Successorship in Contract Retendering

Previously printed in the LexisNexis Labour Notes Newsletter. 

In Everclean Facility Services Ltd., 2022 BCLRB 14 (“Everclean Facility Services”), the BC Labour Relations Board (the “Board”) considered a trade union’s application for leave and reconsideration of an earlier decision regarding successorship in a situation of contract retendering.

Summary

Everclean Facility Services involved the retendering of cleaning services at Sevenoaks Shopping Centre in Abbotsford, BC (the “Mall”).

Until March 1, 2021, building cleaning services at the Mall were provided by Dexterra.  However, in October 2020, employees were advised by Dexterra that the cleaning contract for the Mall was out for tender and, if the Dexterra contract was not renewed, their employment would be terminated without cause.  Dexterra’s contract was not renewed and the employees were given notice that their employment would be terminated effective February 28, 2021.

Another cleaning company, Everclean Facility Services Ltd. (“Everclean”) contracted for cleaning of the Mall for a period of one year, beginning on March 1, 2021.  Everclean hired some, but not all, of Dexterra’s previous employees.

On February 22, 2021, the Union applied for certification of a bargaining unit of employees of Dexterra at the Mall.  On March 23, 2021, the bargaining unit was certified.

Everclean agreed that it was the successor contractor to Dexterra at the Mall, but denied any requirement to offer employment to former employees of Dexterra.

The Union filed an application under section 32(2.2) of the BC Labour Relations Code (the “Code”) and sought a declaration that Everclean had violated the Code by failing to offer employment to three employees who were previously employed by Dexterra.

At issue before the Board was whether Everclean was obligated under the Code to continue the employment or rehire all of Dexterra’s employees at the Mall.

Original Decision

In the original decision, the Board found that Dexterra gave its employees notice of termination before the application for certification and the terminations were effective February 28, 2021.  As a consequence, there were no employees in the bargaining unit when Everclean took over on March 1, 2021.

Further, the Board held that section 32 of the Code does not preclude an employer from terminating the employment of employees during the statutory freeze period if the termination decision is made for legitimate business reasons.

In its decision, the Board concluded there was no obligation to rehire Dexterra’s employees.

Application for Leave and Reconsideration

On granting the Union’s leave for reconsideration, the Board confirmed that Everclean was correct to acknowledge that it became the successor employer to Dexterra under section 35(2.2) when it took over the building cleaning services.  It was therefore bound to the outcome of the certification vote and statutory freeze.

Further, the Board agreed that Dexterra was entitled to give notice of termination to its employees for purposes unrelated to the Code.

However, the Board disagreed with the finding that there were no employees in the bargaining unit on the date of successorship.  It concluded that Everclean was presumptively obligated under section 32 to continue employment of any employees who were performing work under the contract, subject to the proper cause exception.

In reaching this conclusion, the Board relied on one of its earlier decisions, Granville Island, for the proposition that successor employers cannot refuse to extend continued employment to employees of the predecessor for improper reasons, even where there is no collective agreement in place.

In the result, the Board granted the Union’s application for reconsideration and remitted the matter to the original panel.

Notably, the Board was not unanimous in its decision.  In a well-reasoned dissent, Vice-Chair Najeeb Hassan took the view that the original decision should be upheld.  The Vice-Chair disagreed with the majority on a number of points.  First, he stated that the majority of the reconsideration panel had imposed obligations and granted rights in the context of successorship in a contract retendering situation that go beyond those arising under section 35(1).  Second, he opined that the statutory freeze provision under section 32 does not prospectively apply to a successor employer with respect to the predecessor’s employees. Third, the Vice-Chair stated that the filing of the certification application did not invalidate Dexterra’s termination notices and, similarly, did it invalidate the terminations that occurred on February 28, 2021.  Finally, the Vice-Chair said that Everclean did not alter the terms and conditions of employment of Dexterra’s employees and there was no evidence to suggest that the decision not to hire the three employees arose out of anti-union animus.

Takeaways

Prior to taking over a contract, employers should make a fulsome and careful inquiry into the status of labour relations at the worksite.  Even if there is no collective agreement in place, employers might be obligated to hire the predecessor employer’s workforce.

While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein.  The article is for general information purposes only and does not constitute legal advice.