Definitive Report - Report No 222, March 1983

Case No 1147 (Canada) - Complaint date: 08-JUL-82 - Closed

1. 97. By communications dated, respectively, 8 July, 13 October, 19 October and 21 December 1982, the Professional Institute of the Public Service of Canada (PIPS), the Canadian Labour Congress (CLC), the Public Service Alliance of Canada (PSA) and the Confederation of Canadian Unions (CCU) presented complaints of violations of trade union rights in Canada. The PIPS sent additional information in support of its complaint on 24 August and the PSA sent additional information on 9 November 1982. The Government sent its observations in communications dated 4 November 1982 and 21 January 1983.
2. 98. Canada has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87); it has not ratified the Right to Organise and Collective Bargaining Convention, 1949 (No. 98) or the Labour Relations (Public Service) Convention, 1978 (No. 151).

A. The complainants' allegations

1. 99. In its communication of 8 July 1982, the PIPS - on behalf of eleven duly certified bargaining agents representing a total of 34,047 government employees - alleges that the Public Sector Compensation Restraint Act (known as Bill C-124) removes collective bargaining rights in the Canadian public service. According to the complainant, Bill C-124, introduced in Parliament on 30 June 1982, applies to all public servants presently enjoying collective bargaining rights under the Public Service Staff Relations Act or the Labour Code (depending on the government agency for which they work). It extends the existence of compensation plans for a period of 24 months; all terms and conditions of employment presently existing, other than wage rates, will remain unamended and will continue in effect during this period of two years. The complainant states that, in addition to determining wage increases for public servants without consultation and/or negotiation, the Government, through its Treasury Board, can now arbitrarily and unilaterally make exceptions in the percentage of wage rates and any terms and conditions of employment without any possibility of intervention and consultation with the unions and workers affected. Moreover, every existing collective agreement or arbitral award shall continue in force without change during the 24 months by virtue of section 7 of the Bill.
2. 100. In its communication of 24 August 1982, the PIPS states that Bill C-124 became law on 4 August 1982 with the following amendments: section 7 now allows the parties to a collective agreement, or bound by an arbitral award that includes a compensation plan extended under the legislation, to amend any terms and conditions of employment, other than wage rates or the terms of the plan, by agreement. The complainant considers that this is still unsatisfactory because (a) the definition of "compensation" remains extremely broad, encompassing "all forms of pay, benefits and perquisites paid or provided, directly or indirectly, by or on behalf of an employer to or for the benefit of an employee"; (b) the employer is under no obligation to meet and bargain on non-monetary matters; (c) all charges to non-monetary provisions require joint agreement of the parties; (d) there is no right of reference to an impartial third party in the event of a negotiating dispute or impasse, the Government having stated that it will permit this only where the employer agrees and under procedures determined by the employer. Section 16 of the final Act was also changed to allow the Governor in Council to terminate the application of the legislation in respect of all or some public servants. The complainant states that this provision is intended to permit substitution of the compensation plan extension by a different "negotiated" collective agreement containing changes to monetary and non-monetary items, where such changes are consistent with the total compensation increases mandated by the Act, i.e. within the 6 per cent and 5 per cent limitations laid down in the Act. However, according to the complainant, this section suffers the same shortcomings as Feinted out above in relation to section 7, in addition to the fact that there is no right to apply to the Governor in Council for exemption.
3. 101. In its communication of 13 October 1982, the CLC makes the same allegations against Bill C-124, stressing that it is contrary to Article 4 of Convention No. 98 in particular. According to the documentation attached to this communication, the CLC considers that Bill C-124 does not only freeze wage increases at 6 per cent and 5 per cent for two years and eliminate free collective bargaining for federal public servants, it also reduces their standard of living by 10 per cent, retards progress in achieving equality of treatment between men and women workers and prohibits improvement of other conditions of employment such as health and safety conditions. The documentation also questions the usefulness of Bill C-124 as an element of economic policy, arguing that reduction of wages deepens the recession and does not affect inflation which is caused primarily by the declining value of the Canadian dollar, rising energy prices and high interest rates.
