Canada: The Clash Between Government Restraint And The Charter Rights Of Labour: Where Do We Stand?

Although Canada's economy continues its fragile recovery, governments across the country must nonetheless operate in an environment of fiscal restraint, all of which brings an increased focus to public sector and other nationally-prominent labour disputes.

It is fair to say that there is a degree of uncertainty and confusion about the ability of governments to mandate bargaining outcomes which are consistent with and required by present day economic realities. Although "net-zero" or similarly restrictive bargaining mandates may be precisely aligned with public opinion and may also represent what is required to be done as a matter of public policy, there can at times be a failure to understand or appreciate the importance of respecting the legally-mandated process of collective bargaining.

As a starting point, unions quite correctly refer to the right to bargain collectively which is now protected under the Canadian Charter of Rights and Freedoms. In the seminal decision in Health Services and Support-Facilities Subsector Bargaining Assn. v. British Columbia 2007 SCC 27 ("B.C. Health Services"), the Supreme Court of Canada ("SCC") affirmed that section 2(d) of the Charter constitutionally protects the right of employees and unions to engage, in association, in collective bargaining on fundamental workplace issues.

B.C. Health Services involved a successful challenge to labour legislation enacted by the British Columbia government as part of a process intended to manage escalating health care costs. As enacted, the legislation removed certain key collective agreement protections, including those restricting the ability of health sector employers to contract out work.

In holding that the B.C. legislation violated section 2(d) of the Charter, the SCC confirmed the constitutional right to collective bargaining, which, at its most basic, must include a process of good faith bargaining and consultation with the employer and the right to exchange bargaining proposals. However, the SCC also confirmed that the right to collective bargaining is a "limited" right to a bargaining process, and is not a right or guarantee to any certain substantive or economic outcome or to any particular model of labour relations or any specific bargaining method.

The limitations on the extent to which the Charter enshrines the right to bargain collectively were made abundantly clear in the more recent SCC decision in Ontario (Attorney General) v. Fraser, 2011 SCC 20 ("Fraser") which involved a challenge to the Ontario labour legislation applicable to agricultural workers.

In upholding the constitutional validity of the Ontario legislation, which provides for more limited union and employee rights for agricultural workers, the SCC confirmed that although section 2(d) of the Charter guarantees a meaningful process for collective bargaining, it does not guarantee any particular model of collective bargaining or any particular outcome. Instead, the SCC in Fraser emphasized that the bargaining rights protected by the Charter grant workers the constitutional right to make collective representations and to have their collective representations considered in good faith by the employer. The SCC in Fraser stated that "[i]n every case, the question is whether the impugned law or state action has the effect of making it impossible to act collectively to achieve workplace goals".

In two companion cases where McMillan LLP was counsel, the B.C. Labour Relations Board ("BCLRB"), adopting the SCC decisions in BC Health Services and Fraser, confirmed that a trade union does not have any constitutional right to a particular model of collective bargaining. In its decisions in Emergency and Health Services Commission –and– the Government of the Province of British Columbia –and– Ambulance Paramedics of British Columbia, CUPE, Local 873, BCLRB No. B197/2011, and Health Employers Association of British Columbia –and– Emergency Health Services Commission, BCLRB No. B198/2011, the BCLRB rejected a union Charter challenge to the placement of the Ambulance Paramedics Union within one of the statutory multi-union health sector bargaining units. The BCLRB confirmed that reliance cannot be placed on section 2(d) of the Charter to achieve or maintain a bargaining process that maximizes or preserves a union's particular collective bargaining interests or existing bargaining structures.

Two recently decided cases, one from British Columbia and the other from Ontario, are instructive in further delineating the extent to which governments may be able to mandate economic outcomes in the collective bargaining process.

In Federal Government Dockyard Trades & Labour Council v. Attorney General of Canada 2011 BCSC 1210, the B.C. Supreme Court held that the Expenditure Restraint Act, which had the effect of nullifying an arbitrated wage increase applicable to certain federal employees, did not result in a breach of section 2(d) of the Charter. The relevant legislation was saved because the requirements of "good faith negotiation and consultation" had been preserved and were followed during the process by which the legislation was enacted. Additionally, the Court held that, if a breach of section 2(d) had been found, the legislation would have been reasonably and demonstrably justified in a free and democratic society and thereby saved under section 1 of the Charter.

The constitutionality of the same Expenditure Restraint Act was also considered in Assn. of Justice Counsel v. Canada (Attorney General), 2011 ONSC 6435. At issue was the constitutionality of a legislated cap on wages. The Ontario Superior Court of Justice held that, in the circumstances, the legislated wage cap violated section 2(d) of the Charter, since the legislation had the effect of preventing any meaningful discussion and consultation between the parties on the issue of wages.

Nonetheless, the Court was persuaded that, for certain years in which the wage cap applied under the legislation, the federal government's fiscal position was sufficiently serious to justify a temporary suspension of the full range of collective bargaining "to facilitate a multi-faceted economic response to a crisis affecting the financial well-being of the public". Put differently, depending on the context, and even in the face of the Charter rights of union, governments may be able to provide appropriate justification for wages to be frozen or other components of a bargaining mandate to be constrained.

Based the relevant decisions, our view is that the following framework will apply to government efforts to shape bargaining mandates:

  1. As has long been the case, employer bargaining teams in many situations will continue to be tasked with a restraint mandate.
  2. Provided the Charter right to a bargaining process is respected, and subject to prevailing economic conditions, governments can be expected to continue to insist on restraint mandates.
  3. The appropriateness of particular bargaining positions, and the related justifications for any proposals, will continue to be driven by the unique circumstances of a particular set of labour negotiations.
  4. The traditional labour law obligation to bargain in good faith will continue to apply.
  5. No amount of legislation will be effective in doing away with the ongoing obligation to meet with relevant unions, make candid presentations to justify relevant proposals, and consider any union proposals in good faith.

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2012 McMillan LLP

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