Definitive Report - Report No 284, November 1992

Case No 1603 (Canada) - Complaint date: 31-OCT-91 - Closed

1. 57. In communications dated 31 October and 6 December 1991, the Canadian Labour Congress (CLC) submitted a complaint of violations of freedom of association against the Government of Canada (British Columbia), on behalf of the National Union of Provincial Government Employees (NUPGE) and the British Columbia Government Employees Union (BCGEU). The International Confederation of Free Trade Unions (ICFTU) and the Public Services International (PSI) expressed their support to the complaint in communications dated respectively 8 and 12 November 1991.
2. 58. The federal Government, in communications dated 13 May and 14 September 1992, transmitted the observations and information from the Government of British Columbia.
3. 59. Canada has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87). It has not ratified the Right to Organise and Collective Bargaining Convention, 1949 (No. 98), the Labour Relations (Public Service) Convention, 1978 (No. 151), or the Collective Bargaining Convention, 1981 (No. 154).

A. The complainant's allegations

1. 60. In its communication of 31 October 1991, the complainant organisation alleged that the Government of British Columbia had violated Conventions Nos. 87, 98, 151 and 154 by enacting in March 1991, Bill No. 82, the Compensation Fairness Act (the "Act"), which infringed upon the free collective bargaining rights of public servants in that province. This type of legislation is not new to the public service, since such acts restricting wage increases have also been adopted twice in 1982 and 1983.
2. 61. This Act however goes well beyond previous wage restraint legislation. No specific percentage limit on wage increases is established - the limit will depend upon the employer's "ability to pay", as determined by the employer and the government-appointed Commissioner. Ability to pay means any fiscal or financial policies adopted by government. Under the legislation, "compensation" is defined to include far more than wages and benefits: it would also include work practices and rules, working conditions and organisation, reclassification and increments. The legislation may apply retroactively and the date is left undefined.
3. 62. The Act gives a Commissioner an all-encompassing authority to disregard freely negotiated agreements; there is no right of appeal against these decisions. The Commissioner has the power to:
   • - roll back wages or other compensation;
   • - order workers to pay back wages;
   • - reach back in time as far as he/she likes in imposing wage controls;
   • - reverse a mediator's settlement;
   • - overrule an arbitrator;
   • - unilaterally impose wage settlements or any other item he/she considers part of the compensation package;
   • - unilaterally impose the way compensation is divided among wages, working conditions or benefits;
   • - dictate how compensation is calculated;
   • - hand down orders for enforcement, with the legal weight of a court order, without any appeal procedure contained in the Act,
4. 63. The complainant refers to previous decisions by the Committee involving similar issues in the province. In Case No. 1173, the Committee held that "A system which operates to interfere with collective bargaining is not only liable to discourage the use of voluntary collective bargaining, but is also incompatible with the principles of non-interference in the collective bargaining process by the public authorities." (230th Report, para. 578.) The Committee later expressed its trust that the Government would respect equitable agreements concluded by the parties (234th Report, para. 91(c)). The Government however failed to implement the Committee's recommendations in that instance, and enacted further wage restraints in the public sector in 1985. This formed the basis of another complaint, Case No. 1329, where the Committee repeated its recommendations. The Government, by delaying its reply in the second complaint, also managed to avoid being included in the Study and Information Mission which went to Canada in 1985.
5. 64. One significant aspect of the Act is that it is not time-limited. Therefore, it could not be argued by the British Columbia government that this legislation has been enacted in order to address an economic crisis. The Act eliminates free collective bargaining and replaces it with imposed wage guidelines to be decided upon and administered by the Compensation Fairness Commissioner. The creation of this position is simply a high-handed way for the government to do indirectly what it cannot do through the collective bargaining process. In other words, the government will determine what percentage increase (if any) will be paid to public sector workers, dictate this to the Commissioner, whereby the Commissioner simply becomes the voice of the government/employer.
6. 65. Part 2 of the Act outlines compensation guidelines. This part is extremely restrictive. The compensation fairness guidelines are issued by the Executive Council and will specify to whom, when and in what manner the guidelines will apply. Section 12 permits either party to request the services of a mediator, but the mediator is not a neutral third party, free to make impartial recommendations, because the section requires the mediator to operate within a compensation plan which complies with the Act. There can be no freedom to negotiate settlements. Section 14 states that: "In reaching or establishing a compensation plan for public sector employees, the parties to the plan or the public sector employer establishing the plan shall give paramount consideration to the ability to pay of the public sector employer." Section 15 places a requirement on public sector employers to file a compensation plan with the Commissioner within ten days of it being established. The Commissioner then reviews the plan to determine whether or not it complies with the guidelines; if he determines that the plan is outside of the guidelines, he can send it back to the parties to allow them another opportunity to conform.
7. 66. Part 3 of the Act grants authority to the Lieutenant Governor in Council to make compensation regulations. These regulations are very broad and can prescribe limitations on compensation increases, require reductions, and prohibit any increases in compensation. These regulations are all-encompassing. For example, if a particular public sector employer wants to negotiate a better package with its employees, it is prohibited from doing so by reclassification of positions or by reorganising its business.
8. 67. The power of the Commissioner is further demonstrated in sections 23(2) and (3), whereby he is authorised to fix the terms of a compensation plan for the parties. Rather than using the collective bargaining process, the Commissioner simply imposes a plan on the employees. Furthermore, the Commissioner is granted powers of enforcement through section 24.
9. 68. The complainant alleges that the Act breaches Convention No. 87 since, although it does not directly prevent employees from joining trade unions, it effectively removes the benefits of becoming a union member, i.e. to establish an organisation for bargaining purposes through a bargaining agent. Under the Act, trade unions would be little more than social clubs and would have no real collective bargaining rights.
10. 69. The Committee has repeatedly stated in the past that government employers ought not to use their authority to disregard negotiated settlements. Furthermore, the fact that the Act is not time-limited is contrary to the Committee's previous findings in that respect (241st Report, Case No. 1172, para. 115).
11. 70. The Act also violates Convention No. 98 because it disregards voluntary collective bargaining, by vesting in the Commissioner authority to impose working terms and conditions on the parties. This is contrary to previous findings of the Committee (Digest of decisions and principles of the Committee on Freedom of Association, 3rd edition, 1985, paras. 639, 640 and 643).
12. 71. In addition, the Act also breaches Convention No. 151, since bargaining members and managers are treated in a discriminatory fashion. The Act was introduced without any attempt to enter discussions with the union and does not provide for settlement of disputes through independent and impartial machinery. Furthermore, the underlying rationale and contents of the Act are totally incompatible with Convention No. 154.
13. 72. The complainant concludes that the Act, as introduced in March 1991, is contrary to principles of international labour law as it removes the right of free collective bargaining, and requests that it be repealed.
14. 73. In its communication of 31 October 1991, the CLC mentioned that similar complaints were presented concerning five different provinces and requested that they be examined separately. It emphasised however that, in the view of the labour movement and most independent labour relations professionals, labour relations in the public sector in Canada are rapidly deteriorating as governments in Canada are quick to enact legislation which denies or severely restricts collective bargaining in the public sector. The CLC believes that, in order for the ILO Committee on Freedom of Association to obtain an accurate account of the extent of the deterioration of the labour relations climate in Canada, it will be necessary to send its own independent mission to Canada sometime during the next several months. It therefore suggests that the Committee strongly consider this as an appropriate option necessary fully to appreciate concerns related to public sector labour relations in Canada. The CLC reiterated its request in its communication of 6 December 1991, mentioning that a further complaint against back-to-work legislation enacted by the federal Government against its public servants would soon be presented to the Committee. According to the CLC, this means that more than one-half million workers in Canada have had their basic rights denied or severely restricted by federal or provincial legislation.

