Canadian Labour and Employment Law Journal Revue Canadienne De Droit Du Travail Et De L'emploi VOLUME 10

Canadian Labour and Employment Law Journal

Revue canadienne de droit du travail et de l’emploi

VOLUME 10

EDITOR IN CHIEF / RÉDACTEUR EN CHEF

Brian Etherington 2003 CanLIIDocs 189 Faculty of Law University of Windsor ASSOCIATE EDITORS / RÉDACTEURS ADJOINTS Jeffrey Sack, Q.C. of the Ontario Bar John C. Murray of the Ontario Bar MANAGING EDITOR / DIRECTEUR GÉRANT Janine Benedet Osgoode Hall Law School York University COMMENTARY EDITOR/ RÉDACTEUR D’UN COMMENTAIRE Michael Lynk Faculty of Law University of Western Ontario BOOK REVIEW EDITOR/ RÉDACTEUR D’UN COMMENTAIRE SUR UN LIVRE Sandy Price 2003 CanLIIDocs 189 EDITORIAL BOARD / COMITÉ RÉDACTION

CHAIR The Honourable Mr. Justice Warren K. Winkler Court of Ontario

Prof. Roy Adams Prof. William Kaplan McMaster University University of Ottawa Prof. Marie-France Bich Prof. Ron McCallum University of Montreal University of Sydney Prof. Innis M. Christie Sydney, Australia Deputy Minister of Labour Prof. Jean Sexton Nova Scotia Université Laval Prof. Geoff England Ken Swan

University of Lethbridge Arbitrator 2003 CanLIIDocs 189 Prof. Keith Ewing The Honourable Madame Justice King’s College Katherine Swinton London, England Court of Ontario Prof. Judy Fudge Prof. Lord Wedderburn Osgoode Hall Law School Emeritus Professor of Law William B. Gould IV London School of Economics Chair, U.S. National and Political Science Labour Relations Board London, England Prof. Patricia Hughes Prof. Paul Weiler University of New Brunswick Harvard University

PRACTICE ADVISORY PANEL / COMITÉ CONSULTATIF

David Blair Gaston Nadeau Vancouver, B.C. Montreal, Quebec David Corry Gordon Petrie Calgary, Alberta Fredericton, New Brunswick Sheila Greckol Ron Pink Edmonton, Alberta Halifax, Nova Scotia Donald McDougall Thomas A. Roper, Q.C. Halifax, Nova Scotia Vancouver, B.C. Mel Myers Suzanne Thibodeau Winnipeg, Manitoba Montreal, Quebec 2003 CanLIIDocs 189 Employee or Independent Contractor? Charting the Legal Significance of the Distinction in Canada

Judy Fudge,* Eric Tucker** & Leah Vosko***

The distinction between employees and independent contractors is crucial in determining the scope of application of labour and employment legislation in Canada, since the self-employed are, for the most part, treated as entrepreneurs who do not require the statutory protections accorded to employees. Yet statistics indicate that most self- employed people resemble employees more than entrepreneurs, in the sense that they are economically dependent on the sale of their labour and are often subject to inferior terms and conditions of work. Using 2003 CanLIIDocs 189 four Canadian jurisdictions as a basis for comparison, the authors demonstrate that there are wide variations in the personal scope of coverage of the common and civil law of employment, collective bargaining, employment standards, human rights and workers’ compensation legislation, as well as social wage and income tax legislation. These variations, it is argued, reflect an ad hoc political process of extending or denying coverage to certain groups of employees while attempting to maintain the formal distinction between employees and independent contractors. Furthermore, the development of increasingly elaborate legal tests has not succeeded in eliminating the uncertainty which often attends the determination of a worker’s status. In the authors’ view, the time has come to consider dissolving the employee-independent contractor distinction, and extending coverage to all workers dependent on the sale of their capacity to work, unless compelling policy reasons exist for a more restrictive approach.

* Professor, Osgoode Hall Law School, York University. ** Professor, Osgoode Hall Law School, York University. *** Canada Research Chair, School of Social Sciences, Joseph E. Atkinson Faculty of Liberal and Professional Studies, York University. We would like to thank the Law Commission of Canada, Human Resources Development Canada, and the Social Sciences and Humanities Research Coun- cil for the financial support to conduct this research. This article is based upon a report titled The Legal Concept of Employment: Marginalizing Workers (Ottawa: Law Commission of Canada, 2002). 194 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

1. INTRODUCTION

Employment is a legal concept that is crucial for determining the legal protection, social recognition, and economic security associated with different forms of work. The legal definition of the term “employee” determines the personal scope of labour protection; it fixes the boundary between “the economic zone in which business entrepreneurs are expected to compete” and the “economic zone in which workers will be afforded the relatively substantial protections of the labour standards . . . and of the common law . . .”1 People who work for pay but who are self-employed are treated for most legal purposes as independent entrepreneurs, who, unlike dependent employees, do not need labour protection. Instead, independent contractors are subject to the rigors of competition, and the principles and

institutions of commercial law. Workers seeking reasonable notice, 2003 CanLIIDocs 189 minimum wages, the right to refuse unsafe work, statutory holidays, or maternity leave must establish to the satisfaction of an adjudicator that they are employees in order to enjoy these legal rights. Employee status is also a prerequisite, in the overwhelming majority of cases, for the application of collective bargaining legislation. Moreover, it is crucial for a range of other benefits in our society, from employment insurance to private and public pensions. And owing to our system of deducting payroll taxes and withholding income tax at source, employment is also a huge source of revenue for the state. The legal definition or tests of employment have long been the focus of scholarly attention. As a legal concept employment is elu- sive; its historical origins are convoluted, and precisely how work is organized and the legal form it takes varies widely. Since the 1950s prominent employment and labour scholars have concluded that the English common law did not have a unified conception of employment or a coherent method for distinguishing between employees and independent contractors.2

1 G. England, I. Christie & M. Christie, Employment Law in Canada, 3d ed. (Markham, Ontario: Butterworths, 1998), vol. 1, at p. 2.1. 2 O. Kahn-Freund, “Servants and Independent Contractors” (1951), 14 Mod. L. Rev. 504; R. Rideout, “The Contract of Employment” (1966), 19 Curr. Legal Probs. 111; K. Wedderburn, The Worker and the Law, 3d ed. (Harmondsworth: Penguin, 1986). EMPLOYEE OR INDEPENDENT CONTRACTOR? 195

In the 1990s the legal definition of employment began to attract a great deal of attention internationally and in Canada. The changing nature of employment relationships has put the legal tests under considerable stress. Firms attempt to shift the risks of productive activity and employment onto workers by categorizing work relationships as commercial arrangements rather than employment.3 The legal distinction between employees and independent contractors is even harder to draw now than it was before. The remarkable growth of self-employment since the early 1980s calls into question models of how capitalist labour markets operate, theories about entrepreneurship, understandings about the nature of self-employment, official measures of self-employment, and the adequacy of the legal tests of employment status for determining the personal scope of labour protection and social benefits.

While self-employment is seen as an important source of growth of 2003 CanLIIDocs 189 entrepreneurship, bringing with it the potential for longer-term employment growth, in 2000 the Organization for Economic Co- operation and Development (OECD) identified a number of concerns associated with its growth — concerns about the working conditions, training, security, and income of the self-employed, as well as self- employment as a form of disguised employment.4 These concerns are particularly relevant in Canada, where there has been a large growth in self-employment. Through the 1980s and 1990s self-employment grew as a share of employment, reaching 16% in 2000. In that year, 34.6% of the self-employed were self- employed employers who hired employees. The majority of the self- employed did not hire employees and thus were categorized as “own account”; they constituted 10.3% of the total workforce in 2000. The income distribution of the self-employed is highly polarized; in 1999, the average annual incomes of employers and the own-account self-

3 U. Beck, The Brave New World of Work (Cambridge: Policy Press, 2000); R. Chaykowski & M. Gunderson, “The Implications of Globalization for Labour and Labour Markets,” in R. Chaykowski, ed., Globalization and The Canadian Economy: The Implications for Labour Markets, Society and the State (Kingston, Ontario: School of Policy Studies, Queen’s University, 2001), at p. 79; H. Collins, “Regulating the Employment Relationship for Competitiveness” (2001), 30 Indus. L.J. 17. 4 OECD, “Partial Renaissance of Self-Employment,” OECD Employment Outlook (Paris: OECD, 2000). 196 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] employed were $46,825 and $16,918 respectively.5 Income differences also prevail by sex. In the same year, women and men employers had average annual incomes of $39,920 and $49,470 respectively, and women and men in the own-account category had average annual incomes of $13,032 and $19,769 respectively. The comparable figures for all female and male paid employees were $26,015 and $40,183 respectively, indicating that the average annual incomes of men and women in paid employment tended to be less than those of their counterparts working as self-employed employers but significantly more than their counterparts in own-account self-employment. Men are more likely to be self-employed employers than are women, who make up a larger share of the own-account self-employed. The working conditions of many self-employed workers are also inferior to paid employees. Specifically, the self-employed are less likely to have

access to training, earn overtime pay or receive maternity, parental or 2003 CanLIIDocs 189 sick leave, and they report longer working hours than paid employees. However, the self-employed report greater autonomy than employees along the dimensions of control, pace and duration of work.6 The self-employed do not make up a homogenous category; instead, they range from the high-income professional who employs others to the child-care provider who employs no one and works out of her home. In Canada, few of the self-employed conform to the

5 Statistics Canada, Survey of Labour and Income Dynamics 1999, Special Run. These figures refer to net income. Income is defined in the Survey as wages, salaries, CPP/QPP, EI, workers’ compensation benefits, retirement pensions, other income, investment income, Old Age Security, GIS/SA, social assistance, Child Tax benefits, GST/HST credit and Provincial/Territorial tax credits. For the self-employed, income is a better indicator of economic status than earnings, since they derive a range of benefits from their employment status invisible in earnings data. This data is discussed in detail in J. Fudge, E. Tucker & L. Vosko, The Legal Concept of Employment: Marginalizing Workers (Ottawa: Law Com- mission of Canada, 2002), Part Two. 6 B. Delage, Results from the Survey of Self-Employment in Canada (Hull: Human Resources Development Canada, 2002), at http://dsp-psd.communications.gc.ca/ collection.RH 64-12-2001C. pdf.; Human Resources Development Canada, Own Account Self-Employment in Canada: Lessons Learned (Ottawa: HRDC Evaluation and Data Development Strategy, 1998); OECD, “Recent Develop- ments in Self-Employment,” in OECD Employment Outlook (Paris: OECD, 1992), at p. 156; OEDC, supra, note 4, at pp. 169-170. EMPLOYEE OR INDEPENDENT CONTRACTOR? 197 ideal of entrepreneurship that is marked by ownership, control over production, and autonomy; 65.4% are own account and economically dependent upon the sale of their labour. The majority of the self- employed in Canada resemble employees more than they do entrepreneurs. However, the problem is that both own-account and employer self-employed are classified for legal purposes as independent contractors. A careful consideration of how the legal distinction between employment and self-employment is drawn allows us to identify and evaluate the basis for limiting labour protection to only certain forms of paid work. This question is particularly important in light of the commitment that the International Labour Organization (ILO) made in its 1998 Declaration of Fundamental Principles and Rights at Work to the equality of treatment of different forms of work.7 The

goal of providing opportunities for women and men to obtain decent 2003 CanLIIDocs 189 and productive work in conditions of freedom, equity, security and human dignity is truly momentous, for as Amartya Sen remarked, it applies to all workers, not just workers in the organized sector or wage employment, but also to homeworkers and the self-employed.8 From a normative perspective the ILO has identified the policy challenge as being to extend effective legal and social protection to self- employed workers.9 The purpose of this article is to examine the significance of the legal distinction between employment and independent contracting in determining the personal scope of legislation. Instead of focusing exclusively on how adjudicators develop and apply legal tests in the context of labour protection legislation, the examination here extends to legislative and administrative techniques that grant rights and protections to persons not classified as employees by deeming them to

7 ILO, ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up (Geneva: ILO, 1998). 8 A. Sen, “Work and Rights” (2000), 139 Int’l Lab. Rev. 119. 9 ILO, Income Security and Social Protection in a Changing World: World Labour Report 2000 (Geneva: ILO, 2000); ILO, Meeting of Experts on Workers in Situ- ations Needing Protection (The Employment Relationship: Scope) Basic Techni- cal Document (Geneva: ILO, 2000); ILO, Decent Work in the Informal Economy (Geneva: ILO, 2002). 198 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] be employees.10 Moreover, the article extends its inquiry beyond labour protection legislation to examine the personal scope of social wage, and income tax legislation and law in four jurisdictions, British Columbia, Ontario, Quebec and the federal. The goal is thus to provide an indication of the variation in the personal scope of employment legislation and the different techniques for determining coverage in different jurisdictions and policy contexts. In doing so, the article provides a basis for evaluating the capacity of adjudicators to adopt a purposive interpretation in determining the personal scope of a legal regime and for assessing the continuing legal significance of the distinction been employees and independent contractors. It begins with the common and civil law, since courts and tribunals historically have invoked its concepts and methods when interpreting statutes.

2. THE PERSONAL SCOPE OF EMPLOYMENT- AND 2003 CanLIIDocs 189 LABOUR-RELATED LAW AND LEGISLATION

(a) Common Law and Civil Law

(i) Common Law

The common law has drawn a distinction between employees and independent contractors for two principal reasons: vicarious liability and wrongful dismissal. Courts have held employers to be vic- ariously liable to third parties for the negligence of employees but not of independent contractors. They have also held that an implied term of contracts of indefinite hiring is that such contracts can be termi- nated only by reasonable notice, absent cause or a binding contractual provision, but they have not generally implied a right to notice in contracts for service. Having made this distinction for these purposes, courts soon had to grapple with the reality that contracts for the performance of work assumed a range of forms and that it was no easy task to draw the line in the “appropriate” place.

10 Recent work that considers the scope of labour protection in Canada includes G. Davidov, “The Three Axes of Employment Relationships: A Characterization of Workers in Need of Protection” (2002), 52 U.T.L.J. 356; and B. Langille & G. Davidov, “Beyond Employees and Independent Contractors: A View From Canada” (1999), 21 Comp. Lab. L. & Pol’y Journal 6. EMPLOYEE OR INDEPENDENT CONTRACTOR? 199

In the context of implied rights to notice, the Ontario Court of Appeal held in 1936 that the legal categories of employee and independent contractor did not completely occupy the broader field of contractual relations for the performance of work. There were, in addition, cases of an “intermediate nature” where the relation of master and servant did not exist, but where a notice requirement might be implied. Since then, jurisprudence has been developed to identify those cases of non-employment where a right to notice of termination is implied, taking into account factors such as permanency, exclusiv- ity, investment, risk and business integration.11 More generally, however, the courts have focused their attention on the test for distinguishing between employees and independent contractors, rather than on limiting the significance of the distinction itself. In the early twentieth century courts looked primarily at the

issue of control over the manner of doing the work, although the case 2003 CanLIIDocs 189 most frequently cited for this approach, Yewens v. Noakes, was a tax case.12 In the context of another Canadian tax case, Montreal v. Mon- treal Locomotive Works, the Privy Council pronounced that a more complicated test was necessary to deal with the “more complex conditions of modern industry.”13 To meet the challenge, it articulated the fourfold test that considers control, ownership of the tools, chance of profit, and risk of loss. Another approach to the problem was developed by Lord Denning five years later and became known as the “organization test.” The focus of this inquiry is the extent to which the work performed is an integral part of the employer’s business.14 These tests, along with a few others, sometimes singularly and sometimes in combination, have gained widespread acceptance in Cana- dian courts.15 The development of new legal tests for determining employee status has tended to widen its scope, as the emphasis has shifted from

11 Carter v. Bell & Sons, [1936] 2 D.L.R. 438 (Ont. C.A.); Marbry v. Avrecan Int’l Inc. (1999), 171 D.L.R. (4th) 436 (B.C.C.A.). 12 (1880), 6 Q.B.D. 530. See also Dallontania v. McCormick (1913), 14 D.L.R. 613 (Ont. C.A.); R. Flanagan, “Enterprise Control: The Servant-Independent Con- tractor Distinction” (1987), 37 U.T.L.J. 25, at pp. 37-39. 13 [1947] 1 D.L.R. 161 (P.C.), at p. 169. 14 Stevenson Jordan and Harrison, Ltd. v. Macdonald and Evans, [1952] 1 T.L.R. 101 (C.A.), at p. 111. 15 England, Christie & Christie, supra, note 1, chap. 2. 200 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] direct subordination to include economic dependence as the basis for extending labour protection to working people.16 However, it has not simplified the adjudicative process. Nor has it rendered control irrelevant; control continues to be a factor in determining employment status, but what is meant by control depends upon the nature of the work. A variety of different legal tests of employee status are applied in different legal contexts in which decision-makers consider dozens of factors. In Canada, some scholars suggest that statutory context, or the purpose for drawing the distinction, provides a principled and coherent basis for determining employment status.17 Recently the Supreme Court of Canada, having reviewed the jurisprudence in the context of determining employment status for the purpose of vicarious liability, concluded: . . . there is no one conclusive test, which can be universally applied to deter-

mine whether a person is an employee or an independent contractor. 2003 CanLIIDocs 189 ... The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker’s activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.18 After articulating a multi-factor test, the Court continued: “It bears repeating that the above factors constitute a non-exhaustive list, and there is no set formula as to their application. The relative weight of each will depend on the particular facts and circumstances of the case.”19 The approach adopted in Sagaz Industries gives judges a great deal of scope to tailor the boundaries of the category of

16 Ibid., at p. 2.17. 17 D. Carter, G. England, B. Etherington & G. Trudeau, Labour Law in Canada (Hague: Kluwer, 2002), at p. 87; Davidov, supra, note 10; England, Christie & Christie, supra, note 1, at p. 2.2; Langille & Davidov, supra, note 10. 18 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983, at paras. 46-47. 19 Ibid., at para. 48. EMPLOYEE OR INDEPENDENT CONTRACTOR? 201 employee to fit their view of the justice and merits of the case. To assist them, the Court also articulated a set of policy justifications for vicarious liability. Whether the purposive, or policy-based, approach to determining employment status will generate greater certainty than the earlier tests remains to be seen.

(ii) Quebec Civil Law

Unlike that of the rest of Canada, the civil law of Quebec is code-based. The Civil Code of Lower Canada (C.C.L.C.) was in force until January 1, 1994, when the Civil Code of Quebec (C.C.Q.) replaced it. The C.C.L.C. did not use the term “employment,” but rather spoke of the “lease and hire of work” as “a contract by which the lessor undertakes to do something for the lessee for a price.”20

The Code distinguished three different types of work that might be 2003 CanLIIDocs 189 leased: personal services of workmen, servants and others; work by carriers; and work by builders and others who undertake work by estimate or contract. In the last case, the undertaking party was expected to “either furnish labour and skill, or also furnish materials.”21 Although the distinction between the first group and third group of workers was not well-developed in the C.C.L.C., or in the codes of other legal systems based on Roman law, Quebec courts built up its significance, primarily in the early twentieth century, in the context of workers’ compensation and vicarious liability cases. As a result, the distinction between employees and independent contractors is as deeply embedded in Quebec as it is in common law jurisdictions. Moreover, courts in Quebec, like those in common law jurisdictions, also recognize intermediate categories of persons who are neither employees nor independent contractors, but who are entitled to reasonable notice of termination.22 The Quebec courts initially identified the key distinction between employees and independent contractors as that of subordination and control. In Quebec Asbestos Corp. v. Couture, the

20 Title VII, Chapter 2, art. 1665a, “Of the Lease and Hire of Work.” 21 Art. 1683 C.C.L.C. 22 G. Audet & R. Bonhomme, Wrongful Dismissal in Quebec (Montreal: Y. Blais, 1990), at p. 5. 202 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

Supreme Court of Canada held that under Quebec law, “[t]he contract of lease and hire of work may be distinguished from the ‘contrat d’enterprise’ principally by the subordinate character of the employee in the former contract.”23 Later, Quebec courts also took into account the fourfold test developed in Montreal v. Montreal Locomotive Works, even though the judgment in that case made no reference to the C.C.L.C. Despite the use of the fourfold test, the factor of legal subordination remained predominant.24 The emphasis on subordination was further embedded in the Civil Code of Quebec when it replaced the C.C.L.C. in 1994. Article 2085 defines a contract of employment as one in which “the employee undertakes for a limited period to do work for remunera- tion, according to the instructions and under the direction or control of . . . the employer.” This is contrasted to a contract of enterprise or

for services in which the provider of the service is able to “choose the 2003 CanLIIDocs 189 means of performing the contract and no relationship of subordination exists between the contractor or provider of services and the client in respect of such performance.”25 The language of the C.C.Q. clearly makes subordination the most significant element.26 However, to determine whether legal subordination is present in marginal cases, courts interpreting the C.C.Q. may consider economic subordination, although economic subordination alone does not allow the court to characterize a contract as one of employment. This approach to the interpretation of subordination allows other factors to be brought in. The uncertain state of the law can be seen in the recent decision of the Federal Court of Appeal in Wolf v. Canada.27 Although the case dealt with whether a worker was an employee or independent contractor for the purpose of determining liability for income tax, the three Quebec judges agreed that employment status was to be determined according to the C.C.Q. They also agreed that while the

23 (1928), [1929] 3 D.L.R. 601 (S.C.C.), at p. 603. 24 Wolf v. Canada, [2002] 4 F.C. 396 (C.A.), at paras. 44-48. See also Audet & Bonhomme, supra, note 22. 25 Art. 2099 C.C.Q. 26 R. Gagnon, Le Droit du Travail du Québec, 4th ed. (Cowansville, Quebec: Y. Blais, 1999), at p. 51. 27 Wolf v. Canada, supra, note 24. EMPLOYEE OR INDEPENDENT CONTRACTOR? 203

C.C.Q. in its provisions was much more detailed than the C.C.L.C., it did not substantially alter the law in Quebec. According to Décary J.A., “what fundamentally distinguishes a contract for services from a contract of employment is the absence in the former of a ‘relationship of subordination’ between the provider of the services and the client . . . and the presence in the latter of the right of the employer to ‘direct and control’ the employee...”28 Yet, despite their unanimity on the centrality of subordination, the judges differed over the legal tests to determine its presence. Desjardins J.A. took the view that the distinction between contracts of employment and contracts for services under the C.C.Q. could be considered in light of the tests developed in both civil and common law. On that basis, she endorsed the approach of the Supreme Court of Canada in Sagaz Industries, although in her application of it she failed to discuss the purpose of 29 the taxing statute. Décary J.A. appeared to be less amenable to let- 2003 CanLIIDocs 189 ting the common law influence the civil code, and in particular insisted: “The test, therefore, is whether, looking at the total relationship of the parties, there is control on the one hand and subordination on the other.” He then added: “I say, with great respect, that the courts, in their propensity to create artificial legal categories, have sometimes overlooked the very factor which is the essence of a contractual relationship, i.e. the intention of the parties.”30 The third judge, Noël J.A., thought that as none of the tests was conclusive, the intent of the parties should prevail.31 In sum, the distinction between employees and independent contractors is as salient under the civil law of Quebec as it is under the common law of Canada, and as difficult to draw. The most important difference between the two systems is that in Quebec, at least among some judges, greater emphasis is placed on the test of control and subordination than on a more open-ended test in which the weight to be given to any particular factor is left unspecified. It is far from clear, however, whether this difference in approach has any appreciable impact on the outcome of cases.

