Saint John's Rehabilitation Hospital v. CUPE, Local 790 v ...

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In the Matter of a Labour Arbitration pursuant to the Ontario Labour Relations Act
Between:
Saint John’s Rehabilitation Hospital
(the Hospital)
-and-
Canadian Union of Public Employees,
Local 790
(the Union)
-and-
Brookfield LePage Johnson Controls
(the Intervenor)
CUPE Grievance No. 111 – November 11, 1998
Board of Arbitration: Randi H. Abramsky Chair
Roy Filion
Employer Nominee
Joe Herbert
Union Nominee
Appearances
For the Hospital: Peter F. Chauvin Counsel
For the Union: Steve Barrett Counsel
For the Intervenor: Richard J. Nixon Counsel
Hearing:
October 10, 2001 in Toronto.

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AWARD
When the Hospital decided to contract-out its environmental services/materials
management functions to Johnson Controls World Services Ltd. (now Brookfield LePage
Johnson Controls (“BLJC”), a dispute arose with the Union concerning the meaning of Article
10.02 of the parties’ collective agreement. Specifically, the dispute centers on whether Article
10.02 requires a subcontractor to act as a co-administrator of the Hospital’s collective agreement
with the Union, treating the operations of both as a single bargaining unit, or whether it requires
the subcontractor to enter into the same collective agreement with the Union, but as a separate
entity.
Article 10.01 and Article 10.02 of the parties’ collective agreement provides as follows:
ARTICLE 10
CONTRACTING OUT
10.01 – Contracting Out
The Hospital shall not contract out any work usually performed by members of
the bargaining unit if, as a result of such contracting out, a layoff of any
employees other than casual part-time employees results from such contracting
out.
10.02 – Contracting Out
Notwithstanding the foregoing, the hospital may contract out work usually
performed by members of the bargaining unit without such contracting-out
constituting a breach of this provision if the hospital provides in its commercial
arrangement contracting out the work that the contractor to whom the work is
being contracted, and any subsequent such contractor, agrees:
(1) to employ the employees thus displaced from the hospital; and
(2) in so doing to stand, with respect to that work, in the place of the hospital for
the purposes of the hospital’s collective agreement with the Union, and to
execute into an agreement with the Union to that effect.
In order to ensure compliance with this provision, the Hospital agrees that it will
withdraw the work from any contractor who has failed to meet the aforesaid terms
of the contracting-out arrangement.

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The contractor, BLJC, intervened in the arbitration hearing without objection.
The
parties also entered into an Agreed Statement of Facts, along with agreed upon documents. The
Agreed Statement of Facts is as follows:
The Issues in Dispute
1. On October 5, 1998 the Hospital announced that it intended to contract-out its environmental
services/materials management functions to Johnson Controls World Services Ltd./now
Brookfield LePage Johnson Controls (“BLJC”) effective December 1, 1998. The
announcement stated that BLJC would offer each affected employee employment with BLJC
under the same terms and conditions of employment as defined in the existing agreement
between the Hospital and Local 790 and that the employee’s membership in Local 790 and
seniority date would continue in place with BLJC. (See Tab 1).
2. Local 790 filed Grievance No. 111 dated November 11, 1998 which alleges that:
The Employer has violated the collective agreement including Article 9.08, 9.12,
10, 13 and 18.03. In October the Union and employees were notified by the
Hospital of the outsourcing of existing Environmental Services, including
Materials Management (stores), CSR and Housekeeping to Johnson Controls
contrary to the provisions of our collective agreement.
Therefore I/we request that you cease and desist immediately the improper
contracting-out and improper lay-off and any other redress deemed appropriate.
(See Tab 2)
3. The Hospital entered into discussions with Local 790 and the Redeployment Committee. On
March 16, 1999 the Hospital issued another notice announcing that the effective date of the
contracting-out would now be September 16, 1999, thus giving 6 months notice of the
contracting-out. (See Tab 3).
4. Local 790 maintained that its Grievance No. 111 dated November 11, 1998 applied to the
March 16, 1999 announcement. The Hospital submitted that its October 5, 1998
announcement had been withdrawn with the result that there was no longer anything in
dispute regarding its October 5, 1998 announcement or the November 11, 1998 grievance.
The Hospital also submitted that the November 11, 1998 grievance could not apply to the
March 16, 1999 announcement. Ultimately, the Hospital wrote to Local 790 counsel on July
16, 1999 stating its arbitrability objections and confirming that the Hospital had requested
particulars regarding Local 790’s issues in dispute regarding both the October 5, 1998 and
the March 16, 1999 announcements. (See Tab 4).

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5. In June 2001 the Hospital and Local 790 counsel discussed the issued raised in the
Hospital’s July 16, 1999 letter. This discussion regarding the scope of the issue in dispute in
this arbitration is set out in the Hospital’s letter dated June 12, 2001 and Local 790’s letter
dated June 15, 2001 (See Tab 5 and 6). To summarize, Local 790’s letter states that:
To clarify, with respect to paragraph 3 of your Letter, the thrust of the Union’s
position is that under the scheme set out in Article 10 of the collective agreement,
the hospital collective agreement continues to apply to and is extended to
employees affected by a contracting out, and that the role of the contractor is to
administer that agreement given that it continues to apply to the affected
employees. This includes treating the non-BLJC hospital operations and the
BLJC hospital operations as a single bargaining unit, inter alia, for purposes of
job postings and vacancies, and job security matters.
Further, with respect to your paragraph 2, while the union is not arguing that the
hospital is the sole employer on the basis that it continues to effectively control
the work in question, the Union does take the position, as set out above, that the
intent and effect of Article 10 is that the contracted services should be considered
to be performed within a single bargaining unit comprised of the employees
performing work for BLJC together with other hospital employees.
Local 790 confirmed that its argument is based only upon what it submits is the proper
interpretation and implementation of Article 10.01 and that it is not advancing the other
arguments set out in the Hospital’s June 12, 2001 letter.
The Collective Agreement
6. The Hospital participates in the central bargaining process between CUPE and the
participating hospitals.
7. The central interest arbitration Award for the CUPE and Participating Hospitals 1993 to
1995 collective agreements was issued on May 31, 1996 by a Board of Arbitration chaired
by Mort Mitchnick (the “Mitchnick Award”) (See Tab 7)
8. The Mitchnick Award awarded the contracting-out language which constitutes Article 10.02
of the collective agreement between the Hospital and Local 790.
9. The Divisional Court issued a Judgment dated June 10, 1997 dismissing a Judicial Review
Application regarding the Mitchnick Award. (See Tab 8)
The Contracting Out
10. The Hospital entered into a Facility Services Agreement with Johnson Controls World
Services Ltd./ now Brookfield LePage Johnson Controls (“BLJC”) whereby the

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environmental services/materials management functions formerly performed by the Hospital
were contracted-out to BLJC.
11. BLJC is a partnership between Brookfield LePage and Johnson Controls, both of which are
established companies which provide facilities management services. Johnson Controls is a
large, publicly traded corporation that carries on business and has operations and facilities
around the world.
12. The Hospital and BLJC have no common ownership, control or direction and are not related
employers for the purposes of s.1(4) of the Labour Relations Act, 1995. Nor is Local 790
maintaining that the Hospital remains the true or actual employer at law, notwithstanding the
contracting-out. Rather, Local 790 submits that:
Under the scheme set out in Article 10.01 of the collective agreement, the
Hospital collective agreement continues to apply and is extended to employees
affected by a contracting-out, and the role of the contractor is to administer that
agreement… (See Tab 6)
Local 790 submits that under 10.01 the Hospital and BLJC are two employers who are
required to jointly administer and be bound by one collective agreement.
13. Through the Facility Services Agreement, BLJC provides the Hospital with its extensive
knowledge and expertise in the area of facility management and services and with additional
services not previously performed by Hospital staff. On site supervisors are provided by
BLJC who replaced the Hospital’s former supervisory staff.
14. The Facility Services Agreement provides the BLJC, and any subsequent contractor, agrees:
(I)
(II)
to employ the employees displaced from the Hospital; and
in so doing so to stand, with respect to that work, in the place of the Hospital for the
purposes of the Hospital’s collective agreement with Local 790, and to execute into an
agreement to that effect.
15. In accordance with the Facility Services Agreement with Local 790, BLJC employed the 17
persons displaced from the Hospital on September 16, 1999 due to the contracting-out.
16. BLJC employed these persons pursuant to the same terms and conditions of the collective
agreement between the Hospital and Local 790.
17. BLJC remitted union dues on behalf of these persons to Local 790, which dues were
accepted by Local 790.
18. BLJC applied for and was accepted and registered as an employer for the purpose of the
Hospitals of Ontario Disability Income Plan (“HOODIP”) and the Hospitals of Ontario
Pension Plan (“HOOPP”).

