Definitive Report - Report No 306, March 1997

Case No 1859 (Canada) - Complaint date: 20-OCT-95 - Closed

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INTRODUCTION
A. The complainants' allegations
B. The Government's reply
C. Additional information requested from the Government and the complainant organizations
D. The Committee's conclusions
The Committee's recommendations
Appendix 1

Allegations: Restrictions on the scope of collective bargaining

177. In a communication dated 20 October 1995, the Canadian Labour Congress (CLC) submitted a complaint of violations of freedom of association against the Government of Canada. The CLC transmitted supplementary information from its affiliate, the Public Service Alliance of Canada (PSAC) on 23 November 1995.
178. The Government sent its observations on this case in communications dated 6 February and 14 April 1996.
179. At its meeting in May-June 1996, the Committee requested both the Government and the complainant organizations to provide further detailed information concerning the machinery for determining matters of employment security in order to be in a position to examine the case in full knowledge of the facts.
180. The CLC submitted a supplementary statement of evidence in a communication dated 19 September 1996. The Government and the Public Service Alliance of Canada sent a joint statement dated 8 October 1996 in reply to the Committee's request. This statement was supported by the CLC in a separate communication of the same date. The Government sent comments on the CLC statement of 19 September in a communication dated 23 October 1996.
181. Canada has ratified the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87). It has not ratified the Right to Organize 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 complainants' allegations

