Public Service Alliance of Canada v. Bombardier Inc. (C.A.) [2001] 2 F.C. 429
Date: 20001220
Docket: A-74-00
CORAM: LINDEN J.A.
McDONALD J.A.
MALONE J.A.
BETWEEN:
PUBLIC SERVICE ALLIANCE OF CANADA
Applicant
- and -
BOMBARDIER INC., BOMBARDIER SERVICES GROUP, and
FRONTEC CORPORATION
Respondents
Heard at Regina, Saskatchewan, on Thursday, November 16, 2000
JUDGMENT delivered at Ottawa, Ontario, on Wednesday, December 20, 2000
REASONS FOR JUDGMENT BY: LINDEN J.A.
CONCURRED IN BY: McDONALD J.A.
MALONE J.A.
Date: 20001220
Docket: A-74-00
CORAM: LINDEN J.A.
McDONALD J.A.
MALONE J.A.
BETWEEN:
PUBLIC SERVICE ALLIANCE OF CANADA
Applicant
- and -
BOMBARDIER INC., BOMBARDIER SERVICES GROUP, and
FRONTEC CORPORATION
Respondents
REASONS FOR JUDGMENT
LINDEN J.A.
Introduction
This is an application for judicial review in respect of a decision of the Canada Industrial Relations Board (the "Board") dated January 14, 2000 involving the successor rights provisions of the Canada Labour Code.1 The Board's decision was rendered in response to two applications filed by the Applicant, Public Service Alliance of Canada ("PSAC"), pursuant to paragraph 47.1(c) of Part I of the Code. The first application named Bombardier Inc. and Bombardier Services Group ("Bombardier") as respondents. The second application named Frontec Corporation ("Frontec") as the respondent. By the applications, PSAC sought to be certified as bargaining agent for employees then employed by Bombardier and Frontec to provide certain services in relation to the Canadian military pilot training program at CFB 15 Wing Moose Jaw ("CFB Moose Jaw"). It also sought to be certified as bargaining agent for a potentially larger group of employees who would be employed in the future by Bombardier in respect of a new initiative known as the NATO Flight Training in Canada ("NFTC") program.
Successor Rights & the Canada Labour Code
This appeal marks the first time that a Court has been required to interpret sections 47 and 47.1 of the Canada Labour Code.1 Those sections fall under the heading "Successor Rights and Obligations" in Division III ("Acquisition and Termination of Bargaining Rights") of Part I ("Industrial Relations") of the Code. The proper interpretation of sections 47 and 47.1 requires a contextual understanding of those provisions. (See Annex for full text of legislation)
The sections in question form an integral part of the Code's framework (established in sections 43 to 47.1) for preserving collective bargaining rights acquired by workers. This framework is designed to ensure that the existing collective bargaining rights of workers, whether they exist by virtue of certification or of a subsisting collective bargaining agreement, are not adversely affected or lost upon the occurrence of certain potentially destabilising events. Such events include (1) trade union mergers (section 43), (2) the sale of a business or the change in a business's activity (sections 44-46), and (3) the deletion or severance of part of the public service and its establishment as, or integration into, a corporation or business. (sections 47 and 47.1)
Parliament has chosen to preserve acquired collective bargaining rights through the notion of "successorship rights". The introduction of successorship rights fundamentally alters the notion of privity of contract by allowing existing collective bargaining rights to survive despite fundamental changes in the legal relationships, such as the transfer of a business's ownership from one employer to another. There is a two-fold purpose to successor provisions in the business context: (1) to protect the trade union's right to bargain and (2) to protect any subsisting agreement from termination on sale.1
In W.W. Lester (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740,2 McLachlin J., as she then was, explained the legislative intention behind the enactment of these successor rights provisions:
| Successorship provisions similar to s. 89 of the Act exist in all provincial labour acts and in the Canada Labour Code. While there are slight variations in the wording, the purpose attributed to successorship provisions is consistent. One of the oft-cited quotes explaining the underlying rationale for successorship provisions in the private sector is found in a decision of the British Columbia Labour Relations Board in Kelly Douglas & Co. Ltd. and W.H. Malkin Ltd., [1974] 1 CLRBR 77, at p. 81: |
| When an employer exercises this legal freedom to dispose of its business, this can have serious consequences for the situation of its employees. They may have struggled to become organized and achieve collective bargaining and then to arrive at a collective agreement. Once that agreement is finally settled, the employees naturally expect that its terms will be fulfilled in the conduct of the enterprise. The trouble is that these expectations could be set at naught by a simple change in corporate ownership. The employees may find themselves still working at the same plant, at the same machine, under the same working conditions, under the same supervision, doing exactly the same job as before, but for a different employer. The result of the sale of a business of which the employees may not even be aware is that the collective bargaining rights of the employees may have disappeared. |
| Realistically, one cannot expect these interests of the employees and their union to be at the forefront of the business negotiations which employers are free to engage in. Accordingly, the legislature adopted a very straight- forward protection. Certification and other orders under the Code follow the business into the hands of the transferee. The legislature went even further to impose the collective agreement on a person who didn't sign it. It is up to the prospective purchaser to investigate the terms of the bargain which its predecessor has made with the trade union and see that this is taken account of in the purchase price of the takeover before it steps into the shoes of the old employer. |
| Within that framework, it is important that the Board give a full and liberal interpretation to the concept of successorship. In particular, little reliance should be placed on the technical legal form which a business disposition happens to take as between the old employer and its successor. The significant factors as far as collective bargaining law is concerned is the relationship between the successor, the employees, and the undertaking. |
The bulk of legislative activity on successorship rights has addressed a business sale or corporate reorganization. Both those situations are governed by sections 44 to 46 of the Code. When the transfer or sale of a business or part of a business is effected, subsection 44(2) automatically and immediately applies, inter alia, to preserve and continue the bargaining agent status of the union representing the employees employed in the business and to bind the new employer to the terms and conditions of any collective agreement applicable to those employees.3 The Board will only be implicated where there is a dispute as to whether a business has in fact been sold. Subsection 44(3) operates in the same way to continue bargaining rights where a provincial business, by virtue of a change in its activity or a sale, becomes regulated under the federal labour relations regime.