4. 102. In its letter of 19 October 1982, the PSA stresses that two decisions of the Public Service Staff Relations Board (copies of which were attached) dated 31 August and 6 October 1982 respectively, clearly state that the right of collective bargaining for federal public sector workers no longer exists. In particular, it quotes two statements from the decisions: "... no collective bargaining may take place and no changes made or ordered to the existing collective agreements except as expressly permitted by the Public Service Compensation Restraint Act"; "... the Board found that it has no authority or jurisdiction to deal with any interest disputes because collective bargaining as contemplated by the Public Service Staff Relations Act has been rendered inoperative during the restraint period established by the Public Service Compensation Restraint Act". The PSA also alleges that Bill C-124 also eliminates the right to strike for all workers concerned for the two-year period, and may apply to certain categories of employees (e.g. programme administrators) for three years depending on the date on which their existing collective agreements were to have expired; the documentation supplies statistics arguing that other measures, such as a decline in interest rates, would be more effective economic controls than the wage controls provided for in Bill C-124.
5. 103. On 9 November 1982, the PSA submitted additional information, alleging that, during the public hearings on the proposed legislation before it became law, the arguments which it presented concerning conformity of Bill C-124 with ILO Conventions were not taken into account and the Ministry of Labour, which is responsible for ILO relations, was not given an opportunity to present its views. In addition, the complainant states that, by extending the duration of a compensation plan under sections 4 and 5 of Bill C-124, the Government violates Article 2 of Convention No. 87, ratified by Canada, in that it denies groups of federal public servants their right to change bargaining agents. The PSA further states that Bill C-124 renders new certifications meaningless because section 2 thereof defines "a compensation plan" to cover the terms and conditions of employment of non-unionised employees as well. It considers that the new legislation prevents the lawful exercise by a union of its right to formulate programmes related to collective bargaining during the extension period, in direct violation of Article 3 of Convention No. 87. It also reiterates that sections 4 and 5 of Bill C-124 are direct violations of Article 4 of Convention No. 98 and Articles 7 and 8 of Convention No. 151, stressing that section 7 of the Bill only provides for discussion instead of the "machinery" mentioned in the ILO instruments. The PSA explains that the right to strike is suspended because paragraph 101(2)(a) of the Public Service Staff Relations Act provides that no employee shall participate in a strike "where a collective agreement applying to the bargaining agent in which he is included is in force" and section 6(1) of the new legislation provides that a compensation plan, including a collective agreement, is to continue in force for the period of applicability of the Act. Lastly, the PSA states that section 12 of the new legislation imposes permanent wage controls in this sector by stipulating that compensation plans, entered into "at any time", allowing for higher wage increases "are of no force", i.e. even after the termination date given in the Act. In this connection it recalls that section 9(1)(a)(ii) of the Act provides the Treasury Board with the legal authority to roll back a previously negotiated wage increase if it was to be paid subsequent to 29 June 1982; this superseding power directly affects federal government clerks whose union had signed a collective agreement with the Treasury Board for a wage increase of 12.25 per cent as of 12 December 1982, but who, under the Act, will now only receive 6 per cent. The PSA concludes with the statement that Bill C-124 is not simply wage control legislation but an absolute assault on the freedom of association and collective bargaining rights of some 500,000 federal public servants.
6. 104. In its communication of 21 December 1982, the CCU states that Bill C-124 violates Convention No. 87 because, while not overtly suspending or dissolving workers' organisations, its invalidation of their efforts to defend and further workers' interests through collective bargaining strips the guarantees of freedom of association of any practical significance. The complainant makes similar allegations as concerns Conventions Nos. 98 and 151 as are outlined by other complainants above. Lastly, it challenges the Government's justification of Bill C-124 arguing that (1) even business-oriented economists recognise that wages are not the cause of inflation in Canada and therefore such legislation is not an economic necessity. (2) the wage limits set by the Act do not provide adequate safeguards to protect workers' living standards

B. The Government's reply

1. 105. In its communication of 4 November 1982, the Government states that it recognises the right of Canadian workers to organise into associations and unions and to bargain collectively, as is evidenced by the provisions of the Labour Code (which applies to employees in undertakings under federal competence) and the Public Service Staff Relations Act (which applies to government employees), and that the Public Sector Compensation Restraint Act does not in any of its provisions interfere with the freedom of association of Canadian workers. It explains that this Act determines' for a period of 24 months, the wage increases of public servants: namely a 6 per cent increase for the first 12 months and a 5 per cent increase for the following 12 months with other terms and conditions, such as negotiated overtime clauses and paid leave entitlements remaining in place.