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19. BLJC wrote to Local 790 on May 9, 2000 stating that BLJC would like to enter into a
collective agreement with Local 790 in accordance with Article 10.02 of the collective
agreement and the Facility Services Agreement (See Tabs 9 and 10). Local 790 has not
responded to these requests.
20. The Hospital has not, since September 16, 1999 considered the persons now employed by
BLJC to be Hospital employees and has not considered those persons to be covered by the
Hospital’s collective agreement with Local 790.
The history of the contracting out provision is fully set out in the Mitchnick Award. He
notes that the initial inclusion in the collective agreement of language restricting contracting-out
came in the 1979 award of Howard Brown. That language read:
The Hospitals will not contract out any work with the objective of effecting a
layoff or reducing the regular hourly rate of pay of any employees in the
bargaining unit. The parties agree to consult on a monthly basis or as may be
otherwise mutually agreed as to the Hospitals’ requirements for the contracting
out of services.
Because the language “with the objective of” created concern for the Union, in 1984 the
parties agreed on language that had been awarded to SEIU in 1982 by arbitrator Teplitsky. The
clause then became:
Effective September 29, 1984, the Hospital shall not contract out any work
usually performed by members of this bargaining unit if, as a result of such
contracting out, a layoff of any employees other than causal part-time employees
follows. Contracting out to an employer who is organized and who will employ
the employees of the bargaining unit who would otherwise be laid off is not a
breach of this provision.
The Mitchnick Award then continues at p. 4:
In 1986 the Union made the argument before Mr. Burkett that a contractor being
“organized” provided no assurance that the wages and working conditions that
had been achieved to cover this work at the Hospitals would be maintained. Mr.
Burkett responded to that concern by adding the current language explicitly
calling for the maintenance of “similar terms and conditions” by the new
employer (as Mr.Teplitsky himself had just done for SEIU). The Union came

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back before an arbitration board in 1990, this time chaired by Mr. Gorsky, and
sought a total ban on contracting out. That request was refused, and leaves us
with the situation as it exists today.
The existing clause, as drafted by Mr. Burkett, reads as follows:
10.01 – Contracting Out (FT & PT )
The Hospital shall not contract out any work usually performed by members of
the bargaining unit if, as a result of such contracting out, a layoff of any
employees other than casual part-time employees results from such contracting
out. Contracting out to an employer who is organized and who will employ the
employees of the bargaining unit who would otherwise be laid off with similar
terms and conditions of employment is not a breach of this provision.
According to the Mitchnick Award, the Hospitals argued for the status quo in regard to
contracting out and the Union sought deletion of the second sentence of the clause, contending
that it was “unlikely to provide any real protection to employees…” (Award p.5) The Award
states as follows at p. 3:
[T]he Union finds its “demonstrated need” on the face of the language itself,
arguing that when the re-structuring of Hospital services does begin in earnest, as
now appears imminent, there may be practical difficulties in carrying out a
comparison, on a collective-agreement-wise basis, to determine what are “similar
terms and conditions of employment”. Additionally, the Union submits, the
language as drafted would not appear to prevent the obliteration of the effect of
the clause completely through the medium of a further “flip” of the contract to a
once-more-removed entity.
The board, however, was “not prepared to simply delete the ‘savings’ clause that has
existed in these Hospitals’ collective agreements for more than a decade”, but acknowledged that
“the potential deficiencies of that sentence, in achieving the kind of protection that the clause
was clearly intended to accomplish are, as the Union has submitted, apparent on its face.”
(Award, p. 5) The Award states at pp. 5-7 (emphasis in original):

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Mr. Brown in 1979 awarded a lay-off-based restriction on contracting out, and the
balance that the clause has sought to achieve, at least since the 1984 round, was to
allow contracting out even to the point of displacement from the Hospitals
themselves, so long as employment was maintained generally, and so long as the
contracting-out was not used simply as a vehicle for imposing lower standards of
employment. The Hospitals coming into this round have not taken issue with
that. Obviously the mandating initially of an “organized” employer as the
recipient of the work was thought to be a way of achieving these goals; but the
weaknesses in that assumption were subsequently recognized and sought to be
corrected. Thus came the express stipulation that there be essential parity with the
actual terms and conditions of the collective agreement itself. But once again, the
Union has, in our view, fairly identified the potential difficulty with even that
intended method of protection. Whether the Hospital employees are displaced to
another employing entity having its own collective agreement, or one that is
tabling a new one, the question of what constitutes “similar terms and conditions”
on a comparison of the entire collective agreement is not without difficulty, and at
the very least would seem to forecast a profusion of “rights” disputes. And while
such uncertainty is, from an enforcement point of view, of obvious concern for
the Union, the same difficulty of predicting arbitrators’ conclusions as to when a
collective agreement overall is “similar” could pose major problems for the
Hospitals in their re-structuring initiatives, particularly given the potential liability
in a large-scale re-structuring for “guessing wrong”. … In the chairman’s view,
the best way of dealing with the current clause is to try to find a more effective
and predictable way to carry out the objectives that the present clause was
intended to achieve. And that includes the question of the protection intended in
the clause arguably being nullified as a result simply of a second successive flip.
The Award notes that Article 10 “already attempts to provide significant protections for
employees in the event of ‘contracting-out’”, so much so that Hospitals have been reluctant to
engage in “traditional” contracting out. (Award, p. 8). It further notes that the “primary thrust” of
restructuring appeared to moving more towards “shared services” rather than traditional
contracting out, and specifically noted the proposal for shared food service preparation provided
by Sodexho Canada. The Mitchnick Award quotes at length from Sodexho’s proposal
concerning the collective bargaining elements of the consolidation, finding them “interesting”, as
follows, at p. 9-10:
The sections of Bill 40 dealing with the acquisition of a business require Sodexho
to maintain and continue any existing rights and agreements in place. Again,
Sodexho will comply fully with all aspects of Bill 40 by honouring all existing
contract language.

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…
To effect the desired labour reductions, Sodexho will work closely and openly
with the bargaining units, the participating hospitals, and the community. We
have found from prior experience that labour confrontations and unfavourable
publicity are avoided as long as all wages, benefits and pension plans, as well as
seniority rankings, are accepted and honoured.
In further elaboration of that on page 22 the text indicates:
From experience in dealing with labour adjustment situations involving CUPE,
SEIU, and other similar unions, and discussions with labour relations attorneys
practicing in Ontario, we are confident that the specific language of both
agreements dealing with contracting-out and new technology and Bill 40 will not
prevent the labour reductions required to justify the Shared Food Services Project.
The specific implications of Bill 40 and the collective agreements will eventually
depend upon the management and ownership structure determined for the Project.
We believe that the labour relations/adjustment issues emerging from the
centralizing of many jobs and elimination of positions can be managed to a
positive outcome for the participating hospitals, community and employees. This
effort will require considerable resources and should begin as soon as possible.
From the beginning, representatives of the bargaining units must be involved.
Open communication, dialogue and negotiation with all stakeholders is essential
to the success of the project.
Both collective bargaining agreements contain the same language regarding
contracting-out. This would only apply to the Toronto Shared Food Services
Project if an outside firm introduces their own workforce to replace those
represented by the members of the existing bargaining unit. We can avoid any
issues with this clause as long as the employees of the new centralized facilities
remain represented by the bargaining units [sic].
The Board then stated: ”We think that that is in fact a proper perspective, particularly in
light of the strictures on Hospitals that already exist under this contract language.” (Award p.
10). The Board noted that in many shared services cases, the structure might result in a Hospital
remaining the “true” employer, or that the new employing entity might be a "related employer”
to the Hospital, or there might be a “sale of a business” as those terms are used in the Labour
Relations Act. The Board then stated at pp. 10-11 (emphasis in original):

