EllisDon could find relief from long-forgotten agreement

1958 ‘Sarnia agreement’ – rediscovered in 1986 – requires construction giant to hire from union pool: OLRB
By Liz Foster
|Canadian HR Reporter|Last Updated: 10/22/2013

A private member’s bill has been introduced in the Ontario legislature to assist construction giant EllisDon in its efforts to free itself from a working agreement that dates back to 1958.

Bill 74, introduced by Tory MPP Monte McNaughton, would amend the Ontario Labour Relations Act to end bargaining rights recognized by working agreements entered into before 1979 between an employer and a council of trade unions. Ontario currently has a Liberal minority government.

This amendment would affect the absolute bargaining rights the International Brotherhood of Electrical Workers (IBEW) Local 586 and the Ontario Sheet Metal Workers and Roofers Conference (OSMWRC) Local 539 currently claims with EllisDon through an agreement that was signed in 1958.

That agreement for collective bargaining rights entered into by EllisDon and the union employees in the Sarnia, Ont., area — commonly referred to as the Sarnia agreement — was forgotten for decades after its signing. When copies of the agreement were discovered in 1986, however, broad labour reform implemented in the 1970s and 1980s that extended agreements provincially made the terms of the Sarnia agreement — which had applied only to the Sarnia area at the time of its signing — applicable province-wide.

IBEW and OSMWRC filed grievances against EllisDon in 2005 for employing non-union workers, citing the 1958 Sarnia agreement, and the Ontario Labour Relations Board (OLRB) upheld the union’s position in a 2012 ruling.

Because the OLRB ruled the agreement should remain in force, in February 2014 EllisDon will be required to subcontract all industrial, commercial and institutional (ICI) work involving electrical and sheet metal trades to subcontractors under agreement with the two unions involved.

The board also ruled that IBEW Local 586 and OSMWRC Local 539 would be prevented from asserting rights under the Sarnia agreement for two years. During that time, EllisDon would be permitted to seek legislative remedy.

Bill 74 is that legislative remedy. The bill would free EllisDon from any claims to the Sarnia agreement and allow the company to continue to employ both union and non-union employees outside of Toronto.

“This is a simple and straightforward bill designed to resolve a specific loophole that has recently been uncovered,” said McNaughton at the June 6, 2013, reading of Bill 74 before the legislative assembly. “This loophole is putting an established Ontario construction firm at a decided disadvantage in bidding for industrial, commercial and institutional contracts outside of the city of Toronto.”

Bill 74 will only affect the Sarnia agreement, he said. “A single working agreement that was made all the way back in 1958 is now being dredged up, and a recent unfair decision by the Ontario Labour Relation Board puts their future at risk and threatens the viability of this very important contractor.”

Jay Peterson, industry development representative for OSMWRC, which represents about 6,000 workers, said the legislation surrounding Bill 74 undermines fair agreements and will shut union workers out of fair contracts.

“Ultimately, we’d be pleased if this anti-worker legislation was scrapped,” said Peterson. “Our goals are to continue to work with all of our industry partners. We’re well-trained, professional craftspeople and we want to continue to do good work for fair contracts across Ontario.”

EllisDon, headquartered in Mississauga, Ont., was founded in 1951. Today, the operation has grown to include offices across Canada and the Middle East.

Under the restrictions of the Sarnia agreement — the effects of which EllisDon believes will be extended to include other trades unions relying on the OLRB’s ruling — EllisDon says it will be unable to compete with foreign companies.

Within Toronto, general contractors are bound by 25 ICI agreements represented by 22 trades. Outside of Toronto, however, contractors are only bound by the agreements of the six trades they traditionally employ directly — carpenters, labourers, operating engineers, cement masons, bricklayers and rodworkers.

The distinction between the Toronto area and the rest of the province was created by a deemed abandonment regulation, a partial relief granted in 2001 that deemed abandoned the ICI bargaining rights held by all but the six civil trades outside of Toronto, while maintaining all trade bargaining rights within the city.

The rediscovered Sarnia agreement restricts EllisDon to subcontracting only union workers for electrical and sheet metal work throughout all of Ontario, overriding the deemed abandonment regulation.

“It significantly restricts your pool of qualified subcontractors and the cost,” said Tom Howell, vice-president of labour relations for EllisDon. “It’s not just two new agreements that would be problematic for us. It’s expected those other trades will assert their bargaining rights. What the outcome would mean is EllisDon would be the only contract company bound by agreements province-wide.”

The competitive disadvantage, said Howell, would ultimately hurt the company and restrict the number of union workers it could afford to employ.

“We’re proud to be a unionized general contractor and we’re proud to employ union workers,” he said. “It’s not an anti-union bill. In my view, it’s a pro-union bill. If we’re forced into this position where we’re unable to compete, that’s only going to hurt the trades we do employ. It’s been characterized as somehow trampling bargaining rights and we’re not doing that. Other building trade unions like the carpenters and labourers — workers we regularly, directly employ — they’re entirely supportive.”

James Barry, business manager for IBEW Local 586, which represents about 15,000 workers across Ontario, said EllisDon’s fears about competition are unfounded.

“I don’t believe for a second that whole argument of being non-competitive,” said Barry, explaining that EllisDon spent years growing as a company while exclusively using union workers for electrical and sheet metal work after the copy of the 1958 Sarnia agreement was rediscovered in 1986.

“EllisDon used IBEW on every job and they’ve had no problem. Now they want to pick and choose when to use union workers to put money in their own pocket.”

The OLRB is in place to settle these disputes and its rulings should be respected, said Barry.

“The government should not get involved because someone doesn’t like the decision,” he said. “We play by the rules and the most recent decision found that EllisDon is bound to the unions by its own actions, which it now apparently regrets. EllisDon is not the only employer bound to IBEW and Sheet Metal and it’s not the only general contractor so bound. What’s to stop other employers from seeking the same legislative treatment? This could set a terrible precedent.”

The legislative conduct surrounding Bill 74 undermines the rule of law, the independence of labour and the stability of labour relations, said Barry.

Bill 74 passed its second reading in front of the legislative assembly of Ontario and will go to the standing committee on finance and economic affairs later this fall.

Liz Foster is a news editor with Canadian Labour Reporter, a sister publication to Canadian HR Reporter that covers collective agreements, arbitrations, news and trends in labour relations. She can be reached at liz.foster@thomsonreuters.com. For more information, visit www.labour-reporter.com.

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