A trio of decisions have considered the issues of successorship, common employer, and true employer in the health care sector in regard to the closure of the Regina Hospital Laundry. On December 13, 2013, Health Shared Services Saskatchewan (“3sHealth”) announced that it had signed a 10-year contract with K-Bro Linen Systems Inc. (“K-Bro”) to provide linen services to the Regina Qu’Appelle Health Region (“RQHR”) and other Saskatchewan health care employers. K-Bro was contracted to provide services in a new laundry facility to be built, owned, and operated by K-Bro. The new contract would result in the closure of the RQHR laundry facility and the loss of all jobs in that facility.

Faced with this prospect, the Retail, Wholesale and Department Store Union (“Union”) applied to the Saskatchewan Labour Relations Board (“the Labour Relations Board”) for various forms of relief, including common employer rights and successorship declarations under The Saskatchewan Employment Act. The Union submitted that K-Bro, RQHR, 3sHealth, and the Saskatchewan Association of Health (“SAHO”), which provided centralized services to all affected health care employers, were all partners in providing laundry services, and thus should be classified as common employers. If that were the case, RQHR’s union certification, collective bargaining agreement, and current employees could all be transferred to K-Bro. In the event that the Labour Relations Board did not find that any of the parties were common employers, the Union submitted that K-Bro was a successor to RQHR, 3sHealth, and/or SAHO. If successorship was found, K-Bro could be ordered to recognize the existing union certification and collective bargaining agreement.

Labour Relations Board: Decision 1

The Labour Relations Board issued its initial decision on August 26, 2014. It determined that RQHR, 3sHealth, and SAHO were not common employers because they were not under common control or direction. It also denied successorship rights because a business had not been transferred from RQHR to K-Bro. Rather, the Labour Relations Board found that RQHR, with the assistance of 3sHealth, had simply contracted with K-Bro. The Union disagreed with this decision and applied for judicial review on the grounds that the Labour Relations Board had made numerous errors in its decision.

Saskatchewan Court of Queen’s Bench Decision

The Saskatchewan Court of Queen’s Bench issued its judicial review decision on September 23, 2015. Although the Union argued that the Labour Relations Board made several errors, the Court determined that it correctly applied the law in every aspect of the case, with one exception. The Court found that the Labour Relations Board failed to explain how it dealt with the issue of whether K-Bro was a common employer with any of the other respondents. Given that this was a central matter in the dispute, the Court referred the matter back to the Labour Relations Board for further consideration. The Court noted it was the Labour Relations Board’s responsibility to determine appropriate relief should it find that K-Bro was a common employer with one or more of the other respondents.

Labour Relations Board: Decision 2

On May 26, 2016, the Labour Relations Board issued its supplementary decision regarding the single issue of whether K-Bro was a common employer with RQHR, 3sHealth, and/or SAHO. The Labour Relations Board concluded K-Bro was not a common employer with any of the respondents because there was no common control or direction between the parties. K-Bro had full control of the laundry facility and was found to be the true employer.

In the result, the Labour Relations Board determined that K-Bro, RQHR, 3sHealth, and SAHO were not common employers and that successorship rights did not apply to K-Bro. Ultimately, RQHR’s union certification, collective bargaining agreement, and employees will not transfer to K-Bro. K-Bro was found to be the true employer with the autonomy to operate its business independently of the other respondents.

Below are the links to the three decisions:

LRB 1: http://www.sasklabourrelationsboard.com/pdfdoc/350-13.August%2026%202014%20KL

SKQB: http://www.canlii.org/en/sk/skqb/doc/2015/2015skqb300/2015skqb300.pdf

LRB 2: http://www.sasklabourrelationsboard.com/pdfdoc/350-13May%2026%202016KL