GMAC--Case Comment--Thumbs Up

Every collective bargaining law in Canada provides that employers who continue operating unionized businesses can be named "successor employers", and thereby inherit collective obligations to unionized employees, even if the new corporate vehicle for the business is technically or legally distinct from the original employer. Just because a sale of a business is arranged as an asset-purchase transaction rather than a share-purchase transaction should not deprive the employees of their statutory right to collective bargaining. These rules reflect the reality that labour relations in a Wagner-act system is not really purely contractual, and does not cohere well with ordinary corporate law concepts. But were it any other way, any employer could get out of its statutory obligations to engage with its certified union by rather simple corporate transactions.

The existence of a "successor employer" provision shows that the Wagner-act system of collective bargaining gives employees a right to a certain kind of represenation in the enterprise (which the Pithlord views as a real community), not in the corporation (which is just a legal fiction, albeit a convenient one).

Corporate insolvency also raises issues about the continuation of the collective agreement and of the rights of the certified union. In the Pithlord's view, the creditors have no right to interfere with the prospective relationship between the union and the enterprise, since their contractual relationship is with the corporation.

In GMAC, the Supremes (with one exception) all agreed that the Bankruptcy and Insolvency Act does not interfere with the jurisdiction of provincial labour boards to make successor employer designations, and tha there is nothing wrong with sticking bankruptcy trustees who run businesses upon coprorate insolvency with the obligations of a unionized employer. Although Parliament could restrict union rights in an insolvency, it has to do so in clear words.

This strokes the Pithlord's sweet spots, since I am both pro-union and pro-provincial jurisdiction. Anyway, it's the right decision. Thumbs up.

Case Comment of GMAC Commercial Credit Corporation - Canada v. T.C.T. Logistics Inc., 2006 SCC 35