursuant to section 13.1 of the ESA and thus are required to provide termination notice or pay in lieu of notice to the terminated former employees of Bitove.

3. In a decision of the Board dated December 6, 2000, the Board indicated that this application would be addressed in two phases. The first phase would deal with all issues pertaining to the entitlement of the employees, as a group, to require Cara and/or Can Can to pay termination pay. The second phase of the application, which would only occur if there was a finding of entitlement in phase one, would be an examination of the individual circumstances of each person and a determination of what entitlement, if any, each person had.

4. The parties have now provided all the evidence and made all their submissions with respect to phase one of this application. This decision is solely in relation to the phase one issues.

5. There are a number of arguments raised by Cara and Can Can as to why the provisions of section 13.1 of the ESA do not apply. Those arguments can be broadly summarized as follows:

6. The GTAA is a federal undertaking. section 13.1 of the ESA creates a code of responsibilities when a food service is transferred from one employer to another. The code binds not only the predecessor and successor employers, but also the building owner/manager. As a federal undertaking, the provisions of the ESA and, in particular, section 13.1 cannot bind the GTAA the building owner/manager. Since the ESA cannot bind the GTAA, the code has no application to any of the parties to the transaction.

7. The UFCW has no standing to bring this application on behalf of its members.

8. Cara and/or Can Can did not replace Bitove. Bitove continues to provide food services at Pearson and Cara did so previously (albeit on a much more limited basis).

9. The food services that are being provided are not provided to the GTAA. This is simply a commercial lease of space. The services are not related to the servicing of the premises nor are they provided exclusively to the users of Pearson or employees of the GTAA.

10. Cara and Can Can required Bitove to provide the necessary termination notice to its employees. Therefore, Cara and/or Can Can ought to be able to take credit for that notice. As well, the employees have received termination notices from Bitove and accordingly are not entitled to receive any further termination notice.

11. Even if section 13.1 of the ESA applies to Cara and Can Can and this transaction, the Board ought to exercise its discretion and not award any damages.

Background Facts

6. Prior to June 5, 1999, Bitove was the main food service provider at Pearson. It employed approximately 400 persons who were represented by UFCW. All of the restaurants and food court establishments at Pearson were operated by Bitove which leased space from the GTAA. Bitove operated in each of Pearson’s three terminals. As a result of the decision by the GTAA to subdivide its lease with Bitove into three approximately equal parts, and the fact that Bitove would only operate about one-third as many food service establishments as it had prior to June 4, 1999, approximately 227 employees of Bitove were given notices of termination by Bitove.

7. As of June 5, 1999, the GTAA leased space to Bitove as well as Cara and Can Can. Each operated restaurants and/or food courts at Pearson’s three terminals.

8. Cara and Can Can both made significant leasehold improvements to the spaces leased by the GTAA. They introduced completely new food establishments in the three terminals. In some cases, the new concept was similar to what had been provided by Bitove – for example, an establishment that had been an Arrivals Deli Bar when operated by Bitove became a Shopsy’s when operated by Cara. Conversely, some of the new concepts were quite different – for example an establishment that had been a Sports Bar when operated by Bitove became a Tim Horton’s when operated by Cara.

9. Both Cara and Can Can were aware of a potential issue relating to the employees of Bitove. An arrangement was made by Bitove, Cara and Can Can to provide for severance pay to the Bitove employees whose employment was terminated as a result of the change in the food service operation at Pearson. Cara, Can Can and Bitove each paid a share of the cost, although, the Board was not provided with specifics as to the amount of each share or whether they were equal shares. As well, it was not disputed that the changeover date had been extended until June 4, 1999 so that Bitove could provide termination notice to its employees.

10. There is one additional fact that needs to be referred to, although it has no bearing on my ultimate decision in this matter. The Ministry of Labour publishes a Policy and Interpretation Manual for the ESA. As of the time of the decision of the Employment Standards Officer (March 6, 2000) it was the policy position of the Ministry of Labour that section 13.1 of the ESA did not apply to a transaction such as the one in this application. However, the Ministry of Labour, as of April 2000, amended its policy and now states that section 13.1 does apply in circumstances such as the one in this application.

