Does buying a unionized business mean inheriting the exact union terms?

Buyers of unionized businesses often hope that buying assets lets them set fresh terms. In Ontario and British Columbia the statutes point the other way for an agreement in force: the buyer steps into what the seller signed, whatever wages, hours and grievance procedure it contains.

What the statutes say

Ontario’s Labour Relations Act says that when an employer bound by a collective agreement sells its business, the buyer is, until the Board otherwise declares, bound by the agreement as if it had been a party. It also keeps the union as bargaining agent for the like bargaining unit. British Columbia’s Labour Relations Code says an agreement in force continues to bind the purchaser to the same extent as if it had signed it.

Who decides disputes about the sale

The labour board, not the parties, settles the hard questions. In Ontario the Board determines whether a business has been sold, and its decision is final for the purposes of the Act. In British Columbia a question about which rights and duties have passed goes to the board on application, and it may amend a certificate or unit description and direct how the agreement is applied.

Where the terms can move

Ontario’s Board may terminate the union’s bargaining rights if, in its opinion, the buyer has changed the character of the business so that it is substantially different from the seller’s. It may also declare the buyer no longer bound where the buyer has mixed the acquired employees with those of its other businesses. These are powers exercised on application, not options the buyer can use alone. Quebec’s Labour Code binds the new employer as if named in the agreement, but when only part of an undertaking’s operation is transferred, an unexpired agreement is deemed, for relations between the new employer and the union, to expire on the day the transfer takes effect, subject to exceptions the Code sets out.

What to read before pricing

Read the whole agreement rather than a summary: its term, wage scale, seniority and recall rules and any open grievances. Other provinces and federally regulated workplaces have their own labour statutes, so confirm which one governs the bargaining unit.