Interim Report - Report No 310, June 1998

Case No 1943 (Canada) - Complaint date: 12-NOV-97 - Closed

Allegations: Governmental interference in arbitration and labour tribunals

1. 185. The Canadian Labour Congress (CLC), the Service Employees International Union, Local 204 (SEIU), and the Ontario Federation of Labour presented a complaint of violations of freedom of association against the Government of Canada (Ontario) in a communication dated 12 November 1997.
2. 186. In response to the allegations, in a communication dated 23 April 1998, the federal Government transmitted the reply of the Government of the Province of Ontario.
3. 187. 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 complainants' allegations

1. 188. The complaint concerns legislation dealing with compulsory interest arbitration in specific areas of the public sector: the Savings and Restructuring Act, 1996 (Bill 26), in particular Schedule Q; the Public Sector Transition Stability Act, 1997 (Bill 136), in particular Schedule A which is the Public Sector Dispute Resolution Act, 1997; the Social Contract Act, 1993 (Bill 48). In their communication of 12 November 1997, the CLC, SEIU and Ontario Federation of Labour allege that the legislation as well as the continued absence of an independent body to appoint interest arbitrators in Ontario, interfere with the independence of interest arbitrators and the integrity of the arbitration process, thus contravening the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), the Right to Organise and Collective Bargaining Convention, 1949 (No. 98), the Labour Relations (Public Service) Convention, 1978 (No. 151), and the Collective Bargaining Convention, 1981 (No. 154).
   • Schedule Q to the Savings and Restructuring Act (Bill 26) and the Public Sector Dispute Resolution Act (Bill 136)
2. 189. The complainants submit that the imposition of statutory criteria on interest arbitrators pursuant to Bill 26 and Bill 136 interferes with the public sector bargaining process and with arbitrators in Ontario.
3. 190. The complainants state that over 250,000 unionized employees fall within the scope of Schedule Q of Bill 26, which deals with the resolution of disputes in the hospital, police, fire and school board sectors. Previously, the Government of Ontario determined that disputes regarding the negotiation of collective agreements for hospital and nursing home workers, firefighters and police would not be determined by recourse to strikes or lockouts, but through binding arbitration. Collective bargaining for municipal and non-teaching employees in the education sector is governed by the ordinary provisions of the Labour Relations Act, including the right to strike. However, as a result of Bill 136, where there is a restructuring of an employer in the municipal or education sector, the first collective agreement following the restructuring may be determined by an interest arbitrator, who will be required to apply all the statutory criteria under dispute in this case.
4. 191. Schedule Q to Bill 26 sets out a number of criteria that arbitrators are required to consider in making a decision or award, including the following:
   • -- the employer's ability to pay in light of its fiscal situation;
   • -- the extent to which services may have to be reduced, in light of the decision or award, if the current funding and taxation levels are not increased.
     • In addition, under Schedule A to Bill 136, an interest arbitrator is now also required to take into account "best practices that ensure the delivery of quality and effective public services that are affordable for taxpayers".
   • 192. The complainants submit that requiring public sector interest arbitrators to consider the above-noted criteria allows the Government to determine unilaterally the terms and conditions of employment, interferes with the impartiality and independence of arbitrators, impairs confidence in the arbitration process, vitiates the adequacy of the arbitration process as a replacement for the ability to strike, and undermines the process of free collective bargaining. In addition, the complainants contend that the imposition of the ability to pay criterion is, in effect, a subterfuge for wage restraint.
5. 193. The complainants state that ability to pay/affordability has not been an accepted part of interest arbitration in Ontario. While the factor of the employer's ability to pay may have legitimacy in private sector bargaining, it has been consistently and repeatedly rejected as being an irrelevant criterion in the public sector. One of the most important principles governing interest arbitration, in light of the withdrawal of the right to strike of the workers to which the procedure applies, is that it should attempt as closely as possible to replicate the results of free collective bargaining. Pursuant to that goal, the traditional criterion used by arbitrators to determine wages in public sector collective agreements in Ontario, as in other Canadian jurisdictions, has been comparability with employees performing similar work for the same employer, with employees performing similar work for other employers in the public sector, and with employees performing similar work for employers in the private sector. This "comparability" criterion ensures that wages for employees governed by interest arbitration in the public sector follow freely negotiated collective agreements in those sectors where the parties have the right to strike.
6. 194. Requiring arbitrators to consider the employer's ability to pay in light of its fiscal situation provides the Government, in the opinion of the complainants, with the ability to effectively determine the outcome of disputes regarding financial compensation through the exercise of its spending power. In reality, "ability to pay" as used in Schedule Q to Bill 26, amounts to no more than the decision of the public sector employer, or the Government which is the ultimate paymaster, as to how much it is willing to pay.