28 Ibid., at para. 112. 29 Ibid., at paras. 49-94. 30 Ibid., at para. 117. 31 Ibid., at paras. 122-124. 204 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

(b) Collective Bargaining Law

Across Canada and Quebec labour tribunals administer collective bargaining legislation, which provides a mechanism for unions to obtain the exclusive right to represent groups of workers and to bargain terms and conditions of employment on their behalf, protects workers who seek to exercise their right to join or participate in a trade union, and regulates the conduct of employers and unions when it comes to labour relations disputes. The goal of this legislation is to provide workers with countervailing power through a scheme that pro- motes collective representation, and thereby to foster industrial peace. By contrast, the Competition Act forbids entrepreneurs from combining to restrict competition. Competition is the guiding principle of commercial policy and law. But “combinations or activities of

workmen or employees for their own reasonable protection” are 2003 CanLIIDocs 189 exempted from the Competition Act, as are arrangements pertaining to collective bargaining over terms and conditions of employment.32 Employment status removes workers and their organizations from the ambit of laws designed to ensure that markets are competitive. Thus, when determining the personal scope of collective bargaining legislation, it is also necessary to consider its implications under competition law.33 The federal Wartime Labour Relations Regulations, 1944 initiated a practice of confining the scope of the legal protection for collective bargaining to employees without defining the term.34 Some of the early labour tribunals in Canada, likely influenced by American jurisprudence, emphasized economic dependence in determining employee status.35 The important question was whether a group of workers would benefit from collective bargaining legislation, not

32 Competition Act, R.S.C. 1985, c. C-34, s. 4(1)(a). 33 A. Andras, “Labour and Combines” (1952), 30 Can. Bar Rev. 592; H. Arthurs, “The Dependent Contractor: A Study of the Legal Problems of Countervailing Power” (1965), 16 U.T.L.J. 89; C. Backhouse, “Labour Unions and Anti-Com- bines Policy” (1976), 14 Osgoode Hall L.J. 113; Labour Law Casebook Group, Labour and Employment Law: Cases, Materials and Commentary (Kingston: IRC Press, 1998). 34 The statutes identified specific groups of employees, such as managers, who were excluded from the definition of employee for the purposes of the statute. 35 Arthurs, supra, note 33, at p. 93. EMPLOYEE OR INDEPENDENT CONTRACTOR? 205 whether they were employees at common law. This approach changed when the Nova Scotia Court of Appeal, overruling a labour tribunal, held that in the absence of a statutory definition the meaning of the term employee should be “determined by the general law.”36 Fishers who owned their own boats were found to be partners, not employees, for the purposes of collective bargaining law. This case established the precedent of invoking the common law tests of employee status to determine the personal scope of collective bargaining law, which had the effect of narrowing its scope. Initially the majority of labour tribunals resolved challenges to the employment status of workers who sought the benefits of collective bargaining legislation by invoking the common law control test. Ontario led the way in adopting the “fourfold test,” which was generally regarded as an improvement by labour law scholars, who were 37 critical of the control test. The fourfold test placed greater emphasis 2003 CanLIIDocs 189 on the economic reality of the relationship, an important consideration in the context of collective bargaining legislation that was designed to enable the economically dependent to exercise countervailing power. However, it did not help those workers whom Harry Arthurs described as “ ‘dependent’ economically, although legally ‘contractors’ ”; according to him, “[s]elf-employed truck drivers, peddlers, and taxicab operators, farmers, fishermen, and service sta- tion lessees personify the dependent contractor.”38 In an influential article published in 1965, Arthurs approached the question of the personal scope of collective bargaining legislation from the perspective of competition policy. He argued that a dependent contractor “who sells services doubly disrupts the labour market. On the one hand, he competes with organized employees for available work; on the other hand, his attempts to organize for collective action, lacking statutory sanction, are often characterized by economic force and legal reprisals.”39 As part of the solution to labour market unrest caused by dependent contractors, Arthurs recom-

36 Lunenberg Sea Products Ltd., [1947] 3 D.L.R. 195 (N.S.C.A.). 37 Arthurs, supra, note 33, at p. 93. 38 Ibid., at p. 89. 39 Ibid., at p. 114. Arthurs notes that dependent contractors in the product market, like farmers and fishers, “presents even more institutional problems.” 206 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] mended that collective bargaining legislation be extended to them.40 The report of the influential Task Force on Labour Relations, which had been appointed in 1966 by the federal government to report on industrial relations in the context of rising labour unrest, focused attention once again on the plight of the economically dependent self-employed and advocated the extension of collective bargaining legislation to them.41 Both Arthurs and the Task Force recommended that competition law be amended specifically to exclude collective bargaining by dependent contractors. Between 1972 and 1977 seven jurisdictions modified their collective bargaining legislation to extend the definition of employee to include dependent contractors.42 British Columbia and Ontario adopted a broad definition.43 By contrast the definition in the federal Canada Labour Code was (but no longer remains) narrow, limited by

industry (joint-venture fishers) and occupation (owner-operators of 2003 CanLIIDocs 189 trucks).44 However, the actual extent to which the statutory definition of dependent contractor expanded the personal scope of collective bargaining law depended upon how labour tribunals interpreted and applied it. Labour tribunals across the country have developed lists of factors to assist them in distinguishing dependent from independent contractors.45 Another technique of extending the personal scope of collective bargaining legislation is to give the labour tribunal the authority to designate workers as employees for the purpose of collective bar-

40 Ibid., at pp. 114-115. 41 Canadian Labour Relations: Report of the Task Force on Labour Relations (Ottawa: Office of the Privy Council, 1969), at p. 140. 42 M. Bendel, “The Dependent Contractor: An Unnecessary and Flawed Develop- ment in Canadian Labour Law” (1982), 32 U.T.L.J. 374. 43 British Columbia Labour Relations Code, R.S.B.C. 1996, c. 244, s. 1(1); Ontario Labour Relations Act, S.O. 1995, c. 1, Sch. A. 44 Section 107 of the predecessor Canada Labour Code, R.S.C. 1970, as am. S.C. 1972, c. 18, s. 1, contained the narrow definition. The wider definition of dependent contractor, adopted in S.C. 1983-84, c. 39, s. 21(1), remains in the current Canada Labour Code, R.S.C. 1985, c. L-2, s. 3(1). 45 For example, in Algonquin Tavern and C.L.C., Local 1689, [1981] 3 Can. L.R.B.R. 337, the Ontario Labour Relations Board listed eleven factors to be considered, including evidence of entrepreneurial activity and economic mobility; G. Adams, Canadian Labour Law, 2d ed. (Aurora, Ontario: Canada Law Book, 1995), at pp. 6-3 – 6-5; Langille & Davidov, supra, note 10, at pp. 27-28. EMPLOYEE OR INDEPENDENT CONTRACTOR? 207 gaining. Manitoba and Saskatchewan have opted for this solution.46 The statutes in both jurisdictions state that the concept of employee is not relevant to determining the scope of collective bargaining legislation, and that the important question is whether collective bargaining is appropriate. This technique of expanding the coverage of collective bargaining legislation has the advantage of making it clear that the decision to cover a particular group of workers is a policy question and not a matter of adjudicating between competing legal categories, but it is not obvious that these differences in approach yield significantly different results. Indeed, even in those jurisdictions that did not enact dependent contractor or deeming provisions, the development of civil and common law tests of employee status has combined with the increased emphasis on a purposive interpretation of key statutory terms to expand the personal scope of collective bar- 47 gaining legislation. In Quebec the term “employee” has been 2003 CanLIIDocs 189 broadly interpreted by the labour tribunal to include workers who in other jurisdictions would be considered dependent contractors.48 In the federal jurisdiction, when the definition of dependent contractor was limited to specific industries, the labour tribunal declared that the definition of employee was wide enough to encompass dependent contractors in other industries.49 The development of a broader conception of employment that emphasizes economic dependence may explain why collective bargaining by dependent contractors has not attracted any attention under competition law. Despite the fact that neither the competition legislation nor the Criminal Code were amended to exempt dependent contractors who engaged in collective bargaining, there have been no legal proceedings alleging anti-competitive behaviour by them.50

46 Manitoba Labour Relations Act, R.S.M. 1987, c. L-10, s. 1; Saskatchewan Trade Union Act, R.S.S. 1978, c. T-17, s. 2(f)(iii). 47 Bendel, supra, note 42. 48 Ibid., at pp. 390-391; S. Bernstein, K. Lippel & L. Lamarche, Women and Home- work: The Canadian Legislative Framework (Ottawa: Status of Women Canada, 2001), at p. 130. 49 Adams, supra, note 45, at p. 6-9; Société Radio-Canada (1982), 1 Can. L.R.B.R. (N.S.) 29 (C.L.R.B.). 50 Backhouse, supra, note 33; Labour Law Casebook Group, supra, note 33, at p. 210. 208 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

Economic dependence and control are the key factors distinguishing workers who are granted access to collective bargaining legislation from workers who are not.51 People who have made a considerable capital investment in the equipment used to perform their work, who provide services to several different firms, and who hire others on a limited basis to help them perform their work have been considered to be either employees or dependent contractors. Such diverse groups as owner-drivers of dump trucks, driver-sales- men employed by dairies, oil-burner servicemen, freelance journal- ists, homecare workers, and house parents working for welfare agencies are now entitled to the protection of collective bargaining legislation.52 However, where a labour tribunal will draw the line between employees, dependent contractors, and entrepreneurs in a particular case is hard to predict. One important question is whether

the degree of economic dependence on a particular employer is 2003 CanLIIDocs 189 enough to keep a dependent contractor in the legal category of employee. Another controversial question is whether contractors who hire other workers should be considered to be dependent contractors. Several jurisdictions provide special rules to deal with potential conflicts of interest over representation and bargaining structure between traditional employees and dependent contractors. The legislation in Ontario specifically provides that dependent contractors be placed in a bargaining unit of their own unless a majority indicate their preference for being assigned to a unit composed of other employees. In British Columbia and the federal jurisdiction dependent contractors are included in units with employees.53 As Canadian firms increasingly contract out many of their core functions, this difference of approach assumes greater significance.54 Not only is the line between employees and independent contractors as slippery as

51 Davidov, supra, note 10; Langille & Davidov, supra, note 10, at p. 28. 52 Carter et al., supra, note 17, at p. 252. 53 See the discussions of dependent contractors and bargaining units by Bendel, supra, note 42, at p. 401; Labour Law Casebook Group, supra, note 33, at p. 218. 54 Labour Law Casebook Group, supra, note 33, at pp. 218-219. EMPLOYEE OR INDEPENDENT CONTRACTOR? 209 ever, now a new one must be drawn between dependent and independent contractors.55

Employment or labour standards legislation imposes minimum terms and conditions of employment in most sectors and for the majority of workers. Its origins can be found in early protective legislation such as Factory Acts that established maximum hours of work for women and children in the 1880s and statutes that imposed minimum wages for women at the end of World War I. After World War II sex-specific protective legislation was gradually replaced by omnibus statutes that established minimum wages and overtime rates, maximum hours of work, annual vacations with pay, statutory

holidays, and pregnancy and parental leave as well as termination 2003 CanLIIDocs 189 notice and severance pay. Employment standards legislation recognizes the inequality of the employment relationship, and that labour is more than a commodity. According to the Supreme Court of Canada, such legislation should be given a large and liberal interpretation in order to better achieve its purpose, which is to protect employees from the superior bargaining power of employers.56 Although all of the employment standards statutes provide a definition of “employee” most of them are not very helpful. Thus, adjudicators have invoked the common law to give meaning to the term, applying a variety of different tests.57 Unlike in the collective bargaining context, these tests were never supplemented with a statutory definition of dependent contractor or the power to designate. However, it is not clear to what extent the absence of a dependent contractor definition has limited the personal scope of employment standards legislation. Increasingly adjudicators emphasize the statutory purpose of employment standards legislation to extend protection to economically dependent workers who do not fit the tradi-

55 Bendel, supra, note 42, at p. 400; Langille & Davidov, supra, note 10, at p. 29. 56 Rizzo v. Rizzo Shoes Ltd., [1998] S.C.R. 27, at para. 24; Machtinger v. HOJ Industries Inc., [1992] 1 S.C.R. 986. 57 England, Christie & Christie, supra, note 1, at p. 2.1. 210 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] tional definition of employee.58 They have also taken to listing the range of factors that should be considered in determining employee status.59 The definition of employee in Quebec’s Act Respecting Labour Standards is broadest, as it includes “a worker who is a party to a contract” with a person, and who “undertakes to furnish, for the carrying out of the contract, the material, equipment, raw materials or merchandise chosen by that person and to use them in the manner indicated by him.”60 This provision has been interpreted to include a worker who deducted expenses related to the job for income tax purposes as though an independent contractor, and who occasionally hired assistants.61 The personal scope of employment standards legislation is expanding to include workers in a position of economic dependence, regardless of the precise definition in the statute or their

employment status for tax purposes. 2003 CanLIIDocs 189

(d) Human Rights and Equity Legislation

Human rights legislation prohibits discrimination against individuals on grounds such as sex, race, religion, disability and age. Human rights or anti-discrimination statutes were first enacted after World War II, and by 1970 every jurisdiction in Canada had legislation that prohibited discrimination on a range of grounds relating to human dignity in a range of situations. Generally human rights

58 For a discussion of the Ontario jurisprudence, see R. Parry, Employment Stan- dards Handbook, 3d ed. (Aurora, Ontario: Canada Law Book, 2002), at pp. 1-21 – 1-24. For a recent decision upholding a purposive approach to the definition of “employee” under Part III of the Canada Labour Code, see Dynamex Canada Inc. v. Mamona, [2002] F.C.J. No. 534 (QL). The Federal Court, Trial Division accepted the purposive approach adopted by the referee and upheld the finding of employee status in respect of courier drivers. This was so despite the fact that, for purposes of income tax, couriers who owned their own vehicles and occasionally employed helpers were considered to be independent contractors. 59 England, Christie & Christie, supra, note 1, chap. 2; Parry, supra, note 58, at 1, pp. 1-21 – 1-24. 60 R.S.Q. c. N-1.1, s. 1(10). 61 Bernstein, Lippel & Lamarche, supra, note 48; Quebec Department of Labour, Online Policy Manual, “interpretation,” Commission des Normes du Travail, online at www.cnt.qc.ca; Couture-Thibault et Pharmajan, [1984] T.A. 326. EMPLOYEE OR INDEPENDENT CONTRACTOR? 211 statutes prohibit discrimination in the provision of services, the terms of contracts, accommodation and employment. Thus, prohibiting discrimination in employment is simply one dimension of the broader goal of human rights legislation, which is to prohibit discrimination broadly, whether in the labour market, the realm of commerce, or the provision of public services. Prohibiting discrimination in employment is a crucial dimension of anti-discrimination legislation. Human rights statutes have a number of provisions dealing specifically with employment, ranging from issues related to hiring, such as advertising and employment agencies, to sexual harassment and vicarious liability. The actual wording of the prohibition against discrimination in employment varies from jurisdiction to jurisdiction. Some statutes provide a definition of the terms “employee” and

“employment.” For example, British Columbia defines “employ- 2003 CanLIIDocs 189 ment” as including “the relationship of master and servant, master and apprentice and principal and agent, if a substantial part of the agent’s services relate to the affairs of one principal; and ‘employ’ has a corresponding meaning.”62 By contrast, federal human rights legislation broadly defines “employment” as including “a contractual relationship with an individual for the provision of services person- ally by the individual.” This definition includes personal services performed by individuals regardless of whether they are employees or independent contractors.63 Ontario, along with several other jurisdictions, does not define either employee or employment in its statute. Moreover, as the leading text on human rights law notes, “[a]lthough at least half of all complaints considered by the human rights commissions concern employment, there are very few adjudi- cations that have attempted to define these terms.”64 While the distinction between employees and independent contractors is a problem “shared in both the anti-discrimination and labour relations fields,”65 it is not obvious why it should be a problem in the case of human rights codes or, if it is, that it ought to be solved

62 British Columbia Human Rights Code, R.S.B.C. 1996, c. 210, s. 1. 63 Canadian Human Rights Act, R.S.C. 1985, c. H-6, s. 25. 64 W. Tarnopolsky, W. Pentney & J. Gardner, Discrimination and the Law, rev. ed. (Scarborough, Ontario: Carswell, 2001), vol. 2, at p. 12-11. 65 Ibid., at p. 12-13. 212 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] in the same way in both fields. Unlike labour relations legislation, human rights protections apply to both employment and commercial relations; refusing to provide people with services or to contract with them on the basis of their race, religion or sex is prohibited regardless of whether or not the relationship is one of employment or commerce. Employment status should be (and in several jurisdictions is) irrelevant to the personal scope of human rights. However, it is relevant in determining specific obligations in situations in which people are vulnerable to other people who exercise power over them. Employment is a paradigmatic situation in which people are vulnerable. The few decisions in which employment status has been at issue have adopted an expansive interpretation of employee, based on the purpose of human rights legislation. The cases illustrate not only that an expansive definition of employee has been adopted, but also that

adjudicators have been able to justify this interpretation in light of 2003 CanLIIDocs 189 the policy of human rights legislation. By endorsing a liberal interpretation that implies any arrangement “ ‘in which one person agrees to execute any work or labour for another,’ ” the courts have indicated their willingness not to be bound by traditional distinctions between employees and independent contractors in providing human rights protections.66 The public policy goal of protecting human dignity and guaranteeing that people are treated equally transcends the traditional rationales for distinguishing between employees and independent contractors. Human rights statutes prohibit discrimination generally, whereas pay and employment equity legislation provide specific rights and obligations only with respect to employment. Pay equity legislation provides mechanisms by which women workers can assert a claim to wages equal to those of men who perform work of equal value. This legislation can be proactive, imposing positive obligations on employers, or complaints-based. Only Ontario and Quebec place statutory obligations on private sector employers to achieve pay equity. The goal of employment equity is to ensure that groups of people who have historically been disadvantaged in employment are

66 Cormier v. Alberta Human Rights Commission (1984), 6 C.C.E.L. 60 (Alta. Q.B.), at p. 86; Pannu v. Prestige Cab Ltd. (1986), 8 C.H.R.R. D/3911 (Alta. C.A.); Canadian Pacific Ltd. v. Canada (Human Rights Commission) (1990), 16 C.H.R.R. D/470 (F.C.A.). EMPLOYEE OR INDEPENDENT CONTRACTOR? 213 represented throughout the hierarchy of a firm in proportion to the group’s representation in the labour market generally. The only employment equity statute in Canada is in the federal jurisdiction, and it addresses the issue of the representation of four historically disadvantaged groups in employment.67 Only persons who are employees are entitled to benefit from pay and employment equity legislation. The Ontario Pay Equity Act68 does not define the term “employee.” However, the Quebec statute defines “employee” in terms of control by an employer, and specifically excludes independent contractors who are in business on their own account and who work for several parties or only intermittently.69 There has been little litigation over the personal scope of pay and employment equity legislation. This is not surprising, given the nature of the legislation and its limited scope of application. The per-

sonal scope of pay and employment equity legislation simply reflects 2003 CanLIIDocs 189 where the line has been drawn under collective bargaining and employment law.

(e) Occupational Health and Safety

Occupational health and safety laws impose a duty on employers not to expose workers to unsafe and unhealthy working conditions and give workers rights to be informed of hazards, to participate in their management, and to refuse unsafe work. These laws have grown from a patchwork of statutes protecting workers in specific industries to omnibus laws applicable to most workers. There is, however, considerable variation among jurisdictions in the treatment of independent contractors. Ontario provides the greatest protection to independent contractors. Its definition of employer includes a person who contracts for the services of workers, and its definition of worker includes a person who performs work for money. According to the Ontario Court of Appeal, this wording means that employers owe the same duty to provide a safe work environment to independent contractors as to

67 Employment Equity Act, S.C. 1995, c. 44. 68 R.S.O. 1990, c. P-7. 69 Pay Equity Act, S.Q., c. E-12.001, ss. 8, 9. 214 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] employees.70 However, the distinction between employees and independent contractors is not irrelevant. Self-employed persons are required to comply with some of the statutory obligations imposed on employers, such as the duty to use prescribed protective devices, and they may be prosecuted for failing to do so, even though compliance may cause economic hardship.71 As well, a tribunal has held that independent contractors are not workers for the purpose of participatory rights such as joint health and safety committees because that section of the Act refers to workplaces where workers are “employed.” According to this view, participatory rights that are more akin to those associated with collective bargaining than to public rights to protection are to be enjoyed by a narrower segment of the class of workers. The adjudicator adopted the control test, and on that basis found that a group of taxi drivers were self-employed.72

The situation of independent contractors in British Columbia is 2003 CanLIIDocs 189 similar, although the result is achieved by somewhat different and more circuitous means.73 Other jurisdictions provide considerably less protection to independent contractors. In the federal jurisdiction, most employer obligations arise only in the context of traditional employment relations. However, employers are under a duty to ensure that every person granted access to their workplace is familiar with and uses all prescribed safety materials, equipment, devices and clothing, and that his or her activities do not endanger the health and safety of employees.74 In contrast to the Ontario legislation, employers do not owe statutory health and safety obligations to independent contractors working outside their workplace, and there is no duty on self-employed persons to comply with the requirements of the Act. Clearly, then, much hinges on the distinction between employees and independent contractors. The two decisions on point both involve truckers and, although they differ in their outcome, they both use a

70 Occupational Health and Safety Act, R.S.O. 1990, c. O-1, s. 1(1); R. v. Wyssen (1992), 10 O.R. (3d) 193 (C.A.). 71 Occupational Health and Safety Act, ibid., s. 4; Hutton, [1997] O.O.H.S.A.D. No. 280 (QL) (Ont. L.R.B.). 72 526093 Ontario Inc. (c.o.b. Taxi Taxi ), [2000] O.L.R.B. Rep. May/June 562, at para. 15. 73 Workers’ Compensation Act, R.S.B.C. 1996, c. 492; B.C. Reg. 296/97. 74 Canada Labour Code, R.S.C. 1985, c. L-2, ss. 125(1)(w), (y). EMPLOYEE OR INDEPENDENT CONTRACTOR? 215 multi-factor test that weighs control, ownership, chance of profit and risk of loss to determine employment status.75 Quebec’s legislation provides even more limited protection to independent contractors. Its definition of employer and worker contemplates a contract of service as the basis for imposing employer duties.76 As a result, the Act does not impose duties on employers to safeguard independent contractors. It does, however, require self- employed persons who carry out work in a workplace where there are workers to abide by the obligations imposed on workers under the Act, and to abide by the obligations imposed on employers in respect of products, processes, equipment, materials and dangerous sub- stances.77 In such a regime, much depends on how the individual is classified. Notwithstanding the absence of a specific statutory provision, tribunals have taken the view that dependent contractors will be

considered to be workers, provided they meet the criterion of eco- 2003 CanLIIDocs 189 nomic dependence.78 In sum, although there has been significant movement in some jurisdictions towards abolishing or limiting the distinction between employees and independent contractors for occupational health and safety purposes, a great deal of variation remains in the treatment of independent contractors under provincial health and safety schemes, as well as in the legal test used to distinguish between independent contractors and employees. Even where independent contractors are given the benefit of direct protections, they are excluded from the right to have and to participate in joint health and safety committees. However, in the absence of statutory duties, employers may nevertheless owe a common law duty of care to independent contractors, especially where the work is performed on the employer’s premises.79

75 Clarke Road Transport Inc. and King, [2000] C.L.C.R.S.O.D. No. 10 (QL) (independent contractor); Brymag Enterprises Inc. and Phillips, [1999] C.L.C.R.S.O.D. No. 2 (QL) (employee). 76 An Act Respecting Occupational Health and Safety, R.S.Q. c. S-2.1, s. 1. 77 Ibid., s. 7. 78 Bernstein, Lippel & Lamarche, supra, note 48, at pp. 77-79. 79 The precise circumstances in which this duty might arise, and its scope, are outside the ambit of this analysis. 216 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

(f) Workers’ Compensation Legislation

Workers’ compensation is a statutory scheme designed to provide economic benefits to workers who suffer disabling or fatal work-related injuries and illnesses. The governing principles are the same in all Canadian jurisdictions: covered workers who are injured on the job are entitled to compensation, regardless of fault, out of a state-administered fund generated from assessments levied on the payroll of covered employers. In exchange for the right to compensation, workers lose their right to sue their employers for damages. The key question is, who is a covered worker? The general principle is that a covered worker is an individual who is either hired under a contract of employment or is deemed in law to be a worker. The distinction between employees and independent contractors,

however, is an important one because coverage of employees is 2003 CanLIIDocs 189 mandatory, the employer being required to pay premiums, while individual operators are deemed to be workers only if they apply for insurance and pay the applicable premium themselves. In general, all jurisdictions use a multi-factor test of employment status that asks whether in reality the individual can be said to be running a separate enterprise. Each jurisdiction, however, has its own rules for drawing the distinction and, in some cases, for making exceptions. In Ontario, leaving aside some outworkers and casuals who are completely excluded, the Workplace Safety and Insurance Act establishes three basic categories: (1) workers, for whom coverage is mandatory; (2) independent operators and others, for whom coverage is optional but who must pay their own premiums; and (3) employers, who must pay premiums for their employees.80 Administrators and adjudicators have struggled to find an appropriate test to distinguish between workers and independent operators. An influential 1989 decision identified the problem and proposed a solution: The vast spectrum of service relationships lying between a contract of service (“worker”) and a contract for service (“independent operator”) must still be divided into only two areas. Accordingly, it is necessary to have a flexible and

80 Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sch. A, ss. 2, 11 and 12; D. Gilbert & L. Liversidge, Workers’Compensation in Ontario: A Guide to the Workplace Safety and Insurance Act, 3d ed. (Aurora, Ontario: Canada Law Book, 2001), at pp. 4-5. EMPLOYEE OR INDEPENDENT CONTRACTOR? 217

highly adaptable test which will cover the myriad relationships encompassed in this “employment” spectrum from a workers’ compensation perspective.81 The panel adopted the “business reality” test, involving a non- exhaustive list of eleven factors that it hoped would lead to decisions in accordance with the real merits and justice of the case.82 The board’s policy manual currently refers to the “organizational test” and directs adjudicators to consider the degree of control, the opportunity to make a profit or suffer a loss, and other applicable criteria. It then goes on to provide more specific criteria for assessing each factor. For some industries, such as construction, logging, taxicab, and trucking, in which the distinction is very difficult to draw, the board has developed industry-specific questionnaires.83 The British Columbia scheme also distinguishes between workers under a contract of service, for whom coverage is compulsory, and independent operators, who may be deemed to be workers if they 2003 CanLIIDocs 189 opt in and pay their own premiums. It also uses a multi-factor test, but applies it in a way that is sensitive to policy objectives and wary of shamming.84 Where ambiguity remains after application of the test, in certain circumstances the Board may classify the individual as a “labour contractor.” Labour contractors may register as employers, but if they do not, they and any help they employ are considered workers of the prime contractor or firm for whom they are contracting.85 As well, special fishing industry regulations effectively deem all commercial fishers to be workers and commercial fish buyers to be their employers for assessment purposes.86

81 Decision No. 921/89 (1990), 14 W.C.A.T.R. 207, at p. 222. 82 Ibid., at pp. 223-225. 83 Ontario, Workplace Safety and Insurance Board, Operational Policy Manual, 01-02-03. 84 “For full effect to be given to the principle of compulsory coverage contained in the Act . . . the prohibition of contractual avoidance must be applicable [to contracts that describe] the parties as independent contractors in circumstances in which the relationship is, in substance, one of employment.” Re the Employment Relationship (1974), 1 W.C.R. 127, Decision No. 32 (B.C.W.C.B.), at pp. 128-129. 85 The full complexity of these arrangements is explored in Decision #98-0563, unreported, April 7, 1998 (B.C.W.C.A.D.). 86 B.C. Workers’ Compensation Board, “Fishing Industry and Workers Compensa- tion” (Briefing Paper for the Royal Commission on Workers’ Compensation in British Columbia, March 27, 1997). 218 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

The Quebec scheme differs from those of Ontario and British Columbia in that while the Act distinguishes between employees and independent contractors, it specifically deems independent contractors to be workers if they perform work for a person who has employees performing similar work, provided that they do not work for several persons simultaneously, serially on short-term contracts, or intermittently. The caselaw drawing these distinctions is contra- dictory, making it difficult to arrive at clear conclusions about the approach taken by the tribunals that determine these matters.87 Work- ers in federally regulated industries are governed by the provincial legislation in force where they are employed.

