Individual personally liable for corporate unfair labour practices

Trucking company in Windsor, Ont., closed down after successful union certification drive

On Oct. 24, 2006, the Canada Industrial Relations Board (CIRB) held the individual who was officer, shareholder and manager of a trucking company personally responsible for unfair labour practices committed by the company. The order was the third in a series that began when Pegasus Express, a trucking company in Windsor, Ont., closed its doors in response to a successful union certification drive.

In the first proceeding, the CIRB found Pegasus had engaged in an illegal lockout and ordered the company not to close its operations, move its operations to the United States or transfer its work to persons outside the bargaining unit, if any reason for doing so related to the presence of the union. Pegasus was also ordered to reinstate employees terminated as a result of the closure, commence collective bargaining with the union, pay $30,000 to settle employee claims of unfair treatment during the organizing drive and pay the union’s legal costs.

The second CIRB order found that, prior to union certification, Pegasus had taken action against particular employees to prevent the union from achieving certification. This order awarded damages to several employees.

Owner agreed to personal obligation

Pegasus chose not to participate in any meaningful way in either of these hearings and failed to obey any of the CIRB orders.

The union’s response was to file additional complaints with the CIRB. The union listed as respondents in this complaint Pegasus and related companies, as well as Victor Vaseleniuck (officer, shareholder and manager of Pegasus) and his family members, and other individuals involved in running Pegasus.

Before the hearing began, a CIRB official helped the union and Pegasus agree to a settlement of all the union’s complaints. The settlement required Pegasus Plastics, another of Vaseleniuck’s companies, to make a series of payments to the union. Vaseleniuck agreed that if Pegasus Plastics did not pay, the union could enforce the settlement against him personally.

CIRB order against employer

Pegasus Plastics failed to honour any of the terms of the settlement so the union requested a third CIRB hearing. Pegasus and Vaseleniuck did not attend the hearing.

The union requested all the remedies previously requested, along with additional remedies. The CIRB found it still had jurisdiction over these complaints, since they had not been withdrawn, but it would not upset the agreement between Pegasus and the union. It also found that Pegasus’ actions, taken as a whole, constituted a complete disregard of the company’s obligations under the Canada Labour Code. As a result, the CIRB determined it could issue an order against Pegasus.

Decision may have far-reaching effects

The CIRB acknowledged that, contrary to its first Pegasus decision, it could not order Pegasus to remain open — it could not interfere with the right of an employer to close its business. However, it did order enforcement of the agreement between Pegasus and the union, plus it ordered interest and costs for the union’s lawyer, plus the union representative’s travel expenses. It also directed that its order be filed in Federal Court so it could be enforced as a court order.

The most spectacular part of the CIRB order was that Vaseleniuck was found personally responsible for payment of all these amounts. Because Pegasus was no longer in operation, any order against it was meaningless, but as the directing mind of Pegasus, Vaseleniuck was acting on the company’s behalf. As well, he had accepted personal liability in the settlement that was made — then ignored — with the union.

Now that the CIRB has confirmed that individuals can be found personally liable, unions will make this request in future cases. Employers will have to be prepared to argue why the Pegasus result should not apply to them.

Lessons for employers

The Pegasus decisions also provide vivid evidence of a number of factors all employers should be aware of:

•a labour relations board has the power to impose broad remedies for any unfair labour practices — the best defence is to ensure that actions taken in the heat of a certification drive, or following a certification application, cannot be found to be a violation of the statute;

•employers who ignore labour relations board proceedings, or attend without a solid understanding of the purpose of the hearing and its consequences, may have only themselves to blame for any consequences of those proceedings;

•settlements employers enter into are likely to be enforced; and

•officers and directors of corporate employers should not expect to be immune from the wrath of a labour relations board.

Glenn Tait is a partner in the labour and employment practice group in the Yellowknife office of McLennan Ross. He can be reached at [email protected] or (867) 766-7676.

Latest stories