Section 45 applies to the sale of a business under section 44 which results in the intermingling of employees from the acquired business with employees from the acquiring business. The provision is designed as a complement to the automatic successorship in section 44 in that it allows the employer or any trade union that is affected by a sale or transfer under section 44 to ask the Board to "determine whether the employees affected constitute one or more units appropriate for collective bargaining". In making such determinations, the Board enjoys the powers conferred upon it under section 18.1 of the Code regarding Board review of the structure of bargaining units.
Section 46 rounds out the successorship provisions regarding the sale or reorganization of a business. That provision reserves to the Board the decision-making authority to "determine any question that arises under section 44, including a question as to whether or not a business has been sold or there has been a change of activity of a business, or as to the identity of the purchaser of a business". Section 46 reinforces the privative clause in section 22 of the Code by granting to the Board a very broad jurisdiction to determine the conditions for the exercise of its `sale of business' powers.
Most of the jurisprudence has been devoted to explication of the provisions regarding the sale of a business. Much of the discussion has centred on the question of whether a sale has in fact taken place, and, therefore, whether collective bargaining rights continue after the transaction. Without launching into an exhaustive review of the relevant case law, which has not been free from inconsistencies or scholarly criticisms,4 the general approach to determining the sale of a business is nevertheless important to note for present purposes.
The objective of protecting the permanence of bargaining rights has led to a broad legislative definition of the word "sell" and to the notion that the word "sale" should be given a liberal interpretation.5 A broad understanding of a sale as encompassing any method of disposing of a business is crucial to preventing the unwarranted termination of bargaining rights merely by operation of the formalities of ownership transfer. However, in recognition of the fact that successor rights were never intended to apply to certain circumstances (namely genuine instances of subcontracting, the loss of business to a competitor or corporate dissolution), a section 44 sale requires a minimum nexus between predecessor and alleged successor employers. The Board has generally adopted a two-pronged analysis in determining the existence of such nexus. This traditional approach was explained in Newfoundland Steamships Ltd.6 as requiring a continuity in the activities carried out by the employees and in the purpose of the business. This test has been applied by the Board on a case by case basis in order to respond to the individual circumstances of each alleged sale and to ensure the achievement of section 44's policy objectives.
More recent case law at the Board level has narrowed the scope for the continuation of bargaining rights. In Canada Post Corporation and CUPW (Niemen's Pharmacy),7 the Board reformulated the test for a section 44 sale in the following terms:
| For successor rights to be triggered, there must be more than a transfer of assets or of work. While the transfer of any one or all of the foregoing might be a compelling indicia that a sale within the meaning of the Code has occurred, each on their own is not conclusive. For successor rights to apply, the business as a whole or any part thereof must pass from the seller to the purchaser. For the purposes of a sale under the Code, any part of a business has been defined as meaning a coherent and severable part of a business' economic organization, or a functional economic vehicle or a going concern capable of standing alone. It is not enough that employees of another employer are now doing work previously done by employees of a predecessor employer for a sale of business to have taken place. There must also be some continuity in the employing enterprise for which a union holds bargaining rights as well as continuity in the nature of the work. The two go hand in hand. |
In contrast to successor rights in private business situations under section 44, the continuance of bargaining rights by operation of sections 47 and 47.1 in the public service sphere has not been the subject of any sustained analysis. It is, therefore, necessary to explain how sections 47 and 47.1 function within the larger framework of the Code. The provisions of section 47 express a similar automatic continuance mechanism in public service cases as follows:
| 47. (1) Where the name of any portion of the public service of Canada specified from time to time in Part I or II of Schedule I to the Public Service Staff Relations Act is deleted and that portion of the public service of Canada is established as or becomes a part of a corporation or business to which this Part applies, or where a portion of the public service of Canada included in a portion of the public service of Canada so specified in Part I or II of Schedule I to that Act is severed from the portion in which it was included and established as or becomes a part of such a corporation or business, (a) a collective agreement or arbitral award that applies to any employees in that portion of the public service of Canada and that is in force at the time the portion of the public service of Canada is established as or becomes a part of such a corporation or business continues in force, subject to subsections (3) to (7), until its term expires; and (b) the Public Service Staff Relations Act applies in all respects to the interpretation and application of the collective agreement or arbitral award. |
47. (1) La convention collective ou la décision arbitrale applicable aux employés d'un secteur de l'administration publique fédérale qui, par radiation de son nom de la partie I ou II de l'annexe I de la Loi sur les relations de travail dans la fonction publique ou par sa séparation d'un secteur mentionné à l'une ou l'autre de ces parties, devient régi par la présente partie en tant que personne morale ou qu'entreprise ou est intégré à une personne morale ou à une entreprise régie par la présente partie_: a) continue d'avoir effet, sous réserve des paragraphes (3) à (7), jusqu'à la date d'expiration qui y est fixée; b) reste totalement assujettie, quant à son interprétation et à son application, à la Loi sur les relations de travail dans la fonction publique. |
Thus, as a general rule, bargaining rights will be continued and a trade union may apply for certification in either of two cases: (1) where there is a deletion of the name of any portion of the specified public service which is established as or becomes part of a federally regulated business or corporation, or (2) where there is a severance of a `portion of a portion' of the specified public service which is established as or becomes part of a federally regulated corporation or business. It can be readily seen that the original purpose of section 47 was to protect bargaining rights in the rare situation when a portion of the public service became a Crown Corporation.8 This explains the use of the words "deletion" of "a name of any portion of the public service of Canada as specified from time to time in Part I or II of Schedule I to the Public Service Staff Relations Act". Schedule I of the Public Service Staff Relations Act9 lists the departments and other portions of the public service which are employed by the Treasury Board (Part I) or a separate employer (Part II). Therefore, a `deletion' of any of the names on that list would represent the removal or "deletion" of a government department from the public service of Canada.
However, as part of a general overhaul of Part I of the Code, section 47 was amended to extend successor rights to the situation of privatization of government functions. In the process, it was necessary to contemplate the piecemeal privatization of government functions which might not involve the severance of whole departments or large units of the public service.10 Accordingly, section 47 now provides for the continuance of bargaining rights where "a portion of the public service of Canada included in a portion of the public service of Canada so specified ... in Schedule I to [the PSSRA]" is severed and established as part of a private business. In other words, the successorship of bargaining rights does not depend upon the wholesale deletion of a major part of the public service; it may also operate when a smaller part of the public service is privatized.