2. 106. According to the Government, section 7 of the Act provides for amendment - by agreement of the parties - of terms and conditions of employment not related to compensation, such as health and safety and the grievance procedure. It points out that, where mutual agreements cannot be reached, the terms and conditions of employment in place prior to the 24-month period of application of the Act will continue in effect.
3. 107. The Government quotes the following ILO statement:
   • ... the (ILO) supervisory bodies have not ignored the serious problems that may arise in certain circumstances in the economic field, and they have accordingly stated that it would be difficult to lay down an absolute rule concerning voluntary collective bargaining because, under certain circumstances, governments might feel that the economic position of their countries called at certain times for stabilisation measures during the application of which it would not be possible for wage rates to be fixed freely through the medium of collective bargaining. Nevertheless, any such restriction should be imposed as an exceptional measure and only to the extent that is necessary, without exceeding a reasonable period, and it should be accompanied by adequate safeguards to protect workers' living standards.
   • It claims that the Act, while admittedly restricting collective bargaining of compensation, meets the criteria set out in this statement. First, it is being imposed as an exceptional measure; secondly, it has a two-year definite term of application; thirdly, it contains safeguards to protect workers' living standards and to maintain other important terms and conditions of employment.
4. 108. The Government points out that section 16 of the Act (which reads as follows, "The Governor in Council may, by order, terminate the application of the Act in respect of all employees or a group of employees to which this Act applies") does not require the concurrence of the employer to seek an order.
5. 109. Lastly, the Government points out that its Constitution has recently been amended to include a Charter of Rights and Freedom identifying freedom of association as a fundamental right of all Canadians, a right which has not and will not be interfered with by the Government.
6. 110. In its communication of 21 January 1983 the Government stresses that sections 6, 7 and 16 of the Act permit collective bargaining, proof of which is that the PIPS and the Treasury Board, as employer, signed voluntarily negotiated memoranda of settlement on 7 December 1982 (for the home economics bargaining unit) and on 8 December 1982 (for the historical research bargaining unit); the parties agreed to introduce paid maternity leave as a new benefit for employees of those groups. Negotiations leading to these settlements are allowed under section 16 of the Act. Moreover, according to the Government, the allegations in this case are misleading as they focus only on the lack of third-party intervention in the bargaining process and ignore the willingness, already shown by the Government, to enter into negotiations and bargain collectively under the Act. For example, as of 13 December, negotiations under section 16 are being held for the nurses bargaining unit between the PIPS and the Treasury Board and negotiations under section 7 are being held for the radio operators and the aircraft operators bargaining units between the Board and the Canadian Union of Professional and Technical Employees. In addition to this, consultations and negotiations are continuing within the framework of the National Joint Council, a body which brings together public service unions and the Treasury Board; the PSA is a party to these activities.
7. 111. The Government states that the two decisions of the Public Service Staff Relations Board referred to by one of the complainants simply recognise that the new Act has suspended collective bargaining under the Public Service Staff Relations Act; these decisions do not find that collective bargaining "per se" is suspended. The Chairman of the Staff Relations Board recognised this in one of the decisions when he stated "I would like to point out, however, that all provisions of the PSSRA which are not inconsistent with the PSCRA, remain in effect, including the provision of the PSSRA which allows the Chairman to appoint a mediator to assist the parties in the resolution of all manner of disputes which may arise during the restraint period established by the PSCRA".

