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What Happens When a Union Gets Decertified?

I’ve been reading Bill 85, the strange Saskatchewan omnibus law that merges over a dozen statutes into one giant, complicated employment law bill.  The government claims that one of their goals is to simplify the law.  Boy, did they fail there.  It got me thinking about an old issue I haven’t discussed on this blog before, but which comes up occassionally when I teach HRM executives.

What happens to employees’ contract terms when their union is decertified?

This comes up in Saskatchewan Bill because part of the very right wingcollective agreement government’s strategy is to encourage union decertifications.  Saskatchewan employers will be subject to almost continous, disruptive campaigning in the workplace.  The Bill largely removes the ‘open period’ that has always ensured labour peace for extended periods of time by limiting union decertifications and union raids to predictable periods of time near the end of collective agreements.

Unions can be ‘decertified’—lose their legal right to represent a bargaining unit of employees—if a majority of workers in the unit vote for this.  But then what happens?  Does the employer then get to start fresh in setting the terms of the new employment contract of the employees? The answer is yes and no.

First of all, when the union is decertified, the collective agreement is terminated and the union is no longer the exclusive bargaining agent.  One day the employees’ contract terms are those in a collective agreement; the next day the employees are governed by a series of employment_contractindividual employment contracts, which are subject to interpretive rules of the common law.

The important question is what are the terms of the new individual employment contract?

The answer is that many of the basic terms of the collective agreement that applied to the employee under the collective agreement flow over and become the terms of the new individual employment contract.  The Supreme Court of Canada once commented on this question in a case called PACCAR v. CAIMAW.  At page 1009, LaForest J. explained:

LaForest J.:It is only sensible that the terms and conditions formerly contained in a collective agreement be presumed to continue to govern the relationship, absent circumstances that would imply otherwise. The alternative to this, it is fair to say, would be chaos.

If the collective agreement required the employer to pay $25 per hour, then so too does the new individual employment contract.  If the collective agreement entitled the employee to 4 week’s vacation, or a right to bank sick days, then those rights become part of the employees’ new individual contract.  Dito pension contributions and health and dental benefits.  If the employer was required to provide a benefit to the employee under the collective agreement, then they are still required to provide that benefit under the individual employment contract.

If the employer tries to reduce or eliminate any of those benefits or wage rates, then we are now dealing with the law of fundemental breach of contract and constructive dismissal.  An employer cannot unilaterally amend an employment contract.  To refresh your memory on when and how an employer can alter contract terms, read Wronko v. Western Inventory.  That law would now apply to any change that the employer attempts to make to the contract terms.

Of course, the employee would now be without the professional and financial support of the union if the employer does this.  The employee would have to sue their employer in a court if she wanted to enforce the original terms of the contract, and very few employees do that.  It’s expensive, highly stressful, and can take a long time.  Losing the union’s support when the employer breaks a rule is probably the most significant thing employees give up the moment they decertify.  Employees are now in their own.

What About the Collective Agreement Terms That Gave Rights to the Union?

Many collective agreement terms are tied to the union.  For example, the union dues clause, or the right to refer a grievance to arbitration.  Courts are likely to find that collective agreement terms that related directly to the union expire with the collective agreement.  It would make no sense for those terms to apply absent a union, so this would fall within the category of “circumstance that imply otherwise” in Justice La Forest’s comments above.  You need to read the collective agreement to identify those contract terms that require union participation, as opposed to those that confer substantive rights on employees.

Most (if not all) collective agreements in Canada require the employer to have “just cause” to discipline or terminate an employee, and all collective agreements require disputes to be resolved at private arbitration rather than in a courtroom.  “Just cause” protection is one the most important benefits unionization brings.  It means that the employer needs a reason to discipline or dismiss the employee.  A typical nonunion employment contract permits an employer to fire an employee for any or no reason at all.  You can be fired for wearing blue or for being an Ottawa Senators fan.

The nonunion employee is only entitled to some period of notice.  An employee covered by a collective agreement will usually be reinstated if an arbitrator rules that the employer did not have a good reason for firing them.  Absent a contract term requiring it, a nonunion employee will not get reinstated by a court, even if the employer breached the contract in the way that they fired the worker.  

In theory, if the terms of the collective agreement become the terms of the individual employment contract, then so too might a term protecting the employee from discipline or discharge unless there is just cause.  That is what a B.C. judge seemed to decide in a case called Sullivan v. Victoria Golf Club.  In that case, the employer told employees that the terms of the collective agreement would be respected after the decertification, and the judge found that this means the just cause and arbitration provisions too.  As a result, the employee could not sue for wrongful dismissal (failure to give reasonable notice of termination), but instead had to proceed with a grievance and pursue an arbitrated resolution rather than a court rule trial.  In Sullivan,  the employer expressly pledged that it would comply with the old collective argeement terms.

It wasn’t clear from the reasons in Sullivan whether the collective agreement gave the employee the right to proceed with a grievance, without the union’s consent or involvement.  Most collective agreements give the union ownership of the grievance, not the employees?   This means that the union decides whether a grievance goes to arbitration or is dropped.   In that case, the grievance procedure and arbitration process probably dissolve with the decertification of the union.

The Ontario Labour Board thought so in a case called Muskoka Board of Education.  In that case, the Board agreed that the collective agreement terms roll over into the common law individual contract, but not terms that confer rights on the union, rather than employees.  The collective agreement there granted carriage of just cause grievances to the union, so the just cause provision and the arbitration expired with the union’s decertification.  As such, the employee was governed by the common law rules and could be fired for no reason at all by the employer.

In most cases, employees who decide to decertify are forfeiting their right to ‘just cause’ protection and subjecting themselves to termination at any time for any or no reason at all.  That’s great news for the employer, for sure.  But it’s a risky choice for employees, unless they have great trust that their employer will treat them fairly once there is no collective agreement to protect them.

Seniority Rights and Mandatory Arbitration

What about seniority rights that were in the collective agreement?  For example, the old collective agreement may have required the employer to consider seniority of employees in decisions relating to layoffs, promotions, and recalls from layoff.  Do these benefits flow over to the new individual employment contracts?  What do you think?

Issues for Discussion

I have argued that the terms of the collective agreement are incorporated into the individual employment contracts following a union’s decertification.  Do you think my analysis is correct?  Does this conclusion surprise you?

If I am right, then this law offers unions an option of continued to represent workers even after decertification.  Workers who choose to remain union members could pay voluntary union dues in exchange for the union providing contract advice and representation in any legal proceedings.  Do you think unions should be offering this type of service to workers outside of formal collective bargaining?

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