Issue 1 – the Constitutional Question – since the GTAA is a federal undertaking, can [section 13.1](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e14/latest/rso-1990-c-e14.html#sec13.1_smooth) of the [ESA](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e14/latest/rso-1990-c-e14.html) apply to this transaction?

11. The parties entered into an Agreed Statement of Facts in respect of this issue which is reproduced in its entirety below. Paragraphs 1-17 are agreed to. There is a dispute as to paragraph 18. I agreed that if my decision turned on the facts in paragraph 18 that the parties would be able to call evidence with respect to this fact. My decision does not turn on this fact so no evidence need be called. The Agreed Statement of Facts is as follows:

STATEMENT OF FACTS

CONCERNING

THE CONSTITUTIONAL ISSUE

1. Lester B. Pearson International Airport (“Pearson Airport”) is an aerodrome facility located in the City of Mississauga, Ontario. It is the largest airport in Canada and the seventh largest in North America.

2. Pearson Airport occupies approximately 4,400 acres and includes air side, terminal, ground side and aviation support facilities. It currently has four runways in operation and approximately 90 planes can take off from or land on these runways every hour.

3. Pearson Airport has three large commercial passenger terminals, each of which handles domestic and international passengers and cargo. There is also a subterminal to Terminal 2, which handles certain US-Canada transborder flights for Air Canada and its connector airlines. Approximately 60 airlines provide regular service at Pearson Airport. Pearson Airport handles approximately 28 million passengers per year and approximately 400,000 tons of cargo.

4. There is currently a major redevelopment project taking place at Pearson Airport because of the great increase in demand for the aviation services provided by Pearson Airport. The passenger demand is expected to grow to 36 million people by the year 2010. the redevelopment project includes construction of new runways and also the construction of a massive new terminal building. The primary objective of this latter aspect of the project is to replace the outdated and capacity constrained Terminals 1 and 2, with a single new terminal building to be constructed on the site where Terminals 1 and 2 are currently located. The new terminal will be a very large facility capable of handling domestic, transborder and international air traffic and all commercial aircraft types. Additionally, airline space, including business and frequent flier lounges, will be constructed and retail concession space (including bars and restaurants) will be interspersed throughout the terminal. The new terminal will have a three level roadway system (ie arrivals, departures and service vehicle levels) and a new integrated ground transportation facility.

5. The Greater Toronto Airport Authority (“GTAA”) was incorporated on March 3, 1993 under Part 11 of the Canada Business Corporations Act as a corporation without share capital. Such incorporation took place in contemplation of the new National Airports Policy which was announced by the federal government in July 1994. Under this Policy, the management, operation and maintenance of some 26 airports within the National Airport System (including Pearson Airport) were to be transferred through various ground lease arrangements to different Canadian Airport Authorities.

6. Until about the mid-1990’s, Pearson Airport was owned and operated by the federal Crown. In 1994, the federal Crown went from being an owner and operator of airports to an owner and landlord. That year, the Government of Canada published the National Airports Policy, which called for the commercialization bot [sic] of Canadian air navigation and Canadian airport services. Under this policy, the federal Crown retains its control over aeronautics and maintains its role as regulator of air safety and security. But it now leases airports to private operators called Canadian airport authorities, which are “free to operate airports on a commercial basis”.

The National Airports Policy led to the creation of the GTAA and Nav Canada. The GTAA is a private non-profit corporation. Its board of directors consists of nominees from the Regional Municipalities of Durham, Halton, Peel and York, the City of Toronto, the Province of Ontario and the federal government. GTAA Board members reflect the interests of business, organized labour and consumers. In December, 1996, the federal Crown leased Pearson Airport to the GTAA under a 60-year ground lease. As the local airport authority, the GTAA’s mandate is to manage, operate and develop the airport for the term of the lease.

7. By virtue of its status as tenant under the Ground Lease, the GTAA has the authority to set and collect airline rates and charges from airlines and negotiate and/or issue leases, licences and permits covering a broad range of activities.