(g) Canada and Quebec Pension Plans

The Canada Pension Plan (CPP) and the Quebec Pension Plan 2003 CanLIIDocs 189 (QPP) are statutory schemes designed to ensure that Canadians retire in security and with dignity. Both are contributory earnings-related programs that provide income to people in retirement and are designed to supplement the Old Age Security pension (OAS), a universal entitlement financed federally through general revenue, and private employer-sponsored pension plans. The CPP and QPP are financed by employer and employee contributions that cover the costs of benefits and administration. Under the CPP/QPP, coverage is extended to working persons and contributions are mandatory. However, an important distinction is drawn between employees and independent contractors or the self- employed in relation to contribution formulas. Most important, self- employed persons are required to pay contributions at the full rate, while employees are only required to pay half; the other half is paid by the employer(s). Where there is doubt as to whether an employment relationship exists, Human Resource Development Canada normally instructs a worker or an employer to make application for a ruling on worker status to the Canada Customs and Revenue Agency; a party can also go to the Agency directly. In deciding such cases, the Agency uses a

87 Bernstein, Lippel & Lamarche, supra, note 48, at pp. 77-79; An Act Respecting Industrial Accidents and Occupational Diseases, R.S.Q. c. A-3.001, s. 9. EMPLOYEE OR INDEPENDENT CONTRACTOR? 219 multi-factor test that emphasizes the dimension of control, but also considers supplemental factors related to the ownership of tools, chance of profit, risk of loss and integration. Workers are required to fill out a questionnaire designed to provide the Agency with the information that it needs to apply the test. As well, workers are asked to state the reasons why they believe they are either employees or self-employed. If a worker or an employer is dissatisfied with the ruling of the Canada Customs and Revenue Agency, either party can pursue the matter further in the Tax Court of Canada. In determining the status of workers under CPP/QPP and the Employment Insurance program (EI), the most influential case is Wiebe Door Services Ltd. v. Minister of National Revenue, a 1987 decision of the Federal Court of Appeal. This case involved the assessment of CPP/QPP and Unemployment

Insurance (now EI) contributions against the company in respect of 2003 CanLIIDocs 189 door installers and repairers whom it treated as independent contractors.88 The Federal Court of Appeal held that there is only one test of employment status — the fourfold test — and that the key question is, “whose business is it?”89

(h) Employment Insurance

EI is a contributory earnings-related social wage program intended to provide unemployed people with income benefits (EI Part I) and active re-employment benefits (EI Part II).90 Under EI, coverage is extended to all persons having “insurable employment” in Canada. Contributions, called premiums, are mandatory; they cover the costs of both benefits and administration, and are normally shared between the employee and the employer. Cases involving the issue of employment status for the purpose of levying CPP/QPP and EI contributions are frequently heard and resolved together in the Tax Court. However, the question of employ-

88 Wiebe Door Services Ltd. v. Minister of National Revenue, [1987] D.T.C. 5025 (F.C.A). 89 Since the resolution of this question depends on the facts in the particular case, the Federal Court of Appeal remitted the case to the Tax Court for a decision regarding the installers’ status. 90 Employment Insurance Act, S.C. 1996, c. 23. 220 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] ment status also arises in relation to determining eligibility to receive benefits, and these disputes are resolved by a different set of agencies and tribunals. Where worker status is in question, the Employment Insurance Act instructs the EI Commission to refer the matter to the Canada Customs and Revenue Agency and to defer judgment until a decision by the Minister of National Revenue or, in the case of an appeal, the Tax Court has been received.91 In such cases, the applicable authority is Wiebe Door Services, with the result that the fourfold test dominates in determinations of worker status under EI. Determi- nations of worker status under EI thus follow a similar logic to CPP/QPP. Under EI most insurable employment is employment carried out under a contract of service.92 Yet EI coverage is extended by regulation to some groups of workers engaged under a contract for services.

These powers have been exercised to create a separate scheme for 2003 CanLIIDocs 189 self-employed fishers. In practice, EI deems self-employed fishers to be engaged in insurable employment so long as they participate in making a catch, do not fish for sport, and hold a specified interest in an asset used in fishing. The scheme also identifies certain persons or entities as employers for the purpose of making contributions.93 Fish- ers’ EI is financed by self-employed fishers and designated employers, each of whom is responsible for half of the full contribution.94 There are a handful of occupations — barbers, hairdressers, manicurists, taxi drivers, and other drivers of passenger-carrying

91 Ibid., ss. 90(1)(a), 131(1)(a). 92 Insurable employment is defined as: “employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise” (ibid., s. 5(1)(a)). 93 These entities include the buyer of the catch; the head fisher, where s/he is a member of a crew who make a catch and where s/he is the recipient of the gross returns from the catch’s sale; the agent who sells the crew’s catch and to whom the gross returns from the catch are paid; and the common agent, who may or may not be a crew member and must pay EI premiums but can recover them from the buyers. 94 Under this scheme, qualifying requirements are organized on the basis of earnings rather than hours: SOR/96-445; SOR/01-74, ss. 5(1)-(6). EMPLOYEE OR INDEPENDENT CONTRACTOR? 221 vehicles — that are also treated as special cases by the EI Regula- tions.95 Although not under a contract of service, these workers are deemed to be engaged in insurable employment. Unlike under CPP/QPP, in each of these cases, contributions are split between the owner or operator of the business and the self-employed person.

(i) Income Tax

Taxes are the most important source of state revenue.96 Taxes on income comprise the largest proportion of tax imposed and revenue collected as well as the most progressive (redistributive) tax instru- ment in Canada. Important tax consequences hinge on the determination of employment status. Employees and independent contractors are treated very differently, not only for the purpose of levying pay-

roll taxes such as CPP/QP and EI, but also for determining liability 2003 CanLIIDocs 189 for income tax.97 Since most questions relating to a worker’s employment status for tax, CPP/QPP and EI purposes are resolved by the same agencies and courts applying the same legal tests, the answers tend to be the same. Moreover, because these questions typically arise in the context of determining liability for tax, the interests of the parties tend to be the same in different contexts. Firms have an incentive to characterize workers as independent contractors for both payroll and income tax purposes, albeit the incentive is much weaker, and mostly administrative, with respect to income tax. Workers share firms’

95 SOR/96-332, s. 6(d)(e). 96 P. Hogg, J. Magee & T. Cook, Principles of Canadian Income Tax Law (Toronto: Carswell, 1999), at p. 37. 97 A. Gaucher, “A Worker’s Status as Employee or Independent Contractor” (1999), 33 Tax Conference 1; J. Magee, “Whose Business Is It? Employee ver- sus Independent Contractors,” in W. Crawford & R. Beam, eds., 45 Personal Tax Planning 584. A worker’s status is important for a number of tax-related purposes: (1) determining the nature and amount of expenses the worker is entitled to deduct from income for the purpose of income tax liability; (2) establishing the timing of income recognition and the deferral of tax; (3) deciding whether benefits received by the worker are subject to income tax; (4) requiring payroll deductions and remittances by workers and the firms that purchase their services in respect of CPP/QPP and EI, as well as income tax; and (5) determining the goods and service tax obligations of workers and firms. 222 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] interest in avoiding taxes, while the state has an interest in treating workers as employees, since payroll taxes are a growing source of revenue and business expenses claimed by independent contractors are hard to police. But what distinguishes the determination of employment status for the purpose of income tax from either CPP/QPP or EI is that, in the case of income tax, workers never have an incentive to claim employee status. By contrast, under EI, for example, one of the advantages of being an employee is that an employer is required to make contributions to a scheme that provides benefits to employees who are unemployed. There is no similar incentive with respect to income tax for workers to claim employee status; to the contrary, tax consultants tout self-employment as “the last great tax shelter.”98 Section 248 of the Income Tax Act defines the term “employ-

ment” as “the position of an individual in the service of some other 2003 CanLIIDocs 189 person . . . and ‘servant’ or ‘employee’ means a person holding such a position”.99 This definition is treated as referring to the common and civil law distinctions between contracts of service and contracts for service, and the common law tests are used to determine employment status. These tests have evolved from simple control to the Wiebe Door Services “four-in-one test,” which is a variation on the classic fourfold test (control, ownership of tools, chance of profit, and risk of loss), combined with an admonishment to consider all the facts in order to determine the true nature of the relationship. The Tax Court of Canada has accepted Wiebe Door Services as the leading authority in determining employment status for tax purposes, but it provides little guidance on how to evaluate the factors.100 Commenta- tors have noted that Revenue Canada’s bulletins which, though not legally binding, are designed to guide taxpayers through the self- reporting system, tend to emphasize control.101 While the taxpayer makes the initial determination of employment status, Revenue Canada officials have the power to dispute that categorization. Ultimately the courts resolve disputes over the inter-

98 J. Cestnick, “Self-employment as the Last Real Tax Shelter,” The Globe and Mail, April 27, 2002, B1. 99 R.S.C. 1985, c. 1 (5th Supp.). 100 Gaucher, supra, note 97, at pp. 62-63, 71. 101 Ibid., at pp. 66-67; Magee, supra, note 97, at p. 603. EMPLOYEE OR INDEPENDENT CONTRACTOR? 223 pretation and application of the Income Tax Act. Courts have adopted a number of different interpretive approaches to tax statutes. How- ever, adjudicators tend to interpret taxing statutes so as to impose liability on taxpayers only if the wording of the statute clearly requires it.102 This approach contrasts with a remedial interpretive approach that is designed to give a broad and generous interpretation to the terms of a statute in order to achieve the public policy goals of the legislature in enacting the statute. The courts’ approach to the interpretation of taxing statutes helps to explain why workers are classified as independent contractors for tax purposes at the same time as they are classified as employees for the purposes of employment and labour law, despite the fact that the same tests are invoked and similar factors are considered in both legal contexts.103 A recent decision of the Federal Court 104 of Appeal, Wolf v. Canada, not only illustrates the uncertainty that 2003 CanLIIDocs 189 results from this form of adjudicative process, but also highlights the extent to which courts are prepared to defer to individual choice without regard to public policy. At issue in Wolf v. Canada was whether a mechanical engineer who was hired as a consultant by the large airplane manufacturer Bombardier was an employee or an independent contractor for the purposes of income tax. Emphasizing the factor of control, the Tax Court upheld Revenue Canada’s decision to disallow certain business deductions claimed by the taxpayer on the ground that he was an employee and not an independent contractor. The three-member appeal court unanimously allowed the taxpayer’s appeal of his status, and ordered the case to be referred back to the Minister for reconsid- eration and reassessment on the basis of its reasons. Although each judge wrote a separate opinion and applied a different version of the legal test of employee status, the underlying rationale for the decision was the same.

102 B. Arnold, “Reflections on the Relationship between Statutory Interpretation and Tax Avoidance” (2001), 49 Can. Tax J. 1. 103 See, for example, the following cases in which the employment status of the worker differs for tax and employment standards: Dynamex Canada Inc. v. Mamona, supra, note 58; and Thomson Canada Ltd. (c.o.b. Winnipeg Free Press) v. Canada, [2001] T.C.J. No. 374 (Tax Ct.) (QL) (T.C.C.). 104 Wolf v. Canada, supra, note 24. 224 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

This rationale was most clearly expressed by Décary J.A.: “We are dealing here with a type of worker who chooses to offer his services as an independent contractor rather than as an employee and with a type of enterprise that chooses to hire independent contractors rather than employees. The worker deliberately sacrifices security for freedom . . .”105 Invoking the freedom of taxpayers to organize their affairs in such lawful way as they wish, the Federal Court of Appeal explicitly stated that the parties’ intention should determine the taxpayer’s employment status in this case.106 It is unlikely that Wolf will have much impact on the legal tests of employment status in tax law since the case deals primarily with the definition in the Civil Code of Quebec. However, Wolf is significant because it illustrates the extent to which the application of the legal tests depends upon the courts’ prior assessment of the legal con-

text. Tax scholar Vern Krishna has written: 2003 CanLIIDocs 189 Although not openly acknowledged, there is a difference in judicial attitudes in characterizing employment relationships in tax law and other employment related areas. In employment law, there is a trend to characterizing workers as employees to enable them to derive the benefits of legislation intended to protect the economically dependent and vulnerable. In tax law, the advantage lies with the independent contractor and, hence, one may be inclined to view the relationship from a different perspective.107 The fact that adjudicators adopt a policy perspective or purposive approach to the interpretation of key concepts is not particularly troubling. In fact, according to the Supreme Court of Canada in Sagaz Industries,108 this is precisely what adjudicators should do in determining employment status. The problem is that adjudicators, and in particular judges, have not demonstrated that they have good skills at identifying the purpose of statutes or discussing the policy implications of different interpretations. Noticeable by its absence from Wolf is any discussion by the Federal Court of Appeal about the purpose of

105 Ibid., at para. 118. In a similar vein, Desjardins J.A. accepted the taxpayers characterization of his employment as non-standard, “which emphasizes higher profit coupled with higher risk, mobility and independence . . .” (at para. 94). 106 Ibid., at para. 119; para. 124. 107 V. Krishna, Fundamentals of Canadian Income Tax, 5th ed. (Scarborough, Ontario: Carswell, 1995), at pp. 192-193. 108 Supra, note 18. EMPLOYEE OR INDEPENDENT CONTRACTOR? 225 income taxation, and the reasons why employees are treated differently from independent contractors for tax purposes.

3. CONCLUSION: ABOLISHING THE DISTINCTION BETWEEN EMPLOYEES AND INDEPENDENT CONTRACTORS

The determination of the personal scope of employment and labour legislation in Canada is very complex. Although the distinction between employees and independent contractors remains crucial, different tests are applied, extended definitions of “employee” have been added, and there have been some ad hoc extensions and exclusions that affect particular groups of workers. The personal scope of employment and labour legislation differs from jurisdic-

tion to jurisdiction as well as across different legal regimes. While 2003 CanLIIDocs 189 there are some general patterns — for example, legal regimes that are designed to promote social justice, such as human rights and occupational health and safety legislation, have the broadest coverage, and income tax legislation has the narrowest — the scope of coverage in economic governance regimes that regulate the terms and conditions of employment and in social wage regimes varies widely. However, it is obvious that the traditional distinction between employees and independent contractors does not serve as the boundary defining the personal scope of labour protection, social wage or revenue legislation. Despite some well-intentioned efforts to respond to the diffi- culty of imposing legal categories on an increasingly heterogeneous group of workers, legislators and adjudicators have been unable to resolve satisfactorily the difficulties they face in determining the personal scope of employment- and labour-related legislation. In some areas of the law, efforts have been made to reduce the salience of the distinction between employees and independent contractors by extending coverage to persons who were not traditionally categorized as employees. Many jurisdictions in Canada have extended the personal scope of collective bargaining law to dependent contractors, workers who are not legally subordinated but who are economically dependent. Rarely is collective bargaining legislation extended to independent contractors; however, both Quebec and the federal jurisdiction have enacted a form of collective bargaining legislation for 226 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] artists who are independent contractors.109 A couple of Canadian jurisdictions have gone so far as to make the distinction between employees and independent contractors irrelevant for social justice purposes. This strategy has been adopted for legal regimes in which the distinction has little significance, such as human rights legislation and occupational health and safety standards. However, the more common strategy has been to maintain the distinction between employees and independent contractors while extending coverage through legislation or regulation to workers who would otherwise fall outside of the definition of employee or denying it to workers who would otherwise fall inside the definition. Although this piecemeal approach has benefited particular groups of workers in specific ways (for example, making workers’ compensation available to fishers in British Columbia), it has signifi-

cant limitations. The most obvious is that the processes of inclusion 2003 CanLIIDocs 189 and exclusion are ad hoc and dependent on factors that have little to do with public policy and more to do with political power. For example, while most provinces amended their collective bargaining legislation to include dependent contractors in response to industrial strife in a number of industries where the use of contract workers was undermining stable collective bargaining relationships, they did not also give these workers the benefit of minimum standards legislation, notwithstanding that they were in an economically dependent position that made them more like employees than independent contractors. Presumably, a major reason for this inaction was the absence of the kind of political pressure that was being brought to reduce industrial conflict. Similarly, the extension of employment insurance to east-coast fishers came about both because of their depressed condition and because of the politics of federalism.110 A second problem with this kind of ad hoc incrementalism is that it creates new legal categories such as “dependent contractors” whose rights may be dif-

109 E. MacPherson, “Collective Bargaining for Independent Contractors: Is the Status of the Artist Act a Model for Other Industrial Sectors?” (1999), 7 C.L.E.L.J. 355. 110 W. Schrank, “Benefiting Fishermen: Origins of Fishermen’s Unemployment Insurance in Canada, 1935-1957” (1998), 33 Journal of Canadian Studies 61; W. Clement, The Struggle to Organize: Resistance in Canada’s Fishery (Toronto: McClelland and Stewart, 1986), at pp. 56-57. EMPLOYEE OR INDEPENDENT CONTRACTOR? 227 ferent from those of both traditional employees and independent contractors. As a result, the boundaries of such categories must be defined at two margins. While this approach may allow adjudicators to make the legislation more inclusive in at least some of its dimensions, it creates additional difficulties in drawing lines. In short, a process of adding on new categories of employees inevitably depends on ad hoc political, executive and administrative decisions, rather than on a more principled consideration of the appropriate scope of coverage. Thus, this technique for determining the personal scope of labour law is unlikely to diminish and, indeed, may increase the burden on adjudicators of applying legal definitions to complicated and ambiguous facts. Adjudicators in various settings have attempted to grapple with the challenge posed by the need to draw categorical distinctions in a

world in which “most labour market boundaries and categories are 2003 CanLIIDocs 189 heuristic rather than descriptive — conceptual rather than material.”111 In general, adjudicators evince a keen awareness of this diffi- culty and in response have adopted increasingly elaborate factor tests that emphasize aspects of control, subordination, economic depend- ency and integration into another’s business. They have also asserted that the number of factors is not closed and that the weight to be given to any given factor is not fixed. In an attempt to produce greater coherence and certainty in the determination of employment status, some adjudicators have held that the application of the factors should be guided by an explicit discussion of the purpose of the legislation that is under consideration. While this technique is marginally better than alternative legal approaches that depend upon fitting workers into fixed legal categories, leaving the problem to be resolved through adjudication is a poor solution for at least three reasons. First, the purposive approach does not resolve the problem of determining the scope of legislation; it simply changes the nature of the inquiry. The crucial question according to this approach is not whether an individual is an employee or an independent contractor, but rather whether this is the kind of individual to whom the legislation ought to apply. Second, this approach assumes that adjudicators

111 K. Purcell, “Changing Boundaries in Employment and Organizations,” in K. Purcell, ed., Changing Boundaries in Employment (Bristol: Bristol University Press, 2000) 1, at p. 1. 228 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] are the appropriate personnel to identify the purposes of a legislative scheme and, on that basis, define the class of people covered by it. This assumption is extremely problematic, given the diversity of administrative decision-making processes, appointment procedures, and qualifications of adjudicators, let alone the scope for judicial oversight and control.112 Finally, the purposive approach to the application of definitions that determine the scope of coverage is a deeming process thinly disguised as adjudication. The effect of using adjudication to determine the scope of legislation is that it creates conditions of uncertainty so that many workers do not know whether or not they are covered by legislation and they have to bear the burden of finding out. Adjudication, in essence, operates as a system of ex post facto decision-making that in reality will leave the status of a large number of workers highly unpredictable, notwithstanding that the 113 abstract character of the test may produce an illusion of consistency. 2003 CanLIIDocs 189 Given the transformation in employment relations in the latter part of the twentieth century and the changing nature of self-employment, the current situation not only encourages litigation, it invites the manipulation of contractual arrangements to avoid the incidence of legal regulation. Recently Brian Langille has noted that “developments in the economy have forced us to question . . . the contract of employment’s continued availability and viability as a platform for delivering” a “substantive conception” of human freedom.114 Revital- izing the legal definition of employee through the development of

112 In a recent decision overturning a finding by the Appeal Tribunal of the New Brunswick Workplace Health, Safety and Compensation Commission that drivers for a delivery service were employees under the Workers’ Compensation Act, the majority of New Brunswick Court of Appeal did not even consider the purpose of the workers’ compensation legislation, so intent was it on the question of common law characterization: see Joey’s Delivery Service v. New Brunswick (Workplace Health, Safety and Compensation Commission) (2001), 201 D.L.R. (4th) 450 (N.B.C.A.). The Supreme Court of Canada has denied leave to appeal: [2001] S.C.C.A. No. 425 (QL). Thanks to Debra Parkes for bringing this case to our attention. 113 P. Davies, “Wage Employment and Self-Employment: A Common Law View,” in Report to the 6th European Congress for Labour Law and Social Security, September 13-17, 1999, 165, at p. 167. 114 B. Langille, “Labour Policy in Canada — New Platform, New Paradigm” (2002), 28 Can. Pub. Pol’y 133, at p. 140. EMPLOYEE OR INDEPENDENT CONTRACTOR? 229 better tests fails to address the deeper problem, which is the mistaken assumption that the legal status of self-employment — independent contracting — corresponds to economic independence and autonomy.115 A close examination of self-employment in Canada suggests that the time has come to consider dissolving the distinction between employees and the self-employed for the purpose of labour protection and social wage legislation. The majority of the self-employed much more closely resemble employees than they do entrepreneurs, although for legal purposes many would be classified as independent contractors and, as such, they would be denied the legal protection available to employees.116 But, as the data reveal, not all independent contractors are entrepreneurs, for many of them are dependent upon selling their labour. According to the report of experts appointed by the European Union to consider changes in work and the future of

labour law, 2003 CanLIIDocs 189 . . . it is advisable to prevent a gulf from forming between employees protected under contract and persons working under other kinds of arrangements that afford less protection. One of the historical functions of labour law has been to ensure social cohesion. It will only be able to continue to fulfil that function if it is able to accommodate new developments in the way that work is organized in contemporary society and does not revert to covering just the situations it was originally intended to address, which are becoming less typical.117 The economic rationale for taking an expansive approach to the personal scope of labour regulation is tied to the goal of economic activity — improving living standards. According to economist Joseph Stiglitz, “if improving living standards is the objective of economics, then improving the welfare of workers becomes an end in itself; and only if one believes that the market leads to efficient out- comes can one feel confident in not paying explicit attention to work-

115 Taking a contrasting position, Andrew Stewart proposes an interesting new legal definition of “employee” to replace the traditional common law definition. He assumes (mistakenly, we would argue) that employees can be distinguished from independent contractors who are correctly identified as entrepreneurs. Stewart also addresses a number of related conceptual and definitional issues. A. Stewart, “Redefining Employment? Meeting the Challenge of Contract and Agency Labour” (2002), 15 Austl. J. Lab. L. 235. 116 See text accompanying notes 5 and 6, supra. 117 A. Supiot, Beyond Employment: Changes in Work and the Future of Labour Law in Europe (Oxford: Oxford University Press, 2001), at pp. 22-23. 230 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] ers’ welfare, trusting that the market will make all the correct trade- offs.”118 Stiglitz has identified a number of information imperfections that distort the labour market. Maintaining the distinction between employees and independent contractors may also produce distor- tions. Differences in treatment of workers on the basis of differences in the contractual form of their work relationship will induce the stronger party — typically the purchaser of labour — to create less regulated commercial relationships over more regulated employment relationships. This process will create downward pressure on wages and working conditions, and may not lead to compensating improvements in living standards. Thus, expanding the personal scope of labour protection is also an important element of economic policy. For these reasons, it is time to collapse the legal distinction between employees and independent contractors and to revise the

basis for determining the personal scope of labour, social wage and 2003 CanLIIDocs 189 tax legislation. Instead of attempting to draw a new line between employment and independent contracting, the starting-point should be that all workers dependent on the sale of their capacity to work be covered, unless there are compelling public policy reasons for a narrower definition. This recommendation conforms to the ILO’s goal of developing a policy framework for decent work, a central element of which is “a universal ‘floor of rights’ — a set of minimum rights to which everyone is entitled, regardless of status in employment.”119 The technical challenge is to develop mechanisms and institutions for making labour protection effective for all people who work for a living. To the extent that there are relevant differences in the arrangements and conditions under which employees and contractors sell their labour, these differences should be taken into account in the design of labour protection and social wage legislation, not in its application.