C. The Committee's conclusions

1. 112. The Committee notes that the Public Sector Compensation. Restraint Act, which became law on 4 August 1982, restricts collective bargaining for federal public servants for a period of 24 months, with the possibility of this period commencing much later than 29 June 1982. The provisions of the Act are applicable to compensation arrangements in force on 29 June 1982.
2. 113. The principal sections of the Act read as follows:
3. 4. (1) Every compensation plan that is in effect on 29 June 1982 for employees to whom this Part applies, including every compensation plan extended under section 5, shall be extended for the period of twenty-four months:
   • (a) from the day on which the first increase in wage rates on or after 29 June 1982 would ... occur under the compensation plan; or
   • (b) where no increase in wage rates is to occur under the compensation plan on or after 29 June 1982, from the day immediately following the day on which the compensation plan would, but for this section, expire. [...]
4. 5. (1) Subject to subsection (2), where a compensation plan for employees to whom this Part applies would, but for this subsection, have expired before 29 June 1982 and no new compensation plan was established before that date, or on or after that date in accordance with subsection 4(2), the compensation plan shall be extended:
   • (a) where the compensation plan would have expired on or after 29 June 1981, for the twelve month period immediately following the day the plan would have expired; or
   • (b) where the compensation plan would have expired before 29 June 1981, until 29 June 1982. [...]
5. 6. (1) Notwithstanding any other Act of Parliament except the Canadian Human Rights Act but subject to this section and section 7, the terms and conditions of:
   • (a) every compensation plan that is extended under section 4 or 5, and
   • (b) every collective agreement or arbitral award that includes such a compensation plan,
     • shall, subject to this Part, continue in force without change for the period for which the compensation plan is extended.
   • (3) The Treasury Board may change any terms and conditions, including any increase in wage rates of not more than. 9 per cent,
   • (a) of a compensation plan that would, but for section 5, have expired before 29 June 1982; or
   • (b) of a collective agreement or arbitral award that includes such a compensation plan,
     • where the parties to the plan fail to agree to change those terms and conditions.
   • 7. The parties to a collective agreement, or the persons bound by an arbitral award, that includes a compensation plan that is extended under section 4 may, by agreement, amend any terms and conditions of the collective agreement or arbitral award other than wage rates or other terms and conditions of the compensation plan. [...]
6. 12. A provision of a compensation plan for employees to whom this Part applies entered into or established at any time is of no force or effect to the extent that it provides for an increase in wage rates that would bring wage rates to a level that they would, but for this part, have reached.
7. 114. The complainants allege that this legislation violates Articles 2 and 3 of Convention No. 87, Article 4 of Convention No. 98 and Articles 7 and 8 of Convention No. 151 and argue that this measure was not necessary for the recovery of the Canadian economy. The Government, on the other hand, considers that the legislation was necessary, that it is acceptable because it only applies for a limited period of time and that it provides guarantees to maintain the workers' living standards both through the discussions which are permitted under sections 7 and 16 of the Act and through the consultations and negotiations which are continuing in the National Joint Council, as well as through the possible appointment of an independent mediator in cases of disputes.
8. 115. As regards the alleged violation of Article 2 of Convention No. 87, the Committee, after a thorough examination of the Act, considers that the right of workers in the federal public service to establish and join organisations of their own choosing without previous authorisation would not appear to be adversely affected. Although the complainants argue that there is a restriction - implicit in the "without change" stipulation of section 6 - on the right of these workers to change bargaining agents during the wage restraint period, the Committee considers that such a consequence is not immediately apparent from a reading of this section which relates specifically to compensation plans and not to the parties or bodies that have participated in their negotiation. In addition, this very section explicitly recognises the supremacy of the Canadian Human Rights Act which lays down the right of all workers to form organisations to further and defend their interests.
