Client Update: Universal interest arbitration proposed for New Brunswick
On March 29, 2016, the Province of New Brunswick tabled proposed changes to the Industrial Relations Act and the Public Services Labour Relations Act. If passed, these changes would dramatically alter well-established principles of private sector collective bargaining.
Presently, all disputes arising during the term of a collective agreement must be resolved without stoppage of work. However, upon its expiry, if the parties are unable to agree to terms of a new collective agreement, strikes or lockouts are permitted: unions or employers may invoke the economic pressure of a work stoppage as a collective bargaining tactic.
Currently, the only exception is with respect to the police and fire sectors. As “essential services”, strikes or lockouts are prohibited in that sector. According, if employers and unions are unable to reach a collective agreement in the police or fire sector, either party may submit the dispute to binding interest arbitration and an arbitration board will set the terms of the new collective agreement.
Key Changes Proposed
Dramatic expansion of interest arbitration: The changes proposed would extend binding interest arbitration to all sectors, not simply police and fire. In other words, if unions and employers cannot agree to the terms of a new collective agreement, either party would be permitted to unilaterally refer the matter to binding interest arbitration, in which case a work stoppage would be prohibited. The terms of the new collective agreement would therefore be imposed by an arbitration board without any strike or lockout.
Change to “final offer” interest arbitration: Presently, interest arbitration boards have wide latitude to select an award deemed appropriate. The proposed amendments would impose a “final offer” framework for monetary matters. This means that, with respect to wages, the arbitration board would be required to choose either the last offer made by the employer or that made by the union; it cannot “split the difference” and make a compromise award. The arbitration board would retain its wide latitude with respect to non-monetary matters.
Change to criteria considered by interest arbitrators: The proposed amendments list five (5) specific factors interest arbitration boards must consider in making their award: wages and benefits in private, public, non-unionized and unionized employment; employment levels and layoffs; the nature of the employment in question including the qualifications required and responsibility assumed; inflation; and the total package of benefits enjoyed by employees (wages, bonuses, pensions, health plans, etc).
Effect of Proposed Changes – Private Sector Employers
This is one of the most dramatic changes to private sector labour law in the past 50 years anywhere in Canada. It represents a fundamental departure from free collective bargaining in which employers and unions, under the economic threat of strike or lockout, are best positioned to voluntarily negotiate the terms of their relationship. Either party would be able to avoid the possibility of a strike or lock-out by invoking interest arbitration in any round of bargaining.
Furthermore, it has the potential to extend the “chilling” and “narcotic” effects of interest arbitration to the entire economy. That is, if parties believe their dispute will ultimately be determined by interest arbitration, incentives to compromise to conclude a collective agreement are “chilled”; and, as parties become increasingly reliant upon interest arbitration to resolve their disputes, a “narcotic” effect occurs wherein they become less able to negotiate. In the last decade, there has been criticism that high wage interest arbitration awards in the police and fire sectors have “chilled” unions’ incentives to bargain collectively as they believe a better result can be obtained through interest arbitration.
In addition, because interest arbitration boards are notoriously reluctant to alter non-monetary terms of the collective agreement, mandatory interest arbitration may make it very difficult for employers to implement changes necessary to maintain competitiveness. This may discourage employers from locating to New Brunswick or expanding operations here.
Although unions have long advocated for the introduction of first contract interest arbitration in New Brunswick, this is not included in the proposed reforms.
Effect of Proposed Changes – Employers in Fire and Police Sectors
The proposed changes have a less dramatic impact in the police and fire sectors in which interest arbitration has an established history.
The move to “final offer” interest arbitration for monetary matters is a welcome development in these sectors as the existing replication model has contributed to rapid wage escalation. Similarly, enactment of explicit criteria to be considered by arbitrators will weaken the present dominance of intra-industry comparisons in wage determination analyses which has contributed to an upward wage spiral in fire and police sectors.
However, the decision to impose a “final offer” framework for monetary matters only will continue to make change in other areas difficult.
Effect of Proposed Changes for Public Sector Employers
While the proposed changes are more significant in the private sector, amendments to the Public Service Labour Relations Act are also proposed to impose a “final offer” framework for monetary matters proceeding to interest arbitration under that legislation.
The foregoing is intended for general information only. If you have any questions about how this may affect your business, please contact a member of our Labour & Employment practice group.
Jennifer Taylor In an important decision for the auto insurance industry, the Nova Scotia Court of Appeal has confirmed that future CPP disability benefits are indeed deductible from damages awarded in Nova Scotia cases for…Read More
Brian Johnston, QC and Matthew Jacobs Bill C-86, enacted as SC 2018, c. 27, will effect massive changes upon how federal labour and employment relations are regulated. They come into effect in 2019 with staggered…Read More
We can all make 2019 a success by building on the year that was. For employers, 2018 was a year of many notable developments in labour and employment law across the country. We saw Ontario…Read More
Level Chan and Dante Manna As 2018 comes to an end, we countdown some pension and employee benefits developments in the last year that we anticipate may lead to developments in 2019. Discrimination in benefits…Read More
Kevin Landry The first look at regulations for cannabis edibles, extracts and topicals has arrived. The Federal Government has opened a 60-day consultation period respecting the strict regulation of additional cannabis products. Notice of the consultation was accompanied…Read More
Erin Best and Kara Harrington “This case is about pain, how it was caused, by what accident and the opinions of dueling experts.”¹ “In this case, like so many, the assessment of the evidence depends…Read More
Jonathan Coady and Michael Fleischmann Overview Once again, the time has come to review the year that was and to chart the course for the year ahead. For municipalities, developers and planning professionals throughout Prince…Read More
Following the various Stakeholder Consultations (which Stewart McKelvey participated in on behalf of Nova Scotia Employers), the Government has changed the Labour Standards Code Regulations effective January 1, 2019 to: a) provide for up to…Read More
Version française à suivre Sara Espinal Henao Canada has expanded its permanent and temporary immigration requirements to include biometrics – the measurement of unique physical characteristics, such as fingerprints and facial features. The new requirements,…Read More
Many businesses rely on trade-mark, copyright, and patent law for the protection of their intellectual property (IP). The Federal Government recently proposed changes to IP laws, which may impact your business. Bill C-86, Budget Implementation Act,…Read More