118 J. Stiglitz, “Employment, Social Justice and Societal Well-being” (2002), 141 Int’l Lab. Rev. 9, at p. 20. 119 P. Egger, “Towards a Policy Framework for Decent Work” (2002), 141 Int’l Lab. Rev. 161, at p. 166. Canada and the ILO: Freedom of Association since 1982

Brian W. Burkett, John D.R. Craig & S. Jodi Gallagher*

Since 1982, the International Labour Organization has received no fewer than 63 complaints alleging that Canada has violated freedom of association principles. As the authors note, this represents a sharp increase in the number of complaints brought against Canada to the ILO, and is much higher than the number of complaints brought against the United Kingdom or the United States in the same period. Following a review of the procedure for bringing a freedom of association complaint before the ILO, the authors explore the reasons for the large vol-

ume of complaints involving Canada, laying emphasis on the domestic 2003 CanLIIDocs 189 courts’ restrictive approach to freedom of association under the Charter in the aftermath of the Alberta Reference, and the labour movement’s willingness to utilize the ILO as an alternative forum in which to pursue its agenda. Whereas the ILO has identified collective bargaining and strike activity as fundamental human rights, Canadian courts have resis- ted the judicialization of labour relations, which in their view raise policy issues that are best left to the legislatures. The paper, which also considers why unions in the United Kingdom and the United States have not followed the same path in advancing worker rights before the ILO, concludes with an analysis of the implications of the Supreme Court of Canada’s recent decision in Dunmore on the constitutional scope of freedom of association.

1. INTRODUCTION

The past 20 years have seen profound shifts in the Canadian legal landscape, brought about in large measure by the entrenchment of the Charter of Rights and Freedoms (the “Charter”) in 1982, and

* Brian Burkett is a partner, and John Craig is an associate, in the Toronto labour department of Heenan Blaikie LLP. S. Jodi Gallagher was a summer student in the Toronto office of Heenan Blaikie LLP in 2002. Portions of this paper were originally prepared as part of a project for the Canadian Employers Council, a not-for-profit organization that has served as the exclusive representative of Canadian employers at the ILO since 1919. The views expressed herein are solely those of the authors. 232 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] the emergence of a more active and interventionist judiciary. Since 1982, Canada’s systems of criminal law, human rights law and family law have all been transformed under the influence of the Charter. During this same period, however, labour law has been largely immune to Charter-inspired legal reform. This is a result of early judicial decisions that characterized labour rights as socioeconomic and collective in nature, and therefore qualitatively different from the individual civil liberties guaranteed by the Charter. After 1987, when the Supreme Court of Canada adopted a very limited view of consti- tutionally protected freedom of association in the labour context in the Alberta Reference,1 it seemed that the Charter would have little direct application to issues central to modern labour relations, such as strikes and collective bargaining. In fact, the Canadian labour law system in 2002 bears a strong resemblance to the system that was in

place in 1982. Of course, there have been substantial reforms in some 2003 CanLIIDocs 189 jurisdictions. Ontario, for example, underwent reform efforts in the 1990s under governments of different political stripes. However, all such reforms amounted to incremental change to the existing labour relations system, as opposed to a paradigm shift brought about by constitutional human rights considerations. The labour movement’s lack of success domestically in pursuing heightened worker protection through the Charter runs parallel to a remarkable increase in the number of freedom of association complaints brought against Canada to the Committee on Freedom of Asso- ciation (“CFA”) of the International Labour Organization (“ILO”). In fact, prior to 1982, Canada was the subject of 16 complaints alleging violations of workers’ freedom of association, whereas in the period 1982-2002 there were 63 such complaints.2 Table 13 compares the number of complaints against Canada to the number brought against

1 Reference Re Public Service Employee Relations Act (Alberta), [1987] 1 S.C.R. 313. 2 As of December 31, 2002. 3 Pursuant to art. 35 of the ILO Constitution, Member States undertake to apply conventions in the non-metropolitan territories for whose international relations they are responsible. This data, however, excludes cases regarding territories and commonwealths such as Puerto Rico (see U.S. Case No. 1420 (1987)), the Isle of Man (see U.K. Case No.1912 (1996)), and Montserrat (see U.K. Case No. 1295 (1984)). For a complete account of territorial/commonwealth cases, see the ILO website at http://www.ilo.org. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 233

TABLE 1 Freedom of Association Complaints to the ILO

United United Canada States Kingdom

Total Complaints Pre-1982 16 17 6

Total Complaints Post-1982 63 10 9 • Closed Complaints • 49 • 9 • 8 • Complaints on Follow-up • 7 • 0 • 1 • Active Complaints • 5 • 0 • 0 • Withdrawn Complaints • 2 • 1 • 0

the United States and the United Kingdom.4 What is obvious is that, 2003 CanLIIDocs 189 since 1982, Canada has been the subject of an unusually high volume of freedom of association complaints to the ILO. The number of complaints before the CFA is not easily recon- ciled with Canada’s position as a leading nation in the areas of human development and living standards. The most recent United Nations Human Development Report ranked Canada as having the third highest level of human development in the world, behind only Norway and Sweden.5 In four of the past eight years, Canada has been ranked first on the same human development survey. Canada is acknowledged to be a democratic and diverse society, with a high quality of life, an effective system of representative government, an independent judiciary, and constitutional protection of human rights including freedom of expression, freedom of association and equality. Canada’s history of protecting and promoting the labour rights of workers is also enviable. In fact, trade unions were lawful institutions under Canadian law by 1872. In 1900, Canada became one of the first nations to establish a national department of labour to pro-

4 Labour law systems with common law origins, which include the United King- dom, the United States, Canada, Australia and New Zealand, are often grouped together for comparative law purposes. These nations have similar levels of industrial development and strong cultural and historical ties. 5 United Nations, United Nations Human Development Report (2002). 234 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] mote workers’ rights and harmonious labour relations. Canada’s first modern law providing for the investigation and conciliation of labour disputes, the federal Industrial Disputes Investigation Act, was passed in 1907. For close to 50 years, every jurisdiction in Canada has had comprehensive legislation protecting the collective rights of workers (including freedom of association, free collective bargaining and the right to strike), and imposing sanctions on employers who penalize workers and unions for asserting their rights.6 In addition, Canada and the provinces have protective systems of employment standards, including comprehensive minimum wage laws, occupational health and safety laws, and workers’ compensation systems. Also notable is Canada’s labour movement, which remains an important force economically, socially and politically. As of 2001, there were 4,111,000 union members in Canada. Canada’s largest

union, the Canadian Union of Public Employees, has 505,000 mem- 2003 CanLIIDocs 189 bers while the Canadian Labour Congress (the “CLC”), the leading umbrella organization of affiliated unions, has close to 3,000,000 members.7 Although the percentage of unionized workers in Canada has slowly declined during the period 1982-2002, union membership continues to grow by 50,000-70,000 per year. Approximately 30% of non-agricultural workers in Canada today are unionized, which is only a few percentage points lower than in 1982. Contrast this relative stability to the situation in the United States, where unionization among the non-agricultural workforce has fallen from 35% in 1965 to 14% today,8 and the United Kingdom, where union density has dropped from over 40% in the 1980s to below 30% in 2001.9 Several related questions arise. Why has there been such an increase in complaints to the ILO alleging violations of freedom of association in Canada? Are worker rights in jeopardy in Canada? Are Canadian governments and employers hostile to the labour move-

6 See “The Universal Declaration of Human Rights and Federal Labour Legisla- tion” (1988), 1 Workplace Gazette 82. 7 Workplace Information Directorate, Labour Program, Human Resources Devel- opment Canada, “Union Membership in Canada – 2001” (2002), 4 Workplace Gazette 35. 8 U.S. Bureau of Labour Statistics, at http://www.bls.gov/cps. 9 K. Brook, “Trade Union Membership: An Analysis of Data from the Autumn 2001 LFS” (July 2002), at http://www.dti.gov.U.K./er/emar/art_01.pdf. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 235 ment? Is there something wrong with Canadian labour relations? Alternatively, are there other explanations for the rise in complaints to the CFA? In this paper, we first provide essential background information on the ILO, and specifically the process for the filing and resolution of complaints concerning freedom of association. We then demonstrate that a variety of factors have contributed to the rising number of freedom of association complaints directed against Canada. These include (1) a basic difference in approach between Canada the ILO with respect to labour relations; (2) the limited role of Canadian courts in the labour relations field; (3) Canada’s traditionally extensive involvement in the ILO; (4) the existence in Canada of a sophisticated union leadership well-versed in the workings of the ILO; and (5) the Canadian labour movement’s determination to take advantage

of international forums to influence the domestic political agenda. In 2003 CanLIIDocs 189 our view, the Supreme Court of Canada’s decision in the Alberta Ref- erence has had an enduring impact on Canada’s role within and before the ILO, as it has caused the Canadian labour movement to look to the ILO as an alternative forum to the courts. We next consider the rather different experiences of the United States and the United Kingdom, two nations whose labour laws are no more protective of freedom of association than Canadian law. What factors underlie the relative scarcity of American and British complaints to the CFA? Our historical review reveals surprising differences in the attitudes of the British and American labour movements to the ILO, which sheds light on the dynamic operating on the Canadian scene. Finally, we conclude by assessing the future role of the ILO in the development of Canadian labour law, particularly in light of the recent decision of the Supreme Court of Canada in Dunmore v. Ontario (Attorney General).10 There, the Court relied in part on ILO conventions in ruling that the Charter obligated Ontario to legislate positive protections for agricultural workers’ freedom of association. Does the Dunmore decision signal a new direction for freedom of association in Canada that is more consistent with the ILO’s

10 (2001), 207 D.L.R. (4th) 193 (S.C.C.). 236 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] approach? Will ILO conventions and principles begin to have greater significance in Canada’s courts?

2. BACKGROUND TO THE CFA COMPLAINT PROCESS

(a) History and Mandate of the ILO

The Treaty of Versailles created the ILO in 1919, at the end of the First World War, for the express purpose of establishing international standards on working conditions.11 The first session of the General Conference of the ILO took place in 1919. In 1944, during the 26th session of the General Conference in Philadelphia, delegates adopted the “Declaration of Philadelphia,” which sets out the fundamental principles on which the ILO is based. These include: 2003 CanLIIDocs 189 • labour is not a commodity; • freedom of expression and association are essential to sustained progress; • poverty anywhere constitutes a danger to prosperity everywhere; and • the war against want requires to be carried on with unrelenting vigour within each nation, and by continuous and concerted international effort in which the representatives of workers and employers, enjoying equal status with those of government, join with them in free discussion and democratic decision with a view to the promotion of the common welfare.

In 1946, the ILO became the first specialized agency of the United Nations. Currently, the ILO has 175 Member States. The mandate of the ILO is to promote social justice and internationally recognized human and labour rights. To achieve this mandate, the ILO promulgates international labour standards in the form of conventions and recommendations. Conventions are international

11 Part VIII of the Treaty of Versailles contained the Constitution of the International Labour Organization. The Constitution is available at http:// www.ilo.org. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 237 treaties subject to ratification by Member States, while recommendations are non-binding guidelines for national policy and activity. The ILO has adopted more than 180 conventions and 185 recommendations on a broad range of subjects, including freedom of association, the right to organize, collective bargaining, abolition of forced labour and equality of opportunity.

(b) Structure of the ILO

The ILO has a tripartite structure. This means that representatives of governments, employers and workers serve together on ILO committees, on the Executive Council and in the General Assembly. Article 2 of the ILO Constitution states that the organization consists of (i) a General Conference of representatives of the members; (ii) a

Governing Body; and (iii) an International Labour Office controlled 2003 CanLIIDocs 189 by the Governing Body. Each of these bodies plays an important role in the operation and activities of the ILO.

(i) The International Labour Conference

The International Labour Conference (the “Conference”) is the General Assembly of the ILO. Two government delegates, an employer delegate and a worker delegate represent each Member State. The Conference meets every June in Geneva, Switzerland, where the ILO is headquartered. The functions of the Conference include establishing and adopting international labour standards in the form of conventions and recommendations, acting as a forum for the discussion of labour and social issues, adopting the ILO budget, adopting guidelines for general ILO policy, and electing the Govern- ing Body.

(ii) The Governing Body

The Executive Council of the ILO, known as the Governing Body, is composed of 56 titular members (28 government, 14 employer and 14 worker). Ten of the government seats are perma- nently held by States of Chief Industrial Importance (Brazil, China, France, Germany, India, Italy, Japan, the Russian Federation, the 238 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

United Kingdom, and the United States), while the remainder are elected by the Conference every three years. In addition to the titular members, the Governing Body has 66 deputy members (28 government, 19 employer and 19 worker). Meeting three times a year in Geneva, the Governing Body makes decisions on ILO policy, establishes a draft ILO program and budget for submission to the Confer- ence, and elects the Director-General. The Governing Body has also established six standing committees and working groups, among them the CFA, to examine specific questions.

(iii) The International Labour Office

The International Labour Office (the “Office”) is the permanent secretariat of the ILO, and the focal point for the overall activities

of the organization. The Office operates under the scrutiny of the 2003 CanLIIDocs 189 Governing Body and under the leadership of a Director-General. Between the Geneva headquarters and 40 field offices around the world, the Office employs 1,900 officials. Following investigation of complaints relating to freedom of association, governments are often directed to use the research and policy resources of the Office in order to bring their laws into conformity with ILO principles.

Once a Member State ratifies an ILO convention, other parties have the right to complain to the Governing Body that the Member State has failed to implement or abide by that convention. Pursuant to Article 24 of the ILO Constitution, employer or worker organizations can complain that any Member State “has failed to secure in any respect the effective observance within its jurisdiction of any Con- vention of which it is a party.” Under Article 26 of the ILO Constitu- tion, a Member State can file an allegation of non-compliance against another Member State. This provision has now been extended to all Conference delegates, including worker and employer representatives. A tripartite Commission of Inquiry appointed by the Governing Body investigates the complaint and makes recommendations to the Governing Body. The government concerned can either accept the recommendations or make an appeal to the International Court of Justice, whose decision is final. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 239

(d) Freedom of Association Complaints

(i) Fundamental Conventions

Eight ILO conventions have been identified as being fundamental to the rights of human beings at work.12 Two of these fundamental conventions relate directly to the concept of freedom of association: the Freedom of Association and Protection of the Right to Organise Convention, 1948 (Convention No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (Convention No. 98) (referred to collectively as the “Freedom of Association Conven- tions”). Member States, by virtue of their adherence to the ILO Con- stitution, are obligated to respect the principle of freedom of association articulated in the Freedom of Association Conventions.

The concept of freedom of association is so fundamental that com- 2003 CanLIIDocs 189 plaints of non-compliance in relation to these conventions can be brought against even non-ratifying Member States.13 The ability to file complaints against a Member State in relation to a convention it has not ratified has practical consequences for Canada. While Canada ratified Convention No. 87 in 1972, it has never ratified Convention No. 98. Nevertheless, the ILO will entertain complaints that Canada has breached the guarantees of Conven- tion No. 98 because the rights to organize and to bargain collectively are considered basic labour rights enshrined in the ILO Constitution. Simply by being an ILO Member State, Canada has committed to uphold these minimum standards.14

(ii) Supervisory Mechanisms for the Freedom of Association Conventions

Due to the special regard afforded the principles of freedom of association, ILO Member States decided in 1950-1951 to promote

12 The ILO’s Declaration of Fundamental Principles and Rights at Work is available at http://www.ilo.org. 13 See Y. Poisson and A. Torobin, “The Right to Organize and Collective Bargain- ing: Canada and International Labour Organization Convention 98” (1999), 2 Workplace Gazette 86. 14 Ibid., at p. 88. 240 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] the observance of associational rights by establishing special supervisory machinery. Two bodies were established: the CFA, and the Fact-Finding and Conciliation Commission (the “Commission”). The CFA is a tripartite standing committee of the Governing Body composed of nine regular members representing in equal proportion governments, employers and workers. The CFA meets three times a year and, to date, has considered more than 1,800 cases.

(A) SOURCE OF CFA COMPLAINTS

Freedom of association complaints regarding Member States of the ILO may be sent directly to the CFA, or may be referred from other bodies of the United Nations. Article 24 complaints against Member States that allege an abridgement of freedom of association

may also be referred to the CFA for consideration. Upon receipt, the 2003 CanLIIDocs 189 CFA decides whether the complaint is receivable and, if so, investigates the allegations made in the complaint, draws conclusions and makes recommendations. The CFA reports directly to the Governing Body.

(B) THRESHOLD CRITERIA

Complaints lodged with the ILO must be in writing, signed and supported by proof of allegations relating to specific infringements of freedom of association. Vague or unsubstantiated complaints will not be considered. Once these requirements of form are met, complaints must also meet two gate-keeping criteria in order to be considered. First, the complaint must be “receivable,” meaning it was submitted by an organization of employers or workers, or by a government. An organization may be:

• a national organization directly interested in the matter; • an international organization of employers or workers which has consultative status with the ILO (the International Organisation of Employers, the International Confederation of Free Trade Unions, the World Confederation of Labour, etc.); or • another international organization of employers or workers, where the allegations relate to matters directly affecting affiliated organizations. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 241

The CFA has full authority to decide whether an organization is an employers’ or workers’ organization within the meaning of the ILO Constitution, regardless of any national definition of these terms. At present, it appears that the CFA is not willing to entertain a complaint from an organization that purports to represent both workers and employers jointly. The second gate-keeping hurdle is that the subject-matter of a complaint must be within the general competence of the CFA. Ques- tions concerning social security legislation, general requests to opine on the degree of legislative regulation in a particular state, or complaints raising purely political matters lie outside the CFA’s competence, and will not be considered. The CFA’s competence to examine complaints does not depend on the exhaustion of domestic legal procedures and remedies. Where

the subject-matter of a complaint is before the domestic courts, the 2003 CanLIIDocs 189 CFA may postpone its investigation for a reasonable time if the domestic court decision could provide additional information. Such a postponement will be refused where the party whose rights have allegedly been infringed would be prejudiced by a delay. In general, however, the CFA considers that “in view of its responsibilities, its competence to examine allegations is not subject to the exhaustion of national procedures.”15

During the information-gathering stage, the CFA (or the Dir- ector-General on behalf of the CFA) contacts the complainant for further information to clarify or substantiate the allegations, and requests a reply from the government. When a government is unco- operative, the CFA resorts to certain pressure tactics in order to obtain a detailed, substantive reply, such as publishing a strongly worded appeal in the CFA/Governing Body reports or initiating direct contact by an ILO field office. At any time during the complaint process, the CFA may obtain the consent of the nation concerned for a “Direct Contact Mission,” in which an ILO representative travels to the nation for the purpose of

15 CFA, Digest (1996), Annex I, at para. 33. 242 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] investigating the complaint or appraising the implementation of CFA recommendations. The last Direct Contact Mission to Canada was led by Sir John Wood, who visited in September 1985 to investigate and report on four complaints against Canada.16 In addition to soliciting written submissions from the parties to an allegation, the CFA may decide to hear one or more of the parties. The CFA’s discretion to invite oral submissions has been exercised very rarely, and never in a complaint concerning Canada.

(D) PARTIES BEFORE THE CFA

The government of the nation that is the subject of a complaint is the responding party before the CFA. The CFA’s complaint procedures do not allow for the direct participation of groups other than the

complainant organization and the national government. There is, for 2003 CanLIIDocs 189 example, no procedure by which groups can acquire intervenor status. This means that if a complaint is brought by a national organization of employees, the equivalent national organization of employers (i.e. in Canada, the Canadian Employers Council (the “CEC”)) has no right to participate directly in the complaint. In March 2002, the CFA adopted the following process on a trial basis for securing submissions from parties affected by a complaint: The Committee agreed to adopt on a trial basis a procedure which would allow seeking, as the case may be, the comments of all the parties affected, so that the Government may transmit to the Committee the most exhaustive reply possible. The practical application of this new rule of procedure should not result in a delay concerning the recourse to urgent appeals made to governments nor in the examination of cases.17 As a result, for the time being, parties affected by a complaint are encouraged to provide comments and submissions to the CFA through the national government that is responding to the complaint. This enables national employer organizations like the CEC to participate in complaints brought by worker organizations, albeit through the relevant national government.

16 Case Nos. 1172 (1982), 1234 (1983), 1247 (1983), and 1260 (1984). 17 CFA, Report 327 (March 2002), at para. 26. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 243

(E) CFA CONCLUSIONS AND RECOMMENDATIONS

After reaching its conclusions regarding a complaint, the CFA formulates unanimous recommendations to be approved by the Gov- erning Body. The recommendations are published in the CFA’s Digest. In reporting to the Governing Body, the CFA’s responses to complaints generally fall into three categories:

1. No further examination of the complaint is called for. The issue is moot or the subject-matter of the complaint, upon examination, is in accordance with the principles of freedom of association. 2. The complaint warrants further examination. The government in question is normally invited to amend its laws or practices so as to accord with the principles of freedom of association. If the state

violated a convention which it has ratified, follow-up communica- 2003 CanLIIDocs 189 tions are handled by the Committee of Experts on the Application of Conventions and Recommendations, an independent group established by the Conference to assess state compliance with ILO standards. If the state violated a convention to which it is not a party, follow-up is conducted by the CFA. The government is periodically reminded of the matter and asked to supply information outlining the action taken on the CFA’s recommendations. 3. The complaint should be referred to the Commission. The Com- mission is the highest level of special machinery in place for the protection of freedom of association. Whereas the CFA is composed of members of the Governing Body, the Commission consists of independent persons appointed by the Governing Body. Referral to the Commission requires the consent of the government concerned only if the state has not ratified the Freedom of Association Conventions. A government that is displeased with a decision of the Commission can appeal the matter to the Interna- tional Court of Justice for final determination. However, the Commission has considered only six cases in the course of its 52- year existence.

3. THE INCREASE IN COMPLAINTS AGAINST CANADA

Having set out the complaint procedure before the CFA, we now consider the proliferation of freedom of association complaints 244 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] against Canada at the ILO in the period 1982-2002. The situation has not escaped the attention of the CFA. In its 327th Report to the Gov- erning Body in 2002, the CFA raised concerns about the number of ongoing cases involving Canada.18 In light of a perceived lack of government responsiveness to CFA recommendations, the CFA Chair- person was asked to consult with the Canadian government during the annual Conference meeting in Geneva: Taking into account the discussions which took place on several occasions on cases concerning Canada, the Committee requests its Chairperson to hold consultations with the Government delegation of Canada, during the 90th Ses- sion of the International Labour Conference in June 2002, to examine the general status of pending cases concerning federal and provincial jurisdictions, and to consider the various possibilities of technical assistance or other measures which, through dialogue, would allow finding ways of solving those difficulties that have been identified.19 2003 CanLIIDocs 189 In its most recent Report, the CFA reiterated that during the June 2002 Conference meeting, its Chairperson would be making contact with the Canadian government delegation. The other governments with whom the CFA felt compelled to consult regarding multiple complaints, ongoing labour disputes, and lack of governmental coop- eration in the complaint process were Chad and Morocco.20 The Canadian labour regime can hardly be equated with that of Chad or Morocco, and yet all three countries have been viewed as requiring special attention from the CFA. One possible explanation for the proliferation of CFA complaints involving Canada is the sheer number of Canadian jurisdictions, since the federal government and the ten provinces each has its own labour law regime. Other nations, such as the United Kingdom, have predominantly centralized labour relations systems. The Cana-

18 Ibid. Case Nos. 1951 (1998), 1975 (1998) and 2083 (2000) were complaints in which the CFA had found violations of the Freedom of Association Conventions, and the provincial governments continued to resist the legislative amendments recommended by the CFA. Case Nos. 2119 (2001) and 2145 (2001) were considered on their merits, the CFA concluding in both instances that the Freedom of Association Conventions had been violated. The CFA also noted that two new complaints had been filed against Canada: Case Nos. 2166 (2001) and 2173 (2002). 19 Supra, note 17, at para. 13. 20 CFA, Report 328 (June 2002), at para. 10. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 245 dian system, arguably, creates the potential for ten times as many complaints. However, the multiplicity of jurisdictions does not account for such a dramatic increase in complaints against Canada. Moreover, other federal nations have many jurisdictions, yet have not experienced a similar growth in CFA complaints. The United States is the prime example. Although under the National Labor Relations Act private-sector labour legislation is largely centralized, all 50 states, the District of Columbia and the federal government have legislative authority over their own public-sector workforces. The diversity of legal approaches to public sector collective bargaining among these 52 jurisdictions creates the potential for a plethora of complaints to the CFA.21 Nevertheless, the number of complaints against the United States has remained low and relatively stable over time. To understand the increase in the number of complaints to the

ILO involving Canada, one must begin by considering the ways in 2003 CanLIIDocs 189 which the ILO’s approach to freedom of association differs from that which has emerged under the Charter.