7. 195. The complainants contend that entrenching ability to pay as a criterion that must be taken into account in arriving at awards, compromises the integrity and independence of arbitrators by compelling them to become executors of government budgetary policy. Furthermore, requiring interest arbitrators to consider the extent to which services may have to be reduced as a result of an award may have the effect of encouraging arbitrators not to award a wage increase even through it may be justified, if the delivery of a program or service may be affected by such a result. Such requirement, it is submitted, coopts the arbitrators into making essentially political decisions. Arbitrators do not, nor should they, decide whether programs should be cut, whether lay-offs should occur, and whether taxes should be raised or lowered. The responsibility for making these choices is that of elected politicians. Moreover, insofar as requiring arbitrators to consider the extent to which services may need to be cut encourages arbitrators to give priority to the level of service to be provided to the community over the level of wages to public employees, Schedule Q to Bill 26 has the effect of compelling public sector employees to subsidize the provision of services. In this way, public sector employees are singled out to bear a disproportionate part of the cost of providing services from which the entire community benefits.
8. 196. The imposition of government-determined criteria based on government fiscal policies removes the underpinnings of a legitimate arbitration process: independence and fairness, or in ILO terminology, impartiality and adequacy. The inevitable effect of this loss of fairness and independence on the part of arbitrators is a loss of confidence in the arbitration process by its participants. Furthermore, those public sector workers affected by Bill 26 and Bill 136 are no longer provided with an adequate process to resolve disputes that would compensate them for the removal of their right to strike.
9. 197. The complainants further submit that the Government's interference with the interest arbitration process in order to unilaterally establish compensation rates for public sector workers does not place priority on collective bargaining as a means of settling disputes arising in connection with the determination of terms and conditions of employment. The Government's ability to unilaterally dictate the terms and conditions of employment through its fiscal policy, which interest arbitrators are compelled to take into account, has the effect of skewing the negotiating balance between public sector employers and workers and of obviating the necessity to bargain. The Government, or the employer essentially dependent upon government budgeting, has no incentive to bargain regarding terms and conditions of employment for public sector employees covered by Bill 26 and Bill 136 when it has the ability to impose unilaterally its terms in arbitration through the mandatory statutory criteria set out for arbitrators.
10. 198. The complainants submit that the Government's attempt to determine unilaterally wage rates through requiring arbitrators to consider the public sector employer's ability to pay, the extent to which services may have to be reduced and affordability is, in effect, an attempt to use the arbitration process to impose wage controls, which is an abuse of the arbitration process. The imposition of wage constraints has been taken in the absence of compelling evidence as to their necessity. The interference with the settlement of wage rates represented by the disputed criteria is not an exceptional measure limited to a reasonable period; it represents a wage-restriction programme without any time-limit.
11. 199. In addition, the complainant contends that the Government did not adequately consult affected workers or their bargaining agents before adopting Bill 26 and Bill 136. It is stated that with respect to Bill 26 in particular, it was enacted with a degree of disregard for consultation with interested parties and the public in general unprecedented in the province of Ontario. The Government initially attempted to rush the legislation through the Legislature without providing for any public hearings. Only after much public outcry did the Government allow limited submissions to be made, but then heard only one quarter of these submissions. The Government ignored the submissions of the unions representing the workers affected by Schedule Q to Bill 26. To the extent that it took any submissions into account, it increased the amount of interference with arbitration in Schedule Q by adding "taxation levels" as a factor to be considered by arbitrators in having to determine the extent to which services may have to be reduced as a result of an award. Similarly, while the Government was forced to make significant amendments to Bill 136 as a result of pressure from the public and trade unions, the Government steadfastly refused to alter the imposition of the affordability criterion contained in Bill 136.
12. 200. The complainant notes that the interference with free collective bargaining over compensation represented by Bill 26 and Bill 136 follows directly upon the three-year restriction on collective bargaining on compensation under the Social Contract Act, 1993. The complainant submits that this cannot but have a negative impact on the living standards of workers concerned and that neither Schedule Q to Bill 26 nor Bill 136 nor any other legislation brought in by the present Government of Ontario contains adequate safeguards in this respect.
13. 201. Finally, in this context, the complainants submit that the measures taken by the Government through Bill 26 and Bill 136 are, moreover, part of a more extensive policy of interference by the Government with freedom of association and collective bargaining, which includes the following:
    • -- the elimination for agricultural workers, domestic workers and certain professional employees of the right to collective bargaining and the right to strike, together with the termination of existing bargaining rights and collective agreements for these workers, which are the basis of Case No. 1900 (308th Report, paras. 139-194);
    • -- the attempted repeal of pay equity protection, seeking to override negotiated pay equity plans and eliminate entirely or mostly, all of the pay equity adjustments to which workers among the lowest paid in Ontario, including a large number of SEIU members, were entitled. The amendments were declared by the Ontario courts to be unconstitutional;
    • -- interference with the independence and impartiality of the Ontario Labour Relations Board (OLRB) through the appointment and renewal process.