182. In its communication dated 20 October 1995, the CLC alleges that the Government of Canada has infringed Conventions Nos. 87, 98, 151 and 154 with the proclamation of Bill No. C-76 (the Budget Implementation Act, 1995) which adversely affects some 150,000 of its affiliate's (PSAC) members and thousands of other federal public sector workers in Canada.
183. The complainant organization points out that this is the fourth legislative intervention into collective bargaining in the federal public service of Canada since 1991. Bill No. C-76 amends the Public Sector Compensation Act (hereinafter "the Act" by explicitly rescinding the right of bargaining agents to negotiate job security provisions for a period of three years. The CLC alleges that this latest legislative extension of the Act will result in a situation whereby bargaining agents can return to collective bargaining in 1997-98, but will be prohibited by law from negotiating any provisions relating to job security and workforce adjustment.
184. The complainant organization further states that the Canadian Government has not implemented any of the recommendations made by the Committee on Freedom of Association in Case No. 1800 (also concerning legislative restrictions on collective bargaining) and it expresses concern that the Government has failed to act on the recommendation that it "make use of the assistance of the International Labour Office, in particular through an advisory mission".
185. On 23 November 1995, the CLC transmitted a document prepared by the PSAC explaining in detail the allegations involved in the present complaint and indicating the support it has given to the recommendations made in related cases. (Cases Nos. 1616, 1758 and 1800.) In particular, the PSAC expresses its strong support of the recommendation for an advisory mission as it believes that outside intervention is necessary if the federal public sector is to return to collective bargaining and if the bargaining process is to be truly free. Given that the Government has not agreed to the assistance and has continued with its legislative agenda, the PSAC feels that the federal labour relations crisis has only been further compounded.
186. On a general note, the PSAC emphasizes that their ability, along with the CLC, to file complaints, and the ILO's ability to consider them has failed to keep pace with the Canadian Government's legislative agenda. Hence, while the ILO was considering Cases Nos. 1758 and 1800, the Canadian Government was proceeding with legislation that once again intervenes in the collective bargaining process.
187. The PSAC recalls that, as a result of Bill No. C-113 and Bill No. C-17 extension of wage controls (the subject of previous complaints), the legislatively extended collective agreements of federal public sector workers would have expired at various times in 1996 and 1997, with the majority expiring in the second half of 1998. At that time, the return to bargaining would have been complete. This has now been complicated however by the adoption of Bill No. C-76 which, while not extending the wage control regime or imposing a general prohibition on collective bargaining once the legislative collective agreement extension is removed, does legislatively amend existing collective agreement provisions by prohibiting future negotiation of job security provisions beyond the expiration of the above-mentioned extensions.
188. Section 7.3(1) of Bill No. C-76 explicitly provides that, for a three-year period, terms and conditions of "employment related to job security or workforce adjustment ... shall not be the subject of collective bargaining, or be embodied in a collective agreement or arbitral award". The impact of Bill No. C-76 on the collective bargaining process is that groups which would have otherwise been in a position to negotiate during the three-year period following its commencement because of the expiration of the legislatively extended collective agreements will now be prevented from negotiating job security provisions until July 1998.
189. According to the PSAC, after having effectively controlled wages by means of Bill No. C-113 and Bill No. C-17, the Government has decided to reduce its operating costs through a massive employment reduction programme. Over a three-year period commencing in 1995, the Government has determined that 45,000 jobs will be eliminated. Under the collective agreements that were extended by virtue of the Act (as amended by Bill No. C-113 and Bill No. C-17), this employment reduction could not be implemented unless a significant number of workers voluntarily accepted a cash payment in lieu of their employment security. Hence, in order to implement its employment reduction programme, the Government had either to ensure, as private employers do, that its employment reduction programme was designed in such a way as to encourage a sufficient number of people to voluntarily leave the Government's employ, or adopt legislation that arbitrarily amended provisions of collective agreements. The Government's choice of this latter option demonstrates the little interest it maintains for negotiating or reaching mutual agreement with its workforce and bargaining agent.
190. During the time that the Bill No. C-76 amendments were being debated in the House of Commons and the Senate of Canada, the PSAC advanced a significant number of amendments that were designed to facilitate voluntary terminations and reduce the number of involuntary terminations. The PSAC offered to administer, at its own expense, a matching system that would allow a surplus worker to substitute his/her surplus status with a similarly qualified worker who had expressed a desire to voluntarily leave the Government's employ, but all of its recommendations and overtures were rejected out of hand by the Government.
191. The collective agreements covering federal public sector workers that were extended under the Act included a comprehensive set of workforce adjustment protections that were negotiated by the PSAC in 1991. This protection was provided under the Work Force Adjustment Directive (WFAD), a negotiated National Joint Council (NJC) Agreement that forms part of the collective agreements extended under the Act. The most important feature of the Work Force Adjustment Directive was the provision that surplus workers be guaranteed one reasonable job offer.