In the case at bar, there has been no deletion of a name of any portion of the public service as defined in Schedule I of the PSSRA. Rather, we are dealing with the severance of a portion of a portion of the public service, namely support staff at CFB Moose Jaw. What, then, is necessary in order to qualify as a section 47 `severance' and to trigger the successor rights that accompany such a severance? In my view, four different elements are required.
(A) `a portion of a portion of the public service'
First, a portion of a portion of the public service must be involved. Nowhere in section 47 is the size of a "portion" defined. The term "Public Service" is defined in the PSSRA as "the several positions in or under any department or other portion of the public service of Canada specified in Schedule I". This definition makes it very clear that the acceptable unit of measurement in determining a portion of the public service is "positions". In addition, there must be more than one employee. This is so because paragraph 47(1)(a) and subsection 47(2) imply that the employees forming the portion of the public service must comprise a bargaining unit or units, which units must be composed of "a group of two or more employees".11
(B) `specified in Part I or II of Schedule I to the PSSRA'
This is a purely mechanical requirement which ensures that reference is made to what is properly understood to constitute the `public service of Canada'.
(C) `severance'
There must be a `severance' of the portion from the public service. The term should be given its ordinary meaning. The Oxford English Dictionary, 2d edition, defines "sever" as "to put apart, set asunder; to part or separate by putting in different places... to disjoin, dissociate, disunite". The requirement is minimal; it involves the splitting-off of certain employees from a portion of the public service. This separation might occur in many different ways, including the letting-go, release or dropping of the employees from the public service. It should be noted that there is nothing in the meaning of the word "severance" ("séparation" in the French version) or in the wording of section 47 which requires a "sale", "transfer", "lease" or "other disposition", which apply to situations governed by section 44. This does not mean, however, that a sale of a portion of the public service, if such were entered into, might not amount to a severance.
(D) `established as or becomes part of such a corporation or business'
The portion severed from the public service must be "established as" or "become part of" a corporation or business governed by Part I of the Code. Section 47 provides no express guidance as to what is involved in this step; no special definition of "established as" or "become part of" is provided. It is clear, however, that section 47 does not require that a sale, transfer or legislative enactment be involved. Rather, the severed portion must, in some way or other, simply "become part" of a federally regulated business or corporation.
If these four conditions are met, the existing bargaining rights of the former public service employees automatically continue after the severance in accordance with paragraphs 47(1)(a) and (b). Presumably, these rights continue despite changes in the numbers of employees and their functions, at least until the Board determines otherwise.
The successor rights described above are guaranteed subject to variation by Board determination made pursuant to an application brought under subsection 47(3) by the new employer or a bargaining agent affected by the change in employment. Such application may be made during a window of time which runs from the 120th to the 150th day after the severed portion becomes part of the business or corporation. If a subsection 47(3) application is properly brought within that time frame, the Board must determine whether the severed employees constitute one or more units appropriate for collective bargaining, which trade union will be the bargaining agent for the employees in each such unit, and whether the collective agreement or arbitral award that has been continued by paragraph 47(1)(a) shall remain in force and, if so, for how long. This latter power is needed in this context to ensure that there is a common expiry date for the collective agreements when several units are merged by the Board so that bargaining can commence at the same time.
A slightly different regime applies where a notice to bargain collectively has been given prior to a section 47 severance. In such cases, the provisions of section 47.1 apply. Section 47.1 reads as follows:
| 47.1 Where, before the deletion or severance referred to in subsection 47(1), notice to bargain collectively has been given in respect of a collective agreement or arbitral award binding on employees of a corporation or business who, immediately before the deletion or severance, were part of the public service of Canada, (a) the terms and conditions of employment contained in a collective agreement or arbitral award that, by virtue of section 52 of the Public Service Staff Relations Act, are continued in force immediately before the date of the deletion or severance or that were last continued in force before that date, in respect of those employees shall continue or resume in force on and after that date and shall be observed by the corporation or business, as employer, the bargaining agent for those employees and those employees until the requirements of paragraphs 89(1)(a) to (d) have been met, unless the employer and the bargaining agent agree otherwise; (b) the Public Service Staff Relations Act applies in all respects to the interpretation and application of any term or condition continued or resumed by paragraph (a); (c) on application by the corporation or business, as employer, or the bargaining agent for those employees, made during the period beginning on the one hundred and twentieth day and ending on the one hundred and fiftieth day after the date of the deletion or severance, the Board shall make an order determining
(d) where the Board makes the determinations under paragraph (c), the corporation or business, as employer, or the bargaining agent may, by notice, require the other to commence collective bargaining under this Act for the purpose of entering into a collective agreement; and (e) this Part, other than section 80, applies in respect of a notice given under paragraph (d). |
| 47.1 Si, avant la radiation ou la séparation visées au paragraphe 47(1), un avis de négociation collective avait été donné à l'égard d'une convention collective ou d'une sentence arbitrale liant les employés d'une personne morale ou d'une entreprise qui, immédiatement avant la radiation ou la séparation, faisait partie de l'administration publique fédérale_: a) les conditions d'emploi figurant dans la convention collective ou la décision arbitrale maintenues en vigueur par l'effet de l'article 52 de la Loi sur les relations de travail dans la fonction publique continuent de lier -- ou lient de nouveau si l'article 52 avait cessé d'avoir effet -- la personne morale ou l'entreprise, l'agent négociateur et les employés, sauf entente à l'effet contraire entre l'employeur et l'agent négociateur, tant que les conditions des alinéas 89(1)a) à d) n'ont pas été remplies; b) les conditions d'emploi visées à l'alinéa a) restent totalement assujetties, quant à leur interprétation et à leur application, à la Loi sur les relations de travail dans la fonction publique; c) sur demande de la personne morale ou de l'entreprise qui devient l'employeur, ou de l'agent négociateur touché par le changement, présentée au moins cent vingt jours et au plus cent cinquante jours après celui-ci, le Conseil décide par ordonnance_:
d) dans les cas où le Conseil rend une ordonnance dans le cadre de l'alinéa c), la personne morale ou l'entreprise qui devient l'employeur ou l'agent négociateur peut transmettre à l'autre partie un avis de négociation collective en vue de la conclusion d'une convention collective; e) la présente partie, à l'exception de l'article 80, s'applique à l'avis prévu à l'alinéa d). |
The effect of section 47.1 is described by G.J. Clarke in the following terms:
| This new section freezes the existing terms and conditions of employment until either the right to strike or lock-out has been obtained. This new provision maintains in force the freeze which would have applied to the parties had they continued to be governed by the Public Service Staff Relations Act.12 |
Section 47.1 provides, therefore, that notice to bargain prior to a severance will preserve the status quo achieved by virtue of section 52 of the PSSRA. Under section 47.1, the Board's power to intervene is limited to the making of orders determining the appropriateness of bargaining units and bargaining agents. Such orders, as is the case under section 47, can only be made upon application by the employer or an affected trade union during the period between the 120th and 150th day after the date of the severance. However, it must be noted that, unlike the situation in s. 47(4)(c)(ii), there is no specific power vested in the Board to end or limit the duration of an existing collective agreement, because it is not needed, the term of the collective agreement being in its last three months and approaching expiry. Consequently, absent an agreement between the employer and bargaining agent, the terms of the existing collective agreement continue until a new agreement is signed or until the time when a valid strike or lockout may be called and beyond, in accordance with the various requirements set out in paragraphs 89(1)(a) to (d) of the Code.