8. Pearson Airport continues to require a licence to operate as an airport or aerodrome, which licence is issued by Transport Canada Aviation (an arm of the federal government).

9. The bars and restaurants that Cara operates pursuant to its lease with the GTAA are situated in All [sic] three terminals (Terminals 1, 2 and 3) as well as the Terminal 2 sub-terminal.

10. When Cara took over the various areas in the three terminals as a result of its successful bid, it undertook wholesale, leasehold improvements in these areas. Prior to undertaking these requirements, Cara was required to obtain from the GTAA an approved Facility Alteration Permit.

11. One of the terms of the Ground Lease is that unless the municipality in which Pearson Airport is situated and the GTAA conclude a Municipal Authority Agreement, all construction at Pearson Airport must comply with the National Building Code (a federal enactment) and the National Fire Code of Canada (also a federal enactment). In fact, the GTAA and the City of Mississauga have never been able to conclude a Municipal Authority Agreement and hence the National Building Code and the National Fire Code of Canada constitute the applicable building and construction standards at Pearson Airport. Attached is a copy of an “Application for Airport Construction” form which must be completed and submitted to the GTAA by an applicant seeking to obtain a Facility Alteration Permit. Contractors performing the construction are required to be qualified for completing the work and to be licensed in the Province of Ontario.

12. All food operations carried on at Pearson Airport (including those carried on by Cara, Bitove and Can Can) are subject to federal regulatory control. Federal Health Canada Inspectors inspect the food prepared as well as the food preparation areas in accordance with the Federal Department of Health Act.

13. All individuals (including Cara employees) who work in “restricted” areas at Pearson Airport require a licence known as Restricted Area Pass which is issued by the GTAA. The GTAA conducts appropriate background and other checks before deciding whether or not to issue a Restricted Area Pass. A “restricted” area for this purpose includes the areas in the passenger terminal beyond the personal screening gates, i.e. the screening processes that passengers have to go through before passing into the area from which they board an aircraft. Many restaurants and bars are located in these restricted areas. These include bars and restaurants operated by Cara as well as Bitove and Can Can. Since Cara has the right under its collective agreement, subject to the job posting provisions, to assign an employee working at Pearson Airport to any bar or restaurant operated by Cara at Pearson Airport, all Cara’s employees are obliged to obtain a restricted area pass.

14. In addition, and because access to the Terminal 2 sub-terminal is by way of ground transportation across the Pearson Airport tarmac, an additional special “air side” pass is required for all individuals who work in the food and beverage operations at the Terminal 2 sub-terminal. Once again, this pass is issued by the GTAA and before issuing such a pass, the GTAA conducts various background and other checks before deciding whether to issue it. Cara also requires all of its employees to obtain this pass.

15. The federal Non-smokers’ Health Act applies to employers who employ one or more persons in employment described in subsection 123(1) of the Canada Labour Code. Cara and Can Can maintain that the GTAA requires that construction of the smoking areas in Cara’s and Can Can’s bars & restaurants including the ventilation systems be consistent with the standards set out in this federal statute.

16. Policing at Pearson Airport is handled jointly by the Peel Regional Police Service and the RCMP. Peel Regional Police handle all general protective policing at Pearson Airport, which includes any alleged violations of the Criminal Code, as well as traffic and parking matters. Allegations of workplace theft by persons employed in the food and beverage outlets at Pearson Airport, for example, are investigated by the Peel Regional Police Service. The RCMP meanwhile handles matters that are solely in the federal jurisdiction, which includes immigration and passport issues, drug importation and national security investigations.

17. On [sic] Spring, 1999 Bitove provided the GTAA with information concerning the Bitove employees. This information consisted of the names, start dates, positions, full time/part time status, rates of pay and seniority of all employees employed by Bitove at Pearson Airport on February 1, 1999.

On June 1, 1999 the GTAA provided the following information to Cara and Can Can the names, start dates, length of service, rates of pay, weekly hours, weekly pay and FT/PT status with respect to the Bitove employees with five or more years of service who were to be terminated at Pearson Airport.

