Canada: Bill 36: Labour Relations Implications Of Devolution Of The Ontario Health Care System

On November 24, 2005, the Ontario government introduced Bill 36: The Local Health System Integration Act, 2005 ("Bill 36"). If passed, Bill 36 will purportedly shift much of the management, co-ordination and funding of local health care services providers (including hospitals, community care access centres, long-term care facilities, community support service organizations, mental or community health centres and similar organizations) from the Ministry of Health and Long-Term Care ("MOHLTC") to community-based, local health integration networks ("LHINs"). The Minister of Health and Long-Term Care, George Smitherman, called the legislation a positive step forward in building a health care system that is more accountable and equitable, where health care decisions respecting services which are delivered locally are made locally. Accordingly, the purpose of the proposed Act is stated as follows: provide for an integrated health system to improve the health of Ontarians through better access to health services, co-ordinated health care and effective and efficient management of the health system at the local level by local health integration networks.

(For a fuller description of LHIN governance and the role of LHINs in health system, funding and restructuring, see BLG’s Health Law Bulletin of December 16, 2005). To achieve its purposes, Bill 36 resurrects the Public Sector Labour Relations Transition Act, 1997 to deal with labour relations issues resulting from certain integration decisions within the health services sector. This bulletin focuses on the labour relations implications of Bill 36.


In June 2005, the Ontario government announced its plan to transform Ontario’s health care system and began the process of creating the 14 not-for-profit corporations that will act as the first LHINs under Bill 36. The 14 corporations each represent a distinct geographic area in the province.

Bill 36 is the next phase in the government’s plan. Bill 36 received first reading on November 24, 2005. Second reading of the Bill was debated on November 29, December 5, December 6 and December 7, 2005. On the latter date, Bill 36 was referred to the Standing Committee on Social Policy. Committee hearings are scheduled for January 30 and 31, February 1 and 2, 2006 in four locations: Toronto, London, Ottawa and Thunder Bay. If passed, the Bill will come into force on the day it receives Royal Assent.

Bill 36 continues the 14 corporations created in June, 2005 as crown agencies and provides for their powers, purposes and role in funding and integrating the health care system.

The objectives of a LHIN include the right to plan, fund and integrate the local health system within the geographic boundaries of the LHIN. The word "integrate" is broadly defined to permit the coordination, transfer, merger, amalgamation wind-up, start-up or cessation of operations, entities or health services.

Health System Integration

Part III of Bill 36 provides that, in accordance with a provincial strategic plan, LHINs will, first and foremost, create an integrated health service plan for the local health system within their geographic area and will make that plan available to the public. The plan will include a vision, priorities and strategic directions for the local health system and will set out strategies to integrate and coordinate the system. In creating the plan, LHINs will be required to seek the participation of persons or entities involved with the local health system in which the LHIN operates; and, for this purpose, the LHIN must create a health professionals advisory committee consisting of regulated health professionals as well as those that are prescribed by regulation.

Part V of Bill 36 provides more detail about how a LHIN, the Minister or the Lieutenant-Governor in Council ("LGIC") may require integration.

Specifically, a LHIN may integrate the local health system by:

  • providing or changing funding to a local health service provider;
  • facilitating and negotiating the voluntary integration of persons or entities or the voluntary integration of services between health service providers or between a health service provider and an entity or person that is not a health service provider; or
  • issuing an integration decision that requires a health service provider to proceed with or to cease certain integration activities.

In fact, under Bill 36, a LHIN is required to issue an integration decision any time it integrates the local health system in these ways. Further, in coordinating health services in its geographic area, a LHIN may issue an integration decision requiring a specific health service provider to:

  • provide all or a part of a service or to cease providing a particular service;
  • to provide a service to a certain level, quality or extent;
  • to transfer all or part of a service to one location or another;
  • to transfer all or a part of a service, or to receive all or a part of a service from another person or entity;
  • to carry out another type of integration of services that is prescribed; and/or
  • to anything or refrain from doing anything necessary to achieve the integration required under the above paragraphs.