      • The Social Contract Act, 1993 (Bill 48)
    • 202. The complainants submit that section 48(1) of the Social Contract Act, 1993 (Bill 48), as interpreted by the Ontario Court of Appeal and as confirmed by the promulgation of Ontario Regulation 545/95, interferes with the independence of interest arbitrators dealing with disputes in the public sector. Section 48(1) has been interpreted to preclude an arbitration award from providing for an increase in compensation. Bill 48 came into effect on 14 June 1993 and expired on 31 March 1996. It established a three-year "social contract period" during which public sector employers were required to achieve expenditure reduction targets imposed by the Government.
14. 203. Section 48 of Bill 48 contains specific provisions relating to interest arbitration, and provides that "No increase in compensation shall be given as a result of any arbitration award or decision made on or after June 14, 1993". Section 48(3) provides that "Despite subsection (1), an arbitration award or decision may increase the annual earnings of employees to a maximum of $30,000". There was some uncertainty regarding the jurisdiction of arbitrators to award increases for those employees earning over $30,000 (CDN). The other issue arising was whether a board of arbitration could award benefit increases to either those earning more than or less than $30,000. Both issues came before the Ontario Court of Appeal, which held that in addition to freezing compensation increases for the three year period of Bill 48, section 48(1) and (3) prevent an arbitration board from providing in its award for increases in the rates of compensation for employees earning $30,000 or more, which increase would not come into effect or be implemented until after the expiry of the three-year social contract period. The Court of Appeal further held that the jurisdiction to increase the earnings of employees earning less than $30,000 per year relates only to direct monetary pay, not to other benefits; thus section 48(3) does not authorize an increase in benefits to employees earning less than $30,000.
15. 204. On 19 December 1995, prior to the Court of Appeal's decision, however, the Government had already adopted Regulation 545/95, referring to section 48(1) of Bill 48: "'no increase in compensation shall be given as a result of any arbitration award or decision made on or after June 14, 1993' means that an arbitration award or decision made on or after June 14, 1993 shall not provide for any increase in compensation." Regulation 545/95 was deemed to have come into force retroactively on 14 June 1993. The effect was that approximately 57 decisions by interest arbitrators between June 1993 and June 1995 were potentially affected by the retroactive application of the Regulation, the majority of which awarded increases now precluded by the Regulation. The complainants take the position that the making of the Regulation by the Government reflects its determination to interfere with the independence and integrity of the arbitration process by stripping the jurisdiction of arbitrators.
16. 205. The complainants submit that the constraint on the arbitrator's authority to award pay and benefit increases under section 48(1) of Bill 48, as interpreted by the Court and as circumscribed by the Regulation, raises the same, as well as additional, concerns regarding the independence of arbitrators and the integrity of the arbitration process as those raised with regard to Bill 26. Indeed, viewed against the background of Bill 48, the Bill 26 criteria constitute, according to the complainants, an even more serious and ongoing violation of freedom of association principles. Due to section 48(1), independent interest arbitrators are prevented from replicating the results of free collective bargaining. Due to section 48(1), interest arbitrators are prevented from exercising a significant part of their role: the determination of fair, just and proper wages, and independent arbitrators are made the mere instruments for the enforcement of the Government's policy of wage restraint.
17. 206. The complainants submit that this interference with the impartiality and independence of interest arbitrators undermines confidence in the arbitration process, vitiates the adequacy of the arbitration process as a replacement for the ability to strike, and undermines the process of free collective bargaining. While Bill 26 mandates that arbitrators consider government imposed criteria, Bill 48 goes further by preventing them from awarding compensation increases altogether.
18. 207. The complainants contend that the interference with the independence of arbitrators represented by Bill 48 is not simply an isolated act of the Ontario Government but is, rather, part of a comprehensive effort to limit the jurisdiction of interest arbitrators to make awards in the public sector that depart from the Government's fiscal policy.
    • Independent appointment agency for interest arbitrators Interference with the Ontario Labour Relations Board (OLRB)
19. 208. In the hospital and nursing home sector, and in determining first collective agreements following restructuring in the municipal and education sectors, arbitrators are appointed by the Minister of Labour, a Minister of the Government. There are no statutory restrictions on who the Government can appoint. In the fire sector, arbitrators are appointed by the Solicitor-General, a Minister of the Government, who has full discretion regarding who is appointed. In the police sector, arbitrators are appointed by the chairperson of the Arbitration Commission, who is appointed by the Solicitor-General.
20. 209. The complainants submit that where arbitrators are directly appointed by a government which lays down in legislation certain criteria which arbitrators are bound to follow in the determination of awards, it is inevitable that confidence in the system will be diminished.