All of the foregoing information referred to in the previous 2 paragraphs were passed on by the GTAA to Cara and Can Can in the context of the discussions that were taking place (as referred to in parag [sic] 4 of Can Can’s Response and parag [sic] 6 of Cara’s Response) whereby the GTAA was attempting to make a smooth transition and thereby prevent a labour disruption of the airport.

Cara and Can Can never requested any of the foregoing information from the GTAA concerning the Bitove employees nor any other information concerning such employees.

At no time did the GTAA ever refuse to provide Cara or Can Can with any information it had concerning the Bitove employees.

18. No problem arose in the present case for Cara out of the performance of non-performance by the GTAA of the obligations imposed by section 13.1 of the Employment Standards Act on the building manager.

19. Cara and Can Can argue that section 13.1 of the ESA had no application to them because the GTAA is under federal jurisdiction. Section 13.1 creates a code of responsibilities and obligations on predecessor and successor employers in certain situations. It also places responsibilities and obligations upon the building owner/manager. Cara and Can Can acknowledge that they are employers that are regulated by the provincial employment laws even while operating at Pearson. However, because the GTAA is a federal undertaking, section 13.1 of the ESA cannot be applied in this circumstance to Cara or Can Can. This is because, in their view, in order for section 13.1 to operate the building owner/manager must be subject to the provisions. In this case they argued, as the building owner/manager is not subject to the provisions, the entire code fails and it is inappropriate to require the successor employers to comply with their respective obligations. It was analogized in the argument as being like a set of dominoes. In order for the provisions of section 13.1 to be effective, all the dominoes must be standing. In this transaction, the section clearly applies to the predecessor employer (Bitove) and to the successor employers (Cara, Can Can and Bitove) but it does not apply to the building owner/manager (GTAA). It was argued that if the building owner/manager domino is not standing then the section could have no application whatsoever including any application to the successor employers.

20. It is helpful at this point to set out the responsibilities and obligations of the building owner/manager as set out in the ESA, sections 13.1(8)-(10):

13.1 (8) Upon request, an employer providing services at a premises shall give the owner or the manager of the premises such information as may be prescribed about the employees who are providing the services.

(9) Upon request, the owner or manager of the premises shall give the information referred to in subsection (8) about the employees who are providing the services at the premises on the request date to a person who becomes a successor employer providing the services.

(10) Upon request, the owner or manager of the premises shall give such information as may be prescribed about the employees who are providing the services at the premises on the request date to a person who may become a successor employer providing the services.

14. Counsel for the UFCW argued that there is no constitutional issue in this transaction for two reasons. First, the issue is completely hypothetical. The GTAA did not fail in any way to comply with the ESA such that the successor employers’ ability to comply with the ESA has been impeded. Second, the provisions of section 13.1 could apply to the GTAA despite the fact that it is a federal undertaking.

15. I agree with the UFCW.

16. The matter is purely hypothetical for a number of reasons. First, there is no allegation made that the successor employers would not be able to comply with their obligations because of a failure of the GTAA. Second, the GTAA did not appear and claim that a provincial law was adversely impacting it. Third, the facts agreed to indicate that the GTAA, regardless of whether it was obliged to do so, complied with its obligations under the ESA.

17. As well, the provisions of section 13.1 could be enforced against the GTAA. Having reviewed the decisions provided to me, including the exceptionally well-articulated reasons in Greater Toronto Airports Authority v. Mississauga (City), 2000 CanLII 16948 (ON CA), 50 O.R. (3d) 641 (Ont. C.A.), and Irwin Toy Ltd. v. Quebec (Atorney General), 1989 CanLII 87 (SCC), [1989] 1 S.C.R. 927 (S.C.C.), I am satisfied that the constitutional law question as it relates to matters such as the one before me is quite well settled. In Greater Toronto Airports Authority, above, Laskin J. accepts the test enunciated in Irwin Toys for determining whether a provincial law must be held to be of no force or effect when it is applied to a federal undertaking.. The test is:

(a) If a province seeks to apply its law directly to a federal undertaking, the provincial law will not apply if it affects a vital part of that undertaking, and

(b) If, however, a provincial law only indirectly or inadvertently affects a federal undertaking, it will apply unless it impairs, paralyses or sterilizes that undertaking.