However, Bill 36 restricts a LHIN from a number of significant integration activities, including:

  • acquiring, disposing of, leasing, mortgaging, charging, transferring or otherwise encumbering any interest in real property or any personal property;
  • borrowing, lending or investing money;
  • creating a subsidiary;
  • directly providing health care services without the consent of the LGIC;
  • requiring a health care service provider to cease operating, or to dissolve/wind-up or amalgamate its operations or business, including by way of altering or changing the composition or structure of its membership or board of directors;
  • ordering any persons or entities that operate a public hospital, including, specifically the University of Ottawa Heart institute, to cease performing any non-clinical service and to integrate the service by transferring it to a prescribed person or entity; or
  • doing anything contrary to the LHINs integrated health services plan.

Rather, under Part V of the Bill, such powers are left to the MOHLTC and/or to the LGIC.

The legislation also specifically provides that the Minister can devolve to a LHIN any powers, duties or functions of the Minister under any Act for whose administration the Minister is responsible.

The Labour Relations Implications of Bill 36

Part VII of Bill 36 contains complementary amendments to the Public Sector Labour Relations Transition Act, 1997 ("PSLRTA"), extending its applicability to health services integrations which will be defined as follows:

"health services integration" means an integration that affects the structure or existence of one or more employers or that affects the provision of programs, services or functions by the employers, including but not limited to an integration that involves a dissolution, amalgamation, division, rationalization, consolidation, transfer, merger, commencement or discontinuance, where every employer subject to the integration is either:

  1. a health service provider within the meaning of the Local Health System Integration Act, 2005 or
  2. an employer whose primary function is or, immediately following the integration, will be the provision of services within or to the health services sector.

More importantly, while much of the PSLRTA was only applicable for a transitional period, the PSLRTA will now be applicable to health services integrations for an indefinite period. Bill 36 removes from the PSLRTA, all reference to the transitional period.

Accordingly, under a re-drafted section 9 of the PSLRTA, the PSLRTA will be applicable to an employer that is or will be subject to a health services integration decision and a union that represents the employees to such an employer will be able to request an order from the Ontario Labour Relations Board ("OLRB") providing that the PSLRTA will apply to a particular integration decision. As well, the PSLRTA will apply (with some necessary modifications) to certain partial integrations. Partial integrations are defined as follows:

"partial integration" means an event to which this Act applies where,

  1. some or all of the programs, services, or functions performed by employees in a particular bargaining unit at a predecessor employer are transferred to or otherwise integrated with a successor employer, and
  2. on and after the changeover date, the predecessor employer continues to operate.

So, for example, in the event of a partial integration, as provided in section 14 of the PSLRTA, each bargaining agent that has bargaining unit rights in respect of a predecessor bargaining unit before the changeover date has bargaining rights in respect of a like unit at the successor employer, but the description of the bargaining unit shall be such as to include only:

  1. employees who, immediately before the changeover date,
  2. (i) were employees of the predecessor employer in the bargaining unit for which the bargaining agent has bargaining rights, and

    (ii) were employed in the delivery of programs, services or functions that are being transferred to or otherwise integrated with the successor employer; and

  3. employees who are hired to replace employees described in clause (a).

For greater clarity, Bill 36 goes on to provide that a bargaining agent that has bargaining rights in respect of a non-affected bargaining unit (i.e. one that is not being integrated with another) does not have bargaining rights in respect of a like bargaining unit at the successor employer on the changeover date.

Of course, in the case of full integrations, section 14 of the PSLRTA will apply without modification. A bargaining agent that has bargaining rights in respect of a bargaining unit of a predecessor employer immediately before the changeover date will have bargaining rights in respect of a like bargaining unit of the successor employer, which includes:

  1. employees who immediately before the changeover date were employees of the predecessor employer in the bargaining unit for which the bargaining agent has bargaining rights; and
  2. employees who are hired to replace employees described in clause (a).