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In any of those cases, the effect will be the same: the collective agreement will
simply follow the “contracted-out” work. It is the view of the chairman that that
basic premise – the extension of the existing collective agreement – is an
appropriate starting point for the parties’ discussion of any significant realignment
of the work at this time. And again, that conclusion is not arrived at in a vacuum:
it is arrived at against the current alternative of the parties having to conjecture
on, and eventually litigate, the question of whether some other collective
agreement, (either in place for or tendered by the “contractor”) provides “similar
terms and conditions” to this one. If, under the more direct approach adopted by
this award, there are questions of the applicability or even availability of specific
items to a new employer who may not qualify as a “hospital”, we believe the
parties will be capable of dealing with these (and some of the collective
agreement provisions already contemplate “equivalencies”). If there is
“intermingling” of new and prior employees of the contractor to the point that
difficulty arises over apparently conflicting collective agreements (or bargaining
rights), we believe there are standard avenues of relief available through the
various (“related employer”, “sale of a business”, or possibly even “jurisdictional
dispute”) sections of the Labour Relations Act.
The Award concludes, at p. 12:
As the basis for the present round of bargaining that is of so much importance to
both sides of the table, it is the view of the chairman that the present strictures on
Hospitals in Article 10 of the collective agreement are better stated in the fashion
set out below, as a less ambiguous and more direct way of achieving the
principles currently embodied in the clause, and form the appropriate framework
under which further refinement of these particular issues, as needed, may be
worked through by the parties on a mutual basis.
Positions of the Parties
1. The Union
The Union contends that Article 10.02 permits contracting out which results in layoffs
provided that the conditions set forth in that provision are met. In its submission, under the
specific wording of Article 10.02(2), one of the conditions is that the Hospital’s collective
agreement be extended to and continue to apply to the affected employees. It submits that the
contractor, in respect to the contracted out work, stands “in the place of the hospital for the
purposes of the hospital’s collective agreement with the Union.” In contrast to the Employer, the

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Union submits that this language does not require or permit a separate collective agreement
between the contractor and the Union, but instead, requires the contractor to stand in the place of
the Hospital in terms of abiding by and enforcing the Hospital’s collective agreement in respect
to the contracted-out work. The scheme envisioned by Article 10.02, it contends, places both the
contractor and the Hospital as joint administrators of the Hospital’s collective agreement with the
Union – the contractor as the employer of the displaced employees and the Hospital as the
employer of the remaining staff. Further, because the affected employees remain under the
Hospital’s collective agreement, they remain part of the Hospital bargaining unit and thereby
retain their full seniority rights in terms of job posting, bumping, and other provisions under the
collective agreement.
The Union submits that the language of Article 10.02 does not create a successorship
situation and does not create a new bargaining unit. It argues that the language used in Article
10.02 is different than the language used in the Labour Relations Act for successorship, and that
had Mr. Mitchnick intended to create a successor situation, he would have used that language.
Likewise, it submits that if he had simply intended to require the contractor to enter into a
collective agreement with the same terms and conditions of employment as contained in the
Hospital’s agreement, he would have explicitly said so. Instead, it submits that the language
awarded in the Mitchnick Award requires that the contractor “stand, with respect to that work, in
the place of the hospital for the purposes of the hospital’s collective agreement with the Union.”
Those words, in its submission, do not create a successorship situation but requires the Hospital
and contractor jointly to administer the Hospital’s collective agreement.
The Union further contends that the enforcement provision in Article 10.02 confirms that
the contractor becomes part of the Hospital’s collective agreement, rather than enter into its own

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collective agreement with the Union. It notes that if the contractor fails to comply with Article
10.02, the Hospital must withdraw the work from the contractor. The Union submits that if a
separate collective agreement was contemplated the enforcement mechanism would be through
the grievance arbitration provision of that agreement, not the withdrawal of the work in question
by the Hospital.
The Union submits that Article 10.02 did not just “clarify” the pre-existing language
regarding contracting out, it fundamentally changed it. The prior language, it notes, did not
contemplate an “extension” of the collective agreement, it just required a contractor to be
organized and provide “similar terms and conditions of employment.” The Union acknowledges
that under the prior language, the contractor could be in a separate bargaining unit. In contrast, it
asserts that the language adopted in the Mitchnick Award goes much further in protecting
employees displaced by contracting out by extending the Hospital’s collective agreement to
them, thereby retaining them within their existing bargaining unit and ensuring the full retention
of their existing contractual rights.
The Union further contends that well-accepted principles of contract interpretation favour
its interpretation over that of the Hospital’s. The Union’s interpretation, it asserts, fully protects
the employee’s seniority rights and all of the benefits which flow from that. By treating the
contractor and Hospital as one unit, covered by the Hospital’s collective agreement, both the
displaced employees – and the remaining Hospital employees - would be able to utilize their
seniority fully to post into vacancies or bump. If the contractor’s employees are split off, even
though the collective agreement provisions are the same, the value and benefit of those rights are
diminished. Both groups would have fewer positions to post for when vacancies arise or to

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bump into in the event of a layoff. Citing Re Council of Printing Industries of Canada and
Toronto Printing Pressmen and Assistants’ Union No 10 et al. [1983] , 42 O.R. (2d) 404 at 409
(Ont. C.A.) quoting from Re U.E.W., Local 512 and Tung-Sol of Canada Ltd. (1964), 14 L..A.C.
161 at p. 162 (Reville), the Union contends that it is axiomatic that arbitrators are to construe
collective agreements with the utmost strictness whenever it is contended that an employee’s
seniority has been abridged under the relevant sections of the collective agreement. The Union
argues that this Board should adopt the interpretation that avoids undermining the employees’
seniority rights.
Under Article 9.06 of the collective agreement, the Union notes, employees transferred
by the Hospital to a position outside of the unit (on a non-temporary basis) do not accrue
seniority in the unit, and entirely lose their Hospital seniority after 24 months. The Union
contends that the Hospital’s interpretation, by treating work for the contractor as a “position
outside of the unit”, significantly undermines the employees’ seniority rights.
Legally, the Union argues, once the contractor is a separate bargaining entity, it is free to
negotiate different terms and conditions of employment upon the expiry of the Hospital’s
collective agreement. Although the contractor could agree to be bound to the Hospital’s new
agreement, it argues that the contractor would be legally free to negotiate different terms and
conditions of employment, effectively ending the “protection” created by Article 10.02. This
result could not happen, the Union contends, if the contractor stands “in the place of the hospital
for the purposes of the hospital’s collective agreement with the Union.”
Finally, in the Union’s submission, the last clause of Article 10.02(2) – “and to execute
into an agreement with the Union to that effect” - supports its interpretation. The Union argues
that Mitchnick used the term “agreement”, not the words “collective agreement” and did so

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intentionally because it was not his intent to create a separate collective agreement between the
contractor and the Union but to make the contractor a co-administrator of the Hospital’s
collective agreement. It asserts that had the Board wanted the contractor to adopt an identical
collective agreement with the Union, Article 10.02 could have easily provided for that. Instead,
it requires an agreement by the contractor with the Union to stand “in the place of the hospital for
the purposes of the hospital’s collective agreement with the Union.”
2. The Hospital
The Hospital contends that Article 10.02 allows the Hospital to contract out work,
provided the stipulated criteria are met. Those criteria, it asserts, are: (1) that the contractor
“employ the employees thus displaced from the hospital”; (2) that the contractor honour all of
the terms and conditions of employment contained in the Hospital’s collective agreement; and
(3) that the contractor enter into a collective agreement with the union to that effect. The
Hospital rejects the Union’s contention that Article 10.02 creates some type of joint-employer
arrangement as co-administrators of the Hospital’s collective agreement. Instead, it submits that
the provision requires the contractor to abide by the terms and conditions of the Hospital’s
collective agreement – to stand in the place of the Hospital – and to enter into an agreement with
the Union to that effect, independently of the Hospital.
In support of its interpretation, the Hospital relies on the reasoning set out in the
Mitchnick Award.
In its view, the goal of the Award was to “find a more effective and
predictable way to carry out the objectives that the present clause was intended to achieve.”
Those objectives, it asserts, were to assure parity with the actual terms and conditions of the
Hospital’s collective agreement and to ensure protection in the event of a second successive flip.

