The Elephant in the Room

Elephant in the room

As described by Wikipedia, “Elephant in the room” is an American English metaphorical idiom for an obvious problem or risk that no one wants to discuss.  Controversial yes; however, very necessary conversation(s) here at Riskboss Magazine. In every publication, Riskboss Magazine will address the latest Elephant in the Room to clearly answer hard asked questions.

Section 69.1 of the Labour Relations Act, 1995

By Quintin Johnstone, CEO of Riskboss Inc.

YOU are a Board member of a residential condominium in Ontario and have just been advised 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 you, the existing company became unionized without your knowledge.

The lawyer for the corporation, also in attendance, shocks you by stating that regardless of your opinion and wishes, the Collective Bargaining Agreement (CBA) from the existing company will apply to any new company (whether unionized or not) that takes over the work until the Ontario Labour Relations Board orders otherwise. Your condominium solicits bids in a competitive procurement process, and quotes from both unionized and non-unionized companies are requested; however, many refuse to participate in the process as they do not want to become bound to the collective agreement.

It is an alarming but concrete example of what is happening in residential condominiums and organizations all over Ontario anywhere there are building service providers. Building service providers include persons or companies that provide cleaning, security or food services to a premises or building.  It is 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.

Changes to the Labour Relations Act, 1995 (LRA) came into effect on January 1, 2018, under the Wynn government. Under the new law, when a building service provider (unionized or non-unionized) replaces an existing unionized building service provider, the new provider is required to recognize the bargaining rights of the trade union that represents employees of the existing employer. The new provider is obligated to apply the CBA of the outgoing company; even if all employees of the former company leave the site to continue employment with their existing company elsewhere.

Effective January 1, 2018, as a direct result of Section 69.1, all collective bargaining agreements now run with the site location of the work and not employees or employers. Organizations using building service providers must engage new companies during procurement processes which are willing to adhere to the CBA that the exiting organization used.

Bill 148 adopted almost verbatim wording from the legislation created in 1992 by Bill 40 by then Premier Bob Rae. It expands the scope of the successorship provisions in the LRA; effectively restoring the 1992 version of Bill 40 that Ontario Premier Michael Harris repealed during his term.

There has been a slow but steady realization about the effects of this law since January 1, 2018. Concerned Board members are calling for change. Those affected hope that the new Ontario provincial government will repeal the legislation as Premier Harris did, but to date, they have not.

Prior to January 1, 2018 employees were free to join a union or decline, depending on their preferences. Employees were also able to select any union they wanted to represent them. When a new service provider took over, the employees of that service provider could apply to certify the same union that represented the employees of the previous provider, or select another union, or decide not to unionize. That has all changed due to Section 69.1.

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

In such cases, Section 69.1 imposes the new CBA and may cause employees to lose some or all of the protections of the bargained rights of an existing CBA.

Michael Smyth, Labour and Employment lawyer at Hicks, Morley cautions, “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.”

Smyth continued, “That is not something that they 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.”

Every 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 to use the CBA assigned to that site. Building service providers throughout Ontario have already found themselves being forced to become involved with multiple unions and involving many different CBAs due to Section 69.1. It is causing administrative nightmares for these businesses and employees.

This law has been in force for just over one year, and it already has created havoc for building service providers.  Many service providers refuse to compete for unionized buildings; therefore, providing the advantage to unionized service providers over non-unionized service providers. Many organizations are forced to remain with existing unionized service providers due to a lack of interest in open competition for new providers.

Some property management firms have refrained from discussions on the topic and the impact of Section 69.1 as they feel that they must appear neutral. However, many Boards having found that their organizations have become stigmatized, are holding everyone involved accountable for failing to provide sufficient information. Once affected, there is little that an organization can do except to accept their new state of affairs.

The new reality is that the law extends successor rights, effectively attaching representational rights to a building location, rather than to an employer. It also removes choice from affected employees, contractors and building owners.

The Elephant in the Room is whether such piecemeal unionization has a place in the Ontario labour marketplace.

Whether you agree with unionization or not is not the issue. There are distinct advantages to both sides of that equation.

Gerry Miller, Managing Partner at Condominium Law Firm Gardiner Miller Arnold LLP, advises, “The impact on the condominium industry can be significant. Once a unionized service provider delivers service to a condominium corporation, that building will likely always be unionized, and that will add costs for these services which will result in higher maintenance fees for unit owners.”

The issue is whether Board members are aware of the impact of Section 69.1 and what can they do to about it.

What to Do?

  • As an end user of a non-unionized building service provider, Boards and property managers should seek advice from legal counsel as soon as possible to include a notice provision in all contracted service agreements that compels service providers to provide advanced notice of any material change that may affect the organization being serviced.
  • When engaging building service providers for quotes, ask all competing companies to provide in writing whether the company is or has plans to unionize, or is subject to a union organizing campaign.