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Labour Board refuses to limit its discretion in related employer applications

October 28, 2003

Board says related employer declaration is appropriate even where the related employers have not performed work covered by the collective agreement

In the latest chapter of the turbulent reorganization of Ontario’s electrical power sector, the Ontario Labour Relations Board has refused to limit the exercise of its discretion in a related employer application to circumstances in which related employers have already carried out bargaining unit work.


In the aftermath of the break-up of Ontario Hydro, unions were faced with a splintered and confused array of successor companies and subsidiaries. Many of these companies refused to acknowledge that they were bound to the collective bargaining obligations of their predecessors.

The Canadian Union of Skilled Workers (“CUSW”), the Labourers’ International Union of North America, Local 1059 (“Labourers”), and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry (“UA”) each brought related employer applications seeking to trace bargaining rights from the former Ontario Hydro to the various entities that have sprung from it, including Hydro One and its subsidiaries.

Under ss. 1(4) of the Labour Relations Act, 1995, where two or more companies carry on associated or related business activities under “common control or direction”, the Board has the discretion to treat them as a single employer. If the Board exercises this discretion, each related company is bound to the collective bargaining obligations of the other.

In this case, there was no question that Hydro One and its subsidiaries carried on related business activities under common control and direction. The critical issue was whether the Board should exercise its discretion and bind the various companies to collective bargaining.

The companies argued that because none of the subsidiaries had actually done work covered by the unions’ collective agreements, there had been no erosion of bargaining rights and the Board should not exercise its discretion.

The Board’s decision

The Board refused to limit the exercise of its discretion to circumstances where related employers had already carried out bargaining unit work. It preferred a more pro-active stance designed to protect bargaining rights into the future. The Board put the test in these terms:

The purpose of section 1(4) is to preserve the meaningful nature of bargaining rights. It serves to protect them from being deliberately subverted, or from being eroded by commercial decisions entirely divorced from labour relations considerations. It is therefore necessary for an applicant to demonstrate that there is either actual or potential erosion of those bargaining rights. In the context of a construction collective agreement, that means looking at the work claimed in or covered by that collective agreement. The erosion need only be minor or be only reasonably likely to happen. The claim to the work in the collective agreement need not be conclusive or obvious on its face. But there must be some actual or potential activity on the part of the related employer which could reasonably be said to fall within the scope of the applicant’s collective agreement.

In this case, the Board applied the test in a variety of contrasting circumstances, each of which provide insight into the threshold that must be met before the board will exercise its discretion. For example, one of the subsidiaries at issue was Hydro One Delivery Services Inc. (“HODS”). HODS had never done construction work of any sort, and the companies argued that it was pure speculation to inquire into the work it might do in the future.

The Board disagreed. HODS was set up, in part, to build transmission lines. The one project HODS had seriously explored was the construction of a transmission line across Lake Erie. Although the project was not carried out, the Board looked at the work that would have been involved in this project, as well as the work involved in building transmission lines in general, and found that it fell squarely within the jurisdiction of CUSW and the Labourers. In contrast, the Board found that it was difficult to envision that any of the plans HODS had considered would give rise to work falling under any of the UA’s collective agreements. The UA claimed work on transformer stations, but there was no evidence that HODS had ever contemplated constructing transformer stations. The UA also argued that there might be a toilet or drinking fountain installed at a converter station, but the board dismissed this as “pure speculation, with no evidentiary foundation whatsoever”. Thus, while the threshold is low, there must be some evidence supporting the union’s claim that bargaining rights may be eroded in the future.

The Board also held that, once it has determined that there has been some actual or reasonably foreseeable erosion of bargaining rights under one collective agreement, it will declare that all the bargaining rights held by the union apply to the related employer. In other words, a company cannot fracture a union’s bargaining rights by splintering off various aspects of its business into separate companies or subsidiaries.

Read the decision.


Lorne Richmond

Practice Areas

Construction Labour Relations, Labour Law