Section 22 and 23 of the PSLRTA provide that a successor employer or any bargaining agent that has bargaining rights over a bargaining unit of the successor employer may apply to the OLRB after the changeover date to determine the number and description of bargaining units that are appropriate for the successor employer’s operations, and which bargaining agents, if any, represent the employees in each bargaining unit. In making this determination, the OLRB may order representation votes among the employees in any affected bargaining unit. For bargaining units where 40% or more of the employees were not represented by a bargaining agent immediately before the changeover date, the ballot for the vote must include the option of having no bargaining agent. No representation vote is necessary if the OLRB determines that no change to the number or description of the bargaining units is necessary or if the bargaining agents which represent the employees in the successor bargaining unit all agree upon the bargaining agent that represents the employees in the unit and 40% or more of those were not represented by a bargaining agent before the changeover date. Bill 36 does not make any changes to these provisions either for full or partial integrations.

Similar amendments are made to sections 15 (re: collective agreements); 16 (re: hiring of employees of a successor employer); 17 (re: bargaining rights under other Acts) and 18 (the appointment of conciliation officers) of the PSLRTA in respect of partial integrations.

With respect to collective agreements, Bill 36 simply says that section 15 of the PSLRTA will apply, with necessary modifications, to any partial integration. The "necessary modifications" are not specifically laid out. Accordingly, the collective agreement, if any, that applies with respect to employees of a predecessor employer affected by an integration decision (or a partial decision) immediately before the changeover date will continue to apply with respect to employees who are employed by the successor employer after the changeover date and with respect to employees hired by the successor employer to replace such employees; and, the successor employer will be bound by the collective agreement as if he or she or it had been a party to the agreement. However, in the case of a partial decision, it is likely that the collective agreement will only apply with respect to the employees listed, above, under the revised section 14 of the PSLRTA.

In the event that the application of these provisions results in more than one collective agreement being applicable to a particular bargaining unit, section 24 of PSLRTA provides that the provisions of each collective agreement will merge and form one part of a single collective agreement (a "composite" agreement). Only the successor employer and the bargaining agent representing the employees in the bargaining unit are parties to such an agreement. The composite agreement lasts for one year unless the parties agree, in writing, to an alternate term.

Further, in the event that two or more collective agreements with seniority provisions apply to or will be merged for a particular bargaining unit, the parties can either agree on which seniority provisions will apply or can apply to the OLRB to determine the matter. Ultimately, whichever agreement’s seniority provisions are deemed to apply will also affect which grievance provisions apply to the bargaining unit.

At any time, a party to a composite agreement can give notice of its desire to bargain for a new collective agreement and the composite agreement will cease to apply 90 days following the date on which the notice to bargain was delivered. In the event, that the parties are unable to agree on a collective agreement, section 43 if the Labour Relations Act may apply to allow one or both of the parties to seek an order from the OLRB to direct a settlement of a new collective agreement by arbitration. A board of arbitration with that task is required to consider 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 board’s decision if current funding and taxation levels are not increased;
  3. The economic situation in Ontario and in the part of Ontario where the employer 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 to be performed; and
  5. The employer’s ability to attract and retain qualified employees.

The provisions apply only to parties whose labour relations are governed by the Labour Relations Act 1995 and to whom the Hospital Labour Disputes Arbitration Act does not apply. Bill 36 does not appear to alter or modify any of these provisions.

With respect to sections 16 and 17 of the PSLRTA, Bill 36 simply says that it applies with necessary modifications to partial integrations. As above, however, the "necessary modifications" are not specifically listed.

With respect to the duty to bargain, Bill 36 provides that sections 18(3) and 18(4) of the PSLRTA apply to partial integrations as follows:

  1. a notice to bargain given by a predecessor employer or the bargaining agent of that employer in respect of a non-affected bargaining unit continues to be valid between those parties;
  2. however, a notice to bargain between the same parties does not apply to a successor employer or the bargaining agent that has bargaining rights in respect of a successor bargaining unit and neither party is under an obligation to bargain as a result of the notice; and
  3. a predecessor employer and a bargaining agent that has bargaining rights in respect of non-affected bargaining unit of a predecessor bargaining unit or a non-affected bargaining unit and either of those parties may give notice to bargain on or after the changeover date if entitled to do so under the Labour Relations Act.