18. The federal undertaking is Pearson. It is run by the GTAA, which is also a federal undertaking. Does the requirement that the GTAA provide information to a successor employer in the food services area of Pearson affect a vital part of the operation of Pearson? No. It is not vital. Pearson could operate without food service. However, the effect of this provision does not even go as far as preventing the operation of a food service. It simply imposes an obligation on the GTAA if it intends to change food service providers.

19. Therefore, I find that there is no constitutional reason why these sections of the ESA ought not to be applied against Cara and Can Can. They are both provincially regulated employers and the fact that the GTAA, the building owner/manager, is a federal undertaking does not remove Cara and Can Can from the operation of the provincial statute. A statute which governs their relationship with their own employees at Pearson.

Issue 2 – Can the UFCW bring this application on behalf of its members?

20. Cara and Can Can argue that the UFCW has no authority to bring this application. Applications must be brought pursuant to the ESA. The ESA provides for one mechanism for complaints by unionized employees and another for non-unionized employees. It is argued that neither mechanism was pursued properly. If the employees are non-union, then the UFCW has no status to bring the application. If the employees are union members and entitled to termination pay (as is alleged in the application), then the employees must have been, prior to their entitlement to termination, employees of either Cara or Can Can. Cara’s unionized employees are represented by UFCW, Local 206 and Can Can’s by the RWDSU. Only those unions would have the authority to bring a complaint on behalf of the unionized employees of Cara or Can Can.

21. They argue as well that, even if there is a mechanism by which the UFCW can bring this application on behalf of these employees, there is no indication that it has the authority to do so.

22. The UFCW argues that it may bring this application. It argues that the issue of entitlement to bring the application in this matter was not raised initially with the Employment Standards Branch of the Ministry of Labour and that once an Employment Standards Officer investigates an issue it is irrelevant how that matter comes before the Board. Second, it argues that the UFCW is not the claimant. It seeks nothing on its own behalf. It has listed the employees on whose behalf it seeks compensation. Third, it argues the claim was filed in a manner approved by the Employment Standards Branch of the Ministry of Labour.

23. As for the fact that this application should have been filed by another trade union, the UFCW disagrees. It asserts that Cara and Can Can are not successor employers pursuant to the Labour Relations Act and, as such, the unions that have the representative rights for the employees of Cara and Can Can never represented these employees. The fact that Cara and Can Can are successor employers pursuant to section 13.1 of the ESA does not mean that they are successors pursuant to the Labour Relations Act, 1995.

24. I agree that this application may be brought by the UFCW. First, the Employment Standards Branch of the Ministry of Labour approved the manner in which the application was brought. Second, it would not make sense to require each of these individuals to file an individual application. Third, the UFCW only seeks compensation for the individuals not for itself. Fourth, the ESA is an entitlement statute that should be interpreted liberally so as to give effect to its minimum standards. Although the sections of the ESA setting out the manner in which applications may be filed are narrowly constructed, the ESA does not prohibit a group complaint brought by an agent on behalf of individuals. Finally, there is a gap in the legislation as it relates to an application by a formerly unionized employee for termination pay against a successor. Since the successor never employed the person at law, it is not appropriate to force the litigation of termination pay owed by the successor upon a trade union with which the successor has a bargaining relationship but which never represented the employee. It is not inappropriate or contrary to the ESA to have the former bargaining agent pursue the claim on behalf of the former employees of Bitove.

Issue 3 - [section 13.1](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e14/latest/rso-1990-c-e14.html#sec13.1_smooth) of the [ESA](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e14/latest/rso-1990-c-e14.html) does not apply because Cara and Can Can did not replace Bitove

25. Section 13.1 (2) of the ESA states that:

13.1 (2) This section applies if, on or after October 31, 1995, one employer begins to provide services at a premises replacing another employer who was providing the services.

26. Cara and Can Can argue that the preconditions for the application of section 13.1 (2) are not present. Prior to June 5, 1999, Bitove and Cara were providing the services. Now, Bitove, Cara and Can Can provide the services. Simply put, Bitove has not been replaced.

