A Saskatchewan hotel operator that bought an existing business must recognize the union and honour the previous collective agreement, even though it never signed the deal, according to a recent labour board ruling that highlights the automatic nature of successorship obligations.
The Saskatchewan Labour Relations Board declared Confederation Inn Corp. the successor employer to a Saskatoon hotel with a bargaining relationship dating back to 1989. The decision means the company inherits the certification order, the expired collective agreement, and the duty to bargain in good faith with the United Food and Commercial Workers, Local 1400.
The Oct. 10 ruling rejected the employer’s arguments that the union’s application was premature and outside the board’s authority. It serves as a reminder that purchasers of unionized businesses cannot avoid labour obligations by waiting out an expired contract.
Decades-long bargaining history transferred
The union was first certified at the hotel in January 1989 when it was operated by Ne-Ho Enterprises Ltd. under the business name Confederation Flag Inn. Over the following decades, the union negotiated nine collective agreements with various owners of the business at 3330 Fairlight Drive in Saskatoon.
The most recent agreement was signed in June 2022 with 10190588 Sask. Ltd. In June 2023, the union learned that Confederation Inn Corp. had purchased the business. The purchasing corporation was previously known as Sask Inn & Conference Center Inc. before changing its name.
The union filed both a successorship application and an unfair labour practice complaint after encountering issues with the new owner.
Employer raised jurisdictional challenges
Confederation Inn Corp. opposed the application on two grounds. It argued the labour board lacked jurisdiction and that the union’s application was premature.
The board dismissed both objections. On jurisdiction, the tribunal noted it has concurrent authority with labour arbitrators on certain collective agreement issues and arguably exclusive jurisdiction on matters under Part VI of the Saskatchewan Employment Act.
“Considering the essential nature of the dispute on this successorship relating to the recognition of bargaining rights, this matter is within the Board’s jurisdiction under Part VI of the Act and the jurisdictional objection is dismissed,” the board stated.
Arbitration not required first
The employer’s prematurity argument suggested the union should have gone through arbitration before applying to the board. The tribunal rejected this reasoning, pointing out that arbitrators lack the statutory power to resolve successorship applications.
The board found no basis for delay. The business was acquired in 2023, meaning successorship took effect by law at that time.
The employer also admitted in its reply that it had inherited the collective agreement with the union. The board called this admission “corroborative of the finding that Confederation Inn Corp. is a successor employer.”
Business operated as going concern
The board applied its multi-factor test to determine whether the business continued after the sale. It considered factors including employee continuity, similarity of work performed, transfer of assets and goodwill, and whether operations were interrupted.
The tribunal found the business has operated continuously since the original 1989 certification. The hotel remained at the same fixed location under the name Confederation Flag Inn or Confederation Inn throughout multiple ownership changes.
“The continuous bargaining relationship establishes that each owner accepted that they were a successor by operation of law,” the board stated. The tribunal noted that while it would have preferred evidence of the complete ownership chain, the unbroken bargaining history supported the successorship finding.
Bargaining unit covers most hotel staff
The certification covers all employees except management positions. Excluded roles include the operations manager, general manager, hotel accountant, secretary, front desk manager, coffee shop manager, bar manager, chef and sous chef.
The board found this unit appropriate for collective bargaining. It noted the unit is sufficiently large and viable, with a clear community of interest demonstrated by decades of successful bargaining.
While the employer disputed the scope of the bargaining unit, the board found any negative operational impact was “easily outweighed by the other factors and promoting the freedom of association of the employees.”
Expired agreement remains binding
The board addressed the employer’s references to the collective agreement’s expiry date. Under Saskatchewan law, collective agreements continue in force after expiry on a year-to-year basis until replaced through bargaining.
If the union provides proper notice to bargain, the employer must negotiate a renewal in good faith. The board made clear that time alone does not eliminate the employer’s obligations.
“Confederation Inn Corp. does not have the option of simply running out the clock on the agreement, the Employer must abide by the terms of this agreement until it is replaced through collective bargaining,” the tribunal stated.
Case decided on written record
The board determined the matter without an oral hearing, relying on written submissions from the union and the employer’s initial reply. The employer did not file additional materials despite being given clear deadlines and notice that the matter might proceed in writing.
The tribunal found this approach procedurally fair. Both parties received notice of the process and the case they needed to meet.
The union filed an affidavit and supporting materials. The board reviewed this information and found it sufficient to decide the successorship application.
Certification order issued
The board granted the successorship application and certified the union as the bargaining agent for employees at Confederation Inn Corp. The bargaining unit is defined as reflected in the collective agreement with the previous owner.
The decision means the employer must recognize the union, honour the terms of the expired collective agreement until a new one is negotiated, and engage in good-faith bargaining if the union provides notice under the statutory timeline.
Employers can provide notice to bargain between 60 and 120 days before a collective agreement’s expiry date. Unions have the same right under the Saskatchewan Employment Act.
