Unionized employers in British Columbia that operate across multiple provinces should take note of a recent decision of the Supreme Court of British Columbia (the “Court”) in Gate Gourmet Canada Inc. v Unite Here, Local 40, 2024 BCSC 1528. The Court, in upholding the decision of the British Columbia Labour Relations Board (the “Board”), affirmed that replacement worker restrictions in the provincial Labour Relations Code (the “Code”) apply even when work is transferred outside the province. This ruling has significant implications for employers who operate across multiple jurisdictions and underscores the extra-territorial reach of the Code’s replacement worker restrictions.
Background
Gate Gourmet Canada Inc. (“Gate”) is a single corporate entity that operates an airline catering business in British Columbia, Alberta, and Ontario. Gate is provincially regulated in these provinces for the purposes of labour relations. Notably, of the three provinces Gate operates in, British Columbia is the only one that restricts the use of replacement workers (under section 68 of the Code). Section 68 does not impose a blanket ban on the use of replacement workers. Instead, it restricts their use in specific circumstances. For example, under Section 68(1)(b), an employer is prohibited from using the services of a “person (…) who ordinarily works at another of the employer’s places of operations.” A violation of these restrictions constitutes an unfair labour practice under the Code.
When Gate’s employees at the Vancouver International Airport (“YVR”) went on strike, Gate decided to “double cater” their flights at airports outside of British Columbia. This strategy aimed to bypass the need for the striking workers at YVR by utilizing workers outside Vancouver to cater airplanes for both departing and return flights.
The union, Unite Here, Local 40 (the “Union”), objected to this strategy and filed an application with the Board, arguing that transferring work outside British Columbia that would have otherwise been performed by striking workers violated the Code. The Board ruled in favour of the Union, finding that Gate had breached the Code’s replacement worker restrictions. Gate sought reconsideration, but the Board upheld its original decision. This prompted Gate to file for judicial review with the British Columbia Supreme Court, requesting that the Board’s decision be overruled.
Gate was ultimately unsuccessful on judicial review and filed an appeal of the Court’s decision with the British Columbia Court of Appeal. At the time of publication of this blog post, the appeal has not yet been heard.
BC Labour Relations Board Decisions
Before the Board, Gate argued that the Code can only govern persons, employers, employees and activities within British Columbia, and cannot have extraterritorial application outside of British Columbia. Gate argued that an extended reach would result in the Board’s jurisdiction being stretched beyond its constitutional limits by impacting property and civil rights outside of British Columbia.
With respect to section 68 in particular, Gate argued that its YVR operations was the “employer” for the purposes of the Code (not Gate or its operations outside British Columbia), and its YVR operations did not use the services of a “person” coming within the application of the Code.
The Board, both in its original and reconsideration decisions, rejected Gate’s arguments. The Board emphasized that the purpose of section 68 is to protect the integrity and viability of a bargaining unit by regulating the conduct of a British Columbia employer. It achieves this purpose by restricting the employer from using certain persons to provide services during a labour dispute.
With respect to the specific language of section 68(1)(b), the Board held that:
- “employer” must mean all of a corporate entity, even if a trade union only holds bargaining rights for a single division of a single entity;
- “person” is sufficiently broad enough to apply to employees outside British Columbia; and
- an employer regulated under the Code may have “places of operation” outside British Columbia.
As a result, the Board concluded that Gate had violated section 68 of the Code by using unlawful replacement workers in Alberta and Ontario, and ordered Gate to cease-and-desist this practice.
BC Supreme Court Decision
Gate argued that the Board’s prohibition of Gate’s use of out-of-province replacement workers impermissibly impacted property and civil rights outside British Columbia, contrary to the constitutional limitations on provincial legislation. The Court disagreed and concluded that: (i) it was constitutionally permissible for the Board to regulate Gate’s overall conduct affecting BC labour relations despite the impact on employees and operations outside British Columbia, and (ii) the Board did not err in its findings that Gate was an “employer” under the Code and that it had improperly used replacement workers contrary to section 68.
In its decision, the Court emphasized that there was a “sufficient connection” between the Board, the Code, and the employer’s out-of-province employees that supported having the Code’s replacement worker provisions apply outside of British Columbia.
Takeaways for Employers
This case has significant implications for employers operating across Canada, particularly regarding the out-of-province transfer of bargaining unit work during a labour dispute.
The Court’s decision confirms that the Code applies to an employer regulated by British Columbia’s labour laws, even if it operates across Canada as a single corporate entity with employees outside the province. However, it remains unclear whether the same outcome would apply if the employer were structured as separate but related corporate entities.
If the Board determines that an employer has used unlawful replacement workers, it may impose the following remedies: (i) a declaration that the employer breached the Code; (ii) a cease-and-desist order; and (iii) damages payable to the union, typically based on wages that would have been earned by bargaining unit employees (though this remedy appears to be rare).
Employers should seek legal counsel if they need assistance with a possible or ongoing labour dispute at their workplace, particularly when replacement workers may be involved as part of a strike contingency plan.
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