Ontario Labour Relations Board

Successor rights are a long standing fixture in Ontario’s labour relations legislation. Generally speaking, under s. 69 of the Labour Relations Act (LRA), the purchaser of a business effectively steps into the seller’s shoes for the purpose of labour relations and becomes bound by any collective agreement that the seller is party to, unless the Ontario Labour Relations Board (OLRB) declares otherwise. The same principle applies where the business is leased, transferred or otherwise disposed of. The fundamental purpose of s. 69 of the LRA is to preserve the bargaining rights of the Union. The idea is that once the Union has been recognized with respect to a particular business, the Union may pursue that bargaining right when all or part of the business is sold.

Whether successor rights extend to the context of court-appointed receiverships had been an unsettled area. Recently, the OLRB determined that a court-appointed receiver that actively operated the debtor’s business through its agent was a successor employer for the purpose of s. 69 of the LRA: United Food and Commercial Workers International Union, Local 175 v Rose of Sharon (Ontario) Community cob as Rose of Sharon Korean Long-Term Care Home, 2018 CanLII 32988 (Rose of Sharon). We outline key aspects of the OLRB’s decision below.
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Although brevity is almost always better than wordiness, it would have been better if the legislature had used a few more words in the severance pay provisions of Ontario’s Employment Standards Act, 2000. Under the ESA, employers with a payroll of at least $2.5 million are required to provide statutory severance pay when dismissing an employee with 5 or more years of service. Unfortunately the provision is silent as to whether payroll within Ontario or, rather, global payroll is determinative. It would have been helpful if the drafters had indicated where, exactly, to draw the line.

The pendulum has swung back and forth on this issue. Most recently, the Ontario Labour Relations Board (“OLRB”) held that Ontario-only payroll is determinative, diverging from the direction previously taken by the Ontario Superior Court of Justice. We outline the key cases to date below.
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