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Can an employer “transfer” its employees to another employer?

February 16, 2012

When an employer contracts out work, can it also “contract out” its employees? An arbitrator has said “No”

Can an employer “transfer” its employees to another employer, along with the work it has contracted out?  In CUPE 4191 v. Trillium Health Centre, an arbitrator said “no”; employees are entitled to notice of layoff and the rights set out in their collective agreement.


In June 2011, Trillium Health Centre (“the hospital”) advised CUPE 4191 that it planned to eliminate all bargaining unit positions in its Central Processing Department and give the work to SteriPro Canada Limited Partnership (“SteriPro”). The hospital planned to “transfer” its employees along with the work, so that they would become SteriPro’s employees.

In the hospital’s view, the contracting out of this work and the transfer of the employees to SteriPro did not trigger the layoff provisions of the collective agreement or the employees’ related seniority rights, including the right to bump into other positions within the hospital.  The hospital took the position that, if employees refused to accept employment with the contractor, they would lose their jobs and all of their seniority driven entitlements.

The union grieved. It argued that the elimination of a position required notice of layoff under the collective agreement. The hospital could not force employees whose positions were eliminated to follow the work to the contractor. They could choose instead to exercise their seniority rights, including bumping rights, under the collective agreement.

The arbitrator’s decision

Arbitrator William Kaplan agreed with the union. Like Arbitrator Owen Shime in an identical case decided a few months earlier, Arbitrator Kaplan held that the employees whose positions were being eliminated were entitled to notice of layoff and to exercise their seniority rights under the collective agreement.

Arbitrator Kaplan began his decision by noting that ‘it is axiomatic that seniority rights can only be abridged with the most clear and unambiguous language.” While it might be possible for parties to agree that employees must accept employment with a contractor in the event of contracting out, “it is not something that should be inferred.” He also held that, although the contracting out provision required SteriPro to offer employment to the affected employees, it did not require the affected employees to accept it.  The logical conclusion, therefore, was that notice of layoff must be given to the affected employees and the steps explicitly provided for in the collective agreement then put into effect.

Divisional Court upholds arbitrator’s decision

The hospital sought judicial review of the award, but the Divisional court dismissed the application.


Practice Areas

Labour Law