Originally from Dispute Resolution Journal

Labor arbitrators have generally adopted the view that in order for employers to subcontract unit work during the term of a collective agreement, they must have a valid business reason, other than the avoidance of the agreement. The author of this article followed this rule in finding a contract violation in a 1977 labor arbitration case where the employer had presented no reason for a subcontract that had a substantial effect on the unit. In a related case, the National Labor Relations Board declined to defer, relying in part on the doctrine enunciated in Fibreboard Paper Products Corp. v. N.L.R.B. (1964) and the fact that the employer had discussed its plans with the union. The case, however, was remanded to the board by the District of Columbia Court of Appeals with directions to reconsider.

The author contends that there is no conflict between the arbitral rule and Fibreboard and that, in fact, they are complementary. Fibreboard requires the employer to discuss the decision to subcontract with the union. Arbitration requires that standards of good faith and fairness be applied where the subcontract occurs during the term of the collective agreement and it has a substantial effect on the unit. The author maintains that there is nothing inconsistent in the employer being required to have sound business reasons and to discuss those reasons with the union before taking action.