(a) The Canadian Approach under the Charter: the Alberta Reference

The Canadian approach to labour relations has been premised on the need to balance competing interests within political and administrative, as opposed to judicial, processes.22 This approach was plainly evident in the decision of the Supreme Court of Canada in the Alberta Reference. There, the Court considered whether freedom of association under s. 2(d) of the Charter guaranteed the rights to strike and bargain collectively. In a dissenting opinion, in which he held that these rights did attract constitutional protection, Chief Justice Dickson relied extensively on Canada’s international obligations, particularly under the Freedom of Association Conventions as interpreted by the CFA: The general principle to emerge from interpretations of Convention No. 87 . . . is that freedom to form and organize unions, even in the public sector,

21 E. Potter, Freedom of Association, the Right to Organize and Collective Bar- gaining (Washington, D.C.: Labor Policy Association, 1984), at p. 73. 22 Potter, ibid., identifies a similar “fundamental difference” between the approaches of the United States and the ILO to freedom of association. 246 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

must include freedom to pursue the essential activities of unions, such as collective bargaining and strikes, subject to reasonable limits.23 ... The most salient feature of the human rights documents discussed above in the context of this case is the close relationship in each of them between the concept of freedom of association and the organization and activities of labour unions. As a party to these human rights documents, Canada is cognizant of the importance of freedom of association to trade unionism, and has under- taken as a binding international obligation to protect to some extent the associational freedoms of workers within Canada.24 Dickson thus viewed the ILO’s approach to freedom of association as directly relevant to the interpretation of s. 2(d) of the Charter. However, the majority of the Court took a quite different view of freedom of association and labour rights. Justice LeDain, writing for himself and three other judges, offered brief reasons in which he stated that the rights to bargain collectively and to strike “are not fun- 2003 CanLIIDocs 189 damental rights or freedoms. They are the creation of legislation, involving a balance of competing interests in a field which has been recognized by the courts as requiring a specialized expertise.”25 LeDain added that constitutionalizing labour rights would be inconsistent with the principle of judicial restraint in reviewing labour relations matters that are more properly dealt with by the legislature.26 Justice McIntyre, writing only for himself and concurring in the result reached by LeDain, went into considerably greater detail on what he termed “a sound reason grounded in social policy” for not constitutionalizing labour rights such as collective bargaining and strike action.27 In his view, labour law is an “extremely sensitive subject” amounting to a “political and economic compromise” between two powerful forces — organized labour and employers. The role of Canada’s legislatures has traditionally been to maintain a balance between these forces in the public interest. Achieving this balance is an “inherently dynamic and unstable” process.28 If one or two aspects

23 Alberta Reference, supra, note 1, at p. 355. 24 Ibid., at pp. 358-359. 25 Ibid., at p. 391. 26 Ibid., at pp. 391-392. 27 Ibid., at p. 414. 28 Ibid. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 247 of the system were frozen in place through constitutionalization, according to McIntyre, the ability of legislators to maintain the requisite balance would be undermined: To intervene in that dynamic process at this early stage of Charter development by implying constitutional protection for a right to strike would, in my view, give to one of the contending forces an economic weapon removed from and made immune, subject to s. 1, to legislative control which could go far towards freezing the development of labour relations and curtailing that process of evolution necessary to meet the changing circumstances of a modern society in a modern world.29 McIntyre added that the Canadian experience suggests that courts, as a general rule, are not the best arbiters of labour disputes. This is because problems in labour relations are not purely legal in nature, but raise political, social and economic questions. Hence, “the courts

should refrain from intrusion into the field of legislation. That is the 2003 CanLIIDocs 189 function of the freely-elected Legislatures and Parliament.”30 Underlying the majority position of the Supreme Court of Canada in the Alberta Reference was the view that labour relations issues are better resolved pursuant to existing administrative and political processes, and should not be constitutionalized and thereby placed in the hands of the judiciary. In fact, this approach is not only consistent with the Canadian labour relations tradition, but has even deeper roots, finding its rationale in the legal abstentionist founda- tions common to all modern Anglo-American labour relations systems.31 These systems fundamentally resist judicial involvement in refereeing labour-management conflict. Moreover, the Anglo-Ameri- can approach does not view collective bargaining and strike activity as fundamental human rights, or even predominant social values, within a system of labour law. Rather, collective bargaining and strikes are simply two aspects of a complex, multi-faceted system, other elements of which include union recognition, exclusive representation, mediation, arbitration, lock-outs, management prerogative,

29 Ibid., at p. 415. 30 Ibid., at p. 420. 31 For a general discussion of legal abstentionism in labour law, see O. Kahn-Fre- und, “Labour Law,” in M. Ginsberg, ed., Law and Opinion in England in the 20th Century (London: Stevens & Sons, 1959) 215, and “Industrial Relations and the Law – Retrospect and Prospect” (1969), 7 Brit. J. Indus. Rel. 301. 248 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] the duty to bargain in good faith, and the duty of fair representation. The point is that labour relations systems in Anglo-American jurisdictions are not conceptualized as existing solely or even predominantly to preserve and promote worker rights; rather, their purpose is to serve the public interest by maintaining a balance between organized labour and employers.

(b) Conflicting Approaches to Freedom of Association

The existence of a gulf between Canada and the ILO with respect to the substantive content of freedom of association may seem odd, given that Canada has ratified Convention No. 87, and is required to respect Convention No. 98 as a condition of its membership in the ILO.32 Moreover, the preamble to the Canada Labour

Code recognizes Canada’s commitment to the ILO, freedom of asso- 2003 CanLIIDocs 189 ciation and, specifically, Convention No. 87.33 Nevertheless, Canada’s traditional perspective on labour law as a balancing exercise contrasts sharply with the fairly rigid view taken by the ILO respecting the rights to form and join a union, engage in collective bargaining and conduct strike action. The ILO, through the CFA, has characterized freedom of association and the corresponding rights to bargain collectively and to strike as fundamental human rights, to be limited only in exceptional circumstances and only for a temporary period. Hence, with respect to the permissibility of limiting collective bargaining over wages, the CFA has stated: [I]f, as part of its stabilization policy, a government considers that wage rates cannot be settled freely through collective bargaining, such a restriction should be imposed as an exceptional measure and only to the extent that is necessary, without exceeding a reasonable period . . .34

32 Supra, notes 13, 14. Of course, these conventions are not directly justiciable before the Canadian courts. 33 The preamble reads, in part: “AND WHEREAS the Government of Canada has ratified Convention No. 87 of the International Labour Organization concerning Freedom of Association and Protection of the Right to Organize and has assumed international reporting responsibilities in this regard...” Since 1982, there have been 11 complaints to the ILO against Canada alleging violations of freedom of association by the federal government. For summaries of these complaints, see “ILO Committee on Freedom of Association: Complaints Involving Canada since 1982 by Jurisdiction,” available at http://www.cec-cce.ca. 34 Supra, note 15, at para. 883. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 249

The Canadian approach, as exemplified by the Alberta Reference, is more tolerant of state-imposed limits that arise out of a democratic process, and are advanced in the public interest and not overtly to undermine labour. In general, developed democratic nations with strong labour movements and protective employment standards (a group of nations that obviously includes Canada) are better able to withstand state limits on association, collective bargaining and industrial action. Nations with totalitarian governments and/or emerging economies (i.e. nations lacking the political and administrative mechanisms through which labour’s interests can be pursued domestically) may be considerably more susceptible to state abuses motivated by anti-labour objectives. The ILO’s approach to freedom of association must apply to each one of the organization’s 175 Member States, which range from liberal democracies to authoritarian 35 regimes. This may in part explain the strict approach taken by the 2003 CanLIIDocs 189 ILO to freedom of association, its low tolerance for state-imposed limits on union participation, collective bargaining and strikes, and its seeming reluctance to acknowledge that organized labour may engage in activities that justify state-imposed limitations on freedom of association in the public interest. Canadian governments have thus found themselves on the losing end of complaints to the CFA respecting actions that are not only legal in Canada, but are consistent with the traditional Canadian approach to labour law. For example, in Case No. 1451 (1988), and again in Case No. 1985 (1998), the Canadian government was found to have violated freedom of association in legislating striking postal employees back to work and imposing binding arbitration. The CFA’s view has consistently been that back-to-work legislation is justified only in the case of essential services where the life, health or personal safety of the population is put at risk by the strike action. Even in such a case, the CFA has stipulated that any legislation must be framed narrowly to interfere as little as possible with the right to

35 The issues raised at the ILO by the Canadian labour movement tend to pale in comparison to the issues arising in many other countries: murders, physical assaults, disappearances, arrests, detentions, and forced exiles of workers and union organizers; serious breaches of freedom of assembly and freedom of expression; oppressive states of emergency; and violations of trade union premises and property. See ILO, Your Voice at Work: Global Report under the Follow- up to the ILO Declaration on Fundamental Principles and Rights at Work (1998). 250 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] strike. Hence, the CFA found in both cases that the work performed by postal employees was not in the nature of essential services, that Convention No. 87 had been breached by the back-to-work legislation, and that Parliament should refrain from taking similar action in the future. Notably, in Case No. 1451, the Canadian government had argued that back-to-work legislation was justified in the public interest, and that Canadian domestic law had not been violated by the legislation, since the Supreme Court of Canada had held that freedom of association under the Charter did not guarantee to unions the right to bargain collectively and to strike. The CFA responded that the ILO is a different forum from the Supreme Court of Canada, and was not bound by any determinations of the Court on freedom of association issues. According to the CFA, its mandate is to determine whether a complaint substantiates a violation of the principles enshrined in the

ILO’s conventions, rather than those found in domestic Canadian law. 2003 CanLIIDocs 189 The results in Case No. 1451 and Case No. 1985 underscore the divide that exists between the Canadian and ILO approaches to freedom of association. In the Canadian context, back-to-work legislation and state-imposed binding arbitration do not have the hallmarks of an infringement of fundamental human rights. Where two powerful parties are engaging in a protracted labour dispute, and in the process are causing harm to the economy and inconvenience to the public, state intervention to settle the dispute does not conflict with the principle that the state may act in the public interest so long as a balance between labour and management is maintained. The flexibility of Canadian governments to engage in such intervention is, presumably, what the Supreme Court of Canada sought to preserve in the Alberta Reference by rejecting the constitutionalization of labour rights.

Judicial resistance to the expansion of labour rights through the Charter has no doubt been disappointing and frustrating for many in the Canadian labour movement. Because Canadian labour relations have remained primarily within the ambit of existing political and administrative processes, there has (at least within the labour movement) been a perception that effective remedies for alleged violations of workers’ freedom of association are not available domestically. The CFA, with its strict approach to freedom of association, has CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 251 emerged as an obvious alternative venue for the airing of freedom of association complaints. The resulting rise in prominence of the CFA within the Cana- dian labour movement has been fuelled by the success of complaints.36 Since 1982, the CFA has reached conclusions in 49 of 61 complaints against Canada. In 35 of the 49 complaints (i.e. about three-quarters), the CFA found that freedom of association had been violated. This string of successes has not only provided comfort and vindication to organized labour, but has encouraged the strategy of using CFA findings adverse to Canada to support organized labour’s domestic legal agenda. In fact, in several cases, complaints to the ILO have been brought prior to, or concurrently with, claims in domestic courts. Recent examples include:37

(1) a 1993 complaint by the Canadian Association of Smelter and 2003 CanLIIDocs 189 Allied Workers (“CASAW”) regarding labour relations issues at Royal Oak Mines in Yellowknife, Northwest Territories; this complaint was brought at the same time that CASAW was involved in proceedings that ultimately went to the Supreme Court of Canada in 1996;38 (2) a 1996 complaint by the Canadian Labour Congress raising, among other things, the exclusion of agricultural workers from Ontario’s labour relations legislation; a case raising similar issues (Dunmore) was litigated to the Supreme Court of Canada in 2001;39 and

36 As noted in Table 1, above, there have been 63 complaints against Canada in the period 1982-2002, but two complaints were withdrawn while 12 remain active or on follow-up. Further background on all complaints may be found in the document, “ILO Committee on Freedom of Association: Complaints Involving Canada since 1982 by Jurisdiction,” supra, note 33. 37 The Canadian labour movement has in the past utilized this two-pronged strategy, litigating domestically while complaining internationally to the ILO. See, for example, Case No. 1350 (1985), in which the British Columbia Teachers’ Federation challenged legislation limiting the scope of the collective bargaining, and Case No. 1526 (1990), concerning Quebec legislation limiting the right to stroke of workers in the health services sector. 38 Case No. 1737 (1993); Royal Oak Mines v. Canada (Labour Relations Board) (1996), 133 D.L.R. (4th) 129 (S.C.C.). 39 Case No. 1900 (1996); Dunmore, supra, note 10. 252 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

(3) a 1998 complaint by the Canadian Labour Congress and the Ontario Secondary School Teachers’ Federation concerning the exclusion of principals and vice-principals from collective bargaining in the education sector; a case raising similar issues was litigated to the Ontario Court of Appeal in 2000.40

Importantly, as noted above, the ILO does not require exhaustion of domestic remedies as a precondition to a complaint alleging violation of the Freedom of Association Conventions. On the contrary, the CFA has opined that its findings and recommendations respecting international principles of freedom of association may be helpful to domestic tribunals.41 From a strategic perspective, this means that a complaint may be brought to the ILO in the hope of achieving a favourable result, which can then be advanced domestically. 2003 CanLIIDocs 189 (d) Other Factors

Other factors also help to explain the Canadian labour movement’s interest and success in advancing claims before the CFA. First, the ILO is viewed in Canada as a credible and influential institution, as exemplified by Canada’s long-standing participation in the ILO. Canada was a founding member of the ILO, has strongly supported the aims of the ILO,42 and has traditionally played a significant role in the ILO. Montreal was home to the ILO during the Sec- ond World War, and Canada has chaired the “Industrialized Market Economy Countries” group within the ILO since 1975. Many Cana- dians have taken prominent leadership roles within the ILO, includ-

40 Case No. 1951 (1998); Ontario Teachers’ Federation v. Ontario (Attorney Gen- eral) (1998), 39 O.R. (3d) 140 (Gen. Div.), affirmed (2000), 49 O.R. (3d) 257 (C.A.), leave to appeal to S.C.C. denied, [2000] S.C.C.A. 457 (QL). 41 Case No. 1350 (1985). See also Case No. 1900 (1996), where the CFA stated: “while sensitive to the Government’s arguments [that the CFA should refrain from passing judgment on a matter presently before domestic courts], the Com- mittee considers that, to the contrary, its examination of this case on the basis of long-established international principles of freedom of association may facilitate national consideration of this matter in light of those principles.” 42 J. Mainwaring, The International Labour Organization: A Canadian View (Ottawa: Labour Canada, 1986), at p. 169. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 253 ing four who served as Chair of the ILO’s Governing Body: Arthur Brown, George Haythorne, John Mainwaring and Joe Morris.43 Canada’s support for, and involvement in, the ILO has ensured that it is an institution of some authority in Canada. The reality is that Cana- dian governments and employers probably value the ILO more for its contributions to the development of other nations’ labour laws than for its pronouncements on alleged Canadian violations of freedom of association. Nevertheless, the fact that Canada continues to participate fully before the CFA despite a stream of adverse findings demonstrates at the very least that the ILO is perceived as having legitimacy. Second, the Canadian labour movement has traditionally been very active at the ILO, and is therefore comfortable advancing its agenda on the international stage. Joe Morris, for example, was the

first non-government representative to be elected to the ILO’s Gov- 2003 CanLIIDocs 189 erning Body. Jean-Claude Parrot has sat on the Governing Body since 1993, and is Vice-President of the Committee on Legal Issues and International Labour Standards. Other Canadian union leaders, such as Shirley Carr and Jean Marchand, have also played key roles in the ILO. The Canadian labour movement looks to the ILO as a body through which to pursue improved labour conditions, and to challenge Canadian governments and employers.44 Third, Canadian labour law has become quite politicized in recent times. In the past 20 years, labour law has been a central focus of the political process as successive governments have sought to make their mark on labour legislation. Ontario and British Columbia, two of the most significant Canadian jurisdictions, have both experienced recent swings to more conservative governments. New admin- istrations have implemented labour law reforms to promote “flexibility” and “industrial democracy,” in some cases have reversed previous pro-labour initiatives, and have implemented broad-based reforms in the health care, education and social assistance systems that have disrupted labour relations. Ontario has thus been the target

43 Ibid., at pp. 168-169. 44 A. Torobin, “The Labour Program and the International Labour Organization: Looking Back, Looking Ahead” (2000), 2 Workplace Gazette 85, at p. 86. 254 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] of seven complaints to the CFA in the past six years.45 Of these, four have been brought by teachers’ unions who oppose the Ontario government’s education reforms. The chronic education disputes in Ontario since 1996 bear little resemblance to typical employer-union conflicts over working terms and conditions. Instead, the disputes involve broad matters of education policy with implications for wages, working time and working conditions. Before the CFA, the teachers’ unions have argued that their freedom of association was violated by unilaterally-imposed reforms, while the Ontario government has responded that matters of education policy are properly excluded from collective bargaining. The CFA has reached conclusions highly favourable to the teachers’ unions, finding first that matters of education policy impacting on working terms and conditions must be the subject of free collective bargaining and, second, that pol-

icy issues properly outside the scope of collective bargaining should 2003 CanLIIDocs 189 still be the subject of “full consultation” with the teachers’ unions.46 As noted in Part 2, the CFA may refuse to entertain freedom of association complaints that raise purely political issues. Neverthe- less, the door now appears open for the Canadian labour movement to treat the CFA as a forum in which to pursue campaigns of political opposition, and to appeal domestic political setbacks. Given the general decline of the pro-labour New Democratic Party in the 1990s, the Canadian labour movement has been forced to develop new political strategies. Already, the strategic use of the CFA has emerged in British Columbia; since the electoral defeat of the New Democratic government in 2000, two complaints have been brought against reforms implemented by the new centre-right government.

45 Case No. 1900 (1996) [exclusion of agricultural workers and others from the Ontario Labour Relations Act]; Case No. 1943 (1997) [state-imposed limits on interest arbitration in the public sector]; Case No. 1951 (1951) [exclusion of principals and vice-principals from collective bargaining in the education sector]; Case No. 1975 (1998) [exclusion of persons in a workfare program from participation in collective bargaining]; Case No. 2025 (1999) [back-to-work legislation and compulsory arbitration in the education sector]; Case No. 2119 (2001) [unilateral imposition of co-instructional time in the education sector regardless of collective agreement provisions]; and Case No. 2145 (2001) [back- to-work legislation and compulsory arbitration in the education sector]. 46 Case Nos. 1951 (1998) and 2119 (2001). CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 255

4. EXPERIENCES OF THE UNITED KINGDOM AND THE UNITED STATES

The experiences of the United States and the United Kingdom before the CFA during the period 1982-2002 contrast rather dramati- cally with those of Canada. The figures in Table 1, above, suggest not only that the number of American and British complaints to the CFA was far lower than the number of Canadian complaints, but also that the rate of American and British complaints has remained roughly constant over time. The explanation is certainly not that American and British labour laws more generally conform to the principles set out in the Freedom of Association Conventions. Although a thorough analysis of these laws is beyond the scope of this paper, we note that there is ample academic literature to support the conclusion that

Canadian labour laws offer more extensive protection than those of 2003 CanLIIDocs 189 either the United States or the United Kingdom. Certainly, the labour movements in the United States and the United Kingdom could have advanced many more complaints to the CFA in the past 20 years, had they so desired.47 Our review of the historical experiences of the United States and the United Kingdom reveals certain considerations unique to the two countries that assist in understanding why their labour movements have been relatively less active before the CFA than the Cana- dian labour movement.

47 In the case of the United Kingdom, see T. Novitz, “Freedom of Association and ‘Fairness at Work’ – An Assessment of the Impact and Relevance of ILO Con- vention No. 87 on its Fiftieth Anniversary” (1998), 27 Indus. L.J. 169. Novitz analyzes the extensive reforms that would be required to bring U.K. law into conformity with the Freedom of Association Conventions. See also S. Mills, “The International Labour Organisation, the United Kingdom and Freedom of Association: An Annual Cycle of Condemnation,” [1997] Eur. H.R.L. Rev. 35. In the case of the United States, see Potter, supra, note 21, who argues that U.S. labour law in the public sector is so at odds with the Freedom of Association Conventions that the U.S. would open itself to criticism and embarrassment if it were to ratify the Conventions. See also Human Rights Watch, Unfair Advan- tage: Workers’ Freedom of Association in the United States under International Human Rights Standards (2000). 256 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

(a) The United Kingdom

The United Kingdom has in the past been one of the most enthusiastic supporters of, and participants in, the ILO.48 In 1949, the United Kingdom was the first nation to ratify Convention No. 87, and in 1950 was the first to ratify Convention No. 98. In fact, the United Kingdom has ratified more ILO conventions than virtually any other OECD nation.49 Of course, ratification of ILO conventions and active participation in ILO processes and institutions does not necessarily mean that a nation’s domestic law complies with ILO norms. Not only have several scholars illustrated that U.K. labour law conflicts significantly with the Freedom of Association Conventions,50 but the ILO’s Committee of Experts on the Application of Conventions and Recommendations has repeatedly admonished the United Kingdom 51 for failing to bring its laws in line with the Conventions. This is in 2003 CanLIIDocs 189 part a function of the laissez-faire tradition in U.K. labour law, which is characterized by a distinct lack of positive legal protections for collective bargaining and the right to strike as compared to many countries, including Canada. As one example, U.K. labour law does not recognize a positive right to strike. While workers are immunized from tort liability for engaging in strike action, they may nevertheless be dismissed for taking part in a strike. This aspect of U.K. law, it has been argued, is plainly at odds with the CFA’s interpretation of the right to strike under Convention No. 97.52 Furthermore, from 1979 to 1997 the United Kingdom was ruled by Conservative governments whose administration was marked by a tide of deregulatory initiatives widely perceived as anti-union in nature.53 These initiatives, coupled with pre-existing structural inade- quacies in U.K. labour law, afforded to the British labour movement

48 K. Ewing, Britain and the ILO (London: Institute of Employment Rights, 1994), chap. 1. 49 Mills, supra, note 47. The U.K. has ratified over 80 conventions. 50 Ibid. 51 Ibid., in particular at pp. 36-40. 52 Ibid., at pp. 48-49; P. O’Higgins, “International Standards and British Labour Law,” in R. Lewis, ed., Labour Law in Britain (Oxford: Blackwell, 1986) 572, at p. 585. 53 See S. Fredman, “The New Rights: Labour Law and Ideology in the Thatcher Years” (1992), 12 Oxford J. Legal Stud. 24. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 257 many opportunities to bring complaints to the CFA. Yet, as noted, there were only nine such complaints in the period 1982-2002. Perhaps the most controversial of these complaints was brought by the Trade Union Congress (the “TUC,” the British equivalent of the CLC) in 1984. It concerned the rights of 7,000 unionized employees of the Cheltenham Government Communications Head- quarters (“GCHQ”).54 The Conservative government had announced in January 1984 that it was unilaterally depriving these employees of their right to belong to a trade union. The employees were given the choice of either signing a form in which they agreed to surrender their union membership in exchange for a cash payment of £1,000, or being transferred to other positions in the civil service. As the employees had no recourse in the British courts (there being at the time no constitutional or quasi-constitutional right of association that

could be asserted against state action), the TUC brought a complaint 2003 CanLIIDocs 189 to the CFA in February 1984 alleging a violation of the Freedom of Association Conventions. Not surprisingly, the CFA determined that the government’s actions respecting GCHQ were contrary to the Conventions. The TUC also pursued two complaints challenging the right of U.K. employers to refuse to engage in collective bargaining with unions representing their employees. In the first case, the employer offered a cash incentive to unionized employees in order to induce them to sign individual employment agreements.55 A 1993 statute expressly permitted employers to offer such incentives. In the second case, the employer refused to negotiate with the trade union and required employees to give up their union membership as a condition of continued employment.56 These complaints struck at the very heart of the laissez-faire premise of U.K. labour law, and in particular the view that employers should have the freedom to choose whether or not to engage in collective bargaining. In both cases, the CFA decided that the Freedom of Association Conventions had been infringed, and recommended that the United Kingdom institute positive statutory protections that would prevent employers from interfer-

54 Case No. 1261 (1984). See Ewing, supra, note 48, chap. 5. 55 Case No. 1730 (1993). See Ewing, supra, note 48, chap. 6. 56 Case No. 1852 (1995). See Ewing, supra, note 48. 258 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] ing in union representation and avoiding collective bargaining with legitimate union representatives.57 Although the TUC achieved considerable success in those few complaints it brought before the CFA, this success did not translate into concrete policy reform while the Conservatives remained in office. Consider, for example, the reaction of the Conservative government to the CFA’s findings in the GCHQ complaint: the government declared that the CFA was wrong, and that its findings and recommendations should be ignored.58 In the British courts, the GCHQ matter proceeded by way of judicial review to the House of Lords. Under the heading “Minor matters,” Lord Fraser dismissed the argument that the government had improperly ignored the United Kingdom’s ILO obligations, stating: “I do not propose to consider the matter as the Conventions are not part of the law in this country.”59 It

was only in 1997, following the election of a Labour government, 2003 CanLIIDocs 189 that freedom of association was restored to the employees of GCHQ.60 In a sense, then, the challenges facing the U.K. labour movement — government indifference to CFA findings and inaccessible courts — were similar to those operating in Canada. They were more extreme, however, in the case of the United Kingdom. This meant that complaints to the CFA had, at best, symbolic value to British labour. In order to effect concrete change on the domestic scene, alternative avenues offered greater hope. Two such alternatives presented themselves. First, the TUC and other worker organizations focused their efforts on achieving gains within the European Union which, as one commentator observed, has “the most effective means of enforcement . . . of all the international organisations that lay down labour standards.”61 Although it is not our aim to discuss the relevant Euro-

57 The U.K. has now enacted legislation providing for the recognition of unions as exclusive bargaining representatives of employees. See H. Oliver, “Trade Union Recognition: ‘Fairness at Work’ ” (1998), 20 Comp. Lab. L. & Pol’y J. 33. 58 O’Higgins, supra, note 52, at pp. 579-580. 59 Council of Civil Service Unions v. Minister for the Civil Service, [1985] A.C. 374 (H.L.), at p. 403. 60 Novitz, supra, note 47, at p. 174. 61 O’Higgins, supra, note 52, at p. 587. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 259 pean institutions in detail,62 it can be said with some confidence that in the years 1979-1997 the British labour movement was more likely to achieve concrete policy gains at the European level than domestically.63 This option was certainly not available to the Canadian labour movement. Second, the Labour Party in the United Kingdom not only provided a strong political voice for British labour to challenge perceived rights violations, but held out the possibility of eventually influencing (or even directing) concrete labour law reform. As noted above, the political voice of labour in Canada, the New Democratic Party, has rarely been competitive in most provinces and has never been close to power nationally.64 Given the alternatives available to the British labour movement, it is not surprising that complaints to the CFA were limited in number and focused primarily on fundamental points of principle. In short,

during the period of Conservative government, the British labour 2003 CanLIIDocs 189 movement was active in its opposition, but preferred to expend its resources on initiatives with the greatest likelihood of effecting change in U.K. law. As a final comment, we note that the legal landscape in the United Kingdom was transformed in 2000 by the coming into force of the Human Rights Act 1998, which incorporated into domestic law the European Convention on Human Rights. One of the incorporated rights is freedom of association.65 In effect, freedom of association is now guaranteed in U.K. law in a manner analogous to the protection afforded by the Canadian Charter. It will be interesting to see how the U.K. courts interpret freedom of association in the labour relations context, as this may have a significant impact on the British labour movement’s strategic use of the CFA.