27. As well, Cara and Can Can provide a different food service than that provided by Bitove. They changed the concepts and the layout. They engaged in extensive renovations. As well, Cara did not “begin” to provide the services. It was already providing services prior to June 5, 1999.

28. The UFCW argues that Cara and Can Can are replacing Bitove. Previously, the GTAA contracted with Bitove to provide the services and now the GTAA contracts with each of Bitove, Cara and Can Can. The contract that the GTAA had with Bitove was ended and the GTAA entered into new contracts with each of Bitove, Cara and Can Can. The new contracts had a commencement date of June 5, 1999 and the former contract with Bitove ceased to be of any effect as of June 4, 1999.

29. As for the fact that Cara had a former relationship at Pearson, there was no evidence led that Cara had provided the food services that it was now providing to the GTAA prior to June 5, 1999. Put simply, it was the view of the UFCW that Cara and Can Can had replaced Bitove as is contemplated by section 13.1(2) of the ESA.

30. I agree with the UFCW. There is some question as to whether section 13.1 has any application in a situation such as this, as will be addressed below. However, the section must apply when a building owner or manager subdivides the contracted services among more than one successful bidder. Let us assume a more straightforward situation – a building manager in a large downtown office complex has one company providing cleaning services to the building complex. For whatever reason, the building manager decides to put the cleaning services out to tender and decides to divide the work into two equal parts. Two new companies are awarded the contracts. It would not be sensible to find that subdividing the contract could defeat the provisions of the ESA. Let us take the same fact situation and add an additional fact – one of the successful bidders is the former contractor. In that situation, the provisions of the ESA must still prevail – it would not be sensible to find that subdividing the contract and awarding one part to the former contractor could defeat the ESA.

31. In my view, the present circumstance, although more complicated than the fact situations set out above, must also be one where the ESA provisions still apply. The purpose of the section is to protect vulnerable employees in three sectors – security, cleaning and food service – from the vagaries of what might occur in a tendered situation with competing contractors vying for work. While it is true Bitove has not been completely replaced at Pearson, Cara and Can Can have each replaced approximately one-third of Bitove’s operation. This satisfies the requirements of section 13.1 (2) of the ESA.

Issue 4 – [section 13.1](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e14/latest/rso-1990-c-e14.html#sec13.1_smooth) of the [ESA](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e14/latest/rso-1990-c-e14.html) does not apply because Cara and Can Can are not providing food service to the GTAA

32. This argument was the principal argument made by both Cara and Can Can as to why the provisions of section 13.1 of the ESA do not apply to this situation. It was argued that Cara and Can Can do not provide “services” to a building owner/manager. The relationship between Cara/Can Can and the GTAA is a commercial relationship. Cara and Can Can rent space. There are some restrictions placed on the use of that space in accordance with the commercial lease.

33. Typically, section 13.1 applies to situations where a building owner/manager pays to receive a service, whether it is security, cleaning or food. In this transaction, the financial compensation goes the other way. Cara and Can Can pay the GTAA to be at Pearson. They are not providing a service to the GTAA.

34. They argue that this section is not intended to capture food services everywhere – it is only intended to capture certain types of food services – those that are related directly to serving premises for a building owner/manager, such as a company cafeteria. The services provided at Pearson are more similar to a food court in a shopping centre which would not be covered by this provision.

35. The UFCW argues that the form of the relationship is less important than the substance. It says the question to be asked is whether the services are provided not the direction in which the payment is made in the commercial transaction. In most food service situations, the food service provider is going to charge a customer for the food and then it will either lease space or, if the food is subsidized, it will receive an additional payment. In either case, section 13.1 of the ESA may apply – it is more important to determine if the provider is servicing the premises or providing a general service to the public.

36. The UFCW argues that the GTAA has been very specific in its commercial leases with Cara and Can Can. The GTAA requires that food services be provided. It does not allow Cara or Can Can to sell newspapers or T-shirts.