192. The PSAC recalls that the original Act included a clause that explicitly permitted legislatively extended collective agreements to be amended to incorporate amended NJC agreements which have the agreement of the Treasury Board. Moreover, the revised WFAD was incorporated into collective agreements. In fact, in its defence of the Act before the ILO, the Government used the existence of this legislative provision to argue that the Act did not prohibit collective bargaining. While the PSAC considers that the Government's argument was largely spurious, it agrees that the legislation did allow for a renegotiated WFAD to be incorporated into collective agreements. Once the new WFAD was incorporated into collective agreements in 1991, it became impossible for the Government to change the workforce adjustment rules without either securing the agreement of the affected unions or introducing legislation that would override the relevant provisions of the legislatively extended collective agreements. While the Government attempted to secure the agreement of the unions in late 1994 and early 1995, it failed to do so. The PSAC was unwilling to agree to modifications that weakened the existing job security provisions and make it easier for the Government to involuntarily terminate workers. Hence, in the February 1995 budget, the Government announced its intention to legislate the changes that had been rejected by the PSAC.
193. In essence, surplus workers in "most affected" (a term not defined in the legislation) departments and agencies are offered cash compensation for the loss of their job. If they accept the cash compensation, they are deemed to have voluntarily left their employment. With the exception of the fact that the cash compensation is higher under the Bill No. C-76 provision than it is under the WFAD, the application of this provision is the same in both cases. Under the original WFAD people who are declared surplus and who do not accept cash compensation for voluntarily leaving, are guaranteed that they will be made a "reasonable job offer". Unless they are offered and refuse a reasonable job elsewhere in the Government, they cannot be laid off. Under Bill No. C-76, workers who have the misfortune to be employed in a so-called "most affected" department or agency who refuse cash compensation will be placed on "unpaid surplus status" six months after being declared surplus.
194. Moreover, a worker who is placed on unpaid surplus status "shall be laid off ... where a reasonable job offer within the meaning of the Work Force Adjustment Directive was not made within 12 months after the commencement of the unpaid surplus status or the employee refuses the reasonable job offer".
195. Furthermore, pursuant to section 7.3(3) of Bill No. C-76, the Government can arbitrarily change the Work Force Adjustment Directive which is applicable to all federal public sector workers, by (a) the suspension of the separation benefit; (b) changing the geographic limitation with respect to guaranteed offers of appointment made as a result of privatization and contracting-out situations within the meaning of the Directive; and (c) proceeding with a contract in a contracting-out situation within the meaning of the Directive. The Government lost little time implementing these provisions. The separation benefit was suspended effective 15 July 1995.
196. In essence, by virtue of Bill No. C-76, workers in the so-called most affected departments and agencies have lost their job security, notwithstanding the fact that the job security was negotiated and agreed to by government. The fact that the reasonable job offer has been suspended (rather than eliminated) makes no difference whatsoever to the people who are to be made redundant over the next three years. Moreover, by virtue of the section 7.3(3) amendment to the Act, all federal public sector workers will be adversely affected by the implementation of Bill No. C-76.
197. In conclusion, the PSAC underlines that job security will remain an important if not paramount issue when it regains the legal right to bargain collectively in 1997. If anything, the importance of job security has increased since the passage of Bill No. C-76. During a September 1995 appearance before the Standing Senate Committee on National Finance, the President of the Treasury Board stated that the Bill No. C-76 45,000 person three-year employment reduction programme may well be increased and extended. Without providing any specifics, the Minister stated that the employment reduction programme would increase for at least a fourth year. As a result, this Bill No. C-76 provision and any extension of its term that the Government introduces will continue to frustrate PSAC's legitimate aspirations. Furthermore, the PSAC argues that the legislative prohibitions of the right to negotiate job security provisions until July 1998 will have a negative impact on collective bargaining by forcing the PSAC and other federal unions to consider negotiating collective agreements of short duration in order to minimize the length of time that employment security provisions remain legislated and frozen.
198. Finally, the PSAC adds that the bargaining environment in the federal public service in Canada has reached crisis proportions. In recent months, representatives of business organizations have publicly claimed that the federal public sector wage freeze is having a detrimental impact on morale and recruitment. Even government spokespersons have acknowledged that continued wage restraint will undermine the efficient operation of the public service. Notwithstanding these rhetorical announcements, the Government has yet to indicate that it will return to bargaining when the legislatively extended collective agreements expire in 1996 and 1997. Moreover, having frozen wages for the longest period in Canadian history by virtue of the Public Sector Compensation Act (PSCA) and the Bill No. C-113 and Bill No. C-17 amendments to it, the Government is now embarked on a course designed to reduce employment in the federal public sector by fully 45,000 person-years. Rather than negotiate a package with federal public sector bargaining agents that would have facilitated voluntary departures from the Government's employ, the current Government chose to adopt legislation that explicitly amended collective agreement provisions. Having done so now on four occasions since 1991, the Government has come dangerously close to making legislated incursions into collective bargaining a permanent feature of the bargaining structure in the federal public service of Canada.