62 See Ewing, supra, note 48, chap. 8, at pp. 68-69. 63 We do not mean to suggest that the European Union has the jurisdiction to prom- ulgate directives on matters of freedom of association and collective labour rights. However, the European Union has been influential in other areas of labour and employment law such as worker protection (e.g. the Working Time Directive, O.J.L. 307, 13/12/1993), anti-discrimination (e.g. the Equal Pay Directive, O.J.L. 045, 19/02/1975), and consultation (e.g. the European Works Council Directive, O.J.L. 254, 30/09/1994). 64 Except, perhaps, during the Liberal minority government of 1972-1974, when the New Democrats held the balance of power in Parliament. 65 Human Rights Act 1998, c. 42, s. 1(1)(a). 260 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

(b) The United States

The United States has historically had an uneasy relationship with the ILO.66 Samuel Gompers, a former president of the American Federation of Labour (today, the “AFL-CIO”), was instrumental in the formation of the ILO, and the first ILO conference took place in Washington, D.C. in 1919 at the request of the United States.67 How- ever, the United States did not attend this conference, and did not formally join the ILO until 1934. This initial 15-year absence was largely due to the same isolationist pressures that kept the United States out of the League of Nations, but it was also rooted in suspicion that the ILO had radical and socialist tendencies.68 Despite this, two Americans served as Director-General of the ILO during the period 1935-1977: John Winant (1939-1941) and David Morse

(1948-1970). Prior to 1977, however, the United States ratified only 2003 CanLIIDocs 189 seven ILO conventions, and to date has not ratified either of the Free- dom of Association Conventions.69 Most significant to the instant analysis is a crucial event that occurred in 1977, namely, the withdrawal of the United States from the ILO. The most extraordinary aspect of the withdrawal was not that it happened, but that it was instigated by key officials of the AFL-CIO, the American equivalent of the CLC and the TUC. During the 1970s, the AFL-CIO had become increasingly frustrated by what it perceived as the hijacking of the ILO by Soviet-bloc nations. In 1972, George Meaney, President of the AFL-CIO, was so outraged by the appointment of a Soviet delegate to the position of Assistant

66 For an historical overview, see G.T. Kruglak, The Politics of United States Deci- sion-Making in United Nations Specialized Agencies: The Case of the Interna- tional Labor Organization (Washington, D.C.: University Press of America, 1980); and K. Moy, “The United States’ Legal Role in International Labor Orga- nization Conventions and Recommendations” (1988), 22 Lab. L.J. 767, at pp. 767-769. 67 S. Schlossberg, “United States Participation in the ILO: Redefining the Role” (1989), 11 Comp. Lab. L.J. 48, at p. 50. Gompers had been elected Chairman of the Commission on International Labour Legislation at the Paris Peace Confer- ence of 1919. The Commission’s Report, including the proposed Constitution of the ILO, was included in the Treaty of Versailles. 68 Ibid., at p. 67. 69 After 1977, the United States ratified only two further conventions. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 261

Director-General that he successfully lobbied the House of Repre- sentatives Committee on Appropriations to conduct hearings into the U.S. role in the ILO. At the hearings, Meaney testified as follows: We in the American trade union movement believe in the ILO and its purposes. We see its purposes being twisted and turned to where, if there is not a stop, the ILO will be useless insofar as its original purpose is concerned, and it will exist only as an international propaganda organization dedicated to the Communist way of life, and certainly it will be an organization that can make no contribution to the welfare and the interest of our country.70 This frustration was shared by members of Congress and the U.S. Council of International Business, which represents American employers at the ILO.71 Certainly, some of the United States’ concerns were valid. In particular, the fact that worker and employer associations in communist countries were beholden to, and con-

trolled by, the state undermined the tripartite structure of the ILO. In 2003 CanLIIDocs 189 the opinion of American workers and employers, the ILO could not credibly promote worker protection and human rights so long as the Soviet Union and its allies were active Member States. The specific incident that led to the United States’ withdrawal was the decision at the 1975 ILO Conference to grant observer status to the Palestinian Liberation Organization. Arguing that the ILO had become too distracted by political issues, the AFL-CIO called on the U.S. government to withdraw. With the concurrence of American employers, Secretary of State Henry Kissinger delivered written notice of withdrawal, which came into effect in 1977.72 Although the United States maintained observer status after 1977, it did not rejoin the ILO until 1980.73

70 Mainwaring, supra, note 42, at p. 142. 71 Ibid. 72 The text of Secretary of State Kissinger’s letter listed the following four reasons for the U.S. withdrawal: (1) the erosion of the tripartite system; (2) arbitrary application of the Freedom of Association and Forced Labour Conventions; (3) a disregard for due process and procedural fairness; and (4) politicization. See Mainwaring, ibid., at pp. 147-148. 73 See M.F. Imber, The USA, ILO, UNESCO and IAEA: Politicization and With- drawal in the Specialized Agencies (London: MacMillan, 1989), chap. 4; and W. Galenson, The International Labor Organization: An American View (Madison: University of Wisconsin Press, 1981), for a full discussion of the United States’ decision to return to the ILO in 1980. 262 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

During the 1970s, the United States, and particularly its labour movement, came to the view that the ILO lacked the legitimacy to pass judgment on American laws and practices. This opinion was deeply held, and it is therefore not surprising that it coloured Ameri- can participation in the ILO even after 1980. One indication of this may be that between 1982 and 1990 the AFL-CIO concentrated its CFA efforts on challenging alleged anti-union conduct by foreign multinational corporations operating in the United States.74 Substan- tive challenges to the existing labour law system were few in number. There were, nevertheless, early signs that the ILO had rehabili- tated itself, at least in the eyes of American labour. Credit for this rests with President Ronald Reagan’s mass termination of striking air traffic controllers in 1981. This event, more than any other in recent memory, galvanized the American labour movement. In late 1981,

the International Confederation of Free Trade Unions, with the sup- 2003 CanLIIDocs 189 port of the AFL-CIO, complained to the CFA that the actions of the American government deprived air traffic controllers of the rights to bargain collectively and to strike, contrary to the Freedom of Associ- ation Conventions.75 The CFA’s conclusions could be seen as a significant setback for American labour, as the CFA found that the air traffic controllers performed an essential service, the withdrawal of which endangered the lives and safety of large numbers of passen- gers and staff. Pursuant to ILO standards on freedom of association in essential services, it was therefore permissible for the U.S. government to prohibit controllers from striking, and to dismiss them for doing so. Leaving aside the disappointing result for the American labour movement, it is surely significant that the AFL-CIO actively supported a complaint to the CFA only a few years after campaigning for American withdrawal from the ILO. It could be argued that the rehabilitation of the ILO was complete by 1990, when the AFL-CIO brought two complaints to the CFA challenging substantive aspects of American labour law. In one case, the AFL-CIO successfully challenged the Mackay doctrine,

74 See Case Nos. 1401 (1987) concerning Norsk Hydro; 1437 (1988) concerning BASF; 1467 (1988) concerning ENI; and 1523 (1990) concerning Delhaize- Food Lion. A fifth case concerned labour relations at the United Nations itself (Case No. 1416 (1987)). 75 Case No. 1074 (1981). CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 263 which permits employers to hire permanent replacements for striking workers.76 The second case was an ambitious complaint relating to the prohibition in many States on unionization, collective bargaining and strikes in the public sector. In the result, the CFA called on the United States to ensure that “all public service workers other than those engaged in the administration of the state should enjoy collective bargaining rights.”77 Since 1990, the American labour movement’s attitude toward the ILO has improved considerably. In 1995, the AFL-CIO campaigned against efforts in the U.S. Congress to cut funding to the ILO.78 The AFL-CIO has also campaigned for American ratification of the Freedom of Association Conventions, and has spearheaded an international campaign to raise awareness of the ILO’s Declaration of Fundamental Principles and Rights at Work.79

What explains the renewed interest of American labour in the 2003 CanLIIDocs 189 ILO? Two factors loom large. First, following the collapse of the Soviet Union, it was no longer possible to characterize the ILO as a propaganda tool for anti-American interests. Second, due to trade liberalization initiatives like the North American Free Trade Agreement, the American labour movement has come to view the development of international labour standards as an essential vehicle for preventing social dumping and the loss of American jobs. As the ILO is the predominant standard-setting body in international labour law, it cannot be ignored by any state or organization seeking to use trade liberalization as a platform for securing improvements to labour standards. While it is clear that the AFL-CIO has come to look upon the ILO as an important institution in international standard-setting, it is not yet apparent whether the American labour movement is interested in using it as a forum for testing domestic labour laws. Despite the increased activity of the AFL-CIO within the ILO, there have been no American complaints to the CFA since 1990. Perhaps, as a former American member of the ILO’s Committee of Experts on the Application of Conventions and Recommendations has observed, the

76 Case No. 1543 (1990). 77 Case No. 1557 (1990). 78 See http://www.aflcio.org. 79 Ibid. 264 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

ILO is now viewed in most American circles with disinterest rather than suspicion.80

The primary factors that discouraged the labour movements in the United Kingdom and the United States from pursuing complaints before the CFA were not at play in Canada. While the AFL-CIO’s doubts about the ILO contributed to the withdrawal of the United States in 1977 and influenced the course of the American labour movement’s later involvement, the Canadian movement has never really questioned the legitimacy of the ILO and its institutions as a forum in which to challenge Canada’s labour laws. Moreover, in pursuing its agenda, the Canadian labour movement, unlike its British

counterpart, has enjoyed neither a strong domestic political voice nor 2003 CanLIIDocs 189 access to alternative venues. In short, Canadian labour has viewed the ILO as a legitimate alternative forum to challenge perceived violations of freedom of association. The result has been a remarkable number of complaints to the CFA in the period 1982-2002.

5. CONCLUSION

In the future the ILO’s influence and legitimacy will no doubt strengthen due to the link which has been drawn between trade liberalization and the prospect for improving labour standards. The ILO has featured prominently in the recent debate surrounding the proposed “Social Clause” in the WTO,81 and in the discussions concerning the “social dimensions” of a Free Trade Agreement of the Americas — evidence of the growing importance of the ILO as a body that sets international standards. It is unclear, however, whether the ILO will become more influential in the development of Cana- dian labour law.

80 B. Aaron, Book Review (1997), 18 Comp. Lab. L.J. 487, at pp. 487, 491. 81 The Social Clause debate concerns proposals for an agreement among members of the WTO to comply with the fundamental conventions of the ILO. If such an agreement were concluded, it would effectively make compliance with these conventions a precondition to membership in the WTO and participation in WTO trade liberalization initiatives. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 265

It has been suggested that the recent decision of the Supreme Court of Canada in Dunmore82 signals a new willingness on the part of domestic courts to take into account the freedom of association principles promoted by the CFA. In Dunmore, the Court considered whether the exclusion of agricultural workers from the Ontario Labour Relations Act constituted a violation of freedom of association under the Charter. In light of the Alberta Reference and later decisions in which the Court indicated that labour relations matters were best left to the legislatures, it was clear that Canadian workers were unable to assert a constitutional right to belong to a worker organization certified as a union, to participate in collective bargaining or to engage in strike activity. Accordingly, one would have expected the Court to find that the exclusion of a particular group of workers from a labour relations statute was a policy matter that lay

beyond the scope of constitutional review. However, a seven-judge 2003 CanLIIDocs 189 majority of the Court held otherwise, ruling that the exclusion of agricultural workers constituted an unjustifiable infringement of s. 2(d) of the Charter, and ordered the Ontario government to enact positive protections for agricultural workers’ freedom of association. Justice Bastarache, writing for the majority, placed considerable reliance on Canada’s international obligations to protect freedom of association to support his view that the underinclusiveness of the Act gave rise to an infringement of s. 2(d). It is worthwhile to quote his reasons in detail: The notion that underinclusion can infringe freedom of association is not only implied by Canadian Charter jurisprudence, but is also consistent with international human rights law. Article 2 of Convention (No. 87) concerning Freedom of Association and Protection of the Right to Organize, 67 U.N.T.S. 17, provides that “[w]orkers and employers, without distinction whatsoever, shall have the right to establish and … to join the organisations of their own choosing” (emphasis added), and that only members of the armed forces and the police may be excluded (Article 9). In addition, Article 10 of Convention No. 87 defines an “organisation” as “any organisation of workers or of employers for furthering and defending the interests of workers or of employers.” Canada ratified Convention No. 87 in 1972. The Convention’s broadly worded provisions confirm precisely what I have discussed above, which is that discriminatory treatment implicates not only an excluded group’s dignity interest, but also its basic freedom of association. This is further confirmed by

82 Supra, note 10. 266 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

the fact that Article 2 operates not only on the basis of sex, race, nationality and other traditional grounds of discrimination, but on the basis of any distinction, including occupational status . . . Nowhere is this clearer than in Article 1 of Convention (No. 11) concerning the Rights of Association and Combination of Agricultural Workers, 38 U.N.T.S. 153, which obliges ratifying member states to secure to “all those engaged in agriculture” the same rights of association as to industrial workers; the convention makes no distinction as to the type of agricultural work performed. Although provincial jurisdiction has prevented Canada from ratifying Convention No. 11, together these conventions provide a normative foundation for prohibiting any form of discrimination in the protection of trade union freedoms . . . This foundation is fortified by Convention (No. 141) concerning Organisations of Rural Workers and Their Role in Economic and Social Development (1975), 58 Int’l Lab. Off. 28, which extends, under Article 2, the freedom to organize to “any person engaged in agriculture, handicrafts or a related occupation in a rural area, whether as a wage earner or . . . as a tenant, sharecropper or small owner-occupier.”83 2003 CanLIIDocs 189 In Bastarache’s opinion, even those ILO conventions which Canada had not ratified provided a “normative foundation” with respect to trade union rights. It is important to recall that the issues raised in Dunmore had been the subject of a successful complaint before the CFA in 1996,84 when the exclusion of agricultural workers from Ontario’s labour relation legislation was held to constitute a violation of the Freedom of Association Conventions. Bastarache J. mentions these proceedings only briefly.85 However, the Court was fully aware of the CFA’s conclusions, which were discussed in submissions by the parties and interveners, and it is difficult to imagine that the Court was not influenced by them, particularly since the Court relied in its reasons upon Convention No. 87 as well as unratified ILO conventions concerning agricultural workers. Some in the Canadian labour movement have suggested that Dunmore marks a turning-point in Canadian labour relations, in that ILO conventions and principles will be of increasing importance in defining the meaning of freedom of association under s. 2(d) of the Charter. If so, organized labour could conceivably increase its complaint activity before the CFA, hoping for favourable rulings to transport to Canada to influence the development of domestic law.

83 Ibid., at para. 27. 84 Case No. 1900 (1996). 85 Supra, note 10, at para. 41. CANADA AND THE ILO: FREEDOM OF ASSOCIATION SINCE 1982 267

The extent to which Dunmore departs from the foundational principles of the Alberta Reference remains to be seen. While the labour movement is urging a broad interpretation of Dunmore, the Court’s holding should probably be read much more narrowly. The Court directed Ontario to provide statutory protection to individual agricultural employees in a way that recognizes:

• the freedom to organize (i.e. freedom to join an organization); • the freedom to assemble; • the freedom to participate in the lawful activities of associations; • the freedom to make representations to employers; and • the right to be free from interference, coercion and discrimination in the exercise of the above freedoms.

Of particular significance, however, is the fact that the Court did not 2003 CanLIIDocs 189 require the Ontario government to extend a full collective bargaining regime to agricultural workers. Bastarache J. stated: In choosing the above remedy, I neither require nor forbid the inclusion of agricultural workers in a full collective bargaining regime, whether it be the LRA [Ontario Labour Relations Act] or a special regime applicable only to agricultural workers such as the ALRA [Ontario Agricultural Labour Rela- tions Act]. For example, the question of whether agricultural workers have the right to strike is one better left to the legislature, especially given that this right was withheld in the ALRA (s. 10).86 The Court’s decision in Dunmore is thus aimed at protecting the constitutional freedom of individual workers as opposed to the collective, institutional rights of trade unions to act as bargaining agents. The decision requires statutory protection of an individual’s freedom to associate and to participate in an association’s activities. It does not require the Ontario government to provide for the certification of unions or the establishment of collective bargaining procedures, nor does it require statutory protection of the right to strike.87

86 Ibid., at para. 68. 87 Ontario’s response to the Dunmore decision, the Agricultural Employees Protec- tion Act, 2002, S.O. 2002, c. 16, guarantees freedom of association for individual workers, but does not provide for the certification of unions, collective bargaining or the right to strike. 268 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

In the post-Dunmore era, the jurisprudence on s. 2(d) of the Charter may develop along two distinct paths. Down one path lies an expansion of the Dunmore ruling toward the broad guarantees embodied in the Freedom of Association Conventions. Along the second path lies a confirmation of the principles set out in the Alberta Reference, in which the Dunmore decision is viewed as a limited, principled expansion of individual rights rather than a sweeping recognition of collective, institutional union rights. At this early stage, it is not possible to predict with certainty which path Canadian courts will follow. One can predict, however, that the role of the ILO in Canadian labour law will be the subject of vigorous debate for years to come. 2003 CanLIIDocs 189 The Employment Standards Act, 2000: Ontario Opts for Efficiency over Rights

Elizabeth Mitchell*

1. INTRODUCTION

In December 2000, the Ontario government enacted the Employment Standards Act, 2000,1 the first time Ontario’s employment standards regime had been significantly revamped since 1974. No major changes to the legislation had been made since 1974.2 From the perspective of the employees it was designed to protect, 2003 CanLIIDocs 189 some of the revisions were positive. For example, the new Act includes provisions that lengthen pregnancy and parental leave to match the 12 months of benefits available under the federal Employ- ment Insurance Act. It provides employees with ten unpaid days of absence in order to deal with family emergencies, expands the ability of employment standards officers to reinstate employees as a remedy for specific violations, and significantly increases the penalties available against employers who breach the statute. The legislation also requires all employers to post notices explaining employees’ rights under the Act. On the negative side of the ledger, however, the new Act repeals the requirement, in most circumstances, for government permits to vary minimum standards; exempts more groups and classifications of

* Elizabeth Mitchell is a partner in the Toronto law firm of Koskie Minsky. 1 Employment Standards Act, 2000, S.O. 2000, c. 41 (referred to in this paper as the “new Act” or the “ESA 2000”). Sections 143 through 146 (parental leaves) proclaimed December 30, 2000, all other sections proclaimed September 4, 2001; certain statutes repealed, effective March 31, 2001. The new Act replaced the Employment Standards Act, R.S.O. 1990, c. E.14 (the “former Act”). Bill 179, the Government Efficiency Act, Sch. J, which received royal assent on November 26, 2002, refined some provisions of the new Act. 2 For a clause-by-clause comparison between the former Act and the new Act, see Ontario Federation of Labour, Employment Standards Work Group, “Guide: Employment Standards Act, 2000 (Bills 147 and 57),” January 2002. 270 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] employees from the application of certain standards; creates a 60- hour work week and introduces the possibility of 13-hour days; eliminates some opportunities to earn overtime premiums; discontinues the Employee Wage Protection Program, which had protected wages in the event of an employer’s bankruptcy; and narrows the maximum recovery of unpaid wages to $10,000. This paper discusses and critically analyzes the hours of work and overtime provisions contained in the new Act, which came into effect on September 4, 2001. It considers the nature of employment standards legislation generally, summarizes the hours of work and overtime provisions, compares them to those in other Canadian jurisdictions, and argues that, viewed in the context of the historical purpose of such legislation to protect vulnerable employees, the ESA 2000 is fundamentally flawed. By eliminating the permit system of

the predecessor legislation, which at least had the capacity to protect 2003 CanLIIDocs 189 employees, and replacing it with a series of employer/employee agreements, the new Act has shifted the focus from concern for employee protection to concern for employer efficiency.

2. NATURE OF EMPLOYMENT STANDARDS LEGISLATION

Employment standards legislation has generally evolved to respond to the inability of contract law and the individual employment contract to deliver socially acceptable terms and conditions of employment for many employees.3 Traditionally, employment standards legislation has reflected society’s view that employees require a means of balancing an employer’s superior bargaining power in the workplace. There can be no equality of bargaining power where economic control of the means of production, buttressed by the ability to dismiss employees at will, rests entirely with the employer. Canadian courts, including the Supreme Court of Canada, have frequently commented on the central importance of work to an individual’s sense of dignity and self-worth, the inequality of bargaining power in employment relationships, and the vulnerability of employ-

3 See B. Reiter, “The Control of Contract Power” (1981), 1 Oxford J. Legal Stud. 347. THE EMPLOYMENT STANDARDS ACT, 2000 271 ees to the demands of their employers.4 While the Supreme Court has made these observations in the context of interpreting employment contracts or describing the role of trade unions in society, the principles are equally applicable when assessing the role of public statutes in providing employees who are not represented by a trade union with rights vis-à-vis their employers. Courts and legislatures have recognized the remedial nature of employment standards legislation. The Supreme Court of Canada has described Ontario’s Act as “a mechanism for providing minimum benefits and standards to protect the interests of employees” and as “benefits-conferring legislation.”5 Such legislation establishes a common, minimum floor of rights for employees, rights that normally are supervised and enforced by government agencies. Legislation in the area reflects commonly held values which are to be upheld in every workplace, regardless of the

individual views of owners and operators of a particular business. 2003 CanLIIDocs 189 Not surprisingly, some rights are so widely accepted as to be protected in all Canadian jurisdictions: minimum wages, guaranteed pregnancy and parental leave, notice of termination, a ceiling on hours of work, and entitlement to overtime pay are the prime examples. In theory, as the economy grows, these rights can be strengthened and expanded, as recently illustrated by the incorporation into the new Act of extended pregnancy and parental leaves and family emergency leave days. In addition to providing individual protections, however, employment standards legislation has political overtones.6 To some extent, it levels the playing field among employers operating in a jurisdiction; an employer is precluded from obtaining a competitive advantage by offering its workers less than the statutory minimums. Similarly, by controlling hours of work and imposing financial con-

4 In the wrongful dismissal context, see, for example, Iacobucci J.’s comments in McKinley v. BC Tel, [2001] 2 S.C.R. 161, and in Wallace v. United Grain Grow- ers Ltd., [1997] 3 S.C.R. 701. In connection with freedom of association, see the remarks of L’Heureux-Dubé J. in Dunmore v. Ontario (Attorney General) (2002), 207 D.L.R. (4th) 193 (S.C.C.). See also J. Fudge, “New Wine into Old Bottles? Updating Legal Reforms to Reflect Changing Employment Norms” (1999), 33 U.B.C. L. Rev. 129. 5 Rizzo v. Rizzo Shoes Ltd., [1998] 1 S.C.R. 27, at para. 36. 6 See Reiter, supra, note 3. 272 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] sequences on employers who require long hours, employment standards legislation arguably creates financial disincentives to overwork employees, and thus compels some redistribution of work opportunities. Studies, such as the 1994 “Report of the Advisory Group on Working Time and the Distribution of Work,”7 have recommended an increased use of the power to regulate workplace standards to address the inequities in today’s economy that result in increasingly long hours of work for a few full-time employees, compared to little or only contingent work for many others.8 Shorter work weeks and lower thresholds for overtime premiums may help to accomplish these sociopolitical goals. Both organized and unorganized employees benefit from a strong statutory floor of rights. Trade unions use these rights as the starting-point in collective bargaining; where negotiations fail or the

collective agreement is silent on an issue, employees cannot receive 2003 CanLIIDocs 189 less than the statutory minimum.9 More importantly, however, employment standards legislation protects employees who are not represented by trade unions. For many employees, their only rights in the employment relationship are those which are guaranteed by statute, rights which they can, at least in theory, enforce without fear of reprisal by the employer.10 Unfortunately, in spite of the laudable purposes behind such legislation, the employment standards regime in Ontario, under the auspices of the Employment Standards Branch of the Ministry of Labour, has not been particularly effective in enforcing the statutory protections. A study conducted in 1987 found that very few employees ever file an employment standards complaint; the great majority of complaints were filed by persons who had left the employ of the

7 Report of the Advisory Group on Working Time and the Distribution of Work (Ottawa: Supply and Services Canada, 1994). 8 The Canadian Labour Congress makes the same points in a paper entitled “Cre- ating More and Better Jobs through Reduction and Redistribution of Working Time,” January 12, 1998, available at http://clc-ctc.ca. 9 See the “Submissions of the CAW to the Ontario Government’s Consultation Paper,” summer 2000; and Reiter, supra, note 3. 10 In Dunmore, supra, note 4, the Supreme Court of Canada held, in part, that the failure to provide a statutory scheme protecting agricultural employees from reprisals should they form associations would have a chilling effect on their ability to exercise their freedom of association under the Charter. THE EMPLOYMENT STANDARDS ACT, 2000 273 offending employer.11 The study also found that complaints of reprisal were rare, and that “spot inspections” by Ministry staff to ensure compliance were infrequent. Furthermore, this study found that while the Ministry made an effort to assist employees in recover- ing unpaid wages, it enjoyed only moderate success. Since statutory rights are only as strong as the government’s ability and willingness to enforce them, the actual impact of the new Act, and its capacity to fulfill its protective purpose, remains to be seen. Where the government favours a hands-off approach to employer/employee relations, expansion of the remedies available against employers for reprisal tactics or the establishment of more severe penalties may not, in practice, improve the working terms and conditions of unrepresented employees.