37. All parties agreed that section 13.1 of the ESA applied to food services provided in a company cafeteria but did not apply to food services provided in a food court in a shopping mall. The UFCW argues that the important difference between a food court in a shopping centre and the food courts at Pearson are the degree to which the customers are related to the premises. At a shopping centre, it is entirely reasonable to expect that some people come just for the food. The parking is usually free and there are often restaurants located inside. As well, people who work in neighbouring offices might travel to a food court in a shopping centre for a meal. On the other hand, nobody goes to Pearson for a meal. The parking is expensive and you would not eat at Pearson unless you had another reason to be there – such as working for an airline or at Pearson itself, being an air traveller or someone who is meeting a traveller. The UFCW submitted that there are 28 million passengers who pass through Pearson each year and that the food services provided are for the benefit of those people and others who have business at Pearson. Further, approximately half of the food service facilities are located in secure areas of Pearson, past security checkpoints where only passengers and authorized personnel are permitted to be.

38. It was suggested that the food service facilities at the airport are similar to a concession stand at a stadium, arena or museum. No one would enter such a facility just to have food. The concession stand is invariably being used by members of the public who are using the premises as a whole, while a food court in a shopping mall may be used by a person who has no other business or purpose for being in the facility.

39. On the whole, while I agree with Cara and Can Can that the form of the commercial relationship is important, I also agree with the UFCW that Cara and Can Can are providing services directly or indirectly to a building owner/manager that are related to servicing the premises. The GTAA wants to encourage the use of Pearson. One of the ways in which it does so is to provide additional ancillary services to the flying public such as food services. It contracts with Cara and Can Can to do so (as well as Bitove). Cara and Can Can operate the food services which are designed to accommodate the needs of the 28 million passengers. Almost half of those services are provided on the secure side of Pearson where only passengers and authorized personnel can attend.

40. Food services at an airport fall in an area between food services provided in a company cafeteria and food services provided in a shopping mall. Another type of food service that falls between these two is a concession stand in an arena, stadium or museum. There are no cases that determine whether these establishments meet the test of providing “service to the building owner/manager”. The food services at Pearson are more akin to a concession stand in an arena, stadium or museum. I find that in these types of situations, the service is provided to the building owner/manger. Like the stadium, museum or arena, food services in an airport are provided so that a building owner/manager may enhance the experience of the premises for persons who would be there regardless of the food service.

41. The form of the commercial arrangement is of some significance. In both the provision of security and cleaning services, the relationship is clearly one of owner to contractor and the owner pays for the services provided by the contractor. Food services are a little more complicated. There is often a commercial lease of a premise in which the food service is to be provided. However, the fact that a lease exists does not in and of itself mean that the provisions of section 13.1 do not apply.

Issue 5 – As Cara and Can Can took steps to ensure that the Bitove employees each received a notice of termination, any further notice would be “double recovery”

42. Cara and Can Can argue that, even if section 13.1 of the ESA applied to this transaction, that because Bitove gave these employees notice, a fact that is undisputed, there has not been a termination of employment contrary to the ESA. They argue that as soon as Bitove provided notice, section 13.1 (4) of the ESA does not apply. That section states that:

13.1 (4) If the successor employer does not employ an employee of the previous employer, the successor employer shall comply with Part XIV in respect of the employee.

43. Prior to the changeover date, the successor employers ensured that the Bitove employees were paid any ESA severance that may be owing. In accordance with Regulation 327 of the ESA, a notice was provided to Bitove employees, which provided that:

This posting shall serve as notice of termination for those employees who are ultimately bumped out of a position and laid off indefinitely effective June 4, 1999.

44. Cara and Can Can argue that they are only liable for the liability of the predecessor, Bitove. In this case, the predecessor has no liability and accordingly, the successors are without liability.

45. The successor employers knew that they had to deal directly with the conclusions of the Board in Hallmark Housekeeping Services Inc., Board File No 0579-98-ES dated December 1, 1999 (unreported). In that decision, the Board found at paragraph 37 as follows:

46. The obligations set out in the section 13.1(4) are obligations imposed on a successor employer who does not employ an employee of the previous employer. These obligations do not arise and cannot be discharged prior to the changeover date.

