What are the key considerations when buying a unionized business?

Buying a unionized business means taking on a set of terms, so the work is learning them before you set a price. Labour law differs by province, and some businesses fall under federal law instead. This page uses Ontario, Quebec and British Columbia as examples.

The agreement can follow the business

In Ontario, when an employer bound by a collective agreement sells its business, the buyer is bound as if it had been a party, until the Labour Relations Board declares otherwise, and the union continues as bargaining agent. The Act counts a part of a business as a business, and leases and transfers as sales. Quebec’s Labour Code says the sale of an undertaking, or its operation by another, does not invalidate a certification or agreement, and binds the new employer as if named in it. British Columbia’s Code is similar, and its Board decides what rights and duties passed.

The board can reshape the unit

In British Columbia the Board may, after a sale, inquire into the facts, order votes, decide which employees form an appropriate unit, decide which union is the bargaining agent, amend a certificate or unit description and modify seniority rights. That matters most if you plan to merge the acquired staff into an existing workforce.

What the agreement limits

British Columbia requires every collective agreement to contain a just-and-reasonable-cause standard for dismissal or discipline and a final settlement process, by arbitration or another method the parties agree, for disputes about the agreement. During its term, employees may not strike and the employer may not lock out. Other provinces set their own rules, so read the agreement and the statute that governs it.

Questions to settle before you price the deal

• Is a union certified or voluntarily recognized, for which employees, and when does the agreement expire?
• What do its wage, seniority and benefit terms commit the business to?
• Are grievances, arbitrations or board applications still open? In British Columbia the purchaser is bound by earlier proceedings.
• Will the purchase agreement make the seller answerable for what happened before closing?