21. 210. The complainants also contend that since its election in 1995, the present Government of Ontario has embarked upon a course of conduct which has systematically and seriously eroded the independence of labour tribunals in the province. This interference is not limited to the imposition of statutory criteria on interest arbitrators, but extends to the appointment and renewal of appointments to the OLRB. The complainants explain that the OLRB is the most senior body in Ontario entrusted with the administration of labour relations legislation, including the administration and enforcement of the unfair labour practices protections, the provisions governing certification of bargaining agents, the duty to bargain in good faith, the determination of whether strikes are lawful and whether unlawful strikes should be restrained, and the supervision of strike and ratification votes.
22. 211. The complainants state that the Government has removed eight OLRB Vice-Chairs, as well as the Chair, for a total of nine persons, either through firing or failure to reappoint for a continued term. Of these nine, the background of six consisted of practising union-side labour law. The traditional power and authority of the Chair to recommend effectively the continuation of Vice-Chairs has been eroded, and in many cases of appointment or non-renewal, the Chair was not even consulted by the Government. These changes, it is submitted, have not been without effect on the Board. The complainants explain that SEIU has an existing unfair labour practice against Mr. Johnson, the Chair of the Management Board of Cabinet. During these proceedings, an application was brought before the OLRB to restrain picketing of the public transit system during a one-day general strike against the policies of the Government. Mr. Johnson was quoted in a newspaper to have said that he was considering conducting "a review" of the Board as a result of his view that the OLRB had not sufficiently restricted the picketing activity. As a result, SEIU filed a second complaint, alleging that Mr. Johnson had sought to intimidate, coerce or threaten members of the OLRB, and to influence their decisions on penalty of loss of employment security, particularly given the context of the Government having fired or failed to renew the appointments of various Vice-Chairs. Mr. Johnson denied these allegations.
23. 212. In the course of hearing the second complaint against Mr. Johnson, the Vice-Chair found the entire Board disqualified from hearing the complaint because of the knowledge which all Vice-Chairs of the OLRB had of the Government's action in terminating other Vice-Chairs. As a result, the proceedings were stayed. SEIU was able to obtain an order from the Ontario Court of Justice that an independent adjudicator be appointed to hear the cases against Mr. Johnson. Although the Court's judgement was limited to the unique facts of the OLRB matter before it, the complainants assert that SEIU and other members of the Ontario labour relations community are very concerned that in any case before the OLRB, it may be reasonable to claim that there is a reasonable apprehension of bias institutionally on the part of the Board, arising from the Government's overt attempts to replace Vice-Chairs with those more attuned to its labour relations agenda. A reasonable Vice-Chair would assume that his or her employment security rests entirely with the Premier's office and not with the Chair of the Board. A reasonable person would assume that only those who write decisions favourable to the Government or favourable to the employers will continue to be employed at the Board; thus every decision may be seen as a job application and employment review.
24. 213. In this context, the complainants express their concern that the Government's conduct in connection with the appointment and renewal process at the OLRB can be seen as a failure to comply with freedom of association standards and principles. Without both the fact and the appearance of an independent and impartial Labour Relations Board free from governmental interference, the right to organize cannot be effectively enforced.
25. 214. In conclusion, the complainants submit that the interference with the independence of arbitrators through the imposition of statutory criteria in Bill 26 and Bill 136, the limitations on arbitrators awarding wage increases to take effect even after the expiry of Bill 48, and the interference with the independence of the OLRB, requires now, more than ever, the establishment of an independent body for the appointment of interest arbitrators in Ontario.

B. The Government's reply

• Schedule Q to the Savings and Restructuring Act (Bill 26) and the Public Sector Dispute Resolution Act (Bill 136)
  215. 215 The Government states that the inclusion of the financial and economic criteria in Bill 26 and Bill 136 was a response to a longstanding criticism of the interest arbitration system in the compulsory interest arbitration sectors. Over the years, concerns have been expressed by employers in these sectors about the outcomes of compulsory interest arbitrations, in particular that they do not reflect economic realities of employers and do not mirror the results in the sectors where the right to strike does exist. There has been a perception that these results are due in part to the inclination of interest arbitrators to "split the difference" rather than making hard decisions about contentious collective agreement provisions. The criteria, it is submitted, will in no way compromise the independence of arbitrators, but will provide useful guidelines to encourage responsible awards.
  216. 216 The Government agrees with the complainants that interest arbitration should mirror as closely as possible the results in sectors which have the right to strike and lock-out. The criteria were designed to encourage, and are expected to lead to, collectively bargained outcomes or awards that are similar to ones that the parties would have negotiated under a right-to-strike regime. The Government asserts its belief in and its support for the collective bargaining process: it is of the view that the best solutions are those that are negotiated and worked out in an independent and self-reliant way. It is hoped that parties will resolve collective bargaining issues themselves rather than relying on arbitrators to resolve impasses. The criteria only apply when parties are unable to resolve the issues themselves. Neither Bill 26 nor Bill 136 impose any requirements with respect to the specific contents of collective agreements or arbitration awards.
