Successorship Clause In Collective Bargaining Agreement

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Its successor doctrine at the National Labor Relations Board (“NLRB” or “Board”) requires a buyer/new employer to recognize and negotiate with it the union representing a seller`s workers, if the new employer: (i) continues the activity of its predecessor in substantially unchanged form and (ii) the previous employee as the majority of its staff after graduation. GVS Properties, LLC, 362 NLRB No. 194 (August 27, 2015); NLRB v. Burns Int`l Security Servs., 406 U.S. 272 (1972). However, a new employer is not required to respect the collective agreement of its predecessor when it makes it clear to the union and the workers, either before or at the time of the offer of employment, to the seller`s workers that it does not intend to be bound by the existing collective agreement. Under these conditions, new employers can establish the first terms and conditions of employment that deviate from the existing collective agreement, and then negotiate a new contract with the union. See Burns, 406 U.S. at 273. A majority of directors rejected the argument that succession status should be set after the expiry of the legal 90-day retention period.

GVS legally terminated certain employees of its predecessor at the end of the 90-day retention period and did not at that time consist of the majority of its predecessor`s employees. If the succession had been taken at the end of the 90 days, GVS would not have been required to recognize or negotiate with the union. Instead, the board felt it was necessary to decide at the time when GVS “will take control of its predecessor`s business and hire its predecessor`s staff,” whether GVS maintains sufficient continuity of membership to become a successor. 362 NLRB No. 194, as of 1 The Board therefore decided that GVS violated Sections 8(a)(5) and (1) of the NRA by refusing to negotiate with the union representing its predecessor`s employees during the commitment period imposed by local law. The board held that the fact that the buyer was legally obliged to retain the seller`s employees was irrelevant to the establishment of the succession. GVS Properties` decision should draw the attention of potential buyers to asset transactions with regard to the potential to become a successor employer, as well as the obligation to adopt a previous collective agreement, both where there is a local law or contract requiring the hiring of staff after conclusion, and if this is not the case. Based on the decision of the board of directors, in the event of an asset purchase, buyers should expect to become a successor at the time of closing the transaction, if the majority of their staff at that time consisted of employees of the predecessor (whether the buyer was legally or contractually required to hire the employees of its predecessor).

With regard to share transactions, the employer usually remains the same and the collective agreement between the existing signatories remains in force, so there is no need for a follow-up analysis in this context.. . . .

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