Unity Health Toronto breached its collective agreement by using registered practical nurses (RPNs) and personal support workers (PSWs) from third-party staffing agencies in a manner that placed them under the Hospital’s fundamental control, according to a recent arbitration decision.
The arbitrator concluded that while the Hospital contended it was lawfully contracting out bargaining unit work, it had effectively “contracted in” the agency workers. That finding means the Hospital violated provisions preventing non-bargaining-unit employees from performing bargaining unit duties except in emergencies or for limited purposes.
Agency employees or hospital employees
The grievance was brought by CUPE, Local 5441 (the “Union”) on behalf of a service unit of about 2,850 employees, including approximately 611 RPNs and 665 PSWs across three Toronto sites: St. Joseph’s Health Centre, St. Michael’s Hospital and Providence Healthcare. There was no dispute that agency RPNs and PSWs had worked extensively at the Hospital. Rather, the central question was whether the temporary staff were the agencies’ employees or the Hospital’s “employees” for purposes of the collective agreement.
In reviewing the facts, the arbitrator relied on a multi-factor test. One pivotal factor is which entity exercises “fundamental control” over the conditions of employment. Based on evidence from hundreds of sign-in sheets, corporate service agreements and email exchanges, the arbitrator found that while agencies formally hire, train and pay the workers, the Hospital effectively directs and controls them on-site in a manner indistinguishable from regular employees.
“Agency RPNs and PSWs work side by side with Hospital staff,” the decision states, “performing the same work under the same supervisory structure, using the Hospital’s facilities and equipment and following the Hospital’s practices, policies and procedures.”
Although the Hospital’s counsel, J.S. and K.F., submitted that the institution legitimately contracted out staffing needs and did not violate the collective agreement, the arbitrator held otherwise. Hospital witnesses, including M.B. and A.S., testified about staffing arrangements, as did union counsel W.G. and J.W. for the Union. The Hospital argued that none of its regular employees were laid off because of these temporary hires, which should have satisfied the collective agreement’s allowance for contracting out. But the Union countered that the real issue was whether the workers in question counted as the Hospital’s own employees.
What the collective agreement states
The collective agreement’s Article 11 was a key focus. It states, in part, that “employees not covered by the terms of this Agreement will not perform duties normally assigned to those employees who are covered by this Agreement, except for the purposes of instruction, experimentation, or in emergencies when regular employees are not readily available.”
Both sides agreed that the outside RPNs and PSWs performed duties normally performed by the bargaining unit. The arbitrator’s analysis turned on whether those agency workers effectively belonged within the Union’s scope clause.
A large body of evidence, spanning thousands of pages, included service contracts with 16 third-party agencies as well as numerous emails between the Hospital’s Interprofessional Resource Team (the “IRT”) and at least one primary staffing firm. While the Hospital insisted that actual supervision of agency RPNs and PSWs remained with the agencies, the arbitrator highlighted clauses in the service agreements, on-site direction by Hospital managers, and everyday instructions from charge nurses and other Hospital staff.
The decision also underscored how the Hospital could bar certain agency workers from returning by placing them on “do not book” lists, effectively dictating who was eligible to work on-site. The Hospital also required that all temporary hires complete extensive Hospital-specific training modules, using materials the Hospital prepared. Although the agency might administer modules and carry out its own onboarding, the arbitrator found it was the Hospital that truly controlled the content and standards those workers had to meet.
Handling discipline
Another important factor was the way disciplinary issues were managed. If an agency PSW was found asleep during a shift or performed inadequately, Hospital managers or staff would intervene immediately. In several instances, the Hospital sent workers home before a shift’s end or demanded replacements. While the agencies had the option of terminating or reassigning the worker elsewhere, the arbitrator concluded that “it is the Hospital’s employees, and not agency supervisors, who dealt with problems concerning agency staff on site.”
Regarding formal employment relationship factors — such as who pays wages, who handles taxes and who processes benefits — the decision recognized that agencies managed these elements directly. However, the arbitrator concluded that such administrative details did not override the more substantive issue of control.
The decision cites the Supreme Court of Canada’s view that “employees be able to bargain with the party that exercises the greatest control over all aspects of their work.” Here, the arbitrator found, the Hospital’s pervasive control outweighed the agencies’ role.
Hospital’s position: No layoffs
While the Hospital argued its use of agency staff was a longstanding practice and did not erode the bargaining unit — since no layoffs occurred — the ruling clarifies that “the problem with contracting in is not simply that it may result in erosion of the bargaining unit in the form of layoffs.” Rather, it deprives those doing the work of the negotiated terms in the collective agreement and undermines the Union’s representational rights.
Ultimately, the arbitrator allowed the grievance and concluded that Article 11 had been violated: “In essence, agency staff operate as a casual workforce for the Hospital,” the decision states, “integrated into the Hospital’s operations … in a manner that is more similar to the use of a casual float pool than it is to a true contracting out.” According to the award, the parties will address remedial issues separately.
For more information, see Unity Health Toronto v Cupe, Local 5441, 2025 CanLII 1933 (ON LA).