B. The Government's reply

199. In its reply dated 6 February 1996, the Government denies the allegations set out in the complaint. In particular, the Government submits that:
- - the purpose of the Budget Implementation Act, 1995 (Bill No. C-76) was to fulfil the goals of the 1995 budget which continued to cut spending in order to achieve the Government's deficit reduction targets and to bring the Government's size and structure into line with what Canadians can afford;
- - the PSAC forced the Government to legislate certain changes to the WFAD guaranteed job security provision by refusing to modify it, knowing that the Government had no other option in order to meet the massive workforce reduction plan announced in the budget;
- - Bill No. C-76 enhances collective bargaining in the short term by permitting negotiation of compensation as well as non-salary issues during the life of the Act, providing any changes are cost neutral. Job security is an issue for the National Joint Council (NJC) which is a voluntary union/management process standing on its own, separate from normal collective bargaining and will not dictate the term of a collective agreement. The Government is preparing for the return to collective bargaining in 1996-97 as is the PSAC. Further workforce reductions beyond the announced three-year downsizing programme does not trigger an extension of Bill No. C-76.
200. The Government recalls its dual role as employer on the one hand, and as Government responsible for the welfare of the population as a whole, on the other. Many governments have, for several years, had to deal with economic circumstances which may create a need for restraint measures that may impact negatively on wages and working conditions of their employees. The Government suggests that it would appear timely to examine whether existing ILO collective bargaining jurisprudence (developed mainly on the basis of cases related to the private sector) adequately and realistically reflects the mandate of governments, in democratic societies, to reconcile legitimate, but divergent, interests and conflicting demands for the greater public good.
- Bill No. C-76: The Budget Implementation Act, 1995
201. Bill No. C-76 does not extend the Public Sector Compensation Act, 1991 nor does it impede the return to collective bargaining. It allows the Government to carry out the provisions of the 1995 budget which calls for far-reaching action to restore the fiscal health of the federal Government which is essential for a strong and growing economy. The objective is to get Government right so that it can fulfil its social and economic mandates more effectively and sustainably. This includes deep cuts in the level of federal programme spending - not simply lower spending growth but a substantial reduction in actual dollars spent.
202. Bill No. C-76 provides the framework for the Government to meet its interim deficit target - 3 per cent of gross domestic product in the 1996-97 fiscal year. The ultimate goal is a balanced budget. It allows for the Government to implement the results of its programme review - a comprehensive examination of federal department spending. As a result, Government will focus on what is essential and do it better. It acts on a new vision of the Government's role in the economy, it introduces major changes in social transfers to the provinces, and sets the fiscal parameters within which labour market programmes will be redesigned to foster increased employability.
203. In redefining its role in the delivery of programmes and services, the Government concluded that a more focused, effective and frugal public service would require fewer employees to deliver government programmes. Accordingly, the Government embarked on a massive downsizing of its workforce - 45,000 positions over the three-year period 1995 to 1998. It was imperative to meet the reduction targets within the three years as part of the Government's fiscal plan. In order to achieve the reductions, it was necessary to have more flexible job security provisions for workforce adjustment situations covering employees declared surplus during the three-year period. This required amending the WFAD. In order to implement changes to the WFAD, section 7 of the Act required an amendment which is included in Part I of Bill No. C-76. These changes were twofold in nature. First, to introduce very generous departure incentives of up to 90 weeks' salary plus an education and training allowance that will induce many public service employees to resign voluntarily (these incentives replace the suspended separation benefit contained in the WFAD). Second, to introduce a new workforce reduction programme for surplus employees in designated departments hardest hit by the downsizing exercise. It is important to note that the job security guarantees contained in the WFAD are not abolished but suspended for the three-year period 1995-98.
- Work Force Adjustment Directive
204. The WFAD is one of 28 National Joint Council policies or directives that are deemed to be part of collective agreements covering all 80 bargaining units in the federal public service which are represented by 16 different bargaining agents. It is important to note the differences between the negotiation/consultation process dealing with NJC policies and directives and the collective bargaining process that deals with the renegotiation of collective agreements. These are two distinct and separate processes. The NJC process is voluntary and involves all federal public service unions collectively whereas the process of bargaining collective agreements is legislated and each bargaining agent is dealt with separately.
205. The NJC is a consultative body that provides for regular consultation between representatives of the Government in its capacity as employer and representatives of the 16 public service unions certified as bargaining agents to represent federal public service employees. The NJC consults on matters that affect the whole of the public service such as travel, relocation, health and safety and workforce adjustment.
206. The NJC was established in 1944, 23 years prior to the introduction of formal collective bargaining in the federal public service. The NJC has its own by-laws including a provision allowing unions to opt in or out of any or all directives/policies. Although NJC policies/directives that form part of a collective agreement cannot be unilaterally amended, any changes recommended by the NJC must be approved by Treasury Board ministers. Each NJC policy/directive has its own effective date and is normally reviewed every three years. The triennial reviews do not require the reopening of collective agreements. Each policy/directive is consulted on separately and agreed-to changes can be implemented at any time during the term of a collective agreement(s).
207. Collective bargaining rights, on the other hand, were granted through the enactment of the Public Service Staff Relations Act (PSSRA) in 1967. Collective bargaining involving the renegotiation of terms and conditions in a collective agreement covering a certified bargaining unit is regulated by the PSSRA setting out the legal procedures to be followed by the parties to a collective agreement including a mechanism for resolving impasses, either by conciliation, strike/lockout or arbitration.
208. The WFAD was approved by the Treasury Board ministers on 7 November 1991 following consultation within the NJC. It became effective on 15 December 1991 and was subject to triennial review on 31 March 1994. Consultation with the unions on changes to the WFAD under the auspices of the NJC began in the Fall of 1993 and continued in a variety of forums until early 1995. The unions (including the PSAC) were aware of the public service renewal challenges facing the Government in redefining its role in delivering programmes and services to Canadians: that the transition from a public service that tries to be all things to all people to one that offers Canadians a more limited number of high-value programmes would inevitably lead to a smaller public service and involve a significant reduction in the federal government workforce. It was necessary to amend the WFAD in order to carry out the programme of massive downsizing.
209. In February 1995, the Executive Council of the PSAC rejected a deal that had been brokered with the assistance of a number of union heads and which was tentatively accepted by the leadership of the other 15 unions subject to ratification by their membership. The key elements of the deal included very generous early departure and early retirement incentive packages; a commitment to permit an early return to collective bargaining on non-monetary and cost-neutral issues; a commitment to establish joint labour-management committees across the country to find job opportunities for laid-off employees in other sectors and within the public service; in exchange for a more flexible job security provision with respect to the guaranteed reasonable job offer for surplus employees working in the hardest hit departments.
