Work previously performed by bargaining unit members, identified as bargaining unit work
An Alberta employer breached its collective agreement when it purported to contract out work but instead contracted in an outside worker to perform work that had previously been performed by bargaining unit employees, an arbitrator has ruled.
There’s a big difference between contracting out and contracting in, in a unionized workplace, says Stephen Torscher, a labour and employment lawyer at Carbert Waite in Calgary.
“Contracting out is when an employer will take work on a project that has to be done and they hire an independent third party to do that work - typically, it's work that's done outside of the employer’s usual workplace and the employer doesn't have a whole lot of control over how it's done,” he says. “Contrasting that with contracting in, which essentially is hiring a worker to come into the workplace and work alongside bargaining unit employees doing work that generally looks very similar to the work that the bargaining unit employees are doing.”
“Contracting out as a general rule is something that's permitted, unless there's a specific and explicit restriction in the collective agreement, but contracting in usually isn't something that's permitted,” adds Torscher.
Shell Canada operates a hydrocarbon processing refinery at a complex in Fort Saskatchewan, Alta., where oil sands bitumen is converted into finished petroleum products.
The collective agreement at the refinery defined the bargaining unit as “all production and maintenance employees… except office, clerical, technical, sales, construction, laboratory and health, safety and environmental personnel.” Production employees operated the “tank farm” at the refinery, including operating and monitoring units, controlling the production process, and co-ordinating maintenance when necessary.
Special assignments
It was normal practice to fill 10 positions at the tank farm on every shift, which were presumptively filled by bargaining unit production employees, except for emergencies. Two additional posts were required during the day shifts on weekdays. There was also a special assignment position for tank farm project operator.
The collective agreement defined special assignment as a role “open to bargaining unit employees for a job with different responsibilities and accountabilities than their normal job.” It was normal practice, since the certification of the union, for the tank farm project operator role to be offered as a special assignment to bargaining unit members.
In December 2020, a worker performing the tank farm project operator position accepted a role outside of the bargaining unit. Shell Canada didn’t post a vacancy for the position but instead looked for a contract worker to perform various duties, including those of the tank farm project operator.
In January 2021, Shell engaged a company called Airswift to provide a contract worker to perform work in the tank farm. The contract worker performed supporting work in the tank farm until August, including the duties of the tank farm project operator. Starting in August, the contract worker took on another role for two months.
In February, the union filed a grievance alleging that Shell Canada breached the collective agreement by contracting in an outside employee to perform work that should have been done by a bargaining unit employee. It argued that, during the time that the contract worker was performing the tank farm project operator position, there were bargaining unit employees who were qualified to do it.
Contracting out
Shell asserted that it was difficult to fill all the required positions in the tank farm due to staffing issues from the pandemic. The company argued that article 9.02 of the collective agreement allowed contracting out refinery work to non-bargaining unit employees if it didn’t result in the layoff of a bargaining unit employee.
The company also referred to article 9.01 governing workforce utilization, which allowed that “the performance of work for the company by Shell employees, including union and non-union employees, can be directed by the company to meet business needs” and “the company will utilize employees in the bargaining unit to perform such work.” Shell argued that the workforce utilization article didn’t apply to contractors.
The arbitrator agreed that the language in the two provisions was different, as 9.01 only referred to Shell employees in workforce utilization, while 9.02 referred to both employees and contractors in setting restrictions on contracting out. It was established in arbitral jurisprudence that collective agreements should be interpreted with the plain and ordinary meaning of the words used, which in this case meant that the workforce utilization provision applied only to employees while the contracting out provision applied to both employees and contractors, said the arbitrator, noting that other provisions in article 9 specifically referred to employees without reference to contractors.
The arbitrator found that the provisions in article 9 that referenced contractors were “clear limitations on the company’s ability to contract out” and those that only referred to employees were about workforce utilization of existing employees. As a result, the workforce utilization provision – 9.01 – was not intended to restrict Shell’s management rights to contract out, the arbitrator said.
“Collective agreements are all different and they have to be looked at on their own terms, and language dealing with contracting out can be very broad or very restrictive,” says Torscher. “The importance of looking at the language and trying to determine the intentions of the parties is very critical - the arbitrator looked at the fact that one provision talked about employees and one talked about employees and contractors, and the fact that those words were there were important, so there had to be a distinction drawn.”
Contracting in
However, the arbitrator also found that the company’s appointment of the outside worker from Airswift was not contracting out work. Instead, it was contracting in of the outside worker to perform work that was customarily done by a bargaining unit member – the nature of the work made it bargaining unit work, said the arbitrator, adding that the collective agreement suggested that special assignment work like the tank farm project operator role was open to bargaining unit employees. In addition, the collective agreement defined bargaining unit employees as including all production and maintenance employees – tank farm project operator work was production employee work, the arbitrator said.
The arbitrator also found that there was no significant change to the way Shell did its business and the contractor employee did essentially the same work as the bargaining unit member before him. It was a labour law principle that “for there to be a genuine contracting out, there must be a significant change in the method by which the employer does its business… readily distinguishable from the manner in which business is conducted under the collective agreement,” said the arbitrator.
“This was work that had been done, typically, by a bargaining unit employee - they might have been in that role in a special assignment for a period of time, but it tended to always be a bargaining unit employee,” says Torscher. “Sometimes when work is contracted out, or even when it's contracted in, there's a difference in the way that the work is done by the new worker, but the arbitrator here found that, in substance, the work was essentially the same - for all intents and purposes, it appeared to be just another worker like any of the other bargaining unit employees.”
Control over employee, work
Shell argued that it didn’t pay the contract employee directly and Airswift handled hiring, firing, and disciplinary decisions regarding the employee. However, the arbitrator found that Shell controlled most aspects of the contract employee’s employment – including scheduling, location, tools, direction, supervision, training, and safety meetings – that essentially made the company the employer.
The arbitrator determined that the contract employee performed the same work as bargaining unit members had before him and were qualified to perform. As a result, Shell improperly contracted in an employee to perform bargaining unit work, which violated the collective agreement. Shell was ordered to pay to the union the union dues for the contract employee as if he had been a bargaining unit member during the time he worked in the tank farm.
If Shell wanted to contract out the work, it needed to prove that there was no available bargaining unit employee that could performed it or that Airswift was fully in charge of directing the work, according to Torscher.
“Anytime the employer has so much control over what is being done, how the work is being performed, when it's being done in the employer’s workplace, and for a long period of time, these all tip the scales in favor of being a contracting-in situation,” he says.
“It also goes to things that we deal with in the employment law world too - when you're talking about an employee or an independent contractor, a lot of those same kind of tests and considerations are looked at as they were in this case.”
