Compass Group Canada has been ordered to compensate the Service Employees International Union (SEIU) Local 2 for using subcontracted workers to perform bargaining unit work in violation of the collective agreement, an arbitrator has ruled.
The dispute arose from two policy grievances filed by SEIU Local 2 alleging that Compass had improperly subcontracted bargaining unit work at two Toronto worksites without recognizing the union’s rights under the collective agreement. The arbitrator found that the employer’s use of subcontracted agency workers contravened Article 3.02 of the collective agreement, which stipulates that all work covered under the agreement must be performed by union members in accordance with its terms and conditions.
Cleaning and janitorial services
Compass Group provides cleaning and janitorial services in Toronto and holds contracts for two client sites where subcontracted workers were used. The ruling notes that at one location, two subcontracted employees worked from February to June 2023, while at another location, agency staff performed an average of more than 2,000 hours of bargaining unit work per month between April 1, 2022, and the summer of 2024.
“The practice of subcontracting agency workers as occurred at Client Sites A and Client Sites B violated Article 3.02 of the Collective Agreement, including the Union’s bargaining rights and the employees’ rights under the Collective Agreement,” the arbitrator stated.
The collective agreement’s recognition clause (Article 2.01) identifies the union as the exclusive bargaining agent for all employees engaged in cleaning within the City of Toronto. Article 3.02 specifically requires that all work performed under the scope of the agreement must be carried out by union members unless exceptions apply, such as emergency situations or specialized services.
Undermining bargaining power
The union argued that Article 3.02 prevents employers from circumventing the agreement by using subcontracted workers to avoid obligations related to wages, benefits, and union dues. It also contended that allowing subcontracting on this scale undermines bargaining power and contributes to a “race to the bottom” in wages and conditions in the janitorial industry.
The arbitrator noted that the practice of subcontracting is common in the industry but agreed that in this case, the employer was required to either treat subcontracted workers as bargaining unit employees or ensure the subcontracting agency applied the collective agreement.
Remedy
As a remedy, the arbitrator ordered Compass Group to compensate the union for unpaid union dues, wage differentials, pension, and benefit contributions, as well as lost overtime opportunities. The remedy applies retroactively to the date the grievances were filed. Additionally, a “deterrence fee” was imposed to discourage future violations. The arbitrator left the final determination of the compensation amount to the parties but retained jurisdiction to settle any disputes over the quantum of damages.
“The Employer is ordered to pay damages to the Union representing union dues for all subcontracted hours worked, wages (to the extent top-ups may be required), pension, and benefit contributions on behalf of subcontracted employees, as well as lost overtime opportunities,” the arbitrator ruled.
This decision reinforces the scope of bargaining unit protections in collective agreements and signals potential consequences for employers who subcontract work without ensuring compliance with union agreements. If the parties cannot reach an agreement on the exact amount of damages, the arbitrator will intervene to determine the final compensation figure.
For more information, see Compass Group Canada v Service Employees International Union Local 2, 2025 CanLII 9915 (ON LA).
