When a unionized company intends to sell their business, care must be taken of the fact that the existence of a collective agreement may complicate things and render the transaction less than straightforward.
In unionized settings, where a collective agreement is in place, a purchaser may request that the vendor attempt to negotiate changes to the collective agreement that the purchaser desires. A union has no legal obligation to negotiate with the intended purchaser. A purchaser may not go through with the transaction without certain amendments being made to the collective agreement. However, if they do move forward, the purchaser will automatically take on the obligations in respect of the employees under the collective agreement.
In Ontario, the purchaser is bound by the agreement until the Labour Relations Board has declared otherwise. Once the sale is complete, the purchaser becomes the new employer of all of the members of the bargaining unit, who continue to be represented by the union. Thus, it is important for purchasers to determine if their current business plan is feasible within the bounds of the current collective agreement prior to the purchase, given the nature of the commitment.
When are the union’s bargaining rights affected?
In some cases involving a sale of a business, the union’s bargaining rights may be negatively impacted. In such cases, it is important to consider the purchaser’s intentions concerning the operations of the business after the sale to determine whether bargaining rights will attach to the purchaser.
In cases where the purchaser may intend to move the business outside the geographic area, this may affect the union’s bargaining rights for the employees.
How can Zeilikman Law help?
With a sale of a business, especially in the context of a unionized workplace, it is important to evaluate and understand your options and legal obligations before making a choice.
Whether you are a union deciding whether to negotiate with a purchaser or a potential purchaser trying to determine whether to purchase a business, our experienced labour lawyers can provide the advice required and represent you in the course of a legal proceeding before a court or tribunal if necessary.
Call us at 905-417-2227 to get started!