When you win a contract, do you inherit the workers? BC's retendering rules

Picture this: you win a three-year janitorial contract for a public building at a sharp price. Then you learn the cleaners who worked there for the last contractor were unionized, and their union rights and collective agreement may now apply to you. If your price assumed your own wage rates, that's a problem. In BC, it's a real possibility in a handful of service sectors.

This is general information, not legal advice. Labour law is detailed, and the facts of each contract matter. Talk to a labour lawyer before relying on it.

What changed in 2019?

BC's Labour Relations Code has long had successorship rules: if a unionized business is sold, the union's rights generally carry over to the buyer. Contract retendering wasn't usually treated as a sale, so when a building owner put a cleaning contract back out to tender and a new contractor won, the union's rights often didn't follow. The practice of rebidding to reset labour costs is sometimes called "contract flipping".

In 2019, Bill 30 amended section 35 of the Code to extend successorship to some retendered service contracts. It applies where a new contractor takes over a contract for substantially the same services as before, in these sectors:

• Building cleaning services.
• Security services.
• Bus transportation services.
• Food services.
• Non-clinical services in the health sector.

What does that mean for a bidder?

If you win a retendered contract in one of those sectors and you provide substantially the same services, the union that represented the previous contractor's workers on that contract may hold bargaining rights with you, and its collective agreement may bind you for that work. The Labour Relations Board decides disputes about whether it applies.

In practice, that can affect:

• Wages and benefits for the work, which may be higher than you priced.
• Who does the work, if the collective agreement has seniority or recall terms.
• Your other operations, depending on how the work is organized.

How do I find out before I bid?

• Ask in the question period whether the current contractor's workers on this contract are unionized and, if so, which union. Buyers are often able to say.
• Look for clues in the tender, such as references to a collective agreement, transition requirements or employee lists.
• Check the union's website. Some publish their collective agreements with major contractors.
• Get advice before you price if it looks like successorship could apply.

Does it apply to my trade?

Most clearly to janitorial and building cleaning and security contracts, which are common public service contracts. It also matters in food services and non-clinical health contracts at health authorities. For grounds, snow, roofing and most other trades, this specific retendering rule doesn't apply, although ordinary successorship on a sale of a business still can.

How does this fit with living wage policies?

Separately, some BC buyers require contractors working on their premises to pay a living wage. New Westminster, Canada's first living wage employer, has required it since 2011 for contracted workers on City premises. Between successorship and living wage policies, labour costs on some BC public service contracts are set less by the market and more by rules. Read social value in BC tenders for more.

The pricing lesson

On cleaning and security contracts, labour is most of your cost. Before you price, know what you'll have to pay, not just what you'd like to. How to win janitorial contracts in BC and how to price a multi-year contract take it from there.