210. During the 17 months of negotiations, the PSAC rejected any proposal that reduced the job security provisions of the WFAD. They took the position that the manpower reductions should be handled through attrition and voluntary resignations whereby employees would voluntarily accept any early retirement or departure incentive packages.
211. It was projected that given the very low attrition rate in the public service, together with the availability of the WFAD's guarantee of a reasonable job offer before any lay-off action could take place, that the downsizing targets could not be met, particularly in hard hit departments, and therefore the fiscal plan announced in the budget would be seriously jeopardized.
212. As admitted by the PSAC in its contribution to the complaint, it was impossible for the Government to change the WFAD without either securing the agreement of the affected unions or introducing legislation that would override the relevant provisions of the WFAD. There were no other options. The PSSRA regulations did not apply. The Government could not shut down as a private sector organization could under similar circumstances. The leadership of the PSAC was not prepared to reduce the job security provisions of the WFAD despite the tentative willingness to do so by the other 15 union leaders. Furthermore, the Government could not afford to pay people ad infinitum if there was no work to do. Thus the Government was forced to legislate - a choice imposed by the failure of the negotiations and the seriousness of the fiscal situation that had to be dealt with.
213. In legislating, the Government indicates that it was careful to remain as close as possible to the deal that all unions except the PSAC found acceptable and to make the required changes to the WFAD temporary in nature - effective for the three-year downsizing period only - until mid-1998. Moreover, the Government put the emphasis on voluntary measures by introducing the Early Departure Incentive (EDI) and Early Retirement Incentive (ERI) programmes with the possibility of employees alternating with one another to maximize voluntary departures and opportunities for those who wished to remain in the public service. In addition, to involve the unions in the downsizing process the Government signed an agreement with them to establish regional joint adjustment committees across the country to assist laid-off employees find alternative job opportunities.
214. Finally, the changes to the reasonable job offer guarantee contained in the WFAD were limited to those departments and agencies whose operations will be reduced most significantly during the period 1995-98. These departments and agencies have been designated as "most affected". Fifteen departments and agencies have been designated as "most affected". The majority of departments and agencies have not been declared "most affected", and in those departments and agencies the full job security provisions of the WFAD remain in place.
215. All surplus employees are eligible for an ERI which provides an unreduced pension for employees between the ages of 50 and 59 inclusive. Normally, employees who take early retirement have their pension reduced by up to 50 per cent. Only surplus employees working in "most affected" departments are eligible for an EDI. An EDI contains a lump-sum payment of either 52 weeks' pay for employees with more than five years of continuous employment or 39 weeks for employees with less than five years of continuous employment, plus severance pay equal to two weeks' pay for the first year of continuous employment and one week's pay for each additional year, plus a service allowance of up to six weeks' pay based on an employee's combined age plus years of employment, plus a training and education allowance of up to $7,000. Employees can receive a maximum of 90 weeks' pay plus the training and education allowance. The modified reasonable job offer only comes into play when a surplus employee in a "most affected" department turns down an EDI. At that point, the surplus employee is entitled to a reasonable job offer within the Government for a period of six months. Unless a job is found during this period, the surplus employee may be put on unpaid surplus status and could be laid off 12 months later. The surplus employee will continue to have health, dental and pension benefit coverage during the period of unpaid surplus status.
- Collective bargaining
216. Bill No. C-76 does not impede the return to collective bargaining following expiry of the Act in 1997. The first bargaining unit is scheduled to exit the Act in February 1997. By the summer of 1997 it is expected that the Government will be engaged in collective bargaining with the unions representing 165,000 federal public service employees. The Government, as employer, is preparing for this next round of negotiations as is the PSAC. These actions are counter to PSAC's inference that the Government will not return to collective bargaining in 1997.
217. Bill No. C-76 enhances collective bargaining in the short term by amending section 8 of the Act to allow the parties to a collective agreement to negotiate on all matters including monetary, except wage rates and pay increments, provided that agreed-to changes do not increase costs. Under the amended section 8, a number of unions have requested to reopen collective agreements on a number of issues. For example: discussions with the Aircraft Operations Group Association on the areas of the application of flight pay to flight simulators, overtime and hours of work; discussions with the environment component of the PSAC regarding 12-hour shifts for marine traffic regulators; discussions with the Union of Solicitor-General Employees component of the PSAC on variable hours of work; and discussions with the Canadian Association of Professional Radio Operators to change the way designated holidays are administered.
218. The new subsection 7.3(1) of the Act (Bill No. C-76, Part I) dealing with the WFAD and collective bargaining will not interfere with the renegotiation of collective agreements but will ensure that matters contained in the WFAD will be negotiated collectively with all the federal public service unions as per the NJC process of reviewing NJC policies/directives on a triennial basis. However, new subsection 7.3(2) will allow changes to the WFAD that are agreed to by the Government as employer and all federal public service bargaining agents during the three years prior to the normal triennial review.
219. The inclusion of subsection 7.3(1) will not dictate the term of the 80 collective agreements in the federal public service. The length of any collective agreement is determined by many factors, mainly the ability to predict the future. Short-term agreements can be very appropriate in certain circumstances. Because inflation is under control in Canada, there is a trend towards longer term collective agreements of up to six years with reopeners at various times during the life of these agreements. Ultimately, the parties to a collective agreement will decide what term suits them best.
220. Finally, there is no basis upon which to suggest that any further workforce reductions following the announced three-year programme will force the Government to extend those provisions of Bill No. C-76 pertaining to the WFAD. The Government does not foresee future downsizing of this magnitude.
221. In conclusion, the Government reiterates that:
- - Bill No. C-76 did not extend the PSCA;
- - Bill No. C-76 enhances collective bargaining in the short term and will not impede the return to collective bargaining and the reopening and negotiation of all 80 collective agreements as scheduled for 1997;
- - the PSAC, by refusing to modify the guaranteed job security provisions covering workforce adjustment situations whatsoever, knowingly forces the Government to legislate;
- - job security and the Work Force Adjustment Directive are matters for the National Joint Council;
- - Government has a dual role as employer and as Government responsible for the welfare of its citizens. It is questionable whether jurisprudence which has been developed primarily in the context of private sector practices fully takes account of this dual role.
222. The Government thus submits that it did not violate the standards established in Conventions Nos. 87, 98, 151 and 154.
223. In its communication dated 14 April 1996, the Government has provided additional background information, including press releases, concerning the measures it intends to take to reduce Program spending and to extend the reasonable job offers made to employees to include job offers to work for new employers, as well as various package benefits.

