Government-legislated agency has power to establish subsidiaries, arbitrator ruled
At the beginning of this year, British Columbia’s transportation service transferred its business and administrative applications to its parent company TransLink — eliminating five positions.
Of particular concern was that the transit service violated the collective agreement, specifically the provision pertaining to contracting out. The Canadian Union of Public Employees (CUPE) Local 7000 filed a grievance, and collective bargaining for the upcoming contract was put on hold pending the outcome of this specific arbitration hearing.
At the same time B.C. Rapid Transit Company (BCRTC) — which operates two of the three SkyTrain lines in Vancouver — laid off the employees, it also posted new positions at TransLink.
While one of the three employees exercised an option to remain at BCRTC, two of the others successfully applied for the new TransLink jobs — which they said involved the same work they were doing before, but the jobs were not unionized and were outside the bargaining unit.
But did the company violate the collective agreement? Arbitrator Mark Brown said no.
While the union argued BCRTC and TransLink were two separate entities and therefore hiring any outside workers would infringe on the collective agreement, the company said the degree of integration is so high one group has almost absolute control over the other — meaning it did not constitute contracting out.
According to the current collective agreement, "the company will not contract out work normally performed by any existing bargaining unit employee if such contracting out will result in any termination, layoff, or downgrading of any existing employee."
CUPE believed BCRTC violated that provision.
Two of the three employees who had filed a grievance were doing the same work — even using the same computers — as they had done at BCRTC, only now they were employed by TransLink.
Moreover, CUPE said the two companies are legally distinct corporations — making the transfer not intra-corporate, but rather inter-corporate, and constitutes contracting out.
According to the union, BCRTC cannot have its cake and eat it too.
"BCRTC cannot have it both ways. It cannot avoid a finding that it is a common employer as an integrated part of TransLink by relying on section 13 of the (South Coast British Columbia Transportation Authority Act) and then reverse that position by using an intra-corporate transfer argument to avoid contracting out protections agreed to in the collective agreement," the union said, adding the transit company took a "harsh and draconian" approach to the staffing changes.
BCRTC is a wholly-owned subsidiary of TransLink. As such, improper contracting out only occurs when there is an inter-corporate transfer of work between arms-length companies, BCRTC argued.
However, the transfer of work between divisions of the same corporate entity have been treated as intra-corporate transfers, and do not trigger contracting out provisions.
"Where multiple corporate entities are involved in a transfer of work, arbitrators will pierce the corporate veil to assess the degree of control and independence exercised by the related entities," BCRTC said at the hearing. "The more integrated the operations of the separate corporate entities, the more likely it is that an arbitrator will conclude that there is no breach of a contracting out provision."
The arbitrator sided with the company, saying that because TransLink is a government-legislated agency, it has the power to establish subsidiaries to set up a model of delivery, but does not relinquish control.
"The narrow issue before me is whether the transfer of IT work from BCRTC to TransLink constitutes contracting out...At first instance, the union’s argument and reliance on several cases has some attraction. BCRTC and TransLink are two separate corporate entities and therefore the facts demonstrate an inter-corporate transfer," Brown said in his decision.
"However, I conclude that such an approach is overly technical and is not as persuasive as the more purposive approach in (other cases)."
Brown ruled the high degree of control TransLink maintains over the entire system does not mean a transfer of work, in this case, amounts to a contracting out situation.
"In order to recognize the value and length service of many employees in the overall system, represented by different unions in different bargaining units, all the parties may want to investigate the feasibility of more comprehensive portability provisions in an amended employee mobility agreement," he added.
Reference: B.C. Rapid Transit Company and the Canadian Union of Public Employees Local 7000. A. Paul Devine for the employer, Leo McGrady for the union. Mark J. Brown – arbitrator. Nov. 12, 2013.
