Canada: The Employers' Edge - Ability To Pay, Proper Comparators Key To Interest Arbitration Decision Under HLDAA

Last Updated: December 23 2013
Article by Kelsey Orth

Interest arbitration under the Hospital Labour Disputes Arbitration Act ("HLDAA") is a process designed to address outstanding issues where the parties in a collective bargaining relationship are unable to reach agreement on a new collective agreement.  CCP assists numerous clients in the health care sector with this process, and we share below a recent decision of significance.

In order to qualify for this process, the Employer must be designated a "hospital" for the purposes of HLDAA.  This designation, and access to the interest arbitration process under HLDAA, comes with a tradeoff: the employees cannot go out on strike, nor can the employer lock the employees out.  These restrictions are reflective of the "hospital" designation being a function of the need for the services and/or care provided by the Employer to continue.

Instead, an Arbitration Board (a panel of 3 appointed to determine the issues) gets selected, and its primary task is to "replicate the agreement that would have been reached if bargaining took place in a strike/lockout environment." In order to do so, the Arbitration Board is required to consider specific criteria set out in the legislation:

Duty of board

9.   (1)  The board of arbitration shall examine into and decide on matters that are in dispute and any other matters that appear to the board necessary to be decided in order to conclude a collective agreement between the parties, but the board shall not decide any matters that come within the jurisdiction of the Ontario Labour Relations Board.


(1.1)  In making a decision or award, the board of arbitration shall take into consideration all factors it considers relevant, including the following criteria:

1. The employer's ability to pay in light of its fiscal situation.

2. The extent to which services may have to be reduced, in light of the decision or award, if current funding and taxation levels are not increased.

3. The economic situation in Ontario and in the municipality where the hospital is located.

4. A comparison, as between the employees and other comparable employees in the public and private sectors, of the terms and conditions of employment and the nature of the work performed.

5. The employer's ability to attract and retain qualified employees.

Unfortunately, and notwithstanding that it is the first criterion listed, the longstanding trend has been for interest arbitrators to largely ignore financial realities and fashion awards that most employers would never agree to in that strike/lockout environment. 

However, CCP is happy to report on a recent decision for one of its clients under HLDAA that does take into account the very-relevant "ability to pay" argument, as well as being spot-on with its use of the proper comparators.  The result was a sensible and fair decision that reflected the difficult economic realities facing the Employer. 

In framing the discussion of a proper award in the matter of OPSEU, Local 203 and Guelph Independent Living (October 11, 2013, unreported) Arbitrator Christine Sinclair explicitly recognized that the Employer, Guelph Independent Living ("GIL"), a non-profit assisted-living organization, faced a number of economic difficulties:

In assessing the merits of the outstanding issues in dispute, the Board is mindful of the financial constraints under which GIL operates as set out in its brief.  In light of these constraints, GIL emphasises the importance of the Board considering the mandated "ability to pay" criterion set out under section 9(1.1) of HLDAA.

The other important issue was that of the proper comparator(s): the Union was seeking, mainly, wage parity with an organization (Community Living Guelph Wellington – "CLGW") whose bargaining-unit employees did significantly different (and more complicated) work than the bargaining-unit employees at GIL.  GIL argued that, if the Board were to order anything even approaching that level of wages, GIL would be in dire straits and its continued viability threatened.  However, the Arbitration Board did a thorough evaluation of the job descriptions provided and generally preferred the comparators proposed by GIL, recognizing the significant difference in the type of work performed, the training and qualifications of the employees and the population served:

While the Board appreciates why the Union has set out CLGW as an important comparator, the client population at CLGW includes adults with developmental and emotional challenges.  This translates to a higher level of training required of the workers employed at CLGW to meet their clients bases' needs.  The Board is not persuade that the position of Support Worker 4 at CLGW is sufficiently similar to ASWs or SSWs at GIL to warrant the comparison OPSEU would have it make.

In the end, the Arbitration Board awarded wage increases of 1.1% in both years of the agreement, which, while still more than GIL would have preferred given its static funding level, was a far cry from the debilitating increases sought by the Union in the circumstances.  We consider this a proper application of the criteria and principles set out in the Hospital Labour Disputes Arbitration Act, and are happy to see, HLDAA being considered and applied in the way it was intended. 

We will continue to advocate for our HLDAA-subject clients on this basis and strive to make this kind of decision the rule, rather than the exception.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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