The Facts
Having outlined the way that successor rights operate by virtue of sections 43 to 47 of the Code, the facts of the case before the Court can now be briefly summarized. PSAC had been certified as the bargaining agent under the PSSRA to represent some 18 public service employees in a number of bargaining units, including certain civilian support employees of the Department of National Defence ("DND") at CFB Moose Jaw. DND operated CFB Moose Jaw as a Canadian military pilot training centre where training was delivered by Canadian military instructors to Canadian pilots on Tutor jets.
In the late 1980s, it became apparent that CFB Moose Jaw would have to close down as a result of a shrinking air force and increased operating costs. In 1995, Bombardier approached DND with a plan to offer, at CFB Moose Jaw and CFB Cold Lake, in successive phases, military pilot training for both Canadian pilots and pilots from other NATO member states as well as from other specified countries. The plan was to be known as NATO Flight Training in Canada ("NFTC"). In November, 1997, it was announced that the NFTC would go forward and that CFB Moose Jaw would therefore remain open.
In 1998, a series of contracts were entered into between Her Majesty in Right of Canada ("Canada") and Bombardier and between Bombardier and Frontec. These agreements had the effect, inter alia, of contracting out to Bombardier and Frontec the site support services for military pilot training formerly carried out by PSAC-represented employees at CFB Moose Jaw. The support services covered clerical, administrative, technical, runway, grounds and building maintenance, and infrastructure services at CFB Moose Jaw. Not covered were pilot training, aircraft maintenance and other professional employees as well as military personnel. By two separate contracts,13 the support services were to be provided by Bombardier in respect of the already existing Tutor-based pilot training which was scheduled to be phased out some time in the year 2000 as well as in respect of the subsequent NFTC program scheduled to launch in the autumn of 2000. Bombardier subcontracted to Frontec the following functions in regard to these programs: facilities management, runway maintenance and fire protection.
An "Employment Obligations Agreement" between Bombardier and Canada set out the minimum requirements which Bombardier and its subcontractors had to meet in the employment of former CFB Moose Jaw public servants. Bombardier and its subcontractors were to draw 70% of the NFTC site support workforce from existing indeterminate public servants at CFB Moose Jaw. Job offers had to be for a minimum of 2 years at no less than 85% of the employee's current pay. It was contemplated that the employees who were offered employment under the NFTC program would initially be employed in support of the existing Tutor-based training program prior to their commencing work under the NFTC.
In all, Frontec hired 56 former public servants to carry out site support work, most of whom started working in July and August of 1998. Only 18 received offers to continue on the NFTC program once site support work was phased out for the Tutor program. Bombardier envisioned hiring 237 employees to do all of the work on the NFTC Contract. With other employees hired by subcontractors, the total number comes to approximately 350 employees (to be achieved in 2000). Of the 136 former public servants at CFB Moose Jaw, 20 were working for Bombardier, 56 for Frontec and 10 for a food services subcontractor at the time of the hearing before the Board, for a total of 86. Between 10 and 20 of the 50 former public servants who were not given offers remain with DND.
DND's civilian employees at CFB Moose Jaw that are involved in this litigation were divided into various PSAC-represented bargaining units which had collective agreements with the Treasury Board. Those agreements had expired in 1991 but were extended to 1997 by the Public Sector Compensation Act. The terms and conditions of employment had been frozen by virtue of notice to bargain given April 22, 1997 under the PSSRA, and the bargaining freeze was still in effect as of October 27, 1998, when PSAC brought its applications under section 47.1 of the Code.
These applications requested that the Board make the following orders:
| (1) Pursuant to subsection 47.1(c), the employees working for Bombardier and Frontec on the Site Support Contract, to be followed by the NFTC program, constitute for each employer a single bargaining unit. |
| (2) PSAC is declared the bargaining agent for each of the two above-mentioned bargaining units. |
| (3) Alternatively, Bombardier and Frontec are declared a single employer pursuant to section 35 of the Code. |
The Board's Decision
The Board found that PSAC had brought its applications under subsection 47.1(c) within the time limit set out in that subsection. The Board determined that the severance of the relevant DND employees at CFB Moose Jaw and their commencement of work under their new employers occurred over the span of several months, namely from May 15 to August 31, 1998 in the case of Frontec as employer and from June 16 to September 30, 1998 in the case of Bombardier as employer. The Board appeared to reason that PSAC had to have brought its subsection 47.1(c) application between the 120th and 150th days after any date in those ranges. Having brought its applications on October 28, 1998, PSAC was safely within the time limits.
The Board proceeded to determine whether a section 47 severance had occurred in respect to Bombardier and Frontec under the circumstances. Bombardier and Frontec each agreed that they were corporations governed by Part I of the Code. The Board then reviewed Part I of Schedule I to the PSSRA and found that DND was referred to therein by way of being included in Schedule I to the Financial Administration Act. Therefore, the former DND employees constituted a "portion" of the public service within the meaning of subsection 47(1). It then remained for the Board to determine whether such employees were "included and established as or [became] a part" of Frontec and Bombardier.
