Samsonshield / Riskboss has extensively reported on laws that directly affect condominiums during the procurement of service providers, those being ‘Bill 7’ (Legacy Employees) and Labour Relations Act, Section 69.1 (Unionization).

Ontario Labour Relations Act, Section 69(1) – Unionization

Unbeknownst to the board, the existing security (or cleaning) company became unionized without notice. The lawyer for the corporation shocks the board by stating that the union and Collective Bargaining Agreement (CBA) from this company will now apply to all new companies (whether unionized or not) that the board may hire in the future.

This is a very real example of what is happening in condominiums all over Ontario since the law came into effect on January 1, 2018. In short, once your site is impacted by unionization, new security or cleaning companies must adhere to the union and the CBA in place. The law extends union rights to a building location, rather than to employees. Condominiums must engage new companies during procurement processes that are willing to adhere to the union and CBA of an exiting company.

Prior to January 1, 2018, employees were free to unionize, to select any union they wished, or decide not to unionize at all. Now, employees of a new company have no choice. They must join the union and adhere to the CBA that is attached to the condominium.

Michael Smyth, Labour and Employment lawyer at Hicks, Morley, cautions that, “Building service providers that are considering bidding on work will have to exercise due diligence to determine whether the existing building service provider is unionized, and if so, the scope of bargaining rights held by the union, and the terms and conditions set out in the collective agreement. That is not something they really had to be concerned about before January 1, 2018, as there was no mechanism for automatically transferring those bargaining rights. There is now. As a result, there will also be consequences for condominiums whose building service providers become unionized.”

Condominium service providers throughout Ontario are finding themselves involved with multiple unions at multiple sites and must deal with many different CBA’s, which has caused administrative nightmares.

Many non-unionized service providers are refusing to compete for unionized buildings. This provides advantages to unionized service providers. Many condominiums are forced to remain with existing unionized service providers due to a lack of interest in open competition for new providers.

Gerry Miller, Managing Partner at Condominium Law Firm Gardiner, Miller, Arnold LLP advises, “The impact on the condominium industry can be significant because once a unionized service provider provides service to a condominium corporation, then that building will likely always be unionized and that will add costs for these services, which will result in higher maintenance fees for unit owners.”

Boards should be aware of the substantial impact of Section 69.1 and what they can do about it.

In non-unionized condominiums, boards should seek legal advice to include a notice provision in all service agreements that compels service providers to provide advanced notice of any material change that may affect the condominium, including unionization.

When engaging service providers for quotes, ask all competing companies to provide in writing whether the company is, or has plans to unionize, or is subject to a union organizing campaign.

Bill 7 – Legacy Employees

Legacy (or successor employee) obligations for employers (Bill 7) under the Employee Standards Act, 2000 of Ontario, are probably one of the most misunderstood laws in Ontario.

In the early 1990’s, the Ontario government became inundated with public complaints about business owners leaving employees stranded (orphaned) when leaving a site. All of the tenure, pay rates, and benefits of orphaned employees were lost without recourse, as new service providers were not obligated to hire them. In creating Bill 7 in 1995, the Ontario government made a very clear statement to all employers that if employees are going to be left behind, they must be looked after.

Under Bill 7, incoming service providers must determine whether the outgoing company will leave behind any employees. Nothing more. Asking the property manager to determine this is the most appropriate method of fulfilling all obligations under Bill 7.

Outgoing service providers often provide a declaration indicating that no employees will be remaining after turnover, which completely satisfies all Bill 7 requirements. If employees will be left behind, the outgoing service provider must submit complete information to the new provider through property management.

“Poaching” is a commonly used industry term and describes the solicitation of employees. Incoming service providers often greatly benefit from poaching activities without having paid for such benefits in site training and familiarity of current employees. Many residents may want their favourite employees to stay at the site after turnover, but there may be restrictions against this.

Board members and property managers should never participate in poaching activities under any circumstances. Alex Young, a lawyer at Gardiner, Miller, Arnold, LLP, advises, “Where a condo corporation hires a new service provider, the condo corporation should avoid compelling the new provider to interfere with the contractual relationship between the previous service provider and that provider’s employees, as there may be legal liability where the condo corporation oversteps its bounds.”

Incoming service providers should never be allowed to approach employees to offer employment. Michael Smyth, a labour and employment lawyer at Hicks Morley LLP, states, “While building service providers must recognize that they will have obligations where the outgoing building service provider does intend to leave employees at the site, they need to exercise caution when pursuing employees of a building service provider that is planning on retaining its employees. The new provider has no obligation towards such employees and could risk causing a breach of contractual restriction in the employee’s employment agreement.”

What happens when employees want to stay? There are no ownership rights of employees by employers in Ontario. However, some companies may have contractual prohibitions on their employees remaining at a site for a period of time. Restrictive covenants in both employment and client agreements will prohibit the ability of employees to remain at sites.

If there is no prohibition in an employment agreement or client agreement, employees are free to remain at a site. If there are such prohibitions, the employee may choose to work for the incoming service provider but must adhere to all contractual obligations, including not working at the site.

All lawyers in the condominium industry agree that people should stay within their roles and abide by the law when building service providers change hands. Stepping outside of roles can have serious consequences that can lead to lengthy and expensive litigation, causing reputational stigmatization to a condominium.

Play it safe by always seeking professional advice from legal experts before deciding on a strategy when changing service providers.<

Quintin Johnstone is an experienced Chief Executive Officer with repeated and demonstrated success in both the private and public sectors. He brings a wealth of accredited expertise in condominium security, concierge, risk mitigation, and operational readiness.

www.samsonshield.com
www.riskboss.com

View PDF View Flipbook Back to Latest Issue