Canada: Buyer Beware: The Labour Relations Board Deals With New Successorship Provisions In The BC Labour Relations Code

Bill 30 introduced new contract retendering successorship provisions in section 35 of the Labour Relations Code (the "Code"). Our firm has commented previously that the new provisions will have a significant impact on certain contractors in BC.

Last month, the BC Labour Relations Board released its first decision that deals with the new provisions: Supra Property Services Ltd. and Bee-Clean Building Maintenance Incorporated and SEIU, Local 2, BCLRB No. B140/2019 ("Supra and Bee-Clean").

Without spoiling the rest of this update, this decision indicates that the Board will interpret the new provisions in a liberal fashion consistent with the purpose of the amendments, including the need to address "employment precarity of certain workers and [maintain] collective bargaining and collective agreement rights when contracts for certain services are re-tendered to a new employer" (para 42).

Background

On or about August 2, 2019, employees at 401 West Georgia Street and 355 Burrard Street (the "Properties") received a letter from Supra Property Services Ltd. ("Supra") advising them that its cleaning contracts for the Properties were ending on September 30, 2019.

Subsequently, Bee-Clean Building Maintenance Incorporated ("Bee-Clean"), entered into two contracts for services (the "Contracts") at the Properties to replace Supra. The Contracts were dated August 9, 2019 and they were executed between August 19 and 20, 2019. However, Bee-Clean would not provide services under the Contracts until Supra's contracts ended. Initially, the Contracts' terms were to commence on October 1, 2019 at 9:00 AM. However, a verbal agreement was made on or about September 13, 2019 that Bee-Clean would begin work under the Contracts one day early on September 30, 2019. The services that were to be provided under the Contracts at the Properties by Bee-Clean were effectively the same as those provided by Supra.

In the interim period after the Contracts were executed but before Bee-Clean provided any services, SEIU, Local 2 (the "Union") brought two applications for certification (one for each property) on September 6, 2019 (401 West Georgia) and September 18, 2019 (355 Burrard). Votes were held and the Union was certified to represent employees at both properties (September 19, 2019 at 401 West Georgia and September 25, 2019 at 355 Burrard). All membership cards the Union obtained in support of both applications were signed after August 2, 2019.

Arguments

Section 35(2.2)(a) only applies to contractors for services if Code proceedings are commenced "before the date of the contract for services entered into".

Bee-Clean argued the definition of "date of the contract for services entered into" for the purposes of section 35(2.2)(a) was the date that the Contracts were executed: August 20, 2019. Critically, that date was before the Union commenced its applications for certification at the Board.

The Union argued that the definition of "date of the contract for services entered into" for the purposes of section 35(2.2)(a) was the effective date of the contract for services (i.e. the date Bee-Clean began performing services): September 30, 2019. That date was after the Union commenced its application for certification at the Board.

Decision

The Board ultimately accepted the Union's position. Vice-Chair Drake held that "the start date of the contract, not the date the contract is entered into" is the "date of the contract for services entered into" for the purposes of section 35(2.2)(a) (para 43).

In reaching this conclusion, Vice-Chair Drake found that the provision could bear more than one meaning (para 37), that the Board therefore had to interpret the provision consistent with labour relations policy considerations (para 38), and that the Board had to give the provision at issue a full and liberal interpretation (paras 39-40). Vice-Chair Drake found that if Bee-Clean's position was accepted, the provision would apply to the new contractor before it employed anyone in the unit in question. Vice-Chair Drake found that such a result would be "inconsistent with the language 'continue to be performed...under the direction of another contract' in Section 35(2.2), which...contemplates actual not future performance of services" (para 41). In contrast, Vice-Chair Drake reasoned that the Union's interpretation of the provision was:

42 ...consistent with the intent of the provision, as reflected in the Code Review Panel's recommendations and in Hansard. The purpose of the amendments to the successorship provisions included addressing employment precarity of certain workers and maintaining collective bargaining and collective agreement rights when contracts for certain services are re-tendered to a new employer. I do not agree that the difference between the draft provision the Code Review Panel recommended and what was enacted reflects a change in legislative intent in favour of narrowing the provision.

Key Takeaways

First, for contractors in industries impacted by the new successorship provisions in the Code, this decision provides a strong indication that the Board will interpret and apply the new successorship provisions in a broad and liberal manner. Although this is only one decision, it appears that technical arguments, even where the facts are favourable and the argument is strong on its face, will face an uphill battle. Relatedly, employers should expect that unions in sectors impacted by the new successorship provisions will be more active. For example, SEIU, Local 2 appears to have increased their activity since the new successorship provisions came into force.

Second, employers and companies should be mindful that successorship will apply even where unionization occurs after the execution of a services contract. This risk should be considered when entering into, and drafting, such contracts to avoid being forced to deal with an employment and financial landscape that changes significantly after a deal is already signed but before it takes effect.

Third, this decision may provide some guidance on how other new provisions introduced in the recent legislative changes may be interpreted and applied by the Board. In interpreting the new successorship provisions, the Board considered the Code Review Panel's report and Hansard. Both of those sources contain commentary that emphasizes the employee-side issues that the legislative changes are designed to address.

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.