EllisDon wins in court but loses Liberal government support as it seeks to overcome 1958 Sarnia Working Agreement

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By Mark Buckshon

Ottawa Construction News staff writer

EllisDon’s efforts to prevent a 1958 local agreement from tying the company to province-wide collective bargaining with roofing, electrical and sheet-metal subcontractors resulted in contradictory legal and political decisions in late September and October.

The Ontario Divisional Court ruled in the company’s favour, deciding on Sept. 27 that the unions could not use the old local agreement to force the company to work with union-only contractors outside of the Greater Toronto Area.

However, that court decision caused premier Kathleen Wynne to back off from her earlier support of a private member’s bill that would legislate a permanent solution to the issue. And the unions have said they will appeal the court’s decision.

This leaves the company in a situation where it could face constant legal battles before the OLRB and in the courts affecting only its business and not its competitors, says Tom Howell, EllisDon’s vice-president of labour relations.

“They’ve (the unions) already been back to the OLRB trying to improperly reargue the same points they failed to raise during the judicial review,” Howell said. “This is not an anti-union piece of legislation. We’re a proud union company.  But it’s an incredibly complex issue and that’s why it’s been so hard to get the story out.”

On this issue, EllisDon has the support of two unions not normally used to co-operating with each other, the Carpenters’ Union and the Labourers International Union of North America (LIUNA).

The concern is that if EllisDon is singled out and is the only major Ontario-based general contractor required to subcontract only to unionized roofing, electrical and mechanical contractors, it will be at a competitive disadvantage to both local and well-funded foreign-owned multi-national companies, who would not have to work under the same restrictions.

“Unions recognize that Bill 74 (the private member’s bill sought by EllisDon)  is urgently required if EllisDon is to be able to continue to meet the challenges posed by increased competition from new entrants to the construction industry, including those based offshore,” John Mosynki, the Carpenter’s senior general counsel has written in a letter of support.

The Ontario Building Trades and the NDP, however, oppose the legislation.

The story is complex, in part because of its long history and the various political and legal twists and turns along the way.

Changes to the Ontario Labour Relations Act in 1980 resulted in numerous unions acquiring province-wide ICI bargaining rights as a result of local working agreements entered into decades earlier.

These matters came to a head in 2000, when the Act was amended to allow for certain bargaining rights to be deemed abandoned by the Lieutenant Governor in Council.  In 2001, the amendment resulted in what is commonly referred to as the “Deemed Abandonment Regulation” which “granted partial relief to employers bound through the Toronto Building Trades working agreement, a handful of which remain in operation today,” Howell has written in documentation explaining EllisDon’s position.

“The regulation extinguished (‘deemed abandoned’) the ICI bargaining rights held by all but six civil trades outside of Toronto (OLRB Area 8) while maintaining all-trade ICI bargaining rights within Toronto (the original geographical scope of the agreement),” Howell wrote.

This condition made sense at the time as other major contractors would be required to compete under the same rules in the GTA. However, elsewhere in the province, many of these sub-contracted trades are in non-union shops.  If the Sarnia Working Agreement was extended outside of the GTA to the rest of the province, EllisDon would be the only major contractor required to use only unionized sub-trades for the work, and it would be at a huge competitive disadvantage against other contractors not required to work under the same rules.

Court documents indicate that EllisDon, concerned about the historical challenges of the long-outdated Sarnia local agreement, in negotiations 13 years ago raised the issue of whether the unions would try to resurrect that old agreement in future negotiations.

The OLRB adjudicator heard testimony from Paul Richer, an employee of PCL (a competitor of EllisDon) that a representation was made in 2000 by Pat Dillon, representing the Building Trade Unions, that the unions would not seek to enforce the old Sarnia Working Agreement (SWA) as part of the agreement to set out the Toronto-area understanding.

“The vice-chair (of the Labour Relations Board) concluded that Mr. Dillon told Mr. Richer that no union in the province would seek to rely upon the SWA as creating province-wide bargaining rights,” Ontario Superior Court judge Anne Molloy wrote in her September decision, concurred by the two other judges hearing the matter.  “This was within the context of the unions and the construction companies trying to reach some consensus on a proposal they could make to the Province with respect to labour law reform.”

The proposal on the table at the time was there would be no amendment to the legislation itself, but a regulation would be passed that wold have the effect of limiting the application of the Toronto Working Agreement to Board Area 8 (the GTA).  In other words, the Toronto Working Agreement would no longer have the effect of creating province-wide bargaining rights.

“EllisDon could live with that solution (as opposed to a more extensive amendment to the Act) but needed assurance that it would not find itself in exactly the same position as a result of the Sarnia Working Agreement,” the court ruled. “This was the assurance provided by Mr. Dillon — the effect of the SWA would be limited to the three trades in Sarnia only, and would not be a basis for bargaining rights claimed in any other fashion.”

Accordingly, the court ruled that the “estoppal” of province wide bargaining rights, originally limited to two years by the OLRB adjudicator, should be permanent, giving EllisDon the relief it needs, regardless of the private member’s legislation.

“In other words, the company can continue to operate as it was prior to the OLRB case,” a spokesperson for premier Kathleen Wynne told the Toronto Star.  “The Ministry of Labour lawyers have advised that this ruling achieves the same outcome that was being sought with Bill 74.

“We believe that this bill is no longer needed and will not be supporting it,” the spokesperson was quoted as saying. “The urgency created by the OLRB decision has been removed by the court.”

However, Tom Howell at EllisDon disagrees with this assertion. He says the unions are continuing to mount legal challenges, and the story will not go away until the legislature implements the legislative remedy.  However, without government support, private members’ bills rarely succeed.

The court ruled Sept. 27 that the unions would need to each pay $7,500 in costs to EllisDon. However, the legal costs in fighting the matter going forward will likely cost hundreds of thousands of dollars, Howell said.

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