Northern Exposure

Court refuses to referee fight regarding plant-closure agreement

By Marc Rodrigue

Unionized employees in Canada can’t bring employment claims to court. This is so even where there is no longer any collective agreement in place. So ruled an Ontario court recently in Baker v. Navistar Canada Inc.


Navistar Canada Inc. and the Canadian Auto Workers Union (CAW) have a long-standing collective bargaining relationship. The CAW was certified to represent two groups of Navistar employees at a production plant in Ontario. After the last collective agreements expired on June 30, 2009, Navistar and the CAW were unable to conclude a new collective agreement.

Navistar closed the plant in July 2011. The company and the union then tried to negotiate a plant-closure agreement. They couldn’t. Among other things, such an agreement would have addressed any compensation to be given to employees as a result of the permanent job losses.

A class-action lawsuit was started on behalf of the union’s members. This was based on the legal theory that each employee now had an individual contract of employment, which had been wrongfully terminated. The CAW actively assisted and promoted the lawsuit in an admitted attempt to push the company into finalizing the plant-closure agreement.

The company responded by seeking a ruling that such claims couldn’t be brought before the court.

General principles regarding court access

In a nonunion context, there is an implied and/or written employment agreement directly between the employer and the employee. Disputes between the employee and employer can be addressed between them. Their disputes can go to court if necessary.

In a unionized context, however, the relationship is indirect. The “employment agreement” the employer has is with a union (i.e., a collective agreement). An employee’s rights flow through the union’s relationship and collective agreement with the employer.

Because a unionized employee doesn’t have a direct relationship with his or her employer, it’s a well-established principle in Canadian law that any grievance connected to the collective agreement or the employment relationship must be pursued through the union. Such grievances are typically pursued by way of the grievance and arbitration process under the governing collective agreement. The courts will reject lawsuits brought by unionized employees in connection with their terms and conditions of employment.

Here, however, since there was no longer a collective agreement in effect, the CAW argued that their members gained the ability to sue the employer directly. Since they couldn’t pursue grievances through the collective agreement, the union argued the court had jurisdiction to hear the case.

The court disagreed. It clarified that the above principles apply even in the absence of a collective agreement. The employer/union relationship can’t be bypassed through a court action.

Duty of good faith remains

Navistar argued that the class action sought to impose a plant-closure agreement and undermine negotiations. Under Ontario’s labor laws, the company and the union still had a relationship and still had an obligation to bargain in good faith with each other.

The court agreed with Navistar. It found that the bargaining relationship between the company and the union continued. The court highlighted that the union had a statutory right to bring a complaint to the Ontario Labour Relations Board against the company, alleging bargaining in bad faith, if it had grounds to do so. No such complaint was ever brought.

The court concluded that the union’s claim was without foundation in law. The lawsuit was dismissed.

Lessons learned

An individual unionized employee’s rights to bring a claim against an employer are limited by the special legal relationship between the union and employer. Absent a collective agreement, the requirement to bargain in good faith over employee rights and benefits remains so long as the union has representation rights. Baker v. Navistar Canada Inc. suggests that the courts won’t look favorably on a tactic designed to skirt the union/employer relationship and obligations.

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