3. HISTORY OF THE ESA 2000 2003 CanLIIDocs 189

The former Act, which had been in place since 1968, underwent significant reform in 1974. In 1995, shortly after coming into office, Ontario’s Conservative government, then under former Premier Michael Harris, initiated a series of changes to the legislation. First, in 1996, it passed Bill 49, An Act to Improve the Employment Stan- dards Act. The Bill 49 amendments did not change the minimum standards. Rather, they focused on the Act’s enforcement mechanisms and addressed the issue of overlapping jurisdiction. Employees who asserted the right to a remedy for an alleged breach of the Act were compelled to choose between filing a complaint under the Act or bringing a civil action in the courts. Trade unions became obliged to enforce the Act through the grievance procedure under their collective agreement, and unionized employees were barred from filing complaints under the statutory enforcement procedure. Bill 49 also shortened the limitation periods that applied to the filing of complaints, and commenced the process of repealing the Employee Wage Protection Program, capping the amount of wages recoverable from a bankrupt employer. In January 1997, the Red Tape Review Commission, a panel appointed by the Conservatives to suggest ways of cutting costs in

11 Adams, infra, note 27. 274 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] government, recommended that the former Act be revised to eliminate or streamline the permit system for excess hours of work, to establish a 50-hour work week, and to provide compensating time off as an alternative to overtime premiums. This proposal was followed, in 1998, by a discussion paper titled “The Future of Work in Ontario” and, in 1999, by Conservative election promises, contained in the party’s election brochure “Blueprint,” to give employers and employees greater flexibility in designing work arrangements and to provide statutory protection for family leave. Finally, in July 2000, the government released a consultation paper, “Time for a Change: Ontario’s Employment Standards Legislation,”12 in which it sought public consultation on its proposals “to modernize and clarify” the former Act by eliminating the permit system and introducing a maximum work week of 60 hours, a number higher than even its own Red Tape Com-

mission had recommended. The consultation paper also proposed to 2003 CanLIIDocs 189 replace the permit system with employer/employee agreements; Ministry approval was to be required only rarely. The consultation paper noted that the traditional remedial purpose of the legislation would be recognized in the strengthened enforcement mechanisms which were proposed. The consultation paper created a stir, primarily among trade unions, some of whom noted that the 60-hour work week matched the maximum hours imposed in the 19th century in respect of women and children workers, and that the flexibility trumpeted as the moti- vation for the changes favoured employer flexibility only; unions argued for reduced hours of work, the payment of overtime premiums for hours worked in excess of 40 in a week, and a guaranteed right to refuse overtime.13 Furthermore, the initiative to establish a

12 Ontario Ministry of Labour, “Time for Change: Ontario’s Employment Stan- dards Legislation, A Consultation Paper,” July 2000, available on the Ministry’s website at http://www.gov.on.ca./lab. 13 See, for example, the submissions of the Ontario Federation of Labour, the Canadian Union of Public Employees, and the United Steelworkers of America in response to the Ministry’s consultation paper, summer 2000. In his paper, Adams, infra, note 27, notes that employment standards legislation is typically amended without input from unrepresented workers, though in consultation with unions and employers or associations of employers. THE EMPLOYMENT STANDARDS ACT, 2000 275 longer work week appeared out of step with developments in other western countries. France, for example, had introduced a 35-hour week in February 2000, and other European countries were contem- plating doing the same. Having sought public input, the government then held public consultations: it scheduled six meetings in five different cities between August 23 and September 8, 2000, and set September 29 as the deadline for submitting written submissions. Not surprisingly, given the abbreviated time period in which to obtain and consider public opinion, in November 2000 the government pressed forward by introducing Bill 147, a draft of the ESA 2000 that was not much changed from the consultation paper. Bill 147 was introduced in the legislature for first reading on November 23, 2000, had received Royal Assent by December 21, 2000, and was proclaimed partially in

force on December 30, 2000. The only provisions enacted at that date 2003 CanLIIDocs 189 were those which established in Ontario the expanded pregnancy and parental leaves provided under the Employment Insurance Act. The balance of the ESA 2000 was not proclaimed until September 4, 2001, when the government also introduced several new regulations.

4. HOURS OF WORK UNDER THE ESA 2000

Part VII of the ESA 2000, “Hours of Work and Eating Periods,” re-enacts the standard work week set out in the former Act: the “8 and 48 hour rule,” a standard in effect in Ontario since 1944. That is, under s. 17 of the new Act, no employer shall “require or permit” an employee to work more than eight hours per day or 48 hours per week, and employees can refuse to work longer than those maximums. On closer inspection of the ESA 2000, however, it is apparent that the reference to this standard has little meaning, as the true statutory maximum in Ontario is now 13 hours per day and 60 per week. The actual standards must be determined by examining the statute. First, the daily maximum is altered within the “8 and 48” guarantee itself: it does not apply if the employer has established a “regular work day of more than eight hours for the employee,” in which case the employee’s regular hours prevail (s. 17(1)). The new Act does not expressly impose an upper limit on the “regular work day” or require the Director’s approval to establish a “regular work 276 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] day” longer than eight hours. The true daily maximum can be identified only by inference. Since, in accordance with s. 18, employers must give employees at least 11 hours free from performing work each day, it follows that the maximum work day is 13 hours. The Ministry of Labour has recognized that the interaction of ss. 17 and 18 allows an upper limit of 13 hours per day and 60 hours per week.14 Similarly, consistent with this flexible approach to the stated eight- hour standard work day, Regulation 285, s. 32.1, exempts from the hours of work standards all the longer work days for which employers had received permits under the former Act, to a maximum of ten hours per day. Accordingly, if an employer can establish the existence of a “regular work day” of up to 13 hours in respect of a particular employee, the eight-hour day has no meaning. Also modifying the stated “8 and 48” rule is the concept of

an employee agreement to work excess hours. An employer may 2003 CanLIIDocs 189 “permit” an employee to work beyond the stated maximums if the employee agrees in an Excess Hours Agreement to those hours, which may not exceed 60 hours “or such other number of hours as are prescribed in a work week” (s. 17(2)). Such agreements, which must be in writing and signed by both parties, are revocable on two weeks’ written notice by the employee, or on “reasonable notice” by the employer. The former Act also allowed variations to the “8 and 48” norm. However, under the former Act, an extended work day required the employee’s agreement and the Director’s approval, within the confines of a standard of 12 hours per day and 48 hours per week. Moreover, the Director could add other conditions.15 Under the new Act, where the employer does not already have a “regular work day” longer than eight hours, it can seek employee agreement to extended hours, to a maximum of 13 per day and 60 per week. The third indication that the “8 and 48” rule in s. 17(1) cannot be taken as a meaningful standard is the new provision in s. 19 for “exceptional circumstances.” Whereas the former Act permitted excess hours in cases of “an accident or in case of work urgently

14 Ontario Ministry of Labour, Information Bulletin No. 1, September 4, 2001. The Government Efficiency Act, Sch. J, s. 3(10), clarified that the 13 hours of rest must be consecutive hours. 15 Former Act, ss. 17, 18 and 20. THE EMPLOYMENT STANDARDS ACT, 2000 277 required to be done to machinery or plant,”16 s. 19 of the new Act greatly expands the grounds on which employers can demand hours beyond the maximums set out in s. 17. The exceptional circumstances that are enumerated in the legislation are:

1. To deal with an emergency. 2. If something unforeseen occurs, to ensure the continued delivery of essential public services, regardless of who delivers those services. 3. If something unforeseen occurs, to ensure that continuous processes or seasonal operations are not interrupted. 4. To carry out urgent repair work to the employer’s plant or equipment.

The question becomes how broadly this section will be interpreted.

Will the unexpected absence of a co-worker for a night shift in a fac- 2003 CanLIIDocs 189 tory operating 24 hours a day be treated as “something unforeseen,” allowing an employer to compel another employee to work beyond the stated maximums and into the 11 hours of rest normally required under the new Act? Fourth, adding to this flexible approach to the “8 and 48” standard are the many exemptions to the hours of work protections, both in the ESA 2000 and in the newly passed regulations. All the groups of employees who were exempted under the former Act have been exempted again. In addition, under the new Act the categories of exemptions have been augmented, and now include persons employed under the Ontario Works program, trainees, information technology professionals, and others. Finally, although the theory underlying the new Act is to leave the negotiation of hours of work primarily to employers and employees, s. 141 also permits variation by regulation. Consistent with that provision, Regulation 285, s. 31, authorizes the Director to approve excess hours beyond the 60-hour weekly maximum if employees agree. The Regulation empowers the Director to grant such approval “with respect to an employer or with respect to a class of employers.” How will this approval be obtained? Must an employer obtain the agreement of all its employees, or a simple majority? Which employ-

16 Former Act, s. 19. 278 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] ees must agree before the Director can grant approval to an entire class of employers? On its face, this Regulation appears to open the door to 65-, 70- or 80-hour work weeks in certain industries, assum- ing industry employers can provide sufficient evidence of employee agreement. The provision is particularly troubling in that a Director- approved Excess Hours Agreement is irrevocable if the employee agreed to it on hiring, unless the employer consents to the revocation. The new Act also permits regulations to exempt entire industries from the protection as “defined industries.” Regulation 291, for example, establishes a different set of terms and conditions of work for employees in the ladies’ garment industry, perpetuating a historical difference created under the Industrial Standards Act, which was repealed by the new Act. Part VII of the new Act must be read concurrently with Part

VIII, “Overtime Pay,” to complete the picture of the standards gov- 2003 CanLIIDocs 189 erning hours of work. Again, the ESA 2000 ostensibly affirms the standard set out in the former Act: employees are entitled to receive overtime premium pay at a rate of one and one-half times their regular rate of pay for all hours worked over 44 in any week (s. 22). Prima facie, employees scheduled to work the stated maximum of 48 hours in a week will earn the overtime premium for four of those hours, or for 16 hours if they have worked the 60-hour maximum. With overtime pay too, however, the legislation provides loop- holes. Employers need not pay overtime premiums after 44 hours if a different threshold has been “prescribed,” i.e. varied to a higher number by regulation; employees engaged at tourist resorts, in road- building and in highway transport, for example, are not entitled to overtime pay until after 50, 55 and 60 hours of work in a week, respectively, under both the former Act and the new Act. With respect to overtime pay, employers have two opportunities to avoid the statutory minimum through negotiation with their employees. Employees may agree, in writing, to take time off work in lieu of overtime pay, although the time off must be calculated at a rate of one and one-half hour for each overtime hour worked (s. 22(7)). This time-in-lieu standard merely codifies a practice which had developed under the former Act. Employees and employers may also enter into an Overtime Averaging Agreement, as they could under the former Act. Under the former Act, however, such agree- THE EMPLOYMENT STANDARDS ACT, 2000 279 ments were limited to a two-week period and required a permit from the Director. Under the new Act, an Overtime Averaging Agreement must be in writing and provide an expiry date not longer than two years from the date of the agreement. Until that date, the agreement is irrevocable without the mutual agreement of the employer and the employee; however, the agreement does not require the Director’s permit or approval. The ESA 2000 specifies that an agreement may permit the number of hours worked in a week to be averaged over a four-week period, one week longer than the government’s initial proposal in its consultation paper. Employees can thus agree to work more than 44 hours per week without receiving the benefit of either premium pay or time off in lieu of pay. For example, an employee covered by an averaging agreement who works 50 hours in one week, but only 42 in each of the next three, will receive no premium in

either pay or time off for the extra effort expended in the first week as 2003 CanLIIDocs 189 this employee did not, on average, work more than 44 hours per week in that four-week period. In addition to the prejudice suffered by the individual employee, this averaging method may eliminate the financial disincentive that formerly discouraged employers from scheduling work on an overtime basis. Regulation 285 adds further qualifiers to the stated overtime protections. The Director may approve an agreement negotiated by an employer and an employee which extends the averaging of overtime for periods longer than four weeks (s. 30). Employers with a six-, eight- or ten-week busy season, then, may be able to secure “agreements” which save them from paying any overtime premiums, in either time or money, to employees. The Regulation also exempts many employees from the application of Part VIII, “Overtime Pay,” including all the categories excluded under the former Act as well as several additional categories, such as information technology professionals.

5. HOW DO ONTARIO’S STANDARDS COMPARE?

One apt method for assessing the protections provided by the new Act is to contrast them to those in other jurisdictions. Canada has 13 employment standards regimes, one in each of the federal, provincial and territorial jurisdictions (with the exception of Nunavut, 280 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] which has temporarily adopted the legislation of the Northwest Terri- tories).17 In the Canadian context, how does the ESA 2000 compare? While Ontario’s new Act is silent regarding its purpose, Alberta’s employment standards legislation includes a preamble which references the “worth and dignity of all Albertans,” and recognizes that legislation is “an appropriate means of establishing minimum standards for terms and conditions of employment.”18 The purpose clause of British Columbia’s statute includes an affirmation that employees are entitled to “receive at least basic standards of compensation and conditions of employment” that promote “fair treatment of employees and employer,” and foster a “productive and efficient labour force.”19 Some provincial statutes contain references to their protective purpose in their substantive provisions. For example, British Columbia prohibits employers from requiring employees

to work “excessive hours or hours detrimental to the employee’s 2003 CanLIIDocs 189 health or safety,”20 while the Yukon allows its Director of Employ- ment Standards to investigate whether an employee’s hours are “excessive” or “detrimental to the employee’s health and safety.”21 With respect to hours of work, three jurisdictions expressly establish a “standard work week” of eight hours per day and 40 per week,22 although, as discussed above, these maximums, standing alone, may not tell the whole story. Alberta restricts the working day

17 Canada Labour Code, R.S.C. 1985, c. L-2; Employment Standards Code, R.S.A. 2000, c. E-9; Employment Standards Act, R.S.B.C. 1996, c. 113, as amended by the Employment Standards Amendment Act, 2002 (Bill 48), which received Royal Assent May 30, 2002; Employment Standards Code, S.M. 1998, c. 29; Employment Standards Act, S.N.B. 1982, c. E-7.2; Labour Standards Act, R.S.N. 1990, c. L-2; Labour Standards Code, R.S.N.S. 1989, c. 246; Employ- ment Standards Act, 2000, S.O. 2000, c. 41; Employment Standards Act, S.P.E.I. 1992, c. 18; An Act Respecting Labour Standards, R.S.Q. c. N-1.1; Labour Stan- dards Act, R.S.S. 1978, c. L-1; Labour Standards Act, R.S.N.W.T. 1998, c. L-1 (also applicable in Nunavut); Employment Standards Act, R.S.Y. 1986, c. 54. 18 Employment Standards Code, supra, note 17, preamble. 19 Employment Standards Act, supra, note 17, s. 2. 20 Employment Standards Act, supra, note 17, s. 39. 21 Employment Standards Act, supra, note 17, s. 15. 22 Canada, Saskatchewan and the Northwest Territories (whose standards Nunavut has temporarily adopted). THE EMPLOYMENT STANDARDS ACT, 2000 281 to a 12-hour maximum; Canada imposes a weekly limit of 48 hours; while Saskatchewan sets a maximum of 44 hours per week, unless an employee consents or an emergency exists. Only the Northwest Ter- ritories approach Ontario’s weekly maximums; there, although the standard hours are stated to be eight and 40, employers have the right to exceed this standard, to a maximum of ten hours in a day and 60 in a week. Other legislation, notably that of Newfoundland, leaves the standard hours of work to be fixed by regulation, and any hours in excess of the prescribed daily and weekly standards attract overtime premium pay. New Brunswick’s statute, similarly, does not expressly prescribe a daily, weekly or monthly maximum. As for the threshold for the payment of overtime premiums, eight jurisdictions (Canada, Alberta, British Columbia, Manitoba, the Northwest Territories and Nunavut, Quebec, Saskatchewan, and the

Yukon) require that overtime be paid after 40 hours of work in a 2003 CanLIIDocs 189 week. New Brunswick, like Ontario, requires premium pay after 44 hours; Nova Scotia and Prince Edward Island employers need not pay overtime unless the hours worked exceed 48. Another telling benchmark for comparison purposes is the statutory mechanism for varying a minimum standard. Under the Canada Labour Code, employers can establish a modified work schedule that permits an averaging of hours worked over two weeks, to a maximum of the 40-hour standard,23 an averaging period also found in the short work week provision of Yukon’s statute.24 The modified schedule permitted by the Code requires the agreement of either the trade union or 70% of affected employees. In the Yukon, a majority of the employees must agree in writing to the averaging. In the Northwest Territories, employers and employees may apply in writing for permission from a Labour Standards Officer to average the standard hours of work over a defined period or to obtain a compressed work week, and the officer must consider the “welfare of the employees” before issuing a permit.25 When Ontario’s new Act was passed, British Columbia’s legislation provided that an employer

23 Canada Labour Code, supra, note 17, s. 169. 24 Employment Standards Act, supra, note 17, s. 10. 25 Labour Standards Act, supra, note 17, s. 8. 282 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] could adopt a flexible work schedule, as prescribed by the regulations, but only if 65% of affected employees approved.26 From the perspective of the remedial, protective purposes of employment standards legislation, Ontario does not fare well in comparison with other jurisdictions. Ontario’s “8 and 48” standard work week is higher than the standard in several jurisdictions; its threshold of 44 hours for the payment of overtime premiums is four hours higher than the threshold set by most jurisdictions, and its 60-hour maximum work week is matched only by the Northwest Territories and Nunavut, hardly the economies with which Ontario is direct competition, although, in fairness, a few jurisdictions do not set a weekly maximum at all. Few other statutes leave key elements to the realm of contract between individual employees and their employer. Most maintain some type of approval process by a government

agency if standard work hours are to be exceeded in a significant 2003 CanLIIDocs 189 way, and many require that an employer obtain the consent of a majority of affected employees prior to granting a variation from the standard. While British Columbia introduced averaging agreements in 2002, it continued its prohibition on excessive hours of work detrimental to the employee’s health or safety.

6. THE ROLE OF EMPLOYEE “AGREEMENTS”

With respect to hours of work, the ESA 2000, instead of providing an alternative to individual bargaining about working conditions, makes such bargaining the central vehicle for varying the statutory minimum. The new Act moves from protection of employees toward maximizing flexibility for employers. Consistent with the neo-liberal philosophy of the Harris Conservatives, the ESA 2000 seeks to interfere as little as possible with the employment contract between an employer and its employee. It eliminates the former Act’s permit system, which allowed for the possibility that the Director could ensure the existence of majority support for any deviation from the stan-

26 Employment Standards Act, supra, note 17, s. 37, repealed by the Employment Standards Amendment Act, 2002, S.B.C. 2002, c. 42. The amendment replaced the requirement for 65% support with individual employer/employee agreements to average the eight-hour day and 40-hour week over a period of two to four weeks before overtime premiums become payable. THE EMPLOYMENT STANDARDS ACT, 2000 283 dards or impose conditions on the employer prior to issuing a permit. Although the permit system was ignored to some extent by employers, and was under-enforced by the Ministry of Labour,27 it created a tool for supervision and enforcement, available to a government having the political will to use that tool. Instead of correcting the deficiencies in the permit system, the ESA 2000 introduces individual contracting as a means of overriding protective standards. Employees may agree to work more than eight hours per day, to a maximum of 13 hours, or to work more than 48 hours per week, to a maximum of 60 hours. Only hours of work beyond the 60-hour maximum require the Director’s approval. Employees may also agree to exchange overtime premium pay for time off, or they may agree to overtime averaging such that no premiums are payable. The new Act also enables employees to enter into

agreements to divide weeks of vacation into vacation days, to alter 2003 CanLIIDocs 189 holiday scheduling, and to split meal breaks. The government’s stated purpose was to allow greater flexibility in the workplace and to recognize circumstances already in existence when the amendments were introduced. However, the statute’s heavy reliance on individual contracting negates the historical objectives of employment standards legislation, namely, to provide vulnerable, unrepresented employees with an alternative to individual negotiations with their more powerful employer, and to establish a mandatory floor of employee rights. While the laissez-faire approach exemplified by the ESA 2000 may be appropriate in the case of highly skilled employees who are hired when demand for their skills is high, such faith in free market forces is misplaced in the case of less skilled employees or employees in industries that operate on the margins of the economy. Indeed, in times of economic downturn, even highly skilled employees may experience job insecurity and succumb to pressure to accede to unde- sirable employment conditions. Sixty-hour work weeks are not a positive development in an industrialized economy, either for the health, safety and well-being of employees, or for the broader objective of promoting job creation.

27 See R.J. Adams, “Employment Standards in Ontario: An Industrial Relations Systems Analysis” (1987), 42 Relations industrielles 42. 284 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

Ontario’s ESA 2000 is not unique in recognizing some form of employer/employee agreement to vary statutory standards. Most of the legislation summarized above recognizes that, in certain situations, legislated protections can be varied by agreement. However, in no other jurisdiction in Canada does the legislation contemplate such a range of employer/employee agreements, permit them to govern the parties’ rights in core areas, or leave employees so isolated in negotiations with their employer. Some examples from other jurisdictions illustrate the degree to which Ontario has isolated individual workers. The employment standards legislation in the federal sector, British Columbia (before the recent amendments) and the Yukon all recognize agreements that permit excess hours, overtime averaging, or time off in lieu of overtime. In each of these statutes, however, the agreements are not solely the

product of discussions between an employee and an employer. Rather, 2003 CanLIIDocs 189 with respect to employees not represented by a trade union, the legislation requires evidence that a majority of affected employees have agreed to the amendment of statutory guarantees. An agreement to modify the work week in the federal sector,28 for example, requires the approval of 70% of affected employees and allows any affected employee, within the first 90 days of the agreement, to request that an inspector appointed under the Code conduct a vote in order to verify the existence of the requisite level of support. Similarly, in the Yukon, agreements regarding compressed work weeks composed of 10- or 12-hour days require the approval of the majority of affected employees.29 At the time Ontario passed its new Act, British Columbia’s “flexible work schedule”30 provision in respect of employees not represented by a trade union required that the schedule be prescribed by regulation and have the approval of 65% of affected employees; such approval was necessary both initially and upon each renewal of the schedule. As with Ontario’s time-in-lieu provision, Alberta’s legislation allows an employee or group of employees to enter into a written agreement to receive time off in lieu of overtime pay.31

28 The Canada Labour Code, supra, note 17, s. 169, allows the maximum of 40 hours per week to be averaged over two weeks where “the nature of the work in the industrial establishment necessitates irregular distribution of hours.” 29 Employment Standards Act, supra note 17, s. 10. 30 Employment Standards Act, supra, note 17, s. 37. 31 Employment Standards Code, supra, note 17, s. 23. THE EMPLOYMENT STANDARDS ACT, 2000 285

Other Canadian jurisdictions, then, do authorize variations from the standards prescribed by their legislation. However, these statutes confine the instances of individual bargaining to a narrow sphere, quite unlike the emphasis on such bargaining in Ontario. The standards which can be amended by agreement in other jurisdictions vary, but the extent of permissible variances is far less profound than in Ontario, where agreements can institute 13-hour work days and 60-hour work weeks (or longer, with approval), or overtime averaging arrangements over a period twice as long as that allowed by the federal Code. Nothing in the ESA 2000 requires an employer to seek support for these variations from a majority of affected employees, leaving vulnerable employees in one-to-one negotiation with their employers, without the support of either co-workers or a trade union. Employees who were already employed when the ESA 2000

came into force may retain some ability to resist employer requests 2003 CanLIIDocs 189 for an Excess Hours or an Overtime Averaging Agreement. The employer is obligated to secure their agreement prior to changing the status quo, and current employees have the right to complain under Part XVIII, Reprisals, if they suffer intimidation or penalties as a consequence of refusing an employer request. However, even for the existing workforce, the right to refuse is somewhat illusory. It would take a very strong-willed employee to refuse an employer request, no matter how unacceptable, if co-workers agree to it, or to access the newly strengthened anti-reprisal protections while employed by the employer responsible for the ongoing discrimination. Nonetheless, current employees are probably the only ones to whom the system of employee/employer agreements grants any protection whatsoever. An employer who seeks to impose excess hours or overtime averaging will certainly be able to obtain an agreement from job applicants. Presented with a choice of either losing the job opportunity or agreeing to excess hours or overtime averaging, applicants are likely to exercise their “right to agree” with the prospective employer’s request. In fact, Regulation 285, s. 32(1), contemplates that employers may use hiring opportunities to set “flexible” working terms and conditions for new employees; if agreed to at the point of hiring, an Excess Hours Agreement is irrevocable by the employee unless the employer consents. The anti-reprisal provisions of the new Act are generally not available to job applicants. Under s. 74, protection from intimidation, dismissal or penalties for the exercise of statutory rights is available only to “employees,” including former 286 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] employees, but not to job applicants. Only the provision that prohibits the use of lie detector tests in hiring (s. 68) specifically protects applicants for employment as well as employees, and gives them a right to be hired (s. 104(2)) — a remarkably useless remedy for most job applicants, given the infrequency of demands for a lie detector test in the course of recruitment. Accordingly, prospective employees who are discriminated against during hiring because of a negative response to an employer request to vary statutory standards governing hours of work or overtime pay are left with no remedy, and certainly with no remedy that would restore what they lost: a job.