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Instead of requiring “similar terms and conditions”, the actual terms and conditions were
required. The flip issue was addressed by requiring that “any subsequent such contractor” also
had to abide by Article 10.02. The changes in Article 10.02, the Hospital contends, addressed
the specific concerns raised by the Union and did not create an entirely new approach whereby
the Hospital continues to be a joint or common employer with the contractor.
The Hospital
submits that had such a novel and completely different approach been intended, the Award
would have specifically addressed that. It submit that there is no support in the Award for such a
novel approach which, the Hospital submits, demonstrates that the language was not intended to
create such a result. To the contrary, the Hospital argues that the Mitchnick Award very clearly
states that its goal was to provide a “more effective and predictable way to carry out the
objectives that the present clause was intended to achieve.” It was a “fine-tuning” of the clause,
it suggests, not a wholesale revision.
The Hospital contends that the reasoning in the Award supports the view that the
contractor is required to adopt the Hospital’s collective agreement, but as a separate employer. It
notes that the Award recognizes that “under the more direct approach adopted by this award,
there [may be] questions of the applicability or even availability of specific items to a new
employer who may not qualify as a ‘hospital’, we believe the parties will be capable of dealing
with these….” The Hospital contends that if it the displaced employees remained part of the
Hospital’s bargaining unit and collective agreement, there would be no question about the
“applicability or even availability of specific items to a new employer who may not qualify as a
‘hospital.’” It also relies on the judgement of the Divisional Court, at p. 5, which recognized that
the contractor would have to “abide by the collective agreement that it would be required to sign
as part of the contracting out agreement with that hospital.”

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In terms of the use of the word “agreement” instead of “collective agreement” in Article
10.02(2), the Hospital contends that under the Labour Relations Act, the definition of a
“collective agreement” is an “agreement in writing between an employer…, on the one hand, and
a trade union that…represents employees of the employer…, on the other hand, containing
provisions respecting terms or conditions of employment. …” Accordingly, it submits, nothing
turns on the use of the term “agreement.”
The Hospital further contends that the Union’s argument is a clever way to achieve what
it did not accomplish during the interest arbitration, specifically the elimination of the “savings”
clause. Article 10.02, the Hospital contends, allows subcontracting to the point of displacement
of the employees from the Hospital. The Union’s interpretation, in its view, would essentially
nullify that right by leaving the displaced employees in the Hospital’s bargaining unit and
covered by its collective agreement, thereby retaining some type of “employer” relationship with
the Hospital. In its view, it is disingenuous to allow contracting out yet retain the “displaced”
employees in the Hospital’s bargaining unit.
3. The Intervenor - Brookfield- Lepage Johnson Controls
BLJC adopted the Hospital’s submissions and argued that it was a “successor” employer,
bound by the Hospital’s collective agreement with the union but as a completely separate
employer in a separate bargaining unit.
BLJC suggests that Article 10.02 could lead to three possible interpretations – (1) that the
Hospital remains the “true” employer; (2) that it and the Hospital are “related employers” under
Section 1(4) of the Labour Relations Act, or (3) that BLJC is a “successor” employer. BLJC

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argued that there was no contention by the Union, and no evidence to support, a conclusion that
the Hospital remains the “true” employer or that it and the Hospital are “related employers”.
Nevertheless, BLJC submits that while eschewing such an approach, the Union contends that the
Hospital and BLJC are joint or common employers simply by operation of Article 10.02. It
suggests that such an interpretation is improper based on the evidence presented and beyond the
jurisdiction of this board of arbitration, citing Re Remembrance Services Inc. and U.F.C.W.,
Local 175, unreported decision of Randy Levinson, dated July 6, 2000, quashed by the
Divisional Court, Court File No. 590/00 (June 12, 2001).
BLJC further submits that the Union’s argument is “smoke and mirrors” and suggests
that the Union’s interpretation creates a distinction without a difference. It submits that the legal
effect of the Union’s interpretation of Article 10.02 would place BLJC and the Hospital in the
same situation as if they had been determined, by the Labour Relations Board, to be joint or
related employers, but without any evidence of common control or ownership.
Instead, BLJC argues that it is a “successor” employer, the real employer of the displaced
employees. It submits that it has met the letter and intent of Article 10.02 by employing the
employees displaced from the Hospital, employing them on the same terms and conditions of
employment as the Hospital, and agreeing to enter into a collective agreement with the Union to
that effect. It submits that it has done what the Divisional Court said it expected contractors to
do under Article 10.02 and agreed to sign a collective agreement identical to that of the Hospital
with the Union.
BLJC also submits that the language used in Article 10.02 supports its interpretation. It
notes that it must employ “the employees thus displaced from the hospital” and contends that
employees who are displaced from the hospital are no longer employed by the hospital. It

18
further notes that the contractor must “stand, with respect to that work, in the place of the
hospital” which, in its view, means “instead of the hospital” or “in the shoes of the Hospital.” It
does not say “along side the hospital” or “jointly with the hospital.” Nor, it submits, do the
words “extend the collective agreement” appear in Article 10.02.
In the view of BLJC, the Union’s interpretation emasculates the right to contract out and
pretends that it does not exist, by retaining all of the employees of BLJC and the hospital in one
unit, under one collective agreement with one seniority list. Such an interpretation, it argues,
would gut the clear exception which permits contracting out.
In terms of the Union’s contention that the employees’ seniority rights are diminished
under the Hospital’s interpretation, BLJC submits that the change is no more here than in any
sale of business under the Labour Relations Act. Employees transferred into the new unit lose
the right to bump into the old one. Indeed, in its view, the protections afforded to the displaced
employees here are significantly better in light of the requirement in Article 10.02 that its terms
apply to any subsequent contractor. Under this provision, it contends, if BLJC’s contract is not
renewed, the new subcontractor is obligated to hire the displaced employees.
4. Union Reply
The Union contends that it is not arguing that BLJC and the Hospital are “related employers”
or that the Hospital remains the “true” employer under the Labour Relations Act. Such issues, it
submits, are irrelevant under Article 10.02, although counsel agreed that the effect of Article
10.02 is to treat the hospital and BLJC as common or joint employers since the Hospital’s
collective agreement continues to apply to the displaced employees. In its submission, Article
10.02 does not eliminate the Hospital or split the unit or create a separate collective agreement.

19
The Union asserts that BLJC is not a “successor” employer and submits that the language
used in Article 10.02 is not the “successor” language found in the Labour Relations Act. It
contends that BLJC admitted that its interpretation involves a diminution of the employees’
seniority.
The Union denies that its interpretation “nullifies” or “emasculates” the right to contract
out. It argues that all of the advantages of contracting out, as set out in paragraph 13 of the
Statement of Agreed Facts, remain.
It terms of the reasoning set forth in the Mitchnick Award, the Union contends that it
supports its interpretation that a wholly new approach, a “new regime”, was intended. It argues
that Mitchnick found that the existing language was inadequate to protect the displaced
employees and created a different clause, with a far more direct approach – extending the
Hospital’s collective agreement instead of creating a separate collective agreement.

