The Mysterious Case of the Midnight Cleaners

© Isaac Corey, 2024-10-28

The grievance arbitration award in Westfair Foods Limited v United Food and Commercial Workers Canada, Local 401, 2024 CanLII 100283 (AB GAA) helps delineate between an employer’s right to contract out bargaining unit work, and where “contracting out” mysteriously becomes “contracting in”. The case highlights the importance of carefully navigating the line between employers filling necessary gaps in their workforce, and unsuspectingly taking on responsibilities for workers they never hired. Additionally, it offers a new, summarized list of factors for arbitrators to consider in answering the question: whose employee is this?

A short summary of facts

The employer in this case, Westfair Foods Limited, is a Loblaws subsidiary that operates 34 Superstores in the Province of Alberta. Westfair contracted with several Third-Party Cleaning Companies to clean their stores overnight when they were closed. This arrangement persisted for many years, but due to chronic issues hiring and retaining Courtesy Clerks, who handled aspects of in-store cleaning during business hours, Westfair had to rely on some of these Third-Party Cleaning Companies to provide cleaning services normally handled by Courtesy Clerks during daytime shifts when the Superstores were open.

The Courtesy Clerks at the Superstores are union members. The Union took issue with these Third- Party Cleaners performing bargaining unit work and filed thirty-two (32) grievances relating to the blurred lines between union and non-union workers performing similar work. Though the parties agreed to put the grievances in abeyance when they went into collective bargaining, new Collective Agreements signed in 2021 left the issues unresolved and the Grievances advanced to arbitration.

At Arbitration

At arbitration, the employer, Westfair, relied on its unrestricted right to contract out bargaining unit work as the Collective Agreements concerned did not fetter their ability to do so. Westfair argued that they were using third-party cleaners in a limited fashion out of necessity, and not out of anti-union motives or bad faith. The Third-Party Cleaners were under the direction, supervision, and control of the Third-Party Cleaning Companies, based on an extensive past practise, and their services were simply a legitimate contracting-out.

The Union took the view that the Third-Party Cleaners had, in fact, been “contracted in” to the bargaining unit, and that it was entitled as a result to union dues for the hours they worked. It argued that “an employer’s right to contract out does not entitle the employer to bring non-bargaining unitemployees to work in the workplace, to work alongside bargaining unit employees, to perform the same work, to work under the same supervision and to use the same equipment and supplies as regular employees.” (para 66) In essence, the Union argued that these Third-Party Cleaners were now functionally employees of Westfair, and therefore dues-paying members.

To understand the Arbitrator’s decision, a key distinction in terms must be understood:

“Contracting out” - where a unionized company enters into an arrangement with an independent contractor for that contractor to perform some of the work of the unionized company, and that work had been performed by the unionized company’s employees.

“Contracting in” - where the independent contractor’s employees perform the work on-site at the unionized company’s premises, often side-by-side with the employees of the unionized company.

Arbitrator James T. Casey concluded that the evidence here was “crystal clear”, that the Third-Party Cleaners performed the same work typically performed by Courtesy Clerks during the daytime.

Despite finding that the Employer had legitimate business reasons and had acted in good faith in their utilization of the Third-Party Cleaners, Arbitrator Casey explained that they may still have violated the Collective Agreement if they were the Cleaners’ “true employer”.

In determining who was the “true employer”, this decision recognised that, in the tripartite relationship of Employer – Union - Third Party, “contracting in” is essentially a type of sub-contracting, wherein the Third Party’s employees are sub-contracted to perform bargaining unit work.

When do someone else’s employees have to be treated like my unionized employees?

Arbitrator Casey, summarizing several key pieces of jurisprudence, advanced a new list of factors for arbitrators to consider when answering the above question:

1. Which party hired the individual?

2. Which party exercises direction and control over the individual performing the work?

3. Which party bears the burden of remuneration?

4. Which party imposes discipline on the individual as necessary and which party has the authority to dismiss the individual?

5. Which party is perceived by the individual to be their employer?

6. Was there an intention to create a relationship of employer and employee between the client organization and the individual?

7. Which party provides training to the individual?

8. Which party owns the tools used by the individual?

9. How integrated is the individual into the client organization?

10. Does the employee perform their service as an integral part of the business or are they only an accessory to it?

Applying this list of factors to the Grievances, the Arbitrator was only able to conclude that Westfair was the “true employer” of two (2) of the Third-Party Cleaners. Curiously, the determinative aspect of these two Cleaners’ employment was the length of their assignment at the Superstore. Westfair was ordered to compensate the Union for union dues it would have received for the period when these Third-Party Cleaners were performing the work of Courtesy Clerks.

Lessons for employers:

1. Employers should carefully examine how their Collective Agreement impacts the right to contract out work.

2. Using a third-party company to perform work is safer when this work is clearly distinguishable from that performed by unionized employees.

3. The list of factors above should be considered when entering long-term contractual relationships for services.

4. Directing third-party employees should be avoided as much as possible to keep lines of supervision and responsibility clear for both employers and employees.