The British Columbia Labour Relations Board has dismissed a union’s bid to enforce severance payments through the courts, ruling that a dispute over Galloway Lumber Company Limited’s adjustment plan must proceed through arbitration.
The case stems from the permanent closure of the company’s sawmill in Galloway, B.C., which affected 22 workers. The employer and the United Steelworkers Local 1-405 negotiated an adjustment plan earlier this year that included severance payments totalling $1.09 million.
The plan stated the company would make “reasonable commercial efforts” to pay the amounts by April 4, 2025, and that any disputes over its interpretation or breach would be referred to an arbitrator.
The company has not made the payments, citing delays in refinancing tied to the mill’s sale proceeds, which remain held in trust by its mortgage holder. The union argued that the employer failed to disclose key financial information during negotiations and asked the board to declare the adjustment plan an enforceable order under the Labour Relations Code.
Union’s position
The union said enforcement through arbitration would take too long, noting the agreed-upon arbitrator is unavailable until January 2026. It argued that in the meantime, company assets may be sold, leaving workers with no effective remedy.
It alleged the employer misrepresented what it meant by “reasonable commercial efforts” and withheld details about its financial state and encumbrances on the mill property. According to the union, this amounted to a breach of the duty to negotiate an adjustment plan in good faith under section 54 of the Code.
“The Employer has not complied with its duty to conduct its Section 54 discussions in good faith,” the union said, adding it would not have agreed to the plan had it known the extent of the debt and refinancing issues.
The union asked the board to reissue the terms of the plan as a board order, removing the “reasonable commercial efforts” clause, so it could file the order with the B.C. Supreme Court for enforcement.
Employer’s response
The company argued the matter should be deferred to arbitration under long-standing board policy. It maintained that the dispute centres on interpreting the phrase “reasonable commercial efforts,” making it a contractual issue rather than one “inextricably intertwined” with the law and policy of the Code.
It said it had negotiated the plan in good faith and advised the union that payment depended on the sale of the mill. The company told the board it “reasonably believed” refinancing arrangements would be complete by April 4, 2025, but unforeseen demands from a guarantor’s mortgage holder delayed the process.
The employer also pointed out that the encumbrances on the property were publicly available and could have been discovered through a title search.
Board’s decision
The board concluded the matter was a contractual interpretation dispute and did not fall within the exceptions that would allow it to assume jurisdiction instead of deferring to arbitration.
“At its heart, this matter is a contract interpretation dispute, and I am not persuaded that it is inextricably intertwined with the law and policy of the Code,” the decision stated.
The board acknowledged the union’s concern that assets may be disposed of before arbitration can take place, but determined that possibility was not enough to depart from its established policy.
“I am reluctant to depart from long-standing Board policy to defer to parties’ private ordering due to delays in the agreed-upon dispute resolution process,” the panel wrote.
The application was dismissed, leaving the dispute to be resolved by the arbitrator designated in the adjustment plan.
For more information, see Galloway Lumber Company Limited, 2025 BCLRB 160 (CanLII).
