How do successor rights under the Ontario Labour Relations Act affect a business sale?

Section 69 of Ontario’s Labour Relations Act, 1995 provides that, when a unionized employer sells its business, the buyer is bound by the seller’s collective agreement and the union continues as bargaining agent, in each case until the Board otherwise declares. This page covers Ontario’s Act. For a federal work, undertaking or business, the Canada Labour Code has its own sale-of-business provision (section 44), and continuity of employment under the Employment Standards Act, 2000 (section 9) is a separate provision. The wider idea is in What is the successor employer concept in a business sale?

The buyer is bound by the agreement

Under subsection 69(2), where an employer bound by a collective agreement sells its business, the person to whom it is sold is bound by the agreement as if it had been a party, until the Board otherwise declares. “Business” includes a part of a business, and “sells” includes leases, transfers and any other manner of disposition.

The union stays bargaining agent

Under subsection 69(3), where a union has been certified for the seller’s employees, or has given or is entitled to give notice to bargain, it continues, until the Board otherwise declares, as bargaining agent for the buyer’s employees in the “like bargaining unit” in that business. Subsection 69(4) lets the Board, on application, define the composition of the like unit if a question arises about it.

What the Board can change

The Board decides disputes. Subsection 69(12) makes it the body that determines whether a business has been sold, and its decision is final for the purposes of the Act. Under subsection 69(5), on application within 60 days after the buyer becomes bound or the union gives its notice, the Board can terminate bargaining rights if, in its opinion, the buyer has changed its character so that it is substantially different from the predecessor employer’s business. Where a buyer that carries on other businesses intermingles the employees of one business with those of another and a union is bargaining agent in any of them, subsection 69(6) lets the Board, on application, declare that the buyer is no longer bound by the agreement.

Building services are treated differently

Section 69.1 covers building services such as cleaning, food and security. For the purposes of section 69, a sale of a business is deemed to occur if employees perform services at premises that are their principal place of work, their employer ceases, in whole or in part, to provide those services there, and substantially similar services are then provided there under the direction of another employer. Some services, such as construction, are excluded.