  217. 217 Regarding the allegation of lack of adequate consultation prior to passing Bill 26 and Bill 136, the Government states that it had consulted extensively on both statutes. With respect to Bill 26, approximately three weeks of public hearings across the province were held. Several hundred individuals and groups made oral and written submissions which were carefully reviewed and lead to a number of amendments during the Third Reading. For example, Schedule Q was amended to clarify that the criteria do not give arbitrators any new powers, in particular, that it does not give them the authority to make decisions on service levels, which was a specific concern raised when the Bill was first introduced. Similarly, both before and after the introduction of Bill 136, the Government conducted productive consultations with labour unions, municipalities and the Ontario Hospital Association, school board associations, and other interested parties about the best way to meet its objectives. In response to these consultations, significant amendments to the entire Bill were tabled.
• The Social Contract Act, 1993 (Bill 48)
  218. 218 The Government notes that Bill 48 was enacted by the previous Government of Ontario and came into force on 14 June 1993. The Act provides for restraint measures in the public sector. The provisions regarding the restraint measures are no longer in force. Consequently, public sector employers and unions are no longer subject to the restraints on collective bargaining contained in the Act.
  219. 219 The Government agrees that there were disputed issues regarding the interpretation of section 48. According to the Government, as a result of this lack of clarity and confusion, the Government made Regulation 545/95 under the Act. The Regulation was intended to clarify the situation, and was not intended to be, nor did it result in, an interference with the independence and integrity of the arbitration process.
• Independent appointment agency for interest arbitrators Interference with the Ontario Labour Relations Board (OLRB)
  220. 220 The Government states that in Ontario, interest arbitrators and arbitration boards are usually agreed upon by the parties. Only where the parties fail to agree does a third party have the authority to make appointments upon the request of a party. In the fire and hospital sectors, if the parties cannot agree on the Chair of the arbitration board, application is made under the Hospital Labour Disputes Arbitration Act and the Fire Protection and Prevention Act, 1997 to the Minister of Labour who will appoint an arbitrator. In the police sector, application is made under the Police Services Act or the Public Service Act for provincial police, to the Ontario Police Arbitration Commission, the Chair of which makes the appointment.
  221. 221 The Government acknowledges that it is essential to the integrity of these dispute resolution systems that fair and impartial arbitrators be appointed to resolve collective bargaining disputes. The Government expresses its commitment to ensuring that parties in the fire, police and hospital sectors have access to an open and equitable arbitration system. The Government asserts that it has demonstrated its commitment to such a system by replacing the existing pool of interest arbitrators with a new pool which is composed of retired judges who are credible neutrals and who can make hard decisions about contentious collective agreement provisions. These arbitrators can be called upon by the Government when the parties cannot agree on their own arbitrator.
  222. 222 With respect to the OLRB appointments, the Government submits that it has always been recognized that it is essential that the Government ensure that appointees to the Board have the experience and knowledge to fulfill the important role that government, labour and the business community expect. The Government states that it recognizes the importance of the impartiality of Vice-Chair appointees at the Board, and confirms its commitment to ensuring the continued independence and neutrality of the Board.

C. The Committee's conclusions

1. 223. The Committee notes that this case concerns allegations of governmental interference with the independence of interest arbitrators and the integrity of the arbitration system in violation of ILO standards and principles on freedom of association. In particular, at issue are Schedule Q to the Savings and Restructuring Act, 1996 (Bill 26), and the Public Sector Dispute Resolution Act, 1997 (Schedule A to the Public Sector Transition Stability Act, 1997 (Bill 136)) which impose criteria on interest arbitrators, including ability to pay, in a system where binding interest arbitration has been statutorily substituted for the right to strike for workers in the hospital, police, fire and school board sectors. In addition, the Social Contract Act, 1993 (Bill 48), as recently interpreted, restraining public sector compensation, is alleged to interfere with the independence of interest arbitrators dealing with disputes in the public sector. Finally, the complainants raise concerns regarding governmental interference with the Ontario Labour Relations Board and call for the establishment of an independent appointment agency for arbitrators.
   • Schedule Q to the Savings and Restructuring Act (Bill 26) and the Public Sector Dispute Resolution Act (Bill 136)
2. 224. Schedule Q to Bill 26 amends a number of pieces of legislation, in particular those governing interest arbitration for workers in the hospitals, fire departments, the police services and school boards and teachers. With minor variations that are not relevant for the purposes of this case, the various pieces of legislation are amended as follows:
   • In making a decision or award, the arbitrator or board of arbitration shall take into consideration all factors it considers relevant, including the following criteria:
3. 1. The employer's ability to pay in light of its fiscal situation.
4. 2. The extent to which services may have to be reduced, in light of the decision or award, if current funding and taxation levels are not increased.
5. 3. The economic situation in Ontario and in the municipality.
6. 4. A comparison, as between the employees and other comparable employees in the public and private sectors, of the terms and conditions of employment and the nature of the work performed.
7. 5. the employer's ability to attract and retain qualified employees.