20
Decision
Article 10.02, in the board’s view, is ambiguous. It can be interpreted as the Union
suggests - to require the contractor to “stand, with respect to that work, in the place of the
hospital for the purpose of the hospital’s collective agreement with the Union” as part of a single
bargaining unit. It can also be interpreted as the Hospital and BLJC propose – to require the
contractor to stand in the hospital’s stead for the purpose of the hospital’s collective agreement,
and to enter into an agreement with the union to that effect. Both interpretations are plausible
and our responsibility is to determine what was intended by Article 10.02.
It is our view, after carefully considering the arguments of counsel, that the Hospital and
BLJC’s interpretation is what was intended by Article 10.02. The Mitchnick Award is clear that
Article 10.02 was revised to address the two specific concerns raised by the Union, specifically,
the uncertainty created by the words “similar terms and conditions of employment” and the
problem of the second successive flip.
The Award traces the history of the provision which shows that “[t]he balance that the
clause has sought to achieve, at least since the 1984 round, was to allow contracting out even to
the point of displacement from the Hospitals themselves, so long as employment was maintained
generally, and so long as the contracting-out was not used simply as a vehicle for imposing lower
standards of employment.” The 1984 clause allowed contracting out “to an employer who is
organized and who will employ the employees of the bargaining unit who would otherwise be
laid off…” The inadequacy of the requirement that the contracting employer be “organized” was
dealt with, in 1986, by further requiring that the displaced employees be hired “with similar
terms and conditions of employment.”

21
Yet this language, as well, was determined to be inadequate in the Mitchnick Award. The
Award accepts the Union’s arguments concerning the shortcomings of the existing language,
including the potential for a profusion of rights disputes as well as the uncertainty involved with
“guessing wrong” as to whether another collective agreement’s terms and conditions were
“similar.” It also accepts the Union’s argument that the protections afforded by the clause could
be obliterated through a second, successive flip. The Award determined that “the best way of
dealing with the current clause is to try to find a more effective and predictable way to carry out
the objectives that the present clause was intended to achieve”, including the flip problem.
The inadequacies of the existing provision were dealt with by requiring the contractor to
adopt and honour the Hospital’s collective agreement and by imposing that requirement on
subsequent contractors. That this was the intended result is clearly seen in the Sodexho example
cited in the Award. The quoted sections of that proposal show that Sodexho would “maintain
and continue any existing rights and agreements in place” and “comply fully with all aspects of
Bill 40 by honouring all existing contract language.” It recognized that “labour confrontations
and unfavourable publicity are avoided as long as all wages, benefits and pension plans, as well
as seniority rankings, are accepted and honoured.” It states that issues regarding contracting out
could be avoided “as long as the employees of the new centralized facilities remain represented
by the bargaining [agents].” Thus, the employees remain represented by their own bargaining
agent and the new employer must honour all existing contract language. That is what the
Mitchnick Award believed was the “proper perspective, in light of the strictures on Hospitals that
already exist under this contract language.” In this context, when the Award talks about the
“extension of the existing collective agreement”, it refers to the fact that the contractor must

22
“maintain and continue any existing rights and agreements in place” and honour “all existing
contract language.”
There is nothing in the Award which talks about the displaced employees remaining part
of the Hospital’s bargaining unit and remaining part of the Hospital’s collective agreement.
There is no discussion at all about co-administering the collective agreement, or common or joint
employer relationships. The interpretation proposed by the Union would create, as the counsel
for the Union stated, a “new regime”. Indeed, it would create a quite novel interrelationship
between the contractor and the Hospital – a quasi-multi-employer relationship imposed solely by
operation of Article 10.02. Although the language in Article 10.02 could be read to create such a
situation, there is simply no discussion of or reference to such an approach in the reasoning set
forth in the Mitchnick Award. The reasoning expressed there, on the contrary, supports the
interpretation proposed by the Hospital and BLJC.
For example, the reference in the Mitchnick Award to “questions of the applicability or
even availability of specific items to a new employer who may not qualify as a ‘hospital’”
indicates that the contractor is separate from the Hospital. These types of issues would not arise
if, as the Union proposes, the contractor were bound to the Hospital’s collective agreement as
part of the same unit.
Likewise, the references in the Award to the Labour Relations Act provisions regarding
“related employer”, “sale of a business”, and even “jurisdictional disputes” in cases where “there
is ‘intermingling’ of new and prior employees of the contractor to the point that difficulty arises
over apparently conflicting collective agreements (or bargaining rights)” further indicates that
the contractor is not a co-administrator of the Hospital’s collective agreement as part of the same

23
unit. Again, none of these types of determinations would need to be made if, as the Union
proposes, the contractor was bound to the Hospital’s collective agreement as part of the same
unit. Yet the Mitchnick Award clearly relies on them to deal with such situations if the need
arises.
In our view, the Mitchnick Award significantly strengthens the protections afforded to
displaced employees, while still permitting contracting out. By requiring the contractor to adopt
and honour the Hospital’s collective agreement, it eliminates the uncertainty and potential for
litigation regarding whether the contractor’s collective agreement contains “similar terms and
conditions” to the Hospital’s collective agreement. It eliminates the flip issue by requiring not
only the contract to agree to employ the displaced employees and to adopt the Hospital’s
collective agreement, but “any subsequent such contractor” as well. Unlike the predecessor
language, the contractor must also enter into an agreement with the Union representing the
displaced employees, and not just be organized, perhaps with a different union, and adopt similar
terms and conditions of employment.
We also find that the interpretation proposed by the Union is inconsistent with the both
the language and purpose of Article 10.02, which allows contracting out, even to the point of
layoffs, provided certain conditions are met. The provision requires the contractor “to employ
the employees thus displaced from the hospital.” This language explicitly recognizes that the
employees are displaced from the hospital. Accordingly, they are no longer employees of the
hospital but are employees of the contractor. The Union’s interpretation, under which the
Hospital remains as a co-administrator under the collective agreement, is inconsistent with this
provision.
Although the Hospital would no longer be the “employer” of the displaced
employees, the displaced employees could, under the Union’s interpretation, seek to enforce

24
contractual rights against the Hospital. For example, under the Union’s interpretation, in a layoff
situation by the contractor, a more senior employee of the contractor could seek to displace a less
senior employee of the Hospital even though the Hospital no longer has an “employeremployee”
relationship with that individual. That is the effect of ruling that Article 10.02 creates
a common collective agreement between the Hospital and contractor - as the “employers” - and
the Union.
We also do not agree with counsel for the Union that because the provision states that
enforcement is through withdrawal of the work by the Hospital, rather than through the
grievance procedure of the contractor’s collective agreement, it supports its interpretation of
Article 10.02.
In our view, the Mitchnick Award does not eliminate the potential for
enforcement through the grievance arbitration procedure of the contractor’s collective
agreement, it simply provides another, very powerful means of enforcement. It creates an ongoing
obligation on the Hospital, for as long as it is signatory to Article 10.02, to ensure that the
initial contractor, or any subsequent contractor, honours the terms of the contracting out
arrangement with respect to the displaced employees and to withdraw the work from any
contractor who fails to do so. That obligation, however, does not make the Hospital a coemployer
or joint administrator of the collective agreement with the contractor. Nor does it mean
that the displaced employees remain part of the Hospital’s bargaining unit.
The Union is correct, however, when it asserts that its interpretation more fully protects
the seniority rights of the displaced and remaining employees. Although, legally, by adopting
the Hospital’s collective agreement, the displaced employees’ rights remain the same, their
ability to exercise those rights in a separate unit is clearly not the same. A senior employee in a
bargaining unit of 17 employees has far fewer opportunities, as a practical matter, to bump less

25
senior employees in the event of a layoff than an employee in a unit of 100 employees. But,
unfortunately, this is a consequence of contracting out – the employees are no longer employed
by the hospital and do not remain a part of that unit. What the Mitchnick Award did was to
require the contractor to adopt the Hospital’s collective agreement rather than just provide
“similar terms and conditions of employment.” It provides the maximum possible protection
while still permitting the contracting out of work to the point of displacement of employees.
The Award recognizes, however, that “further refinement of these particular issues, as
needed, may be worked through by the parties on a mutual basis.” Certainly the parties are free
to negotiate additional protections and rights for the displaced employees that the contractor, if it
accepts the work, would have to abide by.
Further, we agree with counsel for the Hospital that nothing turns on the use of the word
“agreement” rather than “collective agreement” in Article 10.02, which requires the contractor to
“execute into an agreement with the Union to that effect.” A “collective agreement”, as defined
in the Labour Relations Act, means an “agreement” between an employer and union with respect
to terms and conditions of employment. Accordingly, it is our view that the requirement that the
contractor execute an “agreement with the Union” to stand in the place of the Hospital for the
purpose of the Hospital’s collective agreement with the Union, requires the contractor to enter
into a collective agreement with the Union which honours and adopts the Hospital’s collective
agreement. We also note that the Divisional Court, in upholding the Mitchnick Award regarding
this contracting out provision, understood it as requiring the contractor to enter into a collective
agreement with the union as part of the contracting out agreement with the Hospital
Could Article 10.02 have been written more clearly Probably yes. As the Divisional
Court mused, at p. 8-9:

