Introduction
Bill C-58, An Act to amend the Canada Labour Code and the Industrial Relations Board Regulations (the “Act”) came into force on June 20, 2025. The Act prohibits federally regulated employers from using replacement workers to perform the duties of unionized employees during a legal strike or lockout, amongst other things. Employers who illegally use replacement workers may face fines of up to $100,000 per day.
Legislative intent
From the Federal Government's perspective, the Act aims to balance what it views as an uneven playing field at the bargaining table. Bill C-58 was sponsored by former Liberal Member of Parliament (MP), Seamus O'Regan, who stated in debate before the House of Commons that:
“People in the labour movement have been telling us that replacement workers distract from the bargaining table and prolong disputes and that the use of replacement workers can poison the relationship between an employer and workers for generations after.”
The legislation was informed by consultation with employer associations, unions, and the government — a departure from prior failed anti-scab bills, according to Mr. O'Regan. While the legislation is intended to enhance workers' bargaining power, it is not intended to encroach on the freedom of employers and unions to negotiate conditions of employment through collective bargaining. New Democratic Party MP Alexandre Boulerice said that, while the Act aims to uphold workers' constitutional rights, “we are not trying to dictate what workers' wages, working conditions or contracts will look like. We just want to give workers a chance to… negotiate a good employment contract.”
Ban on replacement workers
Prior to the introduction of the Act, the Canada Labour Code (the “CLC”) already contained some limited restrictions on the use of replacement workers by federally-regulated employers during strikes or lockouts. Specifically, federally-regulated employers were prohibited from using replacement workers “for the demonstrated purpose of undermining a trade union's representational capacity rather than the pursuit of legitimate bargaining objectives.”
The Act repeals the “demonstrated purpose” restriction and replaces it with a blanket restriction on the use of any of the following categories of workers, so long as such workers perform duties of an employee who is on strike or is locked out:
- any employee or any person who performs management functions or
who is employed in a confidential capacity in matters related to
industrial relations, if that employee or person is hired after the
day on which notice to bargain collectively is given;
- any contractor, other than a dependent contractor, or any
employee of another employer;
- any employee whose normal workplace is a workplace other than
that at which the strike or lockout is taking place or who was
transferred to the workplace at which the strike or lockout is
taking place after the day on which notice to bargain collectively
is given; or
- any volunteer, student or member of the public.
The Act does contain a number of exceptions to the prohibition on the use of replacement workers. These exceptions include the use of contractors in specified circumstances, so long as the contractor's services were being used before notice to bargain is given, and the use of replacement workers generally if their services are required to prevent certain types of imminent threats or hazards.
Strategic considerations
With the passage of the Act, employers should consider revisiting their approach to strikes, lockouts, and bargaining. Some immediate steps to consider include:
- Understand replacement worker exceptions: Employers should assess whether any of the exceptions to the prohibition on the use of replacement workers may apply in their circumstances and prepare operationally to be able to rely on those exceptions if necessary. Employers stand to benefit from determining which services would be critical to maintain during a work stoppage and prepare to justify those decisions before the Canada Industrial Relations Board.
- Review contingency plans: If an employer has relied on replacement workers in the past, those plans should be updated, perhaps to include alternative models that do not depend on outside labour or to remove any “demonstrated purpose” assessments.
- Early and frequent engagement in negotiations: With the option of bringing in replacement labour significantly curtailed, the pressure to reach agreements through negotiation without work stoppages becomes more acute for employers.
- Collaborative labour relations: Collective bargaining and labour relations should now be approached with an increased focus on long-term relationship management. Employers will benefit from fostering open communication channels with unions and considering innovative approaches to dispute resolution.
- Training management: Ensure that those involved in labour relations understand the new obligations under the Act and associated risks, including the $100,000 per day penalty for violating provisions of the Act.
Conclusion and compliance guidance
The Act marks a significant shift in the federal collective bargaining framework and requires both legal compliance and strategic foresight. While the passage of the Act may be perceived by some employers as a limitation on operational flexibility, it may also present an opportunity to create more stable and constructive labour relations.
As this legislation comes into force, federally regulated employers are advised to carefully review and adjust their labour relations strategies accordingly. With replacement labour being much less available as a contingency measure, proactive planning, early engagement in negotiations, and the development of alternative strategies to maintain continuity during work stoppages become paramount.
Employers are advised to consult with legal counsel to ensure full understanding of the new restrictions, revise contingency plans, and provide training to HR and labour relations teams. The financial and reputational risks associated with non-compliance are substantial, and early preparation may prove essential.
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.