9. 116. The allegation that Article 3 of Convention No. 87 is violated by the combined effect of section 6(1) of the new Act and paragraph 101(2)(a) of the Public Service Staff Relations Act (resulting in the prohibition of the right to strike during the wage restraint period) must be examined in the light of the principles and standards of ILO supervisory bodies concerning the right to strike in the public sector. The Committee has considered in the past' that the right to strike may be restricted or even prohibited in the civil service or essential services in the strict sense of the term on condition that adequate guarantees - such as speedy and impartial conciliation and arbitration procedures up which the parties concerned can take part at every stage - are provided to the workers to compensate them for this limitation on their freedom of action. The Committee would also recall that Article 8 of Convention No. 151 amplifies the examples of disputes settlement procedures to include, for example, negotiation and mediation. In the present case, the Committee notes that, according to the Government, adequate guarantees do exist, e.g. section 7 of the Act allows for limited collective bargaining, section 16 allows for exemptions from the Act to be made, and that the mediation procedures under the Public Service Staff Relations Act still apply. In addition, the Committee notes that, under s. 6(2) of the Public Sector Compensation. Restraint Act, the Treasury Board may, in certain circumstances, including cases where the parties fail to agree to change the terms and conditions of a compensation plan, authorise change, including any increase in wage rates of not more than 9 per cent. Taking account of all these factors, the Committee is of the opinion that the denial of the right to strike in the present case, despite the measures taken to place certain restrictions on wage bargaining, is nevertheless accompanied by procedures which allow not only for bargaining beyond the minimum levels fixed by the new legislation (i.e. 6 per cent and 5 per cent), but which, in certain cases, allow for exceptions to be made as well as providing for mediation in case of dispute. The extent to which these procedures adequately compensate the workers concerned for this denial of the right to strike will depend on their effectiveness in practice and the Government should ensure that individual claims are examined fully and in good faith in order to determine whether an exception to the application of the Act should be made.
10. 117. As regards the allegation that Article 4 of Convention. No. 98 is violated by the suspension of collective bargaining imposed by the Act, the Committee would recall the criteria established by ILO supervisory bodies and quoted by the Government in this connection, namely that stabilisation measures restricting the right to collective bargaining might be acceptable on condition that they are of an exceptional nature, and only to the extent that they are necessary, without exceeding a reasonable period, and that they are accompanied by adequate safeguards to protect workers' living standards. The Committee observes that the duration of the wage restraint legislation, viz. two years, is for a period which the Government stresses as being a "definite" one. The Committee can accept, under certain conditions, the imposition by law of wage limitation in exceptional circumstances and for a strictly limited period to commence on a particular date. However, as regards those compensation plans that were freely negotiated prior to the date on which the legislation became applicable, and which provided for increases in excess of those provided for in the Act, the Committee considers that consultations should take place between the parties in order to determine the extent to which such freely negotiated agreements can be implemented within the provisions of the Act.
11. 118. The Committee notes that there is provision for certain limited wage increases of 6 per cent in the first year and 5 per cent in the second year of the applicability of the Act and that discussions and negotiations on a number of other matters are available to the workers concerned. Furthermore, there is provision for exceptions to be made and already, it appears, same have been made. The Committee takes particular note of the Government's statement that, in December 1982, memoranda of settlement were signed, after voluntary negotiations, to give certain income-related benefits to two bargaining units and that negotiations were continuing between the Government and the relevant public service unions of three further bargaining units. Accordingly, the Committee considers that, although collective bargaining in the federal public sector is restricted for the limited period set cut in the Public Sector Compensation Restraint Act, some provision is made to protect the living standards of the workers involved. The Committee expresses the hope that the Government will keep the situation under constant review and negotiate and consult with the unions concerned with a view to ensuring that any adverse effects of the legislation are overcome.
12. 119. As regards the alleged violation of Article 7 of Convention No. 151 concerning procedures for determining terms and conditions of employment, the Committee recalls that Article 7 allows a certain flexibility in the choice of procedures to be used in the determination of the terms and conditions of employment, It also notes that some of the parties in the present case are continuing negotiations on certain issues, and that two bargaining units have voluntarily signed income-related memoranda of settlement even though the Act in question applies to them. In these circumstances, and in view of the Government's declarations that it is willing to continue such activities during the duration of the wage restraint legislation, the Committee is unable to conclude that public employees cannot participate in the determination of their terms and conditions of employment through machinery established for this purpose.