C. Additional information requested from the Government and the complainant organizations

224. In its supplementary statement of evidence dated 19 September 1996, the Canadian Labour Congress stated that collective bargaining in the federal public sector in Canada is a complex system that operates under the Public Service Staff Relations Act. Unlike traditional bargaining structures in Canada and elsewhere, a number of issues that are considered common across the federal public sector are addressed outside the normal bargaining process. In essence, while individual unions and bargaining groups negotiate separately with the Government on issues such as hours of work and rates of pay, other issues, such as the travel directives and the like are jointly negotiated by the Government and all federal public sector unions.
225. This negotiation process takes place under the umbrella of the National Joint Council (NJC). Agreements reached through the NJC negotiation process form part of all federal public service collective agreements as though they had been individually negotiated by each union and bargaining unit. For greater certainty, a number of NJC agreements, including the Workforce Adjustment Directive, are explicitly referenced in PSAC collective agreements.
226. Historically, the NJC has been the vehicle that has been used in the federal public service to determine employment security issues. While issues such as employment security are normally determined through the NJC process, there is nothing to stop individual bargaining agents, including the PSAC, from withdrawing from the process on a specific issue, and negotiating a separate agreement on the issue, as happened for the 1991 Workforce Adjustment Directive.
227. A normal review of the Workforce Adjustment Directive began in 1990 between the NJC Unions, including the PSAC, and the Government. This process did not result in a package of amendments that was acceptable to either the PSAC or the Government of Canada as represented by the Treasury Board. As a result, the PSAC notified the Treasury Board of its intention to negotiate employment security directly with the Government and bipartite negotiations took place over the summer and early fall of 1991, resulting in an agreement acceptable to both the PSAC and the Government of Canada.
228. Subsequently, the Government of Canada took the PSAC/Treasury Board agreement to the NJC and secured the agreement of other NJC bargaining units. Following Cabinet approval of the amended Workforce Adjustment Directive in December 1991, the revised agreement was deemed to form part of federal public sector agreements, including PSAC agreements that had been extended by the Public Sector Compensation Act. The CLC adds that this agreement could not be arbitrarily amended by either party, and would continue in force until the parties agreed, following a normal review and negotiation process, to any amendment.
229. While a review was initiated by the Government, and discussions took place between the Government and the NJC unions in late 1994 and early 1995, no agreement was reached and the Government took the unprecedented step of legislatively amending the 1991 Workforce Adjustment Directive, thus arbitrarily changing provisions of PSAC collective agreements.
230. The CLC concludes that the 1991 Workforce Adjustment Directive formed part of the collective agreements between the Treasury Board and the PSAC that were extended by the Public Sector Compensation Act in 1991 and that the legislated amendments implemented by the federal Government under Bill C-76, the Budget Implementation Act 1995 arbitrarily changed provisions of PSAC collective agreements.
231. The Treasury Board Secretariat and Public Service Alliance of Canada indicated in a joint statement communicated on 8 October 1996 that employment security issues could be determined in one of two ways, either through the auspices of the National Joint Council (NJC) or through formal collective bargaining as provided for in the Public Service Staff Relations Act (PSSRA).
232. The NJC is a council consisting of representatives of the employers and bargaining agents of the federal public service in order to promote the efficiency of the public service and the well-being of those employed in the public service by providing for regular consultation between the Government as the employer and bargaining agents on behalf of employees who come under the jurisdiction of the PSSRA. The NJC may agree to consult on any benefit or working condition of service-wide applicability and make recommendations to the appropriate executive body of the Government. The NJC can further agree as to whether the matter is deemed to constitute part of the collective agreements between the parties.
233. Since the mid-1980s employment security matters have been included in the Workforce Adjustment Directive (WFAD) and dealt with at the NJC. Further, the WFAD is deemed to be part of all collective agreements covering federal government employees for which the Treasury Board Secretariat (TBS) is the employer including those agreements with the PSAC.
234. The NJC is governed by its own constitution and by-laws which requires its Executive Committee to establish and maintain a cyclical review schedule for NJC directives/policies/plans. The review schedule is normally every three years and does not coincide with the expiry dates of collective agreements. At the time that bargaining agents are notified of a triennial review, they have the option (individually or collectively) to either continue their participation in the NJC consultation matter or opt out. Bargaining agents opting in favour of NJC consultation undertake to refrain from making a collective bargaining proposal concerning items contained in the current directive/policy/plan under NJC review for the three-year period between cyclical reviews. When bargaining agents opt out of NJC consultation on a subject, the respective bargaining units shall continue to derive benefits and privileges from the NJC directive/policy/plan in effect at the time they opted out until the next collective bargaining agreement is negotiated in accordance with the PSSRA. However, if during the three-year period between cyclical reviews, a bargaining agent makes a collective bargaining proposal concerning a matter contained in a current NJC directive/policy/plan, then the NJC Executive Committee may determine that the bargaining agent has opted out of the NJC on that matter.
235. Finally, as indicated in the Government's reply, the WFAD can be amended prior to the next triennial review on the agreement of the Treasury Board (representing the Government as employer) and all the federal public service bargaining agents.
236. In a communication dated 23 October 1996, the Government made the following comment concerning the CLC supplementary statement. While considering that the process used to reach agreement concerning the WFAD in 1991 is not relevant to the complaint since that Directive expired in March 1994, the Government indicated that: in 1991 the PSAC along with all of the other bargaining agents representing federal public service employees opted to consult with the Treasury Board Secretariat on changes to the WFAD under the auspices of the NJC; that multilateral and bilateral (with PSAC) negotiations occurred at various times throughout 1991 resulting in a new/amended WFAD that was accepted by all bargaining agents including the PSAC by December 1991; and that as provided by NJC by-laws this new Directive was deemed to be part of all collective agreements. Subsequently, in March 1994, the WFAD became subject to its normal cyclical review as per NJC by-laws which led to the events which are the subject of the present complaint.