The Board found that Frontec's role as Bombardier's subcontractor did nothing to suspend or otherwise affect the operation of section 47 successor rights. Indeed, the Board noted that section 47(1) did not limit the manner in which a portion of the public service could be established as or become part of a federally regulated business. The Board reasoned that "[t]o conclude differently would defeat the purpose of the said section in that it would allow that the work severed not be covered by section 47(1) were it to be subcontracted to one or more subcontractors rather than being performed by the main contractor". In the result, the Board ruled that both Frontec and Bombardier fell within the scope of 47(1) "insofar as the Site Support Contract work [covering the transitional period] is concerned".
The Board held that PSAC had given notice to bargain collectively in accordance with subsection 47.1(a). Specifically, it determined that
| Once the requirements of sections 47(1) and 47.1(a) are met, they apply automatically where "notice to bargain collectively has been given in respect of a collective agreement," which is the case here.14 |
The Board ruled that PSAC's status as bargaining agent was therefore continued in respect of the work associated with the 1998-2000 Site Support Contract. However, the Board felt it necessary to go on and analyse the nature of the NFTC program in order to determine the scope of the work to which the decision would apply. It considered this analysis was necessary despite the fact that PSAC had amended its applications during the course of the hearings so as to delete any reference to NFTC work.15 In contrast to the support work related to the existing Tutor training program, the NFTC initiative was found by the Board to constitute "a new enterprise or endeavour" such that it could not be
| construed as a `severance' from the previous DND activity where DND owned the land, the buildings, the training equipment and the aircraft, and was solely and completely in charge of the syllabus and training of Canadian military pilots with Canadian military instructors, all of which was through public funding.16 |
The Board adopted the approach established in Logistec Corporation et al.17 for determining whether a sale of a business had taken place under section 44 of the Code. On the basis of this approach, the Board found that the mere fact that some former civilian DND employees would continue to be employed under the NFTC program, once the Site Support Contract work had ended, did not give rise to a successor rights situation. Instead, the Board looked to see if the most significant elements of the Tutor jet operation previously run by Canada were substantially present under the subsequent NFTC program administered by Bombardier and Frontec. The most significant feature of the original Tutor jet training program was the actual training by military personnel who were never represented by PSAC. Accordingly, those employees could not be considered a "portion" of the public service that had been "severed" within the meaning of section 47. DND's former civilian employees who carried out support services for the Tutor jet program, being only an ancillary part of the original training operation, could not be considered in the analysis, according to the Board.
The Board held that a more fundamental stumbling block existed to the continuance of bargaining rights under the NFTC program. Though some work activities carried out under the NFTC program are comparable to those performed prior to the program, the Board reasoned that "they do not originate from the same source, the former being the public sector, and the other a largely private sector venture, which is a new and very different entity".18 In the result, the Board determined that the NFTC contract did not constitute a severance of a portion of the public service of Canada as required by sections 47 and following of the Code. Accordingly, PSAC's applications for certification were held not to extend to the NFTC program but to terminate upon the expiry of the 1998-2000 Site Support Contract in respect of the Tutor jet program.
Analysis
| The Standard of Review |
The parties have all made submissions regarding the appropriate standard of review to be applied to the Board's decision. The Board is protected by a broad privative clause in section 22 of the Code. That section contemplates the review of Board decisions only on grounds specified in paragraphs 18.1(4)(a), (b) or (e) of the Federal Court Act.19 Of particular relevance in the present case is paragraph 18.1(4)(a) which allows the Federal Court to exercise its review powers to grant the appropriate relief where the Board has acted without jurisdiction, acted beyond its jurisdiction or refused to exercise its jurisdiction. On issues of jurisdictional error such as these, it has been held that the Board's decisions are reviewable on a standard of correctness.20
By contrast, it has been decided that a decision made within the jurisdiction of the Board may only be interfered with if it is patently unreasonable. This position has been affirmed on numerous occasions, including recent decisions of this Court which have applied the pragmatic and functional approach to determining the appropriate standard of review as mandated by the Supreme Court of Canada in its jurisprudence. In Offshore Logistics Inc. v. Halifax Longshoreman's Association,21 this Court laid out the proper approach to take in determining the appropriate standard of review in applications from decisions of this Board. At paragraphs 13 and 14 of the decision, Rothstein J.A. wrote the following:
| [para13] It is now well settled that the standard of review is to be determined according to a functional and pragmatic approach. The test is whether the question which the provision under consideration raises is one that was intended by Parliament to be left to the exclusive decision of the Board, subject to review only for patent unreasonableness. See Pasiechnyk v. Saskatchewan (Workers' Compensation Board), [1997] 2 S.C.R. 890, at paragraph 18, and Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982, at paragraphs 26 to 28. The factors to be taken into account in the functional and pragmatic approach, among others, are the presence or absence of a privative clause, expertise of the tribunal, the purpose of the Act as a whole and the provision in particular, and whether the nature of the problem is one of fact or law and the generality of the proposition under consideration. (See Pushpanathan, supra, paragraphs 29-38.) |
| [para14] It is now trite law that decisions of the Canada Labour Relations Board and its successor, the Canada Industrial Relations Board, are, in matters within their core expertise, to be granted substantial deference by the Courts. (See Canadian Broadcasting Corporation v. Canada (Labour Relations Board), [1995] 1 S.C.R. 157, Canada (Attorney General) v. P.S.A.C., [1993] 1 S.C.R. 941 at 962-963. The Supreme Court has also cautioned that the Courts should not be aggressive as branding as jurisdictional, and therefore subject to broader curial overview, that which may be doubtfully so. (See I.L.W.U. v. Prince Rupert Grain Limited [1996] 2 S.C.R. 432 at 445-46. |
Consequently, keeping in mind the Supreme Court's note of caution regarding the issue of whether a decision goes to the Board's jurisdiction, it is clear that the standard of review will be correctness in the case of a jurisdictional question and will be patent unreasonableness in the case of a question within the Board's recognised expertise.
| The Board's Interpretation of sections 47 and 47.1 |
Whether or not the Board's interpretation of sections 47 and 47.1 of the Code is considered jurisdictional or within the Board's core expertise, I am of the view that the decision limiting the successor rights to the life of the Site Support Contract must be set aside.