B. The Government's reply

1. 74. Following a general election in October 1991, the new Government stated its commitment to restore free collective bargaining in the public sector, which it reiterated in its Budget of 26 March 1992. In its communication of 14 September 1992, the Government informed the Office that Bill No. 82 had been repealed, and provided a copy of the repealing legislation.

C. The Committee's conclusions

1. 75. The Committee notes that this case involved certain restrictions on collective bargaining for public sector workers in the Province of British Columbia (Canada). It refers to the comments it made in this report in relation to Case No. 1616 (Canada) as regards the general context in which this complaint was presented, and its views on economic arguments as a justification for restricting collective bargaining.
2. 76. The Committee notes that similar collective bargaining restrictions had been in place, under this form or another, since 1982 in the province of British Columbia, and that the purpose and underlying philosophy of the Act closely parallel those of the Compensation Stabilisation Act of British Columbia in force from 1982 to 1988, which it thoroughly analysed in the context of Cases Nos. 1173, 1329 and 1350. In fact, the wording of the substantive provisions in the Act were identical to the corresponding provisions of the former Compensation Stabilisation Act, which the Committee scrutinised in Case No. 1173 (234th Report, para. 85, approved by the Governing Body at its 226th Session). In the present case, by imposing in fact a non-negotiable ceiling on wages and providing for the intervention of a commissioner to whom all negotiated agreements were to be submitted and who had the final authority as regards wages determination, the Act allowed for interference by the authorities in the collective bargaining process.
3. 77. The right to bargain freely with employers is an essential element of freedom of association and the public authorities should refrain from any interference which restricts or impedes the lawful exercise thereof. The Committee has stressed many times in the past the importance it attaches to this principle of the autonomy of the parties to collective bargaining, a principle generally recognised in the preparatory discussions that led to the adoption by the International Labour Conference in 1981 of the Collective Bargaining Convention (No. 154).
4. 78. The Committee has acknowledged that where, for compelling reasons of national economic interest and as part of its stabilisation policy, a government considers that it is not possible for wage rates to be fixed freely through collective bargaining, any restrictions should be imposed as an exceptional measure and only to the extent that is necessary without exceeding a reasonable period, and should be accompanied by adequate safeguards to protect workers' living standards. (Digest, para. 641.) The Committee of Experts has adopted a similar approach on this issue (General Survey on Freedom of Association and Collective Bargaining, 1983, para. 315.) The Committee recalls that ways should be found of persuading the parties to collective bargaining to have regard voluntarily in their negotiations to considerations relating to the economic or social policy of the Government and the safeguarding of the general interest. To achieve this, it is necessary, first of all, that the objectives to be recognised as being in the general interest should have been widely discussed by all parties on a national scale in accordance with the principle laid down by the Consultation (Industrial and National Levels) Recommendation, 1960 (No. 113); it might also be possible to envisage a procedure whereby the attention of the parties could be drawn, in certain cases, to considerations of general interest which might require further examination of the terms of agreement on their part. However, persuasion is always to be preferred to constraint. (Case No. 1329, 243rd Report, para. 184, approved by the Governing Body at its 232nd Session.)
5. 79. The Committee notes however that the new government, soon after its election in October 1991, committed itself to restore free collective bargaining in the province and to repeal the impugned legislation.
6. 80. The Committee also notes that Act No. 82 has been repealed and that the Government has transmitted a copy of the repealing Act. In view of these developments, the Committee considers that this case does not call for further examination.

The Committee's recommendations

1. 81. In the light of its foregoing conclusions, the Committee invites the Governing Body to decide that the present case does not call for further examination.