   • ... Nothing (in the above provision) affects the powers of the arbitrator or arbitration board.
8. 225. Schedule A to Bill 136 adds the Public Sector Dispute Resolution Act, 1997, which also amends a number of pieces of legislation concerning compulsory arbitration. The purposes of the Act are stated to be the following:
9. 1. To ensure the expeditious resolution of disputes during collective bargaining.
10. 2. To encourage the settlement of disputes through negotiation.
11. 3. To encourage best practices that ensure the delivery of quality and effective public services that are affordable for taxpayers (section 1).
    • Section 2(2) of the Act states that "In making a decision, an arbitrator or arbitration board shall take into consideration the purposes of this Act". Section 2(3) states that "Nothing in subsection (2) relieves an arbitrator or arbitration board from any requirement under another Act to consider criteria in making a decision".
12. 226. The Committee notes firstly that most of the services covered by compulsory arbitration through Bill 26 and Bill 136 can be considered essential services, that is, those services the interruption of which would endanger the life, personal safety or health of the whole or part of the population (see Digest of decisions and principles of the Freedom of Association Committee, 4th (revised) edition, 1996, para. 526). The school board and teachers do not fulfil this criteria, and should be entitled to exercise the right to strike if they so wish (see Digest, op. cit., paras. 536, 545; see also 278th Report, Case No. 1570 (Philippines), paras. 165-166). The Committee notes however that in this case the complainants do not seek to question the validity of the compulsory arbitration system, per se, and thus the denial of the right to strike as a means of defending their economic and social interests, but rather object to certain changes in the arbitration system.
13. 227. The Committee recalls that where the right to strike is restricted or prohibited, appropriate guarantees should be given to workers to compensate for the limitation thereby placed on their freedom of action, including adequate, impartial and speedy conciliation and arbitration proceedings in which the parties concerned can take part at every stage (see Digest, op. cit., paras. 546-547). The Committee notes that the Government and the complainants agree that interest arbitration should attempt as closely as possible to replicate the results of free collective bargaining in sectors where parties have the right to strike.
14. 228. The Committee notes that the criteria set out in the legislation at issue appears to be an attempt to contain the level of wages in particular within certain budgetary limits, though some flexibility is maintained through a balancing of other enumerated factors, which are a comparison with other comparable employees in the private and public sectors, and the employer's ability to attract and retain qualified employees. "Ability to pay", is set out as one of a number of factors to be taken into consideration, along with other factors that the arbitrator considers relevant, and the weight to be given to each factor appears to remain at the discretion of the arbitrator. The Committee notes that certain criteria set out in the legislation are particularly vague, and that the arbitrator is left with broad discretion. In these circumstances, the Committee considers that the compatibility of the criteria with the principles of freedom of association and collective bargaining depends on their application in practice. It therefore requests the Government and the complainants to submit further information in this regard and, in particular, to indicate whether the outcome of arbitration in fact replicates the results of free collective bargaining in a manner that both parties consider desirable.
15. 229. The complainants allege that the Government did not adequately consult affected workers or their bargaining agents before the adoption of Bill 26 and Bill 136. In particular, the complainant states that Bill 26 was enacted with a degree of disregard for consultation with interested parties and the general public unprecedented in the province. With respect to Bill 26, the complainants state that only after an attempt by the Government to rush the legislation through the Legislature without providing for public hearings, and only after much public outcry, were limited submissions allowed to be made, and only one quarter of these submissions were heard. However, the Government states that it had consulted extensively on both statutes, in particular, three weeks of public hearings were held with respect to Bill 26.
16. 230. The Committee recalls that where a government seeks to alter a bargaining structure in which it acts actually or indirectly as employer, and the arbitration system is an extension of the bargaining structure in this case, it is particularly important that there be an adequate consultation process, whereby all objectives can be discussed by the parties concerned. Such consultation is to be undertaken in good faith and both parties are to have all the information necessary to make an informed decision (see 299th Report, Case No. 1802 (Canada/Nova Scotia), para. 281; 300th Report, Case No. 1806 (Canada/Yukon), para. 126). The Committee notes that while there were public meetings held, these occurred after the Bills had been drafted, and after much public outcry. The consultations appear to have come very late in the procedure, and the Committee requests the Government to ensure in future that consultations in good faith are undertaken in such circumstances that the parties have all the information necessary to make informed proposals and decisions.
    • The Social Contract Act, 1993 (Bill 48)
17. 231. The Committee notes that the Social Contract Act established a "social contract period" from 14 June 1993 to 31 March 1996 during which expenditure reduction targets were to be achieved in the public service. While the restraint measures in the Act are no longer in force, section 48 of the Act has been subject to judicial and legislative interpretation to which the complainants object. The relevant subsections of section 48 provide as follows:
18. (1) No increase in compensation shall be given as a result of any arbitration award or decision made on or after June 14, 1993 ...