26
Everyone understands the difficulties and that there are legitimate concerns to be
expressed on both sides as to how to handle them, both conceptually and in use of
the English language. We do not consider that from this perspective the solution
devised is patently unreasonable, although probably each of us thinks or
fantasizes that he or she might invent a better scheme, better reflected in
understandable contract language.
But our job, as a board of arbitration, is to try to ascertain the intent of the language used, and for
all the reasons set forth above, we conclude that the interpretation put forth by the Hospital and
BLJC is the more reasonable one. The Mitchnick Award is clear that the goal of the revision was
meant to be “a less ambiguous and more direct way of achieving the principles currently
embodied in the clause.” It was not a completely “new regime”, but a more direct way of
ensuring parity and avoiding nullification of the clause as a result of a second successive flip.
required.
Having read the dissent, however, we believe that a few additional comments are
1. The Union’s Interpretation Requires the Hospital and Contractor to be Co-
Administrators of the Collective Agreement.
In our view, the Union’s interpretation clearly makes the Hospital and the contractor coadministrators
of the Hospital’s collective agreement.
It creates a tri-party agreement,
enforceable against both the Hospital and contractor. Although we agree with the dissent that it
does not render the Hospital and contractor “joint employers” over the employees performing the
contracted out work, we do not agree that they are simply “administering the same collective
agreement in respect of different work and thus different employees.” There could be many
times that an employee of the contractor might assert rights under the collective agreement

27
against the Hospital. The converse is also true – an employee of the Hospital could, under the
Union’s interpretation, assert contractual rights against the contractor.
This is most clearly seen in regard to layoffs, promotions and transfers. If a contractor
were to layoff an employee, under Article 9.09 that employee could seek to exercise his or her
bargaining unit seniority to displace an employee of the Hospital “in the same or a lower or
identical-paying classification” provided that he or she “has the ability to meet the normal
requirements of the job.” Clearly, it would be the Hospital which would make the determination
of the employee’s “ability to meet the normal requirements of the job”, not the contractor. The
same type of determination has to be made in a recall situation.
The same is also true under Article 9.05, Job Posting.
It states: “[I]n matters of
promotion and staff transfer appointment shall be made of the senior applicant able to meet the
normal requirements of the job.” Again, this determination would be made by the Hospital, not
the contractor.
Consequently, in any grievance concerning these types of matters, both the Hospital and
the contractor would have to be involved as co-administrators of the collective agreement. The
Union, in that situation, would be enforcing the collective agreement on behalf of the
contractor’s employee against the Hospital who no longer has an employment relationship with
the displaced individual. The Union could not proceed solely against the contractor since it is
the Hospital which, under the examples cited, determines whether the employee meets the
normal requirements of the job.
For this reason, it is simply not true that the Hospital and contractor are administrators of
the same collective agreement in respect to different employees.
Because the contractor’s

28
employees would have rights in respect to layoff, promotion and transfer to positions in the
Hospital (and vice versa), the two employers cannot be cleanly separated and both might well be
required to administer the collective agreement with respect to the same employees.
It is our view that this de facto tri-party collective agreement and co-administrator
relationship is a most unusual situation in labour law in Ontario. One would expect some
mention of it in the Mitchnick Award , but there is nothing in the Mitchnick Award that
discusses this novel arrangement. We share the dissent’s deep respect for Arbitrator Mitchnick,
and do not believe that he would adopt such an unusual approach without some specific mention
and explanation of it. It is not simply the fact that the Union’s interpretation results in a “less
usual outcome” which leads us to reject it. It is the absence of any specific indication in the
rationale of the Mitchnick Award that the Hospital and contractor were to be “co-administrators”
of the Hospital’s collective agreement in a single bargaining unit.
2. Article 10.02 intentionally governs the commercial arrangement of the contractor.
The dissent states: “[I]f the Hospital and contractor are correct in this case, one is left asking
why it is the Hospital’s commercial arrangement with the contractor which is being governed by
the substance of Article 10.02 rather than the contractor’s collective agreement with the Union.”
It is our view that Article 10.02 focuses on the commercial contracting out arrangement because
the provision
- quite ingeniously - makes the Hospital responsible for ensuring that the
contractor adopts and maintains the Hospital’s collective agreement with the Union.
The
provision creates an on-going oversight obligation on the Hospital to ensure that the contractor
does not alter the terms and conditions of employment enjoyed by the displaced employees. If
the contractor fails to do so, the Hospital must withdraw the work. The only power that the

29
Hospital has to control the contractor is through its commercial arrangement with the contractor
and the requirement to withdraw the work. Thus, the Hospital’s only avenue of controlling the
terms and conditions of employment of the displaced employees who are now employed by the
contractor lies in its control over its commercial arrangement with the contractor. By dictating
the terms of that commercial arrangement and requiring that the Hospital withdraw the work
from any contractor who fails to meet the terms of the contracting-out arrangement, the
Mitchnick Award ensures that the displaced employees’ contractual terms will be protected. The
Mitchnick Award does far more than simply require the contractor to adopt a “separate but
equal” collective agreement. It places an on-going obligation to ensure that on the Hospital and
it accomplishes that through the Hospital’s commercial contracting out arrangement with the
contractor.
Accordingly, for all of these reasons, we are persuaded that the interpretation of Article
10.02 proposed by the Hospital and BLJC is the more reasonable one. Accordingly, the
grievance must be dismissed.
Issued this _15 th day of January, 2002.
___________________________
Randi H. Abramsky, Chair
“I concur”
_____________________________
Roy Filion, Employer Nominee

30
“I dissent”
______________________________
Joe Herbert, Union Nominee
ADDENDUM
As a member of the Interest Arbitration Board chaired by Mr. Mitchnick, I emphatically disagree
with the new Article 10.02 as awarded by Mr. Mitchnick. However, in my view, there is
absolutely no doubt that Mr. Mitchnick did not intend to create a “co-administrator” type of
regime. Rather, it was his objective to clarify and strengthen the pre-existing language. The
Chair in this case has correctly captured the intent of the Mitchnick award, which is clearly
articulated in the reasoning which supported the new Article 10.02.
/s/ Roy C. Filion
________________________
Roy C. Filion, Employer Nominee
Dissent
Regretfully, I conclude that my colleagues have reached the wrong conclusion in this
case and must dissent from the majority award. The facts of the case were the subject of
agreement and are stated accurately in the majority award.
The issue in this case is the meaning of article 10.02 of the collective agreement, which
as the majority correctly notes was the result of a central interest arbitration award of a board
chaired by M.G. Mitchnick. The positions of the parties can be summarized as follows.
The Union argues that articles 10.01 and 10.02 provide a scheme whereby the Hospital
can contract out work normally performed by bargaining unit members and resultantly alter the
employment relationships of Hospital employees, provided that the Hospital collective
agreement continues to apply to those employees to the extent that the contractor now stands in
the place of the Hospital as their employer. Within the purview of the same collective agreement
as also governs the employment of the remaining employees of the Hospital, the contractor
assumes the role of employer for the purposes of that agreement in respect of the work that has
been transferred to its control and in respect of the employees performing that work. There are
thus not two collective agreements but one.

31
The Hospital and contractor argue that the Mitchnick award intends that a separate
collective agreement, identical in its terms to the Hospital collective agreement with the Union,
be entered into by the contractor and Union. For the reasons I will set out below, this cannot
possibly be what article 10.02 requires.