First, in my view, the Board's decision to terminate the bargaining rights of former DND employees in these bargaining units upon the expiry of the Site Support Contract was made without jurisdiction and must be set aside. PSAC brought its applications under section 47.1 of the Code which is the provision that applies where notice to bargain collectively has been given in respect of a collective agreement in force before a severance described in section 47. This notice can only be given during the last three months of a collective agreement. By subparagraphs 47.1(c)(i) and (ii), the Board has been given jurisdiction only to determine whether the employees represented by the bargaining agent constitute one or more units appropriate for collective bargaining and which trade union shall be the bargaining agent for the employees in each such unit. Unlike the situation prevailing in a subsection 47(3) application, there is no express authority given to the Board to terminate or limit the duration of any collective agreement that was in force prior to the severance. In these cases, there is no reason to enable the Board to shorten the duration of the collective agreement because it is about to expire anyway. When notice is given, the existing collective agreements between the parties continue in force until a new agreement is achieved or a legal strike or lockout is declared pursuant to section 89 of the Code. While the Board did not explicitly terminate the collective agreements binding upon the former DND employees, its decision necessarily had the effect of terminating those rights upon the expiry of the Site Support Contract in 2000, something it lacked the jurisdiction to do. The effect of such an order would be to decertify a bargaining agent, something entirely inconsistent with the purpose of sections 47 and 47.1.
Second, an alternative rationale for setting aside the decision exists. Although considerable deference is due to this Board on legal matters, the Board made a clearly irrational error of law. When the Board decided to consider the nature of the future NFTC undertaking, after having correctly found that the former DND employees in the units in question had been severed and that their bargaining rights continued in respect of the site support services for the Tutor jet training program, it made a patently unreasonable legal error. For a section 47 severance to take place, the Code requires that public service employees be established as or become a part of a corporation, that is, Bombardier and Frontec. Once these former DND employees began to work for Bombardier and Frontec, they became part of those corporations, and the section 47 severance was complete. The bargaining rights of their union were preserved for the time being at least. That some of these employees might continue working for those companies after the expiry of the Tutor jet training program in 2000, or might cease to do so, has no bearing on any further severance analysis, as the employees had already been severed from the public service and incorporated into Bombardier and Frontec. The situation in 2000 should have been left to be dealt with at a later time by means of a different application, possibly in an application to decertify or, pursuant to section 44, as a disposition from one corporation to another.
Furthermore, in determining whether a severance in respect of the NFTC program had taken place, the Board was clearly irrational in completely ignoring the plain wording of section 47 and mistakenly applying the language and jurisprudence pertaining to the sale of a business under section 44 of the Code. This error is curious given the Board's explicit recognition earlier in its decision that "Section 47(1) does not limit the manner in which the `portion of the public service of Canada' may become established or become a part of a corporation or business..." Nonetheless, the Board ignored this correct principle and concluded that the NFTC program constituted a new enterprise or endeavour that could not be construed as a severance from the previous DND activity under the Tutor jet program. Under section 47, except in its deliberations about the proper bargaining unit and agent, the Board should not consider the changing nature of the undertaking as a factor in determining the existence of a severance. Of course, any new entity will by necessity be somewhat different than the pre-existing one. That does not matter as long as there is a severance of a portion of the public service that becomes part of a business.
A section 47 severance is not the sale of a business. The Board was clearly wrong to invoke, in this section 47 application, the words from Canada Post Corporation, supra, that "bargaining rights attach to a business, not to any particular incumbent employees...". On the contrary, section 47 speaks of a "portion of the public service", (not a part of a business), which is defined as the "several positions in or under any department or other portion of the public service...". However strange it might seem to the respondents, bargaining rights do indeed attach to the positions of the incumbent employees in a section 47 severance, for there is no business to which they may attach. These egregious errors of law amount, in my view, to patent unreasonableness.
There was some concern expressed by counsel for Bombardier about this section 47 process of successor bargaining rights because it may involve a violation of the section 8 freedom of employees to join and be represented by a union of their choice. He considered it "unconscionable" for potential new employees to be included, against their wishes perhaps, in a bargaining unit represented by a union which they had not freely joined. That is a matter of some concern. There is no doubt that these successor provisions may, to a certain extent, sometimes cause exceptions to the principle of employees being represented by a union of their choosing. However, the successorship provisions are meant to be temporary, merely preserving stability and the status quo through a transition period. In due course, if the employees are dissatisfied with their bargaining agent and wish to be represented by a different union or to be free of any union, the mechanisms exist in the Code for them eventually to alter the interim situation they find themselves in pursuant to section 47.
In conclusion, the decision of the Board to limit the certification to the 1998-2000 Site Support Contract was made without jurisdiction. Alternatively, the Board's determination that no severance occurred with respect to the NFTC program should not have been made and, in any event, it completely ignored the language of section 47, relied on irrelevant jurisprudence and, hence, was a patently unreasonable error of law.
Disposition
The application will be allowed and the matter will be remanded to the Canada Industrial Relations Board for redetermination in accordance with sections 47 and 47.1 of the Canada Labour Code as they have been interpreted herein with the direction that the Board amend the certification orders to state as follows:
| (1) all employees of Bombardier Inc. engaged in support and administration of military pilot training programs at CFB 15 Wing Moose Jaw, Saskatchewan, save and except the Site Manager and the Senior Human Resource Advisor; |
| (2) all employees of Frontec Corporation engaged in the provision of support services to military pilot training programs at CFB 15 Wing Moose Jaw, Saskatchewan, save and except Operations Manager, Project Manager, Manager of Finance and Administration, Supervisor Human Resources and Accounting, Systems Administration Clerk and Receptionist/Works Control Clerk. |
The applicant shall have its costs throughout.
J.A.
"I agree
F.J. McDonald J.A."