19. (3) Despite subsection (1), an arbitration award or decision may increase the annual earnings of employees to a maximum of $30,000.
20. 232. It appears that there had been some dispute as to whether an arbitrator could make an award of compensation for the social contract period, which due to section 48(1) would then not be implemented until the end of that period. Regarding section 48(3), there was also some question as to whether for those earning less than $30,000, an increase in benefits could be awarded. The Court of Appeal for Ontario in a decision dated 15 April 1996, a copy of which was enclosed as an annex to the complaint, has interpreted section 48(1) to mean that "on or after June 14, 1993, the board of arbitration may not make an award that includes increases in compensation". The Court continued, stating that "This is the only interpretation that is in harmony with the remainder of s.48 itself, the scheme of the Act as a whole ... and the object and intention of the Legislature". On the issue of benefits, the Court held that while section 2 of the Act defined "compensation" to include benefits, section 48(3) referred to "annual earnings", thus limiting the board of arbitration to increase only the annual "direct monetary pay" of employees earning less than $30,000 and not benefits. When the case was on appeal, and prior to the above-noted decision being rendered, the Government adopted Regulation 545/95 to clarify the meaning of section 48(1). The Regulation states that "'no increase in compensation shall be given as a result of any arbitration award or decision made on or after June 14, 1993' means that an arbitration award or decision made on or after June 14, 1993 shall not provide for any increase in compensation".
21. 233. The Committee notes that the Social Contract Act, 1993 was examined by the Committee in Case No. 1722 (see 292nd Report, paras. 511-554). In that case, the Committee noted that the main purpose of the Act was to "achieve reductions in public expenditure over a three-year period which, of necessity, entails some interference in the collective bargaining process ... expenditure reductions may ultimately be obtained through a freeze of wage rates or, if this is insufficient, through compulsory unpaid leaves of absence or special leaves" (paragraph 549). The Committee had expressed its regret that the Government did not give full priority to collective bargaining and felt compelled to adopt the Act. It concluded that a three-year period of limited collective bargaining constituted a substantial restriction and expressed its hope that the legislation would cease to produce effects at the latest at the end of the three-year period. The Committee recalls that in Case No. 1722, it made its conclusions in full knowledge of the severity of the Act, and had expressed its regret in this regard.
    • Independent appointment agency for interest arbitrators Interference with the Ontario Labour Relations Board (OLRB)
22. 234. The Committee notes that the complainants raise objections to the direct appointment of arbitrators by the Government and not through an independent appointment agency, and allege that the Government has interfered with the independence of the labour tribunals (the Ontario Labour Relations Board (OLRB)) through decisions on the appointment and renewal of appointments of Vice-Chairs of the OLRB.
23. 235. Addressing firstly the allegation of interference with the independence of the OLRB, the Committee regrets that the Government replied in a general manner to the very specific allegations made by the complainants in this regard, and reminds the Government that its reply to complaints made against it should not be limited to such general observations (see Digest, op. cit., para. 21).
24. 236. The Committee notes that the OLRB is the most senior body in the Province of Ontario overseeing labour relations. The Board's duties include adjudicating issues regarding union certification, negotiation of collective agreements, successor rights, unfair labour practices and strike issues. For most purposes, the OLRB's decisions are final. The Committee considers that there is no doubt as to the fundamental role given to the OLRB in labour relations in the province, and thus considers that it is essential that such a body be fully independent and impartial.
25. 237. The complainants state that since coming to power in 1995, the Government has removed eight OLRB Vice-Chairs and the Chair, through firing or failure to reappoint. The complainants raise the particular case regarding Mr. Johnson, a senior government member, who is alleged to have sought to intimidate, coerce or threaten members of the OLRB, and to influence their decisions on penalty of loss of employment security.
26. 238. The Committee has examined closely the allegations and the decisions of the OLRB and of the Ontario Court of Justice concerning Mr. Johnson which were enclosed as annexes to the complaint. Before the OLRB, SEIU alleged that Mr. Johnson played a decisive role in selecting, on behalf of the Government of Ontario, four particular Vice-Chairs of the OLRB to have their appointments revoked. Secondly, the reappointments that were made in October 1996, were for the first time in the history of the Board explicitly "at pleasure", meaning they could be revoked at any time. Thirdly, Mr. Johnson is alleged to have made various statements to the press suggesting that he would undertake a review of the membership of the Board due to the way it had dealt with a case of protest. Finally, it was alleged that Mr. Johnson had the power to determine the career prospects of Vice-Chairs of the OLRB by controlling their access to the Ministry of Labour's list of arbitrators eligible for appointments under legislation. While feeling obliged not to disclose the details of the process for revoking the appointments of Vice-Chairs, the Vice-Chair hearing the matter stated that at a meeting in September or October 1996, "Vice-Chairs were provided with information concerning the selection process used to choose which Vice-Chairs would have their Orders in Council revoked". This information was key to the Vice-Chair finding that because of a reasonable apprehension of bias, the case could not proceed before the OLRB. The Ontario Court of Justice upheld the finding, and ordered that a disinterested person be appointed to adjudicate the matter.