32
These are:
There are three reasons which suggest the Union’s interpretation ought to prevail.
1. The Union’s interpretation conforms to the wording used at article 10.02 of the
collective agreement while the interpretation of the Hospital and contractor
does not.
2. The Hospital’s interpretation leads to manifest absurdities.
3. When one has recourse to the interest arbitration award of arbitrator Mitchnick,
which is relied upon in the majority award, the Union’s interpretation is supported
by the reasons contained in the award.
I will deal with these points in order.
1. The Union’s interpretation conforms to the wording used at article 10.02 of the collective
agreement while the interpretation put forward by the Hospital and contractor does not.
I begin by accepting the proposition that the Union’s interpretation is one which would
result in a less usual outcome than would the Hospital’s. That however cannot be determinative
of the case, because if the less usual result is what was intended by article 10.02, it hardly lies to
a grievance arbitration board to confer a different meaning on the provision simply because it
would be less unusual.
I must also note at the outset that the provision was the result of an award of arbitrator
Mitchnick, who is one of the most highly regarded neutrals in Canada, a past chair of the Ontario
Labour Relations Board, and an arbitrator who has issued an extremely large number of interest
and grievance arbitration awards. I would be reluctant to conclude that arbitrator Mitchnick
would award collective agreement provisions intended to mean other than what they expressly
say, and highly reluctant to conclude that an easily expressed view such as the Hospital and
contractor espouse, and the majority confirms, would not be expressed in its normal fashion. In
other words, had arbitrator Mitchnick intended only to say that the contractor and subsequent
contractors would enter into collective agreements with the Union identical to the Hospital’s
collective agreement, it strikes me as unlikely that arbitrator Mitchnick would not have said so in
that, or very similar, language. Instead he said something which is quite obviously different.

33
Finally I note at the outset that the Union’s interpretation does not require a ‘joint-employer’
approach at all, and this ‘dilemma’ appears to be at the heart of the majority’s finding. In terms
of the normal role of the employer, i.e. hiring and firing, assigning work, responding to any
grievances etc., those functions would fall entirely to the contractor as it pertains to the work
which has been contracted out by the Hospital. The Hospital and contractor are not ‘joint
employers’ over the employees performing contracted out work. Instead they are administering
the same collective agreement in respect of different work and thus different employees.
I restate for ease of reference the provision at article 10.02.
10.02 –– Contracting Out
Notwithstanding the foregoing, the hospital may contract out work usually
performed by members of the bargaining unit without such contracting-out
constituting a breach of this provision if the hospital provides in its
commercial arrangement contracting out the work that the contractor to
whom the work is being contracted, and any subsequent such contractor,
agrees:
(1) to employ the employees thus displaced from the hospital; and
(2) in so doing to stand, with respect to that work, in the place of the
hospital for the purposes of the hospital’s collective agreement with
the Union, and to execute into an agreement with the Union to that
effect.
In order to ensure compliance with this provision, the Hospital agrees that it
will withdraw the work from any contractor who has failed to meet the
aforesaid terms of the contracting-out arrangement.
If one assumes for the moment, without deciding, that the Union’s interpretation of the
provision is accurate, I would ask what other words arbitrator Mitchnick could have used to
express that intention. The answer, I believe, is that the wording conforms very closely to the
intention argued by the Union. Assuming that there is to be only one collective agreement,
through which the contractor will direct the work that has been contracted out and administer the
employment relationships of the employees concerned, there would need to be written agreement
to that effect both between the Hospital and the contractor, and between the contractor and the

34
Union. And the substance of article 10.02 speaks exactly to the content of the commercial
agreement between the Hospital and the contractor. It requires the Hospital to:
provide(s) in its commercial arrangement contracting out the work that the
contractor to whom the work is being contracted, and any subsequent such
contractor, agrees:
(1) to employ the employees thus displaced from the hospital; and
(2) in so doing to stand, with respect to that work, in the place of the hospital for
the purposes of the hospital’s collective agreement with the Union, and to execute
into an agreement with the Union to that effect.
Subparagraphs (1) and (2) are not independent provisions but instead are intended to
govern the substance of the “commercial arrangement contracting out the work”, i.e. the
Hospital’s contract with the contractor. The very provisions giving rise to this dispute are those
governing the Hospital’s contract with the contractor. As I have stated, that is entirely consistent
and supportive of the Union’s interpretation. On the other hand, if the Hospital and contractor are
correct in this case, one is left asking why it is the Hospital’s commercial arrangement with the
contractor which is being governed by the substance of article 10.02 rather than the contractor’s
collective agreement with the Union. If the provision were intended to obligate the contractor to
sign a ‘separate but equal’ collective agreement with the Union, why (I ask admittedly
rhetorically) does the article not simply say that And most importantly, why would it matter
whether that requirement, once stated in the collective agreement, appears at all in the
commercial arrangement The majority notes the previous obligations contained in the preexisting
article 10.01 which stated:
10.01 – Contracting Out (FT & PT )
The Hospital shall not contract out any work usually performed by members of
the bargaining unit if, as a result of such contracting out, a layoff of any
employees other than casual part-time employees results form such contracting
out. Contracting out to an employer who is organized and who will employ the
employees of the bargaining unit who would otherwise be laid off with similar
terms and conditions of employment is not a breach of this provision.

35
That provision is much more akin to what the majority concludes is intended by the
current article 10.02, in that it permit separate collective agreements. The article created rights by
defining the relationship between current terms and conditions of employment and those
subsequent to a contracting out. In other words, the right is one to a similar collective agreement.
There is no mention whatsoever of a hospital’s commercial arrangement with the contractor,
quite simply because there was no need to do so. Compliance required only achieving similarity
between the pre-existing terms and conditions of employment with those subsequent to the
contracting
out.
Here similarly, if the majority is correct, compliance would obtain once the Hospital’s
and contractor’s collective agreements with the Union were the same, and there would be no
need at all to mention or examine the Hospital’s commercial agreement with the contractor. It is
only because, I would suggest, there is no separate collective agreement created by 10.02, that
the obligations are expressed in terms of the Hospital’s agreement with the contractor rather than
being expressed by describing the content of a separate collective agreement between the
contractor and the Union. It is because there is no second collective agreement that article 10.02
speaks to the content of the commercial relationship between the Hospital and contractor, rather
than a separate collective agreement between the contractor and the Union.
By addressing itself to the commercial arrangement between the Hospital and the
contractor rather than the content of a notional collective agreement between the contractor and
the Union, the structure of the article clearly favours the Union’s interpretation. So does its
precise wording:
provides in its commercial arrangement contracting out the work that the
contractor to whom the work is being contracted, and any subsequent such
contractor, agrees:
........
(2) in so doing to stand, with respect to that work, in the place of the hospital for
the purposes of the hospital’s collective agreement with the Union, and to
execute into an agreement with the Union to that effect.
This provision is at the crux of the dispute between the parties. According to the majority
it is an attempt to say, “The contractor will enter into a collective agreement with the Union
which replicates the Hospital’s collective agreement.” Beyond the obvious observation that
arbitrator Mitchnick did not say that or anything approximate, an examination of the precise
words supports the Union’s interpretation.

36
First the phrase “the contractor...agrees...in so doing to stand...in the place of the hospital
for the purposes of the hospital’s collective agreement with the Union..” as I have already noted,
identifies an agreement made between the Hospital and contractor. But moreover, the use of the
phrase ‘stand...in the place of the hospital’ is a clear way of saying ‘takes on the position and
obligations of the hospital as the employer’, or even as the majority rephrase it as “in the stead”
(which of course doesn’t mean ‘instead’). . In other words, in respect of a hospital’s collective
agreement with a trade union, it is the contractor which assumes the rights and obligations of the
employer ‘with respect to that work’ (i.e. the work that has been contracted out). This is not a
way of saying that a contractor will enter a separate collective agreement but instead means no
more nor less than what it says.
Second, the contractor is standing in the place of the Hospital not for the purposes of
entering into its own separate collective agreement with the Union, but rather “for the purposes
of the Hospital’s collective agreement”. This phrase identifies clearly and unambiguously which
collective agreement is the one where the contractor stands in place of the Hospital in respect of
the employees concerned, and that collective agreement is the Hospital’s collective agreement.
The words “for the purposes of the Hospital’s collective agreement” must be given some
meaning and their ordinary meaning might be expressed more wordily as “as far as the
Hospital’s collective agreement with the Union is concerned”. The words certainly do not
support the interpretation provided by the majority.
Third and finally, the phrase “and to execute into an agreement with the Union to that
effect” again supports the Union’s interpretation. If arbitrator Mitchnick had intended to mean ‘a
collective agreement’, one would think that having just used the words ‘collective agreement’ in
the previous phrase, he would have repeated the term here. Instead, he requires the contractor to
confirm in an agreement with the union that it stands in the place of the Hospital “for the
purposes of the Hospital’s collective agreement.” One certainly would not say that a contractor
will enter into a ‘collective agreement’ to the effect that it stands in place of a hospital for the
purposes of the hospital’s collective agreement.
Indeed, if one re-orders the content of the subsection and substitutes the term ‘collective
agreement’, it would require the contractor to execute a collective agreement with the Union to
the effect that it stands in the place of the Hospital for the purposes of the Hospital’s collective
agreement. It should be apparent that that reading, which is a fair restatement of the majority’s
interpretation of the provision, makes no sense whatsoever. With respect, one ought not purport