47. Cara and Can Can disagree with the statutory interpretation that led the Board to that conclusion. They state that they were not the employer of the employees and, as a result, were under no obligation to provide notice. As well, the employees all received notice of termination from Bitove and there is no statutory basis on which, they argue, I can conclude that the employees are entitled to a further notice of termination.

48. The UFCW argues that the notice of termination provided by Bitove does not render the successors’ obligation to provide notice fulfilled. On October 28, 1998, Bitove wrote to its employees and indicated “Your employment with our company will end on (changeover date). You will be comforted to know that under the Employment Standards Act (“Act”) any new employer will be required to either offer you employment or give you Notice and Severance in accordance with the Act.”

49. The UFCW relies on the Hallmark case, above, to support its position. In that case, the Board carefully considered the statutory framework. The Board based its decision on section 13.1 (2) of the ESA which provides that the section applies to a successor who “begins to provide services”; on the fact that a successor employer does not learn the names of the impacted employees until the changeover date; and the fact that one of the purposes of section 13.1 of the ESA is to encourage successor employers to hire the employees of the predecessor.

50. The simple question is this: does the ESA require that successor employers either employ or provide notice of termination to the employees of the predecessor regardless of whether such employees have already received statutory notice? While it certainly, at first impression, seems that the ESA must not require this, I am compelled by the argument of the UFCW and the decision of the Board in Hallmark to find that the employees of the predecessor are entitled to notice of termination from the successor if not hired by the successor regardless of whether such notice of termination has been provided by the predecessor. My reasons for so finding are based on the statutory interpretation found in the Hallmark decision. In that decision, the Board determined that section 13.1 of the ESA provides a code that is designed to protect employees in vulnerable workplaces. It provides that certain employers who would not otherwise at law be successor employers are successor employers. It provides that those employers are required to comply with the notice of termination sections of the ESA. It provides that the successor will not know the identity of those employees until it begins to provide the services. This is because the employer who becomes a successor employer providing the services may obtain the information by making a request of the building owner. Obviously, it can only do so once it has started to provide the services after the changeover date.

Issue 6 - the Board has discretion as to whether it awards damages and ought to exercise it given the circumstances in this application

50. The responding parties rely on section 13.1(14) of the ESA. It states:

13.1 (14) If a person fails to comply with this section, an employment standards officer may order what action, if any, the person shall take or what the person shall refrain from doing in order to constitute compliance with this section and may order what compensation shall be paid by the person to the Director in trust for other persons.

51. The responding parties argue that to order termination pay in this circumstance would be to provide the employees of Bitove with double recovery. They have already received termination notice from Bitove. In these circumstances, the Board ought to exercise its discretion and not order further termination pay to these employees.

52. The UFCW argues that pursuant to section 68 of the ESA, the Board has the powers of an Employment Standards Officer. An Officer has the power to make an order and to determine how much the compensation is owing but, if there is a violation of the Act, the Officer does not have the power to determine whether to make an order or not and that is what is being requested by the responding parties.

53. Further if the Board has a discretion, it ought to exercise that discretion in a reasonable manner. There is no basis upon which the Board ought to decline to determine that even though the ESA has been violated by the successor employer and the employees are entitled to termination notice (or pay in lieu thereof) that the Board would exercise its discretion to not so award.

54. I agree with the UFCW. Leaving aside the issue of whether the Board has discretion, I decline to exercise any discretion that I have.

Conclusion

55. I conclude for the reasons set out that this transaction is one to which section 13.1 of the ESA applies. The employees are entitled to termination pay from the successor employers.

56. The hearing will resume on November 13, 15 and 27, 2001 and January 3, 4 and 16, 2002, commencing at 9:30 a.m. in the "Board Room", 2nd Floor, 505 University Avenue, Toronto, Ontario to consider all issues relating to phase two of the litigation of this application. The parties may wish to meet with the Labour Relations Officer assigned to this application on the first hearing date to discuss the possible resolution of any and all outstanding phase two issues.

“Stephen Raymond”

for the Board