Does a union follow the business when it is sold in Newfoundland and Labrador?

Section 93(1) of the Labour Relations Act applies where an employer sells, leases, transfers or otherwise disposes of, or agrees to sell, lease, transfer or otherwise dispose of, the business, its operations or a part of either. It applies if the employer or the person acquiring the business is party to or bound by a collective agreement with a bargaining agent on behalf of employees affected, if bargaining agents have been certified, if a union has applied to be certified, or if a bargaining agent has given or is entitled to give notice to bargain. In each case, unless the board otherwise directs, the agreement, certification, application, notice or entitlement continues in force and binds the person acquiring the business.

It reaches an agreement to sell

The words “or agrees to” matter. Section 93 is not limited to a deal that has closed, so an agreement to sell, lease or transfer can bring the section into play. Anyone planning timing around closing should ask a lawyer licensed in Newfoundland and Labrador when, on the Act’s wording, the section starts to apply to their transaction.

Applying to the board

Under section 93(2), an employer, purchaser, lessee, transferee, bargaining agent, trade union, council of trade unions or other person referred to in subsection (1) may apply to the board to resolve a question or problem that has arisen, or may arise, because of the sale, lease, transfer or disposition. The question can concern a collective agreement, certification, application, notice or entitlement to give notice. That lets either side bring uncertainty to the board before it becomes a dispute.

How wide the board’s powers are

Under section 93(3), the board makes whatever award, gives whatever direction or takes whatever other action it considers appropriate in its discretion. The Act names examples: modifying or rescinding, to the extent the board considers necessary or appropriate, a collective agreement; amending or revoking a certification; deciding whether the employees affected form one or more appropriate bargaining units; and declaring which trade union or council of trade unions is the bargaining agent. Because the board has these powers, an agreement’s terms are not guaranteed to survive a sale unchanged.

A separate rule for length of service

The Labour Standards Act has its own continuation rule. Where an employer transfers, assigns or conveys its undertaking to another person or firm that continues it, the employee’s continued and uninterrupted employment with the new owner is considered continuous with the earlier period and counts against the new employer for the employee’s rights, benefits and privileges under that Act. It deals with employment standards, not with unions; see our guide to employment standards when a business is sold in Newfoundland and Labrador.

This page covers Newfoundland and Labrador. The Canada Labour Code regulates the industries ESDC lists on its federal page; check there if the business could be one of them.