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to interpret a provision by rendering it unintelligible. If the majority is correct, arbitrator
Mitchnick required the contractor to enter into a collective agreement with the Union to the
effect that it will replicate the Hospital’s collective agreement with the Union. That concept is an
illusory one to the writer, and one does not enter into a collective agreement with another party
to replicate another agreement - one simply enters into a collective agreement which replicates
the others’ terms. Put simply, the agreement entered into with the union by the contractor, is
intended to reflect the contractor’s consent in its commercial agreement with the hospital to
assume the obligations and rights of the hospital in respect of the hospital’s collective agreement
with the union, to the extent that the Hospital’s collective agreement pertains to the work that has
been contracted out. The purpose of the requirement is to render the Hospital’s collective
agreement enforceable against the contractor as it pertains to those employees performing the
contracted out work.
The final sentence of the article states:
In order to ensure compliance with this provision, the Hospital agrees that it will
withdraw the work from any contractor who has failed to meet the aforesaid terms
of the contracting-out arrangement.
The phrase is neutral in terms of the parties’ interpretations. If the majority is correct it
requires cancellation of any contracting out where the contractor declines to replicate the
Hospital’s collective agreement, and if the Union is correct one of the circumstances giving rise
to the cancellation is the very attempt to create a second collective agreement.
In conclusion, the structure and wording of article 10.02 support the Union’s
interpretation and weigh against the interpretation adopted by the majority.
2. The Hospital’s interpretation leads to manifest absurdities.
The majority finds that arbitrator Mitchnick’s intent was that the contractor and union
“adopt the Hospital’s collective agreement” rather than one which is “similar”. In other words,
the collective agreement between the Hospital and Union is precisely replicated in its terms by
the contractor and union.
This results in an absurdity. It is only a portion of the work which is covered by the
Hospital’s collective agreement with the Union which is being contracted out and this will
inevitably be the case. That work is performed by a limited number of classifications of

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employees. The Hospital’s collective agreement with the Union on the other hand, governs the
employment conditions of numerous classifications of employees whose work is not being
contracted out, and sets out various provisions in respect of wages and working conditions which
would have no bearing whatsoever on the work which the contractor is involved in having
performed.
Why would the contractor enter into an agreement here, for example, which governs RPN
Skill Utilization, or RPN scheduling, or set wage rates for RPN’s and other classifications whose
work is not being contracted out, to name but a few such provisions Such a separate collective
agreement would purport to govern the employment conditions employees not covered by the
collective agreement and would make no sense whatsoever.
3. When one has recourse to the interest arbitration award of arbitrator Mitchnick, which is
relied upon in the majority award, the Union’s interpretation is supported by the reasons
contained in the award.
The majority has concluded that the wording of article 10.02 is ambiguous and as a result
examines the reasons given in arbitrator Mitchnick’s award. As I have already indicated, the
language of article 10.02 is not ambiguous in the sense that there is no preponderance of
meaning. But if one is to review the relevant sections of the Mitchnick award, the majority’s
interpretation of 10.02 does not find support there.
The Mitchnick award issued at the outset of the current period of hospital restructuring in
Ontario, which has led to a number of hospital mergers, and in the face of proposed initiatives to
contract out work not merely in traditional fashions but also through the creation of shared
facilities which would contract with a number of hospitals simultaneously in respect, for
example, of food services. The Sodexho proposal discussed at length in the award, was such an
initiative.
The issue between these parties is whether the Hospital’s collective agreement continues
to apply to the employees concerned, with the contractor standing in the place of the hospitals in
respect of the contracted out work, or whether a new and identical collective agreement
governing a separate bargaining unit will be entered into. At page 10 of his award, arbitrator
Mitchnick states:

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the collective agreement will simply follow the “contracted out” work. It is
the view of the chairman that that basic premise - - the extension of the
existing collective agreement – is the appropriate starting point for the
parties’ discussion of any significant realignment of work at this time.
This sentence, which expresses the very purpose of the amendments awarded by
arbitrator Mitchnick, appears laden with answers to the very question before this board. First,
why is the phrase ‘contracted out’ placed in quotation marks If the Union is correct here, this
makes perfect sense, as the contracting out has not succeeded in dislodging employees from
being covered by the hospital’s collective agreement and thus does not have the normal effect of
a contracting out. If the majority is correct there is no reason whatsoever to qualify the term
‘contracted out’.
Second, the term “the collective agreement will simply follow the contracted out work”
(emphasis added) again unambiguously speaks to a single agreement following these employees
in their new employment relationship.
And finally, and perhaps most conclusively, the term “the extension of the existing
collective agreement” (emphasis added) leaves no doubt in the writer’s mind at least, that what
was intended was that the existing collective agreement continue to extend to the employees
effected by the contracting out. When the majority state that at no point does arbitrator Mitchnick
state that the Hospital’s collective agreement continues to cover the employees whose work is
contracted out, with respect I must differ. Instead what is clear is that arbitrator Mitchnick speaks
directly to the existing collective agreement (rather than “some other collective
agreement”...”tendered by the contractor” at page 11) continuing to apply to those employees
and at no point makes any reference whatsoever to a second, separate collective agreement
except to state that “some other” agreement will not apply to the employees.
Furthermore, arbitrator Mitchnick is clear that in allowing hospitals to gain the benefit of
contractors in providing specialized services, the existing rights of employees will be preserved.
If however, the majority is correct, there is no dispute that employees will lose significant
seniority rights as the result of the majority’s interpretation. For decades, arbitration boards have
been legion in preferring interpretations which confirm seniority rights over those which, as here,
negate or bifurcate those rights.

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Conclusion
The interpretation of the collective agreement put forward by the Union is one which
conforms to the structure and wording of the provision, and one which reflects the meaning of
the words used. The advancement of an alternative interpretation, which does not conform to the
language of the provision, does not make the provision ‘ambiguous’ in any fashion,
notwithstanding that the outcome would be more usual.
The language awarded by arbitrator Mitchnick arose in the context of province-wide
bargaining where it is open to the parties, or an arbitrator, to provide novel ways of dealing with
emergent and unprecedented problems. The majority has elected to make the provision read as
closely as possible to the provision it replaced, confusing arbitrator Mitchnick’s comments about
achieving the “principles” of the previous clause (that is, eliminating the negative consequences
to employees arising from contracting out) with an attempt to preserve as closely as possible its
obligations.

Where the parties or an arbitration board fashion a novel way of dealing with an
emergent problem of considerable importance, it is not the role of a grievance arbitration
board, with respect, to ‘read down’ the provision to make it conform to a less novel
approach. Here, one result of this award will be the complete bifurcation of employees’
seniority rights. While on the Union’s interpretation the bargaining unit would already be
fragmented by having employees within the same unit responsible to different employers,
the erosion of employee seniority rights created by the majority interpretation through the
creation of different seniority lists not only fails to reflect the seniority list required by the
Hospital’s existing collective agreement, but eliminates employees’ rights in respect of
layoff, promotion and transfer as these pertain to other positions at the Hospital. That
conclusion is not only one which ought to be avoided, it is one which is not called for by
the clear wording or structure of article 10.02.
For the above reasons I dissent from this award.
Dated at Ottawa, this 14 th day of January, 2002.
__________________
Joe Herbert
Nominee of the Union