Specific Legal Issues

June, 22 2023 Published by Toronto and Area Chapter - By Quintin Johnstone

The Elephant in the Room

From the Summer 2023 issue of CCI Toronto Condovoice Magazine.

Section 69.1 of the Labour Relations Act, 1995

You are a Board member of a residential condominium in Ontario. Your Board has decided that your security or cleaning company needs to be replaced. A Board meeting is called to discuss the issue. In attendance is the property manager who advises that, unbeknownst to the Board, the existing company became unionized without your knowledge.  

The lawyer for the corporation is engaged and shocks you by stating that regardless of your opinion and wishes, the Collective Bargaining Agreement (CBA) from the existing company must be used by any new company (whether unionized or not) that takes over the site.

Your condominium solicits bids in a competitive procurement process and quotes from both unionized and nonunionized companies are requested; however, some companies refuse to participate in the process as they do not want to become bound to your CBA.

This is a very real example of what is happening in residential condominiums and other organizations all over Ontario anywhere building service providers are found. Building service providers include persons or companies that provide cleaning, security or food services to a premises or buildings.

The Ontario Liberal government changed the Labour Relations Act, 1995 (LRA) that came into effect on January 1, 2018. When a building service provider (whether unionized or non-unionized) replaces an existing unionized building service provider, the new provider is required by law to recognize the bargaining rights of the trade union that represents employees of the existing employer and is obligated to apply the CBA of the outgoing company. This is true even if all employees of the former company leave the site and do not remain.

This was a significant change in the labour relations landscape not only for the businesses operating in the building services provider sector, but also for those organizations that they work for including residential condominiums, commercial office towers, private companies, municipalities and even hospitals.

Section 69.1 of the Labour Relations Act, 1995 Since January 1, 2018 and as a direct result of Section 69.1, all CBA’s run with the site location of the work being performed.

Affected organizations using building service providers must engage new companies during procurement processes that will agree to adhere to the CBA that the exiting organization has been using.

We understand that the Liberal government in creating Bill 148 adopted almost verbatim wording from the legislation created in 1992 by Bill 40 by then premier Bob Rae in expanding the scope of the successorship provisions in the LRA. Bill 148 effectively restored the 1992 version of Bill 40. Early during his term, Ontario Premier Michael Harris repealed this legislation.

There has been a remarkably slow realization about the effects of this law since January 1, 2018. Surprisingly, most people we come across know absolutely nothing about this law. Many condominium Boards have voiced their anger commenting that they had no idea about the impact(s) of hiring a unionized company.

Those affected by this law hope that the Conservative Ontario government will do the same as Premier Harris did but to date, they have not. In fact, it is our understanding that the current government has no intentions to change this law. If there is a political change in Ontario, given that the Liberals enacted this law, the likelihood of any government repealing it is highly improbable. The answer to calls by service provider companies and corporations for change has been deafening. In short, it looks like this law is here to stay.

Prior to January 1, 2018 employees were free to unionize or not, depending on their individual wishes. Employees were free to select any union they wish to have represent them. When a new service provider took over, the employees of that service provider were free to apply to use the same union that represented the employees of the outgoing provider, or select a different union, or decide not to become involved in a union at all. That all changed due to Section 69.1 on January 1, 2018.

Consider the perspective and viewpoints of employees who are in a non-unionized company only then being assigned to a unionized site. Feedback from these employees has been bluntly clear. They simply do not understand why they are being forced to join a union despite having chosen to work for a non-unionized service provider business.

It is important to note here that despite unionization being exclusively employee driven, employees assigned to a new unionized sites have voiced their concerns about the lack of choice in joining or not joining a union.

In their opinion they feel that they have no option and feel forced join the site union despite having nothing to do with being involved with negotiating the CBA or further, something that they may not even agree with.

Regardless of whether a new incoming provider is unionized, all employees of the new service provider at that location must become part of the CBA of the outgoing company that new employees did not negotiate and may not even agree with.

In fact, in these circumstances employees have very little options. The only choice for many employees is to either accept being unionized or look for a new job in a non-unionized company.

Michael Smyth, Labour and Employment lawyer at Hicks, Morley cautions that, “Building service providers that are considering bidding on work will have to exercise due diligence to determine whether the existing building service provider is unionized, and if so, the scope of bargaining rights held by the union, and the terms and conditions set out in the collective agreement.

That is not something that they really had not had to be concerned about before January 1, 2018 as there was no mechanism for automatically transferring those bargaining rights. There is now. As a result, there will also be consequences for condominiums whose building service providers become unionized.”

Consider the landscape since January 1, 2018 where building service companies must engage with many different unions and CBA’s at several different sites regardless of whether that company is actually unionized or not. Each time a building service provider succeeds in a procurement process with a new client, where the existing building service provider is unionized, they are forced by law to use the CBA assigned to that site. The logistics of dealing with multiple unions can overwhelm smaller service provider companies with administrative burdens that were never contemplated prior to January 1, 2018. We are aware of some non-unionized companies being terminated by Boards but then, during the termination notice period, move to unionize that site.

There is no duty on any service provider to provide notice to a corporation about their intention to unionize. Your corporate lawyer should be engaged as soon as possible to include a clause in all service agreements to provide notice to the corporation in advance of unionization.

Reports of angered Board members who try to interfere with the unionization of a site by various means, including speaking with front line employees, have been subjected to strong pressure to immediately disengage. Board members should never under any circumstances speak to this issue directly but instead, engage experts such as their property managers and corporate lawyers for sage advice on impacts to their communities.

One word of advice to all property managers. In the interests of complete transparency and due diligence, Boards should always be advised of the pros, cons and impact(s) of unionization in their communities prior to selecting building service providers. Once advice is provided, Boards can then make an informed and objective decision whether unionization is right for their community.

So where is the future in all of this? We believe that as unions continue to grow in the building service provider space in Ontario, unionized and non-unionized service provider companies alike will find themselves engaging with different CBA’s. It is inevitable that more sites will become unionized and as such, more unionization by service providers.

This article should not be construed as a ‘for or against’ union position. The fact is that there are widely held views on the pros and cons of unionization. We take no position here.

Quintin Johnstone CEO of Samsonshield Inc. / Riskboss Inc.


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