Recently, the Hospitality & Service Trades Union, Local 261 (HSTU) commenced an application at the Ontario Labour Relations Board to have Service Star Building Cleaning Inc. declared a successor employer under Section 69 of the Labour Relations Act.  On a preliminary motion to dismiss brought by Service Star, the OLRB held that the HSTU failed to make out a prima facie case that Service Star was a successor employer under the LRA.

At the time of the application, the HSTU had represented the employees of Aramark Canada Inc. providing building cleaning services at 3500 Carling Avenue, Ottawa, Ontario for a number of years.  However, on or about January 7, 2013, Service Star was awarded the cleaning and maintenance contract at the location.  All existing employees involved in the cleaning and maintenance of the location were continued on the same terms and conditions they enjoyed with Aramark Canada Inc. prior to the contract being awarded to Service Star, with the same work methods being utilized and managerial expertise being relied upon by Service Star after it assumed the contract.

The HSTU submitted that pursuant to the continuity of employment provisions contained in the building services provider sections of the Employment Standards Act, 2000 and the operation of Section 69 of the Labour Relations Act, the awarding of the contract to Service Star constituted a sale of the business, such that Service Star became a successor employer and was bound to the collective agreement with HSTU.

The OLRB disagreed, despite the fact that in the context of determining whether a prima facie case has been pled on a preliminary motion, only the allegations contained in the application (which are assumed to be true and provable) are considered.  In reaching its decision, the Board adopted the following two-step analysis set out in the seminal case of Metropolitan Parking Inc.: (i) has there been a sale; and (ii) does what has been sold constitute a business or part of a business? 

In determining the first question, the Board was not persuaded that a sale or transfer occurred – rather HSTU relied primarily on the fact that the employees and work continued with Service Star under the new contract.  As there must be a nexus between two employers other than the fact that one employed persons to do certain work that the other performs or will perform, the Board found that the assumption of janitorial work by Service Star was nothing more than the “loss of work to a competitor”, and that it was insufficient to be caught by Section 69 of the LRA.  The Board went on to state that as the matter did not pass step one of the Metropolitan Parking Inc. test, it was not necessary to consider step two, and dismissed the HSTU’s application for failure to make out a prima facie case.

Our View:

This decision is notable because it serves to further clarify the concept of whether a sale of business has occurred where a contract has been awarded in the building services sphere.  This is often a complex determination that is heavily reliant on the specific facts at issue, and this case provides some comfort that the continuity of employment provisions in building services provider sections of the Employment Standards Act will not tip the scales in favour of a successor employer finding.