D. The Committee's conclusions

237. The Committee notes that the allegations in this case refer to restrictions on collective bargaining in the federal public service which have been legislatively imposed through the adoption of Bill No. C-76 (the relevant provisions of this Bill can be found in Appendix 1). The amendments in question modify the Public Sector Compensation Act by suspending, for a three-year period, a number of job security provisions found in the jointly approved Work Force Adjustment Directive (WFAD) and by explicitly banning any negotiation in respect of terms or conditions of employment relating to job security during this same period.
238. The Committee first notes the Government's indication that, in order to achieve the reductions necessary in the public service workforce to respond to the budget deficit concerns, it was necessary to have more flexible job security provisions concerning employees declared "surplus" during the three-year period from 1995-98. In this regard, the Government has recalled its dual role as employer on the one hand, and as Government responsible for the welfare of the population as a whole, on the other. Indeed, the Committee has always taken full account of the serious financial and budgetary difficulties facing the governments, particularly during periods of prolonged and widespread economic stagnation. It considers, however, that the authorities should give preference as far as possible to collective bargaining in determining the conditions of employment of public servants. In other words, a fair and reasonable compromise should be sought between the need to preserve as far as possible the autonomy of the parties to bargaining, on the one hand, and measures which must be taken by governments to overcome their budgetary difficulties, on the other. (See Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 899.)
239. As concerns the Government's attempt to resolve these difficulties through negotiation, the Committee takes due note of the Government's indication that consultations with respect to changes to the WFAD under the auspices of the NJC began in the fall of 1993 and continued in a variety of forums until early 1995 when the Executive Council of the Public Service Alliance of Canada (PSAC) rejected a deal that had been tentatively accepted by the leadership of the other 15 unions involved in the negotiation, subject to ratification by their membership. According to the Government, the PSAC rejected any proposal reducing the job security provisions of the WFAD, taking the position that human resources reductions should be handled through attrition and voluntary resignations. The PSAC, for its part, states that it had advanced a significant number of amendments designed to facilitate voluntary terminations and reduce the number of involuntary terminations, but all its proposals were dismissed out of hand by the Government.
240. As the PSAC approach, according to the Government, was not sufficient to meet the downsizing targets set, particularly in hard hit departments, and given the failure of the negotiations and the seriousness of the fiscal situation, the Committee notes the Government's statement that it had no choice but to legislate the necessary changes to the WFAD.
241. The Committee notes that section 7.3(1) of Bill No. C-76 excludes from the possible subjects for collective bargaining "the Work Force Adjustment Directive, any term or condition of employment relating to job security or workforce adjustment or any matter in relation to which the WFAD may be issued or amended during the period of three years, whether or not the WFAD is included in a collective agreement or arbitral award that has ceased or may cease to operate". The Committee also notes that Bill No. C-76 unilaterally suspends and amends certain provisions of the jointly agreed Workforce Adjustment Directive until July 1998 (see Appendix 2).
242. The Committee notes that the suspension of collective bargaining in respect of job security matters in the present case covers a large variety of issues, including protection otherwise provided to ensure an offer of alternative employment prior to dismissal, as well as various indemnities in case of unavoidable dismissals. In previous cases, the Committee has stated that there are certain matters which clearly appertain primarily or essentially to the management and operation of government business and can reasonably be regarded outside the scope of negotiation, whereas certain other matters are primarily or essentially questions relating to conditions of employment and should not be excluded from the scope of negotiations. (See, Digest, op. cit., para. 812.) While the Committee considers that staffing levels or the departments to be affected as a result of financial difficulties may be considered to be matters which appertain primarily or essentially to the management and operation of government business and therefore reasonably regarded as outside the scope of negotiation, the larger spectrum of job security in general includes questions which relate primarily or essentially to conditions of employment, such as pre-dismissal rights, indemnities, etc., which should not be excluded from the scope of collective bargaining.
243. Noting from the information provided jointly by the Government and the complainant organizations that normally matters of employment security can be determined either through the NJC or through formal collective bargaining as provided for in the Public Service Staff Relations Act (PSSRA), the Committee regrets that the effect of Bill No. C-76 is that, during the stipulated three-year period, no forum exists for the consultation of workers' organizations on these important matters which clearly affect them.
244. Given, however, that under the terms of the Bill, these restrictions on the collective bargaining of job security matters will expire in one year's time, the Committee urges the Government to refrain from imposing any further restrictions on negotiations of job security matters when the present WFAD amendments expire in July 1998.
245. Furthermore, noting the Government's indication that the procedures available to resolve impasses under the Public Service Staff Relations Act (PSSRA) do not apply to the WFAD and that there still does not appear to be any machinery for the settlement of disputes in this connection, the Committee cannot but regret that the Government has not implemented its recommendation in Case No. 1800 urging it to take into consideration the possibility of establishing a procedure which enjoys the confidence of the parties and which would allow them to have recourse to conciliation or mediation, and then to voluntarily have recourse to an independent arbitrator to resolve their disputes. As such a procedure might have assisted in avoiding the dispute in the present case and in improving the labour relations climate generally, the Committee once again urges the Government to give serious consideration to establishing conciliation, mediation and voluntary independent arbitration procedures which enjoy the confidence of the parties concerned.
246. The Committee also recalls that it had invited the Government in previous cases to make use of the assistance of the International Labour Office, in particular through an advisory mission, in order to facilitate finding solutions to the difficulties in reaching agreements in the public service.

