Failure to disclose in negotiations can have consequences

By Tony Poland, LegalMatters Staff • Holding back information while bargaining for a collective agreement may tilt the negotiations in your favour but a failure to disclose some details could be seen as bargaining in bad faith, says Toronto employment lawyer Jeffrey M. Andrew.

Andrew, a partner with Cavalluzzo LLP, says unions and employers have a duty to act reasonably in negotiations and failing to do so could end in a complaint to a labour relations board.

“Basically, when you’re unionized in Canada and a collective agreement is about to expire, one side gives notice that they want to go into bargaining,” he tells LegalMattersCanada.ca. “From that point until they reach a new deal, both sides have a duty to bargain in good faith and make every reasonable effort to conclude a collective agreement. They are not required to be successful in those negotiations, of course, but they are required to enter into bargaining with good faith and conduct themselves reasonably.”

Company accused of negotiating in bad faith

The union representing Sunwing pilots recently filed a complaint with the Canada Industrial Relations Board (CIRB) alleging the company negotiated a contract in bad faith because it knew there was a deal in the works to sell the airline to Westjet, according to CBC.

An agreement between Unifor, the union representing 451 pilots, and Sunwing was ratified in February, CBC reports. A few weeks later the airline announced it was being acquired by Westjet.

The union alleges it would not have made the concessions it did if it knew a takeover offer was being considered, it was reported.

According to CBC, the complaint to the CIRB states, “it was of paramount importance to the union to receive assurances from the employer that it was not discussing a sale to WestJet, as any potential sale would have had important consequences on the union’s positions with respect to bargaining.” 

Andrew, who is not involved with the case but comments generally, and says when a union and an employer are bargaining, both sides are entitled to honesty in a number of ways.

‘They do have to be honest in answering’

“There is a duty of honesty in solicited disclosure, meaning if, for example, the union asks a question, assuming it’s relevant to issues on the table, the employer has to be honest and reasonably forthcoming in answering,” he explains. “It does not mean it necessarily has to disclose all their voluminous records, but they do have to be honest in answering. That is part of engaging in a reasonable discussion.

“But there is another concept known as the duty of unsolicited disclosure, which is a more narrow concept,” Andrew adds. “What that means is if the employer has made a de facto decision that is going to have a significant impact on the bargaining unit – not just a few people but on the unit as a whole or much of it ­– it has an obligation to tell the union about it without being asked.”

He says that warning is important because the union “can then bargain to try to protect their members from any planned employer changes.”

Andrew says given the turmoil the travel industry faced due to the pandemic it would not necessarily be unexpected for an airline to seek concessions from its employees in response to business challenges.

However, after offering concessions, a union can be expected to have concerns if it learned the airline was getting a new owner and it was not informed during negotiations, he says.

Unions typically know about terms of other deals

“In the airline industry, unions typically know a fair bit about the contracts signed by unions at other carriers,” Andrew says. “In the case of Sunwing, once the union found out they were being purchased I’m guessing they looked at the terms and conditions that apply to pilots at WestJet and re-evaluated the concessions that they had made.

“For example, seniority could be an issue because it has everything to do with what kind of planes you fly, the routes you get to fly and what bases you fly out of. Seniority is a big deal. It makes a big difference to a pilot’s income.”

While Unifor says it doesn’t object to a merger between Sunwing and Westjet, it wants to ensure its pilots are on a level playing field and wants to revisit the collective agreement, CBC reports.

But getting the labour board to reopen negotiations is not a simple matter, Andrew says.

‘It has to be a decision that’s more or less crystallized’

“The union may allege Sunwing wanted the concessions deal with the union because it made it more attractive as a sale partner,” he says, “But the CIRB will have to be satisfied that it was a de facto decision that had been made during bargaining. Having discussions and giving serious consideration to a sale doesn’t necessarily fit the test. It has to be a decision that’s more or less crystallized, even if it’s not formalized.

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“The union could argue that there’s a rebuttable presumption. Meaning the implication from the close timing of events is so clear that it cannot be a coincidence, so there’s an obligation on the company to prove credibly that the sale had not been effectively agreed upon while bargaining was going on,” Andrew adds. “The key question will be when had the employer effectively sewn up a deal to sell – was it during bargaining? And if it was, this is where it could get tough for the employer.”

He says labour boards “don’t readily reopen relevant parts of a collective agreement but they have ordered that if they are satisfied an employer has engaged in a violation of the disclosure obligation that impaired the union in bargaining.”

Labour boards have several options

“There other things labour boards could do,” says Andrew “For example, they could tell the parties to go out and figure out what the monetary damages to the union and employees would be, though that too is complex since you are trying to quantify a loss of opportunity to bargain a better contract. And if the parties don’t agree on remedy, if asked to try, the labour boards have the final say.”

When bargaining in a capitalist system, “parties are entitled to look out for their own interests,” he says. 

“What generally happens at the start of bargaining is a union will seek relevant financial information or ask certain questions to help them understand where the employer is coming from,” says Andrew.

“What I advise a union to do is to ask directly, ‘Do you have any plans that are under consideration that are likely to lead to a significant impact on the bargaining unit?’” he adds. “That doesn’t necessarily mean they have to answer, because they may not have crystallized anything yet. But at least if the union asks, it puts it on the record in case something does happen down the road and the employer didn’t disclose.”

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