13. 120. As regards the alleged breach of Article 8 of Convention No. 151 concerning the settlement of disputes, the Committee recalls that, in view of the preparatory work which preceded the adoption of the Convention, this Article has been interpreted as giving a choice between negotiation or other procedures (such as mediation, conciliation and arbitration) in settling disputes. In the present case, the temporary exclusion of third party arbitration procedures that are normally available under the Public Service Staff Relations Act would not conflict with the requirements of Article 8 provided the possibility for negotiation remains open to the parties, and is established in such a manner as to ensure their confidence. In this connection, the Committee takes particular note of the Government's reference to continuing consultations and negotiations within the National Joint Council, a body in which at least one of the complainants is actively participating. The Committee also notes that, according to the Government, the possibility of appointing an independent mediator to settle disputes remains open, despite the new legislation. The Committee would, however, stress the importance of the principle contained in Article 8 of Convention No. 151 that the settlement of disputes arising in connection with the determination of terms and conditions of employment shall be sought, as may be appropriate to national conditions, through negotiation between the parties or through independent and impartial machinery, such as mediation, conciliation and arbitration, established in such a manner as to ensure the confidence of the parties involved. The committee expresses the hope that this principle will be fully respected, especially during the two-year period laid down in the Act in question.

The Committee's recommendations

• The recommendations of the Committee
  121. 121 In these circumstances, the Committee recommends the Governing Body to approve this report and, in particular, the following conclusions:
       • (a) As regards the alleged violation of Article 2 of Convention No. 87, the Committee, after a thorough examination of the Public Sector Compensation Restraint Act of 1982, considers that the restriction on collective bargaining set out therein would not appear to adversely affect the right of federal public servants to establish and join organisations of their own choosing without previous authorisation.
       • (b) Likewise, as regards the alleged violation of Article 3 of Convention No. 87 by the prohibition of the right to strike during the wage restraint period, the Committee is of the opinion that the denial of this right in the present case, despite the measures taken to place restrictions on collective bargaining, is accompanied by procedures which allow not only for bargaining beyond the minimum levels fixed by the Public Sector Compensation Restraint Act, but which allow for exemptions to be made as well as providing for mediation in case of dispute. As the extent to which these procedures adequately compensate the workers concerned for the denial of the right to strike will depend on their effectiveness in practice, it considers that the Government should ensure that individual claims are examined fully and in good faith in order to determine whether an exception to the application of the Act should be made.
       • (c) As regards the alleged violation of Article 4 of Convention No. 98, the Committee recalls that restrictions on the right to collective bargaining might be acceptable on condition that they are of an exceptional nature and only to the extent that they are necessary, without exceeding a reasonable period, and that they are accompanied by adequate safeguards to protect workers' living standards.
       • (d) As regards the compensation plans that were freely negotiated prior to the date on which the legislation became applicable, and which provided for increases in excess of those provided for in the Act, the Committee considers that consultations should take place between the parties concerned in order to determine the extent to which such freely negotiated agreements can be implemented within the provisions of the Act.
       • (e) The Committee expresses the hope that the Government will keep the situation under constant review and negotiate and consult with the unions concerned, with a view to ensuring that any adverse effects of the legislation are overcome.
       • (f) As regards the alleged violation of Article 7 of Convention No. 151, the Committee, in view of the flexibility of the choice of procedures to be used in the determination of terms and conditions of employment recognised in this Article and of the continuing negotiation of certain issues taking place, is unable in this case to conclude that public employees cannot participate in the determination of their terms and conditions of employment through machinery established for this purpose.
       • (g) As concerns the alleged breach of Article 8 of Convention No. 151, the Committee would stress the importance of the principle that the settlement of disputes arising in connection with the determination of terms and conditions of employment shall be sought, as may be appropriate to national conditions, through negotiations between the parties or through independent and impartial machinery established in such a manner as to ensure the confidence of the parties involved. It expresses the hope that this principle will be fully respected, especially during the two-year period laid down in the Public Sector Compensation Restraint Act.