The Committee's recommendations

247. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
- (a) Regretting that Bill No. C-76 eliminates for a three-year period any potential forum for the consultation of workers' organizations on matters of job security, the Committee urges the Government to refrain from imposing any further restrictions on negotiations of job security matters when the imposed amendments to the Work Force Adjustment Directive expire in July 1998.
- (b) Regretting that the Government has not implemented its previous recommendation in Case No. 1800, the Committee urges it to give serious consideration to the establishment of a procedure which enjoys the confidence of the parties and which would allow them to have recourse to conciliation or mediation, and then to voluntarily have recourse to an independent arbitrator to resolve their disputes.

Appendix 1

Relevant provisions of Bill No. C-76
(the Budget Implementation Act, 1995)
PART I
Compensation
Public Sector Compensation Act
2. Section 7.1 of the Public Sector Compensation Act is renumbered as
subsection 7.1(1) and is amended by adding the following:
(2) On or after the date of the coming into force of section 7.2.
(a) a payment under the Civilian Reduction Program shall not be offered or
given pursuant to subsection (1) to or on behalf of an indeterminate employee
of the Department of National Defence or Emergency Preparedness Canada unless
that employee is a surplus employee within the meaning of the Work Force
Adjustment Directive; and
(b) any employee referred to in paragraph (a) who has been offered a payment
pursuant to subsection (1), whether before or after that date, but has not yet
ceased to be an employee within the meaning of the Public Service Employment
Act becomes subject to the program and section 7.3 applies to that employee,
except that the payment is given in an amount and subject to any other terms
and conditions respecting the payment fixed for the Civilian Reduction Program
pursuant to subsection (1) and no other payment may be offered or given to
that employee pursuant to section 7.2.
(3) For the purposes of this section and sections 7.2, 7.3 and 7.5,
"program" means a program respecting early departure incentives, unpaid
surplus status, lay offs and related matters arising from the February 27,
1995 budget;
"public service" means the entities referred to in subsection 3(1);
"Work Force Adjustment Directive" means the Work Force Adjustment Directive
issued on the recommendation of the National Joint Council of the Public
Service and with the approval of the Treasury Board that came into force on
December 15, 1991, as amended from time to time in accordance with subsection
7.3(2) and (3).
3. The Act is amended by adding the following after section 7.1:
7.2 (1) Notwithstanding this Act or any other Act of Parliament except the
Canadian Human Rights Act, or any directive, policy, regulation or agreement
made under any such Act.
(a) the Governor in Council, on the recommendation of the Treasury Board, may
fix the terms and conditions of a program arising from the February 27, 1995
budget and designate any department or portion of the public service or any
part of that department or portion of the public service to which that program
is to apply; and
(b) the Treasury Board may offer or give to or on behalf of an employee of the
department or portion of the public service designated pursuant to paragraph
(a) who is a surplus employee within the meaning of the Work Force Adjustment
Directive or otherwise subject to the program, a payment under the program
and, subject to the terms and conditions fixed pursuant to paragraph (a).
(i) may, no earlier than six months after the date on which the offer is
received by the employee, place the employee on unpaid surplus status within
the meaning of the program, and
(ii) shall lay off the employee where a reasonable job offer within the
meaning of the Work Force Adjustment Directive was not made within twelve
months after the commencement of the unpaid surplus status or the employee
refuses the reasonable job offer.
(2) An employee within the meaning of the Public Service Employment Act who is
laid off pursuant to subparagraph (1)(b)(ii) ceases to be an employee under
that Act, but is entitled to the same rights and privileges to which that
person would otherwise be entitled as a person laid off under that Act.
(3) The Treasury Board may authorize the deputy head of a department or the
chief executive officer of any portion of the public service to exercise and
perform, in such manner and subject to such terms and conditions as the
Treasury Board directs, any of the powers, duties and functions of the
Treasury Board under subsection (1).
7.3 (1) Notwithstanding this Act or any other Act of Parliament except the
Canadian Human Rights Act, or any directive, policy, regulation or agreement
made under any such Act, the Work Force Adjustment Directive, any term or
condition of employment relating to job security or work force adjustment or
any matter in relation to which the Directive may be issued or amended,
whether or not the Directive is included in a collective agreement or arbitral
award that has ceased, or may cease, to operate, shall not be the subject of
collective bargaining, or be embodied in a collective agreement or arbitral
award within the mean of the Public Service Staff Relations Act, in respect of
any portion of the public service of Canada specified in Part I of Schedule I
of that Act, during the period of three years beginning on the coming into
force of this section.
(2) The Treasury Board and bargaining agents may, by agreement in writing,
amend the Work Force Adjustment Directive but only as it relates to their
collective agreements or arbitral awards, whether their collective agreements
or arbitral awards are in force or have ceased to operate.
(3) The Governor in Council, on the recommendation of the Treasury Board, may
amend the Work Force Adjustment Directive in relation to any of the following
matters:
(a) the suspension of the separation benefit;
(b) geographical limitations with respect to guaranteed offers of appointment
made as a result of privatization and contracting out situations within the
meaning of the Directive; and
(c) proceeding with a contract in a contracting out situation within the
meaning of the Directive.
(4) Any amendment to the Work Force Adjustment Directive made pursuant to
subsection (3) ceases to have effect on the expiration of three years after
the coming into force of this section.
(5) Notwithstanding any other Act of Parliament or any collective agreement or
arbitral award that incorporates by reference the Work Force Adjustment
Directive and any amendments thereto, any amendment to the Directive made
pursuant to subsection (3) is incorporated by reference in the collective
agreement or arbitral award, subject to such modifications as are required by
that Act and the collective agreement or arbitral award.
7.4 (1) The Governor in Council may change any terms and conditions of a
compensation plan that is extended under section 5 or 6 or in respect of which
section 11 applies if those terms and conditions are, in the opinion of the
Treasury Board, required to implement the voluntary leave without pay programs
arising from the February 27, 1995 budget.
(2) Any change to a compensation plan made by the Governor in Council pursuant
to subsection (1) ceases to have effect on the expiration of three years after
the coming into force of this section.
4. Section 8 of the Act is replaced by the following:
8. (1) Subject to subsection (3), the parties to any collective agreement or
arbitral award that includes a compensation plan that is extended under
section 5 or 6 or in respect of which section 11 applies may, by agreement in
writing, amend any terms and conditions of the collective agreement or
arbitral award otherwise than by increasing
(a) wage rates; or
(b) any form of compensation referred to in subsection 5(1.1).
Appendix 2
Suspended provisions of the Work Force Adjustment Directive
The following sections were in effect prior to July 15, 1995 and will come
back into effect on June 23, 1998 unless further changes are brought to the
Directive.
...
6.1.1 Employees declared surplus as a result of a privatization are guaranteed
an offer of appointment on an indeterminate basis to another position in the
Public Service within their headquarters area, either at their current level
or with salary protection, where necessary.
...
7.3.1 When a surplus employee is terminated, in whatever manner, under the
provisions of this directive, that employee shall receive a separation benefit
of one week's pay for each year of service with a department or agency for
which the Treasury Board is the Employer (PSSRA I-I) up to a maximum of
fifteen weeks' pay, providing that the individual is entitled to opt for or is
entitled to an immediate annuity or an immediate annual allowance under the
Public Service Superannuation Act, except where
(a) the employer has arranged contiguous employment elsewhere suitable to the
employee, or
(b) the employee has received more than one month's retraining pursuant to
this directive, or
(c) a non-surplus employee has volunteered to receive pay in lieu of
unfulfilled surplus period in the place of a surplus employee, or
(d) the employee has received a one-year payment under 8.6.1 or 8.8.1.
...
8.4.1 Employees declared surplus as a result of contracting out are guaranteed
an offer of appointment on an indeterminate basis to another position in the
Public Service within their headquarters area, either at their current level
or with salary protection, where necessary.
...
8.7.3 Subject to 8.7.4, a department contracting out the work of Public
Service employees shall not proceed with that contract until all affected
employees have:
(a) accepted another job within the Public Service, or
(b) accepted a job offer from the contractor, or
(c) resigned and received a sum equivalent to one year's pay, or
(d) in contentious cases, until the decision of the Administrative Committee
has been made or not made within the 30-day period allowed.
8.7.4 However, where a contract is of a phased nature, individual phases may
proceed without the situation of all affected employees being resolved,
provided that no phase proceeds until the situations of those employees
directly affected by that phase are resolved.