Recently, the Hospitality & Service Trades Union, Local 261
(HSTU) commenced an application at the Ontario Labour Relations
Board to have Service Star Building Cleaning Inc. declared a
successor employer under Section 69 of the Labour Relations Act. On
a preliminary motion to dismiss brought by Service Star, the OLRB
held that the HSTU failed to
make out a prima facie case that Service Star was a
successor employer under the LRA.
At the time of the application, the HSTU had represented the
employees of Aramark Canada Inc. providing building cleaning
services at 3500 Carling Avenue, Ottawa, Ontario for a number of
years. However, on or about January 7, 2013, Service Star was
awarded the cleaning and maintenance contract at the location. All
existing employees involved in the cleaning and maintenance of the
location were continued on the same terms and conditions they
enjoyed with Aramark Canada Inc. prior to the contract being
awarded to Service Star, with the same work methods being utilized
and managerial expertise being relied upon by Service Star after it
assumed the contract.
The HSTU submitted that pursuant to the continuity of employment
provisions contained in the building services provider sections of
the Employment Standards Act,
2000 and the operation of Section 69 of the
Relations Act, the awarding of the contract to
Service Star constituted a sale of the business, such that Service
Star became a successor employer and was bound to the collective
agreement with HSTU.
The OLRB disagreed, despite the fact that in the context of
determining whether a prima facie case has been pled on a
preliminary motion, only the allegations contained in the
application (which are assumed to be true and provable) are
considered. In reaching its decision, the Board adopted the
following two-step analysis set out in the seminal case of Metropolitan Parking
Inc.: (i) has there been a sale; and (ii) does
what has been sold constitute a business or part of a business?
In determining the first question, the Board was not persuaded
that a sale or transfer occurred – rather HSTU relied
primarily on the fact that the employees and work continued with
Service Star under the new contract. As there must be a nexus
between two employers other than the fact that one employed persons
to do certain work that the other performs or will perform, the
Board found that the assumption of janitorial work by Service Star
was nothing more than the "loss of work to a competitor",
and that it was insufficient to be caught by Section 69 of the LRA.
The Board went on to state that as the matter did not pass step one
of the Metropolitan Parking Inc. test, it was not
necessary to consider step two, and dismissed the HSTU's
application for failure to make out a prima facie
This decision is notable because it serves to further clarify
the concept of whether a sale of business has occurred where a
contract has been awarded in the building services sphere. This is
often a complex determination that is heavily reliant on the
specific facts at issue, and this case provides some comfort that
the continuity of employment provisions in building services
provider sections of the Employment Standards Act will not
tip the scales in favour of a successor employer finding.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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