Further, under section 18(5) of the PSLRTA, interest arbitrations in which a final decision has not been issued on the changeover date are deemed terminated as between predecessor and successor employers. The same provision applies under Bill 36, but with respect to partial integrations, interest arbitrations involving predecessor or non-affected bargaining units, and bargaining agents, remain active subject to the condition that the parties may be given additional opportunities to make submissions with respect to the affect of the partial integration.

As such, it appears that the OLRB will have broad powers under Bill 36 and the PSLRTA to combine bargaining units, and to make such other orders as it deems necessary in order to facilitate health services integration decisions made by the LGIC or by the LHINs.

Implications for CCACs

Bill 36 also makes a number of key amendments and additions to the Community Care Access Corporations Act, 2001. First, Bill 36 confirms that each corporation designated as a CCAC before Bill 36 becomes law will be continued and will be considered a health service provider under the legislation. However, the letters patent issued to the CCACs will be extinguished and the LGIC will have the power, by regulation, to incorporate other CCACs as corporations without share capital.

Second, Bill 36 removes the right of the LGIC to appoint members of the board of directors and the executive director of a CCAC. Instead, members will be determined by by-law of the corporation and the Board of Directors will appoint the executive director. Accordingly, Bill 36 returns the corporate governance and structure of the CCACs to their pre-2001 state.

More importantly however, under Bill 36, the LGIC is given the power, by regulation, to (i) amalgamate or dissolve one or more CCAC (and to deal with its assets, real and personal property, employees, rights, liabilities and obligations); (ii) divide a CCAC in to two or more CCACs; and (iii) change the name of a CCAC. With respect to the movement of employees, the Minister is specifically given the power to order the transfer of some or all of the employees of a CCAC to one or more other CCACs in the event of an amalgamation, dissolution or division of a CCAC; and, such orders of the Minister are not considered to be Regulations under the Act, so, it is likely that the Minister and/or the LGIC could make such orders, without first having to resort to public consultations.

That said, CCACs must be given notice from the Minister and/or LGIC before any orders or regulations as described above are finalized. Upon such notice, CCACs will be given the opportunity to submit a report that contains proposals for the reorganization of the CCAC, the transfer of assets and liabilities and/or the transfer of employees. Further, Bill 36 reiterates that if a regulation of the LGIC or order of the Minister results in the amalgamation of two or more CCACs the PSLRTA will apply. In such circumstances, the amalgamating corporations will be deemed to be the predecessor employers and the amalgamated corporation will be deemed to be the successor employer. A similar structure applies to employees transferred between CCACs. (i.e. the CCAC from which the employees are transferred is the predecessor employer and the CCAC to which the employees are transferred is considered the successor employer.) In the event that a regulation of the LGIC or an order of the Minister dissolves a CCAC, the Minister is required, after the payment of all debts and liabilities of the corporation, to transfer the remaining property of the dissolved entity to either (i) another CCAC operating in the same area; (ii) another body or entity prescribed by the Minister; or (iii) the Crown. However, an affected CCAC is not entitled to any compensation for any loss or damages arising from the transfer of such property except with respect to losses that relate to the value of property that was not acquired with money received from the government.

The Prognosis:

While many hospital administrators and executive directors of other health care organizations appear to be in favour of the changes proposed in Bill 36, at present, the proposed legislation appears to raise more questions than it answers. In particular there has been some early criticism of the Bill on the basis that while it sets out the objective of achieving devolution of the health care system from the MOHLTC to community-based LHINs, the powers of a LHIN to achieve coordination and integration of health services are limited. Instead, in many respects the MOHLTC and the LGIC have kept for themselves, the substantive powers and responsibilities needed by the LHINs to truly achieve a transformation of the provincial health care system.

Accordingly, only time will tell whether the government’s plan under Bill 36 will result in the benefits, efficiencies and equities promised by the Ministry in adopting the legislation.

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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