"I agree
B. Malone J.A."
ANNEX: LEGISLATION
Sections 44 through 47.1 of the Code are set forth as follows:
| 44. (1) In this section and sections 45 to 47.1, "business" means any federal work, undertaking or business and any part thereof; "provincial business" means a work, undertaking or business, or any part of a work, undertaking or business, the labour relations of which are subject to the laws of a province; "sell", in relation to a business, includes the transfer or other disposition of the business and, for the purposes of this definition, leasing a business is deemed to be selling it. Sale of business (2) Where an employer sells a business, (a) a trade union that is the bargaining agent for the employees employed in the business continues to be their bargaining agent; (b) a trade union that made application for certification in respect of any employees employed in the business before the date on which the business is sold may, subject to this Part, be certified by the Board as their bargaining agent; (c) the person to whom the business is sold is bound by any collective agreement that is, on the date on which the business is sold, applicable to the employees employed in the business; and (d) the person to whom the business is sold becomes a party to any proceeding taken under this Part that is pending on the date on which the business was sold and that affects the employees employed in the business or their bargaining agent. ... 45. In the case of a sale or change of activity referred to in section 44, the Board may, on application by the employer or any trade union affected, determine whether the employees affected constitute one or more units appropriate for collective bargaining. 46. The Board shall determine any question that arises under section 44, including a question as to whether or not a business has been sold or there has been a change of activity of a business, or as to the identity of the purchaser of a business. 47. (1) Where the name of any portion of the public service of Canada specified from time to time in Part I or II of Schedule I to the Public Service Staff Relations Act is deleted and that portion of the public service of Canada is established as or becomes a part of a corporation or business to which this Part applies, or where a portion of the public service of Canada included in a portion of the public service of Canada so specified in Part I or II of Schedule I to that Act is severed from the portion in which it was included and established as or becomes a part of such a corporation or business, (a) a collective agreement or arbitral award that applies to any employees in that portion of the public service of Canada and that is in force at the time the portion of the public service of Canada is established as or becomes a part of such a corporation or business continues in force, subject to subsections (3) to (7), until its term expires; and (b) the Public Service Staff Relations Act applies in all respects to the interpretation and application of the collective agreement or arbitral award. (2) A trade union may apply to the Board for certification as the bargaining agent for the employees affected by a collective agreement or arbitral award referred to in subsection (1), but may so apply only during a period in which an application for certification of a trade union is authorized to be made under section 24. Application for order (3) Where the employees in a portion of the public service of Canada that is established as or becomes a part of a corporation or business to which this Part applies are bound by a collective agreement or arbitral award, the corporation or business, as employer of the employees, or any bargaining agent affected by the change in employment, may, during the period beginning on the one hundred and twentieth day and ending on the one hundred and fiftieth day after the date on which the portion of the public service of Canada is established as or becomes a part of the corporation or business, apply to the Board for an order determining the matters referred to in subsection (4). Determination of Board (4) Where an application is made under subsection (3) by a corporation or business or bargaining agent, the Board, by order, shall (a) determine whether the employees of the corporation or business who are bound by any collective agreement or arbitral award constitute one or more units appropriate for collective bargaining; (b) determine which trade union shall be the bargaining agent for the employees in each such unit; and (c) in respect of each collective agreement or arbitral award that applies to employees of the corporation or business, (i) determine whether the collective agreement or arbitral award shall remain in force, and
... 47.1 Where, before the deletion or severance referred to in subsection 47(1), notice to bargain collectively has been given in respect of a collective agreement or arbitral award binding on employees of a corporation or business who, immediately before the deletion or severance, were part of the public service of Canada, (a) the terms and conditions of employment contained in a collective agreement or arbitral award that, by virtue of section 52 of the Public Service Staff Relations Act, are continued in force immediately before the date of the deletion or severance or that were last continued in force before that date, in respect of those employees shall continue or resume in force on and after that date and shall be observed by the corporation or business, as employer, the bargaining agent for those employees and those employees until the requirements of paragraphs 89(1)(a) to (d) have been met, unless the employer and the bargaining agent agree otherwise; (b) the Public Service Staff Relations Act applies in all respects to the interpretation and application of any term or condition continued or resumed by paragraph (a); (c) on application by the corporation or business, as employer, or the bargaining agent for those employees, made during the period beginning on the one hundred and twentieth day and ending on the one hundred and fiftieth day after the date of the deletion or severance, the Board shall make an order determining
(ii) which trade union shall be the bargaining agent for the employees in each such unit; (d) where the Board makes the determinations under paragraph (c), the corporation or business, as employer, or the bargaining agent may, by notice, require the other to commence collective bargaining under this Act for the purpose of entering into a collective agreement; and (e) this Part, other than section 80, applies in respect of a notice given under paragraph (d). |
