A union representing electrical distribution workers has won the right to proceed with a grievance alleging that Milton Hydro Distribution brought control room work in-house through a contracting arrangement designed to avoid collective agreement obligations, an Ontario arbitrator has ruled.
The Power Workers’ Union, Canadian Union of Public Employees, Local 1000, filed the grievance in February 2025, alleging that Milton Hydro Distribution had effectively hired non-bargaining unit workers to perform work in its electrical distribution control room — work the union claims belongs to the bargaining unit. Milton Hydro Distribution sought to have the grievance dismissed before a hearing on the merits, raising three preliminary objections.
The arbitrator dismissed all three objections and found the grievance arbitrable.
The arrangement
Milton Hydro Distribution owns a control room at its offices in Milton, Ontario. Daytime management of that room has historically been subcontracted to third-party utilities operating offsite. Following a 2021 internal review, the employer built an in-house control room and began a hiring process for control room operators under a related company, Milton Hydro Services.
When the union grieved that job posting in November 2022, arguing the work should fall within the bargaining unit, the employer confirmed months later that it would continue outsourcing to Oakville Hydro instead. The union withdrew its grievance.
Shortly after, Milton Hydro Distribution launched a request for proposals for daytime control room management. A related company, Milton Energy and Generation Solutions, won the contract and subcontracted the work to Concentric, a company incorporated in July 2024 by a former Oakville Hydro systems operator. Concentric’s staff — three individuals — began working onsite in the newly built control room using the employer’s equipment and email addresses, and appeared in the employer’s internal directory under the “Control Room Operations Department.”
The union’s argument
The union argued that Milton Hydro Distribution is the true employer of the control room workers, and that the layered contracting structure involving Milton Energy and Generation Solutions and Concentric is a “sham” designed to preserve an in-house operating model while keeping workers outside the collective agreement’s reach.
The union pointed to the employer’s internal directory listing one of the Concentric principals as reporting directly to Milton Hydro Distribution’s vice-president of distribution services. It also noted that a consultant previously retained by Milton Hydro Distribution for control room planning had been identified in Concentric’s request for proposals submission as a member of the Concentric team.
The employer’s position
Milton Hydro Distribution argued that Concentric is an independent third-party entity with no contractual relationship to Milton Hydro Distribution, and that the collective agreement contains no provision restricting the employer’s right to contract in work. Without such a restriction, it argued, no arbitrable grievance exists.
The employer also argued that control room work has never been performed by bargaining unit employees, and that the union had acquiesced to years of outsourcing — grounds, it said, for dismissal under the doctrines of laches and estoppel.
The arbitrator’s findings
On the question of whether a prima facie case existed, the arbitrator found the union had provided sufficient grounds to argue that Milton Hydro Distribution may be the true or related employer of the control room work. The arbitrator noted the 2002 Ontario Labour Relations Board finding that Milton Hydro Distribution and its related companies were engaged in associated activities under common control.
The arbitrator also found that, under either the “implied restriction” or “true employer” analytical framework, the union had established a reasonable prospect that the grievance could succeed. If Milton Hydro Distribution is found to be the true employer, the arbitrator noted, the contracting arrangement would not be considered genuine and could constitute a collective agreement violation.
On laches, the arbitrator found the union’s delay was not excessive. Concentric’s staff were unlikely to have been on-site before mid-November 2024, and the grievance was filed less than three months later. The employer’s earlier notice of the union’s opposition to in-house hiring weighed against a finding of prejudice.
On estoppel, the arbitrator drew a distinction between contracting out — which the union had not challenged — and contracting in, which it had actively opposed since 2022. The arbitrator found no basis to conclude the union had acquiesced to the specific practice now in dispute.
The grievance will proceed to a hearing on the merits.
Counsel for the Union: Joshua Mandryk, Counsel; Joshua Schwartz, Counsel (Student-at-Law)
Counsel for the Employer: Daniel McDonald, Counsel
Decision Maker: Arbitrator Deanna Webb
For more information, see Power Workers’ Union, Canadian Union of Public Employees, Local 1000 C.L.C. v Milton Hydro Distribution Inc., 2026 CanLII 29452 (ON LA).