27. 239. Given the outcome of the above-noted OLRB case, the Committee must express its serious concern as to the perceived effects on the independence of the members of the OLRB due to external pressures brought to bear on them. The Committee considers that, as it has stated with respect to arbitrators, members of a tribunal such as the OLRB should not only be strictly impartial, but if the confidence of both sides is to be gained and maintained, they should also appear to be impartial (see Digest, op. cit., para. 549). The Committee requests the Government to reply to the specific allegations made in this regard, and to indicate how members are appointed, any consultation process involved, the term of such appointments, and the basis in law and in practice upon which appointments are or can be revoked or not renewed. The Committee also requests to be kept informed of the outcome of the independent adjudication of the case concerning Mr. Johnson, and requests the Government to forward to the Committee a copy of the decision once it is rendered.
28. 240. Concerning the allegation that arbitrators are appointed by the Government without restriction where there is compulsory arbitration in the municipal and education sectors, and fire and police sectors, the Committee notes that pursuant to the legislation, it is only where the parties fail to agree on the arbitrator that the Government plays a role. However, where the Government does appoint the arbitrator, as stated above, it is essential that such person should not only be strictly impartial, but if the confidence of both sides is to be gained and maintained, he or she should also appear to be impartial (see Digest, op. cit., para. 549). The Committee stresses that this is all the more important in the public sector where the Government itself is one of the parties. The Committee therefore requests the Government to provide it with information regarding the process of choosing arbitrators for appointment where the parties cannot agree on an arbitrator.
    • Overall industrial relations climate
29. 241. Finally, the Committee considers that the allegations raised in this case must be viewed in the context of the general industrial relations environment in Ontario. The Committee cannot but remark on the fact that after three years of statutorily imposed wage restraint in the public sector through the Social Contract Act, changes have been made to the compulsory arbitration system without full consultation with the parties concerned. In addition, as addressed recently in Case No. 1900 (see 308th Report, paras. 139-194), agricultural workers, domestic workers and certain specified professions have been excluded from access to collective bargaining and the right to strike through legislation, and legislation concerning successor rights has been repealed. In addition, there was an attempt to repeal important pay equity provisions. Given the combination of factors impinging on labour relations in Ontario, the Committee considers it necessary to point out that such actions and restrictions can, in the long term, prove harmful to and destabilize labour relations. The Committee considers that to overcome the loss of confidence of the trade unions and the other residual negative effects on industrial relations that have occurred from the recent governmental action, the Government should consult fully with the trade unions and employers' organizations to determine how to strive to promote confidence in the arbitration, which is essential for harmonious industrial relations. The Committee requests the Government to keep it informed in this regard. The Committee draws this case to the attention of the Committee of Experts on the Application of Conventions and Recommendations.

The Committee's recommendations

1. 242. In the light of its interim conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee requests the Government and the complainants to submit further information regarding the application in practice of the criteria for arbitrators set out in Bill 26 and Bill 136, in particular, to indicate whether the outcome of arbitration in fact replicates the results of free collective bargaining in a manner that both parties consider desirable.
   • (b) The Committee requests the Government to ensure in future that consultations in good faith are undertaken regarding any changes in the bargaining structure, in such circumstances that the parties have all the information necessary to make informed proposals and decisions.
   • (c) Concerning the allegation of interference with the independence of the OLRB, the Committee regrets that the Government replied in a general manner to the very specific allegations made by the complainants in this regard. Expressing serious concern as to the perceived effects on the independence of the members of the OLRB due to the external pressures brought to bear on them, the Committee requests the Government to reply to the specific allegations made in this regard, and to indicate how members are appointed, any consultation process involved, the term of such appointments, and the basis in law and in practice upon which appointments are or can be revoked or not renewed. The Committee also requests to be kept informed of the outcome of the independent adjudication of the case concerning Mr. Johnson, and requests the Government to forward to the Committee a copy of the decision once it is rendered.
   • (d) Recalling that it is essential that the arbitrator should not only be strictly impartial, but if the confidence of both sides is to be gained and maintained, he or she should also appear to be impartial, and stressing that this is all the more important in the public sector where the Government itself is one of the parties, the Committee requests the Government to provide it with information regarding the process of choosing arbitrators for appointment where the parties cannot agree on an arbitrator.
   • (e) The Committee considers that to overcome the loss of confidence of the trade unions and the other residual negative effects on industrial relations that have occurred from the recent governmental action impinging on labour relations in Ontario, the Government should consult fully with the trade unions and employers' organizations to determine how to strive to promote confidence in the arbitration, which is essential for harmonious industrial relations. The Committee requests the Government to keep it informed in this regard.
   • (f) The Committee draws this case to the attention of the Committee of Experts on the Application of Conventions and Recommendations.