| 44. (1) Les définitions qui suivent s'appliquent au présent article et aux articles 45 à 47.1. « entreprise » Entreprise fédérale, y compris toute partie de celle-ci. « _entreprise provinciale_ » Installations, ouvrages, entreprises -- ou parties d'installations, d'ouvrages ou d'entreprises -- dont les relations de travail sont régies par les lois d'une province. « _vente_ » S'entend notamment, relativement à une entreprise, du transfert et de toute autre forme de disposition de celle-ci, la location étant, pour l'application de la présente définition, assimilée à une vente. (2) Les dispositions suivantes s'appliquent dans les cas où l'employeur vend son entreprise_: a) l'agent négociateur des employés travaillant dans l'entreprise reste le même; b) le syndicat qui, avant la date de la vente, avait présenté une demande d'accréditation pour des employés travaillant dans l'entreprise peut, sous réserve des autres dispositions de la présente partie, être accrédité par le Conseil à titre d'agent négociateur de ceux-ci; c) toute convention collective applicable, à la date de la vente, aux employés travaillant dans l'entreprise lie l'acquéreur; d) l'acquéreur devient partie à toute procédure engagée dans le cadre de la présente partie et en cours à la date de la vente, et touchant les employés travaillant dans l'entreprise ou leur agent négociateur. ... 45. Dans les cas de vente ou de changements opérationnels visés à l'article 44, le Conseil peut, sur demande de l'employeur ou de tout syndicat touché décider si les employés en cause constituent une ou plusieurs unités habiles à négocier collectivement. 46. Il appartient au Conseil de trancher, pour l'application de l'article 44, toute question qui se pose, notamment quant à la survenance d'une vente d'entreprise, à l'existence des changements opérationnels et à l'identité de l'acquéreur. 47. (1) La convention collective ou la décision arbitrale applicable aux employés d'un secteur de l'administration publique fédérale qui, par radiation de son nom de la partie I ou II de l'annexe I de la Loi sur les relations de travail dans la fonction publique ou par sa séparation d'un secteur mentionné à l'une ou l'autre de ces parties, devient régi par la présente partie en tant que personne morale ou qu'entreprise ou est intégré à une personne morale ou à une entreprise régie par la présente partie_: a) continue d'avoir effet, sous réserve des paragraphes (3) à (7), jusqu'à la date d'expiration qui y est fixée; b) reste totalement assujettie, quant à son interprétation et à son application, à la Loi sur les relations de travail dans la fonction publique. (2) Un syndicat peut demander au Conseil son accréditation à titre d'agent négociateur des employés régis par la convention collective ou la décision arbitrale mentionnée au paragraphe (1); il ne peut toutefois le faire qu'au cours de la période pendant laquelle il est permis, aux termes de l'article 24, de solliciter l'accréditation. (3) Dans les cas de transfert visés au paragraphe (1) où les employés sont régis par une convention collective ou une décision arbitrale, la personne morale ou l'entreprise qui devient l'employeur, ou tout agent négociateur touché par ce changement, peut, au moins cent vingt jours et au plus cent cinquante jours après celui-ci, demander au Conseil de statuer par ordonnance sur les questions mentionnées au paragraphe (4). |
| (4) Saisi de la demande visée au paragraphe (3), le Conseil doit rendre une ordonnance par laquelle il décide_: a) si les employés de la personne morale ou de l'entreprise qui sont liés par la convention collective ou la décision arbitrale constituent une ou plusieurs unités habiles à négocier collectivement; b) quel syndicat sera l'agent négociateur des employés de chacune de ces unités; c) si chaque convention collective ou décision arbitrale qui s'applique à ces employés_: (i) restera en vigueur,
... 47.1 Si, avant la radiation ou la séparation visées au paragraphe 47(1), un avis de négociation collective avait été donné à l'égard d'une convention collective ou d'une sentence arbitrale liant les employés d'une personne morale ou d'une entreprise qui, immédiatement avant la radiation ou la séparation, faisait partie de l'administration publique fédérale_: a) les conditions d'emploi figurant dans la convention collective ou la décision arbitrale maintenues en vigueur par l'effet de l'article 52 de la Loi sur les relations de travail dans la fonction publique continuent de lier -- ou lient de nouveau si l'article 52 avait cessé d'avoir effet -- la personne morale ou l'entreprise, l'agent négociateur et les employés, sauf entente à l'effet contraire entre l'employeur et l'agent négociateur, tant que les conditions des alinéas 89(1)a) à d) n'ont pas été remplies; b) les conditions d'emploi visées à l'alinéa a) restent totalement assujetties, quant à leur interprétation et à leur application, à la Loi sur les relations de travail dans la fonction publique; c) sur demande de la personne morale ou de l'entreprise qui devient l'employeur, ou de l'agent négociateur touché par le changement, présentée au moins cent vingt jours et au plus cent cinquante jours après celui-ci, le Conseil décide par ordonnance_:
(ii) quel syndicat sera l'agent négociateur des employés de chacune de ces unités; d) dans les cas où le Conseil rend une ordonnance dans le cadre de l'alinéa c), la personne morale ou l'entreprise qui devient l'employeur ou l'agent négociateur peut transmettre à l'autre partie un avis de négociation collective en vue de la conclusion d'une convention collective; e) la présente partie, à l'exception de l'article 80, s'applique à l'avis prévu à l'alinéa d). |
R.S.C. 1985, c. L-2, as amended [hereinafter the Code ].
This Court dismissed an application to set aside a Board decision relating to a severance under section 47 in Public Service Alliance of Canada v. Saskatoon (City) (1998), 229 N.R. 207 (F.C.A.); however, no analysis of that section was undertaken by the Court.
1 G.W. Adams, Canadian Labour Law , 2nd Ed. (Aurora: Canada Law Book, 2000) at ¶ 8.10.
2 [1990] 3 S.C.R. 644 at 673-674.
3 Paragraphs 44(1)(a) and (c).
4 See e.g. G.J. Clarke, Clarke's Canada Industrial Relations Board (Aurora: Canada Law Book, 2000) at I 11-10.
5 In s. 44(1), "sell" is said to include "transfer", "leasing", or "other disposition". See also Terminus Maritime Inc. (1983), 50 di 178, 83 C.L.L.C. ¶ 16,029 (CLRB #402).
6 (1981), 2 C.L.R.B.R. (N.S.) 40 (Can.) at 59-60.
7 (1989), 77 di 181, 4 C.L.R.B.R. (2d) 161 (CLRB #742) at 174-175.
8 G.J. Clarke, supra note 6 at I 11-25, Human Resources Development Canada, Highlights of Major Developments in Labour Legislation, 1995-1996 at 13.
9 R.S.C. 1985, c. P-35, as amended [hereinafter PSSRA ].
10 Sims Task Force, Seeking a Balance: Review of Part I of the Canada Labour Code (February, 1996).
11 See section 3 of the Code .
12 G.J. Clarke, supra note 6 at I 11-27.
13 The "Site Support Contract" related to support services during the transitional period (June 1, 1998 to May 31, 2000) during which the Tutor-based training would be phased out and the NFTC program phased in. The NFTC contract related to the NFTC program once phased in and is expressed in a number of agreements relating to the rights and responsibilities of the parties under different aspects of the program.
14 Decision of the Board dated January 14, 2000 at paragraph 102.
15 Decision of the Board dated January 14, 2000 at paragraph 103.
17 (1986) di 120, 87 C.L.L.C. 16,008 (CLRB #593).
19 R.S.C. 1985, c. F-7, as amended.
20 See e.g., Canada Safeway Ltd. v. Retail, Wholesale and Department Store Union, Local 454 (1998), 226 N.R. 319 (S.C.C.) at 330, Dynamex Canada Inc. v. Canadian Union of Postal Workers, [1999] 3 F.C. 349 (C.A.) at 359ff.