7. CONCLUSION

Employment relationships are regulated by three mechanisms:

the common law, collective bargaining, and public statute. Individual 2003 CanLIIDocs 189 bargaining over terms and conditions of employment may be appropriate for marketable and sophisticated employees. The concept of collective bargaining through trade unions is based on a recognition that concerted action is another way to balance the inequality of bargaining power in the workplace. Workers who are neither very marketable nor represented by a trade union must look to statutory standards to protect them from unreasonable employer demands. The ESA 2000 fails vulnerable workers by incorporating into the process by which those very standards are established the concept of substantive individual bargaining. The Act’s underlying faith in market forces to provide a fair result is not consistent with the history of employment relations and the judicial recognition of the inequality of bargaining power in the workplace. With the passage of the ESA 2000, the most vulnerable of Ontario’s employees have become even more vulnerable to employer demands. When it decided to replace the former Act, the government had an opportunity to enact a forward-looking statute which recognized the importance of work to the dignity of individual employees and allowed employees to share in the productivity gains made over the last 25 years, while still meeting its political goal of creating more jobs. Instead, the government bowed to the efficiency concerns of its business partners and enacted a statute that leaves many employees with few enforceable protections as far as hours of work and overtime pay are concerned. Strategies to Resolve a Grievance Backlog: The OPSEU/MBS Case Study

Timothy G.M. Hadwen & Robin Gordon*

1. INTRODUCTION

If you are seeking some ideas on how to resolve a large grievance backlog, our story may be of assistance to you. For us, the crucial elements of a successful attempt to deal with the tangled and corrosive mess that is a large grievance backlog are: 2003 CanLIIDocs 189 • a shared desire for change; • willingness to hold up a mirror to the situation, so that the parties can see themselves more objectively; • development of a simple dispute resolution scheme that fits the parties’ needs; • follow-up, in the form of focused and sustained implementation.

This paper will outline the background to the grievance backlog which evolved in the Ontario public service, comment on the elements identified above, discuss the steps that should be followed after a backlog has been resolved, and then set out some “morals” of the story.

2. BACKGROUND

Management Board Secretariat (“MBS”) is the arm of the government of Ontario which has lead responsibility for labour relations within the public service. MBS works closely with the human resources departments of the various ministries. The largest union with which MBS deals is the Ontario Public Service Employees Union (“OPSEU”), representing more than 50,000 public servants. In

* Tim Hadwen is OPSEU General Counsel and Robin Gordon is an OPESEU Grievance Officer. The views expressed in this article are those of the authors. 288 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

1998, there existed a backlog of 19,000 outstanding grievances between the parties. Over the course of two years, the backlog was virtually eliminated. Since then, the parties have generally been able to resolve new grievances in a reasonably timely fashion. This fact becomes even more remarkable when seen in context. The parties have poor labour relations. A protracted strike took place in the winter of 1996 (from the point of view of OPSEU picketers, five bitterly cold weeks). MBS reports to the Tory government which, in its capacity as employer, has followed a course of downsiz- ing the Ontario public service, and contracting out (privatizing) many of its functions. In addition, many of the remaining public servants have justifiably felt that their role was being devalued. Another long strike occurred in the spring of 2002 (from the point of view of OPSEU picketers, only the weather was better). The provincial gov-

ernment has also passed a series of labour law changes which unions 2003 CanLIIDocs 189 perceived as being designed to make it more difficult for them to organize, strike and stay certified. Among the most discontented unions are those in the public service, who have had a number of entitlements legislated away, including successor rights. At the public service workplace level, labour relations are somewhat variable, but generally poor. The following words have been used by participants on both sides to describe the environment: “adversarial,” “confrontational,” “entrenched,” “tense,” “difficult,” “complex,” “imperfect,” “dysfunctional,” “bureaucratic,” “archaic,” “time-con- suming,” “costly,” “inconsistent,” “cautious,” “reactive,” “political.” One problem is that very little local workplace dispute resolution takes place. The early steps of the grievance procedure are largely ineffec- tive. Most grievances are not resolved until they have been referred out of the local workplace and further up into the bureaucracy of either management or union. A contributing factor is the lack of clarity about the authority of front-line management to resolve grievances. For the union’s part, there is an extremely uncommon “carriage rights” policy which gives individual union members more say than usual as to whether a grievance will proceed to arbitration. As the backlog grew, the union adopted a priority review system. The most important grievances, such as dismissals and policy matters, were identified and scheduled, while the vast majority simply joined the long queue. Managers’ incentive to resolve grievances at the local level diminished as they came to rely on an indefinite STRATEGIES TO RESOLVE A GRIEVANCE BACKLOG 289 delay of further action. Similarly, union members had little incentive to assess the merit of their grievances at an early stage and to consider settlement or withdrawal. Instead, they often pinned unrealistic hopes on their arbitration hearing in the distant future. The grievance backlog was formidable not merely because of its size, but also because of its shape. Many of the grievances were three or four years old, and some dated even further back. The issues were often complex, involving health and safety, job competitions, scheduling, management rules, and contract interpretation. Thousands of grievances included allegations that related not only to the collective agreement, but also to human rights, employment standards, and occupational health and safety legislation. Hundreds of layoff and bumping grievances remained unresolved from the massive downsiz- ing and reorganization of certain ministries in 1996 and 1997.

In light of all these factors, it is truly remarkable that almost 2003 CanLIIDocs 189 19,000 grievances got resolved so quickly. Let us turn to the component parts of the solution.

3. SHARED DESIRE FOR CHANGE

Both MBS and OPSEU wanted to get the grievance backlog moving. It would be nice to be able to report that this arose out of a shared desire for improved labour relations, but any such desire would have prevented the backlog in the first place. Rather, it seems that each party developed an increasingly acute sense that it was in its own self-interest to effect meaningful change in grievance resolution. On the union’s side, a growing number of members were dissatisfied with their inability to have grievances heard and resolved. Members wanted to know where they stood so they could get on with their work lives. Moreover, staff were becoming frustrated by their inability to provide effective and timely service. Finally, the specter of legal exposure was of steadily increasing concern, since, at some stage, the Ontario Labour Relations Board might have viewed the union’s failure to wrestle with the backlog as a breach of the duty of fair representation. On the employer’s side, it would be best for the employer to speak candidly for itself. We can offer only the union’s perspective on the employer’s motives. There was, it appears, a growing sense among management labour relations staff that unresolved disputes 290 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] were impeding the program of restructuring in the public service, and that constantly dealing with “old news” was unpleasant and inefficient. Furthermore, the idea took hold that labour relations in the Ontario public service were not in keeping with “best practices.” The government, which apparently prided itself on conducting matters in a business-like manner, may have become concerned that its rate of dispute resolution was so substandard as to be an institutional embarrassment. However, the shared desire for change in dispute resolution grew without a concomitant growth in the appetite for improved labour relations generally. In other words, the parties began to realize that they needed to resolve disputes more quickly even while continuing to be extremely disputatious. The clearest expression of this par- adox is that in March 1999 the parties went to the brink of yet another

strike, even as the grievance backlog reduction program continued 2003 CanLIIDocs 189 unabated.

4. HOLDING UP A MIRROR

It was important that the parties to the process were able to view the situation with some degree of objectivity. Two key factors permitted this. First, both sides had experienced labour relations staff who maintained functional working relations. These professionals were committed to talking about the issues and working on ways to resolve them. In other words, lines of communication were kept open. Sec- ond, third-party neutrals were closely involved from the outset. Labour relations in the Ontario public service are governed by the Crown Employees Collective Bargaining Act,1 which establishes the Grievance Settlement Board (“GSB”) as a statutory tribunal to deal with all grievances, under the direction of a part-time Chair and a number of Vice-Chairs. Then Chair Owen Shime, a highly respected neutral, repeatedly advocated to the parties that they needed to improve their dispute resolution process, and suggested ways in which this could be done. Furthermore, the GSB provided a forum or vehicle through which the parties could implement solutions that they reached.

1 S.O. 1993, c. 38. STRATEGIES TO RESOLVE A GRIEVANCE BACKLOG 291

5. A SIMPLE DISPUTE RESOLUTION SCHEME

Motivated by their own self-interest, and after discussing the issues somewhat dispassionately, with the aid of a third-party neutral, MBS and OPSEU selected a process built on the standard set of dispute resolution mechanisms so well known to labour relations practi- tioners.2 The mechanism that they decided upon involved enlisting arbitrators (Vice-Chairs of the GSB) to engage in mediation only, scheduled by workplace (in this case, by ministry), and taking place on location, where the parties mediated several cases every day, with the facilitation of union and management staff specialized in handling grievances and familiar with the issues. Initially, as a cost efficiency, the parties experimented with the use of professional labour relations mediators who were not arbitra-

tors. However, they quickly came to the conclusion that arbitrators 2003 CanLIIDocs 189 were preferable because of their persuasive authority in the eyes of both management and rank-and-file union members. In addition to their adjudicative authority, GSB Vice-Chairs had extensive familiar- ity with the complex collective agreement, and the unique culture, of the provincial public service. The parties themselves decided which issues, cases and workplaces would be mediated when and by whom, while the GSB made the necessary arrangements and did the bookings. If a dispute arose regarding the mediation schedule, it was addressed by the Board. The mediations were largely without prejudice. Cases that were not successfully mediated in this bulk process were referred to arbitration, often before the same Vice-Chair. Only at arbitration were lawyers involved, and even then the parties remained committed to using as expeditious a process as possible. The employer has an in- house department of grievance counsel. The union, in addition to its in-house department of grievance officers, retained a select group of lawyers to handle arbitrations during the project. In this way the par-

2 For a leading article outlining the available mechanisms, see K. Burkett, “Cost and Delay in Labour Arbitration: Is There a Silver Lining,” in Labour Arbitra- tion Yearbook, 1999-2000, vol. 1, 317, which reviews the experience of several large parties with respect to quick hearings, pre-hearing preparation, filing of briefs, summary awards, mediation-arbitration, and so forth. 292 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] ties kept the number of arbitration hearings in check, and adhered to the principles governing the project. The system was well adapted to this employer’s and this union’s particular circumstances. First, little allowance was made for preparation time. The parties found that the vast majority of grievances could be resolved at mediation without additional preparation, allowing them to maximize the number of cases their staff could handle. While both the employer and the union committed special resources to the project, both had serious institutional budget constraints. This was particularly important to the union, as it was the party bearing the legal onus in the majority of grievances and it had a smaller pool of staff. Second, the parties were able to provide a “day in court” in front of a “labour relations judge” in an efficient manner. Front-line

management on the one hand, and grievors on the other, had the 2003 CanLIIDocs 189 catharsis of being heard by a neutral without the necessity of pro- longed litigation. Third, the fact that the arbitrator could express authoritative views, albeit in a mediation context, had a direct impact on settlement discussions. The guidance of the arbitrator as mediator made the negotiation of reasonable settlements possible, even in the face of poor labour relations. The arbitrator’s influence helped cut through extreme positions which the parties may have adopted, and allowed the merits of the grievance to be addressed from an objective standpoint. Some risks attended the use of this process. The first was the possibility of a lack of procedural fairness for either party or the grievor. This was dealt with in several ways. Formally, it was clear that the mediation was just that, mediation and, if it did not succeed, it amounted to no more than a without-prejudice, off-the-record effort to settle. If either party believed that it had been treated unfairly, it was entitled to proceed to arbitration. Informally, the real solution was to always preserve the key element of procedural fairness, which is to be heard by the adjudicator on the underlying issues. When the parties felt that their central arguments had been listened to, they were less concerned about the trappings of procedure. A “day in court” consists, at its core, of some time of being listened to, closely and dispassionately. It need not take an inordinate length of time, especially in simpler cases, and the parties were able to allo- cate sufficient time, notwithstanding the busy mediation schedule. STRATEGIES TO RESOLVE A GRIEVANCE BACKLOG 293

A second risk lay in the lack of development of the jurisprudence between the parties. Without hearings, without formal rulings and awards, fewer reliable precedents are set. This concern was addressed in several ways. First, informal understandings quickly developed respecting the tariff, or standard, for resolution of certain kinds of cases. These tariffs were often more important and more influential than any particular arbitral decision. Second, the main collective agreement interpretive issues were in fact litigated, and they became the subject of formal awards. A large volume of formal adjudication is not necessarily helpful to labour relations. Parties can become more interested in the incremental jurisprudential advance than in improving relations and collective bargaining. Throughout this process, arbitrators continued to issue awards on most of the jurisprudentially important issues. 2003 CanLIIDocs 189 6. FOLLOW-UP

Both parties were required to work hard on implementation, making sure that the process was firm enough to sustain a project of this size, and flexible enough to deal with the inevitable bumps in the road. The project was conceived and committed to at the top levels of both the employer and the union, with the GSB’s assistance. Secur- ing this kind of central commitment was crucial in ensuring that the parties’ constituents cooperated fully. There was no question that everyone wanted the huge backlog of grievances to be cleared, but the new focus on mediation was not universally welcomed. Given the parties’ poor labour relations, and a long history of recourse to litigation, many people at the local level had an entrenched belief in the more legalistic and adversarial process of arbitration. The solid central commitment to the project forced the parties’ constituents, such as local managers, human resources personnel, individual grievors and local presidents, to participate despite any misgivings. While the basic structure of the project had to be created cen- trally, implementation was fine-tuned to the different components of the public service. For each ministry, specific labour relations professionals were assigned by the employer and the union. They began their component project by addressing how best to adopt the general process in light of particular factors such as the ministry’s size, geo- 294 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] graphical organization, management structures, workplace cultures and common grievance issues. In the case of some ministries, a protocol agreement was entered into containing detailed provisions on how to schedule, locate, and conduct mediations. Often, the locations were determined mutually, but day-to-day scheduling was in the hands of the union. The parties agreed that, where a grievance was not successfully resolved, a joint statement would detail the issues to be forwarded to an arbitrator. All settlements were to be without prejudice or precedent, but either side could request that the settlement be entered as an order of the GSB. Guidelines were set out with respect to costs, adjournments, and release time from work for union participants. In some of the smaller ministries the parties agreed to the exchange of short statements of their position on each grievance in

advance of mediation. Management representatives were often par- 2003 CanLIIDocs 189 ticularly keen on adopting this format, although generally the union’s staff felt that it had little effect on the ultimate success of mediation. In larger ministries the need for case preparation prior to mediation was, out of necessity, kept to a minimum, so that the parties could schedule the maximum number of grievances on each mediation day. Another important, and sometimes controversial, element was the participation of elected local union officials in preparing for and conducting mediations. In most ministries the union pressed the employer to give one or more union officials from the local membership paid release time to assist the union’s staff. This was granted in only a few cases. In other instances, the union agreed to refund the member’s wages to the employer. Sometimes the union concluded that a single key member, working on an entire ministry, would provide the best assistance, while on other occasions one or more members with limited release time helped to prepare a specific workplace. Although the employer often failed to appreciate the value of the local officials’ involvement, the union considered their role vital, and would have expanded it. First, these members helped stretch the resources at the disposal of the union, which, unlike the employer, did not have recourse to a network of human resources professionals. Second, they provided full-time union staff with invaluable insights into the background and context of disputes at the ground level of their workplaces. The more connected the union’s grievance special- ists are to the real source of disputes, the better prepared they are to STRATEGIES TO RESOLVE A GRIEVANCE BACKLOG 295 help negotiate a resolution. Third, the members learned a great deal about assessing grievances and negotiating solutions, and they took these lessons back to their workplaces where they could apply them in the hope of improving early dispute resolution processes. Apart from the organizational questions, how were the parties able to reach settlements on so many grievances so quickly, despite their age and complexity, and in the face of generally poor labour relations? The following three factors were critical. First, the professional staff of both the union and the employer shared not only a commitment to the process of mediation, but also a belief that in almost all cases a negotiated settlement is possible and contains the best result for their constituents. Certainly the union’s staff believed that the results of mediation were better for the members, collectively and individually.

Second, the representatives of both sides became adept at mak- 2003 CanLIIDocs 189 ing reliable initial assessments of grievances, and using an unofficial common “toolkit” of remedies. The mediators’ skill at quickly getting to the heart of a dispute, and identifying simple, rational solutions, was invaluable. Some cases needed only a slight nudge to be revealed as either complete losers or complete winners. Other cases, less clear on the merits, might nevertheless be capable of an easy remedy. The pressures of time motivated all the participants to stay focused on the goal of reaching an acceptable resolution, rather than getting bogged down in contentious facts or legal arguments which had little productive value at mediation. Third, everyone understood that grievances must be addressed on two levels, on both their legal and labour relations merits. Negoti- ations were heavily shaped by assessment of the prospects at arbitration, focusing on whether the grievance made out a demonstrable violation of the collective agreement or related legislation, and whether the remedy sought was legally available. However, the parties were also influenced by the existence of a genuine sense of grievance and a concomitant recognition by the employer that, in some cases, there had been a management shortcoming. A grievance that would not succeed for legal reasons might nonetheless disclose a labour relations problem which the parties could and should address in the broader context of their ongoing relationship. The mediators associated with the project also brought to the table a balance of legal expertise and labour relations sensitivity. 296 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.]

7. WHERE TO GO FROM HERE?

Learning from the success of the backlog project, the parties moved to formally incorporate much of the same process into their grievance handling system. The collective agreement that was ratified in March 1999 included a mandatory mediation/arbitration process for most grievances.3 New Rules of Procedure have been adopted at the GSB that also build on the experience of the backlog project.4 The collective agreement ratified in May 2002 left all these advances intact.

3 The 1999-2001 OPSEU-MBS collective agreement contained the following language:

22.16.1 Except for grievances concerning dismissal, sexual harassment, 2003 CanLIIDocs 189 and/or human rights, and Union grievances with corporate policy implications, all grievances shall proceed through the GSB to a single mediator/arbitrator for the purpose of resolving the grievance in an expeditious and informal manner. 22.16.2 The mediator/arbitrator shall endeavour to assist the parties to settle the grievance by mediation. If the parties are unable to settle the grievance by mediation, the mediator/arbitrator shall determine the grievance by arbitration. When determining the grievance by arbitration, the mediator/arbitrator may limit the nature and extent of the evidence and may impose such conditions as he or she considers appropriate. The mediator/arbitrator shall give a succinct decision within five (5) days after completing proceedings, unless the parties agree otherwise. 4 The Grievance Settlement Board Rules of Procedure set out the terms under which OPSEU and MBS are to administer their mediation/arbitration procedure. The rules include the following: (b) To ensure the efficiency of the procedure, the parties agree that a reasonable number of grievances must be dealt with by each mediator/arbitrator for each of the days of hearings set aside. ... (h) The mediator/arbitrator shall endeavour to assist the parties to settle the grievance by mediation. If the parties are unable to settle the grievance by mediation, the mediator/arbitrator shall determine the grievance by arbitration. When determining the grievance by arbitration, the arbitrator may limit the nature and extent of the evidence and may impose such conditions as he or she considers appropriate. STRATEGIES TO RESOLVE A GRIEVANCE BACKLOG 297

The parties are now dealing with the task of tidying up the last remnants of the old backlog, and ensuring that the continuing large volume of grievances does not become a new backlog. Without the additional resources that had been dedicated to the special project, the pace of mediation has slowed, but the number of grievances has also dropped somewhat. The process is being continually fine-tuned in practice, but it is challenged and often strained by the never- improving climate of labour relations and the fatigue of experienced staff on both sides. The project’s success itself poses a problem. As the backlog is largely eliminated, some of the parties’ incentive to settle diminishes, and they are susceptible to a backslide into legalistic and entrenched postures. However, mediation continues to be the major method of dispute resolution. Formal arbitration remains the exception.

Further improvements are possible. The parties should be work- 2003 CanLIIDocs 189 ing towards a system such as mediation/arbitration, under which mediation is followed immediately by arbitration, even on the same day. It is recognized that the most valuable commodity in the labour relations process is the time that knowledgeable people have to think about a problem. That time should be used to optimal benefit. “Rein- venting the wheel” or educating newcomers about a problem is extremely inefficient. A system which maximizes the amount of work that can be done on a problem by a group of knowledgeable people who are called together on a particular day is the system best able to deal with a high volume of grievances. Thus, a system that allows the same third-party neutral, assisted by the same union and management officials, to mediate and, if necessary, to arbitrate seems to be the most efficient. It is interesting to note that grievances which are unsuccessfully mediated and referred to formal arbitration are at that point commonly subjected to an informal process of mediation/arbitration. The parties tend to invite the arbitrator to attempt mediation again before adjudicating the case on its merits. This informal process should be integrated with the formal mediation process which precedes it. Another frontier that lies before the parties is to improve front- line workplace resolution of disputes. Grievances are referred to mediation and arbitration because they were not resolved in the workplace. Dealing with grievances more efficiently after they have been referred out of the workplace is less desirable than producing 298 CDN. LABOUR & EMPLOYMENT LAW JOURNAL [10 C.L.E.L.J.] fewer grievances in the first place. That, of course, requires improved workplace labour relations, which remains a real challenge in the current Ontario public service. The solution would include fostering mutual respect, encouraging the growth of working relationships between responsible persons, allocating time properly, and arriving at compromises that are tailored to the particular workplace.

8. CONCLUSION

What lessons can be drawn from the experience of MBS and OPSEU? The first is that a large backlog of grievances can be reduced quickly and effectively, even in the absence of overall improvement in the parties’ labour relations. The parties to a collective bargaining relationship can come to realize their mutual self-

interest in enhancing the process of dispute resolution, while 2003 CanLIIDocs 189 remaining very disputatious. In order to reach this understanding, they should internally consider and discuss what they would gain from an improved dispute resolution system, which would probably include more efficient use of scarce staff resources, an enhanced ability to move ahead with organizational plans, less susceptibility to third-party criticism, etc. Each party should instruct or permit knowledgeable staff to discuss the issues with the other side. Poor relations should not be an excuse for unprofessional relations, or no relations. It may be of great assistance to involve a third-party neutral to work, not on the substance of any particular case, but on the dispute resolution process itself. In the context of certain relationships, it will be overreaching to try to improve labour relations generally. The neutral may be best employed to achieve progress toward the narrower goal of creating a process for settling grievances more quickly. The same neutral could be charged with the processing of grievances, so as to resolve any procedural obstacles that either party tries to raise in a given case. The parties should review the different types of dispute resolution options that exist and pick one that will work well for them. The options, obviously, include mediation:

• case-by-case, or in groups of cases; • by an arbitrator or a mediator; STRATEGIES TO RESOLVE A GRIEVANCE BACKLOG 299

• by the same person that will hear the arbitration, or by a different person; • in writing or orally; • with or without preparation; • with the facilitation of staff, or of lawyers.

We certainly have our views about what works for us. Parties may find that a large, dated backlog is best attacked by retaining experienced arbitrators to act as mediators, working with the parties to quickly and informally “separate the wheat from the chaff.” In any case, the parties should devise a solution which they see as their own. Once a model has been selected, it must be fully and aggressively implemented. The parties should be under no illusions as to the large amount of dedication and hard work required to clear up a large

grievance backlog. 2003 CanLIIDocs 189 Once the backlog is cleared, the parties should try to build on that accomplishment by further improving their dispute resolution process. They may wish to revitalize the earlier stages of the grievance process, and/or revamp the conduct of arbitration hearings. Both steps are well worth taking. If the parties do not continue to move forward together, they risk falling back into old habits. 2003 CanLIIDocs 189